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Podcast Summary: This Week in Startups - E1719 with Paul Yacoubian
Episode Overview In this episode of *This Week in Startups*, host Jason Calacanis interviews Paul Yacoubian, the CEO of Copy.ai. The discussion revolves around the rapid evolution of AI technologies, particularly OpenAI's GPT models, the implications of AI on various industries, and the future of AI and copywriting.
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Key Topics Discussed
- Evolution of GPT Models
- GPT-2 to GPT-3 Transition (2:38)
- Yacoubian started using GPT-2 in late 2019 for generating startup ideas.
- Noted creative potential but poor factual accuracy.
- Launch of GPT-3 (July 2020)
- GPT-3 significantly improved with 100 times more parameters, enhancing output quality.
- Transformation in how generative AI can be utilized effectively.
- Working with GPT-4
- Enhanced Performance (13:39)
- GPT-4 builds upon previous models by incorporating human feedback for better contextual understanding.
- It performs well across various natural language processing tasks.
- Radical Shifts in AI (20:46)
- AI is poised to radically change many industries, with the potential for efficiency and innovation.
- Importance of acceptance and adaptation to AI tools in workforce practices.
- AI's Impact on Copywriting
- Copy.ai enables copywriters to enhance productivity without replacing jobs.
- The tool allows users across various sectors (students, marketers, freelancers) to leverage AI for writing tasks, validating a wide market interest.
- Ethics and Legal Issues (48:54)
- Discussion of training datasets and legal implications of AI training on proprietary data.
- The importance of understanding copyright and licensing as AI continues to evolve.
- The Demand for AI Hardware
- The increasing need for specialized hardware (like GPUs) to support AI development.
- NVIDIA's GPUs are currently in high demand, impacting the ability for new AI products to be developed.
- The Future of AI and Business
- AI tools will become integral to business processes, potentially reducing workforce sizes while increasing efficiency.
- Shift towards building autonomous AI systems that require less human intervention.
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Key Takeaways
- AI is Transformative: The evolution from GPT-2 to GPT-4 illustrates the rapid advancement of AI capabilities, predicting significant shifts in how businesses operate.
- Creative Enhancement: Rather than replacing copywriters, tools like Copy.ai enhance their capabilities, allowing for greater creativity and productivity.
- Legal and Ethical Considerations: As AI becomes mainstream, understanding the legalities surrounding data usage and copyright is crucial for developers and companies.
- Hardware Challenges: Access to powerful GPUs and the infrastructure to support AI models is becoming a bottleneck in AI innovation.
- Business Adaptation: Companies that quickly adapt to AI tools will likely experience increased competitiveness, while those that hesitate may fall behind.
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Conclusion The episode emphasizes the importance of embracing AI as a tool for creativity and efficiency rather than seeing it as a threat to existing jobs. As AI continues to evolve, businesses must adapt rapidly to leverage its capabilities, ensuring they are not left behind in an increasingly competitive landscape.
For more insights from Paul Yacoubian and to learn about Copy.ai, visit [Copy.ai](http://copy.ai).
Written by AI. May contain mistakes. Listen to the episode to check what was said.
Transcript
Automatic transcript. May contain errors.0:00Hey, everybody. Hey, everybody. We all know the AI space is moving at a blistering pace right now. So we decided to do a little ad hoc miniseries on it. We're calling it Innovators in AI. Very creative. Every week, I'm going to interview a founder in the AI space here on This Week in Startups. And every founder that joins is going to be building something awesome. That is the criteria. We don't want just pontification. We want to actually see real products. And today, we have the CEO of Copy AI, Paul Yakubian. We have a great conversation about the insane pace of AI, as I mentioned, and building products for a specific niche, in this case, writing, copy AI, right, they do writing on top of various LLMs.
0:42And he explains how he's dealing with the fact that, hey, he started, I think, with GPT two or three, then they went 3.5, four, five is coming out, BARD is coming out from Google, so many different LLMs out there. How do you actually build a product that people are willing to pay for when these core platforms are moving so fast that they're going to absorb the innovations of people building on top of them almost in real time. This is a major issue for founders who are building in GPT or in AI with OpenAI's products. So it's going to be a great and insightful episode. Please stick with us. This Week in Startups is brought to you by Mercury, where innovation meets peace of mind.
1:27Now more than ever, startups need a safe place to put their cash. Mercury offers a simple way to manage bank risk and protect every dollar with up to$5 million in FDIC insurance and a money market fund. Visit mercury.com to apply in minutes. The Microsoft for Startups Founders Hub helps all founders build a better startup at a lower cost from day one. Startups get up to$150 ,000 in Azure credits, access to OpenAI APIs, free dev tools like GitHub, technical advisory, access to mentors and experts, and so much more. There is no funding requirement and it only takes minutes to join. Sign up today at aka.ms slash thisweekinstartups.
2:15And Mayfair helps venture-backed companies protect and grow their cash automatically. Diversify where you hold your cash, increase your FDIC insurance coverage, and earn up to 4.35 % yield on deposits. Go to getmayfair.com slash twist to get started today. All right, everybody. Next up on the program is a company that's been doing generative AI, specifically in copy and words, for a couple of years. I met Paul a couple of years ago when he was raising money for copy.ai. My bestie, David Sachs from Kraft Ventures, is an investor in the company. and i remember meeting you paul and paul's last name is yukubian yukubian right that's right that's right there you go yeah um you i remember were working on a couple of experiments when we met one of them was like doing taglines for using that's right i don't know if you were using chat gpt at that point but when did you first become aware of chat gpt and or generative ai for a copy Good question.
3:24So I started using GPT-2 in the end of 2019. And we were using it to create startup ideas. So it was insanely creative, but it was really bad at telling the truth. Because it wasn't trained on as much data as GPT-3 was. And it was immediately clear that the creative power was where the value driver would come from with the generative AI models. And I thought it'd be seven years away from being commercially viable. because it would just make stuff up and you had to really help constrain the outputs of it to drive value from it. So I was creating science fictional products and just had this explosion of ideas.
