NEWS: Ackman's SPARC, Unity CEO steps down amidst dev revolt, AI operating costs skyrocket | E1827

26:57But you're not going to be able to get a ride, where it's gonna say 10 minutes, and then Uber is going to say two minutes, and it's going to be 30. And, you know, most people are going to make the choice that their time is worth more than the money. And you might just not even get a car. I'm here in New York doing some meetings. And I've been testing this rebel r e v e l, which is all Tesla's, I think, all electric cars. And so I was fascinated, it's a competitor to Uber and Lyft. And, you know, they're just not available. And when they are available, it's 10 to 20 minutes to wait. So I've used them twice.

27:28I want to try it, see if it's a better service, they pay the drivers hourly. and you know you're going to make compromises if you're going to pay the drivers hourly you're going to need to have a high utilization rate because they're going to get paid no matter what which means the wait times have to go up because you can't have people waiting for a ride with uber because it's a marketplace frequently i don't know if you've had this happen um but when you live in the suburbs you'll get an uber and it won't start moving for like three minutes you're like why is the uber not moving and then i asked the person hey do you live in the area and were you waiting for a call while watching TV.

28:00And they're like, yep, I had to put my shoes on. And that's why I didn't move for three minutes. And so people will, you know, wait for an airport ride if they live near, you know, SFO or JFK. And sometimes drivers live near those places so they can get those calls. And so, you know, marketplaces just ultimately perform better because they price correctly. All right. Can I read you this quote from the Lyft CEO real quick? Yeah, let's hear it. Primetime pricing, TechCrunch is paraphrasing there, is a bad form of price raising, said lift ceo it is particularly bad because riders hate it with a fiery passion and so we're really trying to get rid of it and because we've got such a good driver supply our reliance on it has decreased significantly okay number one they don't have a great driver supplies lying and this is the hippie guy who worked in a non-profit for like a decade david rischer yeah so no offense but this like hippie dippy guy who has you know worked at amazon then took a decade to work in a nonprofit is not cutthroat enough to go up against, you know, the modern CEO and the modern startup, you know, the whole point of surge pricing was to get the drivers more money for them to drive at times when maybe they didn't want to drive like a holiday, like a weekend.

29:13So and I don't think people hate it as much as they're saying, you know, there's two things that are going to be certain in life. Customers want to pay less, and employees want to get paid more. That's 100%. So if you survey any customer and say, hey, what do you think about the price of a cup of coffee? I want to pay less. Do you want to pay more or less? Or do you feel this is a fair price? They're like, no, I want to pay less. Then you've asked the barista, hey, do you think you deserve to get paid more? They're like, yeah, I do. How much more? Double. There's somebody who's advocating for a$50 minimum wage right now.

29:45I mean, that's absurd. You would have no jobs in the United States if you put a$50 minimum wage in the market has to do price discovery and the sign of a healthy market is that the participants uh maybe have a little bit of tension there does that make sense yeah do you feel you should get paid more working for me yes do i feel i should pay you more maybe yes but the point is this is like the nature of work and so this was all when the journalists came after uber they're like uber drivers are unsatisfied they want to get paid more it's like that's an entry-level job in society if you as dishwashers or people picking rice in a field like how much do you love your job it's like i'm on my knees picking rice in a field it was back-breaking labor.

30:40I'm picking strawberries in the heat in California. This is horrible. Yes, I hate my job. Like, really? Does anybody like making coffee all day? I mean, maybe some hipsters, but, you know, if you work at Dunkin' Donuts, I think it's the highest turnover of any fast food restaurant. It's hard work. It's hard work, and people are cantankerous, and it's hard. Just anecdotally, what I've seen from people driving Uber, especially people that have been doing it since like, you know, the 2011, 2012 range. It's almost sort of like what you said with unity where, and this happened gradually with Uber, but do you remember the driver credits that Uber used to give when they were like, Oh my God, it was.

