The AI Clown Car W/ Gamersnexus

Semiconductor companies in the AI era

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2:40Hello and welcome to Better Offline. God damn, it's your host Ed Zitron. I am back. Better Offline.

2:56And we are returning with a returning champion of the show, Steve Burke of Gamers Nexus, who's here to talk to us about how well the semiconductor companies are conducting themselves in this era of AI opulence. I think it's a good way of putting it. Are you really happy with them? Oh, they're great. They're so good. The clown industry has never had more candidates. It's so strange. So you put out this wonderful video about the, well, it's just we're out. There are no more non-clowns. It's just, it's funny.

3:28There are no non-clowns in the clown car at this point. I think it's accurate. As we record this, they've recently announced that OpenAI and SB Energy are building a data center with NVIDIA backstopping it, but it's not really a backstop. This doesn't feel like a real industry, Steve. It's all pretend and make-believe, I think, at this point. I mean, yeah, it's my favorite quote I've heard recently. I did see that news today, but my favorite quote was Jim Cramer saying, I like data so

4:02much, data center so much, I wish I could live in one. They should make him. Yeah. Weren't you on CNBC or was that a- I was on CNBC a few times recently, and they've not asked me about Jim Cramer living in a data center yet. No, they haven't. Okay. I thought maybe they'd be looking for a realtor. I want him to go and live in one just so that he can sit around and just get deafened, I assume, because they're pretty loud from my experience. Yeah.

Local pushback against data centers

4:29I mean, there's so much going on right now because locally we had a data center town council meeting that was supposed to happen actually tomorrow. And I was going to go to that. And the pushback from locals was so much that the applicant withdrew their application for the data center. Where was this? This was in Raleigh. Southeast Raleigh specifically is where they were looking at. Because there were a few data centers over there, right? I know CoreWeave have some crap.

5:00Yep. CoreWeave, they have a good amount of stuff out near the mountains out west. And one of the old former crypto mining facilities has been converted or in the process of being converted into a data center as well out there. But yeah, no, they're popping up everywhere. It's just, it seems like finally, I guess, there's a more widespread public understanding of what it means when a data center pops up. And it's, I was talking with someone on the team about this.

5:34Data centers have existed forever, right? And it's interesting. Yeah, there's like a lot of them. Yeah. And they, it's just like this particular type of data center for AI processing, it rightly gets a much worse rap. And it's, you know, it's far more power consumption. It's more, typically more water consumption and potentially more land area. And it's, they've, they've sort of, they've sort of ruined it for the rest of the data

6:06centers that have been around since the beginning of time, I feel like. But, you know, they're all big structures. It's just these new ones, and particularly the AI processing solutions tend to be louder and more power hungry. And so I'm just happy to see, though, that people are, you know, are finally informed on this stuff and showing up. I do like the amount of politicians who are like, no, it's good for jobs. It isn't good for jobs. It isn't good for jobs at all. Oh, it's good for the local economy. It's good for the local economy, as long as the data center is being built, and then that stops.

6:36And even then it's, how much, how good is that for the economy? We don't really know. And it's, it's frustrating to watch this happen because it feels like something about data centers is just corrupting everything. Like, it corrupted.

Executives shifting to financial generalities

6:49I remember watching your video earlier today, watching Lisa Su talk about this, like watching Lisa Su of AMD, who was before this, I would have genuinely been like, that's one of the good CEOs. She's a smart one. She doesn't give in to marketing hype. She's no bullshit person. Listening to her talk about this stuff, it's, it's like she's been huffing paint. Yeah, she was, she was pretty well liked. I mean, I, my experiences with AMD over the years have been mixed, but broadly speaking,

7:23AMD has at least maintained the appearance of, if not the actual, you know, practice of being sort of an engineering first company. And Lisa Su technically comes from an engineering background. I'm sure she doesn't do a lot of it these days, but that still counts for something. And so does Jensen, to be fair to him. But yeah, Lisa, over the last year or so, has shared the stage a lot with Michael Kratzios from the White House to talk about their AI action plan.

7:56And in that plan, they describe things like getting clean water and clean air regulations out of the way of data center construction. Good. Oh, good. Yeah. Yeah. I mean, the things to put in your press release that would make a PR person go, wait a minute. So the, the clean air part, how are we going to, how are we going to spin that exactly? And they're like, well, AI will make more clean air.

