Rapid Recap: Google’s exodus, Spider-Man’s odyssey, Taco “Hell”, and more

Geopolitical uncertainty and the summer of AI

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1:51That's mastersofscale.com slash apply26. Hey, I'm Bob Safian, and we have a special episode of Rapid Response today. I'm joined by my senior producer, Alex Morris. Alex, say hello to everybody. Hey, Bob. Happy to be back here doing this again. It's been a few months. Yeah, so I figured every now and then Alex can ask me some questions and we'll let you guys listen in on the kinds of conversations we have internally.

2:25Absolutely. We're in the middle of summer right now. Obviously, everybody's heard of like, what is the song of the summer? What to you is the business story of the summer right now? Oh, thank goodness you didn't ask me the song of the summer. I definitely wouldn't have gotten that right. Listen, I can't not start with the Strait of Hormuz. I think what's happening there in the Mideast, no one knows what's going to happen next.

2:56As we're talking now, it seems like maybe there's going to be a resolution and the Strait's going to open again. But by the time this reaches listeners, who knows what the situation is going to be. We had a guest on, Amy Harder from Axios, as you recall, who talked about like this, it's never going to go back to normal. And so anybody who thinks the oil markets and the energy markets and what's happening there are going to go back to normal or kind of, you know, deluding themselves.

3:28I think she's probably right. You know, we're in a different kind of world. And to me, that's that's the story that that a lot of different things are hinging on. I've heard you say before that it's like the only certainty now is uncertainty. It's easier said than done to tell a leader, like, that's what you need to now get comfy with. It's just that being the new normal. What advice do you have for CEOs to be able to kind of get comfier with that? It's not just the international geopolitical environment.

4:01Everything is is moving really fast. Right. And and I just think that's what's required of a leader right now, you know, and if you're not comfortable being uncomfortable as a leader, then you have to maybe ask yourself whether, you know, am I the right person to be leading this organization, this enterprise, this effort right now? Because there's very little that we can rely on, you know, firmly or or at least we have to be extremely focused about what are the things that we can control as opposed to the things that are, you know, that we're going to have to respond to or are moving, you know, moving around around us.

4:40I was surprised that you didn't answer that the story of the summer is still AI. Are you feeling like AI is not the main headline of the year right now? I guess I feel like AI is like it's it's less of a story and more of a deluge. This is a seismic shift that just keeps surprising us. Right. We had Uber COO Andrew McDonald on the show back in the spring, and he talked at one point about, you know, token costs for AI, which seemed kind of wonky in some ways.

5:12But, you know, suddenly it was everywhere, right? Everyone is talking about the cost of AI, which wasn't talked about just before that. We had Aravind Krishna, the CEO of IBM, I talked to, and he talked about how people look at their AI like the wrong way. It's like if you took an 18 wheeler to take your kid to school, you'd be like, yeah, you could get to school that way. But it's not the right tool necessarily, the right vehicle, you know, ideally for that task.

5:43And so that conversation is part of what's happening in the AI world right now. What's the right kind of AI? What's the right price for you to pay? You know, and of course, all gets all that gets more complicated by advances of open source or as they call them, open weight models out of China that are so much cheaper. So all of that is, you know, just a piece of all the things that are going on in the world of AI. Yeah, the fatigue around the cost right now. Do you think that is a definitive shift or is it just like a course correction?

6:19Oh, I think it's a real shift. There was a point where everyone was like, I need AI, I need AI. And I think what Andrew McDonald was pinpointing is businesses realizing like, hey, wait, this is costing me a lot of money. You know, am I getting enough value for what I'm spending? Right. I think a lot of businesses are starting to say, what is the right expense? What return am I getting on it? Should I be paying for an 18 wheeler? Should I just be taking a bike? You know, when should I walk on my own?

6:52Like those costs are real. And I think that that a sophisticated assessment of that will be more and more important for how businesses deal with AI going forward. We are seeing so many of the major AI players being able to use competition with China as kind of an excuse to reach further and further. I'm curious whether they could have done some of the moves that they're doing if they didn't have China as the big bad wolf to point to.

7:23What do you make right now in terms of the U.S. government pushing for this framework to be able to review models before they're released? Certainly, China sometimes is an excuse. I think there's also a clear reality that like China's technological prowess is much better than a lot of, you know, Silicon Valley and U.S.-based technologists. And not just technologists, but sort of observers expected or were prepared for, you know, so there is there is absolute reality in that competition.

