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Big Technology Podcast
OpenAI's GPT-5 In 2025?, Big Tech’s Big AI Spend, The Polymarket Election
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- [00:00]
Tomer Cohen
OpenAI. Sam Altman says GPT5 isn't coming this year. We discuss why. Plus, big tech is spending big on AI. Alexa can't get its head straight, Meta says yes to AI slop and is this the Poly Market election? All that and more is coming up right after this.
- [00:17]
Michael Kovnat
Hey, I'm Michael Kovnat, host of the Next Big Idea Daily. The show is a masterclass in better living from some of the smartest writers around. Every morning, Monday through Friday, we'll serve up a quick 10 minute lesson on how to strengthen your relationships, supercharge your creativity, boost your productivity and more. Follow the Next Big Idea Daily wherever you get your podcasts.
- [00:41]
Tomer Cohen
I'm Tomer Cohen, LinkedIn's chief product officer. In my new podcast, Building One, I interview some of the best product builders out there, people at the intersection of.
- [00:50]
Ranjan Roy
Dreaming and building and learning. Together, you and I will learn from their experiences.
- [00:55]
Tomer Cohen
If you're just as curious as I.
- [00:57]
Ranjan Roy
Am, follow Building One wherever you listen.
- [00:59]
Tomer Cohen
And check out the conversation on LinkedIn. Welcome to Big Technology Podcast Friday edition, where we break down the news in our traditional cool headed and nuanced format. What a show for you today. We have so many forces colliding. Big moments in AI combined with big moments in big tech earnings. And of course, we have an election that's just a few days away here in the United States. So there's so much to talk about and we're going to do it as always with Ranjan Roy of Margins. Ranjan, good to see you. Welcome to the show.
- [01:26]
Ranjan Roy
It's 75 degrees here in New York on November 1st, so I'm not complaining right now and absolutely nothing going on in the world, right? Absolutely nothing to talk about. Alex.
- [01:36]
Tomer Cohen
Well, let's bring the heat, okay? Because this has been a very interesting week. You know, it seems like you can't go a week without opening eye, making an interesting headline and they made two this week, so let's talk a little bit about it. So to me, the most puzzling thing we've seen from OpenAI this week is the fact that Sam Altman went on Reddit, did an AMA and told all the Redditors, the Reddit hopeful, the Reddit faithful, shall we say that there's not going to be any GPT5 this year. Remember OpenAI months ago talked about how it started training GPT5, but no, no GPT5 at the moment. This is what he says. He says all these models have gotten quite complex and we still can't ship as many things in parallel as we'd like to. He says the company has limitations and hard decisions when it comes to allocating compute resources toward many great ideas. He says OpenAI is going to have some very good releases coming later this year, but nothing that we're going to call GPT5. I have some thoughts on why we haven't seen GPT5, but I'm curious what your perspective is.
- [02:42]
Ranjan Roy
Yeah, I think the bullish case about this would be that they are recognizing that just investing in some massive new model rather than actually productizing the models that they do have. And 4.040 mini, these are all pretty good. So I think if they're actually moving that direction, it'll look better for their financials, it'll look better for their actual user adoption, it'll look better for any future fundraising. So the bullish take is that Sam Altman is finally recognizing talking about the here and now, rather than some kind of far off pipe dreams around what our AGI could look like. That would be my bullish take. The, the bearish take is just that they don't have anything and they're just stalling right now.
- [03:31]
Tomer Cohen
So I have two perspectives on this. The first is just like the simplest one, which is that expectations have been built up to the point that releasing something GPT5 and if it's not AGI, it's going to look bad for OpenAI. We just had Aidan Gomez, one of the authors of the original attention is all you need paper that kicked off the generative AI revolution on the show, and he talked about how, look, you can train the models with more compute, they're going to get better. But there is, you know, some, some sort of saturation point where like the, the gains don't become as exponential as they've been. That's his perspective. Here's a slightly different take if we put that aside. So I think that they did begin training GPT5, and since the time they've been training GPT5, the amount of spending that's taken place within their competitors on competing models has been beyond what they expected. I'm talking about the 100,000 GPUs that Elon Musk has put together at XAI. And this week we just got news that Meta has put together a cluster of more than 100,000 Nvidia H1 hundreds for its Llama 4 model. Zuckerberg told investors that they're training Llama 4 models on a cluster that's bigger than 100,000 H1 hundreds, bigger than anything I've seen reported for what others are doing. And we do know that as you add more compute into the model, you do get better results. I think OpenAI thought, this is just speculation, but I think they thought maybe we can get GPT5, let's say 60,000 H1 hundreds or 70,000 H1 hundreds. And then they've like watched Musk and Zuckerberg pass them with this massive cluster and they've probably said to themselves, we're going to need a bigger cluster here. So they raised 6.6 billion. They're going to lose 3 billion on trading costs this year. I think what they're doing is basically saying we need to match these competitors on size, otherwise we might lose our lead. Because if GPT 5 comes in worse than llama 4 or worse than whatever x AI is doing, it's not curtains for, for OpenAI, but it's certainly not good. What do you think?
- [05:41]
Ranjan Roy
I disagree completely. I think they showed what the last model Release, calling it 4o and 4o mini and just kind of adding some additional letters and going into some kind of iPhone naming convent is good enough that people will be fine with it. They'll still be able to raise $6.6 billion and everything will be okay. So, and especially because we had talked a lot about OpenAI's financials and like consumer facing subscriptions are still going to be the bulk of what they're actually projecting. So they need to, and we're going to talk about it, make search GPT work. They need to release Sora into the wild and allow users to create videos. They need to make chat GPT better and better. Claude, Artifact facts there is amazing and they're supposedly working on, I think it's called ChatGPT Canvas, which is going to be an equivalent product. So. And it's still only in beta. So I think it's good. I think it's like if they really focus on those kind of things and let the massive arms race for Pure Compute play out, but actually focus on the products, I think Sam Altman could have a chance.
