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- [00:02]
John
Meta is selling compute. They're getting out of the computing business. They said we don't need computers anymore to do what we need to do. We don't need them, we're going to be selling them. Meta Platforms is developing plans for a cloud infrastructure business to sell access to AI computing power and models. Competing with industry leaders like AWS and gcp, the company is considering selling access to various AI models hosted on its existing AI infrastructure as well as raw computing capacity as part of its Meta Compute and initiative. Meta plans to generate revenue from excessive computing power could help return its investment in AI infrastructure includes hundreds of billions of dollars spent on data centers and expensive chips. And so lots of reactions to this. The Neo cloud market is selling off. Oddly enough, Meta has a bunch of Neo cloud contracts. Some of those companies are selling off because now they're a buyer and also a competitor. Lots of different takes about Meta finding its footing, finding something that justifies the massive capex.
- [01:03]
Adam
Of course it's deeply confusing, John.
- [01:05]
John
Yeah. Is it?
- [01:07]
Adam
I mean the whole thing. The whole thing.
- [01:08]
John
What's confusing?
- [01:09]
Adam
I think that, I think it is practical what they're doing.
- [01:14]
John
Yeah.
- [01:14]
Adam
But as somebody that, that, you know, I would say overall has been a big, you know, cheerleader for Meta. I think it's truly the best. In my view it is a perfect business. It doesn't give you a lot of confidence in like the strategy overall. They're signing these Neo cloud deals worth tens of billions of dollars. They're built, you know, spending hundreds of billions of dollars and yeah, they can make the argument that these type of like doing any type of Neo cloud deals themselves is just good business. It's just like how it's just the best way to get ROI today. It doesn't give you a lot of confidence that there's near term products on the horizon for Meta that are going to be able to utilize that capacity themselves, which has clearly been their strategy. Mark and the team have never said we want to be in the cloud business. They've talked about the possibility of it, but the stated goal of MSL is personal superintelligence. We don't know what.
- [02:18]
John
Which I was a fan of and I think you were a huge fan of. You were like Manus on your phone, going around your social networks. That's my biggest bull case for all of this. There are so many different applications that I can imagine being a daily driver of in the Meta family of apps. Oddly, none of that has really been even tried in my opinion. It feels like a little bit early
- [02:42]
Adam
to Call so far. Is Muse Spark good on benchmarks like Decent, you know, again, not anything that. That anyone should really get that excited
- [02:53]
John
about as a, you know, as. As an API provider.
- [02:57]
Adam
Exactly.
- [02:58]
John
They did announce that they were going to release a. Via an API. I don't think they have. They might still.
- [03:02]
Adam
It's a good model, sir, but I don't think it will have a lot of demand.
- [03:06]
Jordy
Yeah.
- [03:06]
Adam
And then we've seen Meta Vibes which was a Mid Journey.
- [03:09]
John
Yeah.
- [03:09]
Jordy
Wrapper.
- [03:10]
John
Even if Muse Spark is not on the super giga frontier, can it be good enough to get some work done inside Meta family of apps like it should? I would imagine, yes, but they just haven't found that that killer feature. There are plenty of applications that are AI powered. There are plenty of models out there that have found their footing without being on the super intelligence path or on that particular curve.
- [03:36]
Adam
And it's interesting because yesterday we were talking about the story where Google had been telling Meta like, hey, we don't the capacity for you. And here is with. With plenty of capacity themselves. I don't think we can read too much into this because it's just one article from Bloomberg. I think it will matter a lot who the potential buyers of COMPUTE are going to be if it's. There's a number of companies that I think the market would get excited about, but if they're actually just going and trying to compete as.
- [04:07]
John
Yeah, it's weird that it came as a leak about around like a plan to sell compute as opposed to just what SpaceX did where it was just like boom, huge contract with anthropic. Lots of excitement going into the ipo. Like that was such a perfectly massaged story as Space X entered the public markets. That would have been great if they just said, hey, we have a Frontier lab that's paying us $1 billion a month now and like it's going to show up in earnings next quarter, like get ready. But the stock market loved it. Like the stock is way up and I don't know if it's way up because they see it as a huge growth area for Metta now. Is it that crazy?
