457 Meta Agreed To Pay $18 Billion For What Its Apps Did To Teenagers | The Pirate Street Journal

0:00Thanks for pressing play and welcome to this very special episode of the Pirate Street Journal. My name is Christopher Lochhead and yes, I am also the host of Follow Your Different. And what you're about to hear is something that I've been dreaming of for quite some time and we got a lot of feedback that people wanted us to do it, so we're doing it. And so what the it is, is a regular look at kind of relevant business news through the category design lens. it's predicated on the crazy idea that the Wall Street Journal doesn't know how business works. And as outrageous as that sounds, it's true in the context of most business press is focused on companies, maybe products and technologies, but almost never market categories.

0:49And so what the Pirate Street Journal is, is we take three important business topics of the day. And Eddie, Bree, and I look at those topics through the category design lens and share them with you and in and out in 30 minutes. It's the Pirate Street Journal. It's a very different look at business, and I sure hope you enjoy it. And we're going to be releasing PSJs on a regular basis for the foreseeable future and drop our regular follow your difference that are either one-on-one with me or a conversation with a legendary guest. So without any further ado, this is the Pirate Street Journal on Folly or Different.

1:25Hey-ho, let's go.

1:43Christopher Lochhead: Today's first topic, Meta just agreed to pay$18 billion to 48 states over what its apps did to teenagers, and the most interesting part of the deal is that part that only pays out if TikTok and YouTube agree to the same rules. Second topic, NVIDIA reported Wednesday and did$96 billion in a single quarter. The stock went up, which it has not done after earnings in over a year. And third topic, the best return on an AI investment we found this month was about$4 million on one production line in Poland making potato chips. We're recording on Friday, August 28th. hey-ho, let's go. Topic one, Meta settled Wednesday with 48 states and four U.S.

2:26Christopher Lochhead: jurisdictions. The headline number is$18 billion. The number Meta is actually guaranteed to pay is$12.7 billion over the next 10 years. The other$5.3 billion is contingent, and we'll come back to that in a second. It stopped the trial in Oakland in week two. Adam Mossery, the head of Instagram, had already started testifying. Zuckerberg was expecting next, but the attorney generals had asked for roughly$200 billion. Meta also agreed to rebuild the product, a default two-hour daily limit for under 18s, a night mode blocking the apps midnight to 6 a.m., a school mode killing push notifications from 8 to 3.

3:04Christopher Lochhead: Only a parent can change any of it. Where is the contingent$5.3 billion we talked about? Well, Meta will pay that only if TikTok and YouTube each agree to a default one-hour daily limit for underage users, and each pay the states about$5.3 billion themselves. Meta has written a statement where its own final payment is on a bounty on its competitors accepting the same rules. Meanwhile, Florida and New Mexico refused to sign. Florida's attorney general called the payouts peanuts. New Mexico already took Meta to trial this spring and won $942 million. Meta admitted no wrongdoing in any of this. And two weeks before signing, Zuckerberg published a 6 ,500-word manifesto called The Futurist for Everyone, promising the world personal superintelligence.

3:51Christopher Lochhead: A tutor with a PhD in every subject, a superintelligent lawyer for everyone, the danger he names in it is the excessive concentration of power. So, Christopher, is$12.7 billion accountability or the cheapest regulatory moat anybody has ever about? Well, I don't want to say it's a joke, but if you read the fine print and, you know, nobody does. So at first they say, what, 18 billion was the number they put out there. It's actually 12.7 because there's five of it that's being sort of held out to see if the other social companies will come in. So it's 12.7. Here's the part nobody else has reported on.

4:31It fucking drives me crazy that the media grabs the headline and goes with it. They are paying it over 10 years. Their revenue is approximately$200 billion a year. So this settlement is roughly 1 % of their annual revenue. Rough and tough. You can do the math, but I think it's a little more than 1%. translation, mouse nuts. And if you've ever had a mouse, you know, mouse nuts, tiny. Hamsters, for some reason, very large nuts compared to their bodies, but not mice. So this is not a hamster nut deal. This is a mouse nut deal. That's the first piece. The second piece is we did get some good things.

5:24The parental controls are real. Turning off notifications during school, turning off the damn thing overnight, et cetera, and that those things have to be overridden by parents. Those are good things. Will kids get workarounds for them? They absolutely will, but those are good things. But here's the really big problem. We have known for years now, it was years since I'm blanking on her name. She was a whistleblower, came forward, testified in Congress. That was several years ago. So what do we really know here? Meta knowingly hurt kids. And they didn't stop until they were forced. That's what just happened.

