Podcast Summary: This Week in Startups – E2220

What’s REALLY going on with those “ads” in ChatGPT (Dec 9, 2025)

Host: Jason Calacanis
Guests: Alex Wilhelm, Lon Harris

Episode Overview

In this episode, Jason Calacanis and Alex Wilhelm dissect a viral controversy about a supposed ad in ChatGPT, examine OpenAI's missteps and competitive position, debate the inevitability of ads in AI, and reflect on the shifting landscape of tech, startups, and media. The conversation is energetic, full of candid insights into startup culture, product strategy, market share, and the realities of modern tech business models. Later, Lon Harris joins to break down major media mergers, antitrust drama, and offer streaming TV recommendations.

Key Discussion Points & Insights

1. The Viral “Ad” in ChatGPT: Misinterpretation or Marketing?

Timestamps: 00:00–05:26

• A screenshot showing a Target module within ChatGPT sparked rumors of OpenAI launching ads.
• Jason’s theory: It could be a Chrome extension or 3rd party app inserting ads, not OpenAI itself.
• Alex clarifies: The module was a result of an official OpenAI-Target partnership, allowing users to connect to Target within ChatGPT. OpenAI insists it wasn’t an ad, but more of a “connection tool.”

Memorable Quote:
"It's an ad. It's not a targeted ad. It's in house promotion. It's an in house ad."
— Jason Calacanis (04:16)

• OpenAI’s Nick Turley publicly addressed confusion and halted the feature to improve the model, emphasizing there are “no live tests for ads” (04:41).
• Jason suggests OpenAI lacks clear ownership over in-product promotions, leading to a messy user experience.

2. Startup Code Reds and Company Culture

Timestamps: 05:26–13:16

• Discussion shifts to OpenAI's internal “Code Red,” called to improve ChatGPT amid competitive pressure.
• Jason breaks down “Code Red” culture: Founders use it to test the team's commitment, create urgency, and identify who’s truly on board.
• Startup pressure: “You are essentially seeding some of your personal life to that role.” (12:50; Alex Wilhelm)
• Exception: Kids’ health and major family events are legitimate grounds for missing work, but yoga class is not.

Notable Quote:
“Are you in this like a Jedi? ...that no worldly possessions, relationships are more important than the mission of this company? …That is going to ring to a normal, well-adjusted person as insane.”
— Jason Calacanis (09:30)

3. OpenAI’s Future: Ads, Competition, and the “Netscape” Parallels

Timestamps: 13:16–19:59

• Market share erosion: ChatGPT’s dominance dropping from ~100% to 68% as Gemini, Grok, Claude, and others gain ground. Jason predicts OpenAI will fall below 50% market share by 2028.
• Revenue realities: Consumer subscriptions will decrease, advertising will fill the gap ("It's coming folks, and it's going to be awesome.").
• Competitive landscape: OpenAI now faces giants—Elon (Grok), Microsoft, Google/Sundar, Zuckerberg, and Anthropic.
• Netscape analogy: Michael Burry called OpenAI “the next Netscape, doomed and hemorrhaging cash.” Jason gives it a 10% chance of serious trouble but expects the pie to expand overall.

Notable Quote:
“They have the same mousetrap as everybody else. And everybody's mousetrap is getting 5% better every three months.”
— Jason Calacanis (05:26)

4. The Race to AI Monetization: When Will Ads Truly Arrive?

Timestamps: 19:59–25:03

• Jason and Alex review their ongoing bet about when real ads will appear in ChatGPT. Market sentiment says ads before end of 2025 are unlikely (market odds: just 4%).
• Key point: Whoever launches ads first will “take a bunch of heat,” but the subscription model will be hard to sustain as LLM competitors proliferate.
• Predicted Ad Format: “Interstitials” (ads shown during “deep research” tasks or loading times) expected to be the first wave.

Notable Quote:
“In this great game of chicken, we'll see what happens. …If you can get deep research for free, that's a win, win, win.”
— Jason Calacanis (23:06)

5. Media Mergers, Antitrust, and Trump’s Interventions

Timestamps: 25:28–38:49

• Jason, Alex, and Lon Harris break down major deals: Netflix’s acquisition of Warner Brothers (WB), Paramount’s competing bid, and political interference.
• Trump’s comments: POTUS indicates he may get involved in antitrust review, muddying regulatory waters (“I'll be involved in the decision.” – 27:32).
• Deal math: Paramount is offering more cash, but Netflix is seen as the healthier operator.
• Market evolution: Jason criticizes legacy media for rearranging “deck chairs on the Titanic” as minutes on YouTube and TikTok dwarf those on traditional platforms.

