← Sharp Tech with Ben Thompson
Sharp Tech with Ben Thompson
(Preview) An OpenAI Reminder, Netflix’s Expanding Appetite, Q&A on Remote Work, Taco Bell, and Data Centers in Space
00:28:42
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- [00:00]
A
Hello, and welcome to a free preview of Sharp Tech. Hello, and welcome back to another episode of Sharp Tech. I'm Andrew Sharp, and on the other line, Ben Thompson. Ben, how you doing?
- [00:20]
B
I literally just said this on Dithering, so I hate to reuse my takes, but I made the analogy you haven't experienced this yet, but once your kids go to school, the great thing is everyone's looking forward to Christmas vacation or spring break or whatever it might be. And what happens is the moment you get there, they immediately get sick. You probably remember this in your year. Your body's like, okay, I made it. I'm done now.
- [00:47]
A
I mean, that's still happening in adulthood.
- [00:49]
B
That's my sensation right now. Yeah, no, that's my sensation right now. I posted the year in review that I do every year last night, and my. I'm having to remind my body I still have two more pieces of content without one's down. This is the last one. It might get loopy, but we're gonna do our best.
- [01:05]
A
There you go, the home stretch. I mean, I feel like school's already out. I'm in a great mood. It's gonna be nice and light. Mailbag episode today.
- [01:15]
B
I know one of us has to do a good job here, so I'm trying to hold it together for the both of us.
- [01:19]
A
Okay, good, good. I like that. That's the headspace you're in as we venture forth here. First, I need a lot of bullet
- [01:27]
B
today in the back.
- [01:30]
A
It's going to be a little bit of news up front and then a lot of partying in the back.
- [01:34]
B
No, but just to be clear, it happens every year. I will take care of it. Since you forgot to do it, this is the last episode for a couple of weeks. We'll be back the first week of of January. You will still be podcasting with the goat.
- [01:45]
A
I was going to say it's not actually my last piece of content because I'm recording the goat later tonight. And we'll keep the goat rolling over the holidays because basketball never stops, Ben, so people can look forward to that. But here on Sharp Tech. That's right. We won't be back until the first week of January. For now, we did have some news this week before we hit mail, some news I wanted to address quickly. First news item, I'll read from Bloomberg. OpenAI is rolling out an update to ChatGPT that's intended to generate images better and faster. The latest move by the artificial intelligence developer to bolster its flagship Chatbot A amid heated competition from Alphabet Inc's Google. The company is also creating a new section within Chat GPT's mobile app and website, meant for people to make images rather than just doing so in an. In an interaction with the chatbot. So, Ben, you've had a couple days to play around with chat GPT image 1.5. What are your impressions of this new feature from Chat GPT?
- [02:54]
B
It seems pretty good. I'm enjoying it quite a bit.
- [02:56]
A
I am too.
- [02:57]
B
Yeah. I was using Gemini for a little bit, which I think speaks to. This was a really important area for ChatGPT to shore up. Like that was a reason to go use Gemini is the image generation was really good.
- [03:10]
A
It was basically the only reason to use Gemini over the last several months.
- [03:15]
B
Right. I mean, if you want to generate a picture of a turkey, go to Gemini. If you want the correct instructions for how to cook it, go to ChatGPT was sort of my takeaway. Yeah, but the. But yeah, it seems I personally on what I've done on both, it's interesting because I sort of wrote the daily update. I had this sort of long thread that had been going on for a little bit and it was more a. You know, my single favorite image across both apps was actually from Gemini. But as a whole I think I preferred the ChatGPT ones. But they're both great, they're both amazing. And it's really important for people who already have ChatGPT to not think about going somewhere else. So I think getting this out ASAP. They also did the 5.2 update, still the same base model. It's sort of more post training but a good response by them and then we'll see what happens in the new year when supposedly the real next generation model is supposed to come out.
- [04:12]
A
Yeah, well, and it was a really clean user Interface. I mean ChatGPT is just good at this. Like even the name of this product, ChatGPT image 1.5, clunky as ever. Consistent with the OpenAI house.