6:08Now, this is terrifying on many, many levels. We know that the data about their products hurting children got to Zuckerberg. That is a fact. That is an established fact that's been repeated many times from many places. Okay. And notice that this suit got settled, um, as Zuckerberg was getting closer and closer to testifying. And the last, I believe it's two trials, Brie, that have happened fairly recently, um, have crushed them and they were going to get absolutely crushed on this one. So make no mistake, uh, Zuckerberg and Metta knowingly hurt children and they didn't do it until essentially the eve of when Zuckerberg was going to have to take the stand.

6:53And I was listening to a Wall Street Journal podcast this morning, and the reporter covering this said that very damning evidence about what Zuckerberg and Facebook knew was about to come to light. Okay, so what does this tell us? They knowingly hurt kids for profit. That's what it tells us. That's the net of it. These are fucking not good people. Now, this matters from a past perspective, but it really matters, Brie, from what you just said around the New Zuck Manifesto around superintelligence. So what's he evangelizing? He's evangelizing an AI partner that is part of everything in your life.

7:30And we know this is going to be the future, right? We will have an AI partner that will help us from everything, from buying things that we wanna buy, scheduling doctor's appointments, monitoring our health, to you name it, helping us do our jobs, you name it. So here's the question. for a decade and a half, two decades almost now, we have trusted Facebook with our relationships and our interests, right? That's essentially what we're doing on Facebook. They radically abused that trust and they hurt our children. By the way, parents have some responsibility here too. That's a different topic. So in the future, as we develop more and more intimate relationships with AI, and that's the only real word for it, AI is going to know more about you than Google and Facebook and Apple combined.

8:20And so the issue going forward is one word, trust. Who do we trust with our AI native life? That's the question. And as it relates to meta, fool me once, shame on me. Fool me twice, as George W. Bush said, I won't get fooled again. And so I do not trust them. I continue to use them for fun and silly photos and all that stuff. But I am not using any of their AI products. I think they're a terrifying company. And they did it before. And the likelihood they will do it again is almost certain. I think terrifying is the right word. That's what the feeling that comes to mind. And I think if you want the facts that back up that feeling is, I think as you laid out, Christopher and Bree, Zuck and Facebook is a company that they'd rather ask for forgiveness than ask for permission because they know forgiveness is cheap.

9:17They will only do it after they get their hand slapped, as Christopher said. Not a huge deal. That's kind of number one. Number two, what would have been really interesting if ever Congress gets Zuck to testify again, here's the question I would like to ask. Do you let your kids, your own kids, use Facebook and Instagram and TikTok and everything else? At what age and why and why not? And I bet you the answer is no. Because we've heard this from other Silicon Valley CEOs. I don't let my kids use my products. I've heard that in other CEOs. Like I did a thing once for Kraft way back in the day when, you know, I was at a meeting with their top 100 executives and I did a survey.

9:58How many of you feed your own kids Kraft products? not many hands went up, right? Because there was a bifurcation. Why? Because they know what's in the cheese. They know what's in it. They've seen all the data, I'm sure. But also, there's a real kind of separating path that has happened as, you know, I'm a capitalist, but as CEO compensation has risen and as the average CEO is less and less the representative of the actual everyday consumer, you know, Zuck is not, he's not close to the everyday user of Facebook. The CEO of Big Food does not eat the same things that their consumers eat. They don't eat the way the average people eat.

10:34And so you have to watch out for CEO hypocrisy. Ask them what they do. And if they feed their, you know, do they drink their own whiskey? Do they eat their own dog food? That's kind of the second one. And then the third one I think is for parents. And this was a real struggle for me. You will take heat from your kids. You will get the, but my friends get this and that. But other parents get this and that. And you know what? That's part of your job is to suck it up and be the bad dad, be the bad mom and say, look, yeah, I'm the bad guy here. You're not going to get what everybody else gets, and that's okay.

11:07And, you know, you bear the arrows. And, you know, thankfully, it's been an interesting thing, you know, for me as a parent. You know, our youngest got off of Instagram his senior year, and I think it was really helpful for him. You know, he's back on it now. So I think the idea of, you know, even for me, I've thought about deleting Facebook and Instagram. I don't use it very much at all, but I've never really deleted it. But I think the idea of a fast is a very perfectly acceptable thing. You know, you fast from food. It cleanses out your system. You feel better as a result of it. You get sharper in your brain, actually.