8:28Right. Maybe. Yeah. And it, it's so funny as well, because rewatching that video, I've seen a few of these clips of these various executives sounding like they're part of a doomsday car or what have you. And it's so strange watching people that even two years ago were like, yeah, and here's the, we're talking, they're talking about things like inference and high bandwidth memory and like the actual financial, sorry, the actual technical features of AI GPUs to just speaking in financial generalities. It's like, it will be a $30 billion, a hundred billion, $250 bazillion dollar TAM industry.

9:01It will be so big. It will be so huge. We love it. And you made the point. It's, it's become more about financial engineering than electrical engineering. Yeah. Yeah. The whole thing feels like we've completely lost the plot of any of the technology. Like I, I, with some exceptions, I almost never hear these executives now when they're doing their various podcasts, which by the way, they've all gotten really onto the, the like podcast and TV show and a lot more appearances than I've really ever seen from a lot of the

9:35CEOs. Normally they've, you know, they've historically kind of only wheeled them out for the big keynotes and then they disappear for six months. So that's been different too. But, but yeah, it's out of all the appearances from Jensen and Lisa and everyone else, Sam Altman, especially, you almost never hear anything actually technical now. It's all how many billions of dollars or how many gigawatts. And that's kind of the start and the end of the conversation. Occasionally they'll talk about how it's going to create a bunch of plumbing and electrician

10:08jobs while kind of, you know, skirting past the fact that those will last for a couple of years at most. And then it's, you know, the structure is built. So those jobs go away. But to your point, I, yeah, I think it's, uh, the engineering side has completely faded, which I wonder if I'm, I'm not that, that well informed on sort of the.com era, um, technicals, like how it actually built up. Obviously I'm aware of what happened, but I wonder if you look back then, you know,

10:41do you see a similar trajectory? Is it like it starts rooted in technicals and then it, that, that falls away over time and it becomes just pure money or is this different the way it's being discussed?

Comparing dot com bubbles to current hype

10:53Looking back, the early days of the internet were so vestigial that almost every article was basically re-explaining what the internet was. And the way they talked about it was in these vast generalities of like, okay, well, so there's this, that, like just vaguely like, yeah, the internet, you know, it's pretty, it's going to be pretty big or they'd get into very big ethical discussions. And a lot of the original pushback on the internet was, hey, we're just going to create a giant swamp of unverified information. Is this a problem? And people were generally like, shut up, you fucking idiot.

11:26That'll never happen. It was, it's so funny, the pushback on the internet back then was actually quite smart, but for the most part, people were like, yeah, this could be anything. But when you read the articles about like Winstar, which was a telecoms company that basically was in a circular relationship where it borrowed money from Lucent to pay Lucent and then use that money to pay Lucent back for the loan that they were using to pay Lucent. And when you read their articles, fun fact, the only time I've ever been able to find a bubble where someone mentioned annualized revenues, only other time, it's the same

12:00bullshit, but it would be like, yeah, and they're going to blanket the entire country with these dishes. They're going to be everywhere. It's going to be that it was very highfalutin, very big numbers, but very, very light on the technical details, still heavier than it is now. Because the funny thing is, is if we think about this 30,000 foot view, taking away my critic glasses, putting on the booster glasses I use, and all you can see is yellow and blue.

12:27The thing that I think is, isn't this the time when the technology is the most important? Because they haven't made this profitable yet. They really haven't. Like, it's very obvious they haven't. And I keep, every time I read about like Vera Rubin, for example, next generation GPUs, Vera Rubin, right? Every time I read about them, I get the same shit, which is, yeah, they're 10x more efficient, or 25x. And also, they're 25x more efficient on DeepSeq R1, a year and a half old model. And yeah, you can't, like, we haven't benchmarked that.

13:00It's not like we could benchmark with Anthropic or OpenAI, because if we did that, you might find out they're unprofitable. So, and it's just, every time you, it's like a, it's like being in a bad relationship where you don't want to ask the questions that you know would end it. Do you know, have you noticed the sort of dual narrative lately where, because you were just talking about how, you know, it'll be, it'll be 10x the performance of whatever. So, there's a performance number there. But then at the same time, I don't remember if it was CoreWeaver, who it was, just last

13:33week, I saw an interview with some executive who was talking about the cost per GPU hour being $2 previously, and now those devices are $4. I don't know if this rings a bell to you, but... Yeah, yeah, yeah, no, I remember this. Yeah, and so the narrative that was being constructed by that interview was one of, look, even the old, the comparatively ancient technology from somewhere between, you know, three and six years ago is more expensive now, or is more effective now, and is still useful.