- [04:25]
B
I thought you were about to say, you said that after they're good at this. And then you listed another horrific name. I'm like, wait, where are you going?
- [04:32]
A
But here's the thing. I mean the upshot of that name is that everyone who uses this will refer to it as just ChatGPT, which again reflects good product instincts. I mean, I was hearing about Nano Banana for the last several months and it's like, well, where do I find that?
- [04:49]
B
Why isn't it called Gemini? Yeah, exactly.
- [04:51]
A
And Chachi.
- [04:52]
B
So funny how bad this man. And no I think the new UI with the like giving you prompts for what to do, it's so funny, like
- [05:01]
A
how it's, it's really helpful for someone like me. Just for the record, it's so basic
- [05:07]
B
and yet no one does it. Like, like, this is one of those things I do come back to on the question of ChatGPT versus Google long term. And I always, as a rule of this week, I always say ChatGPT or OpenAI is better at product. And like, what do I mean by that? And it's funny that everyone talks about product in Silicon Valley. There's a reason why Apple just cleaned everyone's clock for decades. Because it turns out technical people just suck at products because they know how it works, they know how to do it. How do you put yourself in the mind of a normie? And actually it's because the thing is, it's not just the capability, right? Everything in that new view was already possible before. And it's not just people needing to think of what can be done, like have ideas, which is in there. That's part of it. Like generate a Christmas card, right? Was like one of the options in there. People don't know what's possible, right? Like, AI can do so much and people have no idea and you have to leave.
- [06:08]
A
And the tech people who do know what's possible will think, all right, the performance here is going to sell itself and they don't go an extra step to make it idiot proof so that people could discover how amazing all of it is. And ChatGPT has cracked that code like nobody else in the space over the last two and a half years. And I thought that the release this week was a continuation.
- [06:31]
B
You were churning out images.
- [06:32]
A
Yeah, exactly. I was having fun with it. And as far as the competition with Google is concerned, I mean, to go back to your point a couple of minutes ago and the advantages that OpenAI has, I never felt that compelled to download Nano Banana until four days ago when a friend was making fun of another of our friends generating Photoshops with Nano Banana. And I was impressed by how good the Photoshops were and I thought, maybe I need to check out Nano Banana. And then literally A day later ChatGPT releases this feature.
- [07:07]
B
That's why they needed to get it out.
- [07:09]
A
Exactly. Not downloading Gemini, Keep the normies in the E ecosystem. And I still have not tried out Nano Banana, but I had a lot of fun with image.
- [07:19]
B
The other thing I thought was really interesting is I, I redid all the prompts from that Other thread in Chat GPT. And it's funny because that thread was. It was like this ongoing conversation and there'd be some funny thing. Like it would be funny to illustrate this in AI. So I'm like, so I had the idea and so this was AI as tool. I'm going to go and do this thing and go to AI and generate this image.
- [07:40]
A
Right.
- [07:40]
B
So I did the same thing. I just copied all the prompts exactly word for word. And what ChatGPT did that nano Banana did not. And again, this is like, it seems so obvious, but it actually didn't occur to me to ask for this, is there. There was like this. It made all the images consistent. Like, so there was like characters that repeated and the style was all the same and I didn't have to tell it to do that. So number one, that was super delightful. Oh yeah. This is actually way more fun that it's more consistent. And whatever they do with the context window and using old images to sort of make the new ones is interesting. It made me want to make more images because it was like I was drawing a comic book of these different things that were happening and then I wanted to build on it and go from it. Whereas with nanobanana and Gemini, I. I only went to it when I already had an idea. So I had an idea and then I went there to generate. Was pulling ideas out of me. And that's like another really important sort of product capabilities. It's not just that you know what's possible and in teaching you, but it's can it inspire you? Can it make you want to use it more? And again, these are things that it's funny because this doesn't sound like a moat, like, well, can't Google do that? Yeah, they could, but they don't. They don't again and again. And again. So yeah, so I thought it was pretty encouraging from a OpenAI perspective. Not just that the model was good because it's not just about models, it's also about products. And I thought this product rollout was more compelling than I think you even realize when you look at relative images.
