Is AI not nearly as powerful as some companies would lead us to
believe? We're recording this episode hot
on the heels of one of Andre Carpathi's AI State of the Union
interviews. I'm only sounding pessimistic
because when I go on my Twitter timeline, I see all this stuff
that makes no sense to me. It has us reflecting on the
vastly different takes people are having about AI.
On the one hand, you have the New York Times reporting that
America's biggest employer is moving towards complete
automation, while on the other, we're seeing AI failing to
impress. In today's episode, we want to
look deeper into the power behind the potential a bubble
we're seeing. But first, we'll be discussing a
recent article written by Madeline Renberger in which she
takes a deep dive into how Andreessen Horowitz are making
off like such bandits. We'll look into the results
they're expecting to end the year with and what moves they
made to get nearly $25 billion in gains since its founding.
This is the newcomer podcast. All right, Madeline, we've been
diving deep into Andreessen's numbers over the last couple of
weeks on Newcomer. And couple weeks ago we had a
big story with a lot of their kind of unrealized and realized
returns. But the question that came out
of that story was like, but really how much was distributed
back-to-back to partner, sorry, back to investors, which we now
have a much more clear read on after the story that you and
Eric did so. This is real venture nerddom.
You know they absolute well. How is Andreessen doing?
Yeah, you can see markups, but then, you know, we get feedback
from our readers like, but what's the actual cash?
How does they? Mean the real Yeah.
What's a reasonable thing to want to know more about?
I mean, this is always the question about venture, right?
Especially in an era where, you know, there's not a lot of IP OS
and you know, actual cash returns are like a big question
for all of these companies. So what do we, what do we got in
Andreessen? What did we, what did we learn
from your piece? Yeah.
So it's really a tale of where they made money kind of lands
into two buckets. There's all of the funds pre
2014. So their first few funds, those
have done incredibly well. And post 2014 crypto has done
incredibly well. And that's basically the story
of Andreessen's actual cash back to investors.
I would say, you know, the first fund was spectacular.
It has returned as this was of course, as of end of 2024.
But they had returned 6X on the investment to investors from
their first fund. That included their Skype exit,
a couple other, you know, really big deals.
But like it's that they really showed their money there.
Like that first fund out of the gate.
Super impressive, kind of set their reputation.
Always good. If you start a venture firm, you
want to, you want to come out of the gate strong, and they did
that. And you should subscribe to
newcomers. You can see the whole chart.
We have all the numbers. You can follow along.
And I think one thing I'm proud of in this story is that we got
sort of the Cambridge Associates benchmarking data.
So you not only see how Andreessen's doing, but at the
same time what was sort of the top quartile and top 5% DPI
distribute distributed to painting capital for venture.
And you know, in this first one, Madeline's talking about
Andreessen is 6X DPI at the time of this, you know, September
2024. And then top quartile is 2.37 X
and then top five percent is 3.98 X.
So by any measure that first fund that came out of the gate
strong. The second fund, they're in the
top quartile, but not the top 5%.
The third fund they're in both the top quartile and top 5%.
So that's that's the early days. Yeah, the early days, super
impressive and yeah, they're basically like in the one, I
won't go into direct averages, but like the very top of
performance. These first funds, which is what
you obviously want to see going forward.
Obviously the closer we get to the present, you're not going to
see as big of returns, right. But even their, you know, core
2016 fund which is almost 10 years old has a DPI of just .3.
So we've gone from 6X on the first fund to .3 where you
really should start seeing cash. So that one has really
underperformed. I mean, it's below the median,
so it's not even the top half of performance.
With and those funds are bigger. I think a key thing with the
Andreessen story is that they get more and more money, right?
It's like they do well in the beginning and then they're like,
screw, like the benchmark model and this small model of venture
capital, we're going to get huge and we're going to raise a bunch
of money. And so part of what you want to
know as somebody covering Andreessen Horowitz, the, you
know, the most prolific investor now in Silicon Valley, founded
in 2009, you know, run by Marc Andreessen and Ben Horowitz,
this epic venture capital firm. You want to know it's like, OK,
they did well in his small venture capital.
Are they going to do well as a huge sort of money manager?
And those funds are not performing.
You know, the 2016 fund is worse than what you're saying, even
the median, right? So that is, yeah, it's not doing
great, right. And then a lot of venture,
Andreessen or or otherwise hasn't really returned a lot of
money in, you know, the last nine years.
I don't. Know I was going to say even as
you to your point, as they've gotten bigger, they've expanded
into other verticals. And so they have these biotech
specific funds and obviously we're kind of in a biotech
winter right now, but those have really underperformed even just
the rest of the Andreessen portfolio, they're not doing
well. I feel like, you know, they're
capital halls that they've, you know, raised multiple bio funds,
but even the first one is just not doing as well as the rest of
these. But I will say the big asterisks
and the big saving grace for these later funds for Andreessen
is their crypto funds. The crypto funds, which began in
2018, have just done just so much better than all of these
other recent funds, and they show cash back to LP's faster
than the typical venture cycle. Flipping tokens, you get you
invest equity and the you know, the businesses, but then you
also get these tokens and you can sell them.
I will also in our first and recent story, which you should
also subscribe to the newsletter to read, we had they're making
this staking revenue, which I only half understand.
I'm sure some crypto die hard will listen to this and be like,
duh, staking. But you know, they're they have
money riding in these crypto projects and they they throw off
millions of dollars of cash as an investment firm, just, you
know, holding tokens and getting staking income.
So they're, yeah, they're making a lot on crypto and it's it's
been a boon for the firm. LP, though, how excited are you
to be like basically getting paid back via crypto like token
flipping? I guess like money is money and
if you're getting what you want back, you're fine to a degree,
But it doesn't seem like you're really fully indexed like across
the tech, you know, ecosystem the way you might want to be if
you're just getting like, you know, basically coin flipped.