31:17So I think a lot of the negative sentiment from drivers is actually like, Hey, what happened to all those boosts we used to get all the time? Cause now we were trying to get profitable and that doesn't happen as much anymore. I think that's really where a lot of the sentiment, the negative sentiment comes from, from drivers. 100%. Yeah, they used to get these spiffs like, hey, if you do your 10th ride, we're going to give you 50 bucks. If you get your 20th ride, we can give you 100 bucks. And that was just to keep people loyal to the platform and keep them playing the video game. And Travis is a genius when it comes to gamification.

31:46He was into video games, he gamified being a driver. And it made people want to get that incremental 10 rides in. And if you get those 10 rides, and those rides are cheaper, man, Uber spread so fast around the globe, because and everybody became addicted to it and now as i said for five or six years when people are like it'll never be profitable like they lost a billion they did a billion rides if you had two dollars each ride they would make a billion a profit do you think that's impossible to do and it's like yeah that's impossible i was like well here we are it's possible duh give me another story nick what else you got on tap here so much news going on according to wall street journal sources github's copilot which is github's text code tool that's powered by OpenAI.

32:29Users pay$10 a month for it. Microsoft is losing$20 a month per user on average on Copilot. And some power users are costing them as much as$80 a month. But again, they're losing$20 a month on average. The article is sort of essentially saying that the major problem with AI services right now is that there's no benefit from economies of scale because operating costs and user queries are sort of tied together. The more people are using your product, the more that you're paying for it, right? This makes total sense to me because if you're using a co-pilot all the time, like a developer, you're writing code for, let's say you're doing it six, seven hours a day, you're just pounding code and it's filling in what it thinks you should do.

33:10It basically would be like me writing my next book and it's constantly giving me the next paragraph, right? Because that's what it's doing. It's giving you a lot and it's doing it in real time. So imagine you're a business journalist, you're writing seven hours a day. And every sentence, it's not guessing just the next word, which would be pretty lightweight, it's guessing the next series of sentences. And it's just constantly hitting servers. I think that's what's happening with copilot. And so the probably the difference between losing$10$80 a month is the number of hours somebody's coding a day.

33:42And it's just very simple to solve this a developer is worth$100 ,000 in the world they obviously at 10 or 20 a month that's way underpriced this should be a hundred dollar a month product yeah and so they probably were betting that over time this cost would go down and they're they didn't want anybody to compete with them so they just underpriced the market which microsoft is a unique has a unique ability to do and it's worth it because if they lose it you know tens of millions of dollars on this but they get all that data from developers using it, just think about how valuable that is over time.

34:17So it's probably an investment, just like Uber in building out its network of drivers and its network of cities around the world. Uber becomes more valuable every city that comes online, and then every service that then goes to every city. So if they release this task rabbit, like they're rumored to do, or train rides, or planes, or hotels, or experiences, whatever they add, and they try on the product. You know, if any of those things take off across the entire network, that cost can be spread out against the 15 billion or something that was invested the paid in capital to Uber, I think at one point was like 15 billion.

34:51That 15 billion people were like, Oh my god, it's never made its money back. It's like it made its money back with the DD investment that threw off like six or 7 billion. Each of those investments really quickly started to pay off that 15 billion. And then over time, just like Tesla, you know, I don't know if there was 10 billion invested into Tesla, and then they showed the j-curve or tesla yeah you know when they all of a sudden you get to the millionth car boom now you're in full-on profit mode and the thing starts printing money it's the paid in capital the complete amount of money invested in the company and just people got used to doing taking bigger risks whether it's amazon tesla or uber you know and those all are hardware real world businesses so that's of note right those businesses can be more capital intensive because you're operating in the real world yeah the article was interesting though because it noted sort of the pricing strategies of different big, like major AI players that are using it in their products.