14:08And then, obviously, on the other side of it, you have the FOMO of, you need the absolute newest Vera Rubin, or what the fuck are you even doing, you know? Right. Right, and so it's the have your cake and eat it too setup on the GPU side, but on the consumer side, like the end user side, all I saw with that, our old GPUs are worth more than ever conversation was like, oh, this is bad. This is like, because now you're just, you're the last bastion of hope, I think, for consumer

14:42pricing was, okay, well, maybe we'll get the scraps from last generation. And now they're saying they even need that, so. Well, the thing is, there's a few wonderful parts of this.

GPU pricing and operating costs

14:53Number one is, I saw that it was saying there was like, you're getting, instead of getting two something per black whale, you're getting four something an hour, right? Right. That is not enough to cover the costs. That's not even fucking close enough. I have an Oracle contact who told me, and this is someone with actual infra experience, they were saying that it costs like six something dollars an hour in OPEX just to run a GB300. Wow. So, I don't think four bucks an hour is going to do it.

15:23And this is the story, no one really wants to talk about this one as well. It's like, yeah, when you're selling spot pricing to the desperate, you can make more money. But when it comes to the longer ones, when it comes to the longer duration contracts, that cost, the cost drops. It drops dramatically. Oracle charging two something an hour per H100 GPU and H200 GPU for OpenAI with their contract. And again, no one really wants to talk about this because it's like, if you're getting two to four dollars an hour for this shit, okay, so maybe you'll break even in 10 years

15:58if you have constant utilization. Right. If that works. And even then it's like, wow, you have a gross margin of 30%, mate. You want to start an airline? Like, what the fuck? This isn't really much of a business. But then you go and you hear these things that Lisa Su or Jensen Huang or Sam Altman are saying. It's like, yeah, it's the next industrial revolution. It's going to be huge. You're going to make so much money. Everyone's going to be rich. Everyone's super rich. Everyone's so, buy a GPU, buy seven of them, buy as many as you can. We need to sell them. And it feels like living in an alternate reality sometimes because the math isn't that crazy

16:35to me, you know? Well, I think it's also the government investment in all of this or the increasing government investment or the individuals in the government invest in not in a specific capacity. I mean, well, the Trump's investment in NVIDIA, right? Yeah. Millions of dollars transacted. All right, folks. I'm here talking to you again about Quince, one of my favorite clothing brands. We've got a little under two months' worth of summer left, so it's worth looking at some

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20:37I was talking with someone on the team earlier today and he made the comment, he was asking me, you know, if there's all these data centers and this massive demand for storage now as well, if the average person is using ChatGPT or Claude to make a spreadsheet at most or be a chat bot, you know, at least, like that doesn't require all that processing power and storage. And so what is it? And then to me, it's, I don't know if this is too conspiracy-brained or not, but the dots

21:12I'm connecting are the government's really invested in the, I guess, the success or at least the prevalence of data centers and AI companies. Some of that could just be as simple as no administration wants the economy to fail on their watch. So, you know, they, they're invested in it. Um, but also you see stuff like flock cameras popping up everywhere and axon cameras and drones and all of that. That's what requires data centers. Like that's. Does it though? Oh yeah.

21:42To process. How does it require the GPUs though? I think. So it's two things. The storage definitely. Yeah, the storage, but you don't need an AI data center for that. I think the only reason you might, and this is still something I'm kind of playing with the idea of, so I'm not sure on yet, but I think the reason you might find the GPUs useful is to start connecting large complex matrices of information you have on people or objects to each other. Like this is something that, you know, this is, this is something that GPUs should be good

22:15at. Uh, in theory, but this is the thing though, to push back on this, cause I don't get a fair amount of emails, people saying this is, um, this is like, this is the thing I'm afraid of the government surveillance. Ah, the department of, I think like there's multiple different government agencies that work directly with Oracle and already have, and already have that. Like they already have, they already have like bunches of GPUs. So if they were going to do this, they were going to do this, they probably already done it.