- [06:54]
Tomer Cohen
Well, I don't think these things are mutually exclusive. And I ask you this, if you were running that company, are you okay with ceding the leadership of having the best foundational model out there to Elon Musk or to Mark Zuckerberg?
- [07:07]
Ranjan Roy
I think, I mean the ego involved alone means that will never happen. And OpenAI is almost like built itself on the kind of mythical nature of its foundation model. So if I am Sam Altman, there's no way that's happening. If I am Me and I'm looking at the Ron John Roy of margins and I'm looking at the future of the company and the business. Actually, sure. I don't. Because I genuinely don't believe like productizing generative AI is hard. Like what's happening with Alexa. There is a long piece in Bloomberg this week making Search GPT as good as perplexity and work well in making the UI nice. Like this is where I genuinely believe the actual battleground is going to be, not the next frontier model. Even though none of them say that and they all are talking about clusters and future models and you know, I still just think the companies that have the best products are going to be the one that actually win.
- [08:10]
Tomer Cohen
Well, we've been talking about on the show about how the applications where the real value of AI is this entire time and now you're telling me that OpenAI is going to where the real value of AI is, which is to making products out of the technology. And I'm like being skeptical. So. Okay, I totally understand you, I understand where you're going. But I do think the leadership on the foundational model component is super important. Except if there's one thing that's happening that I think the general public hasn't taken into account, and that is that the delta between GPT4O today and whatever meta builds on its 100,000 GPU plus model isn't going to be that big. Like, obviously the next foundational models will be better, but unless you can tangibly feel the stack change, the step change, and I'm not sure you will, you know, then if you can't feel that step change, then it makes sense to go product only, right? Like basically, if you could have GPT this next gpt5 or this meta model that's like really capable of like getting deep into some PhD type territory. Well, you're only, it's only going to be useful if you're like PhD trying to discuss that, that thesis, right? Like there are limits to how smart you can make this thing. Which is kind of weird to say out loud. I don't know, I'm spitballing here, but what do you think about that? Take.
- [09:31]
Ranjan Roy
No, I think like, okay, do you remember what the difference between four and four?
- [09:37]
Tomer Cohen
Oh, the voice thing maybe, but that's a productize. That's the product side of it.
- [09:43]
Ranjan Roy
Yeah, exactly. And like O was omni. So I think that was related to the voice like omnichannel delivery of large language models. But again, and still the company's moving. They're releasing products, they're trying to get users, they're getting subscriptions. So overall, I think the company is moving into where they see the battleground. And remember, they just closed the largest fundraising round in VC history. They are going to have to deliver some revenue. Like they have to deliver something and they're probably going to, from all speculation, have to raise again at some point.
- [10:19]
Tomer Cohen
Largest VC round in history. It's going to last them 11 months.
- [10:22]
Ranjan Roy
Exactly. So show some revenue numbers and sales numbers and traditional financial metrics and maybe in the background they are actually developing something amazing. But it would still make more sense to not build hype around it right now and not raise expectations to an obscene level unless they're delivering anything very, very soon.
- [10:46]
Tomer Cohen
One note about Sora, because they did address that in this ama. Kevin Weald, the chief Product officer, former chief Products officer at Instagram and Twitter, he's now running product at OpenAI. He's also been on the show, he talked about Sora. He said it's delayed due to the amount of compute time required for inference due to safety. He said they need to perfect the model and get the safety impersonation, other things right and scale the compute. So I just read that and we're going to get in Search GPT, but on so quickly, which is the video generation model. I think we could go all of 2025 and not see it.
- [11:22]
Ranjan Roy
I'm pretty sure we will like video. I've played with Runway. ML has a video generation feature. I've tried a few of them. It's interesting right now it's kind of where image was a few years ago, text was even before that. But we are so far away from video I genuinely believe being a reliable thing because it is so incredibly difficult to do well. So I think it weren't. We're. I agree we're not seeing Sora this year.
- [11:50]
Tomer Cohen
This year they're not going to.
- [11:51]
Ranjan Roy
I mean not even this year, in 2020.
- [11:53]
Tomer Cohen
Did you just do an about face and agree with me mid sentence?
- [11:56]
Ranjan Roy
I. I agree with you. We're not going to see Sora. I think they're going to focus on the products that can actually win, like Search GPT.
- [12:05]
Tomer Cohen
Ranjan, I'm going to let you run with this because I'm very curious to hear your perspective. This is one of your OpenAI products and this is the new strategy. So this is a big moment for you in particular. But let me just read quickly what it can do. So you can search it, search the web with ChatGPT and it can return both information and links. So this is from the Verge. The search lead, Adam Fry, showcased the feature by searching for Apple stock and any relevant News. In return, ChatGPT displayed an interactive stock graph, upcoming earnings information and news articles with clickable citation links to original sources. He also did a search for restaurants in San Francisco and he asked follow up questions and got it to narrow down on certain types of places, which I think has been like one of the dream applications of this technology. So talk a little bit about Search GPT. Have you tried it yet and do you think this is a big moment for OpenAI?