4:04What was the interface like for that chat GPT-2 at the time? Was it all like a dev tool? Because I remember it was a lot of startups were trying to get access to it. Yeah, GPT-2. And it wasn't really available. It was actually open source. So somebody had to set up the model, host it, and then build a UI for it. And the simplest UI was really just a text box where you type something in and then just click a button and auto complete it for you. And so I was using that, but I wanted a lot of ideas. And so I kept hitting the button and then deleting what it printed out and then hit it again. And I was like, a search interface would make way more sense, like a UX interface for brainstorming.
4:45And so I thought it would be about seven years before the model would actually be good enough because only about 10 % of the results even made sense at that time with GPT-2. And then fast forward until July of 2020, which is only like six months later, and they launched GPT-3, which is 100 times the size of GPT-2, and all the numbers flipped. So all of a sudden, most of the time, it was making sense what was coming out. Ah, so when you were doing 2.0, this is really interesting to look at the history of it. I'm sure people are going to study this rapid pace that this has gone on. There was no web-based service.
5:25There's no cloud-based service. You had to download it. And then did you have to provide a model or was there already some training in it based on some model? Yeah, they had pre-trained it and they had open sourced the model. So somebody else ended up hosting it and providing that interface. Got it. And so that's what I was using. Were they upfront about what was in the model or did they just say, Hey, we trained it on some stuff. Or were they explicit? Hey, we downloaded the Wikipedia. Hey, we did Quora. Hey, we did Reddit. Were they at that time? Because that's something that I've been trying to get my head around.
5:56And hopefully you can educate us in the audience as to what exactly. How do you know what's been it's been trained on? Yeah, they I think in the paper listed out a number of the sources. One is a common crawl data set. It's just a huge, huge file that's open source. You can download it and you can use that to train the model. Wikipedia was a big, a big component of it. Common crawl as in a common crawl of open web. So just a bunch of web pages that are in an open source search engine of sorts. That's right. They got Reddit and I don't think they got Quora at that time. I think. Yeah, probably had a paywall or something or a registration wall.
6:32So they couldn't get in there. Right. I think since then they have, they have probably gotten access somehow to Quora. it's data set so you see 3.0 and it goes from one in ten times to getting it right to one in ten times getting it wrong you said it another way nine in ten times at least making sense like it wasn't completely gobbledygook gibberish exactly yeah so the first the first thing that came to my mind i was like this is the next big wave in tech because all that you have all these new use cases that are unlocked and we would i thought we would see you know immediately i've tweeted this out i I thought it was a phase change of the internet.
7:09So this is the first time the internet can be trained and synthesized into a model and then talk back to you directly. Right. So that's a profound change in the amount of information that you have access to at any moment in time. And given that you're kind of able to talk to the internet, I thought that conversational interfaces would be the most relevant way to access that information that's inside the models. so we built built a slack bot and we asked uh open ai if we could launch it and their safety team said no you can't launch that it's too dangerous and so we had to go back to the trying board and we built um built the an app that could just summarize whatever you threw at it so we launched that we got a mention in the uh wall street journal um for that and then we realize, you know, people, that's like a sometimes use case.
8:06I mean, that is a component of a skill that they models have, but that's not something that people will subscribe for and pay us money every month. Listen, as a founder, ensuring your cash is safe is priority number one. It's been a bit crazy out there. I don't want to put caps locks on right now, but I will if you need me to. The FDIC$250 ,000 limit is just not enough for most businesses. So let me tell you about Mercury Through its partner banks and sweep networks, Mercury customers can access up to$5 million in FDIC insurance. That's 20 times the per bank limit. Sounds a lot safer, doesn't it?
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9:20Head to mercury.com to join more than 100 ,000 startups that trust Mercury for banking. And if you're interested in Mercury Rays, applications for both Seed and Series A are open through April 20, right? So you got to get it in there by April 20th. Mercury is a financial technology company, not a bank. Banking services are provided by Choice Financial Group and Evolve Bank and Trust, members FDIC. when it's summarizing something explain to a lay person what it's actually doing so you have a paragraph let's say you have a i don't know a movie review from the new york times it's a thousand words about some you know really detailed movie like tar right academy award uh uh oscar nominated best picture but what does it do what is the what is the um what is the model actually doing when it is summarizing?
10:14So there are different techniques for summarization for these models based on neural networks. The neural net is learning skills. So it has learned skills that you would have otherwise needed specialty natural language processing algorithms to do. And that's really what sets it apart. So when you had 176 billion parameters in the model and they're structured into layers, these layers get really good at doing certain things. And for the summarization tasks, it can learn what summarization means. What does the word mean to summarize something? It can pick that up from the corpus that it's trained on, so all the text that it's trained on.
10:58And then that is a task it can do pretty well. Which to me, I was like, okay, now this one model we can use to do all of these natural language processing tasks without needing a bunch of NLP engineers on the team. It's literally one API call, and I can just prompt it in natural language and tell it what I want, and it'll give that back to me. So the first, that was a major unlock because it suddenly made the process of building an MVP, a software MVP that uses natural language technology, made that really easy. So you could build a prototype and launch it. And so when we built our next prototype, it was called taglines.ai.
11:42It was just a tagline generator. That took 48 hours from beginning to end to build the entire thing. And we launched it 48 hours after saying, okay, maybe people would buy, maybe marketers would buy words if we can generate them. And so within the first week, we had validated that not only would you have professional copywriters using these tools, but you'd have marketers and freelancers and small business owners, students. So that was a huge validation of the market size and the TAM potential because it was such a wide user base. And then we also validated that people would use a tagline generator to do email subject lines, headers for websites, just all kinds of PowerPoint slide titles and really validated that the number of use cases were really wide for that as well.
12:35And then throw up like a Stripe paywall. And then validated people would sign up for a subscription. So we started charging$3 a month. We got some subscribers, raise it to six, and then raise it to 10. And we continue to get subscribers coming in. So at that point, we validated one that it was commercially viable, that you had a wide market and a wide set of use cases. Right. And that makes sense. There are copy editors in the world. You discovered this is working nine out of 10 times. and if you can make them more efficient for$10 a month, if they, the average copywriter, I think freelance probably gets paid 50 bucks an hour, 40 bucks an hour, 60 bucks an hour, something that range.
