Anthropic vs. OpenAI, Netflix Password Crackdown, & Teen Mental Health Crisis

0:28Stop waiting for customers to fall into your funnel. dash ads. Good morning, Brew Daily Show. I am Neil Freiman, first of his name. And I'm Toby Howell, Sir Blonde a lot, I guess. Not bad. On today's show, Netflix is finally dropping the hammer on password sharing here in the US. And we are going to debate the hundred most reputable companies in America. Then we'll talk all about a new AI challenger named Claude that could take down chat GBT before telling you about La Sombrita, the worst bus stop structure ever designed. It's Wednesday, May 24th. Let's ride.

1:09Toby, I made an egregious mistake yesterday on the podcast. I said the word B-A-N-A-L out loud and pronounced it banal. As soon as I said it, I knew that was totally wrong. And I just knew I I was going to get so many text people making fun of me for pronouncing it wrong. If you want to know how to correctly pronounce it, which I knew but didn't say it, it's banal. I'll give you a pass, Neil. I knew we made eye contact. You knew you did it wrong. It's all right. But thank you for saying a lot of words. If you want to impress your friends by using that word today, it means boring, ordinary, and not original.

1:47So that's the last time I am sticking my neck out and trying for a fancy word. The lesson I've learned from all of this is I'm just keeping it Dr. Seuss level from now on. That's good. Also, we expect the like notes app apology issued on your social medias today for pronouncing banal wrong. I will do that. Let's get to the news. For years, there have been concerns swirling around social media's impacts on kids' very impressionable brains. Yesterday, the U.S. Surgeon General entered the chat. The Surgeon General, whose name is Vivek Murthy, came out with this forceful public advisory yesterday warning that social media presented profound risks to the mental health of children.

2:27He said they've been unknowing participants in a decades-long experiment, then that we don't have sufficient evidence to conclude that it is sufficiently safe for them since their brains are still in development while they're being bombarded with likes, retweets, comments, cyberbullying, etc. So all of this was a call to arms to better understand what social media does to kids' brains and for tech companies to make their platforms safer for kids. So here's some nuggets that just stood out to me about this issue that can maybe kick off the conversation. Essentially, virtually all teens are on social media.

3:02So 95 % reported using at least one social media platform, and more than one-third said they use social media almost constantly. And the other two-thirds are lying. The other two thirds are lying probably. And if not, teach me your ways. And they also start really young, which is kind of crazy. Two in five children have begun using social networks between the ages of eight and 12. Meanwhile, social media companies are supposed to ban children under 13 from using them. But clearly that is not working. Yeah. I mean, this is one of those things that everyone knew was bad. Like everyone knew that social media was probably not great for especially developing young kids brains.

3:40So now I actually want to give like the Surgeon General a relative pat on his back for just saying the quiet part out loud here. And I was looking back through some of the other Surgeon General reports that have been issued over the last decades or so. They can be pretty powerful in shaping public opinion. I mean, if you go back to the 1960s in the conversation around smoking, that was a big Surgeon General report where they said like, listen, people, this is not good for you. Also, the conversation around HIV and AIDS in the 80s, it helped change the public opinion. And then also in the early 2000s, the obesity epidemic, which is, again, one of those things that you kind of see happening in the background.

4:18But until you get these Surgeon General's reports and telling the public like this is actually going on. So to me, this is another one of those moments where the Surgeon General is really bringing to light what this epidemic that's happening to young kids everywhere. Yeah, he's really setting the tone. And I know on the podcast a month or two ago, we talked about he issued a very similar thing about the loneliness epidemic for sure. And people were lonely. So he's been on this crusade to sort of sound the alarm around teens mental health. It's really interesting looking at the science of people studying what social media does to kids brains, because it is while it seems obvious that it is bad, but it is not obvious in the literature, the data is relatively inconclusive.

5:02So a systemic, no, so they did this analysis of other studies, a bunch, like a dozen studies, and there was this review of them. And they found that most reviews interpreted the associations between social media use and mental health as weak or inconsistent. It has been found to not have the same impact for everyone. So it is more of a threat to adolescent girls or people with body images, body image issues, as opposed to other people. And they also find that social media can actually be beneficial to some groups. They really cited LGBTQ plus youth in particular. They've been shown to benefit from social media use because you may not find your community within your peers in your school or anything.

