#214: Musk v. OpenAI Round 2, Coinbase AI Layoffs, AI “Soft Nationalization & xAI Folds Into SpaceX

Introduction

0:00it's so hard to wrap your head around an exponential and actually try and comprehend it it's like it's like looking up at the stars at night and trying to actually comprehend the size of the universe like you can see it like they're out there but like you cannot envision the size and that's kind of what an exponential feels like welcome to the artificial intelligence show the podcast that helps your business grow smarter by making ai approachable and actionable my name is paul reitzer i'm the founder and ceo of smarter x and marketing ai institute and i'm your host each week i'm joined by my co-host

0:34and smarter x chief content officer mike kaput as we break down all the ai news that matters and give you insights and perspectives that you can use to advance your company and your career join us as we accelerate ai literacy for all

Episode Introduction

0:54welcome to episode 214 of the artificial intelligence show i'm your host paul reitzer along with my co-host mike putt we are recording at an unusual time mike it is saturday may 9th at 8 40 a.m eastern time if you're new to the show we usually do this on mondays but i looked at my schedule thursday night and realized i'm not here monday so i am doing a crazy thing i do every year which i think this is my seventh year mike is the orange effect foundation a wonderful non-profit started by our friends joe and pam plitzy that uh they have us play a hundred

1:29holes a hundred golf holes in one day it's a hundred hole golf marathon we tee off at 7 a.m we end around 7 p.m if you count the holes correctly which i did not do two years ago i actually miscalculated and we ended up playing like 109 holes and stuff

100 Hole Golf Marathon

1:45it is it's wild it is fun um if you're a golfer you can appreciate 100 holes is a lot i mean we were talking like three four hundred swings in a day uh but it's a blast and it's you know it's for a wonderful cause the orange effects foundation is a non-profit that empowers children and young adults with speech disorders by providing grants for speech therapy and technology so it's a amazing cause amazing people uh i am oh i always look forward to it i always start regretting it around

2:17the 50th hole but then you're like you power through so but it's it's so much fun it's like speed golf it's just two people and you just play as fast as you can like it doesn't the scores don't matter it's just just finished so so that's what i'm doing on monday so here we are on saturday morning

Recording on Saturday

2:33i messaged mike and i was like dude any chance we can't do a mother's day by the way happy mother's day to all our moms out there um a belated happy mother's day uh so we're not going to do this on a sunday no way we're spending the day doing that so here we are saturday morning all right uh but there was so much going on there's no way we're going to just like skip a week okay so this episode is brought to us by ai academy by smarter x which helps individuals and businesses accelerate ai literacy and transformation through personalized learning journeys and an ai-powered learning

3:03platform new educational content is added weekly so you always stay up to date with the latest ai trends and technologies our ai for departments collection features seven course series and certificates designed to jumpstart ai understanding and adoption so when you become an ai academy member

Course Series and Certificates

3:19or you can actually buy these course the course series individually if you don't want to become a member it's actually cheaper to just become a member though if you want to do a couple of these so we have marketing sales customer success hr finance operations and legal is actually the latest one mike that we dropped um related to that yeah so yeah the whole idea is you can get in you can take your fundamentals and then you can personalize your experience based on what department you're in or departments you support you can go by industry you can do by tools so the whole concept of our

3:50academy is just to allow you to build these personalized learning journeys and then if you have a business account our team our customer success team will actually work with you to customize learning journeys for your teammates and employees so it's really cool if you haven't been to it check it out at academy.smarterx.ai there are individual plans as well as business account plans available now

AI Pulse Survey Results

4:12and as i mentioned you can become a member for you know an annual fee or you can do single courses in series for one-time fees so that's academy.smarterx.ai to learn more um okay and then we have our ai pulse survey every week we put up a quick pulse these are informal polls uh we ask our listeners a couple of questions based often on things that we talked about on that episode so last week we had has your company set ai usage as a baseline expectation um interesting okay so we have four 41 say yes

4:45informally expected so it's not a formalized thing 23 say it's being discussed 27 say no and no plans to and nine percent say yes with a formal mandate that's interesting yeah uh and then the second one is how how has your personal sentiment about ai shifted in the past six months this is interesting like a complete actual exact split 41 say about the same 41 say more excited nine percent say more worried nine

5:18percent say more cautious that is that is bizarre looking pie chart uh all right so um yeah i'm like let's get into it we have uh the continuing courtroom drama which is just really like i said last week i think like something out of a hollywood movie but the script is maybe better in real life i was gonna say you got some more quotes for that script uh this past week because you know we had covered this past week the opening of the musk first open ai trial and last week musk had kind of taken his first