- [04:43]
Adam
Well, I think where's the ROI going to come from for this? Hundreds of billions of dollars spend and up until now there's been no obvious place that it's going to come from. Right. The Manus deal that's being unwound. Yeah, they have the deal with, you know, Mid Journey and Vibes. That's unclear. It seems very obvious that they're going to be able to integrate AI into their glasses over time. But the glasses that have product market fit today are more of just like the. I think the product market fit is really with the camera, not the intelligence combined with a pair of glasses.
- [05:22]
John
Yeah. Which is also surprising that we haven't seen a diffusion model, an image model. Instagram in general is pretty. It's remarkably slop free. At least my feed is. I don't see a lot of viral slop images, but you can imagine AI powered features, background replacement, a lot of that stuff being AI enhanced and people receiving that very positively and enjoying that. I was using Adobe products recently and like in Photoshop they have an integration with Gemini Nanobanana and you can plug in all the different image models and you can actually use the tools in very interesting ways. I keep going back to that idea of like the personal superintelligence. What do I actually want? I ran into an interesting conundrum the other day because I've been sort of disappointed by the lack of AI in meta apps, which I know I'm like the only person that feels that way because the general vibe on Instagram is like extremely anti AI. Meta does have granular data about every reel I post. Some do better than others. I went to meta AI in the Instagram app and I asked what should I do more of in order to grow my account? This would be useful sort of a high powered analytics tools, personalized analytics tools for what I do. But I got this very generic LLM response. We might be able to pull it up. I think it's in. I shared the image in the timeline. Let me see if I can pull it up here. It said buffer recommends focusing on sustainable organic growth instead of quick hacks like follow trains. Post reels consistently since they get 36% more reach than carousels and 125.
- [06:57]
Adam
It's so funny to be referencing. It's referencing a blog post from a social media management SaaS company.
- [07:02]
John
Exactly.
- [07:02]
Adam
Like you would think that if you had. I mean, and clearly they're not focused on this use case.
- [07:07]
John
Yeah.
- [07:07]
Adam
But you would think that there would be an opportunity to give creators personal and super intelligence to just keep creating on the platform.
- [07:15]
John
Yeah. So use Instagram analytics to see which content converts viewers into followers and double down on it. Like that's what I asked you to do. I said what can I do better to grow my following? Like you have all the data about what does. Well, I don't want to go and look at this reel got 5,000 views. That one got 50,000 views. What's the difference here? I want you to do that. Collaborate with micro creators in your niche for authentic cross promotion rather than paid ads. Engage with responding to comments and testing out trust. It also said to optimize your profile with clear keywords in the bio and maintain a consistent visual brand. It's like a lot of that, I'm already doing a lot of that is is old and so I'm just like sort of disappointed that. Say what you want about musespark and its benchmarks or whatever. Like clearly if they wire that model up to the user's data, they should be able to integrate appropriately and they just haven't productized it properly. And maybe if I get Manus and I get an API integration, like I could get there. But like it should just live in the Instagram search box. I imagine since they already have an LLM there, it's just a legacy one on the product side. It's just not. It's just not enough to get to. Okay. There's crazy demand for AI within the app.
- [08:25]
Adam
Adam, did you ask it if the shareholder value is 3 eggs? Is the goose value?
