← The Prof G Pod with Scott Galloway
The Prof G Pod with Scott Galloway
The Risks and Opportunities of an AI Future — with Eric Schmidt
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- [00:01]
Scott Galloway
Support for the show comes from ServiceNow, the AI platform for business transformation. You've heard the big hype around AI. The truth is, AI is only as powerful as the platform it's built into. ServiceNow is a platform that puts AI to work for people across your business, removing friction and frustration for your employees, supercharging productivity for your developers, providing intelligent tools for your service agents to make customers happier. All built into a single platform you can use right now. That's why the world works with ServiceNow. Visit ServiceNow.com AI for people to learn more. Support for the show comes in the new season of Crucible Moments, a podcast from Sequoia Capital. What is a Crucible Moment? It's a turning point where we face a tough decision and our response can shape the rest of our lives. These decisions happen in business, too, and Sequoia Capital's podcast Crucible Moments gives you a behind the scenes look, asking founders of some of the world's most important tech companies, including YouTube, DoorDash, Reddit and more, to reflect on those critical critical junctures that define who they are today. Tune into season two of Crucible Moments today. You can also catch up on season one at cruciblemoments.com or wherever you listen to podcasts. Support for the show comes from the new season of Crucible Moments, a podcast from Sequoia Capital. What is a Crucible Moment? It's a turning point where we face a tough decision and our response can shape the rest of our lives. These decisions happen in business too, and Sequoia Capital's podcast Crucible Moments gives you a behind the scenes look, asking founders of some of the world's most important tech companies like YouTube, DoorDash, Reddit, and more to reflect on those critical junctures that defined who they are today. Tune in to season two of Crucible Moments today. You can also catch up on season one at cruciblemoments.com or wherever you listen to podcasts. Episode 326326 is the area code serving southwestern Ohio. In 1926, the first SATs took place. Latest exam for me? A prostate exam. My doctor told me it's perfectly normal to become aroused and even ejaculate. That being said, I still wish he hadn't. Go Go. Welcome to the 326th episode of the Prof. GPOD. In today's episode, we speak with Eric Schmidt, a technologist, entrepreneur and philanthropist. He also previously served as Google's chief executive officer. I don't know if you've heard of him It's a tech company. You can actually go there and type in your own name and you see what the world thinks of you later. He was the executive chairman and technical advisor. We discussed with Eric the dangers and opportunities AI presents in his latest book, Artificial Intelligence Hope in the Human Spirit. That sounds like a show on the Hallmark Channel in hell. Okay, what's happening? I'm off to Vegas this week. I've been at Summit. It's beautiful here. It's lovely. I love kind of the western Baja sky or light. I think I may retire here when I retire in Mexico. I think so. The food's amazing, the people are incredibly cool. The service goal. I, no joke, think that Mexico is the best vacation deal in the world. Anyways, where am I headed to next? I go to Vegas tonight. Then now that you asked, doing a talk there tomorrow. Vegas during the week. Not so much fun. Not so much fun. That definitely kind of an unusual vibe there. And then I go to LA for a couple of days. Daddy will be at the Beverly Hotel. Swing by. Stay. Hi. I'll be the guy alone at the bar. Oh, I love eating alone at the Polo Lounge. How do you know if I like you? I stare at your shoes, not mine. Anyways, then I'm back to Vegas for Formula one, which I am so excited about. I love it. The city comes alive. And then just because I know you like to keep up on my travels, I head to Sao Paulo, where the nicest hotel in the world is right now. I think the Rosewood and Sao Paulo. I think Rosewood is actually the best brand in high end hospitality. Isn't that good to know? A lot of insight here. A lot of insight. All right, let's move on. Some news in the media and entertainment space. Netflix said that a record 60 million households worldwide tuned in to watch the boxing match between Jake Paul and Mike. I'm sorry, I'm sorry. Just a quick announcement. This is very exciting. I just struck a deal. As I told you, I'm going to la. And you're the first to know that Hulu has announced it'll be live streaming a fight between me and Jimmy Carter. By the way, if you get paid $20 million. I don't know what Tyson was paid. I think it was 20 million. You have an obligation to either kick the shit out of someone or have the shit kicked out of you. This kind of jab snort through your nose and just stay away from the guy. I don't buy it. I want my $12 back. Netflix. Despite the disappointment in the fight, Jake Paul did in fact defeat Mike Tyson in eight rounds. Can you even call it a win? Can you? The fight was shown in over 6,000 bars and restaurants across the US breaking the record for the biggest commercial distribution in the sport. But the record numbers came with a few hiccups. Viewers reported various tech issues, including slow loading times, pixelated screens, and a malfunctioning earpiece from one of the commentators. That's a weird one. A malfunctioning earpiece for one of the commentators. Data from down detector revealed that user reported outages peaked at more than 95,000 around 11pm Eastern time. Frustrated fans flooded social media criticizing Netflix for the poor streaming quality. Netflix CTO Elizabeth Stone, soon to be probably former cto, wrote to employees, I'm sure many of you have seen the chatter in the press and the social media about the quality issues. We don't want to dismiss the poor experience of some members and know we have room for improvement, but still can consider this event a huge success. No, that was a pretty big fuck up for you, Ms. Stone. Specifically, Netflix tries to garner evaluation not of a media company, but of a tech company, which means you're actually supposed to be pretty good at this shit. And didn't you know exactly how many people were going to show up for this? Didn't you kind of. Weren't you able to sort of estimate pretty accurately just exactly how many people would be dialing in at exactly the same time and then test the shit out of this? You're beginning to smell a little bit like Twitter in a presidential announcement. That just is unforgivable for a fucking tech company. Come on guys, this is what you do. This isn't the first time Netflix has fumbled with a live event. Last year, their Love Is Blind reunion show faced a similar situation, leaving viewers waiting over an hour before a recorded version was made available. And this brings up a bigger