OpenAI Ends Side Quests, SF Housing Market is Back, Kalshi’s $1B Prize | Diet TBPN

0:02Happy St. Patrick's Day. We are not drinking Guinness currently, but we hope that you are.

0:08John Coogan:Yeah, enjoy it. It seems like Tyler is in the St. Patrick's Day mood and is wearing a fantastic St. Patrick's Day hat. What do you think of my hat? How did you wind up here? That's a nice hat. Where did that come from? Did we just have that in the studio? No, I had this. Oh, you just had it. You had it handy. You just daily drive that? Yeah. Okay, yeah. It wasn't in your car? Yeah, he wore it to the gym this morning. Okay. In the news, the Wall Street Journal has an article about, this is a scoop from Berber Gin. We didn't have to break down the paywall, but Berber Gin has a scoop. It says, OpenAI's Fiji Simo told staff last week that the company could not afford to be distracted by side quests.

0:50John Coogan:Main quest only. Main quest only. What is the main quest? Probably just scaling compute, but we'll get into that. And there's a whole bunch of takes back and forth, said the company execs are actively looking at areas to deprioritize. Of course, throughout last year, OpenAI launched a ton of different initiatives across consumer hardware. And I think a lot of people were starting to say, like, okay, like, do you want to be fighting a battle on all these different fronts? Or do you want to just really nail consumer, nail enterprise? And now that is what they are signaling internally. So from the Wall Street Journal article, OpenAI's top executives are finalizing plans for a major strategy shift to refocus the company around coding and business users, recognizing that a do-everything-all-at-once strategy has put them on the defensive.

1:33John Coogan:Fiji SEMO, Open AI CEO of Applications, previewed the changes to employees at an all-hands meeting, telling them that top leaders, including Sam Altman and Mark Chen, were actively looking at which areas to deprioritize. They expect to notify staff about the changes in the coming weeks. We cannot miss this moment because we are distracted by side quests. Side quests is the key term there. We really have to nail productivity in general and particularly productivity on the business front. Last year, OpenAI announced an array of new products, including the video generator Sora, a web browser called Atlas, a new hardware device, and e-commerce features for ChatGPT.

2:09John Coogan:Some of those are like wildly different timelines for these things. Yeah, and remember during this time, that's when I started talking about viewing OpenAI's activities like they were a hyperscaler. When Google launches a new product, you don't have to assume that, hey, it's going to work every single time. And in fact, it's the exact opposite. A lot of these experiments don't end up going anywhere. It's fine. Like, again, you have this like massively scaling, you know, core business. You start to say like, hey, let's experiment in a bunch of these different areas. Some of them are going to work.

2:43Some aren't. It's OK. But then ultimately that creates a scenario where you're sort of like opening up maybe too many fronts, right, to the competition, right? You're competing with Meta and Social, with Sora. You're competing with Google in some ways. You're competing with even like the Microsofts of the world in other ways. And ultimately, this just feels like, hey, let's like narrow the fronts. And I think a lot of people expected something like this for the last few months.

3:12John Coogan:OTP in the chat is surfacing a very interesting old take from Ben Thompson about OpenAI should not be in the API business. and now based on the way things look, originally that was like, oh wait, well maybe Microsoft will be able to handle and scale the API demand, but API demand has been so huge and it's allowed Anthropic to develop such a solid business there that it's undeniable that OpenAI should also be in the API business, especially - Yeah, the other side of that is like they clearly need to be in the harness business too, which is why Codex is accelerating. Yeah, yeah, yeah. Yeah, and so the hyperscaler, like your take of think about OpenAI as the new hyperscaler, I think that takes it aged extremely well, especially with recent interviews with Dylan Patel and Dorkesh.