- [08:31]
John
That just sounds like a, like a jumble of words. Is that even a correct sentence? I don't know, but sounds correct to me. I mean honestly, like the best place, it's very ironic, but the best place for Instagram growth hacks these days is just Adam Mosseri's front facing videos. He takes to Instagram. He uses Instagram very well. He goes direct, posts reels about all sorts of things. So today I got serviced one. If you post something and it doesn't do well, should you delete it and then post it again? And he says no, because the algorithm will give the same result. And your followers who saw the first one didn't like it. They're gonna see it and like it even less the second time they see it. He just answers a bunch of common questions. He does Q&As and it's actually the best way to communicate and get insights into how the Instagram platform works. But it's not personalized. Like he's just giving generic one size fits advice. I want the Adam Mosseri brain enhanced with meta's AI tailored to my account. That's what I want. And like a social media copilot, but maybe I'm in the minority here. I don't know, maybe I'm the only one that would want this. I feel like Tools for Creators would be a great way to launch this. Even like a small user, everyone almost always cares about how I'd love to get a couple more views on whatever, even if they're just using it primarily a consumption tool. And then there's also agentic shopping, which we asked Mark Zuckerberg about at Meta Connect last year. This idea that, you know, they're meta Ray Ban displays, they have the hud, they have AI. You should be able to look at a pair of shoes and say, order me those. And he sort of like gestured towards that being one potential possible future. But it's crazy to me that we haven't even seen them really. Try to remove at least one click from the shopping experience. Store some more of your data, shorten the funnel, increase conversion rates. That's good for brands, that's good for companies that advertise on Meta, it's good for meta, it's good for users. And it just doesn't feel like that's where the energy has been in terms of productizing AI within the family of apps. And so it feels like e commerce will see agentic shopping happening. We're getting closer, computer uses getting better, APIs are there, MCP servers, and Shopify has a bunch of tools for this stuff. But it's weird that Meta hasn't even been experimenting there and we haven't seen like, oh yeah, like they launched a thing where if you see an ad you can click a button and the agent will try and go check out with you and then just confirm the details within the Meta app and you don't actually have to open up the Safari window. I don't know, maybe that works. Maybe that doesn't at least run the experiment. Maybe they have, I don't know, maybe I just missed it. Yeah, this feels like a wind down of like the super intelligence ambitions that Zuck was gesturing towards last year. But I don't know, maybe this is in the path. Maybe, maybe this is just a temporary thing.
- [11:16]
Adam
Yeah. And if you look at the SpaceX deals with Google and Anthropic, they weren't like five year deals. Right. They were shorter term opportunities for both sides to get out. And I think that Meta could easily do something like that where they could make again, this is like the practical decision and say, like, hey, we actually do have way more capacity than we need. We plan on being able to utilize it fully over time, but we need to get our products sort of ramped up and so in the meantime, why not sell that capacity and signal to the market that we're not entirely irrational.
- [11:54]
John
Yeah, yeah.
- [11:54]
Jordy
I think Meta can actually wait until like the features that they need to implement are like extremely obvious. Right? Like, Apple waited a long time to actually implement these things. Even though everyone was like basically begging. I don't know if people are like begging for AI features in Instagram and maybe that'll happen in the future and they can just basically just wait while like, oh, we're not really sure how to implement this stuff. Yeah, you can put in the search bar or whatever, but it doesn't improve the experience that much. But maybe in a year or two there's going to be some feature that like, wow, everyone really wants this in Instagram. By then they'll have all the compute necessary they can. You know, 90 days before they implement it, they can get out of the lease or whatever.
- [12:29]
John
Yeah, yeah, yeah. It's interesting. I feel like they just need to do more product experimentation. Like the core Instagram team, they launched the. What's it called, Glimpses or something. It's like a shorter, even shorter version of Stories, like lower. It sits in the little sidebar of the chat. They are launching different features across the family of apps. But that culture, it feels like they have a research organization, but they don't have an AI product organization that's actively productizing things as quickly. I mean, Meta Vibes, even though it was this white label of midjourney, was at least it was launched fast and at least they got the feedback.
- [13:06]
Jordy
I don't think they've ever been the company that really innovates on product. Right. There's going to be some feature that everyone's like, wow, this is really great for AI and then they can then just integrate it into all their apps. They have all the capacity to serve it by that point.
- [13:19]
John
Yeah, I don't know. I don't know. I don't know where it goes. Amit is investing over there, shares his perspective. Two perspectives on the Meta news. He says bearish. The bearish take is if Meta has excess compute that they are willing to sell via a new cloud business, doesn't that mean we aren't compute constrained? Isn't this really bad for neoclouds? Why would Meta give a deal to Core Weaver Iron if they just sell the compute themselves? Furthermore, wouldn't they cut Capex because idle compute as the basis for a new business means they don't need as much compute as they bought, which means Capex should come down. That would be bearish for all semis. The bullish take is if Meta is building a cloud business, even if they are using Idle compute, which means they aren't compute Constrained, they might end up spending more on CapEx to compete with GCP, AWS and Azure. Like if they realize that selling compute and services on top of a meta cloud is better than just ads, then wouldn't they end up having to spend in the same way that Google, Microsoft, Amazon do in order to build out a full cloud business? They do have a lot of capabilities in terms of spinning up data centers quickly. Maybe not quite as quickly as SpaceX and AWS, but they're certainly like near the frontier of that capability in terms of putting up GPUs in tents. Says more capex would be good for semi. So what do people think? Where do we land on this? The market is certainly reacting positively to Meta and negatively to the Neo clouds because there's a new competitor in town.