11:40And fasting from social media. I mean, fasting from anything is going to be a good thing. We know that fasting, this intermittent fasting is a huge deal. If you're a cable news addict, do a one-week fast and see how you feel. That's the real talk. Get your own data. Get off of social media for a week and see how you feel. And actually, our church does this three times a year. It's a fast. You can pick whatever it is. Some people pick lunch, people pick food, some people pick caffeine. That would be hard for me in particular. But you pick the thing that you don't want to be addicted to and you see how you feel as a result of it.

12:12And guess what? You feel like you realize you have more control over yourself than you thought you did. And the last thing that I'll say to you is the reason why fasting is so critically important here and watching for the hypocrisy and watch out for Pete Bill who will lean towards forgiveness and ask for permission is remember what the category is. Use category design for your own personal life, for your parenting, this and that. What is a category that meta is? It's not social media. It's not what AI and what Zuck is talking about. Not augmented reality, what he was trying to do beforehand. It is comparison.

12:45It started out as face mash. They would put two pictures of girls in college and say, which one do you like better? And that they've extrapolated that concept to your everyday life. And they say, this person's life on Facebook is your friend. Is your life better than that person? This person on Instagram, is your body better than that person? And that is what they have monetized. It's a different form of monetizing envy. But when you monetize comparison, guess what? Comparison, not so healthy for you all the time. And so it doesn't mean that you shouldn't compare at some point, but fasting from that is going to be mentally healthier for you and emotionally healthier for your kids as well, too.

13:24Amen. Hallelujah. Luia, just say no to Zuck and Meta.

13:28Christopher Lochhead: Topic two, NVIDIA reported quarter two earnings Wednesday, so here are some of the numbers. $96.2 billion in revenue for the quarter, up 106%. Data centers alone did$89 billion, up 117. Net income of$59.7 billion in three months, 75 % gross margins, and they guided next quarter to$108 billion. The options market had priced a 5.3 % move and NVIDIA had fallen the session after each of its last four reports. Four straight quarters where the company beat and the stock went down anyway. But on Thursday, it closed up 8.7%, intraday almost 10. Jensen Wong's line on the call, AI has reached its inflection point, its tokens are productive and profitable.

14:15Christopher Lochhead: And then he said, now compute is revenue. And this is the same company that just committed to a$500 billion plan with six Wall Street firms to backstop loans to customers who can't afford its chips. The same company that paid$6 billion for poolside's technology and engineers to build an open weight model that competes with DeepSeek, with Kimi, and with OpenAI and Anthropic, its own customers. America is voting data centers out of town. AI has been polling worse than almost anything we measure, as we covered back in May, and the company at the dead center of all of it just out-earned the biggest quarter in oil history, and nobody is angry at Jensen.

14:53Christopher Lochhead: So Eddie, NVIDIA owns one layer of six in the six-layer cake, and history says the hardware king wins the opening act and never the close. Is open-weight play NVIDIA buying a second layer or admitting one layer was never going to be enough? I think Jensen and NVIDIA, it's a really fascinating case study of what we have seen the theory of kind of who wins early, who wins late play out over the last four massive technology revolutions. But let me just pause for a second just so people get perspective on what NVIDIA did this last quarter, right? They did$59.7 billion of profit in the last quarter.

15:3159.7. Just so that you can compare that. I was just about to ask you to say that number again. 59.7 with a... Thank you. So here's a list of 12 companies, their quarterly profit in the same time period, and it adds up to$57.9 billion. Less than one company did NVIDIA in the quarter, right? Apple,$29.8 billion. Walmart, Coca-Cola, P &G, PepsiCo, Disney, McDonald's, Costco, General Motors, Nike, Starbucks, and UPS. You add up their quarterly profit in the same time period, 57.9. And here's the striking part. I haven't done the math to add up all the market cap of those companies. Here's what we know.