4:00John Coogan:Jensen just went on Certechery. There's a whole bunch of new data points that show how compute constrained we are, how tricky it will be, how chips will be the key bottleneck. There's that interesting story that Tyler was recounting from Dylan Patel about how the TPU was developed by the TPU team. DeepMind didn't realize how important it was going to be, how compute constrained they were going to be. So the TPU went and sold it to Anthropic and then DeepMind went back to them and was like, wait, wait, we want those chips. Like we need the chips. It's particularly about the ability to marshal compute at hyperscale.

4:32John Coogan:I was interested to look at like the history of side quests among mag seven companies above trillion dollar tech companies Because it's all over the place. And so it's very hard to paint with a broad brush I think right now there's a huge narrative around like opening I was doing way too many side quests They need to do zero side quests and the reality is probably like, you know We've seen this with Riley walls joining the labs team like there will be small projects there will be acquisitions There will be a continuum of bets there's just a level of refocusing that's going on right now. And reorganization, and this has happened at many, many times.

5:05Yeah, and I think the bet with the OpenAI Labs team is you have a really small group of people that are focused on creating or being quick to new product approaches. But that can be, again, like a two-pizza team. And that type of experimentation is going to make more sense if the rest of the company needs to refocus on enterprise and the core business.

5:26John Coogan:History of side quests in tech. Can we paint with a broad brush here? Spoiler alert, I think the answer is no. But there are some fascinating stories. So Google has a balloon internet play that's a serious company called Project Loon where they inflate balloons that go into the stratosphere, I believe. They go high up and then they deliver internet, sort of a competitive Starlink. They also have - They have the Fiber Play too. Fiber Play, oh yeah, they just sold that. That's not even close to the weirdest thing. The weirdest Google side project that I found is they make a contact lens that will tell you how drunk you are.

6:02John Coogan:I'm not kidding about this. Google, they have a project. It does more than that. It's supposed to do biometrics, and it can do a lot of different things. But one of the things that it can measure, it can measure glucose in your tears. It can measure any sort of biomarker that's in your tears, which apparently is a rich source of data. But one of them is blood alcohol level. So you can put in this contact lens from Google and it will tell you how Jarvis am I drunk am I good? Am I good? Am I good to drive? You're absolutely not. He's like you sir You should take a Waymo tonight. Would you like me to connect you?

6:36John Coogan:See this is all part of the plan They also briefly own Boston Dynamics But most importantly they bought DeepMind which was completely seen as like this wild card side project How does that fit in? You know, it's a bunch of researchers and then it became like the most critical thing in And Amazon has taken tons of shots at journal-related delivery and home security stuff. They also own Twitch, but they never really linked the site to live shopping and closed that loop. Have you thought that that's weird? And Jassy doesn't do earnings calls on Twitch. He doesn't do earnings calls on Twitch. Of course, Apple.

7:06John Coogan:Tried to build a car, then pulled out. Who knows where the Apple Vision Pro goes, although, of course, I hope it continues. I'm hoping for another Apple Vision Pro. Apple Vision Air, just make it lighter, same screen. That's the trick. Make it like$1 ,000. I think it'll sell. And they have a bunch of health moonshots. They've been working on non-invasive glucose monitoring, which is, there's some book about it called like the white whale of biotech or something. It's something that people have been working on for so long and they've never been able to crack it. The best thing I think they have is that you can get a continuous glucose monitor.

7:35John Coogan:Thank you for the W's in the chat, by the way. There's a lot of W's in the chat. You can get a continuous glucose monitor that is invasive, meaning it is pricking you, it is measuring your blood and then calculating the amount of glucose in that. And you can wirelessly connect that now to your Apple Watch, but they can't do it in the Apple Watch. There's always been the question about, like, could you just shine a light through your skin and detect the blood, the glucose in the blood? Very, very difficult to do. Lots of money spent with little to show for it, at least so far. Meta is probably the most, you know, egregious side quester.