35:42And one quote that I thought was really interesting about Zoom specifically, because remember, we just talked about how Zoom is now doing these AI summaries that are dead on. So here's the quote from the article. Zoom has developed a smaller, cheaper software for its AI assistant, powered by multiple models, including those made by OpenAI and Meta. So they're using Llama, the open source model for Meta for some things. quote it only uses the most powerful ai and most expensive for the most difficult tasks right so this is why the models that will run independently we talked about this with sunny you know maybe you can use chance gpt3 or 3.5 to summarize a zoom call and it's powerful enough and you can run it on commodity hardware you don't need a h100 or a100 or some giant server farm of really expensive you just put it on your existing cluster and and you know how much time does it take right right you know if you're processing video files for youtube and it's a free service do the people who are getting free service care if their 4k file takes 10 minutes or two minutes no you know if you're mr beast maybe you care but most people don't yeah so that seems very smart and so this is where you know maybe copilot will be on its own smaller dedicated hardware or a verticalized language model that is able to run locally.

37:05Maybe you could eventually run this locally, right? And it would cost a lot less. Yeah. Hey, everybody. Today, I'm joined by Roots CEO Dan Dorfman. Dan, welcome to the show. Thanks for having me, Jason. Tell everybody here in the audience, what is Roots? And what makes it different than the other real estate investing platforms? I'm a complete neophyte. Roots is a REIT with a little twist. Sorry, I had to do it. We are the first real estate portfolio that we know of that builds wealth for both our investors and our residents. And we've created a unique win-win model that creates partners and not tenants.

37:39So you're telling me instead of putting down a$2 ,000 one month security deposit, you get$2 ,000 invested into the REIT. So you're day one an owner. Absolutely. And so it kind of goes against... When we first started this 2 years ago, I wasn't really looking to build a product out, to be honest. I was looking to find a product that I could offer my residents in my other portfolios that would help them get to homeownership or help them participate in this market. And all I saw was rent-to-owns. And in theory, those are great, except for the fact that less than 10 % of them actually convert into homeownership.

38:17So you're kind of just putting a carrot out in front of your resident and you're not really actually impacting. So we wanted to really develop a program and a model that said, hey, we believe in you. You're a partner from day one. Help us take care of this thing and we can all win at the end. Head to investwithroots.com slash twist to sign up and start investing today. That's investwithroots, no spaces, no dashes, dot com slash twist to sign up today. hey google is using data from google maps to help certain cities optimize their traffic lights in seattle drivers weigh an average of 20 seconds at red lights and these delays result in over a thousand metric tons of co2 emissions daily according to wired google's ai software is aiming to reduce both the environmental impact and delays for drivers and the initial results are really good 30 % reduction in stops and 10 % reduction in emissions for 30 million cars every month.

39:14This has been the holy rail of AI and also IoT, internet of things. So the original idea of how to solve this problem was to put in every car a beacon and airplanes have these. So if you get too close to each other in airplanes, like some alarm goes off that there's traffic near you, and then you have to go visually go find the other small plane. So imagine every car had a beacon in and that beacon knows i'm going you know north i'm going south on broadway and you're coming across 14th street and the the grid knows hey it's 1am and i'm going to get to the intersection of broadway and union square before you therefore i get the green light but it knows you're coming and there's nobody else coming north or south coming south on broadway okay let's switch the light.

40:02And, you know, if the lights are typically timed, based on, you know, just alternating, you know, one minute for north south, and then 31 minute for east west, that's suboptimal. And so what they're doing here is a different instead of putting IoT in every car, which is how we thought this would work. They're just saying, hey, the traffic patterns are showing, there's a lot more people going north south, right now than east west. Let's just give 45, let's give a minute 30 seconds to north south and give 30 seconds to east west traffic let the east west traffic bulk up and wait and let's just keep going you know who also does that remember when they would have a person in new york at an intersection moving the traffic by flow and just keeping people going and they still have that in some places to keep people from blocking the box and doing gridlock so yeah this is these are gains that are just obvious um and because they have that weighs in real time data, you can you can probably Yeah, it looks like they can solve a third of of wasted time.