5:51days on the stand so since we recorded this past monday the trial has basically wrapped its second week in oakland and a lot more has come out so open ai disclosed in a court filing this past week that musk had actually texted greg brockman two days before trial to gauge his interest in a settlement and when brockman replied suggesting both sides dropped their suits musk wrote back quote by the end of this week you and sam will be the most hated men in america now the judge on the case ultimately

6:23ruled that text inadmissible uh she told open ai's lawyers they should have submitted it during musk's own testimony like we alluded to last week uc berkeley computer scientist kind of ai luminary stuart russell took the stand monday as musk's only ai expert witness russell actually told the jurors there is a tension between the pursuit of agi and safety and walked through a long list of ai risks from misalignment and cyber security to discrimination job displacement and people becoming emotionally attached

6:55to ai greg brockman took the stand on tuesday and rebutted musk's account of open ai's early years brockman testified musk had pushed for majority control of open ai in part to fund what musk had kind of pitched as his city on mars and his mars ambitions for spacex he also alleged that musk had open ai employees do months of secret self-driving work on tesla's autopilot team back in 2017 even as he was publicly framing open ai as a charity musk's lawyers spent a lot of time on the fact that

7:27brockman's personal stake from the for-profit restructure now makes is now worth about 30 billion dollars and they surfaced excerpts from those journals of brockman's we talked about last week he asked to himself in those journals quote financially what will take me to one billion on wednesday former open ai board member shabon zilis who importantly has four children with musk testified that she had served as a years-long intermediary between musk and open ai's leaders she told the

7:57court also that during the 2017 negotiations musk wanted open ai to merge into tesla and offered altman a seat on the tesla board and finally the jury also saw video deposition from former open ai cto mira marati who testified that altman had been creating chaos inside the company by saying one thing to one person and completely the opposite to another she specifically said altman lied to her about safety clearances for a new model and falsely claimed open ai's legal team had determined the

8:28model did not require review by the deployment safety board so paul as we covered this last week second week is even messier it seems like what stood out to you most from what we learned this past week in this trial the the musk attempt to do the settlement was interesting just because you know i had said leading up to this i i just couldn't imagine this actually goes to trial there's just too much risk here for everybody including microsoft and musk and zilis and mira marat like no craig brockman's personal journals like nobody wanted this stuff to come out i don't think i i think this was musk

9:03tried to like call their bluff and you know pushed this far enough and they finally were like all right whatever my personal journals are out there like let's just go let's get this all out like i think that was sam's quote like the week before is let's just go like you want this all out in the world let's let's have it um i i did uh post on x at one point i mean on thursday and i said i expected this trial to be crazy but the stuff coming out in evidence is so far beyond anything i thought we would learn and i was specifically referring to the max zeff article um and tweets so he said

9:37with siobhan zilis on the stand opening eyes lawyers presented new evidence detailing tesla's 2017 plans to build an ai lab to compete with google deep mind tesla executives discussed recruiting sam altman for the effort and even suggested trying to get demis hasabis so rewind 2017 again the the transformer is just being invented at google brain google deep mind so the attention is all you need papers just coming out in 2017 we don't have gpt one yet most of the work in deep learning is

10:12focused on gaming the dota team dota if you're not familiar with the gaming that has been talked about a ton in the trial and that's what opening i was working on at that time was actually like gaming as you know google deep mind was big into gaming and so it wasn't clear that the language stuff was gonna hit and so at that time they're talking about like well let's just do this at tesla and like let's bring sam over here so sam's not the ceo yet they haven't had their falling out yet that happens in 2018 and then sam becomes the ceo of open ai i think in 2019 so before i'd never heard any of this like

10:46that there was this effort to recruit so i thought this was brand new and then demis who you know elon all admires like you know um he he and demis had a relationship but at the same time he demis was working with like the evil empire which was google to elon musk that they were trying to you know create this super intelligence that was gonna destroy the world and and then another one in another email to musk in february uh 2018 um this is some where some of this comes from zillis listed

11:18out some brainstorming ideas to quote run for an agi counterbalance one of the ideas is to have sam altman run tesla ai another is to recruit demis now one of the ways they concocted to do this was to actually host an event at uh neurops which is a big machine learning conference every year and they wanted sam to like be like the moderator and in essence almost like force function him into announcing this tesla ai initiative so it's like whoa like they had they concocted all these ways they were gonna get him to do it um yeah so that there was a then there's a wired article we'll put in

