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Big Technology Podcast
OpenAI’s IPO Plan, Deconstructing The AI Bet, Apple’s iPhone17 Revival
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- [00:00]
A
OpenAI has a clear path to an IPO. Will it be the biggest ever? Plus we deconstruct the broader AI bet and ask what happens if it fails and Apple's back in a surprising way that's coming up with MG Siegler right after this. The truth is, AI security is identity security. An AI agent isn't just a piece of code. It's a first class citizen in your digital ecosystem and it needs to be treated like one. That's why Okta is taking the lead to secure these AI agents. The key to unlocking this new layer of protection is and identity security fabric. Organizations need a unified, comprehensive approach that protects every identity, human or machine, with consistent policies and oversight. Don't wait for a security incident to realize your AI agents are a massive blind spot. Learn how Okta's identity security fabric can help you secure the next generation of identities, including your AI agents. Visit okta.com that's okay. Ta.com Capital One's tech team isn't just talking about multi agentic AI. They already deployed one. It's called chat Concierge and it's simplifying car shopping using self reflection and layered reasoning with live API checks. It doesn't just help buyers find a car they love, it helps schedule a test drive, get pre approved for financing and estimate trade and value. Advanced, intuitive and deployed. That's how they stack. That's technology at Capital One. Welcome to Big Technology Podcast, a show for cool headed and nuanced conversation of the tech world and beyond. MG Siegler is back with us for his first, usually first Monday of the month appearance. But we have such a big show for you. We moved it to Wednesday. This is the big show of the week. We're going to be talking about the potential OpenAI IPO, looking at what happens if the AI bet fails and then we'll both take a Look at the iPhone 17's impressive performance. Ask what it means for the future of Apple. Great to have you back on the show MG Welcome.
- [01:59]
B
Great to see you again Alex. And yeah as always just keeps mounting all the news.
- [02:05]
A
I love going through the spyglass headlines as we do our monthly recap and just seeing how much ground the tech industry and the AI industry covers in just 30 days. We started October really with Sora. We ended with this big deal between OpenAI and Microsoft and and it all adds together because it shows that OpenAI is on the path to an IPO. They of course have ChatGPT, they have other products, they have a hardware product in the planning process which by the way is going to be free of any influence from Microsoft it seems under this new deal. And it sort of all points to, we'll see, it all points to this ipo. And that's sort of how that, that is how you lead your post on the OpenAI Microsoft Agreement. That's the, I think to me one of the big things here you say, looks like an IPO is back on the menu. OpenAI has a much cleaner path towards at least the financing goals that it's going to need to hit because guess what, there is now actual equity for sale, not just the nebulous promise of future profits. You know, Ranjan and I were talking a little bit about how important this deal with OpenAI and Microsoft is and I think this really gets to it, the fact that there, there's equity for sale which means they can sell it to the broader market. So what do you think we should anticipate from this potential OpenAI IPO? And I jokingly, I mean you, I just said should it be, will it be the biggest ever? Of course it's going to be the biggest ever, right?
- [03:36]
B
Has to be, yeah, yeah, yeah. I mean given their fundraisers are bigger than any IPOs ever. So this has to be, you know, an all time record IPO in the making. And yeah, I mean I kicked off that piece as soon as I saw that news with exactly what you stated there. The quote IPO is back on the menu. Because that was my initial thoughts. And then that few hours later, of course Reuters I think had the reporting that sure enough they're, they're at least talking about it behind the scenes. No surprise there. Of course, like everyone sort of assumed that that was a big part of this equation. And I do think one of the more interesting sort of one level deep layers of this is that they got it done this year. Everyone talked about, right, like there was the, the notion that they maybe had to for some of the SoftBank round, you know, that like it, it was, that tension was alleviated a bit because it didn't seem like SoftBank was really going to not give OpenAI more money at, you know, a great, a great deal for them, a lower valuation than, than what the company is currently at. So I didn't think that that was too big of a risk. But at the same time it does sort of at least fulfill a promise that they were making to investors, right? To say like we're going to be able to, to sort of steer the ship towards becoming a for profit entity, a public Benefit Corporation. And, and they were able to do that again this year, like they said. I do think that ties into the weird news of a few weeks ago about, you know, sort of pre. Announcing the, the agreement with Microsoft. And, and I think that, that, you know, sort of leads directly obviously to this, this actual agreement and now getting the states to sort of sign off, you know, both California and Delaware signing off on being, and allowing OpenAI to make this conversion. And so, yeah, the, like you said, make it much easier to IPO actually selling equity. Imagine that. How, how strange for, for a company, you know, that that's, that's raising billions and billions of dollars. And so all of a sudden OpenAI becomes a much more, not quite straightforward maybe, but certainly more than it had been up until this, this point. Straightforwardness. And the ipo, to me, you know, writing about this leading up to this event even has always been, it feels like eventually, sooner rather than later, they're going to have to be a public company to be able to sort of tap into all of the different finance financing mechanisms, be beyond what they've been doing, obviously to the greatest extent of anyone ever in the, in the private markets. But there are still, they're probably going to be limitations on that at some point, you would imagine, like we're well into sovereign wealth fund territory now and that will still, that still has ways to go probably, and, and whatever SoftBank can cook up, but they're going to be able to do things like, you know, eventually bond sales, which we see Meta doing also for their AI build out. It's like these are instruments that OpenAI wouldn't have had access to, you know, until they're able to go public.