You couldn't get more index than Andreessen Horowitz.
I don't know. I reading this.
You know, if I was an LP, would I deploy in Andreessen?
I wouldn't want them to bully me into bio.
I guess that would be. But yeah, I think you get a
broad coverage of venture capital and private technology
for a fund that has proven that they can get sort of top access
and has top performance. And then you just worry that
this, I think you have to make this sort of question is like
is, has the technology business gotten so much bigger to justify
these much larger funds? And like, that's still playing
out. And that's the question.
You know, firms like CO2 and Tiger Global, you know, they
raise enormous funds and sort of the pandemic, everything's
digital frenzy of 2021, late 2020.
And those funds haven't done very well.
And so it seemed like, oh, we didn't need all that money.
Andreessen has sort of kept kept sort of growing.
And so I think there's this question about sort of large
private investing. But I do think on a relative
basis, Andreessen has done pretty well.
Right. It's too early to.
I was going to say, yeah, I agree.
I think for the early funds, I certainly would have wanted to
invest in those funds. What the big asterisks in the
big test is that it's too soon to have any measurable DPI or
cash back from these post 2020 funds.
And that's when everything ballooned.
So to your point, these mega funds, you know, off of the
success of these early deals, they're raising more and more
capital and they've raised, you know, they closed like a multi
billion dollar crypto fund. This first crypto fund that
returned super well was in the hundreds of millions.
So the scale of can they replicate these impressive even
token flipping returns, you know, well is remains to be
seen. And does that mean you'd go buy
in now? I don't know.
But they are in every major tech deal.
They do have the access which is part of the buy in right?
And I, I do think there's value if I'm a limited partner to, you
know, getting visibility like data bricks becomes a key
company for Andreessen Horowitz. If I'm a limited partner in
Andreessen, they keep backing up the truck into data bricks.
Maybe one day I say, oh, I should, you know, if I'm a super
wealthy, you know, sovereign wealth fund or if I'm a
university, I say, oh, we'd like to jump in and do our own, you
know, investment following on. So, so you get visibility into
what's coming up. And then you can try, if you're
savvy to sort of jump into winners yourself with the Intel
you get. So they're non monetary reasons
to invest. But but yeah, I think, you know,
the days of Journal, I mean, Andreessen Horowitz comes on the
scene in 2009 really loud and says like, you know, tech is
much bigger, this whole world's going to get much bigger.
And there are a bunch of the reporter class that was worried
like bubble, bubble, bubble. And I think they were right.
Like 22,009 to 2016 was a great time to invest funds did well,
there is money to be made. And like a lot of the bubble
concerns were misguided. And so I think, yeah, looking
back on that period of worry on Twitter and, you know, just
among sort of the chattering classes and tech observers, I
think Andreessen was pretty right and the naysayers were
were wrong. I don't know, Tom, what it as
somebody who sort of watched the discourse, what's your?
Take on that. Give us the discourse, yeah.
Look, I, I think Andreessen, I think loud is the right word to
use, right? I mean, they came onto the scene
and and this was Marc Andreessen's software as eating
the world declaration, which did prove for a time to be
incredibly accurate. And sure, I mean, we talked in a
previous episode about some of their key investments that
worked out for them. There was Airbnb, a lot of the
partners, by the way, they were behind these big investments are
not there or the kind of not active with entries, which I
think is worth pointing out to me.
What's matters now, it's like we're talking about like you're
saying, funds that are over a decade old now.
So, so, and this just sort of is where my mind is going
constantly with all of these funds right now with AI is like
how strong is your portfolio within AI?
And if you look at, you know, the spectrum of their
investments that they have right now, correct me if I'm wrong
here, but the banner ones that I see from Andreessen right now is
they are an open AI. So they do have some, they do
have some, some equity there, whatever.
But they weren't like a core early.
They weren't like so right about opening AI and in fact their
crypto obsession blinded them a little I think to some of the AI
stuff like they pivoted loudly, but I think they there's a
little like, you know, we're decentralized and AI is
centralized and there so there's this if you're close, close
Swatcher, there is a little hesitation I think from the firm
before. They were late, but they've
bought up a pretty significant holding at this point.
They can make a strong case to their LP's that they have
exposure to to open AI. That should make them feel
pretty good. Right, and they're in, I think
they're big in XAI, they're huge thinking machines like, and
they're in, you know, a lot of, I think like Replit, they're in
Replit, you know, which is coding application type company
that will speak at Cerebral Valley.
But you know, they were in that, you know, several pivot or
several moods ago for, for the company.
So they, they have a, you know, portfolio of very recognizable
names that are in the Silicon Valley zeitgeist where you look
at, you know, some of these other firms, you know, if no,
no, I mean Sequoia. I'm, I'm more saying like
General Castle and Lightspeed, Like if you look through their
decks, which we have also published in Newcomer, the AI
names are a bit more random. And I think Andreessen's AI
investments are names that you would know partially because
Andreessen does a good job of making sure we hear them.
We do know that I actually think lightspeed is OK.
They're a little, there's a little bit of randomness with
them, but they're, you know, they're big in in they're an
anthropic. They they led some previous
rounds there so they can. And they're and they're like
their business. They're good at like real
business. So often it's like, Oh yeah, we
haven't heard of them because they're wonky going to make
money. Whereas the Andreessen companies
are a little bit more like in in the zeitgeist, I think.
Yeah. Lightspeed I think is in like
Glean and all other a couple of these other like enterprise
tools that are like doing quite well, yeah.
Actually, Eric, I'm interested in your thoughts here because
you have like a good kind of, you know, higher altitude view
of maybe where VC is trending. But do you think in some ways
Thrive has kind of taken the mantle of like the loudest, most
banner company oriented firm where it seems like they
basically go very heavily into things like open AI and in a
much more public way and probably more money than than
Andreessen has. They're in Stripe, obviously.