- [13:01]
Ranjan Roy
I have tried it and I think it's a big moment and I think that now they're going head to head with perplexity. And in the whole area of search, I've been thinking about this a lot. There's kind of traditional search in the Google sense of you have a search bar and you type in some loose words to get a general direction and list of websites. Then there's a more traditional kind of generative AI ChatGPT query where you ask a long question and you try to get really condensed information and then there's something in between. And I think perplexity has been the leader in that in between space where you want some information but you also want some links out. And perplexity I honestly the related questions, the links out that has become my search and OpenAI playing in that space I think is very, very interesting. So basically right now there's a little like globe icon at the bottom of the search bar, the entry Bar in ChatGPT. If you click it, it still gives you a generative AI style chat answer, but it also has a list of links and citations and I think that's basically perplexity. The ui, the field, the actual utility and use case is perplexity. And in fact I asked is the Big Technology Podcast good? And I can tell you that Search GPT told us Overall, the Big Technology Podcast is well regarded for its informative and thought provoking discussions on technology and society.
- [14:34]
Tomer Cohen
What's up with that qualifier? Overall? Come on. Search GPT overall, unbelievable.
- [14:41]
Ranjan Roy
Overall? Well, it also tells us that a reviewer on Apple Podcast described it as a must listen for anyone interested in the tech world. So a reminder, not only will your 5 star reviews help us in terms of the platforms of Spotify and Apple Podcasts, as the world moves towards generative AI search, your reviews will help us even more in terms of showing up in Search GPT results. But overall I'm excited about it because perplexity has replaced Google for me, I would say majority of my information querying, which I don't even just say is search is done on Perplexity. And they already on day one search GPT is pretty good.
- [15:26]
Tomer Cohen
It's very interesting because you have like these new search engines, whether it's search GPT perplexity. Did you see this week also the information reported that Meta is building its own AI search engine, it says to lessen its reliance on Google and Microsoft and basically like people search Meta for new sports stocks and it will have to use Google and Microsoft to answer those queries. And if it builds its own AI search engine, there's a chance it won't need to rely on them. So that's interesting. But I think it's interesting that there are all these companies developing search engines and yet Google, they had great earnings results this week and they remain dominant. Like they showed that they were like making money from search and that they're growing. And I saw an interesting back and forth between Josh Miller who runs the ARC browser and Arvind Srinivas who runs Perplexity. They were both talking to each other on X this week and basically Josh was saying that as long as Google has the controls, the browser and the control T, right, which means new tab, it will control search, bottom line. And Srinivas said he agreed. And I'm just kind of curious. I mean yes, a lot of people are gravitating towards these new search engines, but also just the structural advantage they had built in platform advantage is pretty big for Google. Are these two like this, like the unstoppable force in the immovable object?
- [16:52]
Ranjan Roy
Well, first I would like to say regarding Josh Miller and the ARC browser, I don't know if you had seen this as a avid fan of the ARC browser. They just announced they're going to be moving away from it onto a new project. So if Josh Miller is listening, please keep working on the ARC browser. It's a wonderful way to browse the web and actually has integrated generative AI features. But I think beyond that the platform question, it's true because the ARC browser was going after Chrome. The Android operating system obviously is like a massive platform that allows the space to be dominant in generative AI. Like Google has the platform, they have Chrome, the web browser. But I think they're going to be, they're losing, they're going to be losing more and more of that utter dominance in terms of platform. Like if antitrust we've heard, could they have to spin off Android, there's already going to be some necessary repercussions around what Google will have to do in terms of like meeting the antitrust claims upon them. So I think they're going to be losing more of that platform. So it's going to be an actual battle around who is going to be able to deliver the actual best information experience. Not even the best information, but the overall best information experience. Like even Apple just released their sports app and I'm not Googling anymore what the World Series score was all week. I was just, it was like live in the that bar at the top of my iPhone. So everyone is going at Google in different ways right now.
- [18:29]
Tomer Cohen
Yet Google's revenue jumped 15% to 88.3 billion this week. This is according to the New York Times reporting on earnings, a 34% increase in quarterly profit as well beat Wall street expectation driven by advertising and cloud. So we've been talking about this for two years, right? Two years since ChatGPT came out. Google is probably in the best position it's ever been.
- [18:55]
Ranjan Roy
The search advertising market. They still own. No. And Perplexity was supposed to be launching ads in Q4 and I know you had talked about it with their CEO. Like I still have not seen them myself. Have you seen any?
- [19:10]
Tomer Cohen
I'll be honest, I don't use it too often. I'm still old school Google search and I feel like my normie tastes are going to be reflective of the way that the rest of the world uses this stuff.
- [19:22]
Ranjan Roy
I am going to make the call one year from now. You are in that medium ground between traditional search and generative AI chatbots. I think majority of big tech listeners will be as well. I'm making the call here.
- [19:38]
Tomer Cohen
I'm going to put it in the calendar November 1, 2025. Should we live that long and be lucky enough to be on a stable planet? I will see your bet and we'll find some stakes on it and we'll figure it out.
- [19:53]
Ranjan Roy
Maybe we'll create a betting market contract.
- [19:55]
Tomer Cohen
Exactly. And that's a good heads up for the rest of the conversation. I just want to say before we move on, this week also featured one of the funniest scenes I think I've ever read about in in tech history and that is that Google employees were meeting with their executives, I think for their weekly Q and A. Or well, they don't do it as much anymore. So I'm curious what the setting was. But this is so according to some reporting from cnbc, so they showed up in their Halloween costumes. So Google Chief scientist Jeff Dean wore a starfish costume to the meeting. The cfo, Anat Ashkenazi wear a jersey from Indiana Pacer star Reggie Miller. CEO Sundar Pichai wore a black T shirt that read error, Error 404 costume not found with an image of a pixelated dinosaur. And they're there standing in front of the company and some of the employees are like, so are there going to be more layoffs?
- [20:51]
Ranjan Roy
That I'm so happy about that because one of my wishes in life. I think all great human drama should take place on Halloween. So you have to be completely serious while in costume.