41:03And then you add to that a lot of electric cars and hybrid cars. And I have one gas power car, I only have one ice car left my suburban, my suburban when I'm at a stoplight turns off. Yeah. And so I don't know what they call that technology. But that technology is pretty cool, too. So even if I am waiting, maybe you know, it's 10 seconds with the engine on and 20 seconds with the engine off so all this stuff helps better yeah my car is it's called eco mode on my car i think eco mode yeah that is what they call eco mode just turn the car off temporarily turn the engine off and then start it back up really quick this is where i think the hybrid technology is awesome is with hybrids the original idea was you could just say i'm going to use my battery i can press a button use my battery for 50 the first 50 miles i think that should be regulated every car should have a 50 mile battery in it uh just as a default and you should just use the 50 mile battery for the first 50 miles of every ride.

41:55I don't know why that's not mandated. And I can't see anybody getting upset about that because you would just save so much money, right? That would be an easier mandate than getting rid of ice cars is to just say, you got to at least have the hybrid technology. And people were putting that in post, there was a whole movement before Tesla, where people were taking Priuses, putting extra battery packs in, and then there was some software and these hackers had made it so you could override. and you could pick use battery only because the way the toyota prius worked was it would just dynamically switch right but then people said wait a second i only use 10 miles a day my battery does 50 i just want to be 100 but it wouldn't let you and then they put this like ability to switch and then you put an extra battery pack in and they basically people made their own teslas before teslas were widely available really clever idea so awesome job to the team at google and there's probably a million other opportunities like that and that's what we see with airplanes too right people are now flying airplanes not to maximize for speed but to maximize for fuel consumption right and it's very smart why wouldn't you do that uh it makes total sense and this is a really clever idea also probably there's some safety issues here too that's that's going to be the super exciting part as we talked about with the cruise non-crash you know the the collateral uh damage of crews being included in a hit and run so many of the safety issues we're seeing like why do people run red lights like i literally was walking in manhattan last night and i swear to god almost got hit a jeep just full-on blew a red light had to be somebody drunk you can't blow a red light like that without and when i say blew a red light you know he was speeding and went through the red light and didn't even attempt could have been texting and not even have seen it i think that's what it was and you know in my car the the tesla it does give you a chime when the light turns from red to green to remind you like if you were texting at a stoplight hey dummy it's a green light you can go now let's go yeah it's like the honk you know instead of getting a the guy behind you you get the chime from your car yeah it should also warn you you know red light red light red light if you're if you're gonna come to a red light i don't know why it doesn't say red light red light red light or something like that yeah and so i think all cars should have that when i was in vegas there was a time period where they had these i guess there were so many fender benders that this cab company had put in a smart device on the dashboard that showed you the number of feet between your car and the next car and when it got to 10 feet it would start you know doing that little alarm and i mean i was driving it one time this guy kept tailgating people and the alarm kept going off and i was like hey guy like the alarm's there for a reason but i guess that cab company decided to put those in i think that should be mandatory too like an early warning collision it's a no-brainer to have that in there that would also save so much money with insurance etc so this is better living through data big data iot ai uh and they could probably even tell them where you need stop signs and where you need red lights right i've always wondered about that decision why do some places have stop signs why do some places have red lights and why don't we dynamically change between them maybe there's like during rush hour it should be a light and then it should be a stop sign at all other times at night like should we have a dynamic way of changing that so we should there's all kinds of places we can innovate and i'm just really i saw that story in wire and i thought good on the google team keep thinking like that long ways to innovate all right last thing real quick oh for you just this is very very short Very, very short for you.

45:30Yeah. Just one little hot take that you can give off. So Caroline Ellison had her second day of testimony today. I read through some of the stuff. Nothing that was that shocking or crazy that you haven't already heard. One thing though I thought was interesting. So SBF sort of like operating mantra was effective altruism, right? Yes. And it was alluded to today. and she mentioned that he, SBF, justified his stealing, his taking customer funds, all of the illegal actions by practicing something called utilitarianism, which basically means that all of the means, the ends justify the means if you maximize the amount of good that you can do in the world.

