This is David Shoemaker here with a very exciting announcement.
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I think listeners are this show know that I am fascinated by this new suite of generative AI.
These tools that allow us to create images or articles from word prompts.
Now I am fascinated by it, I’m spooked by it.
I’m confused by it, I’m excited by Ai and sometimes I’m purely scared of it.
I think that when we look at tools like chechi PT, we are seeing like the early embryonic signs.
Something that is really quite strange and extraordinary but one of the reasons is that I’ve been holding off on a longer conversation about this technology is that and I don’t really know how to put this like, I think I have trouble seeing the landscape of artificial intelligence if there are some topics, for example, we did an episode on Obesity medication a week ago.
There’s some topics where the landscape of questions seems relatively clear to me from the onset I go.
They’re these new weight loss pills that have become really popular really quickly.
Where did they come from?
What do they do biologically how well do they work?
What’s the upshot for the obese?
What’s the upshot for people who just want to lose weight which the downside for culture?
How will they change Healthcare?
How will they change society that the questions just like materialize so it automatically with AI I feel like I don’t even I know what I’m looking at sometimes I don’t even know what to compare it to.
I saw someone say that Chachi PT is like a calculator but for creativity a tool to amplify the speed of writing or idea generation and you know maybe that is perfect or maybe it’s totally wrong.
Like I feel like I’m looking at a modern art piece, not understanding it.
So I have four weeks been looking for a conversation to help ground.
Me to help me understand what I consider to of the big unknowns in this space.
Number one, what’s the best way to understand what this class, or technology?
Let’s call it generative.
A I could mean for the world and number two maybe even more concretely.
What’s the best way to understand?
How the biggest tech companies, Apple Google Microsoft are going to use this Tech to change the world.
Earlier this year the excellent Tech writer Ben Thompson.
No relation to me of these trajectory newsletter and podcast wrote this quote, these story of 2022 was the emergence of a I first with image generation models, including Dolly mid-journey and the open-source stable, diffusion and then chat GPT the first text generation model to break through in a major way.
It Clear to me that this is a new Epoch in technology and quote.
When I read these words, a few things come to mind.
One is the yes, this is someone who I think.
Seize the promise of a, I just the way I see it and that is thrilling to me, but also it’s like, what does that even mean?
What does it even mean?
There were entering a new Epoch Epoch epoc H that you say it, a new era of Technology.
What does that new era?
Even look like.
So I asked him to come on the show and to describe the landscape of AI as he sees it.
And the following is our conversation.
I really hope you enjoy it.
I think you’re in for a bit of a ride.
I’m Derek Thompson.
This is plain English.
Ben Thompson, welcome back to the show.
It’s good to be back.
I think I was last on when the news broke about Elon Musk, potentially buying Twitter, and that’s right.
A lot has happened since then, I think it’s fair to say yeah, Elon is had a decade in the last seven months since you were last on, in a recent article, this for this trajectory newsletter.
You said that a, I was The Story of the Year in 2022.
Why What’s something that’s been burbling under the surface like a lot of things intact.
It takes many sort of years for something to come to the surface.
I think it was around two thousand and Seventeen or eighteen.
There’s a group of Google researchers that published this paper.
Now that they’ve just gave me.
It’s something very clever I call.
You need is attention or something like that.
That that detail this new sort of capability called the Transformer that completely transformed the way that data was sort of process.
In in sort of, for machine learning models, in for AI.
And that, I mean, it’s difficult to overstate what a big shift that was.
So that’s actually the story.
But that’s a good example of something that happened.
Five years ago, didn’t emerge until 2022.
What happened in 2022?
I think was a series of things.
So, the first thing was from the public perception of AI, the first was the emergence of Dolly to again, a good example of why it takes a while for Up to emerge.
It wasn’t even.
The first version was the second version where you could make these incredible images.
And and this came from open a.i. and on one hand, it was amazing capability.
On the other hand, it’s sort of fed into the sort of conventional wisdom around AI, which is that it was going to be centralized is going to be these entities that had a ton of power compute, power, and data processing ability, that would sort of dominate.
Then over the summer came mid-journey, which was a start-up and Unfunded startup itself funded and they had arguably even better or different.
Very compelling sort of image generation, run via Discord and then the big bombshell in the image generation space was stable, diffusion, which was open source and it could run on a single GPU on your own computer and that was a really big deal because it opened up the possibility that this AI capability is maybe going to be more distributed than we thought, which changes all sorts of things.
Like what the competitive landscape?
Look like, you know what, you know, where is this going to be a centralized thing is going to be much more of a commodity.
So that’s the image generation space and the thing with images is images are, you know, an image is worth a thousand words which we’ll get to in a moment.
That’s actually a very important Insight, but images are so evocative and you can sort of see that and realize that this was a big deal.
The biggest release of although was, you know, chat GPT which I’m sure you know all your wishes.
I’m sure are familiar with and again Check GPT is underneath the surface built on GPT three and it’s an evolved version of it.
They called GPT 3.5, but G PT. 3 came out in 2020.
And at that time if you were sort of plugged in it was pretty mind-blowing what it could generate but check GPT productized that it did you use this method called you know reinforcement learning with human feedback.
We’re basically humans were in the whoop, really guiding it towards the not just controlling Only what it did or did not say which is obviously a controversial topic but also how it said right?
Really shaping it.
So it give you high school quality essay answers, you know, you a lot of gpg answers, you have a topic sentence, you have supporting Point ones for display, 2032 concluding sentence, right?
And people start, it’s easy to sort of mock that but you realize there’s a reason we teach people to do that for a reason, right?
And it’s an effective way to communicate.