question with Netflix is pushing to live sports, including NFL games scheduled for Christmas and a major deal with WWE starting next year. Can they deliver the kind of quality viewers expect that they get from broadcast cable? It looks like what's old is new again and that we have taken for granted kind of the production quality of live TV and how difficult it is. That's one thing I'll say about Morning Joe or the View or even I think Fox does a great job. They're great at delivering TV live. I think CNN also does a fantastic job. Netflix isn't alone. Other streaming platforms, including Comcast's Peacock, have also been getting into live sports. Earlier this year, Peacock's January playoff game between the Kansas City Chiefs and Miami Dolphins drew 23 million viewers, which broke records for Internet usage in the U.S. get this, the game was responsible for 30% of Internet traffic that night. That's like squid games. This is all proof that the market for live sports on streaming platforms is a massive opportunity and companies are willing to spend big. According to the Wall Street Journal, Netflix is paying around $75 million per NFL game this season. They also recently signed a 10 year, $5 million deal with WWE. It used to be that live and sports were the last walls to be breached in broadcast cable. We'll always have sports. And then the people with the cheapest capital and the deepest pockets showed up and said, hey, we'll take Thursday Night Football. Hey, we'll take the Logan. Paul or Jake? Paul, is it Jake? And I can't remember. Anyways, I mean literally broadcast cable television right now. It's like Mark Twain said about going bankrupt. It was slowly, then suddenly we're in the suddenly stage of the decline of linear ad supported tv. It has gotten really bad in the last few months. I had breakfast with the former CEO of CNN who's a lovely guy, and he said that CNN's viewership versus the last election has been cut in half. Can you imagine trying to explain to advertisers our viewership is off 50% since the last time we were talking about election advertising? My theory is that the unnatural, unearned torrent of cash that local news stations have been earning for the last 20 years is about to go away. And what are we talking about, Scott? Tell us more. What are you saying? Effectively a lot of smart companies, including I think Hearst and others, have gone around and bought up these local news stations. And why? Because they're dying, aren't they? Well, yeah, they are. But old people watch local news mostly to get the weather and local sports. And because that Jerry Dunphy is just so likable. And that hot little number they always have some old guy with good hair and broad shoulders who makes you feel comfortable and safe and some hot woman in her 30s who's still waiting for the call up to do daytime tv. And everybody. Old people love this. And old people vote. Now what's happening? Okay, so the numbers are in. A million people watch the best shows on MSNBC. The average age is 70. It's mostly white and it's mostly women. So a 70 year old white woman podcasts, 34 year old male. Think about that. Also, the zeitgeist is different. People go to cable news to sanctify their religion or specifically their politics. People come to podcasts to learn the Zeitgeist is different, where we try to present our guests in a more aspirational light. We're not looking for a gotcha moment to go live on TikTok. It's not say a twist a phrase, get it done in six minutes because we got a break for an opioid induced constipation commercial or life alert. I've fallen. We don't do that shit. We sell zip, recruiter and athletic greens and fundrise and different kind of modern cool stuff like that. Also, Viori, I'm wearing Biore shorts right now, by the way. I fucking love this athleisure. I. Oh my God, I look so good in this shit. Actually, no one look. No one really looks good. No man looks good in athleisure. But I look less bad than I look in most athleisure. I love the fabrics. Not even getting paid to say this. Wearing it right now. So let's talk a little bit about Netflix. It's up 81% year to day. True story. I bought Netflix at 10 bucks a share. That's the good news. The bad news is I sold it at 8 bucks a share and now it's at $840. Dad. Daddy would be live broadcasting of it from his own fucking Gulf Stream right now had I not been such a shithead. I want to find a time machine, get in and go back, find me, kill me, and then kill myself.
- [10:39]
Eric Schmidt
Jesus God.
- [10:41]
Scott Galloway
Anyways, Amazon is up 34%. I do own that stock. Disney is up 22%. My stock pick for 2024, Warner Brothers Discovery, down 22%. Jesus Christ, Malone, you fired the wrong guy. Paramount, by the way, Zaslav, the guy who has overseeing a destruction of about 60 or 70% of shareholder value since he talked a bunch of stupid people into why this merger made any fucking sense and took on way too much debt. He's managed to pull out about a third of a billion dollars despite destroying a massive amount of shareholder value. Paramount is down 28% year to date. Comcast is down 2.3%. Comcast, I think is arguably the best run of the cable folks. Obviously not including Netflix, which is just a gangster run company. So Netflix has about 250 million users. Amazon Prime Video has 200 million. Is that fair though? Because you just automatically get it with Prime. Disney +150 million. Max 95. I love Max. I sold. We sold our series into Netflix, our big tech drama. I think Most of us would have liked HBO just because HBO has a certain culture that feeds kind of the water cooler. If you're talking about something in streaming media, you're usually usually talking about something on Max. But Netflix has also got bigger reach. These are good problems. Hulu's paramount is at 63 million, Hulu 49, Peacock 28, ESPN plus at 26, Apple TV at 25, and then Starz, remember them at 16 million. Effectively, these guys have cheaper capital. They're absolutely killing linear tv. Does that mean it's a bad business? No. Someone's going to come in and roll up all of these assets. Between the old Viacom assets, cnn, Turner, all the Disney shit, abc, they're going to roll them all up, milk them for their cash flow, cut costs faster than the revenue declines. These businesses, while they seem to be going out of business pretty fast right now, it'll probably level out. AOL's still a small but great business. I think it does something like 4 or $500 million in EBITDA because there's still a lot of people that depend on AOL in rural areas for their dial up for their Internet. And some people will hang in there if you will. But this is going to be a distress play. They're going to stop this consensual hallucination that these things are going to ever grow again. They'll consolidate them. They'll start cutting costs. One of the best investments I ever made, Yellow Pages. We bought a yellow Pages company for about two or two and a half times cash flow. Yeah, it's