5:41But when you log on to social media and you're like, oh, my God, I found people like me in these various chats or platforms or groups that I'm forming. So you can see that could be positive in that particular way. Yeah, for sure. I also think that the next part of this conversation is, okay, if there is a link between mental health problems in kids and social media, like what do we do about it? And so some of the recommendations are basically stuff that a lot of the social media companies say they're already doing, which is don't let 13 year olds on social media. But then I also think about the laws that are kind of popping up here and there, especially the law in Utah, which has instituted a curfew on kids below the age of 18.

6:21They need their parents' explicit approval to access social media between the hours of 1030 p.m. and onwards, which we've said that we need those laws as well. But, yeah, are we going to see a rise in legislation, people trying to legislate social media? I mean, literally, Montana just banned TikTok. Right, right. And it may have been over national security reasons, but I'm sure there was a little statement in there that it's like bad for our kids. For sure. Yeah. I mean, again, we knew everyone knows that social media is probably not good for your brain, but it is. But you have these people on the other side.

6:54I know I'm playing a little contrarian. You have people on the other side of this argument that are like this sound. This seems a lot like a moral panic. Yeah. A little bit like when jazz music came out, whenever there's this innovation or technology that's new and kids are using it. There's always an uproar. You have like the jukebox, television. Everyone's like, it's rotting our kids. They're all going to hell because of this new particular innovation and social media is one of them. And so some people are saying like, look, let's let's view all of this with a bit of skepticism before we know the actual facts.

7:27And the facts will trickle out, but right now it still remains like a total mystery as to whether it's an associative or, you know, that kind of relationship or more of a causal relationship. Yeah, maybe I'm just shaking the old man shaking his fist. I mean, you'd definitely be right. Yeah. Okay, let's move on. And Neil, there's a new AI company I want to tell you all about. It's called Anthropic, and it just announced a$450 million funding round led by Google yesterday, which brings its total funding to nearly$1 billion over the last year alone. So why is Anthropic getting all this money, and how is it different from the likes of OpenAI and these other large language model companies?

8:06Well, for starters, it's a constitutionally governed AI. That means its creators gave it its large language model named Claude a set of explicit values to determine determined by a constitution to guide its behavior rather than letting its values be determined by kind of large scale human feedback. So essentially Claude has some guiding principles that don't let it run into some of the other pitfalls and biases that other large language models like Cough Cough, ChatGPT run into. And so some of the things its constitution seeks to prevent are stereotyping groups of people, spreading misinformation, offending non-Western audiences, and other toxic chatbot behaviors.

8:49So do you kind of buy into this new approach, this new constitutionally governed AI? And is Claude potentially a chat-gibit killer? I will say I have no expertise in whether one method of training is better than another method of training in terms of AI large language models. I just don't know. But they do seem to be positioning themselves as the anti-chat GPT. And I thought what was the funniest thing was that they said that their constitution was based on many documents, including the UN's Charter for Human Rights and Apple's Terms of Service. Two of the most important documents. Apparently, Apple's Terms of Service is like the Magna Carta of tech documents.

9:29I had no idea. Yeah, for sure. No, I do think that Anthropic is just one to keep an eye on because it just raised so much money. And it's also already landing some big customers. Some of its customers include Notion, Slack, DuckDuckGo, which is a search engine, Zoom, and then also Quora. So it's kind of weaseled its way into all the other platforms that maybe aren't on the OpenAI train. So that's partly some of the reason for raising just this ginormous sum of money. Yeah, I think it's the second most funded AI startup now after ChatGPT. And there was a report from earlier this spring, or OpenAI, sorry.

10:07There was a report from earlier this spring that it was valued at$4.1 billion, which is a lot. But when you talk about tech startup valuations, it has room to grow. I'll say that. One of the reasons why, because I was thinking, why is it raising so much money? It literally raised$300 million two months ago. And then it just raised$450 million yesterday. So I was like, what is going on behind the scenes? Obviously, you need a lot of money just to run an AI startup. But also, a bunch of its early funding was actually provided by FTX and Sam Bankman-Fried. And so they're definitely nervous that that money could get clawed back in the bankruptcy proceeding.