It gets the point across and it was in this super easy to access chat interface.
Is that really woke people up and I think the reason why 2002 is the year of AI, is because it was a wake-up publicly about what was coming, even if that stuff that was coming, had actually been sort of burbling for a while and there’s lots of interesting takeaways there about you know where this can be done the importance of products.
You know the thing about about the language models is they are more complicated.
You can’t really run them locally to the to the extent or You can G PT 3, I think like Chachi PT.
Like one question runs across like 16 gpus as opposed to one and part of that is the thousand words.
Sort of thing Glenwood is more complex.
It’s harder to sort of get it, right?
And so that is still fairly centralized.
But anyhow, I’m diving into like, 47 details.
In one answer, it was the emergence of this, in the popular Consciousness in the realization.
That this is a lot closer than people realize that made it such a momentous year.
You had a great menu there and we’re going to dive into some of Of those appetizers and entrees and just a second.
I want to begin by saying, you know, I have friends who aren’t as interested, or aren’t as deep and attack as I am and one of their questions to me about AI is often, how is this not just crypto again?
How is this not just a metaphor ass?
And when they say that, what they’re saying is, how can you ensure?
How can you promise me?
This isn’t something that people are really excited about for like 3 months in early 2023 but like nine months from now.
It’s not going to be a thing at all.
What do you say in response to that?
It’s just a lot of hype case.
Well, I think the most damning thing for crypto is the fact that it has been around for 15, 16 years and there has yet to be a single demo or use case.
That’s as compelling as any of the ones that came out last year for AI.
And so, there is an extent where machine learning is obviously been a thing for a long time Transformers, as I noted have been around for four five or six years, but it is Meaningful that the use cases that we have already seen the demos.
We’ve already seen like the quality of a demo in the degree to which it grabs people’s attention is, I think of meaningful signal.
And the reality is, is that chap G PT is more compelling than basically.
Anything crypto has developed in 16 or 17 years and a lot of the crypto sort of Use cases are compelling to the extent.
They are in the back end and hidden from users.
And, you know, and even then there’s not really many.
Wait, just just to jump it right there.
This might be too glib or a too glib gloss on the point you’re making.
But one thing that I said to a friend is crypto was a big pool of money looking for a compelling, use case and chat GPT is a compelling.
Use case looking for a big pool of money.
There’s no commercialization yet for Chachi PT, we don’t know what kind of business is going to be built around it.
But to your point, the demo is already more compelling to more people in a use case Beyond gambling on assets.
And hoping that they go up then as you then crypto could have produced or has produced I think in the last 15 years, this is not a prediction that crypto will never produce anything in the next 15 years.
But on in the use case race it seems to me that AI is already ahead.
Yeah I think you make a good observation which is that the money aspect has a warping effect You know, I think the and I think it’s been bad for crypto.
I mean what makes at a fundamental level, what makes crypto compelling for, you know, from a theoretical perspective, is that what in digital?
Everything is infinitely copied copyable, right?
And you infant reproducible, and a lot of the economic value of digital flows from that point and you have zero marginal cost production and duplication of content and that has all sorts of implications.
Like guys, it’s kind of like the core insiders trajectory Like what’s the implication of zero marginal cost content or zero marginal cost information and applying that to company after company and Industry after industry?
And what makes crypto potentially compelling is crypto?
Enforces scarcity in the digital space so you can have a lot of the benefits of digital easy to transfer stuff.
Easy to move stuff around but you can guarantee there’s only one of something and that is theoretically compelling.
It’s sort of like what could be done with this but by extension And that’s a very small sort of add on to the vast majority of digital which is and will always be infinitely duplicable and it’s like where some unique cases.
Now, if you want something to be scarce an obvious sort of manifestation of that is money, like money is valuable because it’s scarce, but the problem is, you had all this investment, all this attention that was basically naked self-interest and like, how can I get rich as soon as possible and there wasn’t nearly enough or much investment in.
What, how can I add on this?
Little sprinkle of scarcity to a generally digital product, which I still think is something that is interesting.
Like, what can you have?
Can you have like a entitlements that you can carry across from service to service, right?
Where and you can verify, who you are in a way that’s independent from any company that could go out of business or change it, or you can have different things like there.
There, there’s theoretical use cases.
But again, we’re in, I keep saying theory for a reason because we haven’t seen the Actual manifestation of these whereas to your point, AI is the exact opposite.
It’s the, you know, if you want to get to the scarcity, abundant sort of thing.
The long-term output of AI is massive, abundance of all sorts of information because it’s generated by a computer, it’s not generated by human.
So it’s kind of in the exact opposite direction from crypto.
In that regard, I’m gonna steal that as / also reference you, but the idea.
Yes, that AI is the ultimate expression of abundance and crypto is the ultimate expression of scarcity is a really nice way to distinguish these two technological movements.
I said this other contexts and I’m sorry if I’m repeating myself for this audience, but when I look, everybody dies, people don’t care what you say as much as you do.
It’s really funny.
I want to apologize, I rescind the apology but I look at the genitive AI tools that are producing synthetic content based on prompts.
And that is like in a very abstract way the most boring way I can summarize, what’s actually Happening Here with this AI tools.
When I look at this technology, I think we don’t even know what this is going to become.
This is like seeing a tadpole in a uterus and try to predict if it’s going to be a frog or a human or a woolly mammoth.
You don’t know.
It could be any of those things at.
Like the biggest breakthroughs might not be on our radar at all, and not Friedman, the writer and VC made this point.
When he was talking to you about a program called, I think riff Fusion, which generates music from It prompts users using visual sonograms.
You can be like in a right Mia 90s, alt rock, jam and C minor and it will do that.