11:53there um it also talked the one i thought was interesting i wonder if this is gonna come back at all zillis testified on wednesday that altman never ended up joining tesla and the ai lab and the neurops launch event never came to fruition she also testified that musk reached out to carpathy andres carpathy which we've talked about to recruit him to tesla which is actually in conflict with musk's own testimony the week prior that said carpathy came to them to to come there so something is off

12:26a misremembering by musk of how it transpired or just straight up not telling the truth about it i don't know um but usually not telling the truth under oath isn't isn't the ideal thing um yeah so then there's just like these inside stories about how they pursued this and how they tried to get them um so then two years later after those efforts in 2018 um in january 2020 zillis is appointed to open the eyes board of directors now no one knows that she has a romantic relationship with musk which apparently again so much is like soap opera like i don't want to go get into all of it but like

12:59apparently there was a romantic relationship at a time and then um it became an in vitro fertilization thing where she she decided she couldn't have children and he offered to father her children and so that's how they ended up having four kids together unbeknownst to sam altman and greg brockman so now a board member at open ai after the split so musk has since left under not good terms his

13:30a woman who has had four of his children is now a board member and hasn't disclosed this to anyone because she has an nda with elon not to tell anybody and then a business insider article comes out in 2022 that said this is what was happening and so she then had to tell altman that this was true and so she was basically a plant within the board for musk to keep tabs and they have messages back and forth about what should i do should i stay on the board you know here's what's going on and i mean wild

14:06like you're like an operative on the open ai board so then she finally has to resign because she's aware of musk's plans to build xai which we'll talk about later in this episode and so once it comes out that altman figures out he's going to do this and he's the father of her babies she resigns from the board so like what like again like i said like this is so beyond anything then there's another one that

14:38you know moving on to mira marati um there's these tech emails that the the message text messages that came out and and this goes back to the time when sam gets fired temporarily and mira for like 24 hours becomes the ceo and sam is unaware that mira is one of the driving forces behind him getting fired and so ilia and mira are corresponding with the board at the time sam gets fired and mira actually

15:09had created an executive brief about his um shortcomings as a ceo let's say so they have text messages as this is transpiring so council by fall 2023 did you perceive altman was not candid with you truthful honest mira after a very long pause not always counsel did you did he undermine you as cto yes did he pit other execs against one another yes now mind you there was articles at the time saying all of this which open ai denied so like everything like all media is just like running with

15:42sensationalized okay well here's the text messages that were like verbatim what they would be reported counsel asks if her views on sam's management has changed since she was asked by the board mira i've i've been gone from open ai for over a year up until the moment i left my views have been consistent mira says the problem she had with altman's management style after he was reinstated still persisted as well as with brockman though to a lesser degree in the latter case as we already know in 2023 roddy asked by board to collect info on sam's management style which she did and wrote an

16:15extensive memo on it roddy testifies she pressed the board for why they fired altman board response saying their lawyers had advised them not to give more info roddy at the time in absence of the info starts thinking something criminal or national security risk had occurred so she doesn't connect the dots that her own executive brief is actually now what's driving this and her distrust of him as the ceo so this is all coming from mike isaac a new york times writer who's in the courtroom who's like live tweeting this stuff and it says written about it then an interesting one is helen toner who was

16:46a board member at the time sam gets fired she testifies in a video deposition and it was really fascinating she said helen toner's deposition in musk versus altman includes some striking quotes about miramradi's involvement with altman's ouster she said mira was quote totally uninterested in telling her team that her conversations with us had been a significant factor in firing altman also claimed that mira sat on the fence and this was the quote that i was like holy shit uh she was waiting to see which way the wind would blow and she didn't realize that she was

17:19the wind i was like man that is yeah that's poetic um so that was an open ai board member basically saying like mira was the reason we were doing this and she was like unaware of it and then the last one i'll highlight mike because i think this is significant is microsoft so another thing that comes out of all this is microsoft's own internal struggles in 2018 before they decide to fund the building of open ai so the verge has this but it was in court documents but it will link to the verge

17:50article so it said court documents from the ongoing musk versus altman trial have provided a rare look at the communication between microsoft's top executives about investing in open ai and fears the ai startup would quote storm off to amazon and shit talk microsoft those are the quotes just days after opening i showed a bot beating dota 2 professional in summer 2017 which is the same exact time period that the transformer paper comes out as the origin of gpt altman responded to nadella's congratulations email with a proposal for a much bigger partnership with open ai to fund its next phase of ai research so