8:08John Coogan:They don't do side quests. They do full quests. They create side quests in VR. There's actually one of the popular games. It's all about doing side quests. and yeah I mean they bought Oculus they bought a bunch of VR studios they roll everything up they renamed the company spent tens of billions of dollars on what is starting to feel like less of a side quest but still is is so early you know the meta ray-bans are like a success but to the tune of millions of units not you know billions of units or anything like that or hundreds of millions of units I think the iPhone has an install base over a billion now and the ramp from here to there on meta ray-bans is going to be long tesla launched a premium tequila in a lightning bolt shaped bottle so you know it comes for all different mac 7 companies but it truly like side quests come in all shapes and sizes some are just good for morale like it's just fun we do we do side quests here all day long uh tbpn simulator that's a side quest what was the other simulator jeremy gaffan simulator that was a side quest you know they're just fun some of them are good for marketing good for attention good for fun uh some are complete dumpster fires where you just pour money in and it just sucks all resources and you can get nothing out.

9:15John Coogan:And then some reshape businesses entirely. DeepMind's a great example. And there's certainly others in the Mag7 that have really, really changed the business. It seems like the entire Boring Company is a side quest. Yeah, it's technically a separate company, but Elon's king of side quests. Although I think Boring Company is... Yeah, it feels like the company that gets the least amount of attention, that's not on the critical path for many of the other projects. Totally. Some of OpenAI's teams come from very small teams with relatively tiny compute budgets, but they get a lot of attention sometimes because of the particular product category.

9:50John Coogan:So, SOAR is a great example where small team, not huge resource investment, probably a lot of inference and training cost, but relative to Codex 5.4, SPAR, I don't know. I don't actually know how we're looking on the order of magnitude there. Yeah, I think a big part of it is like, For viral, right? Yeah, and what percentage of the team, the overall team's energy is going towards a specific product, right? Yeah, yeah. So the idea of experimenting quickly and then consolidating efforts even faster makes a ton of sense. Nano Banana was a big deal for Gemini. Bringing image, video, and audio generation together in a single chat GPT flow is clearly the next step.

10:28John Coogan:And so some of this is not, it's probably not going to take the form of like, stop doing the side quest. It's like let's fold that into the main quest because clearly the interaction pattern of chat GPT is is where people want to go And so once we've done the experiment it works put it all together Dylan Patel and Dorkash said the TAM for GPT 5.4 was north of a hundred billion dollars Which is crazy for a bunch of reasons. I mean, it's a huge market that was created in just a few years The enterprise opportunity in general is crystal clear for anyone involved at the same time you still do need to experiment to make sure you are early to create the next breakout product experience and so with that backdrop opening labs and being more efficient with the shots on goal makes a lot of sense i still think that the the overall narrative around ai just in ai broadly this year will be about the main quest which i see as like compute scaling raise the money do the deals grow the capacity i was thinking back to travis on the show saying if you're doing something and it's easy, it's not valuable.

11:26John Coogan:The key is if money matters, which I think we say, we would say it does, especially in certain categories. He was probably thinking of ride sharing where there was a capital war and AI compute where there's also a capital war. You need to be the best in the world at it. Yeah, and I think overall, there's real competition now. It's intense, right? You have OpenAI Anthropic at the frontier pushing very, very hard. But the other side of this for OpenAI is like, yes, there was a ton of stuff that was announced last year. there was hardware, Sora, etc. But Sam was running around doing all these different mega deals for the compute side that now serve the main quest, and so the positioning is actually great.

12:05John Coogan:Google Capital bloke, the longtime Google bull, says, So Anthropic and OpenAI are going to just give the consumer market to Google? And I don't know how, I mean, yes, OpenAI reportedly planning to shift the strategy to refocus around business users and vibe coders, there's a lot of stuff going on there. listening to some of the data around the retention curve of the various products like i don't think that they're giving up on consumer at all that seems like sort of a an odd read yeah and we can pull up this chart uh that sam showed of codex usage this is like the again this is like what i think is informing the battle with anthropic as well as like this chart is going to inform the strategy shift which is like hey we can run we can take revenue into the hundreds of billions of dollars with the current products that we have.