It won’t be very good, but it will do that.
And this car than you think.
Yeah, I just used it.
Some of them are incredibly.
I think, like, emotional synth, was actually quite good and I will try to give it a more conservative is like, the entry of computers to music.
So that makes sense.
That, that that’s where it would do better.
Yeah, I try to give it something acoustic and it was not very good at all, but this comment that you can generate music from text that.
Uses visual sonograms inspired you to write this and I want yours to respond to it quote right now.
Text is the universal interface because text has been the foundation of information transfer since the invention of writing humans, though are visual creatures and the availability of AI for both the creation and interpretation of images could fundamentally transform what it means to convey information in ways that are impossible to predict.
And quote, then what did you mean by that?
Well, I think the conventional wisdom and rightly, so is that these large language models like GPT are more important economically.
And, you know, then the image models, right?
I mean, images, images are great, our art is important, all those sorts of things.
But at the end of the day, everything about our economy, in the way, we work runs on text, and it’s not just that it goes.
Back to the written word, but also the foundation of computers are text, right?
Well, you know, in like you code in text and Did yo and text was first on the internet.
I, you know the reason they’re especially earlier is trajectory, I would write a lot about what happened in newspapers was happening to to that space because they were the first online because they were text and you go back to the road as the internet and there is very well bandwidth and hard to transfer stuff.
Like I remember, you know, being in college and we were transferring music files via FTP and it took forever because they were so large right in the Napster comes along.
It’s all my God, I could get all this Museum, still took forever and you know, I and then movies.
No, no way, right?
And so text was very, very early and and so text is easily transferable.
It’s easily storable, it’s easily and a lot of the time we spend in schools for kids is really about getting them to be able to understand interpret and generate text.
Because that’s sort of the core of core of communication now because of that, anything text Waited is going to be more important, right?
And the and so given that you start from the premise of analyzing, what’s going to be the impact on the ecosystem?
You start with the assumption that Texas most important.
Well, then you get to things like, well, tax actually takes a lot more resources than image generation does, and it’s like, well, okay, that’s going to be more centralized players is going to be more important XYZ Etc, but that is a sort of sustaining Innovation.
It’s like we’re just doing X, but we’re doing it better.
And the Assumption there is that, the existing players will benefit from a sustaining Innovation, but it’s interesting to back up and say, what could be a truly paradigmatic fit shift here.
I’m not sure if I said that word, right?
But Cliff I think you know I think it’s gushing.
Have you paradigmatic?
Is that how you say it?
Maybe I suffer from the writer Affliction of.
I know a lot more to say, but um we’re what happened, like things that are meaningful.
There’s usually a V1 that Just sort of does what came before in a different way and sometimes in a better way, sometimes in a worse way that there’s a V2 that transforms the way things actually work.
So you go back to advertising online in newspapers, you would have text.
And next to that text, you would have an out because that’s, we were limited by the capability of a printing press, which had to like, put that page down one at a time.
And so you get to the web.
And how did advertising work?
You’d have taxed.
And next to it, you would have an ad and Those ads did work as well.
There is a lot of talk about print dollars in digital dimes.
And when advertising took off in a meaningful way, you know, Google is obviously one of them was Facebook.
What in Facebook do they invented the feed and the feed is something that’s fundamentally, the printing presses incapable of you can’t generate on-demand on an ongoing basis, an individualized, publication for every single reader.
That’s what Facebook does.
Facebook is an unbelievable.
If you think about it, where billions, People are going out to the site and every single person is seeing something different and it’s completely customized to you.
And it’s infinite till you just keep scrolling and you get a picture of your nephew and you get a story from the New York Times.
And, you know, they all this stuff has interesting bits about the commodity, the commodification of sort of content, but one of those bits of content could be an ad and that ad, you think about it.
Now, instead of an ad off to the side, you’re scrolling your phone and even if it’s just for a split second, the entire screen of your phone is taken up by an ad and it’s very compelling in from a sort of business perspective and and it makes a whole bunch of money, but the point is the the effectiveness had to come from transforming what you were doing in a way, that was only possible to medium.
That was sort of in place.
So you need this transformational change.
Now you back up, that’s relatively small Stakes compared to what we’re talking about with a i The again, the conventional wisdom and the best bet is that AI does.
All our texts routed jobs and everything, sort of better than we do.
But it is very interesting to think about the fact that text is to some extent unnatural for humans, like humans.
As I said in that, that blurb are visual creatures.
We communicate images before we had text, we had here, ugh, laughs.
And we had drawings, you know, on the walls of caveman, or whatever might be right.
Like that’s that’s How we process information again I go back to that a picture’s worth a thousand words like that has all sorts of manifestations if you think about it and what makes the image generation space really interesting.
It’s a lot of people are pretty dismissive of.
It’s like okay that’s fine.
I’ll kill stock photos or whatever but but if you think about it, if anyone can generate images and sort of generate them on the Fly and you could imagine this is like the long-term metaverse play where you’re in a metaverse.
It’s generated On Demand on on the fly, like a Facebook feed, its customized to you and something completely unique.
That’s a that’s pretty compelling.
That’s, that’s pretty interesting.
And what if we can start to communicate and our means of interaction and information, transfer transfer back away from text back to something that’s more sort of human-oriented, guess what?
Every single entity that’s predicated on taxes in trouble then, right?
Because they’re not going to completely shift.
The work that’s going to be the opportunity for completely new companies, completely new, sort of things.
But we’re a long ways away from that.
There is so much there and I’m it might take me a few days to just chew over all the implications.
But let me, let me ask one little follow-up question before we move on to open a.
I and some of the big tech companies.