18:25again he's asking microsoft for money to fund this continuing effort to do video games as a way to build intelligence opening i needed larger sums of compute to expand the dota 2 project far beyond the azure credits it was using from microsoft quote probably something like 300 million at azure list prices according to altman this initially spooked some executives inside microsoft quote for those numbers to make sense we'd have to be generating significant incremental revenue directly due to the deal

18:56parentheses 500 million plus that couldn't be gained in a more efficient way said jason zander who was microsoft's azure chief at the time in an august 2017 email to nadella's these are internal microsoft emails um then another quote i guess the other thing to think about here is the pr downside of us not funding them and having them storm off to amazon in a huff and shit talk us and azure on the way out so this is scott the cto of kevin scott the cto of microsoft in a january 28 email so this is now

19:28like six months later they are building credibility in the ai community again this is scott very fast recruiting well and are going to be an influential voice all things equal i'd love to have them be a microsoft and azure net promoter not sure that alone is worth what they're asking a year later scott admitted in an email to nadella and microsoft co-founder bill gates um now it's time period to that yes we only we're probably gpt one at this point um scott admits to nadella and gates that he

19:58had been highly dismissive of ai efforts of at open ai and google deep mind when the companies were competing to see who could achieve the most impressive game playing stunt that's a quote scott became a lot more impressed when open ai moved towards natural language processing models and feared microsoft would slip behind google google's ai efforts a month after scott's thoughts on opening i email microsoft announced a 1 billion dollar investment in open ai so again i don't think that's ever been public like the internal debates and how they kind of didn't they basically were like well let's just do

20:31it so we don't get talked and so again the discovery and the evidence in this case is just so far beyond what i was expecting we were gonna see and it's not done yet it's unreal and we've said this before but like soap opera i wonder or like hollywood thriller doesn't even give it justice this is like game of thrones over here there really is backstabbing each other yeah and the texts are nuts like i i don't um i think there's another one maybe later on i had oh wait is this it i mean i'll click

21:05over real quick oh here here it was um all right hold on a second mike i gotta put this in my other one so these were the marati and altman texts that were going on so as sam is fired and marati is without telling sam she was involved she's in meetings with the board and they have these text messages sam can you indicate directionally good or bad satya and others anxious marati directionally very bad sam okay sam can you wrap up soon lots of pressure from microsoft for an update

21:37mira sam this is very bad sam can i come in they don't want you to sam what do you want to make it better i'm still willing to just walk away if that helps if they are ramped up for crazy lawsuits against me that i'm not sure what can you please tell me i just want to resolve this however and how uh and would like to join mira they're convinced about their decision sam for me to be fired or some new thing yes for you to be gone sam okay then i can come in and talk about a path forward they're saying no and they need more time more time for what they've walked me through all the reasons and the

22:10issues with you and why you can't be the ceo can you ask them why they've been saying all weekend they wanted me back she said they want a new ceo in place can i call you back in 10 minutes so they want a new ceo in place tonight uh not me mira saying sam do they know who can i tell satya is this final or would you uh should you add satya i'm trying to add satya now still don't want me new guy is rando twitch guy who is emmett sheer that was mira saying who the new ceo is gonna be

22:40he's like emmett question mark yeah i mean just nuts so sorry that was i forgot i had those pulled up three yeah and we'll we'll see how this evolves over the next few weeks too but with elon musk saying i'm gonna make you guys the most hated men in america i don't know if that only applies to him trying to say things during the trial i could see no because there was nothing that came out this week that would like follow on to that threat that i saw you know it's like there's something else still something else coming yeah that was my sense of it too like he didn't just say that because of

23:15what came out about brockman's journals or whatever which we already kind of know yeah we may when we talk about the xai stuff with anthropic we may start getting into this a little bit more might be a prelude to the later topics all right so next up this week coinbase ceo brian armstrong sent an email to all employees this past week announcing the company will cut roughly 14 of its workforce that's about 700 jobs he cited two converging forces one the company is in a crypto down market they are exclusively a crypto company in exchange and they need to adjust their cost structure as a result but

23:50also he said ai is fundamentally changing how the company works armstrong wrote that he's watched engineers at coinbase use ai to quote ship in days what used to take a team weeks and that non-technical teams are now shipping production code he also said coinbase is quote fundamentally changing how we operate rebuilding coinbase as an intelligence with humans around the edge aligning it so he's recommending some aggressive structural changes to do that he is flattening the org chart to no more

24:21than five layers below the ceo and coo with leaders owning as many as 15 or more direct reports he said every leader has to be a strong individual contributor as well what armstrong calls a quote player coach he kind of alluded to the fact pure managers are out he is also concentrating the company around what he calls ai native talent who can manage quote fleets of agents including experiments with one person teams that combine engineering design and product management into a single role so this is kind of