going down by 8 to 12% a year. But if you cut costs faster than that by going and buying the other shitty Yellow Pages companies and then consolidating the staff, which is Latin for layoff people, and you can cut costs faster than 8%, you have an increase in EBITDA every year. I still find across the entire asset class. And this is where I'll wrap up. In general, a basic axiom that I have found holds water through the test of time around investing is the sexier it is, the lower the roi. And if you look at asset classes in terms of their sex appeal, venture investing or angel investing is fun. Right? It's for What I call FIPs, formerly important people that want to stay involved and want to help entrepreneurs. But be clear, the only return you get is psychic. It is a terrible asset class. Even if something works at that stage, it is very hard to predict. You're talking about one in seven, maybe do well. And even that one company Likely you'll get washed out along the way. It'll hit a bump and the VCs have showed up and they'll wash you out. It is a very tough asset class to make money. Venture does better. But the majority of the returns are not only crowded to a small number of brands that get all the deal flow, but a small number of partners within that small number of firms. Then you have growth. I think that's better. Then you have IPOs. Unfortunately. IPOs. That, that winter is really ugly right now. The IPO market's basically been in a pretty big deep freeze for several years now. People keep thinking it's going to come back. We got excited about Reddit, but not a lot followed. And then you go into public company stocks. It's impossible to pick stocks. Buy an index fund. Then you get into distressed or mature companies, dividend plays. And then what I love is distressed. I find that distressed is the best asset class. Why? What business has the greatest likelihood of succeeding? Anything in senior care. Why? Against the above. The less sexy it is. People don't want to be around old people. It reminds them of death. They're generally pretty boring. I know I'm supposed to say they just have so much experience and wisdom sometimes and people want to avoid them. People want to hang out with hot young people, right? And people want to hang out with hot young companies. Specifically Capital wants to hang out with hot young growing companies. And they don't like the way that old companies smell, so to speak. So they avoid them. And that's why there's a greater return on investment in distress. What's the learning here? Sex appeal and ROI are inversely correlated. So yeah, if you want to invest in a members club downtown for the fashion industry and the music industry, have at it. But keep in mind, ROI and sex appeal inversely correlated. We'll be right back for our conversation with Eric Schmidt. Support for Profg comes from Mint Mobile. You're probably paying too much for your cell phone plan. It's one of those budgetary line items that always looks pretty ugly and it might feel like there's nothing you can do about it. That's where Mint Mobile has something to say. Mint Mobile's latest deal might challenge your idea of what a phone plan costs. If you make the switch now, you'll pay just $15 a month when you purchase a new three month phone plan. All Mint Mobile plans come with high speed data on a limited time and text delivered on the nation's largest 5G network. You can even keep your phone your contacts and your number. It doesn't get much easier than that to get this new customer offer and your new three month premium wireless plan. For just 15 bucks a month you can go to mintmobile.com profg that's mintmobile.com propg you can cut your wireless bill to 15 bucks a month@mintmobile.com propg 45 upfront payment required equivalent to 15amonth. New customers on the first three month plan only speed slower about 40 gigabytes on unlimited plan. Additional taxes, fees and restrictions apply. See Mint Mobile for details. Support for the show comes from the new season of Crucible Moments, a podcast from Sequoia Capital. Did you know that YouTube started as a dating site? Probably not because it didn't go well. So how did the company pivot from that failure to become the household name it is? Today? On this season of Crucible Moments, they're going to give you an inside look at that story and more, offering an unvarnished history of some of tech's influential companies told by the founders themselves. You can Hear how losing $35 million led the founder of ServiceNow to start his own company, or how a Reddit founder ended up returning to the company just to save the site from itself. Hosted by Roulev Botha of Sequoia, Crucible Moments provides a behind the scenes look at some of the most tumultuous and defining milestones in tech history. He connects with the founders and they reflect on those pivotal inflection points and how sometimes those moments of turmoil become moments of triumph. Tune into season two of Crucible Moments now. You can also catch up on season one at cruciblemoments.com or wherever you listen to podcasts. Support for the show comes from 1Password. How do you make a password that's strong enough so no one will guess it and impossible to forget? And now how can you do it for over a hundred different sites and make it so everyone in your company can do the exact same thing without ever needing to reset them? It's not impossible. 1Password makes it simple. 1Password combines industry leading security with award winning design to bring private, secure and user friendly password management to everyone. 1Password makes strong security, easy for your people and gives you the visibility you need to take action when you need to. A single data breach can cost millions of dollars while 1Password secures every sign and to save you time and money and it lets you securely switch between iPhone, Android, Mac and PC. All you have to remember is the one strong account password that protects everything else. Your logins your credit card, secure notes or the office wifi. Password. Right now our listeners get a free two week trial@1Password.com Prof. For your growing business. That's two weeks free@1Password.com Prof. Don't let security slow your business down. Go to1Password.com profile welcome back. Here's our conversation with Eric Schmidt, a technologist, entrepreneur, philanthropist, and Google former CEO. Eric, where does this podcast find you?
- [19:18]
Eric Schmidt
I'm in Boston. I'm at Harvard and giving a speech to students later today.
- [19:23]
Scott Galloway
Oh, nice. So let's bust right into it. You have a new book out that you co authored with the late Henry Kissinger titled Artificial Intelligence, Hope and the Human Spirit. What is it about this book? Or give us what you would call the pillars of insight here around that'll help people understand the evolution of AI.
- [19:42]
Eric Schmidt
Well, the world is full of stories.
- [19:44]
Scott Galloway
About what AI can do and we.