- [09:20]
A
Totally. And I sat there the other night, I think it was Tuesday night, I spent like an hour just generating images of my kids in different scenes and having a great time with it. I do wonder how OpenAI is going to pay for all this over the next several years because I'm sure it's
- [09:37]
B
super weird video about like, we don't have enough compute. It's like, I mean, everyone I've been Complaining about the prospects that they're not having enough compute for ages and ages and ages is my whole thing about the API. Just let Microsoft handle the API. You need to be delivering the most compelling user experience for your consumer app, which you have the chance to rule the world with. Yeah. So I feel bad that I backed down on my critique there because I was totally right. So there's my 2025 lesson number one. I should have been even harsher on ads. If they had introduced ads in 2023, the ad product today would be good and consumers would be habituated to it.
- [10:14]
A
Like, I feel like you've made up for that omission or blind spot. Not wasn't a blind spot, but you did back down and you've made up for it over the last two and
- [10:24]
B
a half months on the podcast with vociferousness. I know it's making me is getting
- [10:29]
A
even more vocabulary for Sam and the gang out there. But finance questions aside and compute questions aside, this week was another reminder of the very real advantages that they're good.
- [10:42]
B
They're good at this stuff. Yeah, no, they are. And I think the, the whole compute question, it's possible that OpenAI's biggest problem is actually that they got too popular too fast. It's like a real catch 22. On one hand, that's their biggest advant. On the other hand. I can't remember if I've made this analogy before, but a problem Apple has with the iPhone, it's like, whoa, look at these. Other companies come out with these new innovative features. Like whether it be a flip phone or sort of like whatever it might be, it's a lot easier to roll something like that out when you're looking to sell single digit millions or maybe low double digit millions. If you're selling at the scale Apple is, it's really, really hard because you don't just need to invent it, it has to be reproducible at the scale that they're doing it at. And that just takes longer.
- [11:33]
A
And an error affects 800 million people.
- [11:36]
B
Yeah. But just to be able to do it right. Apple's supply chain almost killed themselves when they introduced face id. They had so many difficulties getting that out and getting it working. And I heard some unbelievable stories about just like heroic missions by Apple's team to get that out the door.
- [11:56]
A
Yeah.
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B
And that's because they sell so many freaking phones. Like, they could. The face ID worked. It wasn't the issue of it working. It was could you get it working at the scale of tens of millions of units. Like, and so they watched that. They could not have watched that a month earlier than they did. It's like, you know, I think even that phone was somewhat delayed or. I can't remember exactly. I think that was during COVID I can't. I don't know. I can't remember exactly. Maybe it wasn't. But that's just an example of. It's really hard at scale. But with marginal pro, like, as long as AI has a marginal cost attached to it, OpenAI feels that to a massively greater scale than anyone else, including Google. If they roll out a ChatGPT feature, it's rolling out to 900 million people.
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A
Yeah, that's really rolling every day, all day. And that's expensive. So Another thing that OpenAI has rolled out, the other news that we haven't hit on the show, you hit it on dithering. Disney licensed its characters to Sora. My question, does that matter? What do you think?
- [12:57]
B
No, probably not. I mean, Sora, I think was another, like, viral moment, which. The fact that the company can produce multiple viral moments, I think is also sort of a positive indicator. It's like number 25 in the app Store now or whatever. You know, is it going to be a thing? I don't know. But the point I came back to, and it's funny, I made this, this is the end of the year problem because I wrote this long thing about importance of, like, totems for content. And then I was doing my year in review and I wrote an entire article about this, like, six months ago that I totally forgot about. I just linked to myself. But this idea that you need something to organize around, I was talking about on the podcast last week. And in a world of AI, I think that's going to give more value to, like, us. Right. Like, because there's tens of thousands of people listening to this podcast. They can talk about it. They can, you know, we should do more about this. Stay tuned. We'll see, See what goes on. But, like, things that people have in common is really valuable.