46:14So that was sort of his mindset. That's deranged and sociopathic. and it sounds to me like if if it was if that literally was his operating principle that would explain the michael lewis position so maybe michael lewis knows something we don't from spending that time with them i'm always open-minded when people were dunking on michael lewis i was kind of open minded to his position uh which was like he saw something that everybody else didn't and that maybe his quotes were being taken out of context i think it's quite possible that that's true like maybe spf was so deranged and he was like this latchkey kid with these really weird intellectual parents and he obviously the people at jane street who hired him thought he was off oh yeah they had some like really like he was kind of scary off like maybe this guy would go postal or something and so you know you have a kid who's you know let's say i don't want to say he's neurologically divergent i think might be the way people say it kindly these days so let's say he's neurologically divergent he just thinks different he's on the spectrum maybe he was raised weird he's peculiar maybe he's got adhd and some severe you know asperger's or something uh maybe in his mind he did think like that and that might explain the behavior of why he just thought it's a video game it doesn't matter if you cheat in a video game who cares it's just i'm speed running life so I'm going to speed run, as the kids say, becoming a billionaire.

47:45It doesn't matter how I get there. This is the wrong lesson. This is the wrong lesson. For anybody who's watching, it does matter that you act ethically and morally each step of the way. Now, if you want to reinterpret the law like Airbnb and Uber, we've talked about it countless times here. If you want to try to change the law and you want to take some risks, just be sure that the risk you're taking doesn't have the risk of ruin for the participants in the game. So if, you know, Airbnb wants to operate in New York, and they want to pay the penalty and then fight in court and try to get this overturned, they can take a little bit of risk there.

48:21You know, nobody's getting hurt. But if you're Theranos, and you're, you know, giving people their cancer diagnosis, or their diabetes, you know, or whatever blood tests they're doing, you gotta be more thoughtful. And if it's customer deposits, and you're stealing them, and you're like, you know what, yeah, but I'm going to cure cancer and i'm sure one of my bets works out if sam bank refree was just talented you could just raise the venture fund i understand he basically announced a two billion dollar venture fund and his lp was the deposits at ftx that would be like bank of america saying we've got a 200 billion dollar venture fund we're launching today it's a 200 billion dollar venture fund yeah and by the way everybody with a bank of america account you're our lps surprise congrats Yeah.

49:04Congrats. We did an anthropic. It's a 20Xer. We got a 20 bagger. Everybody's up. It's going to be one of the great performing. I mean, that's the irony of this. I was just curious yesterday looking through Alameda Research's Crunchbase investments list. There's like 270 investments, startup investments on there. Semaphore. Shout out Semaphore. Way to go, Ben. There's like 50 ICOs. There's like all these like Series A crypto projects. I was like, oh. And I was thinking in my head, how many of these were just customer deposits? miss it how did i miss getting him as an lp i always like to deal see this is where i'm an idiot i always think like you know each case like what's the moral character of this person should i be in business with them i made a huge tactical error apparently i should have just gone to the bahamas hung out with him secured like a billion dollar or 500 million dollar lp commit to my next fund and just be done with it you'd be on the stand right now probably yeah i probably would be on the stand actually there's yeah i think i know some people who might be on the stand uh or will be on the stand uh and this is just he's going to jail forever i set the over under at 30 what do you take 30 years sentence well it depends because i i kind of feel like if he is this if he is this smart then i kind of feel like we should give him some sort of uh you know the movie catch me if you can with leo and uh christopher walken fantastic at the end he gets the he gets the deal from the fbi where he's like he does check fraud and he like helps them forever and he gets a reduced sense yeah we should give him that some sort of deal like that because it doesn't seem to be like sbf is some like evil mastermind oh look at you you got full michael lewis i i just you know if he could be an asset to us potentially serious crimes um but okay all right i said no i don't care i mean put him in jail whatever i'm just saying if you're asking me to take an over under i think you should make him you're saying make him an fbi profiler yeah of like crypto crimes or something i don't know yeah it could be like starling of crypto crimes it's not a bad idea um i would shave i would shave 25 of his sentence if he served his sentence at quantico we should give him a room at quantico and just let him with with internet access and just say for every every hundred years of sentences you give out you get one year off your sentence that's how i would do it it's just carry he gets years off his sentence in carry so you like this you go get the tether guys we'll take 10 years off yours you can prove the tether guys whatever they do whatever shenanigans korea group lazarus lazarus group yeah you take them down you get them 10 years off yeah perfect but over under where do you set the one my 30 plus is everybody's taking the over i haven't had one person take the yeah i mean so that's the wrong line i i don't even know how you i guess i'd have to see every single what his like total sentencing is from all of them then i'd probably just take like 80 of that because every single person has flipped on him all of the testimony is like it was his fault it was his fault it was his fault it was his fault and i even read an article yesterday about the uh the judge is like telling his defense team to like shut up because they keep repeating themselves so it seems like the judge even doesn't like his defense team everything is pointing terribly for him i don't know whatever the highest amount is that he could possibly get i'd take 80 of that yeah well i mean i think it's like bernie made off level sentence like multiple life sentences then is where this could wind up it's a big crime you know like the numbers are unfathomably large because it's crypto yes and you put it into real dollars and you're like oh wow this is a great lesson for how a mania can spread right you hear about that tulip mania and people are paying thousands of dollars for a tulip bomb and you're like how stupid could people be you remember people paying thirty thousand dollars for a jpeg three million dollars for a jpeg that was two years ago nick two years ago we were sitting here on this very podcast talking to do kwan trying to figure out who was paying the interest on the staking.