13:14I mean, it's not even one hour of their time. So that's always one of those great tools for founders is to say, what does this person get paid an hour? Okay, this attorney gets paid$1 ,000 an hour, save them one hour a month, they'll pay you$1 ,000 or they'll be okay with it, right? Exactly. So when we went through that exercise, it was really clear that from all the way from a student to professional would find value in these ai models and then the thing that we learned from going from two to three was that if you throw more data at it it's going to get even better and better performing these tasks at an expert level or beyond so now when we get to gpt4 to get back to this sort of these jumps there was three i think there was 3.5 and four in terms of major releases you're working directly with the open ai team you have some insider access to it, I understand.
14:03So you were kind of in touch with them and seeing what was coming, what was coming between 3.5 and 3.5 and 4. Yeah, so for 3.5, they ended up tuning it to human feedback. And so what that would do is it would allow you to kind of describe the intent that you had, and you wouldn't have to prompt it with examples as much. So when we first built our tools, each tool, he had to give an examples of what good looks like, and he had to make sure that even the examples are very diverse. When they ended up fine tuning it on human feedback, they kind of program that in across a wide variety of use cases.
14:40And so that enabled the chat GPT experience where you can just tell it what you want, and it'll figure out and actually create that content that you want. And so when you saw three, 3.54, maybe you could describe for the audience, the step functions there, you said before, hey, you know, it's right one out of 10 times then it's right nine out of 10 times now let's go to 3.5 and 4. 3.5 yeah it was awesome it was like a big a big leap and a lot of the complexity and prompting it kind of went away a lot of um even the use cases for more fine tuning of models so um you'll see a lot of startups talk about how valuable their their fine tune models are like oh we have proprietary models well at the end of the day not there aren't that many models that are really relevant for for you to have fine-tuned what a model is again to a layperson and what's an incredible example of that where you're restricting it and building a model that maybe results in better output yeah so the these are foundational models so these are built to be general purpose that That means they can do a lot of things at a pretty solid rate.
15:55What they figured out was that the general purpose model could actually outperform specialized models if they kind of made them bigger and trained it on more data. And that is nuts. That's nuts. So I don't know if you've seen some of the GPT-4 metrics, but they said, oh, well, it passed the bar exam. It passed all these exams. right it's getting better across every single category so let's pause on that for a second yeah you used to build in the industry what was called narrow ai yes narrow learning so hey we're going to learn how to beat um you know humans at poker chess go you know pick a video game fortnight and we'll really just work in that narrow subject area now this more general model i'm a little confusing to use the word general because it's loaded because there's general ai as a concept which is it's thinking like a human but their average or their default model maybe is a better word for it their default model is better at doing the l stat or the sats or the bar exam than a model that was trained just to do the bar exam that's what we're they're learning with four that's right and you seem to say hey that's insane why is that insane why is that insane uh it really does level the playing field if you have access to those the gpt4 model so you don't need a whole team of ai engineers you don't need a whole team of machine learning engineers you can actually build you can just go straight into building the application and yeah keep going i was going to say something that i think larger companies are running into issues around is they've kind of delegated the like hey ai team go figure out this generative ai stuff but the ai team you know if the ai team comes back and says you know what we can't beat gpt three and a half we can't beat gpt four they'll get fired right right that's fascinating so if i was working inside of i don't know amazon let's just say walmart and i said hey our internal team is a great example amazon's a great example yeah i'm in amazon i want to optimize amazon prime members to show them better reviews and show them better q a so i take the q a section on an amazon page and the review section and we'll summarize it and make it better for users if gpt4 can do that better than the internal team why is there even an internal team yeah that's pretty wild depends on the use case so if you looked at like the iphone voicemail system you know try to transcribe a voicemail message they had i don't know how many thousand ai engineers at apple and then open ai had a team of i think two or three people that figured out how to how to complete the um voice to text task and they ended up launching a model called Whisper, and they open sourced it.
19:03They literally gave away the technology, and it dramatically outperformed all of the existing technologies, all of it. All right, everybody, our friends from Microsoft are here. Tom Davis, a senior director at Microsoft for startups, and you're a former founder. You are here today to talk to us about the giant leaps that Microsoft has made in the AI space. What does this mean for startups? I see a ton of different tools. I've been playing with ChatTPT for, I have a paid account, but I'm also seeing things happen with GitHub. Absolutely. So the work that we've been doing with OpenAI over the last few years has really set ourselves up with a foundation around, we've built this sort of AI supercomputer from the ground up and we've been looked at everything from gpu configurations to networking and things and really what we're now able to do is sort of allow startups to access all of this innovation through our founders hub so we've been building this to do something at scale so startups can now build their own ai applications and and build out and train llms as well.
20:15And this has really helped us to become a far better cloud for AI broadly. And being able to drive that down to the startup ecosystem is fantastic. It's open to everybody. There's no funding requirement. You don't have to be anointed by a VC. Five minutes to sign up. You get six figures of benefits, Azure credits, GitHub, open APIs, which everybody's really having fun playing with and so much more. So go ahead and sign up right now, aka.ms slash thisweekinstartups, aka.ms slash this week in startups thanks so much tom thank you so as we're looking at this yeah this is almost like the snake is eating its own tail kind of situation we're all going you know uh copywriters you can name your company's copy ai you got 12 million dollars in reoccurring revenue and your premise which turned out to be absolutely correct is hey this thing is advancing fast copywriters are going to use this tool to be willing to pay for is going to make them bionic make them superhuman um won't replace them but might replace the bottom third that are terrible at their jobs or make the bottom third great at their jobs or good at their jobs was that your central tenant um about this because the replacing of a job or elimination of the job in other words i'm the developer or i'm the ceo i'll just ask chat gpt for copy and i don't need a copy editor uh what what is your belief now let's say copy editing your wheelhouse copy editing going to go away and the CEO or the sales team just does the cop ask Chappie T to do it or will there be bionic copywriters who use this as a starting point i think before you know before we launched copy i had no idea what copywriters even did so it was it was never about copywriting it was that was basically the first use case that i thought would be relatively translatable against the models but the thing that really motivates me and my co-founder is the idea that people have great like a high degree of creativity especially kids yeah they're super creative i've got two daughters that are extremely creative and then they we pre-train them through school right just like these models are now pre-trained on the internet and all that pre-training kind of stamps out the creativity and by the time they graduate, they're very tracked in the things that they want to do.