- [13:54]
A
I mean, it's why Warner Brothers is valued at $80 billion now as people fight over the IP that was generated 30 years ago.
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B
Yep. And so I, I think in this case, what did you see the day Sora watched or the first week? Right. It's. It's all with a bunch of nerds.
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A
Enforcement.
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B
Well, that's true. That was fun. You know, actually, no, so a few things. What I was going to go with is everyone who had initially was, like, intact insured AI. And so all the cameos were of Sam Altman, like we like because why he's a common figure who was available. And so that's like one.
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A
Anybody who wound up in the Sora ecosystem knew exactly who Sam Altman was.
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B
And that's right.
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A
Watching him do funny things was amusing to everybody who was working.
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B
And to your point, they also did like no copyright to start and it was funny to make Pikachu do absurd things. And so the this speaks to this is a very bullish signal for Disney, even if Sora doesn't amount to anything. Because what it's speaking to is not just the enduring value of ip, but I would argue the increasing value of IP that's widely recognized and widely seen in a world where everything can be customized and individualized to things that are in common are going to be more and more valuable. And that applies to Disney pretty much more than anyone.
- [15:20]
A
Yep, that makes sense. I'm skeptical that adding Darth Vader is going to bring Sora back to life all of a sudden, but it's an interesting marker to lay down for Disney and a sign that they're going to be forward thinking in that space in any event. Speaking of.
- [15:36]
B
Well, the other thing too is they dropped the cease and desist letter on Google the same day or like the day before. And it reinforces this Google against the world aspect to AI. Google has their own chips, they have their own model. It's all Google all the way up and down. Google doesn't like doing deals. Deals don't scale. Like Google is the ultimate everything must scale sort of entity.
- [15:58]
A
Yeah.
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B
And on the other side you have OpenAI and Nvidia and now Disney. And this is where Apple should end up and OpenAI, you know, hire Johnny IV or whatever it might be. But like it's like it really is Google versus the world.
- [16:09]
A
Mm. Well.
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B
And Google might win.
- [16:13]
A
Yes. I look forward to tracking all of it in 2026 to keep it moving. We got a ton of great questions related to the last episode on Netflix and Warner Brothers. We have some new Netflix.
- [16:26]
B
Actually, speaking of Google, just one thing that we did not on the rundown, but happened this week. Google Gemini 3 Flash did come out. Amazing model that's extremely cheap. There's a bit where even all along the Gemini Flash models have arguably been the more interesting and compelling ones just because they're the ones that are closer to the idea of AI. It's not zero marginal cost, but it's a whole lot closer.
- [16:52]
A
So it's cheaper for Google to run. When you say it's cheap, it's cheaper
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B
for Google to run, it's cheaper for developers to use, the API costs are drastically lower and they that is almost the more interesting performance to look at. How good is the super duper cheap model that you could actually build a business on? And it's really cheap and it's really good.
- [17:12]
A
Interesting. Okay, well, we got a ton of great questions related to the last episode. I'll read one note that we got on the antitrust stuff. Full disclosure, a handful of people were striking this note and I chose the meanest email of them. So Grady says Andrew and Ben Listening to last week's discussion of the Netflix acquisition of Warner Brothers, Ben's choice to focus on attention as the scarce resource is facially arbitrary. Why is attention the marketplace on which Netflix should be evaluated? Why not the marketplace for protons, neutrons and electrons? By Ben's logic, surely that is the only scarce resource for which all companies compete.
- [17:54]
B
While you wait till the end. Or should I just start at the top?
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A
Wait till the end. Wait till the end. Out of respect for Grady while Netflix.
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B
Sorry, there's not a lot of respect for Grady. Okay, I'll continue while you got to be honest here.