22:45Right. Well, I think the difference is a lot of this new stuff is being rolled out by private companies in large volumes, you know, just like the cameras alone. Um, I don't know, something like six months ago, it was 80,000 flock cameras. And now I'm not sure what it is. It's definitely well over a hundred thousand and, um, it's a private company. There's a lot of data. I'm not sure to what extent they currently process this stuff, but definitely to process, um, image

23:21or visual recognition data against video frames is a very computationally intensive task, uh, that would require data centers. Um, right. But I'm just saying that all of these data set, you don't need all of these data centers. No, definitely not. And you definitely don't. And it's not like they're doing CDN share where they need to have it delivered to all points of the world. I'm not saying that this could never happen. And it's just the, I don't think the reason they're building all these GPU data centers

23:51is because of that. I think they're doing all of that because they don't know what they're fucking doing. Well, yeah, I think it may actually just be really simple to be clear. I don't think they're trying to, they're building all of them for that. I think that is a use case of them. Um, and is a reason that, you know, government may be interested in being invested as well. Uh, so yeah, by and large, no, that's not like the main use case. And you see things like, it's kind of the same discussion as the taking ownership of software and hardware into the cloud where no, they're not building all of the data centers

24:23to take gaming away and put it in the cloud. That's like maybe a couple here and there for GeForce now, right? Um, but it's just another use case where, I don't know, it's, it's kind of like, I guess what it comes down to is whatever the problem is that you have or think you have as a private business or a government, the data center is going to fix it for you, right? It's the panacea for your business. Even though when you go and look at the actual returns to businesses, there was an open AI study that came out that said, uh, it said it's hilarious.

24:57It was like, there is no connection between revenue per employee and the amount of tokens used. Okay. Four years in four years in four years. And where are we, we're here and we are nowhere. We are absolutely fucking nowhere. Other than the fact that Jensen Huang has to create like some sort of weird financial engineering, not quite Enron, sort of Enron, Enron-esque, Enron adjacent thing to sell as many GPUs as

25:28possible. So can I ask, so as, as the person I know who is the most knowledgeable on my favorite company, Enron, uh, what, um, to you, what, what's the, what would break the dam? You know, what bridges it from being Enron-esque to being more actually just, no, this is literally Enron, like this is what they did. You know, what's, what's the defining or what's the distinct feature that we're missing?

Financial engineering and legal boundaries

26:00If I'm Jensen Huang and I say to you, Ed, you could, you say I'm Enron-esque, I really just want to be Enron. You know, what do I need to do to get there? And the thing is, the thing is though, like Enron was just nakedly illegal. Like that's, that's the big comparison thing. It's like Enron would take these SPVs and take their debt or their bad parts of the company and just dump them there and be like, ah, well, look, our business is fucking brilliant. There's nothing wrong with this. I think that this is an, this is an opinion with no, with absolutely no financial information

26:34that I found just looking at the financials from OpenAI. OpenAI has a weird thing in their financials that I've mentioned, which talks about moving losses onto different entities. That's, that's weird. That's, I can't say it's Enron, but it smells like it. But NVIDIA, on the other hand, has been smart in the, they never, NVIDIA never uses its credit. NVIDIA always gets some, they invest it for this. So for example, this SB Energy deal, NVIDIA is guaranteeing, they're investing one and a half billion dollars in SB Energy, who's building the data center, and they are guaranteeing the

27:07value of the data center up to $106 billion if it gets completed. Now, because we have financial markets and credit markets run by people with no object permanence, they see that and they go, well, NVIDIA has guaranteed that this data center will do this. They don't make the link that what happens if the data center doesn't get built. And the other thing that NVIDIA did there is they said, okay, well, if, if OpenAI can't rent this, you can try and find someone else. And if you can't find someone else, we will pay you the difference between whatever you

27:41can sell it for and what it sells and what, what is 108 billion. Again, moving, never quite Enroning, never Enroning up with, they're very careful to not go full Enron. So is the full Enron really that, that leap into just distinct illegality? Yes. Okay. And that's the, that's why, so for example, with Enron, they were just committing fraud. Okay. Like Enron, Enron never published a balance sheet or like, which is fucking crazy. Like anyone who saw that company was like, oh, they didn't publish a balance sheet.