I just read this essay about the invention of the alphabet and how the invention of the alphabet changed.
The course of human civilization, and the other that allowed individuals to communicate with each other.
Other via text, it accelerated textual literacy.
But one thing we don’t have similar Literacy for is the ability to produce incredibly complex images for each other.
It’s actually, I have no idea how to create an incredibly complex image for like a friend.
A wait, I’m not an illustrator.
That’s actually a very rare skill to be able to do that.
If to work for video game company, you have to take a long time to become an illustrator, if ordinary people become like literate in the 32 create using Ai and stable, the fusion sort of these on-demand images.
We you’re saying, we don’t necessarily know how that’s going to change communication social media entertainment.
You might open up entire new Vistas and the way that we talk to each other, the way that we you do text each other, the kind of media that you consume on our down time when we’re living in this kind of cornucopia of generative AI 3D image creation.
That is at the fingertips of everybody is that Kind of what you’re saying.
That’s exactly it.
And I’m not making any Grand predictions winner if this will happen or what it will mean.
Because to your point it’s kind of impossible to know right now you’re just saying it’s weird, right?
Its larval and it’s weird it’s the tadpole in the belly.
You don’t know what it’s going to be.
I think when you think about it, you know, right now if you want to generate a great image, you need to like there’s a whole like category.
Now, prompt engineering, right?
How do you put in the exact right words to get what you want?
But that, you know, I suspect it’s a somewhat temporary.
A nominal and not just that, but you’re going to be able to do it by voice.
So, you could generate these images by speaking them into existence, because, you know, that’s actually a fairly trivial problem that that a lot of companies are mostly already solved.
And and, and so, you can communicate and speak an image into existence without even needing to interact with text at all.
Just goes from your voice to images on a screen or in a metaverse or whatever it might be.
Right, there was a tree that I saw at the said the most important programming language the future is going to the English that rather than have to become better than understand, you know, python or C++.
You just just tell the computer.
This is, this is generally the kind of software that I want to exist and then you can create and edit and optimize and do all this stuff just with the prompting of your voice.
That’s on the text side and not simply the image creation side, but the other 32 kind of wondering if you’re gonna be able to speak images into existence, right?
Like you’re not going to need to type.
I mean, that all the pieces To do that are there right now.
It’s just a matter of putting them together in a way that works well, and, you know, the other thing that’s important with all this stuff, this is always the case in Tech, and it makes predictions both interesting and difficult to a certain extent is that whatever products you see today, are the state-of-the-art.
Now they’re not there.
They’re they’re going to be progressing rapidly and they progress on multiple angles.
They progress on a sort of the underlying text.
Sort of perspective, they progress on the user interface perspective and how you interact with it and they progress from the underlying compute perspective.
As as compute continues to get better and faster.
And we have more access to two powerful computers.
And so the death, why you have to look for?
What’s the trend line, right?
And so if you can, so the trend line is absolutely.
I say something in an images of image appears, like all those things are technically possible today.
It’s not good enough to be a product, but that is not at all.
All a limitation because those problems will be solved.
You mentioned chat, GPT you mentioned, Dolly to, we should talk about the company that released both of these programs, that being open a.i.
What’s the most important thing that people should know about?
Open Ai, and what they and Sam Altman their CEOs trying to accomplish Let me open it.
I is a interesting creature.
I think to say the least open the eye on another one of whose co-founders is Elon Musk, by the way, who did leave the company a couple years after it started.
But it’s kind of funny because they’re sort of founding thesis and I’m simplifying somewhat but it was basically artificial general intelligence is a big risk to humanity so we need to invent it so that we can make sure it’s not used poorly, which is um, you know, If we happen to make a whole ton of money along the way, they know then that that’s great.
We were like we’re we need to be in charge because we’ll make sure it’s used correctly, which is a little sort of probably a feels like a bit of a self-serving sort of explanation.
But there is some you know, they it was founded as a non profits because you know like actually this is we believe this and so we’re going to actually put it in the formation of our company and then what happened was they realized that to accomplish this They’re going to need a whole bunch of money.
Because this compute is still very, very expensive.
And so they changed from being a non-profit to a capped profit company, which is investors, would get the 100x that are up to 100 x, their return.
And then past that point, the money would revert.
And this is sort of like dribble down Downstream.
They actually started out running their compute on Google’s Cloud then Microsoft invested and you know as part of that investment moved their compute to To Azure and basically the and there’s a new deal this week, it basically the long and short of it is open a.i., I think the way to understand their goals and approach it.
Again, this is me looking in from the outside.
So, so I might have, you know, not be quite right.
But is they do believe it is possible to have an artificial general intelligence.
That is sort of self, directing and can solve world problems, and can make great scientific breakthroughs.
And, you know, like all the sorts of things that You know, if we have a truly sort of intelligent Computing, entity could, potentially do all these good things and of course could do lots of bad things, right?
If that happens, the value is going to be astronomical like why trillions and trillions of dollars.
And to get there is going to be very very expensive.
And so the deal they’ve basically cut with Microsoft is in, this is simplifying dramatically.
But Microsoft gives them the compute they need and Mike Her soft basically, one gets all the profits up to like, 100 billion dollars or something like that.
I did a not quite right.
But by and large and Microsoft gets to incorporate all these sort of capabilities along the way into their products.
And so you see that Microsoft is going to be building GPT into like word, right?
So you can just generate your essay right there in word, using the sort of capability.
They’re incorporating to Bing so you can like like get a different sort of search experience with with artificial.
Utilities which go we can get a little bit.
But, but and then also, you can access the opening.