22:38So it's like, oh, I'm going to be an attorney or I'm going to be an accountant or I'm going to be a software engineer. And I think that that whole process is going to come to an end here because GPT-4 can do all of the liberal arts better than any expert could. And now that's a tool that's in your pocket, which means we don't need to train people on a lot of these very technical tasks that we used to because we've now trained computers to do that repeatedly so there will be a very um you know a challenging transition for a lot of industries a lot of institutions like higher education education in general and we're gonna have to figure out okay what what's the best use of of a person's time well that that usually comes down to the individual and what we what i'm seeing you know the whole my whole hope here is that people can be way more creative because each time they are creative they have an outlet to actually build something they can actually get things done so a non-copywriter a non-writer somebody's just not good at words can now go in there and be good at words so you take the exactly 80 of people who are not good at that now they can be good at it i may not be good at drawing or illustrating but i can pop up stable diffusion or any number of tools and i could be a good illustrator so now you've got the 99 of people who have no illustration skill can't draw for not uh and they can be creative so it's not that that everybody's job goes away it's that everybody gets good at everybody's job yes that's an interesting way to look at it and that's that's incredibly powerful especially if when you're looking at entrepreneurship so they're If you've ever tried to create your own website, for example, that takes a lot of time and it can be very stressful for somebody that's trying to get something off the ground.
24:33That is now going to be pretty much instantaneous. Like, oh, I need a website. Boom. I've got one. I need a presentation. Boom. I can just generate a whole deck. And then work from there. So you're starting on Firebase. Yeah. And so... Which happens now. You can go on Squarespace, pick a template. And now you'd be able to, a future version of Squarespace will be, Hey, make me a website and show me five different designs. I need one that's funkier. I need one that's a little more avant-garde. Now the challenge, the challenge is what kind of business are you going to create? That's going to actually be able to compete against what the AI models can do.
25:17Yeah. Well, and to your point, the AI developers who are making this, are literally working themselves out of a job the better they do the less they're needed because the general model can do better than the specific model so at least in that case the narrow specific models are being subsumed into the general models yes yeah you're seeing that and then you're also seeing it um in the software itself so i'll give you kind of a run through here so yeah software is why is software valuable jason uh because it makes people more efficient which means it reduces the cost of any good or service right and and what like why software is valuable is because it's reusable so your investment to build it part of it yeah right it's a reusability so we're now heading into a world where software can be generated on the fly right and it's almost the cost of creating new software is going to zero right that means that the returns on investing in that software should also go to zero, which causes some problems in the venture capital community.
26:32I'm an angel investor. You're an angel investor. So we really, this whole thing is going to get transformed from a technology standpoint. Fantastic. I mean, if you can build a company with two people instead of 10 or 10 people instead of 30, well, that means you need less investment and the earliest investors are the only ones who get to seat at the table i'm fine with that i'm fine with people who do series b and c is getting blocked from having an opportunity to invest because the company's too profitable is that sort of your premise it takes less money to run this just like cloud computing drop the cost of it yeah so one it should expand the number of people that can build things which should be good overall for entrepreneurship uh two like you said on the growth stages that that's going to increasingly make i think a little bit less sense and you've seen you saw yc shut down the continuity fund which is their growth stage fund uh this week and and so in that and then when we look at the ai landscape a lot of the repeatable tasks are in the sales and marketing space so like personalization now can be done on a one-to-one basis.
27:44At scale, even things like querying databases, you know, that's something that people had to do on their own. So you'd have to figure out, well, how do I write the right search query to get the right results? Maybe on LinkedIn. So what, what you're going to see happen and this, you know, chat is a great example of this. We'll express intent, right? Which is what our query is when we type into chat. And then the AI will figure out what it needs to go do to get us back what we're looking for. And so that is a world of AI agents where we're letting the AI go and do things for us. And that world looks very different as well.
28:28So AI doesn't need an interface to go grab data, right? It can just query APIs directly and go get the information it needs. If it's allowed to, if it has access to those. Exactly. So I had a tweet about this. I said, by the end of the year, as my prediction, the biggest search engine on the planet won't be Google, it'll be Bing. And it won't be because people are using it, it's because the bots are using it. So so many bots are doing queries that it's just going to increase the size of the corpus and the learning model. the corpus the corpus uh kind of grows when you publish things and so there are going to be you know agent flows and bot flows that go and create more content and new content um but for the on the retrieval side that a lot of those queries are going to get sucked in to you know powering some result right and then that result gets re-indexed it gets re-indexed and now people are speculating is going to pollute the uh search indexes to the point of absurdity somebody like yourself or some group of people offshore uh just like they created content farms they could literally just start creating they could create an ai right now with chat gpt that registers 100 new domains a day makes 100 different recipes and then articles about those recipes and then does the same thing every day until there are so many recipe sites that the internet is flooded with garbage and nobody knows which one actually works.
29:57That's the fear. That's the negative thing. Yeah, Google kind of knows. How? Well, they have the original index. Got it. Yeah. And they can detect AI-generated content. Overall, they're... How do they do that? How do they generate... How do they know it's chat GPT-generated? There are signatures in the outputs. that allow you to calculate. It's a perplexity score sometimes, and that's an actual measurement of how likely the next word is to follow the previous one. Got it. So it's too perfect. It can't be too perfect, and you can make it not be as perfect just by giving it certain instructions and say, hey, mix it up a little bit.