24:58consistent with a pattern he's been talking about for a while he revealed on stripe co-founder john collison's podcast last year that he had gone rogue on coinbase's slack mandating that every employee on board with ai tools by the end of the week and that some employees had been fired for not adopting ai fast enough this has also drawn some pushback though one analyst told bloomberg the crypto winter is probably the real reason for most of these cuts and the ai is likely an easy excuse this also lands along cloud

25:30flair's announcement this past week of 1100 layoffs framed around the agentic ai era so paul two aspects i wanted to get your take on here first every time something like this happens we have people just on fire in the comment section be like oh they overhired during covid or syrup like this is a reduction of that this is ai washing what they want to do anyway or you know their market sucks or they have a bad business and this is an excuse so i'd like to kind of talk about that is it or is it not really due to ai and then also we had flagged you and i offline there regardless of what you think

26:06here there's some really interesting ways he is considering restructuring a company around ai native talent so maybe talk me through those two pieces i feel like this whole is it ai washing is it because they overhired is it because they're in a crappy market like it's it's taking the same extremist positions that i always try and push people to not take it both things can be true like yeah the crypto may be down and yeah maybe they overhired like fine we you know it's like all right we'll

26:37concede to that might be true but when you look at the reasons why they're doing it those are true regardless of what you think of coinbase or brian armstrong or whether or not these are playoffs because they haven't managed the company properly like let's just okay let's do this let's assume you're right like if that's your belief that this is ai washing i'll just give that to you okay let's let's just accept it now let's go through the key points of this ai is changing how we work 100 true over the past year you've watched engineers use it to ship in days totally non-technical teams are now

27:10shipping production mike and i give you examples every week like this those are true regardless of who's saying this and what their situation is next the biggest risk now is not taking action 100 true we are adjusting early and deliberately to rebuild coinbase absolutely become lean fast ai native every company should be doing that like that is you can say whatever you want that is what companies should be doing we need to return to the speed and focus of our startup founding yes we are not just reducing headcount and cutting costs we are fundamentally changing how we operate

27:41rebuilding coinbase as an intelligence with humans around the edge of the lining that is what forward-thinking companies should be thinking about what is the future of the org chart how are the humans and agents working together so again you can think he's lying about reducing headcount not being the reason but like the fundamental idea of why true fewer layers faster decisions 100 that should be happening flattening orgs enterprises are stacked with layers of crap and like inefficiency so if you want to do this right you are going to flatten those layers like that is a given no peer managers 100 anybody who's a manager who has expertise in a domain has expertise in their

28:17field can absolutely also be a builder they can be the person that's doing the work creating things orchestrating like i i agree i don't want to pay anybody who isn't also doing something like there's no reason for it so and then ai native pops i love the concept concentrating on ai native talent who can manage fleets of agents work in super small teams like do these things maybe even single person teams like hey you own this you can you're the builder you're the architect like you're the person doing the things so regardless of what you believe about why they're doing these layoffs

28:50the fundamental ideas he's presenting here as to how they're going to structure coinbase feel directionally correct to me and having spent a lot of time with vc firms pe firms and the companies they fund and own this is going to ring very very true to those people i can promise you this memo was sent if those companies weren't already doing this this thing was on every slack channel of every vc funded company in the world on friday so this is like a prelude to where the market

29:21goes and even if you don't think ai is causing layoffs this gives the cover for more companies to do a 10 to 20 cut because their assumption is there's at least that much efficient efficiency in legacy companies at least and that's the first cut now i think i saw uh posts from armstrong saying hey listen we're still hiring like this isn't like we're just getting rid of everybody we're just going to hire ai forward professionals who can come in and fit this new model we're just getting rid of the

29:54administrative layers and the management layers who don't do stuff who don't understand ai can't build agent fleets can't manage fleets so i would not overlook this like this absolutely with pe and vc like it's it's gonna be front and center and my guess is there's a lot of traditional enterprises who look at that enviously and think shit i wish we could move that fast i think i wish we could get rid of layers of management i wish we had managers who actually did stuff like this is the like this is the kind of stuff we should be really thinking about as leaders of companies so yeah i don't i

30:30mean i would not underestimate the importance of a memo like this it's almost like the toby lucky one from last spring mike where it sort of set off people saying okay it's okay to talk about this as a leader now that the future looks different and i think this one could create a whole new spiral of people just being like you know what let's go yeah and that's why we wanted to talk about too just the detail of how he has this vision for what organizations look like because the ai washing debate i feel like you hit on this just misses the forest for the trees even if it's all ai washing