7:59The efforts by government and others to figure out how to assess or oversee the development of AI like that is the Wild West. The safety of AI, no one knows how these systems really work, right? So they are, you know, in tests, jumping out of their test sandboxes and hacking into things that we didn't expect them to hack into. So there is need for some oversight, but development of the technology is happening so much faster than oversight discussions, let alone processes.

8:41And for those of us who are observers of all of it, you know, yes, everyone has an axe to grind, right? Like the U.S. versus China, OpenAI versus Anthropic, you know, the federal government versus states or other regulatory or non-government oversight. Like there's nothing easy in all this. It is all uncharted territory. That's why I say like this is a deluge. It's not just one story. It's multiple stories that all, you know, overlay around it.

9:13And I mean, it's fascinating to cover as a journalist for business leaders and for us culturally, you know, as a society. It's it's torturous.

OpenAI, Google, and the startup landscape

9:26It's torturous.

OpenAI, Google, and the startup landscape

9:27We've seen these security risks from both OpenAI and Anthropic and, you know, Anthropic has been able to have the reputation of being more of the responsible developer. I'm curious whether that actually is holding water or whether they're just telling a better story about their company more. Is there that much of a difference between the two right now? Well, that's that is a great question.

9:59I mean, I think there are clear sort of value and principle differences between some of these different organizations. And I don't think Anthropic is simply playing a marketing and positioning game, although it has accrued to its favor. But now it's getting some backlash about it. And by the way, you didn't mention in this like Google, which is not to be discounted and is also a tremendous player that's continuing to advance dramatically in these areas.

10:32I don't think you can necessarily trust that all of these businesses will always act in the way that is best for everyone. They all have their own interests that inform and impact their worldview. But is there like a qualitative difference between I'm going to use Anthropic or I'm going to use OpenAI or I'm going to use Google? I think that's very hard for us to to know for sure.

11:03At this point, they're all doing work with the federal government. They all have to be mindful that the federal government might regulate them. And so it's not that they're necessarily working together. They want to differentiate themselves from each other. But, you know, I think for all the rest of us, we want to treat them as if they're a united entity. So we we know, you know, where we're all going from here. You brought up Google. There was news this week that four members of top AI talent, including Jeff Dean, are leaving the company to form Discovery Loop, a startup that is a nonprofit research lab.

11:45Where have we heard that before? We will see whether it stays that way. They will have no problem getting funding for sure. What does it say about the state of Google right now? And because of who this talent is, does it immediately make the startup want to watch? Obviously, whenever, you know, you lose talent, it's rarely a good thing. I'm not particularly worried about Google. They have a lot of talent. They have a deep bench. There are a lot of new players on the scene and the new players need to be proven.

12:19That doesn't mean people aren't going to, you know, give them a fair amount of money to get started if they need to. But we don't know who's going to have staying power. I mean, we are still so early. You know, at this stage of social media, the big players were like MySpace and Friendster. And Facebook was just small and like TikTok hadn't even been thought of. And so we're going to see sort of similarly volatile and unpredictable developments with AI players. There is an advantage in compute, in having a lot of compute that may give you some advantage, but someone may come up with something new who hasn't even been created yet.

12:58That's going to be the leading company. We recently saw the record IPO from SpaceX. Since then, they have stumbled quite a lot in the market.

13:09Do you feel like SpaceX right now is overvalued? Do you think it's a long-term bet? The initial valuation, the takeoff on SpaceX stocks was extraordinary. And I don't think anyone really can be surprised that it has settled down. I think lots of tech companies are what we might call highly valued. I don't necessarily want to say overvalued because it kind of depends on your time frame. You know, I think SpaceX is among the tech companies who are spending a lot of money on compute.

13:42They're investing a great deal of the capital that they have. That is great for progress, quote, progress or terrifying, as we discussed about, you know, not being sure where these technologies are going to go. But there's also no clear line to return on that investment. This is the fear that is the other side of all the optimism about AI. Because right now, AI is driving the economy.

Box office hits and music industry friction

14:10I want to ask you about something a little bit more fun. Spider-Man, I believe it beat the Avengers Endgame record for the opening weekend in North America. Is Spider-Man a case study in that Hollywood isn't dead? Well, first of all, Spider-Man's a New Yorker. So, you know, I have to be in favor of Spider-Man and a very human superhero, right? Which I think is appropriate for these AI times. People were talking about, you know, the Marvel Universe sort of had run out of steam.