30:41I think this is how they caught the chess cheater kid, was he was doing the book move. yes he was and he was accurate yeah how often does somebody do the book move and i play in the chess.com thing and it will tell you like this is the book move this is the you know game theory optimal move basically and if everybody's doing game theory optimal so now you have to put something in there randomized to not do game theory optimal so maybe at some point it figures that out you know it's interesting though they said when the digital camera came out uh that this would change hollywood forever that digital filmmakers and wayne wang did a digital film um and bennett miller had done a digital film on this is all on the vx 1000 i believe was the name of the sony camera the sony one yeah it became super popular in the late 90s in new york and all these and skateboarding and skateboarding yes well skateboarders use it right yeah and it was like this thing is so good that when you blow it up and you put it on a projector you can't kind of tell or most audiences can't tell a cinematographer obviously and then there were filters in you know different pieces of software that would make it look even better anyway the point was because you don't have to worry about film stock developing it the cost just got sucked out of this you could record forever even a bad actor could just keep take doing different takes you would get there and it didn't actually change the world i mean it did create youtube it did create a lot of other content so maybe a nuts extent it did but it didn't change film so what's different about that argument than your argument for um you know ai replacing everything well the the iphone won right iphone won the camera world it destroyed it it also won music so my my like base case is that apple wins probably this too to a large degree one because the phones are powerful enough and the models are going to shrink small enough that they can fit on a phone and so even some of these image generation models they can fit now on the phone text gen and same thing on a long enough time frame they will fit on the phone and um i think that you know that's always crazy but then people just get used to it like oh yeah iphone 20 will have whatever it is native well just like laptops now have wi-fi built in there was a time you had to add bluetooth with a dongle or wi-fi with a dongle or a pcm cia card whatever that was called you know you have different card slots on your laptop you put in different peripherals now it's all on a chip somewhere and you don't have to do anything for it exactly i have one more point here so my kids are my kids are eight and five and they just think computers can generate images just totally natural to them you know and in the um i think it's adults and people that have struggled to use computers their adult lives it's like this is these are the people that have you know a challenge like accepting that ai is going to power computers to do these tasks for us but kids and kids are like yeah of course of course yeah of course it's going to yeah i mean it's just like well it's so obvious that a computer could do it to them that it's not even special or interesting you know if you're of the age where you remember the internet uh happening in broadband um and there was a moment in time where i was on a college campus in the late 80s and i had seen higher speed internet speeds bitnet and arpanet and people only had dial-ups so i was using dial-up at home but i was like you know this this can get a lot faster there are faster systems in this and i had installed token ring and banyan vines and then eventually ethernet in local area networks and like you know this thing's going to be able to carry images and pictures and sound and eventually video and so it's kind of the same thing like you your limitation right now that you're like oh it can produce interesting copy that's sometimes good sometimes bad okay images and once in a while a three second looped video i mean you're gonna be able to talk to this thing and just make your own star wars story and it'll be indistinguishable than i don't know the original series or whatever 10 years ago series without any polish on it i mean that basically is doesn't take much of a jump actually only takes a huge jump if you haven't watched rapid change right well i think in the next year you'll see it probably just take over business in general.
35:05So we know it can generate business ideas. We know it can create websites from an idea. We know it can figure out who the core persona is for that service. We know it can access APIs that would retrieve who the target contacts are. We know it can write personalized emails to them. Right? So it's going to come up with an idea? You make your SaaS startup and then it starts selling it for you. It's all in the same sequence of prompts. Yeah, that's all it is. So that's all that is here today. It's just a matter of infrastructure. And that's something we're working on right now. So what I mean, what you've described means your own business commodified.
35:52So are you saying that your own business is going to or your or are you saying your business will be commodified every 24 months and you'll just have to extend it? no i'd say like most businesses are not commoditized by that loop you know most businesses are up some kind of like real world thing happening let's say like jp morgan right that's not you can't really replicate jp morgan with that kind of system but there are a lot of one services that can be replicated like specialists consulting a lot of that stuff can be replicated a lot of software companies can be replicated yeah i mean you're talking about regulation i mean you could i mean somebody's going to put ai and web three point web three together in crypto and be like make me a crypto that does x y and z they're trying to i mean they're trying to shut you know shut all that down with um regulation regulation the the crypto choke point yes if you f around too much you will find out what the government is capable of When you're a founder, priority number one is hitting your payroll.
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41:03And that was like the GPT-3 Valley. And that's where a lot of people were saying, oh, well, the content's terrible and it's awful quality and it's just going to pollute the internet. That's a very short duration until you basically can replicate all the steps that a person would go through to write a high-quality article. Just replicate that at scale. And I think one of the key points that even chat GPT-3 is not... It's kind of missing right now is the scalability component. So in order for you to get value out of it, you have to manually query it. So your marketing team has to say, okay, we're going to go do this or your sales team is manually figuring it.
41:46The area of opportunity for... In our viewpoint of the future is really scaled, fully automated workflows. So you give the AI, you kind of tell it what you want to do, or over time, just give it access to your systems, and then it will go and configure itself. And it will try to improve your business for you autonomously. So you can't really get there from chat. And so, but part of the backend infrastructure is very similar because in the world of autonomous business process agents, that is like an agent building platform. And so you do need to say, okay, I want to do this. Here's the list of tools you have access to.
42:33Go do it. now instead of reporting back to me report back to yourself and then figure out how you can improve from there right so what you want to do is is build these um you know extend the data flows that you have coming off of your current software stack so you have a newsletter right yep what do you do with the information uh the data that comes out of the newsletter performance nothing don't care right so is there value there sure right and it's and it usually comes down to like the team just doesn't have enough time to do everything right it's an afterthought to think about and to coach yourself there's no person on there so you could say every time the newsletter comes out at the end of the week tell us which stories got the most clicks and then what are stories like those that we can do more of boom and that's just set every week and it just sends them an agent so it's like google alerts or magic leap had this idea that you'd have agents out there doing things for you but if you take a google alert which is on your last name or your company name this is a google alert that can do more advanced things yeah exactly and and even the newsletter maybe you have like very high value contacts in your in your newsletter database Sure.
43:56Yeah. Right. And you're like, Hey, I actually want to personalize theirs. So I want to take this content and just literally personalize it down like one to one to them because I want every single message they get from us to be extremely high quality. Interesting. Right. So those are systems that are going to be you're going to be able to build. We're building out with pilot enterprise partners that we're working with now that are deploying some of these workflows into their existing business processes. fascinating the there the thing that compounds is once we set up a workflow um let's call it like the newsletter use case most newsletters would need it and so that is the thing that we're going to copy that template in your library like notion has templates or any other platform has templates and yeah that gets super interesting in a creative we did uh just as an example here's a couple of you know when we do when the when our researchers are going to do a google search like i'm doing a live show and they're like hey when did netflix launch when did it pass 100 million subs when did disney plus launch when it allows do 100 subs it's now getting that right it wasn't getting that right previously but here's examples of chat gpt doing that and it does seem like bard from google which i've been playing with has more recent information so in your mind how far behind is bard do you think in reality um probably the the measure that matters is the user base for the chat programs i think that would that would be the the difference maker there that ultimately will determine who wins so then google does win because even if open ai has tens of millions of users google has billions across chrome android youtube etc so google wins it's i wouldn't count anybody out i wouldn't count google out i mean google has they have all the data sets that matter yep so they should be able to go faster and have the users and have the browsers they have to really get their vision together about what they're building and for them you know their goal was to make um you know all human knowledge accessible and useful.