- [14:46]
Adam
Zephyr and the Trinity team are going pretty hard. They say lmao, Zuck finally takes the
- [14:53]
John
L. Okay, so if this is a, if this is a Metaverse style side quest and the super intelligence meta trained models are the VR of this cycle for Meta's attempt at a new business creation. And the meta trained models get sort of mothballed in the way that the meta quest and the VR strategy got mothballed. What is the meta ray bans of msl? What would remain? Because when they wind down one of these projects, sometimes you get a meta ray bans which is pretty good business and growing and cool and like there's development there, but it's a much more narrow, focused and I would say image model but they, they seem.
- [15:37]
Jordy
Wouldn't it just be this like Neo cloud business maybe? Yeah, that's what's going to stay on.
- [15:41]
John
It's like profitable. Fun is Ray Bans though. I want a consumer product, consumer company.
- [15:47]
Adam
Yeah. And it's interesting because you can, you can make the case that Meta could build an amazing inference business. They already serve millions of businesses globally. They could make a pretty compelling case for how like hey, we help people acquire customers and we help people deliver products and services over here.
- [16:10]
John
Yeah, we've talked about that before. I don't know that I buy that. The fact that they have like, you know, every single mobile gaming company in D2C E commerce business on is actually flows over to well now get your tokens from us.
- [16:24]
Adam
Yeah, I just think that like people have it in their head like okay, meta is a consumer business but they have massive sales teams, account management teams. They know how to get in front of customers. They've got to the point where, you know, again, they, they're not Operating a commodity business. Right. Having their, you know, social networks cloud is closer to one. But anyways, I'm interested to see. I imagine they'll have to come out with their own kind of news around this pretty quickly so that they're not sitting in limbo with just one kind of rumored article floating out there. And people are speculating.
- [17:06]
John
The meta ray ban display is a good example of like or meta ray bans. Good example of like. There's probably a piece of consumer hardware that's AI enabled, like the Ring or something, or just getting really good at voice models or just getting really good at image models. And if they're a little bit more narrow and constrained, they could probably completely dominate that. But trying to do super intelligence and coding agents and it's a little scattered potentially. Jae Yoon says we are still massively short compute. Meta and XAI are selling compute because there's no inference demand for their models. It's a compute allocation problem. Too much compute in the hands of players with no internal use for it. Not a compute surplus problem.
- [17:48]
Adam
More meta news.
- [17:50]
John
What is that?
- [17:51]
Adam
Apparently, according to Bobby Allen over at npr, that I considered buying Kalshi before it's developing its own prediction market app that is sort of a classic meta playbook. This sort of puts to bed your theory that they might be just making a, you know, clout based, clout based prediction markets where you compete for your ability to see the future.
- [18:17]
Jordy
I still Manifold, is that right?
- [18:20]
John
Yeah.
- [18:20]
Jordy
So it's like a, it's like a pretty big platform.
- [18:23]
John
Yes. But I was saying there's a chance right now, based on the reporting that it could be the Manifold strategy or it could be the polymarket Kalshi strategy and the fact that they didn't try and acquire Manifold, they tried to acquire Kalshi sort of signals like, hey, they're probably going the, the financially incentivized route, which I think fits with your thesis that, you know, it's in consumer, it's profitable and growing very fast. And also Tarek from Kalshi was taking shots at Instagram saying it's brain rot, saying that like every minute you spend on Kalshi is a minute that you're not spending brain rotting on Instagram, which is like, okay, a lot of people would say that these are like equivalent or maybe one is worse than the other.
- [19:04]
Adam
Is the potential profit pool worth the risk of all the attention you're going to get from lawmakers globally by integrating like betting into the product that is already under attack on like a million different fronts? Right.