I capabilities via API on Azure and so if you run your stuff on Azure, you have access to the sort of thing, and they’re sort of bat is look, we’re not actually interested in a quote-unquote, small result, we’re a small result would, as a standalone company be worth, you know, would change the big 52, the big six, we are going for the ultimate goal and so we’re going to sacrifice all the intermediate Al’s and basically give them to Microsoft because if we can get to the Finish Line, we’re going to be worth more than anyone else combined.
And, and by the way, once you get that big, the money then goes back to the nonprofit like event that structure is sort of still in there.
It’s definitely kind of weird but that, but that’s that, that is sort of open the eye there, they’re shooting for this ultimate goal and they found a partner in Microsoft that will fund that and they’ll give away all the intermediate benefits to Microsoft in the Along the way, how catastrophic do you think this deal is for alphabet?
Do you think it exposes their inability to ship certain AI products or do you think in the medium term?
You might see it as being a galvanized ER that gets Google to use there.
As far as I can tell.
Frankly brilliant a I researched able to accelerate the development of their own wondrous products.
Yeah it will to be I mean Google is generally been thought to be ahead in this.
This space by and large and Google will tell you that it’s like, oh, our image generation is better than those guys are text generation is better than them but that it’s like, well, it’d be nice if we could see that Google and and the reality is they do and have been shipping AI stuff, but it’s been in their products particularly search.
And the reason we know this is not just because Google said that but you can actually Trace Google’s costs of goods.
Sold basically like how much they’re spending on compute relative to to the revenue.
Has been increasing for in particular, the last five to six years.
And that’s not the payments made to Apple, that’s somewhere else on their sort of income statement.
This is the actual cost of the computers the running to to provide their services is going up.
And it’s like why would that be happening?
Generally, you would think also be going down and it’s going up faster than revenue.
And the reason the likely reason and the one that makes sense with both what they’re saying, what’s happening attack is, they are like a, i compute is more expensive, you have to like, you have To run these gpus.
You have to do a lot more compute and and so they are spending more relative to what they’re delivering and they say that’s for AI.
And that makes total sense.
And so the Assumption should be that they actually are doing a lot in this space.
It is showing up in their products is just showing up in their product sort of as they as they exist and a lesson, I’ve learned over the years as someone who was hilariously wrong about Google, you know, early and or In the mid sort of Mobile area, remind me.
We, how are you hilariously wrong about Google?
Oh, I thought that, you know, they’d sort of peaked and sort of importance and relevance and their profit is like tedx its Dynamic incredibly dumb take, but the real what I got wrong is, you know, just the power and importance of distribution in ownership and, you know, and that influence my way to writing, right?
And sort of talk about things like aeration Theory, and if you control demand, it gives you all the leverage in the marketplace and things like that.
And Google, you know, with Android and growing.
You know, search on mobile was a Huge talent to them.
And, you know, the way I think about it is I was totally wrong but the best way to be right in the long run is to admit what you got wrong and try to learn from it.
So I hopefully I accomplish that sort of in this case but it does make me gun-shy here because so the fuck the problem facing Google with things like what like a cheap beauty is and this is the where companies get in trouble.
It’s not a technical issue.
We it’s totally, I think we should assume that Google stuff is better.
They have more resources, they’ve been If you don’t wander, I mean they invented the technology for, you know, for goodness sake, the problem is a business model problem and that’s where companies do get in trouble.
The way Google makes the vast majority of their money is when you do a search, they’re running an auction for All Those ads on the page and who wins it auction?
Well, you know, the traditional auctions, whoever pays the most and that was, how web advertising used to work, right?
I pay for these number of professions XYZ.
What made Google.
So brilliant was they didn’t pay just for showing ads.
You could show all the ads you wanted to for free, you paid Google when someone clicked on that ad.
And so you and that would make you more willing to pay because you’re only paying for Success.
You’re actually getting a customer or a potential customer, I should say.
And so in the case of a Google auction, the winner is decided by the user.
The user is displayed about your search results and a bunch of ads and they Pick the winner by clicking on it.
And when that and when they quick then the that’s when The Advertiser sort of sort of pays Google Now, there’s lots of games that are played at this right Googles ads have become increasingly indistinguishable from results either so many ads particularly on mobile that companies who we are the first result feel the need to buy an ad so that they’re still quick through or sometimes.
I’ll search for Levi jeans in the first thing that will come up is an advertisement for Levi’s which of course I’ll click on but like I wanted to click on Levi anyway, right Google because I Gene so so there’s a little bit of a cheating there.
But before Surfers are a lot of it’ll be a lot of the revenue is like that do we do be totally honest this is the case for all search results at the same thing like App Store ads, right?
Apple makes a bunch of money on App Store ads that are search results.
That is what you would have found any way, but you’re going to click what’s top of the list and Did you sort of that’s search advertising I think is very compelling from a business perspective and a little less compelling from a benefit to society and be totally honest with Google though, the problem with a chat interface that sort of works.
Well, is there is no room for that auction to happen, right?
The whole idea is it’s giving you an answer.
It’s not presenting sort of a list of options.
And yes, theoretically, you could put the old kind of advertising where you slapping out in there.
But the entire point of Google and the Facebook feed and things along those lines is having something that fits in the context that It is unique to you and compelling is dramatically more valuable than just throwing it out in there.
And, you know, from an Advertiser perspective, someone clicking on your ad, is worth more than, than the because now, they’re in your website and you can get them to sign up, you get their email address, you start remarketing to them, right?
So that initial Google Quick is more valuable than just sort of a generic add that might prompt a transaction but you don’t know who the customer is and and that that that’s the big challenge for Google is They still make the majority of their money.
Their most profitable business is search the fundamental way that search monetizing works feels incompatible with these sort of chat interfaces, where it just gives you the answer.