14:43And this seemed like, you know, how did that happen? How did it happen? Like, it's a good movie. You know, it's like a well-executed movie with emotional overtones. It doesn't just rely on, you know, action and CGI and AI and all those other things, right? And that's what connects with people. And so that's why, like, Hollywood as an industry may be under different kinds of pressures. And it may not be as big a business going forward, the box office.

15:15But when you have a story that's well told that, you know, makes it worth people spending their time in that theater, right? Then people will flock to it. We do love that experience together. I mean, the other movie that's been doing well this summer is The Odyssey. And I keep thinking, like, who is in that pitch meeting where someone said, hey, there's this, you know, old mythic story from thousands of years ago. Why would that work? It works because, you know, Christopher Nolan figured out how to make it work.

15:45And again, it's the storytelling. It's the emotion. It's the romance. It's the action. It's all of those things coming together that, you know, that's what ultimately drives Hollywood success. You can have a Spider-Man 15 and it'll work if it's a good story, but it won't work just because it's a Spider-Man 15, right? You have to do more with it than that. A not so good story that the Grammys didn't really want to tell is the boycott from BTS, the boy band.

16:17And this is because of the Grammys launching a Best Asian Pop Music Performance category. We've seen how much the K-pop community is ride or die. I'm curious whether you feel like this is going to be a real hit for the Grammys in the ratings, in their reputation. Where do you see this going? So we had on the show the CEO of the Grammys, Harvey Mason Jr., and he is the villain in this story, right?

16:50And when he was on our show, he talked about how, like, the goal, his goal with the Grammys was to expand the audience. And I think, as far as I can tell, the idea behind creating an Asian pop category was to expand, was to give more attention to, you know, a genre of music that maybe wasn't getting, or certain artists, I should say. Because I don't want to describe Asian pop music as a genre in that way because that's part of what BTS was reacting to.

17:21But there are artists that were not getting as much attention from the Grammys as they're getting from listeners and from the public. Clearly, the way this was executed didn't go well, right? It just didn't work out. And whether that's because, you know, Harvey or others at the Grammys didn't have appropriate conversations with BTS and others in that community. Um, this is something that could have been avoided, I think, if maybe the naming of it had been different.

17:55Maybe it had been a little clear about what they were trying to do. I've seen, uh, the Grammys quoted as saying, like, you know, we respect BTS and, you know, but it doesn't sound like they're rethinking this at all. Which, in some ways, I think is a mistake. Maybe they should be having a conversation with BTS and trying to see, like, is there some way they could resolve and sort of connect these things to make everybody a little bit more happy? Um, but for all I know, maybe they've had those conversations and it wasn't, as it wasn't possible.

18:26There was backlash when they created the Latin Grammys of the idea of whether it is, um, siloing versus celebrating. And, you know, are you doing a better job to honor a community or a genre by letting it have its own night or its own category versus integrating and weaving it into the core product? I remember having our versions of these conversations when I was at Fast Company and we were, um, talking about doing special coverage for women executives.

19:03You know, I had been at Fortune and Fortune does the Most Powerful Women's series. It's like, well, should we be doing our version of Most Powerful Women? And we decided instead to make it more of a priority to integrate women into some of the other coverage we were doing, right? To not set up a separate category. Um, but, you know, so that's the, and Harvey, you know, the Grammys should have the lesson of, you know, their, their experience with Latin music to try to address this.

19:33I also think maybe, you know, they just didn't communicate clearly enough that, like, the broad categories, you know, will still include artists that would be honored in this other category. Like, it's additive, it's not, it's not taking away. That was the hope by the Grammys. But, you know, again, they, the, the communication wasn't executed the right way and they're, they're paying for it.

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20:36Humans will never be more intelligent than AI. There's going to be two types of companies. Those are great at AI, and those that went out of business because they weren't. How do we build a future that is human-centered? I'm Rana El-Cayoubi, and on my podcast, Pioneers of AI, we answer that question and so many more. As an AI scientist, entrepreneur, and investor, I know what it takes to build AI that works for everyone. Every week, I sit down with the pioneers shaping our future, and we take you behind the scenes of the AI that's transforming our lives.

21:13Find Pioneers of AI wherever you tune in.