- [19:20]
John
It feels like a movie coming out and stuff. It's like you're jumping straight to the.
- [19:23]
Adam
It feels like you have a golden goose. Right. And the goose is getting valued.
- [19:28]
John
The goose is getting valued.
- [19:29]
Adam
Going back. I'm going to just keep going back to the supplies.
- [19:31]
John
Love these slides.
- [19:32]
Adam
The goose is valued. It's producing golden eggs. And you see another golden egg, but it's almost like a poison golden egg. And if you bring it over to the farm, it might spoil the goose.
- [19:43]
John
Okay.
- [19:43]
Adam
Kill your main goose potentially. And so it feels. Feels risky.
- [19:47]
John
Yeah. Google AI overviews decreased outbound organic clicks by 40% Eric Suefer is sharing. A new paper by researchers at Carnegie Mellon in the Indian School of Business finds that AI overviews were triggered in roughly 41% of observed Google searches and when triggered, reduced outbound organic clicks by about 40%. That seems like one to one. The presence of AI overviews increased the likelihood of a zero click search by roughly 35%. Everyone's going Google zero at this point. And the founder Josh Marshall of Talking Points Memo wrote about Google AI oligarchy and the end of the open web. It's an interesting read, but go through another time.
- [20:30]
Adam
December 2010, Demis was scraping together a couple million bucks for a small company called DeepMind. This is for a founder that just like, you know, had their. Started their career in the last few years. This is like inconceivable. They're like, wait, you mean 2 on 50, right? It's like, no. Sold half the company at 5 million post as one of the most elite.
- [21:01]
John
Can you imagine what technologists in the entire world if it stayed independent this whole time? I don't know, maybe there'd be another path or something.
- [21:09]
Adam
You're saying they sold too early?
- [21:10]
John
It seemed like they sold too early. I don't know. Hard to say. Hard to say.
- [21:15]
Adam
Paper hands, paper hands. Pete.
- [21:20]
John
No, no, no, no. I think all the VCs didn't want to sell. Especially because the whole Google thing that was like the whole story was don't sell to Google. Google's like the bad one. Which is funny because like Google's been very responsible and great, great company. I was playing around with VO3 or V04. Where are we in the VO models? So good and yet still not indistinguishable from reality. We're so, so close and yet so far. If you want to generate a video these days, it is cool. You can do it on your phone though. I like it. And Jordy people were asking you to do a Little bit of a. Little bit of a spin for everyone. Show off the new merch you got there. I'll tell everyone about Codex on the arms. Codex is a powerful workspace for getting work done with AI agents. Whether you're writing code, analyzing data, creating content, or automating business workflows or just trying to. Just trying to look good. Codex.
- [22:18]
Adam
We just got our first shipment of, I think around 201 of our new merch products. Oh, okay.
- [22:25]
John
I know the one you're talking about.
- [22:26]
Adam
And that one is going to be available online.
- [22:29]
John
That's the one.
- [22:30]
Adam
No, no, no, no, no. Not the one. Not the one you're thinking.
- [22:33]
John
Okay, okay.
- [22:34]
Adam
That one will also be available online after all of one. We have one that. We have one that. Bit silly.
- [22:39]
John
It's groundbreaking.
- [22:40]
Adam
It's groundbreaking in the best way possible. It's a product that humanity has been trying to create for centuries.
- [22:48]
John
Yeah.
- [22:48]
Adam
And we did it. We did it.
- [22:51]
John
We did it. And we had a breakthrough.
- [22:53]
Adam
We had a big breakthrough. It took a long time, but. Yeah. No. The merch will finally be for sale and we will make the. It will be dropping in the chat.
- [23:04]
John
Oh, yeah.
- [23:04]
Adam
First.
- [23:05]
John
Yeah.
- [23:05]
Adam
We're not exactly sure exactly when, but we will give it to you guys first. And thank you for the patience.
- [23:13]
John
Yeah.
- [23:14]
Adam
But on that note, we'll see you tomorrow.
- [23:15]
John
Leave us five stars on Apple, Podcast and Spotify. Sign up for a newsletter, tvpn.com we'll see you tomorrow. Goodbye.
- [23:21]
Adam
We love you.