53:06And he couldn't explain it to us. And then I was saying, Well, why would this NFT be worth 3 million, I can understand if it's 50 ,000, it's a membership club to fish fry or whatever, you know, Gary Vaynerchuk was doing some kind of private club. Okay, yeah, so house has a thing. And maybe you can trade the jpeg and the NFT could have the, you know, the the membership go with it, like I tried to be as open minded as possible. But when people started buying those like board apes for 400 500 000 it's like it's the brand jason it's the brand you don't get it you don't get it it's the brand what don't i get like it's no i'm joking but yeah i i didn't get it either um there was no value that whole time was silly i remember club i knew clubhouse was going to be a nightmare when uh remember how it was like only vcs originally yeah yeah the first time i opened the app it was like there was one room and it was like two vcs from like the 18th best most notable vc firm in like new york like it was like basically whatever beat your vc yeah yeah i don't even know if no dig to them yeah but they were like giving they were in a room and it was like founder advice from two vcs and i just listened in i'm like is this interesting and it was just the most generic like they would be better off just going and reading like the last 10 bill gurley or fred wilson blog posts or paul grant blog posts like what are you even what it was just such a waste of time like this is so stupid i can't i feel bad for these founders right now i want to jump in and be like get go read well it showed you the power of like live call-in radio and call-in radio has been a device that's existed for a long time people like it great for sports great for live events great for breaking news probably that's it yeah like we've been down this road like when do you want to do a live call-in show like there are financial ones there are sports ones there are political ones it's typically around news or advice you know relationship advice love line we already know like and the the problem with that company was just the valuation you know if it had just been a hundred million dollar company it would be fun but when you put a billion dollar then a four billion dollar price tag on something that's when you can never reach that valuation and then what's the outcome for that company you know like could have been four billion dollars from twitter man i would have remember i said it at the time like just grab that bag and run like literally just be like yeah you know what you can give us a billion and then give us the three billion in equity we don't care like we'll just take the give us i tell you what give us 500 million cash call it a day you know we'll get an earn out for the other 3.5.

55:46I would have just run, run. Yeah, grab that bag. It's important lesson. Now that we're on the other side of this. Now you as a first time, you know, young person like watching the industry, when things get too hot, and it doesn't make logical sense, the logical thing to do is sell some of your shares, right? And to take a win, book a win, right? Get that dough, Ray, me dough, get the dough in the dough, Ray, me buy a house, you know, that's my best advice for you is to figure out a way to buy a house. strange times strange times all right everybody uh praying for peace in the middle east and uh thoughts and prayers obviously out to the people of israel and it's just really hard times but we are going to carry on here and talk about stuff but it's on it's on my mind just so people if they're wondering prayers for peace all right everybody we'll see you next time this week's bye-bye