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46:16That was like their mission statement. And search does that, right? It does that along one dimension, which is you can search for something. So it's like, I'm going to pull information out and they show you the list of links, which is great. However, the idea that it's making it useful, I think they're failing to deliver on that function. The output that you get back. that and then also just think about how much value is not sitting on the internet that you don't know about that would create value for you right and until now we've never had a way like a technology that could take all of that information and directly apply it and make your thing more valuable whatever it is you've built and have been working on right so even for for you, you're the media company, content company, you're trying to read a lot of stuff and figure out what's important, what's valuable.
47:14And I'm sure in the past four weeks, you see more launches than you can even keep up with. It's crazy. I mean, the number of people launching verticalized AI, like if I had a nickel for every company that's going to respond to sales emails or customer support emails in a better fashion. I mean, it's in the hundreds now. Yeah. Right. And the thing we ran into, we were trying to build verticalized solutions. And we realized that it's just basically the same backend infrastructure that you need to do any of them. And so rather than a large, let's say, bank trying to evaluate 3 ,000 verticalized solution providers, they'll end up opting just for a platform.
48:00And you've seen this happen over and over again. So Segment was a CDP layer, customer data layer that they didn't have to build. Snowflake was a huge data warehouse in the cloud. They didn't have to build that. ServiceNow, one of the originals, just scaled so hard and they were very use case agnostic. And that's very appealing for large companies because they're always trying to reduce the number of tools that they have at the company level. Yeah, for sure. so that's i mean microsoft office perfect example yeah bundling of stuff so show us your product and where you're at with it and what people are using the most and it and specifically how does it differ from chad gpt4 because as i said my premise was or my question to you was was like does this thing eventually collide or are you just in an arms race where they're building this sort of web-based service and then they need people like you to build stuff on top of it yeah it works both ways.
48:58I think there's plenty of room in this categories. This is our chat product. We've connected it to the internet. Let's ask it. So this SVB got sold today. So this would be a real-time query that we can run. on it you know most people we're using like our these tools here second
49:35so over time all the latency drops and the cost drop and so for this result you know you're getting the actual articles right and the citations you're surfing the open web so you have google news or some news feeds fed into here using chat gpt4s like hey go check the web we can do anything we could do any of it we want so you can hit like you can do it in real time you can do like a search api that you can add add to the back end you can use the being api um that stuff doesn't really matter too much like you do any anything you want and then you can bring all those results back in and for for this one you know it answered the question really fast right yeah right and when gbt3 launched it would make something up it would just literally make up like the wrong answer and be very confident in it yeah right so what's the word for that is that what they mean when they say it's delusional or it's hallucination hallucination Yeah, it thinks it's right.
50:40It has no idea. Yeah. Okay. So this is impressive. What next? So what's happening in the backend is actually where the secret sauce gets built. So when you, you know, when a user comes into chat and they ask a question, the, you know, in the Google world, it would just hit up its index. So the index would say, okay, what's the closest set of results that I should show to this user based on that query? In the generative world, you can build these agents. So you can go try to solve the problem. And the more tools you give that agent, the AI agent, the better it can solve the problem. So it is choosing now what route to take.
51:26So these are not pre-programmed steps that you build into it. So it's saying I could go to Wikipedia. I could go to Google News or Bing News, or I could search the open web. I could do a web crawl. It could do, excuse me, any number of things. I searched Twitter, search Reddit or Quora. And it somehow figures out, you know what? This news service is better. Or is it blending the new service with the web search? It's going to do a little bit. It can do whatever it wants. Yeah. So this is fundamentally a new way of building backends to software. The other thing that, you know, ours can do is it can recommend new steps.
52:09So it can add, you know, we can figure out what tools it wants and we can give it access to more tools. So in some cases, people wanted access to like LinkedIn data, right? So we can go get a link, an API that queries LinkedIn profiles and returns that. And it's like a JSON format, which is like a data format. And then now we can take that information and do something with it. That's relevant to that user. this is going to make these large data sets um invaluable and if you're going to use them you're going to need to get a licensing fee from linkedin reddit quora maybe you could talk about what's going on in the back channel because you're probably facing this yourself with those discussions i understand there's like multiple lawsuits about to drop on open ai for using various platforms data without explicit permission and once you start charging for stuff and you take 10 billion from microsoft you can no longer be like oh it's an academic non-profit even non-profits like i never saw the way back machine the internet archive lost its copyright case that's a non-profit so this is clearly unfair use um no i don't know if it breaks the fair use we'll have like a there'll be a big debate coming up but what's the back channel right now about who gets access to quora reddit twitter pick a data set um and how will that hash out in your mind what's the fair route there?
53:32That's a good question. I think over time, you know, I mean, licensing tends to get figured out over time. Music industry, they figured it out. Even in the image generation side now, I was at South by Southwest and at the Shutterstock booth, and they had an AI generated image product. And even them, even though you're using AI to generate it, they would find the images that went into the generation and they will pay a royalty to the copyright holder of that of those images. Yeah, getting images suing Stable Diffusion right now. A bunch of open source developers are suing Microsoft's GitHub Copilot.
54:10So these are dropping. To me, those were like very... They should get sued, at least. Explain your thinking. The code base, I think, I would at least want to see how those arguments play out. if you open source your code, someone grabs it, trains a model, and it is replicating your code verbatim, and even in some cases like the script, the documentation script that was personalized to you, I mean, that's very traceable, right? Yeah. There's a reason not to put citations in it. Why wouldn't you? Right. So that same thing happened on the initial stable diffusion data set. So they did, you know, they grabbed images and you could see like Getty and the watermark.