- [21:04]
Tomer Cohen
Unbelievable.
- [21:05]
Ranjan Roy
It's always. It just adds such an element to anything.
- [21:09]
Tomer Cohen
So this is what Sundar said While in his arrow 404 costume not found shirt. It's like at. At the scale of our company, there could be moments where these small groups of people are impacted. Now look, let's be fair to him. It's not like he's making a layoff announcement in his costume or whatever it is, but it is just interesting that, like, it just shows you what the company has been through with the layoffs over the past couple years, that there's still some trauma within the workforce. And even in moments of like, lightness where like executives are talking with employees, you're going to have this come up and just to have it play out as they're wearing their costumes is. I just. I just think so. Ridiculous. I don't know how to explain it. It's an unbelievable scene. It's like from a movie.
- [21:56]
Ranjan Roy
It's from Silicon Valley.
- [21:57]
Tomer Cohen
Exactly.
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Ranjan Roy
An hbo the greatest show of all Time. It's. It's why it got it right.
- [22:03]
Tomer Cohen
I could. I still, I'll be honest, I could never watch the show. Just too close to home. I was living in San Francisco and I was just like, I'm not touching this thing. Maybe I'll give it a try another time.
- [22:12]
Ranjan Roy
I have similar industry on hbo. I still have not watched. Having been in the. In the finance and trading world, I want to. But a lot of the times any of that kind of programming, I feel it's tough. I agree. When it's too close, definitely.
- [22:28]
Tomer Cohen
Okay, so we have to talk about this new report from Bloomberg about Alexa. So let me kick this off with saying I have three of them in my home. Three echoes in my home. And my wife and I wake up in the bedroom with the echo alarm. It's great. You can leave the phone outside, set the alarm with your voice and you know, and it supposed to play Amazon music. Guess What I've been woken up with for the past two days, what ads for Celsius energy drink that Amazon music played for me through my echo.
- [23:06]
Ranjan Roy
Because that is exactly when you wake up, that is the most soothing possible.
- [23:11]
Tomer Cohen
I couldn't believe it.
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Ranjan Roy
It was the transition into a beautiful New York City.
- [23:15]
Tomer Cohen
The beginning of the ad has like a can popping open and it's like, you know, we're usually waking up to soothing music. Can you, can you understand how bad of a day we're going to have when we have to wake up to an ad from Celsius energy drink? Because the people behind Amazon Alexa can't figure out that they're playing music for an alarm and maybe start with a song first before shoving an ad down our throat. And that brings me to this week's story about Alexa from Bloomberg. Alexa's new AI brain is stuck in the lab. And so basically Amazon has been on this process of trying to develop a new Alexa with new large language models, and it's just not working. So from the story, Andy Jassy asked it a bunch of sports questions, asking it to drill down into individual player performance, league standings, team history, and so on. And then when he asked about a recent game outcome, Alexa just made this the score up. And the story says Alexa's conversational abilities have improved since Jassy, since the Jassy demo. But top engineers and testers involved with the efforts say the AI enhanced assistant can still drone on with the relevant or superfluous information and it struggles with the humdrum tasks it previously excelled at, like turning on and off the lights. That explains a lot. And this is what the people say. Jassy has yet to convey a compelling vision for AI powered Alexa. Many of these people say the project still needs tons of fixes and that they're not bullish, that the resulting product will compare favorably with the long list of AI apps already on the market. Some senior engineers said that Amazon's best hope is that they can ship the 13th or so permutation of ChatGPT. And now it feels like Amazon is playing catch up. I mean, this is, this is, to me, it's so disappointing. I mean, for anyone who saw the promise of Alexa and we. I still believe that there is promise there. The way that the company has flubbed this is exceptional. And it's remarkable to me that when there's so much innovation on the AI front, the Alexa effort within Amazon is just, I mean, I don't know, it's total garbage. I got woken up with an energy Drink ad. I mean, that's unacceptable. Sorry.
- [25:40]
Ranjan Roy
I think it's a reminder that in artificial intelligence, sometimes basic intelligence can be lost when people are trying to kind of shove features into existing products. I, I agree, I'm disappointed and it, I will take this moment to just bash Siri again for once, but I think they're facing the same problem. Voice interfaces should be the most insanely natural places for generative AI interactions to happen. Like, it's literally the natural language is how these things work best. So being able to talk to and get the right actions and results and information should be so easy. And honestly, OpenAI ChatGPT's voice mode is pretty amazing. Obviously it's only giving you back information and it's not taking specific actions like turn on the lights, set an alarm, interacting with third party apps, but it's pretty good. So Alexis should be way, way ahead on this. And I think this whole article, it kind of reminded me of. At these big organizations, there's been a lot of talk, especially around the layoffs at Amazon, the return to five days a week in the office. It's like an organizational bloat and teams that aren't like functioning at their highest capacity, a lack of shared mission, that's. You can, it's, it's kind of crazy when you can see it in the product, you see it in the output, you see it in the feature, and you can almost feel that like lack of cohesion in some big organization in an office park in Seattle. You can actually feel that in your little device in your kitchen. And this one, I definitely so happy.
- [27:25]
Tomer Cohen
You brought that up. You're right. The culture is tangible. And this is exactly what you're saying. It's a culture thing showing up in the product. And here's sort of my explanation for it, which is basically that Alexa was something we all know. Jeff Bezos came up with it. Right. It became.
- [27:42]
Ranjan Roy
And he pushed to get to those amazing stories of like, you need to get the response time down to some number of milliseconds. And like they said it was impossible. And he like just berated everyone till it got done. He pushed.