- [06:32]
A
And we could talk about the timing of this ipo. And the Reuters report says it might be in the second half of 2026 or 2027. We could talk about how much money that OpenAI might raise. There's talk that it's going to be $60 billion, although Brad Gerstner in a podcast with Sam Altman floated 200 billion and Sam didn't seem to flinch. That's obviously a small number for him. But I think what we should really get to is the meat of this, which is how is this going to happen? Because the reported revenue of OpenAI is 13 billion. Reuters is saying this year, Reuters is saying that the company wants to do a $1 trillion IPO. Sam Altman was asked about this by Brad Gerstner in the podcast I just referenced and kind of threw a fit. Gerstner asks how can a company with 13 billion in revenue make 1.4 trillion in spending commitments? Right. So that's just the commitments and spending, not even the valuation. And Sam says we're doing well more revenue than that. And Brad, if you want to sell your shares, I'll find you a buyer. Do you have faith that any of this is going to work out with an attitude like that?
- [07:43]
B
I mean to, to be fair, they, they both I think or at least Gerstner said later like it was in, you know, in better hum. It appeared to be right like that that Sam was just ribbing him a bit. But in the moment and you know, when you, when you listen to it, it does feel like yeah, he's, he's, Sam is at least annoyed sort of, you know, by the, the potential question line of questioning along these lines because.
- [08:08]
A
You could imagine he just kind of sits there and says enough. I mean he does go into more detail than the clips show after he makes this kind of offhand remark.
- [08:17]
B
But sorry, you get the sense that he's been asked this or you know, this, this notion obviously has been lot and certainly a lot in the past several weeks, you know, with all the financings going on and everything and just really the mounting costs because as you, as you talked about sort of the surpassing 1 trillion in commitments and it's like when you look at the actual numbers of the company, like how on earth are they ever going to live up to these commitments that they've made? And I think you know, when, when you're, when you're that far, there's that big of a chasm between those, those numbers that they are actually generating in terms of revenue. Obviously not any, it a big money hole in terms of how much they're losing and these commitments, like it's, it seems ridiculous when you sort of look at it just on the surface level. And he probably, yeah gets, is getting annoyed by everyone pointing that out to him and you know, he's saying like look, the, the revenue growth remains incredible. You have to sort of trust in us. And I mean this all leads into, you know what you and I both have sort of latched onto the notion of this being a AGI or bust. And it's basically this is now to me the most binary bet possible that they're really betting that they can do something, you know, be it AGI, whatever you want to call it, that they're going to fundamentally transform all, maybe all business in a way that's, that's never happened before to the point that that Maybe these kinds of conversations will look silly. It would be how they would frame it. I would guess, you know, in hindsight that they would say like, remember when people were complaining that, that we were only generating X, you know, billion of revenue and committing to trillions. Well, those trillions helped unlock us to get to hundreds of billions and then eventually trillions of dollars in revenue. This would be their, I would just imagine, sort of talking point and perspective on that. And the reality is like, there's a lot to go between now and then. And the thing that I always come back to, that's sort of the most, I would guess I would phrase it as the most concerning. Just not, not that it's a concern right now, but it's the potential concerning layer behind all this is just like there's very real macro risk in that, not even tied to open AI, right? Like everyone knows the markets ebb and flow, you know, the economy ebbs and flows. It's not, the stock market is not going to go up into the right forever. And so when that changes, like what are the ramifications of that with this deal, with these deals that open AI is doing and with, you know, as they're getting more debt done and as they're getting all these sort of these new, new mysterious ways of financ and all that they're talking about, like what actually happens if everything hits the fan and the economy, right?
- [11:05]
A
And we will go through some of the risks here to this trade or moment continuing to run a pace. Because as you think about it further and as the stakes get larger, the risks do pile up. But I'll just say two things can be true, right? You can have one of the most impressive, exponentially growing technologies ever, which is certainly what OpenAI has in its GPT models and ChatGPT in particular. And it could be fair to question what's happening on the money front.
- [11:35]
B
Totally.
- [11:35]
A
And I think Brad's talking about how, first of all, how are you going to fund all this investment if you're making X like 13 billion? How do you fund 1.4 trillion if you're making 13 billion a year? Which I think is a perfectly fair question. And I'm wondering about, and I'd love to have your perspective on. And then the other side of it is, you know, are you able, are you really able to go out in an IPO in 2027? Again, the numbers are the most recent numbers that we've seen is that OpenAI is going to lose 120 billion between now and 2029. So does an IPO in 2027 when you're still doing this math where we had someone on the live stream of the Ranjan Friday episode say OpenAI as a converting to a for profit is a joke in and of itself because there is no profit so to IPO under these conditions. So I'm curious what you think about both of these.
- [12:32]
B
MG Again, I, I go immediately to the, the macro there because who knows what the market looks like in 2027, right? It's impossible to guess. It could be better, certainly. It could be the same obviously, or it could be much worse. And what's more likely, I mean we've been in sort of a bull run for a bit now and obviously there's way too many factors, too many global, you know, elements to all of this, like with not let alone tariffs and everything else that's been going on. And so it's hard, it would be impossible to guess. But there's a very good chance that the market is not as good as it is right now. And if that's the case, like what does open AI trying to go out look like? And some of that, a large part of that will really depend on what the, the story is in terms of if investors are still just buying anything and everything that's sort of tied to AI or if that narrative has changed and they've decided we're starting to see a little bit right with meta. Again, this sort of ES and flows where investors are get wary of their spend, right? You know, some quarters and then other quarters they have great numbers and so they go back to buying meta and then they, then they seem like they're, they're overextending themselves and so then they pull out of Meta. And so I feel like with open AI, it's going to be obviously the ultimate bet on AI itself. And so unless they have some sort of slam dunk narrative that they're like close to AG AGI, closer than we are right now, or right on the path to it, and all they need is sort of, you know, more capital and, and just to keep that going and then you, you too can buy in, right? At like public investors can buy in to the future of everything. You know, that's the narrative that they're obviously going to be pitching, one would assume in 2027, but again like if the market is, is tanking, like I don't know how that is possible now. I would assume that they delay if that is the case and that they don't go out in but again, to what we kicked off talking about, they need the capital, they need access to the capital is the likely reality there. And so how it goes down, it really is, I think, largely, again, yeah, like macro dependent and how the market overall is looking in the health of the market and where investor appetite is on the AI narrative element of it.