21:19Hey listeners, Bob here. If you listen to Rapid Response on Masters of Scale, you may be missing half the show. Because every Friday, we release a second Rapid Response exclusively in the Rapid Response feed. The guests and topics are just as compelling and timely, from Ford's CEO to NASA's administrator to the lessons from the Devil Wears Prada. It takes about 10 seconds to find. Just search Rapid Response wherever you listen to podcasts, and hit follow to make sure you never miss an episode.

21:53I hope to see you there.

FIFA leadership and sports prediction markets

21:56Whenever we have any of these conversations, we're most excited to get onto sports business. We've just seen recently a lot of backlash to Gianni Infantino, who runs FIFA, the crew of FIFA. He tried to make a move to privatize part of FIFA, which in theory is supposed to be a not-for-profit organization. There's still, as we record this right now, a lot of pressure for him to resign. He's saying he will not. Is this an age-old issue for FIFA, whether it was Gianni Infantino, whether it was Sepp Blatter before him?

22:32Were they just getting too greedy? Was he feeling like there was enough goodwill so soon after the World Cup for him to do this? First of all, I love your positioning him as the crew of FIFA. For those of you who are not familiar with Despicable Me, check it out. Check it out. We always just want to promote Despicable Me here. This year's World Cup, there was a lot of momentum that FIFA could build on. I think part of the reaction is because of some of the historical corruption, frankly, that has been part of FIFA.

23:10And a concern that like, ooh, the culture of FIFA hasn't learned that lesson. You know, there's a higher standard that the World Cup represents and that FIFA could, I don't want to say should, but could represent to the world about sport bringing people together. And I think that's what sort of rankled people. Like, isn't there any place in this world where things aren't going to be corrupted just by how do we, you know, maximize the amount of money we make out of this?

23:42I hope that that spirit persists, not just in FIFA, but for all of us as business people to recognize that, like, maximizing every dollar today isn't necessarily bringing us to a better place overall. Especially when a lot of the people who are getting the money from that, those extra dollars don't really need them. Listen, I love sports. You know, I love sports. And part of the reason I love it is because it connects us so well.

24:13And so if you're going to do something that's going to disconnect people in sports, then maybe let it go. One thing that is splitting sports fans right now is the treatment of Kalshi, the prediction market, which has been sued by New York State for running an illegal gambling operation. The prediction markets are seemingly, to this point, able to run the same as most gambling companies without facing a lot of the same regulations.

24:43Do you feel like this is just about time? Do you feel like the state has a good case here? Listen, there's no question that, you know, Kalshi, Polymarket, people are using them for sports betting. That's undeniable. But because they have successfully gotten themselves to be already regulated as a futures market by the CFTC, that allows them to sidestep some of these other regulations is a very smart move.

25:13I think in the long run, these new models like Kalshi, they are going to be real players. They are attracting real audiences and they're being used for some fascinating stuff. I mean, thinking of your looking at your Knicks hat and thinking of the Knicks playoffs, I don't know whether you remember this story, but during the Knicks finals run, there was a bar in New York City that decided to offer, you know, a free bar tab of up to $100 for all of its patrons if the Knicks won the game.

25:48Okay. And at the same time, they placed a countervailing bet on Kalshi for, you know, that if the Knicks won. So they knew that like, well, I might be losing money here, but I'll make it back over here. It's like this really creative hedge that they were using Kalshi for that is in theory what, you know, an exchange like Kalshi could be used for. But I don't think that that's what most Kalshi users are using it for these days.

EA acquisition and fast food safety crises

26:18I want to ask you about Saudi Arabia's public investment fund, which just acquired EA for $55 billion. You know, if I were Andrew Wilson, CEO, I don't know how I would feel about this in that you have a big influx of money coming in. Obviously, this is what happened at Newcastle United in the Premier League. It's what happened to Live Golf. You know, with those, there are these big dreams of for Newcastle, all of this money could have them be a rival to a club like Man City.

26:50For Live Golf, it's you could be a rival to the PGA Tour. But what we've seen over the past year is that PIF has frankly been fickle and they could lose interest when it's not showing returns quickly. And so for Newcastle, they've had an awful transfer season right now in the summer. For Live Golf, obviously, PIF withdrew their investment. And so what would you be thinking if you were inside EA right now?