16:19Apple is a$5 trillion company. Actually, I just looked at it right now. So, NVIDIA is$5.5 trillion. Apple now is$4.6 trillion. Google is$4.10. Microsoft 3.75 and Amazon 2.85. So NVIDIA at 5.5 trillion is by far and away the most valuable company on the planet. Yeah, but this is the point, is that Apple is in that list of the 12 companies that I mentioned. And look at the valuation is about the same. Right, and so the profit difference, if Wall Street was about math, then you would see the stock go higher. So one of a couple things is true. I think what we're seeing is the good old adage, in the near term, it's a voting machine, the stock market, and in the long term, it's a weighing machine.

17:03and that NVIDIA will have its day. I think, Bree, to your question of, does it mean that the idea of you need to win multiple spots on the bingo card and the six-layer cake is different or changing? No, I think that's still the same thing. And I think what you saw in the quarter, not only did they deliver outstanding financial performance, not only did they raise guidance, they meet, beat, and raise, they did the playbook as Jensen historically has done. They are getting close, if not already bought, Hugging Face, an open-source model. as a check and balance. Because what Jensen has done, we're going to talk about writing a book that is How to Win Friends and Influence People by Andrew Carnegie, but the Jensen Hong version.

17:42He is friends with all his customers and he is set up to compete with all of them because he knows they are all set up to compete with him. And that the open source model from Hugging Face is a way of saying, I would love to sell you all the chips in the world, you know, Sam Altman and Dario. However, you know, just be aware, I am ready to go on this side. Elon has said, hey, SpaceX is going to buy NVIDIA chips. They're the best. They're the only ones out there. Tesla does the same. And he said, FSD is the best-in-class software for self-driving. And here's Alpameo, an open-source one that anybody else can buy.

18:18And so he is exerting influence across the entire stack in a way that allows him to sell more chips in the first place. Because some of the striking things, it's not just that the quarter was amazing. He is diversifying his revenue basis, right? Because before, people would say, these numbers are amazing, but you only have it go into just one or two customers. And some of that is true, right? But non-hyperscaler revenue is going to be roughly half the data center business. It's growing 100 % a year, right? So he is diversifying the customer set. He is evangelizing AI across. So number one, he's making the pie bigger overall.

18:54He is absolutely in love with his friends, but he's not afraid to say, I got cards up my sleeve. and he is focusing on the thing that matters the most. The metric that matters the most is revenue per gigawatt. And it's gone from 18 billion with Hopper to 25 billion with Blackwell to 40 billion with Vera Rubin. And he has said it is going to go higher. And his stated ambition is, this is from the earnings transcript. I don't know how to calculate this number, Christopher and Bree, but his stated ambition is infinity per gigawatt. So I don't know what you'd do with that, right? But what I know is that he is really well positioned to play the cards differently and play the layers in a way that I think sets up NVIDIA to be very, very successful for many years to come.

19:43It is early and he is doing a great job. And as we've talked about, he's probably the best person to be the prime minister of AI. And to that end, Eddie, we're begging Jensen to become the prime minister of AI. He effectively is, and we need him to be more visible. And here's why. Think about this. Right now, as we speak, there is more hate to data centers in the United States of America than there is to the coal industry, right? And so the Chinese and the, let's just call them nut jobs, wing nuts, have convinced approximately half of America that data centers are bad. When in comparison to any other major industrial installation, they're not even close.

20:36But anyway, here's the interesting thing. And it just shows you how horribly we are manipulated by the media and social media. If all of this hate towards data centers had any power to it, NVIDIA stock would be cratering. and more importantly, it would show in their numbers. Guess what? It's the opposite. And so the media is a chump that lies and social media is a chump that lies. On one hand, we're being told that all these data centers are being stopped and all this stuff's going on and governors are doing dumb shit, but at the same time, demand is going through the roof. And here's why. Every time any of us use almost any kind of modern tech service, we're using AI.

21:25People say, oh, I don't use AI data centers. I just use Amazon. Amazon runs the non-AI data centers. What kind of donkey are you? Yes, there's a difference between AI data centers and non-AI data centers. However, that difference is blurring every day. More importantly, as more and more AI is center to, central to every app and service we use, be it DoorDash, Uber, you name it, uses AI. So the more you use modern tech, the more you drive demand for AI. You can protest like a donkey all you want. Wall Street knows what's happening. And the number is in the, the truth is in the numbers, the NVIDIA growth numbers, which are numbers we've never seen before.