- [14:54]
A
Right. And I think we would both agree that given the current conditions, like if OpenAI were to IPO today and wanted to raise, let's say, 200 billion at a trillion dollar valuation, it could do it.
- [15:05]
B
It could do it. Right, right. That was like, I think in an earlier post I had written about just sort of playing out in my head how an IPO would go. It's like, because everyone's again, pointing to before, before this, this Salmon Brad Gerstner thing, you know, people were like, this company is going to go public. Like, they're burnt. They're losing 100, $100 million, $100 billion over the next, you know, several years. Like, how on earth is that going to be sustainable as a public company? And the reality is exactly what you're saying, like right now, they for sure could, like, a lot of people would buy into that and say, like, again, this is the future of everything. We don't mind, you know, the, the burn right now, as long as there's. There's hope of the, you know, the promise of the future. And of course, they would point to like the Amazons of the world, right? Where it's like, look, they burned and they burned and they burned until they, you know, were able to sort of turn the corner, flip the switch and, and become this hugely profitable company. Even Netflix, like, same, same general idea, but just on a different scale, you know, of the, in terms of the promise of what they could do and that's what they would be selling.
- [16:04]
A
Now, there was a part of this interview that I think people didn't really focus on that I liked a lot. And I think it really goes to, well, what happens after that IPO hits, right? The IPO isn't the end, it's the middle. And when OpenAI is a public company, because inevitably it will be, the public is going to get a chance to see its numbers. And that's the. That is one of the points that Sam made on this podcast, that he would welcome the scrutiny from the public markets to take a look at OpenAI's numbers and make their determinations on their own about whether. Because right now, while it's on the private market, we really just get these kind of leaked financials and then vague discussions about what's happening. I think it would be good for there because it's such a big part of the economy right now. It would be good for there to be financial rigor that the public markets bring around this company. And then the other thing is all of the value that OpenAI has accrued, unless maybe you're a holder of Nvidia or Microsoft has happened on the private markets and so now public market investors will actually get a chance to own it and do so in a way that like now it's somewhat proven to be a at least established business with a lot of revenue. But I'm curious what your perspective is on the financial visibility and transparency into OpenAI's guys financials and what might happen when we can all see exactly what it's doing.
- [17:29]
B
Well, yeah, I mean I think again Sam Altman is, is feeling good about it now knowing you know what I think what their growth is and if that, if that growth can continue then okay, yeah, sure, maybe that's, that's again that's what you can sell to the public market and public investors. And you say like, you know the, just focus on the revenue growth. We're continuing to just, just grow incredibly fast and you know all the, the limitations are on compute and the limitations are on power generation and those are the things that we're working to alleviate and why we're spending all this money. But if that's you know, narrative is not in place, if they start to slow a bit, if, if other things happen then it's obviously going to be much harder to make that. But yeah, in terms of transparency I do think, obviously I think it would be you know, a better thing and it would hopefully it, you know, it tends to focus a company itself right that they, they know they have these number going to be disclosed and so they have to do things. There's also a downside of that too, right? Like maybe they have to do some, some ju, not juicing in a negative sense necessarily but they have to figure out how to get more revenue out of what they're doing. And so maybe that you know, it leads to a, a faster move on the ad front and you know, faster move on some of the other business lines where they, where they need to show better, better growth. You know, there's also the sort of I, I would imagine that they would hope that the, the proposal to move to sort of the twice a year reporting is in place by then and not the quarterly reports as, as you know, the President, President Trump has thrown out there is in place and maybe it will be. It seems like there's some, there's some level of, of groundswell behind that right now. And so that would be, I think, good for them because if they're in the quarterly cadence, I think, yeah, they, they have real risk of, of sort of getting slammed over and over again if they, yeah. Can't maintain sort of the growth. And they're, we already know, at least from league financials, they're not going to be anywhere near profitability anytime soon in 2027. And they're saying, I think the most Recent one said 2030. Right. They pushed it out another year. And so, so we're talking about being public with, you know, potentially three year, two or three years until you're profitable. And if they are not showing that in their public numbers, which again will be open to everyone if they're not getting towards that trajectory to get to be profitable when sort of it's been reported that they would be, that can be a problem for, for them.
- [19:55]
A
Right. And that is a big projection five years out and that is projecting that all this spending on infrastructure pays off. I mean, to be pro, you have to. How are you. I, I don't know what this math is, but I imagine you have to make more than a trillion dollars in revenue if you're going to pay for 1.4 trillion in infrastructure. You're at 13 billion now, maybe maybe 20. I don't know if it takes him at his word right now. That is, that is going to be very tough. It could be. I mean, it could just sort of stick on the public markets without making any profit for a much longer time, if ever. And that would be very interesting.
- [20:30]
B
The one other element that I just am thinking of while we're talking is, you know, so now we know Microsoft stake officially, right. At 27%, which has, yeah, long been sort of like guesstimated and everything. And I think so that's, that's a healthy percentage. And when you think about when OpenAI goes public, like they better. I assume that they're going to have to have Microsoft sort of have some sort of agreement with them to be locked in, locked up. Right. Like, because if, if Microsoft moves to sell that, you know, that, that stake, you know, not to say that they would do it in one fell swoop, but remember, Microsoft owned a pretty good chunk of Facebook when it went public because of a deal that they had done, the Steve Ballmer deal, one of his, one of his best deals that they had done in around and some other side bets that they were doing with, with Facebook at the time and it wasn't big enough that it was going to, you know, tank I think the stock when they sold, but they did end up exiting it. And you think now if they have, if Microsoft has this 27 stake and they do move to sell a sizable chunk of it, like that's going to be, that's going to put a lot of pressure on the stock. Unless it's the market as it is right now where just everyone is clamoring to buy. And then there's Nvidia and everyone else who owns these stakes.