They've just done a good job of grabbing drives.
Crushies. I mean, I think like you, there
are in some ways like the benchmark of today.
They're not like Benchmark in that they have tons of money,
but like Benchmark in that they're small.
You get to work with the actual people.
There aren't a lot of like Andreessen is like who are all
these people? Like your names aren't on the
firm. Like I feel like Thrive is
small. You're working with somebody.
There's a sense that like you're working with the firm, like
you've got at it and like, you know, that, you know, Josh looms
super large there and Thrive has been able to pull in money from
everywhere. Yeah.
So and you know, I sort of teased them in one of the
newsletters that they were like the top tick investor of the
year. I forget what year that was, but
they've been, you know, I don't some random deals, but like
click house and there's just a lot of things where they were
saying, oh, this stuff is going up and AI has gone up.
You know, they they were bullish correctly.
And again, I think a lot of being in VC is being bullish,
you know, at the right time, you know?
They've also kind of taken the mantle of being like the string
pullers within tech, too. I mean, I don't know how much
you want to go into it on this episode.
And, you know, we've also been out.
We should tell our listeners that Eric's been gone for a
while on paternity leave. So what he knows about, you
know, anything happening right now is time he's taking away
from his new daughter. But you know, Thrive got this
very gauzy profile published in a magazine that I had, not
Colossus, which I I I don't really know exactly what it is.
Seems like some sort of a industry trade magazine that
publishes puff pieces on. It's very much in my media
entrepreneur radar. I mean, Patrick O'Shaughnessy
has a great podcast and he's built out a sort of media
company. Yeah.
The article is very glossy,
though. Yeah.
Yeah, and, and, and, you know, I, I encourage people to try to
read the whole thing because I couldn't do it.
But, you know, the fact that this was, you know, and, and
they, they're very difficult to to profile as, as a fund and,
and they're, you know, jobs. They're definitely precious.
They're very precious, yeah. They they don't give a lot of
media openings, if you will. Yeah, and but to be clear, I can
say this on the show, I like a lot of the people there and and
when I've talked to them, they're they're very friendly.
It's not like they're a mysterious cabal of people.
They just are pick and choosey about their publicity.
But they kind of by doing this Colossus profile, they sort of
did the Andreessen thing, you know, like going direct, like
they kind of actualized it. Like whereas Andreessen spent so
much time building up a media entity.
I understand that was something that they owned.
But all the attention and momentum has headed, like we
say, toward thrive right now. And they're also getting really
nice articles written about at least Josh and the fund.
And to me, it's like you, you see them owning the moment so
much better than almost any other fund right now.
And. I wonder where somebody
Andreessen, to me, still has done the best on media.
Like, I mean, they're a machine. They're huge.
They're sort of synonymous with technology and venture capital.
It'll, it'll be interesting. I mean, you know, they're Mark
and Ben are still very active. So they have that going for
them. They have a podcast, they're out
there. You said earlier, like some of
the people who've done the key and recent investments you were
talking about like Jeff Jordan with Airbnb.
But I think for the most part, a lot of them are there.
I mean, Chris Dixon is the crypto guy.
He did Coinbase. That was key like Ben did data
bricks. Like I don't know a lot.
Some of the key investments they are still around the hoop, but
But Dr. Andreessen yeah, they're both they're both strong.
I'm not I'm not I don't think this like Colossus profile of
Josh. It like moves the needle that
much. I don't know I I think it's good
like Colossus like I think it's cool that they like prioritize
writing and like people can be pro entrepreneur.
I think we're in this era where it's like all the journalistic
defensiveness about like a sort of captured media.
I don't know, it's everywhere. Yeah, we talked about that a lot
last week with Mike Solana. I, I guess the issue with
Colossus was more, less the profile itself, which like, you
know, your mileage may vary on how much you like that style of
writing, but it was more like the declaration that like you
don't need media anymore and you know, there was a.
But I just think there's a sense among some of the text set and I
think arena, which is another one of these publications.
They're like, oh, the great thing about magazine is it's
like it's glossy. It's like somebody's smart was
paid to write something and then your picture is there and that's
that's it. Like, you know, it's like the
text is like, well, well composed.
I don't I don't know. I feel like they miss the fact
that it's like that somebody truly independent, that somebody
is hard to persuade was persuaded that you're like cool
and good. That's that's to me what what
matters in a lot of these media, like marketing media sort of
entities. They they give you the Sheen.
They're like, oh, it's the good writing.
It's glossy, like you're great because somebody who's totally
captured and is destined to say positive things about you said
something positive. Like I, I just don't think
that's going to have people know who's like independent and whose
voice is like, oh, wow, you had, I mean, you know, that's
certainly what I'm trying to create here, which is like,
we're, we say what we think, we criticize people when we're
persuaded. You know, Andreessen and I,
we've thought about tons of stuff.
They freeze me out all the time. Like, but I went and we say, oh,
the performance looks pretty good.
Like the, the idea is that should carry some weight because
it's like, there's this whole history.
I have plenty of reasons just to needle them, you know what I
mean? Whereas when you're getting this
glowing profile from sort of an entity that's interested in
writing positive things about entrepreneurs and investors, how
much weight does that carry? Yeah, you're talking, I mean,
it's kind of style over substance, right?
Like the depth of where this is coming from.
It has all the trappings of, you know, a glowing magazine profile
with none of the actual gravitas behind that of, you know, the
solid reporting backing up the. Reputation and none of the oh,
this could have been a really negative piece and like they
were they like them, you know, you need a little bit of that.
It could have gone in different ways, right?
Right. Yeah, especially with, you know,
a successful firm or and a rich person who's married to a
supermodel. Like, you do kind of need to
overcome the inherent skepticism of a reader to make a better
case as to why you care about them.
If it's an audience that's already like, man, these guys
are great and look how great they are.