28:13That's fine. Kind of, kind of should have seen that coming. Right. Should have seen that one. That being said, I've said this in the premium recently. They're a lot more like General Electric who would just invest in their clients, lend them money. Again, NVIDIA hasn't lent money. That's where they're real. They've been quite smart to not actually become a creditor. Ah. So they'll back, they backstop a CoreWeave lease, as in they agree to pay if CoreWeave can't pay. They invest in CoreWeave. They are, instead of offering up their credit, they're like, we agree to buy a certain amount

28:48of compute from CoreWeave. So you can say CoreWeave has revenue. They exploit the financial system. Or the Juan Foundation, of course. Oh God, I forgot about that. So wait, what is the, they rented through CoreWeave, right? That's his weird non-profit? Yeah, I think that's the, what the connection was. I had researched it a while ago for a video. Very fucking cool. It's been a while. But yeah. So the Juan Foundation is some kind of non-profit. That also rents from CoreWeave. Yeah, and they basically say, you know, we're renting this GPU capacity for, I think it

29:22was for students. Yeah, they donated $108 million worth of CoreWeave AI computing resources for research. Which is just like so crazy to me. That's so beautiful. Yeah, you have this, on one hand, you run and own part of a company that sells the GPUs. Now the other, you've got this foundation that's supposed to be, you know, your own thing. And then it's getting involved with the customer of the first entity to create demand for the

29:58customer that's buying from a company. It's all legal. Yeah, right. It's legal, baby. Don't worry about it. It's all legal. It's totally fine. It's all good. Don't worry about it. It's fine. But this is the thing. When you push back on financial journalists, business journalists about this, that's what they say. It's all gap legal. It's totally legal. There's nothing illegal about this. And it's as if, if something isn't, if something isn't literally illegal. Then it's okay. Then it's totally fine.

30:29And actually people should do it more. And it's not a bad sign. If, what, I think like 12% of CoreWeave's revenue comes from NVIDIA. It's largest supplier. Well, Jensen did say, we played that clip again in this video. Oh, yeah. Yeah. He did say something to the effect of, with that NVIDIA, they don't exist. You know, some of these. Yay. It's just like, I love that. I love that shit. I love that. Because it's just like, wow. Okay. You're just saying it because you know.

31:00This should. Something like that should have the SEC go, and like, whoa, whoa. What do you mean you're doing that? Because I swear there is regulation around round tripping. Yeah. That's my understanding. I believe, maybe. I mean, who gives a shit, right? Like, it's so much of it is, when you go to like, when you go to the AI boosters, you're like, yeah, this is a problem. They go, ah, it's actually great. I saw one that, one of our favorite analysts, that Daniel Fettler, the other day posting, like, people will criticize this as a circular financing.

31:32But what I see is one of the most successful venture capitalists in history. And it's like, yeah, true. The balloons that the clown inflates are so full of air, as long as the clown keeps inflating them. And it's just. I like what Jensen was asked by Axios, you know, about, is this a bubbler or something like that? And Jensen made his comment of, well, the bubble will come someday, but not today. It's not today, but it's in five to 10 years.

32:03Yeah. And he describes how we're in the beginning of it. The next word started with a B and I was like, please be bubble. But he said, build out, unfortunately. And the, I don't know, you could see it. First of all, I don't want to like analyze the body language really, but he did definitely have kind of a, it was, it was a very measured. I need to carefully think about this answer split. Imagining Colet Cress with a gun.

32:35Just let a CFO just like, don't say it, Jensen. Well, he said the other day that compute should become an investable asset class. And it's, it's just, it's just exactly what's the people who were like, compute should be traded like a commodity. And it's like, gun to your head, tell me what you think compute means. Yeah. What is that even? What is compute? As an asset class? Well, asset class GPUs should be traded as that, but also compute should be sold as a commodity. None of these really make any sense.

33:07If you think about it for even one second. Does that mean I need to declare my storage room full of GPUs? We've tested as some form of, uh, some, for some separate line item on the taxes going forward because of the theoretical compute they could produce. You're a commodities trader now. Oh, great. All right, folks, I'm here talking to you again about Quince, one of my favorite clothing

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Power plants and data center energy demands

36:50Well, the famous thing towards the end with Enron, though, and just to be clear, NVIDIA is not trading compute. But towards the end with Enron, they were going to trade bandwidth. Hmm. I mean, if Jensen gets it, I mean, we've already got some people trading power. You've got Meta doing it, Apple doing it. So we've already got a little bit to look forward to there. But the other thing is, I personally want to see NVIDIA do more financial engineering. I want way more than this. I want to see NVIDIA just buying compute from itself at this point.