- [21:48]
A
Now of course it's going to be the weirdest IPO of all time because it is OpenAI. Because not only do you have that stake that Microsoft has and the stakes that Nvidia will have And I think AMD, well, no, OpenAI will have part of AMD. So OpenAI IPO, you're also getting some AMD, but you also have Microsoft owning the rights to OpenAI's intellectual property at the time of IPO go right, it's going to go till 2030 or 2032 in some areas and it's like, all right, so now I'm buying in on this ipo, this company is probably not profitable. I'm getting some amd, that's good. But I'm also just like I'm, I'm buying shares of a company that legitimately some other, a competitor really owns their IP for the next couple years. It's wild.
- [22:35]
B
And what, and one other point is that, you know, presuming like it's somewhere in the ballpark of the trillion dollar valuation that the sort of Reuters was reporting, which is incredible. But you seems like it sort of has to be right just given where they are in terms of private valuation. 500 billion already, it has to be at least like there in order to sort of make it work from a numbers perspective. Obviously they could, they could, you know, go public I guess at a lower valuation. But a lot of people would not be happy about that if that were to happen. And so say it does go public at, you know, around a trillion, you have to, you have to sell a lot of upside, right? Like a lot of people buy into these IPOs, you know, knowing that this is like you said, sort of the middle, it's not the end of the narrative and there's going to be a, a lot of growth from here. Like all the big tech companies right now, you know, when they went public they ended up having Huge, huge upside potential from the point that they went public at. And can you say that for Open AI? Well, obviously they'll be trying to say that, but like, like when you're already at a trillion dollars, like what is it, 5 trillion? Okay, that's now the most valuable company in the world right now. Is Nvidia at 5 trillion? Is it 10 trillion? Like is, is any other company going to be at that level in two years when, when they, when they go out? I would have to imagine no. But again, the way Nvidia has been growing, I mean, I guess it's possible that they could be at that level. But you, you basically you would be buying into OpenAI already becoming the biggest company of all time. If you really are a bull on the company.
- [24:09]
A
And you know, one way it might be able to get there is if it pulls off this device. And we love talking about some like gadgets and hardware on when we talk mg. And it's going to be very interesting to see whether OpenAI can actually execute on this device that Sam Altman is building with Jony. I've now, I have had this conspiracy that they actually paid all that money for this device partnership because they could sort of have that as one of the pillars in the IPO and that would sort of juice the valuation. And the way Sam was talking about it on this Gerstner podcast was really interesting. He was saying like, imagine you could have like something as smart as GPT5 running locally with you all the time that will sort of give you advice and help you do things. He also had a tweet about this in August. Someday soon something smarter then the smartest person you know will be running on a device in your pocket, helping you with whatever you want it. I guess like I'd just love to hear your perspective on whether how seriously we should take this device and whether it is going to be a big part of the recipe as OpenAI goes towards IPO.
- [25:21]
B
I do think you're right. Like it's, it's a good part of the narrative because it's obviously it sort of layers in a, an Apple like narrative right, where it's like you know, know, you know, the iPhone, you know, Apple another. It's a 4 trillion dollar company based off the back of their device, the iPhone largely at the back of the, the iPhone, you know, is the most successful product of all time. Well that's what we're trying to build as well. You know, the new version of that alongside everything else we're doing. And so that's that's sort of I guess the narrative that they would convey. By the way, we have the, you know, chief designer of the iPhone building this for us. And so I think that that will certainly resonate with the market it. And I do think, I'm glad you, you brought that part up of the interview because this is something that I think I'm going to write about too. It's like you honed in on. I thought it was super interesting that Sam said specifically locally that these, that these models are going to run locally. So like when I've been trying to think through the potential of this device, everyone sort of knows and the reporting, you know, to date has been that it's, it's not a phone but you know, it's sort of a device that, that you is both meant to sort of could sit on your desk or could be in your pocket alongside phone. Right? Because one, one thing that I'm having trouble wrapping my head around is like, well yeah, it's another device. And, and sort of historically people don't like, you know, just like adding superfluous devices for, for no reason. It's a hard sell, right? You already have the iPhone, so why is this better than the iPhone? The, the idea that it could be a device. And again, this is just sort of a comment made in, that he made in passing but he's brought it up before but the local element of it is, is super interest one that that suggests that they could potentially make a device that doesn't need a connection to the Internet. Right like, and so famously like you know, Amazon was able to strike that deal in the early days of the Kindle, right With, with getting a 3G connection. But historically it's very, very hard for other companies to sort of make that work and even meta right now like, right, like you have to pair it to the, to the phone and, and, and other such devices always paired to the phone. So I would assume, I was assuming that whatever device that they end up that OpenAI comes out with would be paired to the phone. And I'm sure that there will be a part of that maybe. But, but if it can actually work without the phone completely and without needing a cell connection, like I think that that's, that could be a potentially really interesting layer to this and presumably then it would work a lot faster than the current, the way we currently think about these models working and everything. If you could fully run it locally without a connection and if you needed the connection for like up to date news or things like that you could still sort of fall back to that maybe. But if it can do most of it locally and it becomes super, super fast, I, I could start to see a world in which this is a different type of, of use case for people.