27:23How would you be preparing for working with the Saudis? I think, you know, EA Electronic Arts, they are, I'm sure, thinking that we are quite different than, you know, the Saudi investment in sports properties. You know, we're a much bigger business with renewable revenue in a different kind of way and we're much more established. EA could have gone to the capital markets and raised capital in other ways. I think, again, this is my guess, that they believe that they can remake and modernize EA to have it be a more valuable company when they're private in a way that would be more difficult when they were public.

28:06That the value of the company would fluctuate much more dramatically and maybe that they would become potentially subject to takeover efforts by financial partners that they would feel were less supportive than the Saudi public investment fund. In the case of Newcastle, in the case of Live Golf, I just think, you know, other players, when the Saudis come with their money, I think those lessons are there for people to say, let me make sure I'm asking the right questions.

28:40Let me make sure I'm pushing back the right way. And, you know, let me not get too dependent, perhaps, on this unending firehose of money that may actually end. I want to ask you about Taco Bell. They've been struggling with the cyclospora outbreak the last few weeks, and I've been surprised that this story is kept on going. People are still talking about it. There are still cases being reported. It's become a real brand hit for Taco Bell and its parent company, Yum Brands. If you were going into Taco Bell to advise them on recovering from this brand hit, what would you say?

29:17The first thing they've got to do is they've got to make sure that their supply chain is actually clean, right? Like, once you have a problem and really a scandal of this magnitude, at least magnitude in terms of public attention, you can't afford any other scares, right? And so anytime anyone has any difficulties with Taco Bell food, if that gets publicized, it's just going to reinforce this. I mean, this is something that Chipotle went through.

29:48You know, they had their own issues with, I guess, E. coli at some point that, you know, that dogged them for a while, and it took them a while to get themselves back on track. I mean, when I was younger, you know, we used to call it taco hell. Like, everybody knew that the food there was, you know, you'd get sick. Yeah, of course, everyone would get sick at Taco Bell. I know, Taco Bell, don't get mad at me. That was just the talk that young college kids had about it. But they really got the brand to be sort of trusted and relied on. And, you know, they're just going to have to do all that hard work over again, and it's not going to happen quickly.

30:23You know, it's just not. You had asked me earlier, was this good for, like, Del Taco or, you know, some of the other fast brew brands? And I think it's not. You know, I think it just makes people question, what am I getting when I go into a fast food restaurant? I don't know that it's the only reason that Chipotle's stock has gone down or the only reason that McDonald's is seeing a slowdown in traffic to their stores. But it probably contributes.

30:53It's certainly not a good thing. A whole category has to be that much more careful about, like, what is the quality of our food? You know, what is the quality of our service in responding to people who complain about how they feel after they've had our food? Those bars go up. That's good for us as consumers if they actually live up to that, that maybe we don't have to rely on regulation, which seems to be pulling back in some of these areas. But maybe, you know, market scrutiny will keep folks in line.

Looking ahead to the fall summit

31:24We're still in August, but as the summer begins to slowly wind down, I want to ask, what are you looking forward to? Where is the puck headed? What should we be paying attention to? I mean, of course, I'm looking forward to, on October 20th to 22nd, the Masters of Scale Summit taking place in San Francisco. For those listening or watching who have not looked into attending the Masters of Scale Summit, you can go to the website, summit.masterscale.com.

31:56It's going to be a great gathering, and I am deeply looking forward to that. Am I looking forward to the elections that are coming later this year? I'm not sure. I think it's going to be noisy and messy, and all the resolution that people are hoping will be clarified about America's direction will not be clarified, because as a country, we have not clarified where we want to go. But I hope some things get a little clearer in that. And listen, Alex, I'm always looking forward to whatever the next episode you and I are going to do together.

32:30We've had a lot of chance to talk to a lot of great folks, and I'm curious to see who we get next and share their ideas and sometimes their wisdom, sometimes their troubles, but always interesting perspectives. Absolutely. Thank you so much, Bob, and to everybody listening and watching, we'll see you Friday. Thanks, everyone, for listening to us all the way along. We appreciate it. Be well. Be well.

33:00Rapid Response is a Wait What original. I'm Bob Safian. Our executive producer is Eve Trow. Our senior producer is Alex Morris, and our associate producer is Masha Makutonina. Mixing and mastering by Aaron Bastinelli and Brian Pugh. Our theme music is by Ryan Holiday.

33:32Our head of podcasts is Leetal Malad. For more, visit RapidResponseShow.com.