- [27:57]
Tomer Cohen
Exactly. And so it comes through. He obviously has a global view of the company, but it sits in retail. Okay, he leaves. And as Bezos is leaving, generative AI rises. But here's the thing. The new CEO Andy Jassy comes from cloud and cloud and retail, not very associated within Amazon. So Jassy comes in, he's going to care a lot about cloud. Cloud is obviously the future of the company. He also has to clean up all the superfluous spending that's happened within retail because they built up as if Covid type shopping was going to continue forever and it hasn't. So they had this massive build out. So he's got to get cost under control. What's the thing that's going to slip through the cracks? Alexa and generative AI. And it sure did, it seems like. And it's just a massive, I think own goal because if they got this right, it could be a tremendous business success. I think the stat that I saw is the echoes in one in four households. And I know other households have the, you know, the Apple Home pod like you do or the Google Home or whatever it's called now that intelligent NEST 3.0. You never know what Google names these things. Maybe they should all get in costume and name their devices so they can do a better job. But anyway, I just think that it is exactly right. It's just the culture issues playing out and where we're seeing a degradation of one promising consumer device in front of our eyes because of it.
- [29:21]
Ranjan Roy
Yeah. And one other part of the story I wanted to call out. You can almost like picture it happening in Amazon hq. The story reported. Still, Jassy appeared ecstatic that the Amazon engineers had delivered a semifunctional demo so quickly for one of its new Echo show devices when they started trying to push heavily into this. To me that's probably what's happening in so many of these big company generative AI efforts. It's really easy to get something that works pretty well. It's really hard to get something that works perfectly. And generative AI and large language models are not 100% predictable things. And that's why I think you can almost see the wow moment on day one. And then everyone got back to work and they're like, oh, shit. This is not. This is making up sports scores and forgetting how to turn on and off lights, which is the one thing it was good. You could completely.
- [30:18]
Tomer Cohen
As a Jets fan, sometimes I wish it would make up sports course so I could live in Alexa's fantasy reality and not the reality that I currently inhabit. But you know, that's.
- [30:27]
Ranjan Roy
That could be jets fan mode.
- [30:29]
Tomer Cohen
Exactly. Lie to me. I mean, this is why we need AI slop is to just have alternate imagined realities for our truly depressing existences.
- [30:39]
Ranjan Roy
I'm going to pay a Russian disinformation farm to just make up.
- [30:43]
Tomer Cohen
Hey, you see, they won again.
- [30:44]
Ranjan Roy
Scores in your entire.
- [30:46]
Tomer Cohen
Thank you, Putin. Thank you, Ron. John. All right. So, speaking of breaks, we're going to take one right now. So before we hop on the break, I want to talk quickly about election schedule, Election week schedule. We have global audience and we appreciate all of you, so thank you for being here. It is Election Week in the United States next week, and we are going to gear our coverage towards it. There's going to be bonus episodes. So I'll give you quickly the rundown of what the episodes are going to look like. Alan Deardorf, who is a economist at the University of Michigan focusing on trade, he's done 50 years of study on global trade and tariffs, is going to come on on Tuesday to talk Tuesday, which is Election Day, to talk about the implications of Trump's tariff plans and how global trade and the tech industry in particular might be impacted should Trump get into office and apply those tariffs. So stay tuned for that. I think it's going to be, it's going to be a little wonky, but I think it'll be quite interesting and timely. So as you're making your way to the poll, put the headphones in and listen to Alan. I think that's, I don't think it's going to change your vote. That's not our job here. But I do think it's going to better inform you about what's going on and what might happen after Election Day. And then on Wednesday, if we have results or if we don't, we have Anna Swanson, who's an economic correspondent for the New York Times, and Dan Pramak, friend of the show, chief business correspondent for Axios. They're going to come in and react to whatever we know, what it means for Silicon Valley, what it means for tech. And if you don't care about politics or if you just want to hear about tech, if you live outside the US and you're like, what are you even talking about the past minute. Join Ranjan and I on Friday and we'll be breaking down the week's tech news because as we know, this stuff doesn't stop. Okay, when we come back from the break, we're going to talk about Apple's initial results after seeing the iPhone 16 out on the market. We're going to talk about all this big tech spending on AI capital expenditures. So AI investment. And we're going to get into betting on the election. That's coming up right after this.
- [32:49]
Michael Kovnat
From the minds of visionaries to the desks of disruptors, I'm Lars Schmidt, host of the Redefining Work Podcast. Join me each week as we Explore the new world of work through the lens of those shaping it. CEOs, HR leaders, investors, and more. Be a part of the conversation that changes everything. Subscribe to Redefining Work today.
- [33:14]
Tomer Cohen
And we're back here on Big Technology podcast, Talking Tech. Ron Jon Roy of margins. Ron Jon, you've been following the tech earnings pretty closely this week, and one theme emerged for you, which is that in an era that was defined as year of efficiency or times of efficiency, cut the spending. Actually, big tech is like, screw that. We're spending lots of money to stay competitive. So what happened this week with tech earnings and why did that stand out to you?
- [33:47]
Ranjan Roy
So overall tech earnings were a mixed bag. Amazon did very well. Meta was kind of in the middle. Alphabet did very well. I mean, so like at the top line and bottom line, everything was a bit mixed. But the thing I wanted to call out was capex spending. Amazon now has said they're going to spend a record $75 billion in CapEx in 2024. That's up from $48 billion last year. Alphabet is going to spend $51 billion this year. Meta, Microsoft. Each one of these companies is spending just Microsoft's will be up 50% from last year. So it led to a couple of fascinating thoughts. For me, it's one, this is against still a backdrop of layoffs. So in this idea that you need fewer people and to do more things, it's kind of like cementing that narrative that AI infrastructure is going to be the future, not more employees. And then on that AI infrastructure is going to be the future. It's interesting because the entire first segment on how the productization of generative AI is going not that great. Alexa in case in point, AI overviews telling us to eat rocks in the past for Google, Meta as AI slop. We'll be talking about like, the productization of it is not going that strongly, but they're still all in. And it's fascinating that literally each one of these companies are saying, this is it, this is the bet. And when everyone is doing it, you have to do it. You cannot fall behind. So it's really interesting to me that when the entire industry is taking the same bet, how does this play out? Like, we still have no idea. Is it going to be one clear winner? Is everyone going to just keep spending more and fighting each other? I don't know. Like, the way this plays out is completely unpredictable. I can't remember where every single large company is making the same play.