22:10And so the fascinating thing here is they are the AI company. And he is the prime minister of AI and none of the data center stink is on them. They are, they are the data center. It's this weird ass parallel world. And it just shows you how deeply we are being manipulated because this company is arguably the greatest startup of all time. And yet you have all of this manufactured hate over here and none of it is stopping demand. And as a matter of fact, the people who are being manipulated into trying to stop data centers are using AI data center technology to create their protests. All that is to say, Jensen, we need you now more than ever.

22:56Please get visible, get out there and lead this industry away from the donkeys. We don't need any more Darth Vader's like Zuckerberg, like Altman, like Dario. These guys are scaring the shit out of the world. Jensen, you're our guy. we need to hear more from you. Thank you for your leadership. And let's take it up a notch and get rid of these Darth Vader's like Zuckerberg who are terrifying people. It's so ironic that the guy that dresses most like Darth Vader, black leather jacket, black turtlenecks, black pants, is actually the least Darth Vader-y about it. And I would encourage people to, as you said, because some of it for sure is the media.

23:32Some of it for sure is the either lack of leadership or the bad leadership that has come out. But just look at what Jensen is saying, because he will tell you the truth in a way that really matters. Sam Altman and Dario all say AI is going to take your jobs. What Jensen has said, no, no, no, that's not true. Somebody using AI will take your job over somebody not using it. So he's told you the truth that, yes, it's like, basically, imagine you go back in time and you're like, hey, John McEnroe, here are the old wooden tennis rackets and here's the new graphite ones that allow you to hit harder and fast with less weight.

24:06Like, yeah, it could be the tennis racket, but it's probably the guy wielding the tennis racket that's going to beat out the person wielding the old racket with it, right? And so he tells the truth, number one. He's self-deprecating in a way that's very, very different. We talked about, you know, for legal reasons, I'm sure, Zuck and Meadow will not admit wrong, even though they will pay the fine, admit no wrongdoing by the company, right? And yet, Jensen, not afraid to say, yeah, I got this wrong. You know, I should have invested more into opening an anthropic, right? He takes selfies eating street food, right?

24:35He does the Pulp Fiction dance on stage. He grew up with nothing. He's the American dream. He's gotten paid to work to take out the trash. This is a guy who knows what it's like to be ignored and to be treated like an hourly worker that some people will disrespect. This man is the American dream. This man fought for a decade before this company ever turned into anything like what it is now. You know, my dear friend Rob Burgess, God rest his soul, served on the NVIDIA board for years. Rob loves Jensen. And as a side note, Rob Burgess is a punk rocker. Rob Burgess is a guy who at the start of his wedding, the walk-in song was Billy Idol's White Wedding.

25:17And Rob always wore leather jackets. And I have it on pretty good inside information that at least in part, Jensen has been inspired by Rob's punk leather to make leather his signature. Anyway, all these things make Jensen cool. All these things make Jensen relatable. And he's not a Darth Vader. He's a human being. He does tell us the truth. He needs to be more visible than Dario, Zuckerberg, and Altman combined. Get these Darth Vaders off the stage and get entrepreneurs who are inspiring, who tell us the truth, on the stage. Well, the thing that's the last thing I'll say about this, and this might be a little controversial for us, is that I think his statement about the billionaire tax, wildly different than almost anything that anyone has said, including some of us, right?

26:07He has said, I'd be happy to pay the tax. Now, I don't know this for certain, right? My read on it is EQ-wise, he knows that's going to diffuse it. It's going to take it down. And the only reason why this is being talked about is because we're talking about it. And that if you actually diffuse it by saying, yeah, I'd be happy to pay it. The noise quiets down. The Ro Khanna's of the world can't use it to get their national platform to advance. And I think too many of us fall into the trap. We take the bait. We get mad about it. And it gets more currency for people to talk about it. Jensen is smart.

26:43And I think it genuinely means that I don't mind paying for it. Here's a big idea for you. This comes from my buddy, Flip Collier, who is one of the most genius marketing minds I've ever seen. He said to me the following, every marketing story needs a villain. Right now, they have made the billionaires the villain. They need to make the government the villain because the reason we need this billionaire tax in California is because of radical mismanagement and malfeasance and probably a ton of fraud by the California government. So here's Flip's idea. He said, ha ha, given his name, flip it on them.

27:16The billionaires come forward and they say, we're happy to do the 5%. Matter of fact, we'll do it right now. Under the following conditions, it's like the invest America accounts. The government doesn't get the money. We don't give it to a tax. We give it straight to those who need it. And we set up a capability using modern technology to have the citizen revote for where they want the money to go. And the billionaires bypass the government so that they can make the contribution to the worthy causes, to the worthy people directly, just like the invest American account, America accounts go directly to the children.