They they're telling me, I will say journalistically as someone
who covered, because one of the elements of the story of Thrive
was the role that Josh Kushner played in, you know, Sam
Altman's ouster from Open AI, exactly how much string pulling
he did to get him back on board. I had some qualms with the way
it was described and I understand everyone is the hero
of their own narrative and right, you know, even though
it's. Funny that it's the same moment
Jared Kushner is clearly trying to get tons of credit for this
Israel deal. Both the Kushner's are like
savvy and that Jared's getting in the New York Times in places.
But both are clearly like moments of crisis.
We're we're here. Yes, you could really trace the
Israel Gaza deal back to the time in which Josh Kushner
personally got Sam reinstalled back.
That's the head of opening the eye and you're like, well, I got
to top this somehow. What's what's on my list?
Oh, wait. Peace in the Middle East.
Yeah, yeah, TBD on that one, by the way.
But anyway, look, I, I by the way, the ratings apparently go
down on the podcast when we talk too much about media.
So I don't want to. I don't want to.
Dwell too much on this one. I did it.
I'm sorry. It's my fault.
We can't help ourselves. It's navel gazing.
But but Andreessen look, I think the AI story is is still is
still like everyone else is still to be told they have some,
you know, exposure to a lot of top companies.
I'm interested to see where the XAX AI1 in particular will go.
But you know they. Lost Igor Babushkin, who was
like one of their key executives.
We're having one of their Co founders speak at cerebral
valley on November 12th coming up so I'm we'll we'll be excited
to hear how things are going XAI on stage.
But yeah, it's a, it's a company that I, you know, I think people
had underestimated and I was like.
I did I say it? Big things are coming and they
they caught up, but then I feel like, you know, we need to see
like revenue and stuff like that come out of the company.
Yeah, anyway, we'd love to do more stories on other VC funds
returns, TVPI and DPI. Please keep sending them our way
and. Subscribe and you know our
readers and our listeners, you guys are in the business.
You know as much about this as we do.
Please send me you know well your commentary is anonymous.
You know, if you say off the record, I'll take it off the
record. Please send me your observations
on what what you think the return where you think the
returns are strong and weak would be eager to hear from you.
We're just, we're all at newcomer.co, Eric.
Yeah, we all have takes. You know, yeah, feel free to
weigh in. Speaking of takes, let's check
in on the state of hype within AI and where we're at in the
cycle right now. It's been an interesting couple
of weeks on that front. So we had Andre Carpathy
appearing on the Dwarkesh podcast giving his, you know,
fairly clear eyed. I wouldn't say skeptical or
negative takes, but it definitely got a lot of people
in the industry trying to either defend AI or claiming that they
knew all this whole time that it was overhyped and not quite it
was promised to be. It's an interesting piece also
in the New York Times about Amazon and their plans to
automate a lot of their back of house processes, which is of
course, you know, robotics, but but AI as well.
And then a lot of stuff going on with open AI.
And I mean, they're just a non-stop hype train over there
with. There's a browser claiming.
Have you tried any kind? Of browser they're they're
claiming that they're solving unsolvable math problems.
It's basically just, you know, Matt Damon and, and and goodwill
hunting, but. So isn't Matt Damon good at math
in goodwill hunting? Yeah, well, so was.
So was the claim of open AI people?
Yeah, No, I think it is. Well, I think the Karpati thing
kind of summed up his appearance on Dork Ash and his statements
and kind of everyone's, you know, having a take about them
from both the hype and the skepticism.
It's not going far enough. It's sort of like if you give a
nuanced state of play in the industry to someone, everyone is
going to have a problem with it depending on where they're
coming from. Because he basically was saying,
I think, you know, that based on his understanding at the
technological level, things are very impressive.
We still have a lot to go bullish on AI overall, but AGI
is not going to show up in 2027 like Dario and some other
founders of the other big AI labs have said.
And I think, you know, that level of nuance was certainly
optimistic. He wasn't pessimistic.
I think it was framed everywhere like he, you know, is shitting
on the future of AI and thinks it's all wrong.
But. When Andre Carpathy speaks, the
AI world listens. You know, this is the guy who
came up with the term vibe coding.
I think he's very intelligent and very sort of plain spoken
and direct. He's not someone who puts all
these sort of false linguistical complications into his speech.
He sort of says what he's thinking.
He's trying to speak directly. And so I think just his style of
communication, his obvious intelligence and how close he is
to the development of this technology, people take what he
has to say very seriously. And he's not.
You know, we have people like Dario and Anthropic who, you
know, I like he's spoken at Cerebral Valley.
There's a lot to like about Anthropic but has made Santa.
Roman politically too. I mean, he's like, yes.
Yes, exactly. He's fighting with David Sachs.
Everyone who fights with David Sachs, you know, enemy to my
enemy. But the but you know, he's made
some Dario has made some pretty grandiose predictions about the
rate of AI improvement that I think at this point are not
coming true at at that rate of improvement.
And Sam Altman, obviously at open AI, you know, sometimes
he's saying we're overvalued and sometimes, but he's always like
talks in such big terms that it feels like hypey.
Even when he's not being hypey, it feels like it's big.
We need trillions of dollars. You know, we need more money
that's been ever raised sort of thing.
And so I think, you know, this Carpathy interview had a little
bit more realism, which is a stance that, you know, we've,
we've taken in Cerebral Valley, which is just sort of like it's
clear if you really work with, you know, Chachi BT clawed the
models. There's a lot of capability
there that, you know, if it had a little more guardrails, if it
was handed to the consumer in a more prepackaged way.
It seems, you know, we've seen that with coding, with all these
coding applications, if if you do that work, you connect it to
data, there's a lot of value to be had there.