That’s one of the first things that I experienced when I was using chat CPT and thinking about the way that it lived alongside Google or might theoretically provide a challenge to Google.
It’s, it was the same language I thought of you have search engines which give you links.
And then, there are answer engines that give You answers paragraphs, sometimes even essays.
And yes, the answer can be bullshit on, Chad CPT, but the truth is that sometimes, the search results are bullshit to righty bullshit can sometimes just be an intrinsic ingredient in the digital experience, but I’ve never thought of it quite like this that if, if you, if you provide an answer, you cannot introduce links that are advertisements.
You have to find some other way to introduce advertisements around the answer.
Whether it’s an interstitial ad, which It’s because are extremely annoying, right?
Like the Click here to see the answer.
Or you do this weird thing where maybe like part of the reserve, the results page is an image of an advertisement, like a branding advertisement and you have to like click a button to make it disappear.
So you can see the entire answer being provided by chechi PT or Bing but it requires the entire re-architecture ring of what search is online.
What others that.
But it’s a crappy experience for everyone.
Not is obviously a Craftsman for the user but it’s crap.
Before the advertiser was like, because what makes Google ads, so compelling is the user themselves, decided to look at it decided to follow it as opposed to it being shoved in their face.
And so, in this case, the other thing is, the vast majority of girls money is made on a very small number of searches things like travel insurance, like, you know, things Ecommerce like stuff you want to buy.
And that’s where you’ll.
And you could tell by just the number of like, as on the page.
Like, if you’re getting like five ads, that’s Will be a very profitable search term for Google, right?
There’s other stuff you search for like a Shakespeare quote.
There’s no ads and the vast majority of Google’s searches are the of that type and so my best guess as to how Google will respond is, they will introduce chat like interfaces for the vast majority of queries that don’t make money because those queries are important because they keep people using Google because it’s valuable and gives them answers they want while retaining the sort of different format, you know.
For stuff that actually does make them money and given their position.
And you know, the fact they have so much distribution that will probably work and because I think the it’s safe to assume they have the same capabilities and probably better capabilities than opening I or Bing or whatever.
But if you know the speed with which they decide to do this or respond is going to be sort of very interesting to watch and that’s sort of the, the bullish case for Google is look.
We know they can do this.
Technically, they figured this out before, how to adjust search to New sort of Paradigm, they’ll probably do it again and their existing advantage in users habits and where their existing will be enough to carry them through.
But at least, there is the outline of where you could see that some serious disruption for them.
That’s a very clear frame.
I think I’m gonna remember that that, like, that, that Google’s version of chat GPT might be rolled out for, let’s call them the cheap queries, but for the expensive queries, I want to buy a car.
I want to buy jeans.
I want to, I want to surance.
I want to go shopping.
I want to fly to Singapore.
For those you’re not getting anything like chat GPT you’re getting answer.
The question would be hey I found you a flight on Singapore are like yeah right I don’t trust I don’t trust anyone to book my flight so I’m not going to chat to trust the computer was very very specific preferences.
I have an I have a question that might be, might be stupid and maybe even cheap that brings us to Amazon and apple.
But that’s that, you know, I have an iPhone, I have Alexa, I don’t think Siri or Alexa are very good.
At least they aren’t very good at interacting with me and giving me what I want.
And one of the ironies of living in this early and example under it could be a me problem.
That’s why I brought someone else on to talk about it.
This is not putting the monologue.
It is kind of it.
To me that like Siri doesn’t seem very good but we’re also in this golden age of AI and I wonder whether a you’re just totally reject the premise and you’re like Derek is actually is a you problem people of Siri or be whether you have ideas for how these lme’s, these generative, a eyes could be insinuated into our iPhone experience.
The next few years, in ways that we can’t even see it.
Yeah, no serious things.
You’re right, you’re right, you’re right on that.
I and the other, the main part of your, the premise of your answer.
I would reject is that we’re in the Golden Age of AI.
We are in the first inning and I think so, I think that’s an important distinction.
Number two, in my estimation, Google’s chat voice experience.
Google assistant is way better than Siri, and I think it’s better than Alexa as well.
And that is actually probably the most concrete manifestation of Google’s a AI capabilities that’s out there.
You can have ongoing conversations with with Google.
I don’t rub you used it but it’s it’s a much different experience than I think with Syrian particular, like it retains information better.
You can go back and forth.
It understands you basically perfectly every single time.
And, and it’s a good example of where Google is is strong in this space.
And also it’s an example of Google taking risks and pushing forward because I wrote about this in the context of Google Assistant would First came out like this is a business plan for Google.
It has the exact same issues.
I talked about you like the moment, Google assistant is inserting information based on who paid them to do, it is the moment, the entire value proposition sort of falls apart, but Google has invested in it all the same and that’s a credit to Google.
Yeah, I think so.
It’s out of your overall, premise of the question or your overall question is a fair one, you know, I think the in general intact, Everything is additive there.
It’s very rare.
There’s a popular narrative.
When Tech first started, you had you go back to like the piece, like you had the Mainframe that are these things called mini, where they called mini computers micro camera.
Like, you had like, like Wang Computing, like was like a big company that no one remembers for it was this one Boston was like the center of like the Computing universe and then the PC comes along and cleans them all out and that established this narrative intact.
New products coming along and wiping out the previous generation and that hasn’t really been the case for 20 years, everything is additive right.
The PC is still around, right?
Is it as dominant as it was?
No, it’s been eclipsed by mobile, but we still have PCS.
We’re both sitting on PCS right now conducting this because they’re more capable and beneficial for use cases than a phone.