10:44So that's like... What does that tell you about their judgment? I know. Because Taylor Swift... Yeah, said no. Said no to Sam Bankman-Fried. Meanwhile, Anthropic is like... Said yes. So if you Google ChatGPT versus Claude, you will get so many results. I think it goes like 20, 30 pages on Google. But so people are comparing, like, what should I use Claude? Should I use ChatGPT? One area where Claude has an advantage is this processing power. So it can process about 75 ,000 words of input, text, and output compared to ChatGPT's 3 ,000. I don't think that has anything to do with the constitutional thing.

11:19No. But it's just a beast in terms of processing. and what they did to show how much of a beast it was in processing was they fed it great gatsby and said and they altered one sentence in the great gatsby and said can you spot this one error and it took claude 22 seconds to find the error in uh great gatsby that's pretty beastly you can you can also ask it to interpret like what's the green light mean claude so it has that large language ability to like kind of interpret text as well so yeah claude's a beast definitely one to keep an eye on just for the sheer amount of funding it's gained, if nothing else.

11:54All right, Neil, that's the first half of our show. Before we jump into the next story, we're going to take a quick break. This episode is brought to you by State Farm. Listening to this podcast, smart move. Being financially savvy, smart move. Another smart move, having State Farm help you create a competitive price when you choose to bundle home and auto. Bundling, just another way to save with a personal price plan. Like a good neighbor, State Farm is there. Prices are based on rating plans that vary by state. Coverage options are selected by the customer. Availability, amount of discounts and savings, and eligibility vary by state.

12:31This episode is brought to you by Indeed. You're ready to move your business forward, but first you need to find the right team. Start your search with Indeed Sponsored Jobs. It can help you reach qualified candidates fast, ensuring your listing is the first one they see. According to Indeed data, sponsored jobs are 90 % more likely to report a hire than non-sponsored jobs. See the results for yourself. Get a$75 sponsored job credit at indeed.com slash podcast. Terms and conditions apply. All right, Toby, if you've been mooching off of your friend's Netflix account, I don't know if you do. I am mooching hard.

13:08Really? It is time. Well, you're gonna have to say goodbye, okay? Say goodbye to the free ride. It was a great ride, But after teasing this announcement for months, Netflix is finally cracking down on password sharing in the U.S. And it's kicking people off the accounts they've been freeloading on. Now someone is going to have to pay to latch on to your account outside your house. Just want to go over quickly how this is going to work. You can still share your account, but it'll cost$8 per additional user. And that only applies to subscribers in the standard and premium tiers. I don't know who the heck subscribes to the premium tier for 4K.

13:44I need that ultra 4K HD. But if you're a subscriber to the cheapest two tiers, then you can't share your account with anyone. Netflix has rolled this out in a bunch of other countries, and it had been teasing this for a long time. And yesterday it dropped the blog post hammer. It's such a bummer. I'm shaking my head here because, yes, obviously I'm mooching. I'm just going to be straight up. I'm mooching off my parents still. It's still my mom's Netflix account. So I'm hoping that maybe we upgrade to that additional tier. But this is an end of an era for Netflix because it used to be very pro password sharing.

14:16So in 2017, it tweeted out, love is sharing a password. That tweet is still up, by the way. So people are kind of revisiting it and saying, what happened to the old Netflix? You used to love us. Well, what were they thinking then? Well, it's because it was a brand play. People were like, oh, we get that you guys are sharing passwords. We know it's part of the culture of Netflix. But obviously, that's changed. And their subscriber growth was, you know, 10, 20 percent year over year and times are good. And then now they are showing declining subscriber numbers in certain markets. And they're like, all right, well, if we're hitting peak subscriber growth, we need to squeeze out revenue in certain other ways.

14:53So it's done that by this password crackdown and it's ad free tier, which we can talk about. But it thinks it can really get some new subscribers from this password crackdown sharing. The crazy stat is that they think 100 million people, households globally, are using a Netflix account, including yours. 43 % of its global user base they think is sharing an account. So, yeah, it is. I'm very, very interested to see if this actually pays out or if people just go, like, well, screw it. Like, I'm not paying. I'm not upgrading. I can live without Netflix. So it is definitely a bet that they think people will convert and will stay within the Netflix cocoon.