27:55and disintermediate the corrupt, incompetent California government. That's a genius idea. Flip is absolutely right. And we need to flip the script on these people. And Jensen has taken the first step by saying he's willing to pay it. Now, can we encourage them to go one step further to say, not only are we going to do it, if you vote no for this insane prop, that means they're going to come after your life savings too. Don't be confused. So to get rid of this stupidity, we're going to do this directly and you decide where it goes if the billionaires did that the government that the california government that want this tax that ultimately want to get all of our life savings they will get put in the corner the only thing that i'll add is not that he's willing to do it he said he's happy to do it it comes from a place of gratitude and i think that's the important part of it is that i think flips idea is genius he comes from a place of hey, I came from nothing.

28:50Look at what I have. I'm grateful to pay this. I think if the billionaires did that too, it's not what we do alone. It's how we do it. Anger is not the right fuel for this one, I think, in this regard. And look, let's call a spade a spade. One of the main reasons the billionaires don't want to do this is simple. Who wants to give an incompetent company more money to waste that money? Nobody. We're running a deficit. It's been proven beyond a shadow of a doubt the California government can't get anything done. Just look at the rail business. Just look at the failure in LA to recover from the fires.

29:24There's a long list of malfeasance here. Just look at all of the fraud in the homeless industrial complex. We spent$24 billion on homeless. This is where we're going to agree to disagree. I agree in all the content. I'm just saying, take the anger all of it down. No, I agree with you. And the way to do it, I completely agree, is to do Flip's idea. Just take the government out of it and the billionaires say to the people. A lot of generosity. I'm grateful for what I have. I couldn't have done it anywhere else, but here, let's move forward. Yeah, and we don't trust the government to spend this money wisely for you.

29:56We trust you. And so we're going to go direct. Brilliant move. But we haven't seen him do it yet.

30:02Christopher Lochhead: Topic three, let's talk about the perfect Pringle. This might be the smallest AI story in the news, and that might also make it the most important one. Kelanova makes Pringles in Europe. For four years, its engineering team has been working with ZZIMS to build a real-time digital twin of Pringle dough. Sensors on the line capture 200 data points every millisecond, flower particle size, dough humidity, which geography the potatoes were harvested in, and more than 200 parameters go into a perfect Pringle. And every potato batch is different. The AI model runs live simulations, spots the variants, and tells the operators to nudge the oil or the water.

30:42Christopher Lochhead: A human still makes the call. The investment was$4 to$5 million on one line in Poland. It's delivering a 10 % quality improvement, a 13 % reduction in waste and better than a 40 % return. It goes to Belgium next and then the United States in 2027. 705 million pounds of Pringles a year run through those three plants. The model doing all of this is conventional machine learning, the kind that has been sitting on the shelf for a decade. No generative AI anywhere in it. So Christopher, the real AI economy, the trillion dollar frontier build out everyone is watching, or a$10 ,004 million digital twin that nobody writes about.

31:22Look, you can debate whether they're doing a smart thing or not, or whether they're deploying AI in the way that you think that they should. But here's the bottom line. And it's the same thing with the data center discussion. What is not AI and what is AI is blurring. What is tech and not tech is blurring, right? And so this is a great example of embedding AI into the core of what a company is and does. And I think we're going to see a lot more of it. The question is, will they do it in ways that are not just good for the bottom line and for revenue? Will they do it in a way that is good for consumers?

32:01And on this one, Eddie, you're the consumer guy. I'm very curious. It's fascinating that they're doing this. But what do you think the implication is for consumers? Well, it's interesting. in the food space, you kind of have a barbell effect where on the one hand, you want all the attention today is I want it to be, you know, farm to table. I want it to be organic. I want it to be irregular. I don't want consistency. And absolutely that's true. And this is the duality of humans is that for certain things, you want your fruit to not look engineered. You want it to look natural, even though some of the fruit that we have today is bigger and sweeter than it It has been in the past.