We could do a podcast via the phone but why when we have a better more capable machine right here?
And I think this It will be the case here, like the effect that like search and links and research that doesn’t necessarily going away, we might have something better that’s on top of that same thing with sort of voice interaction, sometimes text interactions better or sometimes like image communication, might be better and that’s probably a safer better framework in general to think about this stuff is don’t get locked into it.
Being a zero-sum game.
Again, to go back to the very beginning of our conversation.
We’re talking about massive abundance, scarcity, is a world, Are there zero somewhere, there’s replacement where you either have a or you have be.
We’re talking about a world where you have all the information that you want.
That could be presented in a million different ways, depending on context.
And and a lot of mistakes and Analysis are made with the assumption that stuff zero-sum and the reality of probably isn’t what like we do.
You think about mobile mobile didn’t replace like we don’t sit at our desks with little phones.
Doing our work.
We’re still at a desk with computer but now we can also Be sitting on the toilet with a computer, right?
Because it’s there’s a new sort of interface that goes with it.
When it comes to the voice stuff, we can be, we’re in the kitchen with our hands, all dirty, you know, cooking something and say, Alexa set a timer, and it’s like, well, is that really beneficial?
Well, you’re now doing more Computing than you did in the past.
Is it replacing your mobile phone?
Experience, knows a replacing, the PC experience.
No, it’s adding on top of it, and that’s how this stuff is going to sort of is particularly in the, you know, the first Short to medium.
Even to long-term is how it’s going to manifest really quick question.
Before I ask you about some of the dark sides here, you know, I’m not trying to get you to just summarize the movie her, but I am kind of interested in the interplay between Apple earpods.
And a I like what happens when you have something in your ear on your face that you can talk to and that can talk back to you combined with what you’ve been discussing for the last 45 minutes.
This new dawn in an ability to generate synthetic intelligence synthetic content on the Fly.
Did any thinking about what that combination could create?
What Horizons that could open in the next few years?
I mean, I do think her is very compelling.
I’ve been referencing and talking about it for four years.
I think, you know it just the this idea of sort of an assistant that’s with you all the time.
And one of the powerful things about these Transformer based models is they learn very quickly.
They don’t have to like iterate a million times and sort of nudge them in a direction that the sort of One-Shot learning where you give them a result.
They immediately Incorporated and sort of understand, you know, and keep that in mind sort of going forward.
It’s interesting because we do have technical limitations to get into there.
So if you want to chat GPT and you have a conversation, it’s like wow it’s amazing how it has memory write, it knows stuff.
We talked about before, that’s a total hack.
What everything every single submission to chat.
TBT is fresh and new.
What it does is it sends your entire past history.
So when it generates the new answer, it has all the context and it generates a new all that sort of thing you know to actually have Distance.
Like this is where a big question about centralized versus local comes in.
Like there’s real compute costs, there’s storage costs, there’s memory costs, all of which are going to be real challenges to sort of overcome if you want to her, that knows you and its extensive.
Like, you have to store that information somehow and you have to be able to retrieve it quickly and efficiently.
And so there’s there’s actually a huge amount of technical barriers to getting to that.
But again, technical barriers will be overcome.
Do you like, that’s if we’ve learned one thing in Tech or 40 years?
It’s that’s not a gating Factor per se.
There’s also weird physiological limits.
It turns out that if you have something in your ear for too long, you will get a bad reaction to it.
Again, we’re talking about having something you’re basically 24/7 like, all the time, right?
And so you know, already there’s gonna be some sort of implant is going to be like, so I go.
How is that going to work?
Obviously, do I want to be speaking in public all the time?
How am I going to communicate to?
You know, is going to capture my Thoughts like that.
Now, that stuff is that’s not like we know how to do it and it’s going to get better.
Like, are we going to actually figure out how this sort of stuff, whatever work.
But I do think by and large this broader idea that we all would have an assistant that does no us because we’ve interacted it for days months weeks years.
I think I got my order wrong there but uh, you know is like that is something that is Plausible.
There’s there’s things that need to be worked out to do that and you can imagine how beneficial that could be right, where you just sort of have, you could do things the distance between having an idea and the execution of that.
Whether that’s generating an image, or writing a paragraph, or booking, a flight, or whatever might be is dramatically compressed.
That’s certainly a vision and a place that, you know, people are going to push to go to you.
Give me one hot.
Ting thought which is that just this week there is a breakthrough in in what is it a brain interface technology that allowed people to produce words on a screen simply by thinking them at a rate four times faster than any previous technology to achieve this?
And it made me think, maybe the future is her as a silent film.
Write that instead of talking to Scarlett, Johansson.
You don’t even have to say anything.
You just think it and And the little bud in your ear interprets, what you have thought and he says, Oh Derek just thought make a reservation for Derek and his wife, Laura and La at 8 p.m. on Friday and it just it just does that.
And I don’t think that we’re getting like 20 years out in the future and I’m not going to ask you to comment to intelligently on pure speculation, but that could be, you know, one combination of two different streams that aren’t a lot of people aren’t necessarily bringing together here.
This sort of, you know, brain interface technology.
And apple, pod, AI technology.
Yeah, I know people are definitely thinking about that.
I think you do but it is to your point.
It’s it’s some point in the future like what?
Like, you know, there’s a lot of things to be solved to sort of get there but certainly that is that is a vision for sure.
Last question for you, there are a lot of people who are really afraid of AI and in particular afraid of what a g, i will accomplish I’d like you to do two things to close us out.
I’d like you to help us understand how you fear artificial intelligence and I’d love to know like what you think AGI artificial general intelligence actually means and whether you think it’s something to be afraid of, there’s a reason why films like Terminator whatever exists, right?