37:25I mean, they're not far from it. But yeah, the energy stuff, too, has been kind of wild. Because the government is getting really involved there. You know, like, months ago, Trump talked about the sort of early concept of the BYO power plant plan. Which is what? Sorry, I must have missed that one. So basically, that's my name for it. But the plan of companies to provide their own energy.

37:56So if they need energy for their data centers, then the companies are either, are through one form or another, going to provide that energy. And the sort of PR play was that this would help prevent rising energy costs on residents and locals. And when I say PR play, I mean, President Trump, literally in the meeting, said data centers need some good PR right now. So, I mean, call him balls and strikes there, Mr. Trump.

38:28And so the concept of, you know, the data centers will be more responsible for bringing online and provisioning their power that they need. Which I could certainly see how, if that's the start. How does that work? Well, I mean, that's definitely the first question. But from a PR standpoint, I guess, if you strip all detail out of it, you could see how that might win some people over if they don't really think too deeply about it. It's like, oh, okay, yeah.

38:58I mean, so they pay for their own shit, and I don't have to pay for their energy uses. Right. But energy is like a terrifying thing to not be fully regulated. Like, energy is dangerous to do wrong. Like, actually dangerous. You know, it can kill people. But also just, there's only so much of it. Like, I think people, AI people especially, really underestimate how difficult power is. Yeah. Like, they're just like, oh, yeah, you know, he's just fucking starting up, and he just, boom. Right. He's fucking, do you want, you need some power or something?

39:30Why are you being a dick about it? Just fucking, you know, just. Well, that's all the gas turbines, right? If you just drop gas turbines on the roof of a data center. So, the crazy thing, I read a story the other day where it was saying the gas turbines are dying.

39:44Because they're not meant to be run. They're not meant to be run all the time. Yeah, they're supposed to be for emergencies. It's like stuff that FEMA will, you know, will deploy. Dude, and they're everywhere. I know at Stargate Abilene, they're fucking, they're everywhere. They got them all over the shop. It's just so strange. I mean, you are a dyed-in-the-wool hardware guy. You've been dealing with hardware for years, and I think you've successfully caught on to the fact that this is no longer about hardware or GPUs or anything. It's about money.

40:15Money, yeah. Yeah, the technology stopped mattering.

The loss of technical depth in keynotes

40:19I mean, they don't even really, even in the keynotes now, which I still watch really closely, Jensen used to be so technical, even with the early machine learning and deep learning stuff before they rebranded to AI. Like, I was at some of those earliest conferences he did. I was at the really awkward GTC where he and Elon Musk sat across from each other on stage. And that was a, I could feel the secondhand embarrassment from just 50 feet away from them.

40:51And all of that, there was, there was always pandering to investors, but there was also a lot of technical detail. Like, I could walk away from a keynote and write a really dense write-up about the architecture of some brand new thing they just announced. And now there's, like, I'll watch a keynote, and at the end of it, I'm like, I honestly, I don't even know what the difference is between this generation and the last generation without going and looking up a white paper. You know, like, it's, they've stripped it all.

41:23And there's still technology there, but. Somewhere. It just, yeah, it just doesn't matter anymore, which is real depressing because it's, like, even if I want to cover the pure technology side of the architecture, it goes into enterprise products, and then say to the audience, you know, well, we cover this stuff because hopefully this comes to consumer at some point in some capacity, which is typically how it's been done in the past. Even if I want to do that now, it's, like, they're not even really putting the effort into making those materials as widely available as they used to be, because it doesn't matter.

41:57Only the money matters. I just don't see how they solve all this. Like, I've been digging into Broadcom recently, and all, like, pretty much every time you read about a semiconductor company, or specifically AMD, NVIDIA, and Broadcom, it's like, yeah, and I mean, for the future, pretty much we need, hmm, I don't know. No, everything to go perfectly for the next three years, because all of our revenue growth is coming from only this. Like, Broadcom, I think, is, I think, like, over 60% of their revenue in the next few years is coming just from AI, which is mostly coming from Google's TPUs.