54:57The watermark. That was classic. So we kind of avoided doing image gen. I know other platforms wanted to launch that as products. But if any of these image generators, they'll produce copyrighted content. And the way the copyright laws work is if you are the one that generated it on your servers and you're selling it, you're going to get deemed for that. Yeah. I mean, it's a derivative product that you created. now if i were to load uh just like on my browser i can take my browser i can save a web page on my desktop that's fair use um and i can even edit the web page on my desktop it's when i choose to put it out in commerce that your copyright gets uh you know has problems but if i were to if i were to download the original chat gpt open source and it's no longer open source is this like chat gpt4 is not open source now when did it stop being open source gpt3 was not open source so three and a half which powered chat not open source for not open source and it's unlikely that opening i will open source is there what's the number one competing product and how far behind are they because it would it seems the world needs an open source version of this and if i would have run the open source version on my cluster of servers or you know my desktop my phone and pointed at a data set that i had access to well that's for my own personal use uh nobody can stop me right you can do that and even the stable diffusion models they've they've shrunk them down they can fit on your m1 macbook or your phone so no you know no kind of copyright issue there but if you try to monetize that you do run into it in terms of open source um open ai is still state of the art um for their for their core foundational models um they the advantage actually is not on the training side it's it's the computational intensity side so it's how they optimize their hardware how they optimize the training of the models that's where you build a really compounding competitive advantage because the bottleneck across the world right now is gpu capacity and availability so nvidia has back orders like crazy for their h100 gpu and no one can get it h100 is it's a really expensive gpu so like a graphical you know processing unit and is you know it's what powers video games it does a lot of um kind of matrix math and that's what you know these neural nets really need that at scale.
57:40And anytime a big company wants to launch an AI powered product, that's just more compute that's needed to serve that up. And I think most people will run into like outages, chat GPT goes down or open AI goes down. It's a function of like the limitations of just not having enough of these GPUs in their server farm and getting overlooked. But isn't the Tensor stuff all open source hardware as well, so other people should be able to build these and compete over time? No. NVIDIA has, you know, they make custom modified chips for folks, and they competed pretty hard. Google did have the TPUs, the Tensor Processing Units, but those have not really performed for the applications in the same way for other companies.
58:30This is not my area of expertise. no i i mean i'm hearing people talk about the shortage now and it does seem like it's an opportunity for you know massive competition to get an open source and another technology just the heart you know that hardware is made and you know like tsmc taiwan semiconductor and that's a whole geopolitical risk too and um it's pretty amazing that we've been talking about this invasion of taiwan now for you know close to a decade but that has gotten more and more heated the last couple years and that um increased tension seems to parallel the development of ai and uh covid yeah i don't know that's that is like you know taiwan built itself on the back of its semiconductor industry because that was the thing that would get the most protection from the u.s yeah over time and that was a good bet that was a good call on that but i think even TSMC is saying, hey, maybe we need to diversify a little bit and start opening up fabs in the US.
59:37Oh, and they are, yeah. India, everywhere. Yep. It's absolutely fantastic. So show me your product before we wrap up here in a minute of time. Any other pieces you want to show? Any other things you're super proud of? I mean, it's super impressive. And I understand now the difference. Yours is doing a lot more inputs in the way it's kind of like Zapier or If This Then That kind of is built into it natively so it can go find more sources dynamically. Yeah, it can go do that. And then I think, you know, over time, and this is what I was getting to about software in general, you know, you can, you've bought software for your team before, right?
1:00:16Sure. And then what happens if the team doesn't use the software to its fullest potential? We unsubscribe at some point. Hopefully somebody remembers they put it on a credit card, but I cancel our cards every year where I have the cards that you can set the limit on where I just say, okay, take all the cards down to zero and let's watch our phones ring off the hook as SaaS vendors are like, hey, your card's not working. That definitely works. And one of the big shift here is when you move away from software and towards agents, the agents know how to use these tools better than people do. And so they're going to extract all the value out of these tools and that it could be APIs, that could be really anything.
1:00:57And you're seeing it across the board and all these little point solutions. But imagine wrapping all those point solutions into a generalized platform. That's what we're building. Makes sense. Yeah. This is pretty crazy. Well, listen, you got a team of 30 or 40 over there. 35. We're going to lean. Yeah. I mean, you raised a decent amount of cash. You got a decent amount of revenue coming in. Are you finding your clients are, this is you're you're too far ahead of what they need or they're just trying to get understand this or now with chat gpt three five and four they're all like oh my god we have to catch up i know we paid for this we need to now expand it and we need to understand this because our bosses are breathing down our uh throats it it's a mix so yeah there there's an ai maturity model gartner published this model in 2019 and they said hey look we're going to start by companies kind of being interested in different potential with AI.
1:01:58I've taken that and adapted their maturity model. And basically that phase one is like the end users are going to start bringing in different AI tools into their day-to-day workflows. So that would be like people using ChatGPT, using RChat, that's also powered by ChatGPT, or using copywriting tools. I saw Canva, Adobe, everybody's now launching. of notion everybody's got an ai feature kind of a wizard yeah which which was you know i think it took two years and probably the 3.5 model was really the point where those companies would say okay we can we feel okay trusting this and putting this out there for our customers um so that's really phase one is are your is your team using it the second piece would be is your team able to actually scale its usage of AI?
1:02:51And that's not something that chat GPT is going to really help your team do. But if you wanted to make repeatable processes, build actual components of your business. So focusing on the system rather than the manual tasks automation. So that's where we built into that. That's kind of phase two. And then phase three is when you connect, you begin to connect enough of the workflows together so that the data feedback loop starts to really run like a flywheel. And at that point, now, more and more of your business is going into autonomous mode. And as you go into autonomous mode, people have to actually build that system out.
1:03:34And it's not the AI team, but it's actually the business users. And so we're seeing... The business process people, the business leaders. Even the functional people. A lot of people want to actually build these systems out. And so you are seeing kind of two groups emerge. One, they're excited about building more efficient systems, being able to do more projects than their team could have ever done before. And they're the ones that are really AI native. And that's who we build for. And then you have folks that are really hesitant to adopt any of the systems and tooling. And ultimately, those companies are not going to be competitive in the 12 to 18 month timeframe.