- [28:17]
A
Maybe I'm seeing the OpenAI narrative now come to like full bore because you could say OpenAI is going to be, you know, if you invest a dollar in OpenAI's IPO, you get a company that could be. And this is the most optimistic scenario, but this might be what they take on the roadshow. A company that might be the next Amazon or Microsoft with the AI cloud division. A company that might be the next Apple with a device built for the future and the company that might be the next Facebook with these AI social media networks like Sora. It's a compelling story.
- [28:50]
B
There you go. Right. It's basically taking all of big tech and packaging it into one super company. You know, maybe even they use the everything app to steal from, you know, what the narrative that Elon's trying to do and that would be a nice like poke in the eye and they, you know, are able to sort of.
- [29:09]
A
Yeah.
- [29:09]
B
Come come up with some sort of narrative packaging around that. But I think you're right. Like you bring up the, the cloud part too. I know. I think Sarah Fryer, their CFO has said this also, you know, just out, out loud now at this point where it's like if we have, if we're building out these data centers and we have excess capacity, like there's, there's a world in which we become. Yeah, the next AWS too, or Google Cloud and, and that, you know, so you buy into that narrative, you buy into the device, you buy into the apps, you buy into the social app. Yeah. And then all of a sudden this is packaged as, you know, the potential 10 trillion plus company. I'm not sure that it will work and that we'll be able to sort of land that ship, but that's, that's how it's going to be packaged, I would imagine. You're right.
- [29:56]
A
Right. And as you answer, I'm like thinking I said all those things and I didn't even include the fact that it's pioneering a new form of computing with ChatGPT or whatever you want to call it, like its own proprietary 800 million user app, which will definitely be a billion by IPO day. If it doesn't, they might as well not go out because this whole thing is over.
- [30:15]
B
Yeah, yeah. And all the, you know, and the other layer of it will be the interesting narrative with the other players. Right. Like, so where is Gemini at for Google at that point? Where's Anthropic at at that point? Right. Like there's, there's currently this narrative sort of bubbling around Anthropic and how they're doing, you know, a much better job sort of on the enterprise side, as has long been the case. Right. But it's like they're probably OpenAI would want the narrative to be that, you know, their own coding tools are eating into Claude and, and some of the cloud code and the other models that Anthropic has been working on that are considered better for coding right now. You would imagine that OpenAI wants to snuff out that narrative by the time of ipo. And so is that going to be feasible? Because that's obviously what Anthropic is working, working harder than ever on maintaining that lead.
- [31:08]
A
Right? Yeah. And add it all up. And I'm just saying. All right. Sam Altman, Take my money, which is what most of big tech and basically anyone with money to invest has been saying. So I want to break down whether there are going to be some risks and vulnerabilities from that. We've hinted at it. This AGI or Bust thing you've written post AGI or Bust, we've done a, a show AGI or Bust. So on the other side of this break, MG and I are going to break down the broader AI bet and talk about why. And I think this is right. He sees this as a bigger risk than I would say a lot of mainstream folks do. So we'll be back and talk about that right after this. The holidays sneak up fast, but it's not too early to get your shopping done and actually have fun with it. Uncommon Goods makes holiday shopping stress free and joyful with thousands of one of a kind gifts you can't find anywhere else. I'm already in. I grabbed a cool Smokey the Bear sweatshirt and a Yosemite ski hat so I'm fully prepared for a long, cozy winter season. Both items look great and definitely don't have the mass produced feel you see everywhere else. And there's plenty of other good stuff on the site. From moms and dads to kids and teens, from book lovers, history buffs and die hard football fans to fit foodies, mixologists and avid gardeners. You'll find thousands of new gift ideas that you won't find elsewhere. So shop early, have fun, and cross some names off your list Today to get 15% off your next gift go to UncommonGoods.com BigTech that's UncommonGoods.com BigTech for 15% off. Don't miss out on this limited time offer uncommon goods. We're all out of the ordinary. Capital One's tech team isn't just talking about multi agentic AI. They already deployed one. It's called Chat Concierge and it's simplifying car shopping using self reflection and layered reasoning with live API checks. It doesn't just help buyers find a car they love, it helps schedule a test drive, get pre approved for financing and estimate trade and value. Advanced, intuitive and deployed. That's how they stack. That's technology at Capital One. And we're back here on big Technology podcast with M.G. siegler of Spyglass. You could find spyglass@spyglass.org, highly recommend you go sign up for the great newsletter there and read all the posts. And MG I found this post that you wrote AGI or Bust to be really interesting because as I read it I kept coming back to the point where you said to your, you kept saying in the, in, in your writing that this bet on the whole market is betting on OpenAI and this is a very big risk. Like it's almost like you're, it almost felt like you were screaming, hey, there's a, there's a big risk here. I'll just read one, one part of it. OpenAI is worth $500 billion as a private company. It's silly but it's not particularly funny and I increasingly do worry that it runs the risk of getting quite serious because I believe OpenAI strategy here is basically AGI or bust. Sam Altman has positioned his company to the point where it can only work if they achieve AGI and it truly does transform well everything. Like there's been talk about whether this is a systemic risk or not. Why are, why are you sort of outlining the fact that you know this is a systemic risk?
- [34:36]
B
I mean it just feels like, I guess once the narrative has ramped to the point where as we were talking about, we're well over a trillion dollars in and commitments in terms of yeah what the these build out look like. And it's not just OpenAI right. It's, it's, it's meta as we've talked about. It's Google, it's Microsoft, it's all these Neo clouds, it's Oracle. Everyone's getting involved amd like we're, we're on to like layers and layers and layers of all these companies and the intertwined nature is the thing that I would, that I would I guess highlight in that, in that risk too because it does feel like, like that at least led by open AI. I think that, that again, going back to the notion of these unique and interesting new methods of financing that Altman has talked about, it feels like he's been able to woo a lot of the rest of big tech to buy into the notion that, you know, they need to get on board with this, this mentality that this is the absolute future. And by the way, like if you don't, you're going to be left behind. And you can even see it right now in the stock market if you do these deals, your stock jumps like all these stocks are jumping because they do these deals with open AI. And so clearly the market loves this.