42:32I mean, it, I don't know, the thing that comes to mind, like, when you said that everything needs to go perfectly for three years, it reminds me of just when I played games as a kid, like, board games. So chess or Magic the Gathering or something, but chess in particular, where, you know, you're a turn-based game, and it's like, you could come up with this master plan of how you're going to win as long as everything goes perfectly, and they move their pieces in exactly the wrong way for the next, you know, 30 minutes. But, like, that's just not how reality works.

43:05And it does seem like these companies right now are, I don't know if they're, sometimes it feels like watching Jensen and some of the other, like, OpenAI's, you know, Sam Altman speak. It feels like there's a little bit of acknowledgement now of things might not go perfectly, but we just kind of need to keep the facade up long enough until there's some major breakthrough where we can get more money pumped into the system. And that's kind of what it feels like I'm watching lately is the sales pitch for we need to dig up the next $100 or $500 billion.

43:42Yeah, we need to make this all work perfectly without fail is pretty much it. And even when they ask about, they usually, if Sammy's done this, Jensen's done it, it's like, yeah, you know, some people will run out of money.

AI screen monitoring and smart TV surveillance

43:56How'd you like Sam's new comments about... What, the genie? Well, the genie, that was a pretty good one. But also the comments about how some descendant of ChatGPT will be able to see everything you ever do on your computer screen. He's so good at this. He's so good at this because it's like, I'm sure you remember when Microsoft did, they announced Microsoft Recall. Yeah. And everyone's reaction was, I'm going to kill you. I'm going to burn down your house.

44:27Do not touch my computer. I will murder you. And Microsoft, who could push through just about anything, were just like, eh, no, we're just going to skip this. And then OpenAI turns up about a year later and goes, fuck yeah, bro, fuck me up. We're going to look at everything you do. And Altman is there being like, yeah, we can see everything you do, everything you've done, and suggest you could do something else. Which is great because, again, it comes back to the classic thing of AI. When we think about AI as a society, it's a cultural thing. We think, okay, AI, it's this thing that just knows everything without us telling it, makes smart decisions without us really having to.

45:04But this AI is feed as much data as humanely possible to this, and maybe it will work one day. Yeah. Well, and you also see this in things like, this video is not up yet for us, and I don't know when you're airing this episode, so this might go up a little before us. But we have a deep dive into some specific smart TVs right now and other devices. And if you really go through the privacy policies of these companies, the stuff they tell you they're doing is crazy.

45:37And that's the stuff they tell you they're doing. And it's all data collection and data harvesting. And now, of course, they've all got AI tacked onto it. You know, there's in one of these smart TV companies, they have a special exhibit for their AI features, like Exhibit A, AI-connected functionality. And you read through it all, and it's just, it's, they straight up say, we sell your data. Like, they just tell you. Well, that's good. You know, it's, yeah, it's right there. And this coupled with things like ACR, automated content recognition, which, depending on the deployment, has the capability of screenshotting what you show, what you have on your screen, on your smart TV in some cases, and transmitting it back.

46:22Like, to be analyzed or converting it technically into a fingerprint, transmitting that back to be analyzed. All of this is mountains of data. They all really want to deploy AI to process it. We've received some tips from viewers who say that for now they're hiring staff to manually parse advertising profiles for TVs by looking at the screenshot data and stuff like that. But the goal is to move it all into some kind of LLM that just magically does all this for you. And I guess that's kind of the dream client for a company like OpenAI or Anthropic.

46:55But even in that dream client scenario, it's just, one, it's a B2B use. And two, it's like a strictly evil use. Yeah. And it's also, I don't know, they've yet to do it. Like, I feel like if they had a super secret source that was great for surveillance that worked really well in it, someone would be buying it and paying more for it than the cost of operating it, which when the direct opposite seems to be happening, it seems that people that you, when you talk to, when you talk to like an average enterprise customer, it's like, yeah, AI costs are already too high.

47:33Why do you do it? Well, all my friends are telling me I have to do this. If I don't do this, I'll face competitive pressure from people that are yelling about how good AI is.