31:05the fundamental question is yes or no does ai change how organizations have to operate and if you believe the answer is no i don't know what to tell you but if you believe the answer is yes it doesn't matter why the layoffs are happening because we're headed in the direction where maybe this crop of layoffs is all ai washing the next one won't be if you believe that to be true yeah and you should as a leader you should be taking elements of all of these and saying what is what rings true to you what feels like something you should also be experimenting with just you could

31:38read this and throw out five of the seven things i just highlighted it's like you don't agree okay but two of those might actually inspire you to make a change within your team department or company and so i think that's the whole point and why we surface a lot of this stuff is like just to put it out there provide some context because no one has all the right answers you just have some people who are willing to put themselves out there take the pr hits um and and like say here's what we're doing and why we're doing it and everybody else can kind of learn from it like hey i actually like a couple of those ideas it fits what we were thinking internally or like hadn't thought about that so

32:12yeah i mean we're never going to have someone who just has nailed the whole thing and you know we'll talk about this actually with the next topic with the nationalization and model like nobody has all the answers but you just have some people are willing to like put out some ideas like we announced andrew yang is coming as a macon keynote and that was my whole thing with with yang we've talked about him on podcasts recently like he's one of the few people he ran for president in 2020 but he also has been on the the um the push for the idea that we need new economic futures we have to think

32:43about things like universal basic income and so while you might not agree with andrew yang's solutions he's at least someone who's out there saying hey let's talk about possible solutions let's not just say we got a problem and so like this is the kind of stuff that i i think is really important that people are putting it out there and that we're talking about it and we figure out what are this sticks and what matters but it's often going to be pretty subjective like you're going to figure it out for your company and your team all right so to that point the third big topic this week is that the

33:13trump administration disclosed at one point that it was considering an executive order to create a federal review process for new ai models before they're released to the public so the new york times reported that this plan as initially set out would have set up a working group of tech executives and government officials to design these oversight procedures with the white house discussing the framework with anthropic google and open ai in meetings last week this kind of escalated a bit midweek when national economic council director kevin hassett confirmed on fox business that an

33:48executive order is being studied and importantly he likened this regime to fda drug testing the administration was also found to be discussing tapping the intelligence community to pre-assess models partly so u.s agencies can study new capabilities before russia and china see them but after hassett's fda comparison started rattling the industry chief of staff suzy wiles posted that night of the interview saying the white house is not in the business of picking winners and losers and she said

34:20that it is leading an america first effort that empowers america's great innovators not bureaucracy a senior official also told politico that hassett's remarks were taken out of context and that the white house is looking for partnership with companies not regulation and then we had on friday the night of friday may 8th bloomberg then reported quote the trump administration is preparing to order u.s agencies to partner with ai companies to protect networks from ai enabled cyber attacks though the directive would stop short of requiring government approval for cutting edge models according to people

34:55familiar with the matter so paul we started talking last week about this idea of soft nationalization it sounds like there's been some back and forth here it doesn't sound like right out of the gate the trump administration is going to be reviewing models but the fact this was even discussed is this a sign we're headed more down the road of soft nationalization they have to they have to find some way to do this but the administration definitely seems like it's trying to thread the needle test different messaging points it's like they put it out there by tuesday they're thinking about like basically approving

35:28the models and by thursday or friday it's like no no like we're we're just like still in draft forms on these things because i'm sure they got massive blowback that day from tech community so i don't know i mean the way i think about is there's probably agencies and advisors within the administration who are truly spooked they've seen the anthropic mythos model they have real concerns about how more advanced models could be used by bad actors and nations to target individuals and businesses and governments and the nation's infrastructure and i think those concerns are well placed like there there are real

35:59unknowns ahead that we're not sure how to handle and then there's probably advisors who hate the idea of government regulation and would see these government efforts to put more controls in place as a threat to innovation and our ability to compete with china unless they can put the thumbs on this their thumbs on the scale and like influence how the regulation happens which is probably what's trying to happen regulatory capture i think would be you know the term we've previously talked about right um so then there's a whole bunch of people in congress who are at beginner level understanding of what ai is what it's capable of today maybe they have some chats with chad gpt but they have no concept of

36:32agentic stuff and reasoning models and self-improvement that we're gonna talk about like they don't understand any of that stuff and so when they try and look out to one to two years out you know this administration's got what three years left or something we got midterms happening right now when you just look one to two years out like they have no concept of what these models mean to the economy jobs national security things like that so the one thing that really concerns me and and it sort of jumped out to me with this idea of the government vetting these models is if it was a purely scientific process if we had experts in place who everyone agreed like these are absolutely experts on