- [19:46]
Eric Schmidt
Generally agree with those. What we believe, however, is the world is not ready for this. And there are so many examples, whether it's trust, military power, deception, economic power, the effect on humans, the effect on children that are relatively poorly explored. So the reader of this book doesn't need to understand AI, but they need to be worried that this stuff is going to be unmanaged. Dr. Kissinger was very concerned that the future should not be left to people like myself. He believed very strongly that these tools are so powerful in terms of their effect on human society that it was important that the decisions be made by more than just the tech people. And the book is really a discussion about what happens to the structure of organizations, the structure of jobs, the structure of power and all the things that people worry about. I personally believe that this will happen much, much more quickly than societies are ready for, including in the United States and China. It's happening very fast.
- [20:56]
Scott Galloway
And what do you see as the real existential threats here? Is it that it becomes sentient? Is it misinformation, income inequality, loneliness? What do you think are the kind of first and foremost biggest concerns you have about this rapid evolution of AI?
- [21:12]
Eric Schmidt
There are many things to worry about before we say the bad things. Let me remind you. Enormous improvements in drug capability for healthcare, solutions to climate change, better vehicles, huge discoveries in science, greater productivity for kind of everyone. A universal doctor, a universal educator. All of these things are coming and those are fantastic. A long way you come with because these are very powerful, especially in the hands of an evil person. And we know evil exists. These systems can be used to harm large numbers of people. The most obvious one Is their use in biology? Can these systems at some point in the future generate biological pathogens that could harm many, many, many, many humans today? We're quite sure they can't, but there's a lot of people who think that they will be able to unless we take some action. Those actions are being worked on now. What about cyber attacks? You have a lone actor, a terrorist group, North Korea, whomever, whatever your evil person or group is, and they decide to take down the financial system using a previously unknown attack vector, so called zero day exploits. So the systems are so powerful that we are quite concerned that in addition to democracies using them for gains, dictators will use them to aggregate power and they'll be used in a, in a harmful and military context.
- [22:40]
Scott Galloway
Sho, I'm freaked out about these AI girlfriends. I feel as if the biggest threat in the US right now is loneliness that leads to extremism. And I see these AI girlfriends and AI searches popping up. And I see a lot of young men who have a lack of romantic or economic opportunities turning to AI girlfriends and begin to sequester from real relationships. And they become less likely to believe in climate change, more likely to engage misogynistic content, sequester from school, their parents, work in some, they become really shitty citizens. And I think men, young men are having so much trouble that this low risk entry into these faux relationships is just going to speedball loneliness and the externalities of loneliness. Your thoughts?
- [23:28]
Eric Schmidt
I completely agree. There's lots of evidence that there's now a problem with young men. In many cases, the path to success for young men has been, shall we say, been made more difficult because they're not as educated as the women are. Now remember, there are more women in college than men and many of the traditional paths are no longer as available. And so they turn to the online world for enjoyment and sustenance. But also because of the social media algorithms, they find like minded people who ultimately radicalize them either in a horrific way like terrorism or in the kind of way that you're describing, where they're just maladjusted. This is a good example of an unexpected problem of existing technology. So now imagine that the AI girlfriend or boyfriend, but let's use AI girlfriend as an example, is perfect. Perfect visually, perfect emotionally. And the AI girlfriend in this case captures your mind as a man to the point where she or whatever it is takes over the way you thinking you're obsessed with her. That kind of obsession is possible especially for people who are not fully formed. Parents are going to have to be more involved for all the obvious reasons. But at the end of the day, parents can only control what their sons and daughters are doing within reason. We've ended up again using teenagers as an example. We have all sorts of rules about age of maturity, 16, 18, what have you, 21 in some cases. And yet you put a 12 or 13 year old in front of one of these things and they have access to every evil as well as every good in the world and they're not ready to take it. So I think the general question of are you mature enough to handle it, sort of the general version of your AI girlfriend example is unresolved.
- [25:21]
Scott Galloway
So I think people, most people would agree that the pace of AI is scary and that our institutions and our ability to regulate are not keeping up with the pace of evolution here. And we see what perfectly what happened with social around this, what can be done? What's an example or a construct or framework that you can point to where we get the good stuff, the drug discovery that help with climate change, but attempt to screen out or at least put in check or put in some guardrails around the bad stuff. What are you advocating for?
- [25:57]
Eric Schmidt
I think it starts with having an honest conversation of where the problems come from. So you have people who are absolutist on free speech, which I happen to agree with, but they confuse free speech of an individual versus free speech for a computer. I am strongly in favor of free speech for every human. I am not in favor of free speech for computers. And the algorithms are not necessarily optimizing the best thing for humanity. So as a general point, specifically, we're going to have to have some conversations about what is, at what age are things appropriate. And we're also going to have to change some of the laws, for example, Section 230, to allow for liability in the worst possible cases. So when someone is harmed from this technology, we need to have a solution to prevent further harm. Every new invention has created harm. Think about cars, right? So cars used to hit everything and they were very unsafe. Now cars are really quite safe, certainly by comparison to anything in history. So the history of these inventions is that you allow for the greatness and you police the guard, technically the guardrails. You put limits on what they can, they can do. And it's an appropriate debate, but it's one that we have to have now for this technology. I'm particularly concerned about the issue that you mentioned earlier about the effect of on human psyche. Dr. Kissinger, who studied Kant, was very concerned and we write in the book at some length about what happens when your worldview is taken over by a computer as opposed to your friends.
- [27:39]
Scott Galloway
Right?
- [27:40]
Eric Schmidt
You're isolated, the computer is feeding you stuff. It's not optimized around human values, good or bad. God knows what it's trying to do. It's trying to make money or something. That's not a good answer.
- [27:53]
Scott Galloway
So I think most reasonable people would say, okay, some sort of fossil fuels are a net good. I would argue pesticides are a net good, but we have emission standards and an fda. Most people would, I think loosely agree or mostly agree that some sort of regulation that keeps these things in check makes sense. Now let's talk about big tech, which you were an instrumental player in. You guys figured out a way, quite frankly, to overrun Washington with lobbyists and avoid all reasonable regulation. Why are things going to be different now than what they were in your industry when you were involved in it?