- [35:55]
A
Someone will buy your shares Brad mentality.
- [35:58]
B
Exactly, exactly. Exactly. There's, there's no, there's no lack of buyers out there for this. And so again, it just feels like it's ramped to the point where the promises, not just with OpenAI itself, but across all of these companies and all of them being so intertwined mind both in investing in each other, but also these, these data center deals and, and everything else. It feels like unless they do truly transform everything with the, you know, again, we call it, we can call it AGI, we can call it super, super intelligence, we can call it anything we want. But unless it truly transforms everything, it feels like it will be a, both a letdown and it potentially will be a business let down in terms of not being able to fulfill all of these, these trillions of dollars being spent on this. And so I think that the narrative that they've built up and, and I think Sam Altman has, has explicitly done this and, and gotten everyone who's on board, on board right now around this notion that they need to do get to AGI and they're going to be the first and it's going to be the biggest opportunity of all time. And I'm just saying that there's a lot of risk as we talked about. But specifically with the macro picture, even if everything goes great for all of these companies, if something just happens in the macro markets and like causes Nvidia to slip on earnings one quarter, you see like this cascading effect. It's not hard to see like you can see how all of a sudden they, the market gets spooked by, you know, Nvidia being public, missing that. Imagine if OpenAI is public and they don't hit, you know, the Numbers that they're, that they're projecting one quarter and the, the market gets spooked about the future of AI. And so not only do they hit open AI, they hit Nvidia, they hit Google, they hit Microsoft. They pull back from these things because they think, you know, people start giant funds start to think that they're over indexed perhaps in, in their AI bet and they're, you know, they're, there's too much risk in their portfolios and, and you can see a cascading effect effect that just like isn't really that big of a, of a, like Ms. Even Required I think in order to sort of cause this to happen. And so I just tried to point out like that that's like a real possibility and I think it's a fairly high, you know, likelihood of that happening at some point. I think it's a matter of timing.
- [38:23]
A
But you say, okay, so you say in your post that the issue is that OpenAI has increasingly dragged others along for the ride and those others run the risk not of not so much failing as much as collapsing the stock market and thus the entire economy. But then the narrative up until this point has said well it's just their profits that they're investing. It's just Microsoft's profits and Nvidia's profits. And so where's the, you know, the risk of you know, sort of cascading failure is not there.
- [38:55]
B
So it is different in that, that I, I think it would largely be a psychological event, you know, again trying to like extrapolate out how this would play out. I think it would be like the, the, yeah, psychological sort of contagion of everyone all of a sudden being worried that AI is perhaps not the future that everyone thought it would be. That doesn't mean again to my point, like it doesn't mean that it can't be great and it can't be great technology and it can't be used for interesting things and there can't be real business. This, it just is saying that like what if it's not the future of every single thing as is being sort of built up in the promise right now that, that I think that we're starting to hear around the, the narrative around from open AI on down. And so I, I fear that that is the thing that basically spooks the market and because these, you know, the magnificent seven and beyond tech companies now control so much of the S P500 and they're just, you know, they're the biggest companies and largest stocks in the world where if they fall like it just starts to have this contagion against the whole market. Again you can sort of see this like it's, it's probably like again like a matter of timing because there is like always going to be a downturn and if there's a downturn, there's is. Do you really believe that like big tech is going to be insulated by it from it? Because you know, of the future of AI. I mean that would be the hope that they would project, I would imagine. But that's just not how markets typically work.
- [40:27]
A
Right. And I, I mentioned earlier that I have this list of risks and it just keeps getting longer the more we see the, the bets grow. And, and I'll read a little bit from it. I mean here are some risks that could really make things go sideways. One is that COMPUTE gets really cheap. Like maybe a company like Grok, not Elon Musk's Grok, but Grok the inference chip makes it so cheap. And then all of a sudden you have a company like OpenAI with a trillion dollars of build out contracts. And I don't know what happens there, but like a lot of company stock prices are hinging on that. Another thing that could happen is that training doesn't yield improvements anymore. Like we've been running on this idea that bigger models will get you exponential, exponentially better. You know, AI, sorry, bigger, bigger training runs will get you exponentially better models. But that might be leveling out. If that doesn't happen, you know, there's going to be a sort of roadrunner off the cliff type of moment. There could also be no economic advantage in holding AGI and I think we're going to start talking about that much more on the show as we, you know, maybe get closer to this. But like if you have all powerful AI and then, you know, you could have, it's not going to be a long time till a lot of others catch up there. And so then what happens? Like OpenAI hits AGI, let's say anthropic gets there the next day and Meta gets there a couple weeks later and Amazon gets there a couple weeks later.
- [41:52]
B
Right.
- [41:52]
A
And then there's of course the market downturn problem. So you add that all up.