15:31But I think it's a little bit of a risk. personally. Analysts say, think of this as a price increase where you have some attrition, you have some people getting churned out of the system because they're like, I'm not going to pay, but the ones that you do, so you have this like short-term stumble, but long-term it'll pay off as you gain more subscribers. And analysts expect they could pick up 2.1 million new US subscribers from the initiative. They have a global user base of around 230 million. So it's not a ton but you know 2.1 million people paying eight dollars a month is is something not nothing yeah and i mean if we go back to q1 of last year they reported their first subscriber loss ever so yeah you're totally right this is an effort to squeeze more out of what they have rather than ever expanding which they thought probably a few years ago that that would happen so all right let's move on to peloton peloton is on the comeback trail and where they're going they don't need a bike.

16:25You heard that right. The company famous for its stationary bikes is trying to reinvent itself as more of a general fitness company. It launched a new app-only membership yesterday to highlight its kind of range of fitness content. Overall, this shift is part of new CEO Barry McCarthy's strategies to emphasize Peloton's content as its real product, not its hardware. So what do we think about this turnaround plan for Peloton? Well, it's definitely going to be more profitable. For sure. Like selling bikes, making things is just not a very profitable endeavor. But selling software and services are, and I had no idea this was the case, but they make more money now from services and their software than they do from selling their bike and treadmill hardware.

17:13For sure. Which I had no clue. It gives shades of like Apple strategy over the last decade. Yeah, because that was like Tim Cook's big shining strategic initiative was to increase services revenue. Because even Apple realizes that it's very hard to be good at – I mean, Apple is the best in the world at hardware. And even they are saying like services is where like the money and where the growth is. So you're definitely seeing like almost like a copying of that playbook. but also this is just i'm gonna call it a vibe shift for peloton as well because if we think back to like that infamous commercial that came out where it was just this upper class like white family who was super fit with the getting like the bike for christmas that was not the vibe that peloton wants anymore they want to appeal to kind of like the everyday person saying that hey you don't need to purchase a two thousand dollar bike you can just use our apps to work out in the gym They even went under like a color rebrand to reflect this.

18:09So it's definitely like a softer, gentler, less elite feeling Peloton these days. It's also a bet that app that people will work out on apps, right? Like you will take your phone wherever you go to your hotel on your travels and you'll just kind of go out to the patio on your Airbnb, set up your phone, put on the Peloton app and then, you know, do a workout, which I... Me personally, like I love that because if you're already gearing yourself up to do a workout, I don't want any mental strain of like, all right, what am I doing next? I just want to follow a video, follow someone telling me what to do.

18:42So I'm on board with that because I don't want the mental load of figuring out what to do if I'm already doing the physical part. If you want to try out, there is a free tier we should mention. There's different tiers for this new services and apps launch. All right, let's move on. Toby, I have a question. If someone asked you what brand had the best reputation in America, what do you think you'd say? I mean, Apple comes to mind because we've just been talking about it. Yeah, Apple. All right. Well, we actually have a list of 100 brands ranked by reputation. Axios and the Harris Poll surveyed tens of thousands of Americans and asked them what they thought of the most visible companies in the U.S.

19:17So are you ready for the five most reputable companies? I'll pause for a sec so our listeners can maybe think of who they think the top five are right now. All right. Now it's not a long time. Number one is, I know, we don't have time. The number one is Patagonia, the maker of Q-Zip. Costco is number two. John Deere is number three. Four is Trader Joe's. And rounding up the top five is Chick-fil-A. Do you have any takeaways from this? Because I have a few. I mean, my takeaway is, one, for Patagonia, like, people love just, like, their environmental sustainability and, like, they're very mission-driven.

19:55And so that one checks out. I'm actually surprised to see Chick-fil-A there because, one, I mean, people love their sandwiches, obviously, but, like, they also are, like, pretty anti-LGBTQ rights. And so I'm surprised that they're in the top five. Two out of the top five are very sort of politically oriented a little bit. Right. And so maybe it just doesn't matter which side you take as long as you make really good chicken sandwiches. I mean, listen, I do love Chick-fil-A, so I can see how it cracks the top five for sure. my takeaways are these are all american companies so we love our made in america none are in tech yeah and so all you can interact with physically all make tangible products i think that is important uh i already said political leanings don't really matter john deere is curious because i don't think the average american interacts with a john deere product on the average basis right it's just good vibes though you associate it with like humble american farmer frontier so yeah even if you don't use it plus that color i know the john deere green yeah So some other takeaways, if we want to head to the other end of the spectrum, coming in and last for the second year in a row is the Trump Organization.