1:04:15They're going to become rapidly uncompetitive. And then pretty much at every company, the CEO is like, hey, AI is here. What's our AI plan? What's our AI strategy? Right? And so then there's a really big gap between the end user tool and the CEO. Yeah. Right? And so where we found success with our platform is selling the vision of the platform to the CEO, C-suite, and then the leaders of all those groups because they say, okay, well, can you do this use case? Can you do this use case? It's like, yes, yes, yes. Because it's all basically just stacking these blocks together. and um that'll cover that i mean that could be a 10-year time frame where that really gets adopted or it could be like three years five years it really depends on um the level one of interest and then two it's like how fast is the underlying technology really going to improve um right now the bottleneck is people don't even know what's possible with ai yet so there is some education That's the key.
1:05:18And that's why I just told everybody to start playing with it. And it's kind of like mobile. One of the first steps people did in mobile was, or even cloud, was just give everybody a mobile phone. So everybody had flip phones and they're like, just get everybody on your team a mobile phone. Get everybody on your team an iPad. If you want to build iPad apps, they got to at least have iPad. If you want to see what 5G and broadband is like, just buy all your executives broadband at home and get them laptops and show them how it works. They need to really start soaking it and playing with it and and then the use cases will come out and it's like anything else some people will go too slow like microsoft did with mobile and they'll give mobile they didn't miss this one i mean this is like the makeup for missing mobile right you think about how badly they miss mobile and now how well they hit this one they're like we're not going to miss this one we'll pay 10 billion and then you look at like mark zuckerberg with arvr or maybe to a lesser extent apple who has a device coming maybe they just also made huge bets and those huge bets are just not going to hit the mark so it's uh one of the great things about technology is how dynamic it is all right listen paul you're in a you're amazing uh really great overview for people who don't know about it and if you're in the business of running a business i think that's as plainly as you can say copy ai might be able to help you be more efficient so go check it out we have free plans there's a free plan go so go play with it until your free plan you use up all your credits and then you go or what do you do multiplayer mode is where you have to pay we're doing right now it's still credits because you know it's a little pricey for us oh it is pricey yeah you have to yeah I mean I thought open AI dropped the price like 100 % or 90 % or something they did they that saved that saved us pretty good yeah that was it was going to be quite expensive and they'll do that again I guess I bet right yeah over time it's going to go to zero and so then you'll have the scale the volumes will really start to to work through the system and that's another reason that i wouldn't want to focus on the end user point solutions because you won't have enough volume over time to really propel a business yeah it's incredible to think about you know something to think about because there is so it's so easy to create companies and you're seeing this ai hype race right but then the durability of a lot of the point solutions is really going to be questionable i think well i also think you have to also want and have the motivation and when human motivation this is a very hard reality for most people especially woke people or people who want to believe the world is fair in some way like it really does break their brain when you're like okay now solve for motivation because i can take any course from mit or harvard or stanford online for free right now and so the world's unfair and those ivy league schools have now given all their information out for free or the vx 100 you can buy a used one and make a movie and so hollywood's holding you back or you could get three or four of your friends together and make a movie this weekend or a short film for free what's holding you back and that's what i learned over time is that human creativity is all there but motivation that fire in your belly the desire to go do something sometimes the unhealthy obsession and desire to go do something that's one that we still uh as much abundance as we have can't seem to uh solve for we can't make people motivated to go change the world some people are and some people aren't my my oldest daughter i asked her like what do you want to do you know when you grow up and she's like well i want to want to breed dogs and i want to do art i'm like sweet i said you could do that now like you don't need to go to college yeah she could do a dog breeder and make art and that sounds like a pretty good she said she said i'll breed dogs and then i'll sell the dogs and i use the money to buy more art supplies and i'll do more art yeah and buy more dogs right so i think if if i could have one wish it would be that when we do go update the curriculums of schools yeah that the only thing that we instill is like that creativity and getting things done that you care about and if you drive that passion forward everyone will be successful because you'll have unlimited tools to make things happen there's literally in a school of um academia so there's montessori and then there's something called regio and regio that one of the core concepts is uh regio amelia is figure out what the child is motivated by and then have the curriculum taught through that in your case art supplies and art and puppies and dog breeding so you could teach biology obviously through dog breeding and you can teach math and you can teach science through the science of oil painting or sculpture and you know the physics of it you can teach anything through a lens in which somebody's you know if somebody's into skiing you could teach them physics of skiing and they would learn all the physics concepts but they would be super motivated and then teaching them physics abstractly they're not motivated turns out every kid could learn physics or pick a topic if you just put it in the right wrapper um but yeah the education system is broken i just we should just ask copy ai right now how to fix the education system i'm sure it has a great answer well you can do custom you know custom learning plans for people people already building those those systems out and even like linking to the right youtube video to watch that's awesome right yeah if it nails that it's incredible yeah at some point it'll be like hey where what is this person stuck on you know nobody will be stuck nobody's gonna be stuck you'll do an assessment of somebody like they're you know like some kids lost in life they're like oh this kid's lost like okay let's figure out some assessment tool and then it's like okay here's what would motivate this kid uh watch these five videos and it's like watch this gladiator video watch this like skiing video watch this puppy video and then listen to this song and it's like it's gonna unlock their brain and unstuck them that'd be awesome that'd be pretty pretty great all right listen we'll see everybody next time on this week in startups bye bye everybody
From the publisher
Copy.ai Founder Paul Yacoubian joins Jason to break down the evolution and progress that OpenAI has made with its GPT LLMs (2:38) before discussing the radical shifts that AI will cause across most industries (20:46). They end the show with a demo of Copy.ai and the legal issues surrounding training datasets (48:54).
(0:00) Jason kicks off the show
(2:38) The evolution of GPT-2 to GPT-3
(8:16) Mercury - Apply in minutes and get up to $5M in FDIC insurance at https://mercury.com
(9:45) How GPT summarizes work
(13:39) Working with GPT-4
(19:14) Microsoft for Startups Founders Hub - Apply in 5 minutes for six figures in discounts at http://aka.ms/thisweekinstartups
(20:46) Radical shifts in AI
(29:59) Accepting AI
(36:59) Mayfair - Get 4.35% APY on your cash and increase your FDIC insurance coverage at https://getmayfair.com/twist
(38:29) Working systems with ChatGPT
(45:20) Who wins between Google and OpenAI
(48:54) Copy.ai demo
(52:38) Licensing of the underlying data
(57:10) The demand for hardware when developing AI
(59:53) More on Copy.ai
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FOLLOW Jason: https://linktr.ee/calacanis
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