- [18:09]
A
Yeah, spoiler alert. While Netflix may perceive itself to be within a competitive marketplace for attention, where in law or common sense does it follow that the company's current strategic positioning is is the only market in which anti competitive effects can manifest? Netflix engages in many marketplaces for creative talent, for subscription video services, for network bandwidth. Ben paid lip service to this. But why does the company's competitive participation or positioning within one market make it so that any competitive effects in other markets are not worthy of public oversight and intervention? By that logic, Amazon's weak positioning within the market for streaming and could justify its acquisition of Walmart, despite that obviously being a contraction and competitiveness A contraction of competitiveness in other markets. I sincerely hope you read this because I would prefer not to write off Ben's analysis of antitrust in the future. Please don't make me into an anti monopolist. All right, so what do you think?
- [19:11]
B
Just to be clear, it's the last line why I dropped the disrespectful comment. Okay, you can write off whatever analysis you want framing it as Ben better answer this or you're out of my mind. That's not how it works at scale. Yeah, sorry, I'm going to drop my takes and I don't care what you think about it, so I would abstain from the Implied threats in the emails in the future, if you want a respectful answer. So I don't think it's facially arbitrary. And I guess the confusion I have in this email, it sounds like Grady's been reading for a long time. It's the single most predictable take in the world that I say the only scarce resource is time or attention.
- [19:53]
A
It was so predictable.
- [19:54]
B
Where have you been, Grady? So sorry. I need to also insult your reading comprehension and memory. No, this is all I'm good fun, Grady, but this is literally like a thesis of trategary.
- [20:04]
A
Sure.
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B
It used to be back in the day, the gating factor was actual physical distribution. In the case of movies, you literally had large reels and you had a few of them that had to be transported to a theater. They would run the theater. A guy had to be up there to switch it over if you watched. If you have like very good eyesight and like perception, you could see the switch over, like when it happened. There'd be like marker frames in there and things like that. And so the, the key in that market was, was controlling that distribution. This is why you go back to the 1948 consent decree about the studios not being able to own theaters. It was a problem that they had that top to bottom control because distribution was the most important thing.
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A
Right.
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B
On the Internet, you can watch any video that you want. And I've had this knockdown, drag out fight before with people. People would get like, no, distribution is not a zero marginal cost thing. You have to pay Google and Facebook. I'm like, you're not paying Google and Facebook to have your content online. Anyone can go to your website and see your content. You're paying them for attention. Yeah. For getting people's eyeballs on that content. And is it functionally, from a business perspective and your accounting kind of the same. Sure, I get why people call it distribution. But it's actually really important to key in on the specific details, which is the dollars you were paying on the Internet was not to. For people to be able to access your content. Like you used to pay for printing presses or for CD presses, or for DVD presses, or for shelf space or for the trucks to deliver it or all these sorts of things. You get all that for free now. And it's because you get all that for free that the competition is infinitely larger than it used to be. Netflix is competing with YouTube. There's just no ifs, ands or buts about it. You have a TV in front of you and the question is, what's on that TV, it could be Netflix, it could be YouTube, it could be linear TV, it could be Disney plus, it could be the Apple aerial screensaver, which I continue to love. Uh, like. But only one of them's gonna be on there. Yeah. That is the plane of competition. And it doesn't matter if, if I have a game coming over a cable wire, or I have a game coming as packets over the Internet or a show or a stream or whatever. If in any sort of. Setting aside the antitrust political questions, in any sort of. Like if I'm a business person, if I'm trying to make strategic decisions, you have to drill down to what is the constraint, where is the bottleneck? And that is the bottleneck. It just is. Now, as I said last episode, that might not matter in court because this is a political process and people are going to draw these. If I can use the word arbitrary lines. But you're the one drawing the arbitrary lines, not me. And by the way, you don't get to say, oh, Ben said this, but he didn't really say this. I said they compete in other areas. I acknowledge that. You don't get to dismiss it. Cause I didn't say it strongly enough the way you wanted it to. Yes, there are monopsony type questions like how many buyers are there for all these sorts of things. That's all true and valid, but that doesn't change the fact that from a consumer perspective, Netflix is 100% competing with YouTube. YouTube is by far their biggest threat. And I think it's impossible to make sense of acquisition without acknowledging that.
- [23:44]
A
I think that is all well said. I wanted to give you some room to respond.