And so I think, you know, the Andre point of view was like,
there's still all this value to be had connecting with the
models can do right to, you know, all this technology and
all this data, but this sort of sense that they're gonna get so
much smarter. We're gonna have AGI tomorrow.
He was he was pushing back on. That I think the point that he
really landed on here was in regards to agents, right?
There's tons of venture capital hype around agents.
Agents are being pitched everywhere is the next big
thing. He basically said the industry
is kind of overshooting the tooling with its present
capability, which anyone who's kind of used these agents that
are like claiming to be travel agents and book everything and
do multi steps for you new already.
And so it's kind of refreshing to have this very serious voice
of technical leadership in AI speak to you honestly and say,
yes, the agents are not quite there.
That does not mean that AI is, sorry to the skeptics, all not
going to work and won't ever get there.
It's just the timelines we need to be a little more realistic on
and we need to explore different technical angles to make these
things work. And maybe we haven't figured
those out yet. Well, the rise of agents was
something super interesting to me when I was covering
enterprises, enterprise businesses at the Wall Street
Journal, because you basically saw the trajectory of AI go
from, you know, Chachi, BT comes out.
It's a consumer phenomenon. Microsoft built their own search
engine and then basically Copilot was the term at that
period. These were assistants that sit
alongside you and can make you more efficient and can make your
job that much easier to do or help you write e-mail, shit like
that. And then with no major, in my
opinion, technical breakthroughs between the Copilot era agents
just sort of appeared on the scene.
And suddenly these things that were like debatable as to how
good they really could work became even more essential and
autonomous in what they were supposed to do for you.
And the technology didn't seem like it took, you know, a major
leap. And so I was kind of scratching
my head this whole time seeing Microsoft specifically go from
like, oh, we have this copilot tool and everyone should pay
extra for Microsoft 365 so you can use their copilot too.
Oh yeah. Now you're supposed to use
agents where it does all the shit for you.
You know, obviously you want to show you that you're an AI
forward company because that you get a premium on your stock.
And so you have to make all kinds of statements when it
comes to utility of this shit. Like they were just starting to
figure out Co pilots and so now you're gonna start claiming
there's agents. I just updated my Apple
operating system, right? And if there's any company
that's trying to force this AI thing that doesn't seem to have
a view of what the actual value it drives, it's Apple, right?
It promised all these phones based on Apple intelligence and
they, they haven't really figured out what the value is.
And it's like, you know, they they mess with your contacts and
they say, oh, here's who we think.
But it's like, I had a nice favorite list.
It was organized how how is your like smaller, weirder version
better than like my nicely organized 1.
And so, yeah, IA lot of these companies have an incentive to,
to force an AI narrative. I mean, Tom, you just wrote
about Salesforce, which, you know, Marc Benioff has been like
agent force, agent force, agent force.
I mean, he's been the most sort of egregious in terms of just
having, you know, the name of his company AI.
You know, he's a, he's a sales guy, you know, he knows how to
try to associate, but that that sort of heavy-handed approach
hasn't resulted in a good stock performance.
No, certainly not because they're stuck in this position
where, you know, you see the rise of these agents or AI
companies. And it's like either someone
like a sales force is going to be able to, you know, leverage
off of that and be able to sell these tools to the customers.
Or there's going to be a whole new wave of tools built by not
sales force that are just going to replace all of SAS.
And you've seen there would be like a negative feeling about
SAS for like the last year or so because of that worry.
But the knock on sales force is that their agents don't work
right. It's just like you're selling a
product to people that have no real utility.
It gets stuff wrong all the time.
And, and I think that's what Carpathy was really trying to
get at in his comments was like, look, there is a world in which
agents have incredible impact on the economy and the way we do
work and, and jobs and and the labor grid and all of these
things, but we're not there yet. And if you're selling it to
people now with the claim that it's, you know, 11 tick away
from AGI and one tick away from being able to replace a huge
percentage of your workforce, you're bound to be disappointed.
It's going to fuck everything up.
And I, I don't know. You know what's interesting to
me with his comments is like how much of the hype around AI and
the amount of money that Sam is consistently able to raise or
stock jumps that he's able to generate through announcements
are built on the premise that AGI is just around the corner.
Like how much value is there in just a good utility for the next
5-10 years if AGI just doesn't exist on the timeline that
people like Dario have been claiming?
I. Know we still have some of those
Edzitron fanboys hanging around just being like, what is this
podcast I I still, you know, think the models themselves are
so valuable. I talked to Chachi PT all day
long like is it not like a key part of your lives?
Like I feel like it's extremely valuable on day-to-day questions
relative to like Google. I don't know, Yeah.
You guys don't agree or? No, I use it.
I use it quite a bit. I've used it for helping me
figure out like recipes and stuff.
And it's a much better search tool for a lot of things.
But it's not even search because it does generate for you what
you need, you know, and provide things for you.
And it helps me, you know, proofread and things like that.
I found it to be an incredibly useful tool.
But I guess I do agree too, I think Kaprathi was getting at,
which I think is where we land here is he, he was landing at
how these can be great assistance and tools and this is
an evolution and they are better.
But what the problem is is you want it to make fewer.
He actually wrote this in his post.
I want it to make fewer assumptions and ask, collaborate
with me when not sure about something.
I want to learn along the way and become a better programmer,
not just get served mountains of code that I'm told worse.
And I was like, that's kind of the through where we're kind of
digging out of right now. But.
But that doesn't mean at all that these aren't useful tools.
Right. What do you want?
What do you guys make about Dario and his claims 'cause he's
doesn't have an amazing track record right now of like
timelines of when stuff is going to happen.
And the thing that I keep thinking about was his claim, I
think a year ago that basically at this time now more than 50%
of code would be generated by AI.