- [28:29]
Eric Schmidt
Well, President Trump has indicated that he is likely to repeal the executive order that came out of President Biden, which was an attempt at this. So I think a fair prediction is that for the next four years there'll be very little regulation in this area as the President will be focused on other things. So what will happen in those companies is if there is real harm, there's liability, there's lawsuits and things. So the companies are not completely scot free. Our companies remember our economic agents and they have lawyers whose jobs are to protect their intellectual property and their goals. So it's going to take, I'm sorry to say it's likely to take some kind of a calamity to cause a change in regulation. And I remember when I, when I was in California, when I was younger, California driver's licenses, the address on your driver's license was public and there was a horrific crime where a woman was followed to her home and then she was murdered based on that information. And then they changed the law. And my reaction was, didn't you foresee this? Right. You put millions and millions of license information to the public and you don't think that some idiot who's horrific is going to harm somebody. So my frustration is not that it will occur, because I'm sure it will. But why did we not anticipate that as an example, we should anticipate. Make a list of the biggest harms. I'll give you another example. These systems should not be allowed access to weapons. Very simple. You don't want the AI deciding when to launch a missile. You want the human to be responsible. And these kinds of sensible regulations are not complicated to state.
- [30:17]
Scott Galloway
Are you familiar with character AI? I am really just a horrific incident where a 14 year old thinks he's establishes a relationship with an AI agent that he thinks is a character from Game of Thrones. He's obviously unwell, although he, my understanding is from his mother who's taken this on as an issue, understandably he did not qualify as someone who was mentally ill. Establishes this very deep relationship with obviously a very nuanced character. And the net effect is he, he contemplates suicide and she invites him to do that. And you know, the story does not end well. And my view Eric, is that if we're waiting for people's critical thinking to show up or for the better angels of CEOs of companies that are there to make a profit, that's what they're supposed to do, they're doing their job. That we're just going to have tragedy after tragedy after tragedy. My sense is someone needs to go to jail. And in order to do that we need to pass laws showing that if you're reckless with technology and we can reverse engineer it to the death of a 14 year old that you are criminally liable. But I don't see that happening. So I would push back on the notion that people need to think more critically. That would be lovely. I don't see that happening. I have no evidence that any CEO of a tech company is going to do anything but increase the value of their shares, which I understand and is a key component of capitalism. It feels like we need laws that either remove this liability shield, I mean does any of this change until someone shows up in an orange jumpsuit?
- [31:56]
Eric Schmidt
I can tell you how we dealt with this at Google. We had a rule that in the morning we would look at things and if there was something that looked like real harm, we would resolve it by noon and we would make the necessary adjustments. The example that you gave is horrific, but it's all too common. And it's going to get worse for the following reason. So now imagine you have a two year old and you have the equivalent of a bear. That is the two year old's best friend. And every year the better the bear gets smarter and the two year old gets smarter too, becomes three, four, five and so forth. That now 15 year old's best friend will not be a boy or a girl of the same age. It'll be a digital device. And such people highlighted in your terrible example are highly suggestible. So either the people who were building the equivalent of that Bear ten years from now are going to be smart enough to never suggest harm or they're going to get regulated and criminalized. Those are the choices. I used to say that the Internet is really wonderful, but it's full of misinformation and there's an off button for a reason. Turn it off. I can't do that anymore. The Internet is so intertwined in our daily lives, all of us, every one of us, for the good and bad, that we can't get out of the cesspool if we think it's a cesspool. And we can't make it better because it keeps coming at us. The industry, to answer your question, the industry is optimized to maximize your attention and monetize it so that behavior is going to continue. The question is how do you manage the extreme cases? Anything involving personal harm of the nature that you're describing will be regulated one way or the other.
- [33:46]
Scott Galloway
Yeah. At some point it's just a damage we incur until then. Right. We've had 40 congressional hearings on child safety and social media and we've had.
- [33:53]
Eric Schmidt
Zero laws in fairness to that. There was there, there is a very, very extensive set of laws around child sexual abuse which is obviously horrific as well. And those laws are universally implemented and well adhered to. So we do have examples where everyone agrees what the harm is. I think all of us would agree that a suicide of a teenager is not okay. And so regulating the industry so it doesn't generate that message strikes me as a no brainer. The ones which will be much harder are where the system has a. Has essentially captured the emotions of the person and is feeding them back to the person as opposed to making suggestions. And that's. And we talk about this in the book. When the system is shaping your thinking, you are being shaped by a computer, you're not shaping it. And because these systems are so powerful, we worry. And again we talk about this in the book of the impact on the perception of truth and of society. How. Who am I? What, what do I do? And ultimately one of the risks here, if we don't get this under control is that we will be the dogs to the powerful AI as opposed to us telling the AI what to do. A simple answer to the question of when is the industry believes that within 5 to 10 years these systems will be so powerful that they might be able to do self learning. And this is a point where the system begins to have its own actions, its own religion. It's called a volition, it's called general intelligence AGI, as it's called, and the arrival of AGI will need to be regulated.