Like this idea that once you have any eye that, you know, first off, there’s a few Is your number one is a GI.
What is a GI?
There’s a big question here and we devise things like the Turing, test, which Chad you can obviously pass, right?
You like you, you like, there’s a criticism of chat GPT that’s like a very confident poster on internet Forum.
That’s totally wrong and implicit in that analogy is we have this archetype, it’s humans, right?
Humans are bullshit all the time.
They make stuff up, they sound very confident.
You know, the The fact that that GPT is basically built from the internet and that was a big.
You know, thing there’s a nailed by Transformers, instead have these carefully labeled data sets.
You could just scour the internet and and get all this data and sort of glean, sort of like, how stuff fits together.
I mean, Jesse BT is not thinking, it’s basically running probability of given this question in this context.
What’s probably the answer that that suffice has to this week?
Are you are describing one answer to my question which is that you know, one dark side of AI is that it will it will confidently produce bullshit.
I mean the internet already constantly produces bullshit but to the extent that these large language models are simply you know like speedrunning that synthesis.
They’re just going to produce even more confident bullshit, which by the way, is another sort of potential danger for Google.
You know, they rely on the internet, having the answer and if there’s the more bullshit there is the better they’re going to do in In distinguishing that and I think a lot of people I certainly agree with that.
Feel that Google search is not as good.
Now as it was previously in part that’s because there’s so much gaming of the system, right?
And that’s, that’s a hard challenge for them to solve.
You’re dealing with an opponent that is unknown unnamed and has zero marginal, cost abilities or generate stuff right?
You go back to like the Macedonian teenagers generate.
Fake stories on Facebook, right?
Does it cost anything to do like, who you can duplicate?
When you had to have a printing press, there was a cost barrier to generating an output.
Reality is is that we as humans are very complicated, creatures were filled with biases, we want things to be true that aren’t necessarily true and and that is the source of so much content mean arguably.
The conflict on the internet is not that people suddenly became full of misinformation.
It’s that we suddenly became exposed to.
Lots of people that think about the world very differently than we do and that’s very upsetting.
That’s A lot of the consternation I think people have online.
It’s not that cranks did exist previously it’s that we weren’t exposed to them and there are real downsides here.
Where if you were if you had an abhorrent opinion you’re probably the only person in your area that did.
You felt isolated?
Now you can find a community of abhorrent opinions online, right?
And but all these issues are pre a.
I like I think a lot of the concern and consternation with the internet generally is going to be projected onto a i when reality, Are all human problems that emerge.
When we’re all in the same place.
At the same time, write it now.
Ai is dumb.
It has no, Jesse be doesn’t know what it’s producing.
It’s all based on this feedback.
Now the I mentioned this reinforcement learning with human feedback, that is a reintroduction of sort of shaping, what it says on top of this sort of Internet Corpus, right?
And so we started saying, all these data sets have to be super.
Highly labeled back in the early machine running area too.
Wow, we can just use the internet.
This is amazing too well for people to actually enjoy using this.
We do need to reintroduce the editing function, a sort of like shaping sort of function.
And so, you know, the answer there is sort of in the middle but it’s still dumb.
You actually be creative to actually generate and to actually be sort of like sentient as however, we might Define it.
It’s still not clear that number one, it’s going to get there.
Now, a lot of people are you look the Of all of, you know, when you think about like text, for example, right to date the generation of text is a deliberate act.
You have to?
Yes it’s cheap and easy to do and duplicate on the internet the actual generation still needs to be done when I’m writing an essay on trajectory, when you’re writing on the Atlantic, how many thoughts, how much processing was never actually put down, right?
Probably 99%, exactly.
And, and even if These a eyes are exposed to all the textual input of humanity.
You just said, they’ve actually only been exposed to 1% of the thought.
And and so what is the line and Bridge to actually being able to incorporate in understand that, in a way that does become, you know, yes, it’s dumb.
It has no thought in his probabilistic base, but it’s just as good as a human.
Is it enough to accumulate all the right knowledge in the world?
Maybe, I don’t know.
And so the question is, number one.
Are we even going to get to AGI?
Number two, if AGI comes, what do we do about it?
I actually have a very kind of out of it.
Cynical is the right word, that’s not cynical.
It’s like, resigned sort of view of it.
I think a truly sort of like, bad acting AI of the sort that’s imagine in Terminator or by, you know, the people that are really concerned about this I don’t think there’s anything we can do about it.
I think, if it happens we’re screwed.
And so there’s a certain aspect of, yo, take about Apple in there.
China operations, right?
If China tax Taiwan and all Apple gets cut off and try to completely, they’re screwed.
So there’s kind of an aspect of.
Yeah, they’re trying to diversify in the edges, but, you know, it’s just not a functional way to think about their business because it would be so astronomically expensive to undo it.
And unwind it immediately that they’re just going to kind of hope it doesn’t happen.
I kind of have a similar velour feel here.
I am a little more skeptical.
There’s people in space that are sure, it’s almost here.
If coming, I’m a little more skeptical for that reason articulated like I do think there’s so much more to actual generation and maybe I’m biased this.
My human my narcissistic solipsistic Humanity, bias here absolutely might be the case.
But I also sort of feel like, well, if we get there, we’re screwed.
So I’m not sure how much it’s worth to Given the realities that this is out there that we have competition.
Space China is investing, just as much as we are investing.
I’m not sure working against a potential outcome, that we probably can’t do anything about is worth limiting and stopping the massive potential benefits that are that are Downstream of this.
Then Thompson, mr.
Secretary, thank you very, very much good.
Talk to you.
Thank you for listening.
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