And I don't know what the actual number is, but everyone was
dunking on that because we're clearly not even close to that
right now. And it reminds me of yeah, yeah,
and it reminds me of, you know, the, the, the self driving era
where there were also outlandish claims about the timeline it
would take for this technology to be St. ready and, and and and
they were way off. And I was super bearish about
that. To be clear, at the time I was
in Ubers in 2016, I was like, they're intervening all the
time. We are not about to be in Ubers
without. Well, Uber, Uber in particular
didn't have record audit like their tech was bad.
But that's when they had the acquisition was auto, yeah.
I mean, there was a period where Uber was really trying to assert
that it was going to be the leader in self driving.
And I think I mean, you know, and come at us at Zitron haters
or the haters that Edwardson brought to the podcast.
But like I, you know I. Think I'd like to say to them
they're they're shooting at us in the comments.
It's our fucking podcast. We can talk.
We're supposed to talk like whatever.
They just want to hand over the mic to somebody else.
Yeah, anyway, go on. Yeah.
Get your piece on Eric that's. Your back, yeah, they're still
comments on that episode. They.
Can shit on me as much as they well, we're just talking about
AI bullishness or not. I'm fine with the negative
comments. I love the comments that are
like, I can't believe they've left the comments open.
It's like, yeah, we can, we have thick enough skin that we can
take a little bit of criticism. What I don't get is that on my
on our own podcast, we're not supposed like, wait, just
because you know that guy and he's on our podcast, we're not
just like handing it over to him to just say whatever he wants
the whole time. I.
Don't know, I'd like to see the tail of the tape.
I like Ed and we've continued. We let him talk so much.
Yeah, he had a lot of time. He had like the time of
possession was strong for Ed in. That episode.
So I have no idea a new. Objection.
Like if you're having like a through line argument, you need
to hold some. It's like we're arguing about
this thing and then you make points around it.
He would just be like, oh what about energy, you know?
Ohh anyway, I'm still still having flashbacks, clearly.
Look, anyway, I'll, I'll bring these haters back here and
saying like, I think self driving cars are really
impressive. I think I I do pay a premium in
San Francisco if I can take a Waymo versus an Uber.
And a lot of the promises, yeah, the timelines are way off, but
the technology did pan out to be non economical.
There's all kinds of issues around like, you know, how much
it costs to run these things. But like it proved itself at a
different timeline than was initially predicted.
And I guess the question is with with AI, you know, is there a
timeline that does make sense that that someone like Carpathy
agrees with where we do reach AGI?
Or is this capability of, you know, these models were Tachi BT
is now, which does seem like it's leveled off quite a bit.
Is that enough to, you know, meet the, the hype of something?
You know, it may not be to the level of displacement, but like
there's a lot of utility. We're all seeing that in in
these tools. And like, where does evaluation,
you know, net out with that sort of thing?
And I don't think he has an answer to that, but that to me
is the question we should be asking in the next year or two.
Hysterical, though unlike self driving cars, our whole economy
seems staying on this question. Right self driving cars were
more of like on the side. These companies can do this.
This was a fad. And with this I do see.
It is. Right.
You know, kind of. Maybe you got a little annoyed
that it's like, oh man, these companies are getting profiles
that act like they're, you know, geniuses when it like they can't
do what they say they can do. But like now I think we're
underrating self driving cars. But the but the yeah, the AI
stuff right now, I mean, just Nvidia's the most valuable
company, you know, in the world. It's it so much of our economy
hangs on continued adoption of artificial.
And, and specifically CapEx spending on data center growth
and that's like I would say 80 to 90% the responsibility of Sam
and striking all these deals that are basically, you know,
deals upon deals of, of data centers to be built.
And so like, yeah, the point I guess you're making is like,
yeah, it does need to be more than where it's at now.
Like you're not going to be building all these data centers
because AGI won't exist like that is, well, we'd like to.
See another leap? You know, it's like, OK, Chachi
PD has been great coding's cool, but like, I feel like our minds
haven't been blown, you know, a little bit right?
I mean, we we get impatient. When's the next the video stuff
is mine the. Video I was gonna say sora was a
big leap for the new sora app it you can still which.
Is still number one on the App Store by the way I checked.
Is it OK? Interesting, yeah, I see.
I see the ones that make it over to TikTok but I I don't love
them like. Well, there was, I will say
this, this deep, this Sora video of like a a pastor, you know,
condemning billionaires went pretty viral over this week that
a lot of people fell for, including a lot of my.
Friends, yeah, I like they are getting reality.
Like I already hated the like I hate those.
The people love those like skits where it's like clearly these
are actors, but they get mad at it in the comments.
You know what I'm talking about where it's like, yeah, it's like
a husband and wife are fighting or something.
But like all the comments, it's like, you know, treat it as if
it was like real where they're like, this guy's a jerk or
whatever. You know, it's like, but these
are clearly actors. I feel like the sort sort of
thing is like the next evolution of it.
I just hate the media consumer that like buys into the fiction.
Like they don't, they don't care like if it's real or not.
They're like, oh, it feels real. And so I'll just react to the
character. Because it's like.
Wouldn't it be great if you. Know this is happening.
There's been a there's been a tick tock meme, I don't know if
you've seen it, of umm, putting various historical figures in
the NBA and talking about how like their career is sort of
ending. So it's like Queen Elizabeth and
like in Celtics jersey being like I'm just sort of old now
and like her like at the. Podium talking about.
Tiring. And then it cuts to it's really
fucking funny. I laugh every time like it's
there's one with Queen Elizabeth, Winston Churchill.
Who else has there been anyway? But so I watched them and I was
like trying to show Rosa them and she's like, this is stupid.
Stop showing this to me. But I and I feel kind of gross
after I watch them too. Like I laugh at it.
And then in the moment I was like, this truly is slop.
I mean, this is the lowest form of of entertainment.
And I understand these things will evolve over time in terms
of acceptance culturally. But as it stands now, like,
yeah, it does entertain me. I do laugh, but I don't feel
good about it. But but the dream is that this
is like some Tom specific video, like the dead.