- [35:52]
Tomer Cohen
Okay, so a couple things on that for you first of all, said that the investment is going to be on infrastructure. AI infrastructure, not people. But are you saying that the AI is replacing people or that they figured out that they were bloated, they cut the people like two. Are they two separate things or are they interlinked? Because one could. One could say, like I was about to say, that they are bloated. They were bloated, they cut, and then AI came and they invested. So is it a replacement or is it just like two trends happening at the same time?
- [36:20]
Ranjan Roy
No. So up until this week, they have been two completely separate trends in my mind that I never conflated. But what was interesting to me, the Google layoff story while Sundar is wearing his 404 error costume shirt. I mean, that was this week. That was the same week. Like, we are still seeing stories of layoffs and there's still talk of efficiency. The Amazon's return to work is supposed to be kind of a de facto layoff. Like, this is the first week. Just the scale and commitment to capex spending and AI infrastructure that every single Mark Zuckerberg, Sundar Pichai, Andy Jassy, everyone coming out and saying without any hesitation, we are betting on this. This is the future against the backdrop of layoffs. That's where for the first moment I'm like, wait, they're kind of just saying this. It like it's happening. Fewer people and AI and infrastructure is what is going to be the combination to take us to the next level. So it's the first time I've actually, they've been tied together directly in my.
- [37:29]
Tomer Cohen
Okay, I think it's.
- [37:30]
Ranjan Roy
That's.
- [37:30]
Tomer Cohen
It's still a bit of a loose association, though. I could see why you're going there. And just in fairness to Sundar Pichai, I want to make sure I framed it the right way. The guy didn't show up in his Halloween costume and say, off with their heads. He just got asked a question about layoffs and that became sort of the tweet. But anyway, the other thing that's important to talk about when it comes to this stuff is you mentioned how everybody's, you know, going ahead on AI and you can't not go ahead on AI. So how big of a risk is there that it's this like, sort of an emperor's new close situation where there's this group think, and then they like, sort of look at the results in the end and they don't really find them.
- [38:08]
Ranjan Roy
That's what's going to be so interesting to me about how this plays out. Apple Intelligence is not going to live up to expectations. I think there is no one who would argue that maybe there are. But Tim Cook, I think we've both seen which way this. Even Tim Cook, I don't know. Or Eddie Q. I don't know how convincingly they'll be able to argue that. You know, you had put in our document a story about Microsoft Copilot AI and how there's still a good feeling of disappointment around it. I think we're all seeing the promises were so grandiose a year ago. They were never going to live up to expectations and there is going to be some kind of fallout but. And there already is. There already has been some bit of trough of disillusionment, but they're still spending. So I agree that any small. It's rare and always dangerous when an entire industry and basically the entire world is concentrated on the same bet.
- [39:08]
Tomer Cohen
Yeah. And just to highlight that situation with the co Pilot is from CNBC. Microsoft Copilot AI use extends deep into corporate America, but companies aren't 100% sold. And this is basically what the survey found. They surveyed all these folks that are using AI. So 79% of survey respondents said their company is using Microsoft Copilot. 25% said it's worth it, 25% said it's not worth it and 50% said they're not sure. And Gary Marcus pointed this out. He's like, so only 25% can tell you for certain that this is worth it and people are trying it, it's in production. And to have 75% say it's. They're uncertain whether it's worth it leaves you exposed to the potential that there could be just sort of like a, a flip. And people are like, oh, you know what, that actually wasn't so good in the end.
- [40:05]
Ranjan Roy
Yeah. I think and Copilot's an interesting one because I think I'd seen one response around like 25% for a technology this new that are genuinely happy with a new product is actually pretty amazing and a good sign that that will only go up. But that's not where we're supposed to be today. When everyone, when Sundar Pichai is saying that 25% of all code written at Google is generated by AI and how correct that is or how kind of like ambitious that is. I think the promises are still so big that trying to fulfill them is still going to be a pretty difficult thing. But they're all spending like it's going to happen.
- [40:49]
Tomer Cohen
Yeah, we got some Good feedback from a listener last week, or I did on Twitter, where basically he was like. And I think it's good. He's like, you have to be a little bit more patient. This isn't going to happen, like in the moment. But I think that one of the things that we, we do here and one of the things that we have to do here is sort of frame up the progress that this industry is making to the expectations that they hold up. So I think you and I are pretty bullish in the long term. Things like AI agents that we spoke about and maybe even co pilots will be good. But the question, the critical question for the time being is, you know, whether they're going to measure up to all the investment that's been put into them and if they don't, what happens? Because there's a chance that before we get to that, you know, treasure underneath the rainbow, we might end up having some sort of backlash. And that could. And I think, Rajan, you've been spot on about talking about this the entire way through. That backlash, you know, could eventually be damaging and eventually potentially hurt the prospects of this stuff getting where to where it needs to be.