- [41:57]
B
Like I think that's, you know, these are all a few other things to throw out there, like along those lines, which is that, that you know, what if just LLMs end up, what if AGI is, is really the, the be all end all, let's say. But what if it's not LLMs that get us there, right? What if that's just a small part of the equation which has long been stated by Yan Lecun and others, like, right, talking about that. And, but what if that, that narrative and that actuality sort of shifts faster than open AI can sort of manage it and it, that sort of gets out in front of them and all these other companies, like, what if they're in the middle of these trillions and trillions of, of of build outs and then all of a sudden it, it, it turns out you need, let's say robots, right? You need robots out in the, in the, in the world. And you know, do they, do they pivot these data centers to become robot factories? Like, you know, or there's any number of directions that this stuff can go in and it's like again, what if LLMs are just a small part of the, of the bigger equation that's needed for this? And how, how well prepared are these companies, companies for that? And what if, you know, something else comes in like Google and Microsoft and all of them are still are working on quantum computing, right? Like, what if that comes into play and that becomes like the next big thing that everyone wants to bet on and not AI anymore because AI to your point is like now just table stakes and everyone has achieved AGI. And so, you know, it's this thing and even going back to what we were just talking about with the device and, and local models, like what if, you know, a lot of the best work that can be done with AI can be done via sort of these local models or smaller models and you don't need these giant, giant data centers in order to train them anymore. And, and, or do inference, you know, in the cloud anymore, what does that look like? And then there's the, the also the thing that's always been in play but again seems to be bubbling up more recently I guess because we're past these trillion dollars of commits now. It's like, like what is the actual like value depreciation value of Nvidia chips? And, and you know, what is this world in which these data centers like have to be refreshed basically every year buying billions and billions of dollars worth of Nvidia chips? Or they're obsolete. Like they would say, like, well they're more profitable. But like is that really playing out that way? It's, it's unclear if that's like that's actually how it's going to work. And what does that mean for Nvidia if, if you both have to Always buy the latest and greatest. And what if you realize, oh, you no longer have to do that. Like there's dual sides to all of this and there's a lot of risk in, in sort of every single side of it.
- [44:35]
A
And let's briefly hit. There's one more headline that just dropped earlier this week that we should talk about. OpenAI has signed. This is from CNBC. OpenAI signs $38 billion compute deal with Amazon partnering with the cloud leader for the first time. OpenAI has signed this deal. It is the the first contract with the leader in cloud infrastructure and the Latest sign that OpenAI is no longer reliant on Microsoft. The first phase of the deal will use existing AWS data centers. And I think this is already coming up. Some of the capacity is already available. This is according to an aws executive. And OpenAI is making use of that. I mean, speaking of the entanglement everywhere, it's very, very interesting that this has now happened. They just. Yeah, the deals are happening all over the place.
- [45:20]
B
Yeah, you know, this is obviously a direct offshoot of, of sort of the new agreement with Microsoft where they can, you know, no longer need to be exclusive. And more importantly, because obviously OpenAI has been signing some deals with other players, but Microsoft had a right of first refusal on all of those and they no longer have that, you know, per their new agreements. And so open eyes for you to sort of go out and play the field, as it were. And so they're doing so right away with the biggest players. This one is interesting too, from the Anthropic angle. Right, because obviously Amazon is a huge shareholder in Anthropic and has that big partnership around their Trainium chips, right. To, to be used for Anthropic's models. And then Anthropic goes and does a deal with Google to use TPUs potentially.
- [46:07]
A
And now Anthropic's helping. I think Anthropic is also helping Amazon build the data set centers. So it's like now is that right knowledge being used for open AI?
- [46:16]
B
Now all of a sudden we have Amazon teaming up with open AI and it seems like this is also around Nvidia chips too, because yeah, they already have have them in some of the data centers, but it's. Is it. Are the training chips involved at all? It's, it's not cited, so maybe not. But like this is get. It's. It's even more entangled by the day, which is wild.
- [46:38]
A
Right. Okay, so we have like 10 minutes left. I definitely want to talk with you about some positive news in the app world and I think we've talked about obviously Apple's AI failures. They've lost many more people to meta since the last time we talked, which is crazy because you'd think that they would hit a limit of people that would go to meta, but they haven't. But actually there's positive news in the Apple world, which is that the iPhone 17 is proving to be a hit. It has. It led Apple to a strong quarter in the most recent quarter that they just spoke about last week. And there's expectations that it is going to have a powerhouse quarter in Q4. Double digit iPhone growth. There were months and months, really years of stagnation on the iPhone line. It just wasn't growing. And it's growing again and, and Apple is in the middle of an unquestioned revival. The question that I have for you is, is it enough?
- [47:37]
B
So this goes to. I wrote a few weeks ago about the notion of, I think I called it a retreat to safety in terms of what Apple is focused on now, as you noted, sort of with the problems that they've been having, to put it lately with AI, it feels like they may be going back to, to sort of their strength, which is obviously devices. Right. And I think that this news only will sort of embolden them more to do that and sort of really double down on like look, a lot of people are doing AI, a lot of people are focused on that. You know, we haven't had success to date. Maybe it's something we should, you know, more deeply partner on. There's growing, you know, talk that Google is, is going to be a partner on, on sort of backing up Siri and being able to bring it up to snuff relatively soon. And so look, that's great, we'll get that taken care of. But what we do that no one else can do is build these great devices. Like, you know, that's OpenAI is not going to build a smartphone. They're working on their other device, which is a far off thing. And we'll see. You know, Microsoft doesn't do this, Amazon doesn't do this. Meta is trying to do the glasses, but they can't do the smartphone. Like we should really focus on the iPhone, we should focus on the MacBook, we should focus on iPad, we should focus on these devices and that's our strength. And again, I think that you'll see them, you know, over the coming years now sort of double down on that as realizing that that's the one thing that they can do that's unique and that is proven. And you know, regardless of, of what we think about the future of AI, the reality is that all of the same stuff has to run somewhere. Certainly in a consumer, you know, side of things. You're going to use it at least until OpenAI's magical mythical device is out there. You're going to likely be using it on Apple devices, whether that's a MacBook or whether that's an iPhone or an iPad. You know, that's how you're going to be running a lot of AI and interacting with a lot of AI. And so to me that that's that story. I do think that the iPhone in particular narrative here is, is interesting because obviously they tried to come up with a new model this year in terms of the iPhone air. There's conflicting reports on whether that model has actually been successful or whether it's not been, but it's sort of, it seemed to maybe focus in on like people realize like, oh, I want the iPhone 17 basic model, the sort of cheaper version, or I want the pro model, you know, the faster and better battery version. And I do think that the colors oddly helped them too. And I think that we might see more of that as silly as it is. I just think like, you know, these are things that consumers like and want to buy. And so Apple was so focused on that they need the AI narrative to like spur a new super cycle or something of iPhone sales. And it turns out they didn't need that after all. It looks like.