They've figured out some sliver of human psychology, and for
some reason you think this odd thing is funny.
And then they can target us all and we get all these weird like
Freudian, like, oh, I like, you know, you, you have this weird,
I don't know, yeah, it's just funny to me that you, you find
it amusing. You haven't found many other
people who find it funny. It's like this is this is the
real dream of these AI generated videos that they can micro
target everybody and. Right.
And then? The panners to each of us.
And it's engineered to be addictive, which is why there's
like, you know, this existential fear in Hollywood over like, how
can we compete against this, right?
If it's all about a battle for attention, It's really hard to
say like original story versus thing that like is almost to the
precision of a casino in terms of how it.
What is your attention amazing about language models that they
haven't got enough credit for is that they were all built around
the truth. They were trying to be like, how
can we not hallucinate? How can we be as accurate as
possible? Unlike, you know, social
networks, which were built on engagement.
And it's like, we'll deliver whatever we can get you to stay
engaged. Obviously, AI is more and more
involved in that, but we'll use the fact that the content has
been created by humans as our excuse that we don't have to
worry about the accuracy of these humans created it, even if
we decided to distribute some of it and not others.
And now obviously, something like Sora, you're like, screw
it. Like let's just do something
based on engagement. And that, you know, that's a
dark path. Well, right.
And then the question is, and I talked to Varun Shetty, who's
the head of media partnerships and Open AI about this.
Like are we supposed to view something like Sora as an off
ramp as just sort of like some entertainment to the side while
you guys are pursuing your path towards AGI or is it critical
towards getting there? And his argument was the latter
is that like, actually you can gain a huge amount of
information about the real world through generating videos.
And I don't know the, the training process that it takes
to do that, which is controversial on its own.
And so that point it's like, we'll improve it.
Like you guys have made this viral Sora app that has gotten a
ton of people addicted to it still number one on the App
Store. Like right now Open AI has the
number one and #2 slots on the App Store.
Like you guys should really be getting towards AGI now, like
'cause this is all just an off ramp towards slop and
entertainment and replacing of social media at the very least.
That's disappointing to investors and, you know, society
at large. I'm sure it takes a huge amount
of GPUs to get this stuff done. But yeah, it's like, I think
they need to keep reminding people.
And I think it's good for people like Karpati to keep talking
about that is like, we know what the goal has to be.
Let's keep in mind what the you know what the timeline is and be
clear eyed about overhyping it. But like this is not about
creating slob. I, I wanted to talk about, you
know, the New York Times did this story on Amazon that
basically said, you know, Amazon is set on automating a bunch of
its workers. You know, Amazon, I think is the
second largest employer in the United States, a company that
really believes in robotics, already has many robots and
they're driving to have even more robots doing work and that
this is part of their grand strategy.
And obviously there are robots that are not built on language
models, but you know, the improvements with foundation
models and language models have improved computer vision and now
in some cases they're powering robots entirely.
And so we're seeing improvements in robots relate powered in some
cases by AI that could mean more automation.
I'm curious what reaction you guys had to that story.
I mean, this has sort of been a long time coming for Amazon.
Like they have been building up their workforce.
It's always been this kind of flex situation where they, like,
over hire during the pandemic, and then they had to lay a bunch
of people off and that caused a huge amount of turmoil there.
But there's no question that long term, this business wants
technology allowed, you know, robots to be able to put stuff
on and off shelves or whatever. That's where it was going to go.
So I was kind of surprised to see people mad about it.
I understand, like, yeah, people losing their jobs is an
upsetting prospect. But certainly given that it's,
you know, to your point, probably one of the largest
employers in the US, but at the I, I guess I agree with you,
Tom, I was kind of surprised to see people kind of freak out
about this story in that it seems like that's definitely was
the goal the whole time. I don't know it, it's as if it
was something new, you know, as if it was something new that
automation is where this was going.
It's just smarter automation, frankly, for.
A lot. I just hated how ominous the
story was. Like, I don't, yeah.
I mean, Amazon's going to try and do things as cost
effectively as possible. What?
What else?
Yeah, I mean, there, you know, and this one is more realistic
than, like, drone delivery or other things that, you know,
Amazon was more public about. But it's weird to see.
You know, I remember, like, height of the pandemic, everyone
was looking at the way that Amazon was hiring all these
people. And remember that movie Nomad
Land came out where you had Frances Mcdormand's character
working temporarily as like an Amazon, which was done with
partnership with Amazon. So it wasn't an anti Amazon
thing. But we were all kind of
wondering like, Oh my God, is like that going to be the new
blue collar job for everyone across the country?
And I, it's weird to see people looking at a job that previously
we thought was like beneath the dignity of most human beings.
And, you know, they're anti union.
And that really pissed off a lot of people.
The working conditions are really terrible.
People were like, you know all the expose about people peeing
in bottles to get the delivery quotas met, that kind of stuff.
A lot of outrage about the jobs before.
Yeah, and you know, Amazon did respond to that stuff and start
paying people more, you know, out of public pressure from
people from like Bernie Sanders. And remember AOC was
successfully got Amazon to not build HQ 2IN and around New
York, which kind of was an early win for her in the left wing
movement. So I, yeah, I don't know, like
this is just the direction of technology and has been for like
dozens of years. They've automated huge portions
of assembly lines in, in, in car manufacturing and stuff too.
I mean, this is not like skilled labor in most respects.
This is putting stuff in boxes. And I'd love there to be a world
where people that had those jobs had more intellectually
inspiring things to do or there's a Ubi that gets people
to do other things. I mean, that to me seems a more
reasonable conversation than worrying about, right?
Companies should automate boring, dumb stuff nobody wants
to do, and we should elect politicians who create a safety
net so that every American has healthcare and nobody starves.