37:07safety and alignment and you know the the threats of these models and they were doing truly apolitical work then i could see a version of a future timeline where this works in today's political climate i see zero chance of that happening so just this week the new york times reported that the food and drug administration blocked publication of several studies supporting safe uh the safety of widely used vaccines against covid and shingles in recent months a spokesman for the department of health and human services confirmed this the studies which cost millions of dollars in public funds were

37:40conducted by scientists that should be apolitical at an agency who worked with data firms to analyze millions of patients records they found serious side effects to be very rare in october the scientists were directed to withdraw two covid vaccine studies that had been accepted for publication in february top fda officials did not sign off on submitting abstracts about studies with shingrets which is for shingles um to major drug safety conference to withdraw the studies is the latest step by the administration to try to limit access to vaccines so that's just like straight out of the new york times

38:12but to me it's an example of maybe maybe the reports were wrong i don't know maybe you study millions of thing you know people and the reports are wrong but the government is is intentionally trying to keep that data from the public and that shouldn't be a super controversial topic it's it's kind of like a cut and dry scientific study you do it these show that they're they're they're positive like it should be a relatively objective thing when you get into models we're talking about a lot of

38:44subjectivity that the out the outputs of the models are they biased toward one political party or religious affiliation like you have all of these other surface areas that come into play where if we can't agree on what should be relatively objective it is or is it it is not effective against these conditions to this whole spectrum of things that would need to be evaluated with models i can't imagine a scenario in today's climate where these things would be unbiased and truly scientific so then you get into like even without any formal nationalization efforts the government already has

39:17tremendous ability to exert influence on these labs we saw it with the department of defense attacks on anthropic um now i don't think we should put the future of the nation and humanity in the hands of the five private companies with no government oversight like i'm not an advocate like hey these companies just do whatever the hell they want but i don't think we're on like the current path so that i'll reference this dean ball thing mike i don't know if you've read this one yet but before uh leviathan wakes was the title of this expo so now leviathan i had to look this up to be honest massive powerful sea monster from biblical theology often symbolizing chaos evil and untamable nature

39:52so dean ball just read a few of these excerpts so um he said my political uh philosophy as with many reflective people on the right is characterized by a fundamental and irreconcilable tension between libertarianism and conservatism fundamentally i view the state as a kind of tragic necessity something we must merely tolerate because without it no civilization we can conceive of is possible here's what that means in practice i oppose literally all almost all ai regulation i do not think there should be new laws to regulate algorithmic discrimination or algorithmic

40:25addiction or algorithmic pricing i despise the notion of regulating algorithmic design and i especially despise the idea of judges and juries second guessing the algorithmic design choices of others as seems to be the current direction of u.s tort law i'm opposed to efforts by bureaucrats to inject ethics or rules against missed information into information technologies i reject most regulation of ai use by businesses and consumers believing as i do that existing law plus private sector simply figuring it out will resolve most mundane ai governance challenges i also am not a doomer i do not believe

40:57ai is going to kill everyone or at least being unable to prove a negative i am skeptical of existential risk i am opposed to pauses and bans of ai development i am uncertain about the labor market impact of ai in the future but i am skeptical of the notion that ai will destroy human work and strongly opposed to regulations or taxes designed to remedy the problem in short i believe almost every single idea in ai policy is bad and i disagree with the vast majority of ai policy proposals that being said my preferences for light regulations extends beyond ai and it gets into like you know existing laws are kind of bad and like

41:30sometimes they just don't work but love my country want to save my country from being strangled through the conservative in me fears that saving it may require radical change there's no solving this tension no way out of the paradox the classic liberal in me is always driving to solve problems the conservative me knows that the most important problems in life have no solution which brings him to the niche of ai regulation that he does affirmatively support today the management of potential catastrophic risks by uh from ai by the state the potential of ai posing catastrophic risks is not hypothetical we have seen ai systems that might allow malicious actors to penetrate devastating

42:06cyber attacks on critical systems like hospitals banks power plants and the like and it seems probable other domains of catastrophic risks such as biological biological weapons development will become live uh live problems soon so he supports regulations to try to mitigate the catastrophic risks of ai he then goes into like four reasons and the fourth one i thought was the one worth highlighting um is practical once ai models have this potential of course the state will get involved do you think national security apparatus for the united states will ignore models with the potential to be weaponized both by america and against america obviously not and then he gets into his fear about the