- [35:32]
Scott Galloway
We'll be right back. Support for ProfG comes from Miro while a lot of CEOs believe that innovation is the lifeblood of business, very few of them actually see their team unlock the creativity needed to innovate. A lot of times that's because once you've moved from discovery and ideation to product development, outdated process management tools, context switching, team alignment and constant updates massively slow the process. But now you can take a big step to solving these problems with the Innovation Workspace from Miro. Miro is a workspace where teams can work together from initial stages of project or product design all the way to designing and delivering the finished product powered by AI. Miro can help teams increase the speed of their work by generating AI powered summaries, product briefs and research insights in the early stages of development. Then move to prototypes, process flows and diagrams, and once there, execute those tasks with timelines and project trackers all in a single shared space. Whether you work in product design, engineering, ux, agile or marketing, bring your team together on Miro. Your first three Miro boards are free when you sign up today@miro.com that's three free boards@miro.com support for profg comes from Toyota look we're all tired of the endless multitasking. Sometimes you need to take the time to close the tabs in your brain and relax. One way to do that is by taking a luxurious drive, and in a Toyota Crown, every drive is a captivating experience for the senses. The Toyota Crown family comes with the quality and reliability that Toyota is known for, along with bold and elegant exterior styles. The Toyota Crown sedan has an available hybrid max powertrain with up to 340 horsepower and comes with an available BI tone exterior finish to help you stand out on the road. And the Toyota Crown Signia gives you the space you'd expect from an SUV with a stylish design unlike any other. Whether you're a daily commuter or a weekend road warrior, make any drive a thing of beauty with the Toyota Crown. Learn more today@toyota.com toyotacrownfamily toyota let's go Places. Support for Prof. G comes from Fundrise. Artificial intelligence is poised to be one of the biggest wealth creation events in history. Some experts expect AI to add more than $15 trillion to the global economy by 2030. Unfortunately, your portfolio probably doesn't own the biggest names in AI. That's because most of the AI revolution is largely being built and funded in private markets. That means the value the vast majority of AI startups are going to be backed and owned by venture capitalists, not public investors. But with the launch of the Fundrise Innovation Fund last year, you can get in on it now. The Innovation fund pairs a $100 million plus venture portfolio of some of the biggest names in AI with one of the lowest investment minimums the venture industry has ever seen. Get in early@fundrise.com propg carefully consider the investment material before investing, including objectives, risks, charges and expenses. This and other information can be found at the Innovation Funds prospectus@fundrise.com Innovation this is a paid advertisement. We know that social media and a lot of these platforms and apps and time on phone is just not a good idea. I'm curious what you think of my colleague's work, Jonathan Haidt, and that is is there any reason for anyone under the age of 14 to have a smartphone? And is there any reason for anyone under the age 16 to be on social media? Should we age gate pornography, alcohol, the military, shouldn't we specifically the device makers and the operating systems, including your old firm, shouldn't they get in the business of age gating?
- [39:16]
Eric Schmidt
They should. And indeed, Jonathan's work is incredible. He and I wrote an article together two years ago which called for a number of things in the area of regulating social media and we'd start with changing a law called Coppa from 13 to 16. And we are quite convinced that using various techniques we can determine the age of the person with a little bit of work. And so people say, well, you can't implement it well, that doesn't mean you shouldn't try. And so we believe that at least the pernicious effects of this technology on below 16 can be addressed. When I think about all of this, to me, we want children to be able to grow up and grow up with humans as friends and I'm sure with the power of AI arrival that you're going to see a lot of regulation about child content. What can a child below 16 See? This does not answer the question of what do you do with a 20 year old who's also still being shaped. And as we know, men develop a little bit later than women. And so let's focus on the underdeveloped man who's having trouble in college or what have you. What do we do with them? And that question remains open in terms.
- [40:31]
Scott Galloway
Of the idea that the genie is out of the bottle here and we face a very real issue or fulcrum Retention, and that is we want to regulate it. We want to put in guardrails. At the same time, we want to let our, you know, our sprinters and our IP and our minds and our universities and our incredible for profit machine. We want to let it run right. And the fear is that if you regulate it too much, the Chinese or, you know, the Islamic Republic isn't quite as concerned and gets ahead of us on this technology. How do you balance that tension?
- [41:07]
Eric Schmidt
So there are quite a few people in the industry, along with myself, who are working on this. And the general idea is relatively light regulation, looking for the extreme cases. So the worst, the extreme events would be a biological attack, a cyber attack, something that harmed a lot of people, as opposed to a single individual, which is always a tragedy. Any misuse of these in war, any of those kinds of things, we worry a lot about. And there's a lot of questions here. One of them is, do you think that if we had an AGI system that developed a way to kill all of the, all of the soldiers from the opposition in one day that it would be used? And I think the answer from a military general perspective would be yes. The next question is do you think that the North Koreans, for example, or the Chinese would obey the same rules about when to apply that? And the answer is no one believes that they would, that they would do it safely and carefully under the way the U.S. law would require. U.S. law has a law called person in the loop or meaningful human control that tries to keep these things from going out of hand. So what I actually think is that we don't have a theory of deterrence with these new tools. We don't know how to deal with the spread of them. And the simple example, and sorry for the diversion for a sec, but there's closed source. And open source. Closed is like you can use it, but the software and the numbers are not available. There are other systems called open source where everything is published. China now has two of what appear to be the most powerful models ever made, and they're completely open. And we're obviously you and I are not in China and I don't know why China made a decision to release them, but surely evil groups and so forth will start to use those now. Maybe they don't speak Chinese or what have you, or maybe the Chinese just discount the risk, but there's a real risk of proliferation of systems in the hands of terrorism. And the proliferation is not going to occur by misusing Microsoft or Google or what have you. It's going to be by making their own servers in the dark web. And an example, a worry that we all have is exfiltration of the models. I'll give you an example. Google or Microsoft or OpenAI spends $200 million or something to build one of these models. They're very powerful. And then some evil actor manages to exfiltrate it out of those companies and put it on the dark web. We have no theory of what to do when that occurs because we don't control the dark web, we don't know how to detect it and so forth. In the book we talk about this and say that eventually the network systems globally will have fairly sophisticated supervision systems that will watch for this because it's another example of proliferation. It's analogous to the spread of enriched uranium. If anyone tried to do that, there's an awful lot of monitoring systems that would say, you have to stop right now or we're going to shoot you.