- [41:53]
Ranjan Roy
Yeah, no, I think especially one of the more interesting things to me this week was what Mark Zuckerberg said about generative AI content. And it's a reminder of where. Of how weird this stuff is right now. So Mark Zuckerberg has talked about, like he said in the earnings call, I think we're going to add a whole new category of content which is AI generated or AI summarized content or kind of existing content pulled together by AI in some way. And he talks about how that can become potentially whole new feeds in Instagram and Facebook or new types of feeds, or start dominating your feed. And it's crazy to me that Mark Zuckerberg is kind of proudly talking about AI generated content, because on one hand, it sounds nice that you start having stuff that's perfectly tailored to you and your interests and, like, it makes you happier. But then for anyone who's used Facebook Blue recently, and there's been a number of articles, there's a great article in 404 Media this week around AI slop and how much more of Facebook is becoming AI slop, it still baffled me that he was proudly saying this in an earnings call.
- [43:11]
Tomer Cohen
I mean, I think Mark knows where stuff goes and he understands that the people want one thing and one thing only, and that's shrimp Jesus. And so we're gonna get shrimp Jesus.
- [43:23]
Ranjan Roy
Speaking of shrimp Jesus, we had talked about This a few weeks ago. So one thing I will say, I had deleted my Facebook in 2017. I recreated an account like about a year ago. I don't really use it, I wanted to buy stuff on Marketplace. So I like friended just a few people. But basically Facebook understood that I was a 40 something male living in New York, married with kids. And it started showing me odd articles because it had no content to show me like Selma Hayek, beautiful women in her 50s and just AI, just the most bizarre AI generated images. And I will say I probably made the mistake that I would click on these images and look at the comments and it just fascinates me that there's real people that you click through to their profiles and they are just commenting like the most creepy stuff and real people with their Facebook profile photos of their families, teachers at high schools and whatnot, like commenting on this stuff. So because this happened, my feed just became a cesspool of this AI slot. And it was. And I literally would show people and we would just get a kick out of it. Facebook profiled me as a creepy 40 something male and gave me the content. And most of it's very clearly AI generated. Now yesterday I went on my feed, there is none of that now it's showing out of my like 40 odd friends on it, it's showing like two week old content. So I'm just saying if there is, if they reacted to the controversy around Mark Zuckerberg saying these things, maybe it's going into the election that they're actually like really cracking down on this generative AI content. But my Facebook feed went from complete AI slot to just really boring stuff from two weeks ago from the few people I follow. And it was jarring how, how clear it was in the feed.
- [45:35]
Tomer Cohen
Yeah, I think that's a short sighted business move for Facebook and you got to, you got to give people what they want, which is AI generated photos for the mood. You know, it's like remember there's an app for that. There's going to be, there's an AI for that where you're going to have AI interactions depending on the mood, AI music depending on the mood, which is something I speak about with the Spotify executive in a show that we have coming up in a couple weeks, which I'm very excited to put on the feed. It's very interesting. It's like, remember we talked a little bit about like what mass culture wants is now what mass culture gets. And we are sort of gravitating towards these, these you know, sort of AI driven images. And we talked about hock tua zins and this. This Costco family. I don't know if you've seen the Costco family. The boom, bring the boom.
- [46:25]
Ranjan Roy
I've seen the Costco family.
- [46:27]
Tomer Cohen
Okay, so I first was. I mean, I am somewhat horrified by the Costco family. Especially I think the.
- [46:33]
Ranjan Roy
Wait, explain. Explain the Costco.
- [46:35]
Tomer Cohen
Costco family. Try to at least this. Dad, I think, in Florida and his son, they go to Costco and they eat the double choc, double chunk chocolate cookie and the chicken bake. And they started rating food based off of how many booms it would get on the boom meter. And there's one through five booms, and it's pretty silly. They go boom and then it makes a boom sound effect. But they made this great song called we bring the Boom, and it's a very catchy song. If you haven't heard it, I recommend you go take a listen. They've also included this, like, their own little universe of people, including a young man named the Rizzler, who is. Is quite pudgy and just brings joy to everybody who watches him. He was on. Was on Jimmy Fallon. He has this thing called the Riz face where he, like, sort of sucks in his cheeks and puts his finger on his chin. I don't know why I'm going on about this, but I believe these are the new heroes of America. And I think that this. This. I really feel bad for the son who seems like he's being these. Obviously, this is, you know, just a joke, but it seems like he's being held to do TikTok content against his will. The Rizzler seems like he loves it, but. But yeah, it's. It's quite a phenomenon. And what's interesting to me is they have more staying power than Hokdua, which I think I'm glad about. I don't know. I have complicated feelings here.
- [47:59]
Ranjan Roy
Actually, now that you're talking about this, it does make me wonder, is AI generated slot significantly worse? Like, maybe. Maybe this is. It's just a reminder. That's actually the. When I look at the image, the AI generated images on Facebook that are getting tens of thousands of likes and comments that are so jarring. It's just. This is what. This is what people want. I mean, want the Rizzler. People want AI slop.
- [48:26]
Tomer Cohen
Exactly.
- [48:27]
Ranjan Roy
Let's just. Let's just lean in. And you're right. That's Mark Zuckerberg superpower that he. He gives the people what they want.
- [48:35]
Tomer Cohen
Gives them five Big Booms.
- [48:37]
Ranjan Roy
Yep.
- [48:38]
Tomer Cohen
The Rizzler. I mean, it's maybe it's good that AI is doing this so we don't have kids that have to perform for their dad and stuff like that.
- [48:46]
Ranjan Roy
That is the most, that's the most optimistic view on this, that we prevent kids from getting stuck giving Booms and AI will help do that.