- [50:29]
A
Can I ask you, do you think it really was the better phone? I mean, the 17 obviously specs wise, much better than the 616 and the 15. It is a jump. And the more I hear about it, the more I want to go out and buy it. Currently I have a 15 Pro. Usually I wait three or four years. It's been two years, I'm feeling the gravitational pull to go get the 17. Is that 100% the explanation of what's happening here? Or could it be, for instance, maybe people bought a bunch of new iPhones four years ago in 2021 during the pandemic and it's just a natural time to upgrade.
- [51:04]
B
Upgrade.
- [51:04]
A
So I definitely explain.
- [51:06]
B
I think that that's part of it. Like it is, you know, these, the phones are impressive, but the reality is like the jumps are impressive. Every year I get a new one every year. It's sort of hard, it's increasingly sort of hard to tell, you know, the difference in terms of just speed, day to day. Speed and using apps and whatnot. The camera systems always get better obviously and, and these, that's important to people. You know, it's like it's the device you use most often. So it's, it's really important to people. But why this year, you know, versus the others? To your point, and I do think you're exactly right in, in terms of just there, there being a confluence of events that are leading people to, to upgrade this year and a big one might be. Yeah, the boom cycle that was. That took place during COVID times is now naturally leading. Yeah to a few years down the road of like everyone sort of needing that, that, that upgrade finally, which they didn't need a year ago. I do, I do wonder how it plays out in of terms next year though, because the, the rumor, you know, as we've talked about in the past, the rumor iPhone fold device and what that looks like, you know, in terms of success. If they're in fact not having seeing the success they want to see with the iPhone air like do they. Are they a little bit more reluctant to sort of push into the fold? I think that, you know, it still goes forward and they still do it. But like what does that actually look like in terms of. Of success? Because they probably thought that would be the, the real marquee thing leading up to that 20th anniversary iPhone that would get people to upgrade.
- [52:31]
A
Yeah, I think they got to do the fold. People love to fold. So we talk about it before. It just makes people happy. But let me ask one more question about this then. If you take the fact that the 17 is doing really well and Apple intelligence is still nowhere, but it doesn't seem to matter matter. That app, you know, if you look across the spectrum, ChatGPT is growing, but it's not like a new device. Alexa plus is being released and rolled out. Should be out to everybody now, according to Panos. Panay maybe, but it's not, it's not this like, you know, paradigm shifter. Google's doing well with Gemini. Is Gemini anything but, you know, another version of ChatGPT? I don't think so yet. So I'm asking myself, did I make too big of a deal about the Apple intelligence failures or is it just that that story is going to take maybe a little bit longer to play out, but it's still very relevant.
- [53:30]
B
Yeah, I mean, I think the thing that you're hitting on there is that the one particular aspect of AI which is sort of more of the agentic workflows, those aren't where they need to be yet. Right. Like I think everyone would agree with that. We've been promised this for at least a couple years now and now we have open, we have open AI's ChatGPT browser. Atlas is out there and, and sort of trying to do the, the agentic work in the browser. We got Perplexities Browser doing some of that, but it's nowhere near. It needs to be in terms of actual day to day usability and, and usefulness. And that's part of what Apple's promise was right. Dating back to the WWDC a couple years ago where it's like, it will be able to, yeah like alerts, you know, alert you and get grandma home from the airport reports and it will be able to, to, you know, pull all this stuff out of, out of your own personal history and everything. I think, I think that that remains a compelling narrative for these devices like if they can actually access, you know, your, your own sort of personal information in a safe and secure way. Of course, like that potentially is, you know, a, a thing that, that moves the needle for people with, with regard to using AI, but we're just not there yet. Right. Like you're talking about with Alexa plus with which is out and, and all of these other things like they're fun sort of like parlor tricks still and they're fun to you know, use to, to chat with a little bit. But like until they can do actual things that are doing real utility and sort of being able to, to become like an actual assistant on your device, like I, I don't think that we're going to see it and Apple is, is perhaps in some ways benefiting from the fact that no one's really doing that yet. Right. Like Google is the farthest along and they tout a lot of, you know, cool potential functionality but it's not, it's not to the point where it's going to sell Pixel devices yet. Right. And so, so again, because that's not the case, I think most people look at the iPhone and be like again, this is a, this is a great device for the things I actually want to do right now, which is take pictures and, and use ChatGPT and use, you know, whatever app I want and, and play with Sora and do all these other things. Right. And so until that, that moment comes where the promise of what we were promised from the new Siri actually comes into place, then I'm not sure that yeah, any of these are going to move the needle from a device perspective.
- [55:55]
A
Fascinating stuff. The website is spyglass.org Our guest is MG Siegler. MG, it's always great to speak with you. Thanks again for coming on.
- [56:02]
B
Likewise, Alex. Talk to you soon.
- [56:04]
A
Speak to you soon. Thank you everybody for listening and watching. We will be back on Friday to break down the week's news. I'm sure nothing will happen in the next couple days between now and Friday, right? That's just how it goes. We'll be back with Ranjan Roy then. So thank you for listening and we'll see you next time on big Technology Podcast.
- [56:27]
B
Foreign.
- [56:35]
A
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