- [23:49]
B
Yeah, I'm fired up now. Yeah, well, now if you don't like it, that's fine.
- [23:56]
A
No, stay, Grady. We enjoyed the emails. We enjoy takes from everybody, takes from all sides. But yeah, we have to wait and see what the government does on any of this. To talk with specificity.
- [24:09]
B
And now I'm over my being Matt at Grady thing. It's fine if you disagree with me on this. People disagree with me about stuff all the time. Yeah, now we're going, I'm gonna think you're wrong and we could all be okay with that and you could think I'm wrong. Well.
- [24:23]
A
And I think because the Clayton Act.
- [24:26]
B
Well, just go back for 12 years. This is. If you wanna distill what strategic. I wrote my 13th year interview this week. This has been arguably the central theme from beginning to end. So it just. Sorry, it is what it is.
- [24:39]
A
Totally. And look, if I were making Netflix's argument, I would point out that hundreds of millions of people around the world have TVs that have the yout app right next to the Netflix app in the ti.
- [24:53]
B
Well, just once you watch a great Warner Brothers. Once you watch a great Warner Brothers movie on Netflix, you can see it win Awards on YouTube.
- [25:01]
A
Oh, that's right. It's all accelerating toward Hollywood's end game here and a new really bizarre future. But I thinking about Netflix, I think part of what's interesting about that company is that on one hand they've come to dominate what was their original market, streaming on demand. And then on the other hand they, it's a case where it's like the appetite grows in the eating. People say that about China sometimes. I think with Netflix, the end game for them for the last 10 years or so has been they want to just be a stand in for all TV and.
- [25:41]
B
That's right.
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A
All energy.
- [25:42]
B
That's right. No, I wrote that, I wrote that a decade ago. Or like early on, like Neff the bull case for Netflix is you went from the cable bundle to Netflix and it's the same experience.
- [25:52]
A
And that's where YouTube is encroaching on their growth potential as we speak. YouTube the more people watch YouTube on TV than Netflix on TV.
- [26:02]
B
Right. Netflix was seeking to replace Hollywood for distribution. YouTube is seeking to extinguish it.
- [26:09]
A
Yeah, exactly. And I don't think YouTube hasn't had any huge impact on Netflix, their pricing power or their ability to retain customers thus far. But it's growing the business and monopolizing
- [26:23]
B
attention where but you draw a line from YouTube to even five years ago to five years in the future or ten years ago to ten years in the future. And everyone in Hollywood should be way more scared of YouTube than they are of Netflix.
- [26:36]
A
Yeah, well, and Netflix is clearly thinking of YouTube. Another deal that was announced this week. New York Times. The number of video podcasts set to flood Netflix next year is growing. On Tuesday, the streaming giant announced a partnership with iHeartMedia furthering its long awaited push into podcasting and yanking a few more shows off YouTube, its rival in the modern entertainment wars. And on Wednesday, Netflix announced a similar deal with Barstool Sports. Under these deals, at least 18 new podcasts Cats will publish their video episodes exclusively on Netflix beginning in early 2026, the company said. And then a reaction from Tommy Viator, host of Pod Save America. Huge news for barstool big cat PFT commenter and hen ease. I believe that guy's name is Hank, who built by far the biggest and best sports podcast in the country from nothing. This move gets the show in front of a ton of new people and drives actual revenue to grow. That's a reference to Pardon My Take, which is I think either number one or number two, the biggest sports podcast in the country. It's them or Bill Simmons. I think it alternates I It'll be an interesting experiment to put all these shows on Netflix. I know Pardon My Takes audience was all pissed off about it. Do you have any reaction to some of the deals that Netflix is doing in that space? All right, and that is the end of the free preview. If you'd like to hear more from Ben and I, there are links to subscribe in the Show Notes, or you can also go to SharpTech FM. Either option will get you access to a personalized feed that has all the shows we do every week, plus lots more great content from Strikery and the Structecary Plus Bundle. Check it out and if you've got feedback, please email email us at emailarptech fm.