But we shouldn't handicap Great American companies and say they
can't use current technology to, you know, get me my, I don't
know, battery packs here slightly faster or whatever.
I ordered from Amazon, you know, in the last last day or two.
Yeah, I don't know. And true leftists, I think,
understand that as well. I mean.
Do they, I don't know, I just feel like what annoys me about
this kind of story is the, you know, the haters from both
sides. The haters are like AI sucks and
AI is killing all the jobs. It's like, which is it?
That's that's what drives me crazy.
This sort of like just ominous people who feel like they're
driven by like ominous vibes and just like depressives reacting
to everything with that is their sort of lens and then find a way
to be negative about everything. That that's what drives me crazy
just socially and interpersonally.
I realize it's a small concern, but that's why these, I don't
know, the The New York Times story just had that sort of like
negative feel. It's like what?
Yeah. Yeah, I understand the concern
and fear about it. I mean, if we are talking, I
mean, there are cities that were basically destroyed economically
because of, I mean, globalization, but also the
automation of a lot of jobs Like Detroit, you know, in many ways
has not really recovered from many of these kind of third
party assembly line businesses, not, you know, meeting as many
people on the line as they used to.
And, you know, I, I don't think the job of a union should
primarily be to stop the progress of technology.
I'm seeing a lot of this happening in Hollywood too,
right, With AI. It's like, what role does a
union have to play when you start to see a potential job
displacing technology come about?
And really, your job is to protect the livelihoods of the
people who you know are affected by it.
But trying to stop something from existing just doesn't.
It doesn't fit with like the March of time.
There's just not great success stories of stopping technology
from existing so. I well the worst ones are these
attempts to stop like ports from automating moving like
containers around which is just insane.
Oh, like the dock workers unions and.
Yeah, yeah. Trying to block, you know, the
automation of ports, which in our entire economy rests on
moving these things in and out. Yeah, I feel like they should
also be looking more at like the types of entities that are
buying ports in America, which are like also fairly insane.
I mean, you have a huge amount of Middle Eastern money
essentially buying up and building new ports in the
country. It's the only people who are
investing in that sort of stuff. So I'd be more interested
following the money there rather than saying we need to protect
man. I don't want to get the dock
workers pissed off at us and get that.
Really. Comment section is full of
Steven. No.
People who the dock. Workers.
Finding our podcast No. I'm not a union diehard, I.
Know I'm the leftist on this podcast too.
Wait, I'm the former Union maiden, but.
Are you? Yeah.
Maiden was the title.
Was my nickname. No, no, I was involved in the
Business Insider union, but I feel like the attitude there has
always been, you know, much more just, I guess not wanting your
job completely automated. But it wasn't resistant to AI
coming into The Newsroom at all. It was just like, how do we use
this strategically? Do we use this to actually write
copy? That's kind of the line that we
land on, but you know, for brainstorming.
And I mean, I feel like as an editorial rule, you know, I
think it's kind of where it's landed in a lot of other news
companies to, you know, not having, you know, plug your
story into ChatGPT and just publish it, you know, not being
what's expected of you well. Within journalism to like the
types of jobs that an AI could do or would be doing or again,
not very good jobs. I mean, certainly copy editors,
yeah. I don't even think those people
were part of the BI union, but it's like.
They were but your article. Yeah, our human copywriter still
generally outperforms Chachi BT, but.
They chachi BT yeah is not quite as doesn't catch all the pieces
as as a. Copywriter also, it hasn't.
It's hard to teach it, obviously our house style and things like
that, but I'm sure that's solvable.
All right, anyway, that's our episode.
Thanks Eric for for dropping on in.
I think I don't know what are you going?
To be in for a. Couple more episodes or what's
the no? No, I'm back.
Well, we're next. We're going to I think Cerebral
Valley is going to take over the podcast.
Max Child and James Wilsterman will be back on.
We have, we love doing our draft of AI startups.
So if you thought this was, you know, somewhat pro AI, we're
about to take AI by the fire hose for the next couple
episodes. So that'll be a lot of fun.
I mean, we're, you know, we're going to be prepping for all
these interviews with the CEO's of top AI companies.
We have execs from Anthropic, XAI, Replit, Versal Speaking and
so. We're Co versal.
I'm sorry, I didn't know this is that.
Yeah, Guillermo is speaking. All right, Guillermo, we got
some questions for you. Interesting photo OPS that I'm
sure will come up at some point in the conversation.
She's. Just we, well, we have both
Amjad at Replit and Guillermo Versal speaking, but I think
we're and they've feuded a little on Twitter over
international politics, but that is not the theme of our
conference. We're talking about AI, but
yeah, they. I don't think they're.
On the same panel. No, no.
And I don't think we're putting them next to each other.
This isn't. This isn't Dario and David Sacks
showing up at the Benioff party last week.
Oh, how was that? Did they interact?
Nope, Nope. And Dario?
I overheard him. Here's a blind item for you.
Dario kind of muttering to, I believe his PR person.
Why am I here? Oh my God.
So we we love a good pairing here at here in tech, but
specifically at the the newcomer sub Repo Valley conference.
Yeah, so that'll be fun. And this comes out.
Oh yeah, this will come out this week.
I, I should have a post in, in the newsletter about my child.
I, I, I've sort of, you know, I, there's an Instagram post, you
know, they're, they're bread crumbs, but I will talk about
having a child and I've quietly been on paternity leave.
I appreciate you guys stewarding the podcast in my absence.
It feels you had some good episodes and I think we keep
learning and improving the show and we've been punching up
production and so excited to yeah, pick up from where you
guys left off and keep keep growing the audience and
improving the show. And we love your feedback.
We subscribe to the newsletter, follow along and definitely tell
us what's working. You know, we want we want
feedback. What do you like?
What don't you like? Send us an e-mail.
Alright, thanks everyone. See you next.
Week. Alright, thank you.
See you. Bye.
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