12:53Let's focus on them and make the best possible products. In other news, OpenAI is forming a joint venture with TPG, Advent International, Bain Capital, and Brookfield Asset Management.

13:04John Coogan:This is great news. AI is coming to Fogo de Chao. Enterprise products across the firm's portfolio companies and beyond. The proposed deal is a free money value. AI is coming to Fogo de Chao. Bain Capital owns Fogo de Chao, the Brazilian steakhouse. Maybe now they can take Apple Pay. Oh yeah, we got cooked on that. Maybe they deliberately don't. I wonder if Apple Pay is expensive for them and this is actually a cost consideration. Fiji Simo said, this news came out a little bit earlier than we planned. We're excited to be building a deployment arm and we'll share more details soon. Companies have a ton of urgency to deploy AI in their organizations and we're sprinting to meet that demand.

13:37John Coogan:More than 1 million businesses run on open AI products. Codex is now at 2 million weekly active users, up nearly 4x since the start of the year. API usage jumped 20 % during the week after GPT 5.4 Watch launched in Frontier, which launched last month to help enterprises build, deploy, and manage AI co-workers that can do real work. It has way more demand than we can handle. That's why we launched Frontier Alliances, so we leverage our ecosystem of partners to scale, and that is also why we're launching a dedicated deployment arm tasked with embedding forward deployed engineers deeply inside enterprises.

14:09John Coogan:This project has been in the works with our investors and Alliance partners since last December, and we are grateful for them and their partnership. We're still early, but the speed of adoption is a clear signal of where this is headed. We're excited to not just be building these technologies, but also building many ways for companies to deploy them and get impact. There was a big talk for a long time about the next-gen private equity firm will buy businesses and deploy AI inside them. And this feels like, well, maybe that works at the mid-market private equity level, but you don't necessarily need a new AI native private equity firm because Bain Capital.

14:46John Coogan:Yeah, this is what I've always said. Like traditional private equity is not going to just be like, oh, we'll figure out AI in like 2030. It's not really on a roadmap right now. They're working as hard as they can to implement it. The question is, will traditional private equity be able to basically roll out and unlock the value of AI better than some of these AI-native, more venture-oriented roll-ups? What is the pitch for a mini or a nano model? Someone ran some evals, and the mini models are equivalent to GPT-5 when that first came out. But it's just way cheaper, right? So if you're consensitive, if you're running a ton of queries, but they don't need to be the max intelligence, then you just use the...

15:24John Coogan:So cheaper, but also faster? yes probably yes and potentially runs on older hardware i think that's unclear this is bullish for our vintage neo cloud the oldest gpus yeah this was craze idea yesterday yeah we're gonna run this on 10 80s uh yeah i mean it's like doesn't like how small the model is doesn't actually like matter imagine imagine running your vintage neo cloud with with a wood-fired hearth yeah powering it all yeah i mean you have to imagine that what's after blackwell what's the the one that announced today? VARORUBEN? RUBEN. RUBEN. Like, you have to imagine that there will be models that only run on RUBEN and need to be sort of re-architected to run on Hopper, I would imagine?

16:06Sure. I mean, I think there's like small performance boosts that you can get.

16:10John Coogan:Or it might just be slower. But you can always, you can run any model on like any hardware. It's just like, it could be like way, way slower. Because you have to the memory's on that. If you run like a fleet of A100s, where you could just be on like a smaller rack of RUBENs. Interesting. What did CalShe launch? CalShe launched the$1 billion Perfect Bracket Challenge,$1 billion for a Perfect March Madness Bracket. So you can win$1 billion for entering this competition? I haven't read the fine print, but it is positioned that way. Vinny says it would be hilarious if Citadel built out a team to attempt to financially impair their competitors.