21:03Because for, yeah, that just kind of makes sense. And then FTX is 99th. It debuted on the list this year at number 99. So not last. I know, not last. Congratulations. And then you have Fox Corporation at 98th, Twitter at 97th, and then Meta at 96th. What I think is hilarious is that no social media platform finished ranked higher than 94th. So there is definitely like an anti-tech, anti-social media. The product we use the most. People hate. People hate. I know, because it's making us sad. We talked about it at the beginning of the show. And then another interesting company to track is Disney.

21:39So Disney has actually been cratering over the last few years. So Axios has been conducting this poll for the last since 2019. In 2019, Disney was fifth on the list. This year, 77th. And before you just blame the DeSantis thing, DeSantis only started in the last year or so, two years. It has been falling every year. So fifth in 2019, 23rd in 2020, 37th in 2021, 65th in 2022, and then 77th this year. So clearly the mouse is rubbing people the wrong way. And Tesla is. So Tesla dropped 50 places from 12th to 62nd place. No other company dropped more than 22 spots year over year. And I swear it's because of the association with Twitter and social media because Elon kind of jumped ship and started working on the 97th favorite company in America.

22:30So, yeah, poor, I mean, poor Elon, I guess. No. The world's tiniest violin. Okay, Neil, today's final story is a doozy. I want to tell you all about La Sombrita. This week, the Los Angeles Transportation Department unveiled its latest attempt to provide some much needed shade for commuters getting beat down by the hot Southern California sun. They held this huge press conference to unveil a new bus stop structure that they says increases equity and inclusion by providing shade in communities that don't have as much of it and also some light at night for people who want to feel safer. Sounds good.

23:09But so then everyone was like, wait a minute, did you see what you're unveiling right now? La Sombrita is a 24-inch wide metal grate that kind of looks like a popsicle attached to a bus stop pole. It provides like one foot of shade. And here's the kicker, it costs$10 ,000 to design and install. So this has just really rubbed people the wrong way. Yeah, it is a symptom of regulations that kind of bar you from doing anything on a road or a sidewalk. So I think what people so people were outraged by the actual shade contraption because it does not deliver shade. It is just not an effective structure.

23:48Yeah. But also it got people digging into like, wait, why couldn't they you know, why couldn't they do something effective? Why couldn't they put a bus stop? And then you learn about all these crazy regulations that are were enacted to make streets focused on cars and not people. Yeah. So especially in these lower income neighborhoods, there are no trees. They planted palm trees in the early development of Los Angeles, which may look cool, but they have zero shade. And these sidewalks are super narrow, so you can't put anything on them. There's all this asphalt, so the sun is baking on this asphalt and creating this heat island in a city that is exacerbating heat.

24:25So you just started digging layer after layer after layer, and you're like, this is truly crazy the way we've designed our cities in Los Angeles to prioritize cars over people. and this La Sombrita is just kind of a symbol and an encapsulation of everything that's wrong with how we design our cities. Yeah, it was crazy. Like if they tried to put this above a bench, which sounds like an innocuous and smart thing to do, it would have triggered a six month review process. So yeah, of course. The red tape here. So I actually started to feel bad for the La Sombrita people, even though like the thing that they invented doesn't do at all what it's supposed to do.

25:01But I started to feel bad just given the red tape they had to clip through. All right. Well, they released four pilot versions of La Sombrita, and I cannot imagine they will expand the pilot or without changing the design significantly. That is our show for today. That was a lot. You can always email us with any questions or comments on anything we talked about, except for banal talk. Don't roast, Neil. Because I fixed that. Morning Brew Daily at morningbrew.com is our email. Huge shout out to our entire crew who made this possible today. Samantha Veles ran the ship beautifully in her first time.

25:37Raymond Liu is the associate producer. Uber Batista brought in bagels and we are forever grateful. We love you, Uber. Uchenoa Ogu is our technical director. Billy Menino is on audio. And you know what? I've decided hair and makeup is just too banal for this show. Devin Emery is our chief content officer and our show is a production of Morning Brew. Great show today, Neil. Let's run it back tomorrow.

26:31The Limu Emu Liberty, Liberty, Liberty. Savings very underwritten by Liberty Mutual Insurance Company and affiliates excludes Massachusetts.