- [48:59]
Tomer Cohen
So I do think that maybe it's fun for the kids. I don't know. The Rizzler seems like he's having a good time. So he's also, he's local, he's a New York kid. Maybe we get him on the show. That would be so fun to interview the Rizzler. Okay, we have some. We have more to talk about. So I should stop talking about the Costco family. Very quickly before we get to the Poly Market election. I'm just going to make a quick note that you talked about. Is Tim Cook even bullish about Apple Intelligence? We did get Apple's earnings results in this week. IPhone revenues up 6%. The company said that sales the iPhone 15 were stronger than the 14 in the year ago quarter and the 16 was stronger than the 15. So everything seems to be pointing up for the iPhone in one stat and they're sorry. And their revenue also rose. And one stat that Cook gave that I thought was fascinating. He said this to Steve Kovac at cnbc. He says we're getting great feedback from customers and developers already. And a really early stat which is only three days worth of data is that users are adopting iOS 18.1, which has Apple Intelligence at twice, twice the rate that they adopted 17.1 in the year ago quarter. So Apple Intelligence is flying off the shelves. Okay, let's talk quickly about Poly Market and this Poly Market election. Ranjan, I'm curious like to hear your perspective here. Everybody's betting on this election, it seems like, and everyone's relying on the prediction market numbers to show them who's going to win the election. Do you believe that there's any credence in this? And is this just the future of politics?
- [50:36]
Ranjan Roy
I think the word everyone is working hard right there. I think people are recognizing it. I think so. Okay, so Poly Market Kelshi as well, election betting markets where you can essentially buy a derivative contract. Like if I buy Kamala to win at 39% and she wins that it cashes out at $1. I've just made 61 cents. Vice versa. Trumpet 61, you make 39 cents. These type of. It's essentially a financial derivative. This stuff has existed forever in different formats. Election betting. I actually remember in the 2000s when I worked in trading, there's a company called Tradesports that made these kind of prediction contracts that got a little big and they'd gotten into politics a bit. Polymarket and Kalshi are making a lot of noise. There is over 100 million in election related bets on Kalshi. Poly market saw $2 billion wagered in October 2024. What's interesting to me is it's illegal. The CFTC has said you are not allowed to create gaming and betting on the election. Now the way they have gotten in the US Kalshi is based in the US and they were able to get a hold on an attempt to shut them down because they say that they're an event based derivative, meaning the same way you can buy weather futures if you're a farmer to help hedge your crops against potential storms. So they're saying that they're actually a financial product that helps investors hedge against potential potential election outcomes, which is not a completely unreasonable argument and could make sense. Poly Market on the other hand is only supposed to be for people outside the U.S. no U.S. citizen can bet on it. So legally it's still kind of fascinating. And also let's not forget Robinhood just announced their own election betting market products as well. They're of course can't leave, will not be left behind, of course, fast followers if ever. So all of these, like for this election, it's clear it's generated a ton of buzz. It's, it's, it has become a big part of the conversation. It's still kind of terrifying the way they have developed because again $100 million in election related bets on Kalshi sounds like a lot, but it's not like what there's one whale trader who betrayed $30 million of that a study had found and was at one point placing 71 bets a minute, all for Trump to win. So market manipulation is very easy when you have an unregulated opaque market that is not that liquid or big. So this is it. To me the most troubling part of this is and this is someone who actually loves the idea of betting markets in everything. Like I think much like us one year from now betting on how we search, I want that as a contract on, that's on an actual website and I think the fact that like one trader could actually move the Kalashi market and this stuff happened all the time in emerging markets when I worked in it, like when it's opaque and illiquid you can move markets with just a small amount of money. But we have seen Elon Musk and others now just touting these results as clear evidence that Trump is going to win. And that's actually the scariest part of.
- [54:09]
Tomer Cohen
This to me is that. Let me ask you about this then, because, like in politics, perception is reality. And do you think that the fact that, like, Trump is so Trump right now is $0.61 to Kamala's $0.39, which you mentioned on Polymarket, the clear favorite. I mean, those are great odds. If you're betting Trump, do you think that the fact that he's that far ahead will influence the election at all? Because it will give this sort of front runner perception? I mean, of course we have polls as well, but I some, for some reason, I think people trust these betting averages more. It's so like you have more stake in things when you have money on it. I'm curious what you think about that.
- [54:53]
Ranjan Roy
That's the theory which I agree with. In theory, the idea that, like, betting markets should be more predictive and efficient because you actually are putting money on the line versus a poll where anyone can say anything and there should be some statistical science behind it. But that's not what's happening here. Like, these markets are being used and manipulated to provide specific outcomes. And to me, actually, what's going to be the most interesting of this is like, is this going to be a reminder that for normal people that none of this ever actually even made a difference or mattered and this was all this kind of sideshow, or will it actually be very predictive and, like, show us kind of the future of this, the way this works. The problem is it's just too small of a market, even at its size, that it's almost just made to be manipulated.
- [55:48]
Tomer Cohen
Exactly. So, well, I think a week from now, we're gonna have a pretty good idea as to whether it was right or not, or we'll still be counting votes. So it should be. Should be an interesting week and we'll have plenty of shows for people who are interested in. Interested in following it and following what it means for the tech industry. Of course. Look, politics is a big thing. Tech industry is just part of it. But we here will do our part to cover and decode what happens next week and what it means for those following and living within tech. All right, Ranjan, thanks so much for coming on. Have a great weekend, man.
- [56:28]
Ranjan Roy
All right, see you next week.
- [56:30]
Tomer Cohen
All right, everybody, thank you again for listening. Appreciate again all your reviews over the past couple weeks. Been awesome to see everybody show up with the support and help boost this podcast and help us get some great guests, which I'm lining up for the next couple months. And they're going to be awesome, so stay tuned for that. Thanks for listening, and we'll see you next time on Big Technology Podcast.