- [44:16]
Scott Galloway
So you make a really cogent argument for the kind of existential threat here, the weaponization of AI by bad actors. And we have faced similar issues before. My understanding is there are multilateral treaties around bioweapons or we have nuclear arms treaties. So is this the point in time where people such as yourself and our defense infrastructure should be thinking about or trying to figure out multilateral agreements? And again, the hard part there is, my understanding is it's very hard to monitor things like this. And should we have something along the lines of Interpol that's basically policing this and then fighting fire with fire, using AI to go out and find scenarios where things look very ugly and move in with some sort of international force. It feels like a time for some sort of multinational cooperation is upon us. Your thoughts?
- [45:09]
Eric Schmidt
We agree with you. And in the book we specifically talk about this in a historical context of the nuclear weapons regime which Dr. Kissinger, as you know, invented largely. What's interesting is working with him, you realize how long it took for the full solution to occur. America used the bomb in 1945. Russia or Soviet Union demonstrated in 1949. So that's roughly. It was a four year gap. And then there was sort of a real arms race. And once that it took roughly 15 years for an agreement to come for limitations on these things, during which time we were busy making an enormous number of weapons which ultimately were a mistake, including, you know, these enormous bombs that were unnecessary. And so things got out of hand in our case. I think what you're saying is very important that we start now. And here's where I would start. I would start with a treaty that says we're not going to allow anyone who's a signator of the treaty to have automatic weapon systems. And by automatic weapons, I don't mean automated, I mean ones that make the decision on their own. So an agreement that any use of AI of any kind in a conflict sense has to be owned and authorized by a human being who is authorized to make that decision. That would be a simple example. Another thing that you could do as part of that is say that you have a duty to inform when you're, when you're testing one of these systems in case it gets out of hand. Now whether these treaties can be agreed to, I don't know. Remember that it was the horror of nuclear war that got people to the table and it still took 15 years. I don't want us to go through an analogous bad incident involving an evil actor in North Korea. Again, I'm just using them as bad examples. Or even Russia today we obviously don't trust. I don't want to run that experiment and have all that harm and then say, hey, we should have foreseen this.
- [47:16]
Scott Galloway
Well, my sense is when we are better at technology, we're not in a hurry for a multilateral treaty. Right? When we're under the impression that our nuclear scientists are better than your nuke. I mean remember, our Nazis are smarter than your Nazis kind of thing that we like. We don't want a multilateral treaty because we see advantage. And curious, if you agree with this, we have better AI than anyone else. Does that get in the way of a treaty or should we be doing this from a position of strength? And also if there's a number two, and maybe you think we're not the number one, but assuming you think that the US is number one in this, who is the number two? Who do you think poses the biggest threat? Is it their technology or their intentions or both? If you were to hear that one of these really awful things took place, who would you think most likely are the most likely actors behind it? Is it a rogue state? Is it a terrorist group? Is it a nation state?
- [48:07]
Eric Schmidt
First place? I think that the short term threats are from rogue states and from terrorism. And because there, as we know, there's plenty of groups that seek harm against the elites in any country today, the competitive environment is very clear that the US with our partner uk, I'll give you an example. This week there were two libraries from China that were released open source. One is a problem solver that's very powerful and Another one is a large language model that's equal to, and in some cases exceeds the one from Meta with which they use every day. It's called llama 3,400 billion. I was shocked when I read this because I had assumed that our, in my conversation with the Chinese, that they were two to two to three years late. It looks to me like it's within a year now. So it'd be fair to say it's the US and then China within a year's time. Everyone else is well behind. Now, I'm not suggesting that China will launch a rogue attack against an American city, but I am alleging that it's possible that a third party could steal from China because it's open source, or from the US if they're malevolent and do that. So the threat, the threat escalation matrix goes up with every improvement. And today the primary use of these tools is to sow misinformation, which is what you talked about. But remember that there's a transition to agents and the agents do things. So it's a travel agent or it's, you know, whatever. And the agents speak English that you give them English and they result, they respond in English. So you can concatenate them. You can literally put agent one talks to Agent two, talks to agent three, talks to agent four, and there's a scheduler that makes them all work together. And so, for example, you could say to these agents, design me the most beautiful building in the world, go ahead and file all the permits, negotiate the fees of the builders and tell me how much it's going to cost, and tell my accountant that I need that amount of money. That's the command. So think about that, think about the agency, the ability to put an integrated solution that today takes 100 people who are very talented, and you can do it by one command. So that acceleration of power could also be misused. I'll give you another example. You were talking earlier about the impact on social media. I saw a demonstration in England. In fact, the first command was build a profile of a woman who's 25, she has two kids, and she has the following strange beliefs. And the system wrote the code and created a fake Persona that existed on that particular social media case. Then the next command was take that person and modify that person into every possible stereotype, every race, sex, so forth and so on. Age, demographic, thing with similar views and populate that and 10,000 people popped up just like that. So if you wanted, for example, today this is true today, if you wanted to Create a community of 10,000 fake influencers to say, for example, that smoking doesn't cause cancer, which, as we know, is not true. You could do it. And one person with a PC can do this. Imagine when the AIs are far, far more powerful than they are today.
- [51:42]
Scott Galloway
So one of the things that Dr. Kissinger was known for, and quite frankly I appreciate, was this notion of real politics. Obviously, we have aspirations around the way the world should be, but as it relates to decision making, we're also going to be very cognizant of the way the world is and make some. I mean, he's credited with a lot of very controversial slash difficult decisions, depending on how you look at it. What I'm hearing you say leads. All these roads lead to one place in my kind of, quote, unquote, critical thinking or lack thereof, brain. And that is there's a lot of incentive to kiss and make up with China and partner around this stuff, that if China and the US came to an agreement around what they were going to do or not do and bilaterally created a security force and agreed not to sponsor proxy agents against the west or each other, that we'd have a lot, that would be a lot of progress. That might be 50, 60, 80% of the whole shooting match is if the two of us could say, we're going to figure out a way to trust each other on this issue and we're going to fight the bad guys together on this stuff. Your thoughts?