Corporate pressure to use AI on the job

47:42I have an interesting one on that. Oh, go on. Yeah. I have a friend who works at a game development company and a pretty large one. Uh, and so the, the directive, as I understand it from internal now at this company is, uh, that AI use is an expected part of their job. Meaning if they don't find ways to burn tokens on queries, then they're not doing their jobs. Great. Yeah. And so the internal move for management has been, uh, everyone is sort of in this, your mission is to figure out, well, could AI help you with your job by which they mean, try to get it to do your job and then present that to management.

48:29And if the answer is yes, you know, I guess we'll see what happens to that job later. Yeah. Good luck on that one. Right. But it's just the crazy part to me was the, even the people who don't want to use it in a creative field for a distinctly human thing, like creating art of someone, you know, writing or literal art or whatever for that field. It's even if you don't want to use it, you have to, because the executives have decided that this is how your job is to be done.

49:05It, I guess in their eyes, it's like refusing to use your email or something. I just think it, I don't think they do any real work. So the bosses are just like, the bosses are just like, ah, just use this thing. Because I read this, Nick Suresh, who was on the show a few weeks ago, was talking about this, how there's just this corporate pressure that if you are not saying you're using AI in the loudest voice possible, your peers will say they use AI more. And then people will get mad and that there's this chain of this kind of dereliction of duty where everyone is saying they use AI so that no one else, no one will ask the question of how useful it is.

49:43Or when they do, they just go, ah, it's somehow like a hundred percent, a hundred times more profitable. Of course, the productive side of the business is just number go up, so big. But it's so fitting to me that, because what you're describing is sycophancy, you know, where if telling the executives, yes, I'm using it and it's great and it's making me so productive, even if it's not true, that's sycophancy, which is just, there's something, it's just, the irony, I guess, is perfect, where it's like, because AI, LLMs, as they're deployed, by and large, are sycophancy machines.

50:21Yes, they're glazing machines.

AI tools for family life and parenting

50:23Right, like, we didn't talk about this one yet, Sam Altman's tweet from a couple weeks ago, when he said he had a great idea after talking to some people about work. Oh God, I know the one, no, hit me with it. He had a great idea after talking to some people at work, that what if you asked your kids about their day and about things they were interested in, and then you used AI to generate a podcast to maybe talk about one kid's birthday, and the other kids' upcoming sport events, and then they can listen to this podcast that you've generated for them on the ride to school.

51:00Right, and there is, of course, no other way to do this with your child. No, you wouldn't want to talk to them. No, I mean, like, you could, you could like, maybe you could talk to the child? No, no, no, no, no, no. No, how else would you focus on business? Right, yes. How else would you focus on business number, go on? And I think that was one of the highest liked replies to him, which I guess is the currency of our world now, but, you know, where they're like, or you could talk to your kids.

51:34But even if you do this idea of his, the thing I would worry about is, like, this is, it just seems so bad to just pipe this sycophanty machine at children. I mean, if you let children, if you let children use this shit, you are doing a bad job as a parent. I'm sorry, I'm unilateral on that, fuck you, you shouldn't be using, this is a bad thing for adults to use, and it's even worse for children that do not have, I don't know, any of the potential ways to protect themselves.

52:11Right. Yeah. Well, you know what, Steve, let's wrap it there. Now we've, on a happy end. Steve, where can people find you? What are you working on at present? Give yourself a shout out. Gamers Nexus on YouTube, and we're currently working on the smart TV investigations. That'll be up soon. And what are you investigating there? The capability of converting smart TVs into covert listening devices without your knowledge. Very cool.

52:42I look forward to watching that and screaming. Yeah. I'm, of course, Ed Zitron. You'll find me at Ed Zitron on basically every platform. We'll be back with a monologue this Friday, of course. Thank you so much for listening. I love you all. Thank you.

52:58Thank you for listening to Better Offline. The editor and composer of the Better Offline theme song is Matt Ossowski. You can check out more of his music and audio projects at mattosowski.com. M-A-T-T-O-S-O-W-S-K-I dot com. You can email me at ez at betteroffline.com or visit betteroffline.com to find more podcast links and, of course, my newsletter. I also really recommend you go to chat.wheresyoured.at to visit the Discord and go to r slash betteroffline to check out our Reddit.

53:33Thank you so much for listening. Better Offline is a production of Cool Zone Media. For more from Cool Zone Media, visit our website, coolzonemedia.com or check us out on the iHeartRadio app, Apple Podcasts or wherever you get your podcasts.

53:54We'll see you next time.

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