Notable Quote:
“This is a bunch of rich Nepo babies …buying the thing they love. That's what's happening here, folks.”
— Jason Calacanis (32:25)

6. Fixing Antitrust: Jason’s PreCheck-for-M&A Proposal

Timestamps: 34:05–38:49

• Jason pitches a system where for ~$25M, companies can “pre-vet” their deals for antitrust clearance with independent reports—like TSA PreCheck for M&A.
• Emphasis on reducing drama, favoritism, and increasing public trust.

Memorable Exchange:
“This is a great idea. This is like TSA PreCheck but for M&A deals.”
— Lon Harris (35:33)

7. The New Reality of Streaming Content

Timestamps: 46:27–53:14

• Lon and Jason discuss how Netflix programming shifted away from “prestige TV” to dominate with low-impact, background-friendly shows.
• Theory: Viewers are dual-screening (e.g., watching Netflix while playing chess or browsing TikTok), so programming is adapted accordingly.

Notable Quote:
“This is why so much Netflix content is that kind of is it cake? Slop.”
— Lon Harris (47:08)

8. The TV Recs & Media Metaphors Segment

Timestamps: 51:45–54:42

• Lon and Jason recommend "Pluribus" on Apple TV+ and debate whether it is a metaphor for AI, the singularity, socialism, or American individualism.
• They appreciate the show’s exploration of alienation, rugged individualism, and mass conformity.

9. Non-Traditional VC Fund Examples: The PR-to-VC Trend

Timestamps: 55:00–61:10

• Alex introduces Lulu, a comms pro starting a $40M venture fund ("storytelling is alpha"). Jason observes how PR, journalism, and comms specialists are increasingly moving into investing, leveraging narrative skills as a form of leverage.
• The hosts debate the merits and annoyances of PR as a startup/VC driver versus old-school technical diligence.

Notable Quotes (with timestamps and attribution)

• "If you want free ChatGPT …somebody's got to pay for it and it's going come from advertising."
  — Jason Calacanis (05:26)

• "The way founders use this [Code Red] is to shock the system, figure out who on the team is committed and who's not... It’s kind of a hardcore test implied in it."
  — Jason Calacanis (08:44)

• “OpenAI is the next Netscape, doomed and hemorrhaging cash. Microsoft is trying to keep it afloat …and sucking out the IP. Not wrong.”
  — Michael Burry, read by Alex Wilhelm (13:16)

• “Every time you insert ads into a product on a site like X or Reddit or Hacker News, our industry is going to over respond... It's coming folks, and it's going to be awesome.”
  — Jason Calacanis (05:26)

• “In a situation like that, they're gonna need to actually get ads on faster. If I was OpenAI, I would be working to get ads on there faster and have it ready to go.”
  — Jason Calacanis (05:26)

• "Are you in this like a Jedi? ...that no worldly possessions, relationships are more important than the mission of this company? ...that is going to ring to a normal, well-adjusted person as insane."
  — Jason Calacanis (09:30)

• "This is a bunch of rich Nepo babies… buying the thing they love… I mean, when I say Nepo babies, I mean people I'm extremely jealous of because I had to build this goddamn chip stack."
  — Jason Calacanis (32:21)

• “This is a great idea. This is like TSA PreCheck but for M&A deals.”
  — Lon Harris (35:33)

• “So much of their viewing is overseas. I think they don’t want to have to worry about individualizing that content for all these markets.”
  — Lon Harris (47:20)

Important Timestamps

• 00:00–05:26: ChatGPT ad investigation & OpenAI/Target partnership
• 05:26–13:16: Startup code reds, testing team commitment, and startup work-life tradeoffs
• 13:16–19:59: OpenAI’s market position, the Netscape analogy, competitive threats
• 19:59–25:03: Bets on ads in ChatGPT, ad market predictions, interstitial formats
• 25:28–38:49: Media deal breakdown: Netflix, WB, Paramount, antitrust concerns, Trump’s role
• 34:05–38:49: Jason’s idea: Pre-vetting M&A with independent reports
• 46:27–53:14: Streaming evolution: from prestige to background TV & tech’s impact on content
• 51:45–54:42: TV recommendations, "Pluribus" as an allegory for AI
• 55:00–61:10: PR people starting VC funds; the rise of narrative-driven investing

Flow, Tone, and Final Thoughts

The episode is candid, irreverent, and opinionated—a blend of Jason’s energetic, sometimes bombastic takes and Alex/Lon’s industry context. Major running themes include the inevitable march toward AI ad-supported models, the shifting sands of tech competition, and the blurring lines between storytelling, media, and capital.

Listeners get a no-holds-barred insider perspective on how Silicon Valley is interpreting AI business models, evolving startup culture, and the behind-the-scenes chess games reshaping both tech and traditional media.

(End of summary. Skipped ad reads and intros per instructions.)