- [52:50]
Eric Schmidt
So Dr. Kissinger, of course, was the world's expert in China. He opened up China, which is one of his greatest achievements, but he was also a proud American and he understood that China could go one way or the other. His view on China was that China, and he wrote a whole book on this, was that China wanted to be the Middle Kingdom as part of their history, where they sort of dominated all the other countries. But it's not like America. His view was they wanted to make sure the other countries would show fealty to China and, in other words, do what they wanted. And occasionally, if. If they didn't do something, China would then extract some payment, such as invading the country. That's roughly what Henry would say. So he was very much a realist about China as well. His view would be at odds today with Trump's view and the US Government's. The US Government is completely organized today around decoupling. That is literally separating. And his view, which I can report accurately because I went to China with him, was that we're never going to be great friends. But we have to learn how to coexist. And that means detailed discussions on every issue at great length to make sure that we don't alarm each other or frighten each other. His further concern was not that that President Xi would wake up tomorrow and invade Taiwan, but that you would start with an accident and then there would be an escalatory ladder. And that because the emotions on both sides, you'd end up just like in World War I, which started with a shooting in Sarajevo that ultimately people found in a few months that they were in a world war that they did not want and did not expect. And once you're in the war, you have to fight. So the concern with China would be roughly that we are codependent and we're not best friends. Being dependent is probably better than being completely independent. That is non dependent because it forces some level of understanding and communication.
- [55:06]
Scott Galloway
Eric Schmidt is a technologist, entrepreneur and philanthropist. In 2021 he founded the Special Competitive Studies Project, a nonprofit initiative to strengthen America's long term compet in AI and technology more broadly. Before that, Eric served as Google's Chief Executive Officer and Chairman and later as Executive chairman and Technical Advisor. He joins us from Boston. Eric, in addition to your intelligence, I get the sense your heart's in the right place and you're using your human and financial capital to try and make the world a better place. Really appreciate you and your work. Algebra of happiness I'm at this gathering called Summit and I've been struck by how many people are successful or at least the appearance of being successful as far as I know, the rich kids. But they do seem to be, I don't know, economically secure or over educated. Interesting. Some of them started sold businesses. But what I see is a lot of people searching and they'll say shit like well I'm just taking a year to really focus on improving my sleep. Okay, no, sleep is supposed to be part of your arsenal. It's not why you're fighting this war. You need good sleep. But I don't think you should take a year to focus on it. Anyways, does that sound boomer of me? But this notion of finding your purpose and what I have found is, and this is probably one of the accoutrements of a prosperous society is ask yourself, do you have the wrong amount of money? Do you have just the wrong amount of money? What do I mean by that? Obviously the worst amount of money is not enough. But a lot of my friends and a lot of people I think at this summit suffer from just Having the wrong amount of money. What do I mean by that? They have enough money so they don't have to do something right away, but they don't have enough money to retire or go into philanthropy or really pursue something creative and not make money. That's exactly the wrong amount of money. And I would say a good 50% of my friends who kind of hit a wall, got stuck, experienced their first failure, sit around and wait for the perfect thing and wake up one, two, three years later and really don't have a professional purpose or a professional source of gravity. And you know, the kind of basic stuff, right? Do something in the agency of others. Be in service to others. But more than anything, I think the call sign is just now, and that is don't let perfect be the enemy of good. And give yourself a certain amount of time to find something. And within that amount of time, when it elapses, take the best thing that you have. And it might not be the. It might not foot to the expectations that you have for yourself or be really exciting or dramatic or really lucrative, but the thing about working is it leads to other opportunities. And what I see is a lot of people who kind of are cast into the wilderness and then come out of the wilderness with no fucking skills. And that is, you'd be surprised how much your Rolodex and your skills atrophy. And so what is the key? Do you want to write a book? Do you want to start a podcast? Do you want to try and raise a fund? Do you want to start a company? Company. What is the key? What is the critical success factor? Is it finding the right people? Is it finding capital? Is it thinking through? Is it positioning the concept? Is it doing more research? No, the key is now you want to write a book, open your laptop and start writing, and it's going to be shit. But then when you go back and edit it, it'll be less shitty. And then if you find someone to help you review it and you find some people, it'll get dramatically even less shittier. All right, you want to start a business. Nobody knows. The only way you have a successful business is you start a bad one and you start iterating. But here's the key. Starting you want to be in a nonprofit. You want to start helping other people? We'll start with one person and see if in fact, your infrastructure, your skills, your expertise tangibly change the community, the environment, or their life. What is key to all of this? Three words. First, n, second, o. Third, W. I have so many people I run across who are searching not because they're not talented, not because there's not opportunity, but they're thinking they're going to find the perfect thing. No, find the best thing that is now and get started. This episode was produced by Jennifer Sanchez and Caroline Chagrin. Drew Burrows is our Technical Director. Thank you for listening to the Profg Pod from the Vox Media Podcast Network. We will catch you on Saturday for no Mercy, no Malice as read by George Hahn. And please follow our Profgie Markets pod wherever you get your pods for new episodes every Monday and Thursday. Food insecurity still affects millions of individuals around the globe, and Nestle, a global leader in nutrition, health and wellness, understands the importance of working together to create lasting change. Nestle's partnerships extend beyond just financial support. From building urban hoop houses to producing custom seasoning for food banks, Nestle and their partners actively engage with local communities, listening to their needs and working together to find innovative solutions. Nestle is committed to helping support thriving, resilient communities today and for generations to come. Together, we can help to build stronger, healthier communities. Learn more@nestle.com support for this podcast comes from Stripe. Stripe is a payments and billing platform supporting millions of businesses around the world, including companies like uber, BMW and DoorDash. 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