16:46SIG through this. So SIG Parametrics from Susquehanna is basically like the financial backer for this promotion. So if Citadel can figure this out, they could leave their competitor with a$1 billion bill. Obviously trying to nail the perfect bracket is functionally impossible.

17:08John Coogan:So there are nine quintillion possible brackets. So the odds of a perfect bracket are one in nine and I believe that they are capping entries. I like my odds. I like my odds. I like my odds. And I believe that they are capping entries at 10 million entries. So if you math that out and then you take some insurance out, you should be able to hedge out any of the risk. If you are good and you don't suffer from any skill issues, you can basically, with strong basketball knowledge, If you have vol knowledge, apparently you can get the odds down to like one in 10 billion. And at that, you know, not from nine quintillion to 10 billion.

17:54If you have nine quintillion, you can sort them by how likely they are. Take the top 10 million. That's, you know, maybe there's some kind of power law thing here where we actually. Yes. You're getting close. We get close.

18:03John Coogan:But I think I think if there's 10 million, if there's 10 million, if like assume that there's 10 billion reasonable brackets and out of the nine quintillion. So you're discarding all the craziest upsets to get to that 10 billion. You already ranked it and narrowed it down by, what, six orders of magnitude or something. And then you're submitting the top 10 million of those 10 billion. Your odds of winning are still one in a thousand. You can make a thousand accounts. No, no, no, no. I think that they are capping the entire campaign, the first 10 million entries. So you have to be on Kalshi. My open claw already submitted.

18:41The SEC prepares proposal to eliminate quarterly reporting if you liked earnings. I was thinking, like, is this bad for us?

18:49John Coogan:We like earnings days, but it's not like our whole shtick. So I think we'll be okay. We will continue soldiering on. Good Alexander says, finally, less transparency around financial results. Yeah, I don't know if this is going to be enough to make it easier to be a public company. It's certainly a burden. but the kind of shareholder lawsuit risk and all that other stuff feels like a much bigger burden. What this is just going to do is create more volatility, right? If you're only getting updates twice a year, you can just see these like massive swings because it's like, hey, we haven't heard from this management team in a formal capacity for six months.

19:31The business could have changed wildly, growth rates fluctuating, et cetera. And so, again, if you love volatility, you're probably going to love this.

19:43John Coogan:So it's good for the VIX. That's bullish for VIX investors out there. There is a world where, I mean, the typical public versus private debate is that when you're private, you can think in multiple years, depending on who your investors are, maybe think in decades even. Whereas when you're in the public markets, you need to think in quarters. And so advancing that from quarterly to six months and you start putting management teams in, okay, what can we deliver that will show up in six months as opposed to what can we deliver that shows up in three months? That's twice as long. It feels like you could wind up with better run companies doing more ambitious things.

20:23John Coogan:I don't know. There is a bulk. Yeah. I mean, the other side of it is you just get more complacency. There's less of that. You're not like on the daily march. You know, you finish earnings and you're like, OK, 90 days, we got to do this again. Like there's no days off kind of thing. So are you are you an advocate for monthly reporting? Daily. Daily earnings calls. Potentially hourly. Just put I mean, this is the this is the crypto folks. They're like, put on the blockchain. I want to be able to see in real time the revenues of this asset stream and how things are moving around. I want full transparency at all times as an investor.

20:55I don't know. NVIDIA. NVIDIA. announcing nvidia dlss5 and ai powered breakthrough and visual fidelity for games coming this fall

21:03John Coogan:video games are gonna get more realistic prepare over the next couple decades this is going to be this is it's entirely possible this happens continue uh yeah it's funny because when i when i see the video i want to see a big when i see the video i my my thought was weren't video games already this realistic but i haven't played video games besides tetris on the automatic they oh yeah long time so let's play geforce rtx dlss 5. dlss of course stands for deep learning super shading something like that dlss it uses deep learning it's used ai for a long time the whole pitch for dlss super sampling has has always been go from a 720p render to 4k up res Just interpolate the pixels.