32:41We'll leave that aside for a second. But in the other side, sometimes you want to eat something a little guilty, a little salty, a little sweet. And you want what you want, and you want it to be familiar. You want it to be consistent. You don't want it to change. And that in a world where you want cheese to be irregular and misshapen and this and that, you don't want that in your Pringles. You don't want that in certain things that you are familiar with that you are. But I remember back when I was doing work for Anheuser, and Christopher, this will trigger you, you know, Christopher will probably say Budweiser not a great beer.

33:13However, what they did was that no matter where you went in the world, in Asia, in Europe, in Latin America, in the US, the formulation and the taste profile of Budweiser was the same. It was consistent. And August Bush III, the chief, made sure that it was. It was a genius of Six Sigma, Kaizen, all the great corporate America type things where he knew for that consumer and for that use case, consistency really mattered. And so this is what Pringles is really doing here is the application of AI. And one of my old clients, Nigel Kirtley, he was the head of R &D at Kraft. He actually said back in the day, he's a British guy, when he was at Cadbury, they were using a version of AI 20 some odd years ago to make sure that the chocolate was consistent because Cadbury fell into the same camp of you want it to taste the same every single time so that I feel comfort, I feel familiar, and that's the experience that I'm looking for.

34:06And so in this one, it's one of the really interesting things about AI is that there are certainly some parts of AI that you want it to be, the use case for it and the unmet need is I want it to help me be more creative. I want to create a new category and this and that. However, in legacy categories, you want consistency. It's a perfect application because Nigel was using this for Cadbury. he would use high quality video to look at the chocolate line to make sure that the viscosity of the chocolate did not vary too far this way or too far that way. Because one of the things I've learned in food is that moisture migration is the biggest problem to solve.

34:47It is a biochemistry product. If you think about DiGiorno's, why did the pizza crust rise? It was a moisture migration problem. They prevented moisture from going from one part of the pizza to the other part, which allowed it to rise in a particular way. So food science, a miracle. There is a reason why Baking, if you were a cook, is way harder than cooking. Cooking is difficult. Baking is even harder. And there's science regard, there's chance. And when you can use AI, when you can use high-speed video to look for aberrations that 20-20 vision cannot, at speeds that human cannot, and reaction times that humans cannot, that is amazing.

35:20And in particular, I don't know that this is the case, but we talk about AGI and artificial superintelligence, but recursive self-improvement, RSI, we hear this all the time. You want that to be used when consistency is on the line because what does AI do great? Here's the job. Do not deviate from the specs. Make sure all the variation gets weeded out of the system and recursively self-improve until you get there. And it can do that better than humans. And I'll guarantee you, the people in Kunto, Poland who are doing that work do not want to be doing that work, staring at the line and manually looking for it.

35:55does that Pringle look like the same as the prior one? It's the Laverne and Shirley, you know, the people on the bottling line. They don't want to do that work anymore. They want to, and guess what? It won't be that those jobs go away. Did you ever see the - They want to be elevated to - Eddie, did you ever see the old clip? Maybe we could put it in the show notes, Brie, of Lucille Ball working at the Chocolate Factory. Same idea. Right, hysterical. Yeah, we don't, humans don't want to do that work. No, and I'll layer one all for the meat that we eat. beef, all the kind of stuff that's out there.

36:27It is painstakingly painful work. It is dangerous work to debone some of these meat processing. A lot of immigrants do that work. It's really hard work and it's not the safest work to do. We would be thrilled as a society to have AI and robotics do some of that work. And so this idea that AI is going to take all these jobs, some of it we actually want to happen in jobs that are highly repetitive, dangerous, and require a level of quality control, observation, and reaction time that humans do not have. So that we, as a consumer on the other side, can buy an experience that is deeply comforting because I know it will be the same as when I enjoyed it 30 years ago.

37:10Now, Brie, before we wrap, are we ready to wrap?

37:13Christopher Lochhead: Because I know you normally wrap quickly. We still have minutes left? You still got four minutes left. Oh, awesome. Here's what I want to say in my four minutes. A, I agree with Eddie. No surprise. B, I want to talk about Dolly Parton. I've loved Dolly Parton my whole life since I was a little boy. Since as long as I've been alive, I can remember Dolly Parton being on the radio, being on TV. And everything about her was legendary. And it sounds funny to say this about a person you never met. But it's upsetting that she's gone. and I miss her. And thank God she left us all this music. So I was looking at some Dolly Parton quotes, so many great ones, but I found this one and it felt apropos for everything that we do at Category Pirates.

38:01Dolly Parton said, find out who you are and do it on purpose.