42:41anthropic uh the fight with anthropic and the national security apparatus realizing that they have to have some control over this and then he goes into uh citing tyler cohen who put it recently we thus want sustainable methods of perpetual interference that are actually somewhat useful from a safety perspective and give governments some control and feeling of control but not too much um that's why he supports a regulation in which in brief summary involves the creation of private institutions to sit between the state and the frontier labs precisely so that they can mediate between the inevitable power

43:15seeking impulses of the state and the private business of frontier industry sustainable methods of perpetual interference so that's what it comes down to and i would recommend reading the whole thing there's a lot more to it but his basic premise is his proposal for how we solve this is not to let nationalization happen not even let soft nationalization happen you have to have an intermediary like an unbiased body in the middle that is truly objective that figures this out allows america to compete allows them to keep innovating but does not give the government control to where someone in the

43:48government doesn't like the output of one of the models or doesn't like the ceo of one of the model companies and all of a sudden their model isn't getting approved and the other one is and if you think that's an unrealistic outcome you do not follow government very much because that is what is already happening so it's a it's totally messy i don't see any near-term resolution to this but i think this is at least like uh again what we want to do in this show is present people with possible solutions talking about the problem is fine but we want to hear ideas of how to solve it and this is

44:23a direction of an idea that's worth highlighting i would say yeah i could not recommend this essay more because i just was like nodding along even though i probably you know disagree on certain parts yeah totally assumptions but it's like i and you know i realize this is not presenting a solution but i think we have to be honest about the fact that if you're following this closely enough i don't see a single pathway forward where increasing nationalization doesn't happen based on the factors that he outlined now that doesn't mean it is inevitable necessarily but i just don't see a path

44:57where it's suddenly like national security apparatus and states stop operating the way they've always operated you know really which is like i think what he's getting at is like you have to act now because this will happen otherwise yeah my i'm not like a huge conspiracy theory guy my assumption is the government is already building their own lab that they're they're they're going to if they haven't they will they will they will pull in the resources necessary to build their own models um now how you

45:32disguise that is hard given the the compute power and the energy that would be needed to do that um maybe they'll do it in the open i don't know maybe they'll they'll just build an open like u.s model um i could see that being but yeah i think either they nationalize in some way or the government builds their own and i mean you could go read um oh what is the the brain one the brain book mike that we liked uh pentagon's

46:05brain oh pentagon's brain yeah go go read that like the government's been trying to do this stuff for 25 years like it's a widely sourced incredible book about the government's efforts to simulate the human brain going back to like the 90s and even earlier so like they're not new to trying to do this and they're pretty good at keeping stuff under wraps when they want to so i would not be surprised at all if the government's just going to keep kind of an arm's length and just say like we're not going to rely on these labs either like we're going to go build our own and that's where you get into the

46:35production act stuff where it's like all right we need 200 000 ships from nvidia and we're going to take first in line before the rest of you get yours i don't know yeah it's the all the darpa stuff in that book is so interesting and it's like not being conspiratorial at all but the cia has a venture funding arm called incutel that is invested in technology like if you think they're not paying attention to this you're crazy and they also took a 10 stake in intel last year exactly so it's like i'm not saying that that means they own that company it just means like you think people aren't making moves and paying attention to these things i think you got another thing coming yes all right

47:11so paul before we dive into rapid fire uh this week's episode is also brought to us by our 2026 state of ai for business report webinar this is taking place live on thursday may 14th at 12 p.m eastern so for the sixth year running we are collecting data on how ai is actually being used in organizations and this year for the first time we actually went beyond marketing which is what we used to capture data on to figure out how ai is being adopted across every function industry and company size and the result is honestly the most comprehensive look at where business actually

47:45stands with ai in 2026 um in the live session the webinar myself paul our director of research taylor rady we're going to walk through based on all the data we're going to reveal all the top findings and talk through where adoption stands uh the gap between how mature organizations think they are and how mature they actually are how adoption varies by role industry and company size what the biggest barriers are to adopting ai and also talking a bit about where ai is heading and how to prepare so registration is free for the webinar everyone who registers gets ungated access to the full 2026

48:21state of ai for business report which is dropping on thursday the webinar is the launch event for this and we're also sending out on-demand recordings so go ahead and register even if you can't make it live to do that we'll put a specific link in the show notes but you can also go to smarterx.ai click on education and then webinars and you'll find it right there okay paul first rapid fire very closely related to this so we wanted to actually spotlight and preview in advance some of the findings from the state of ai for business report so we have actually like i alluded to in our mid-roll ad

48:57have expanded this into a fully cross-functional view of ai adoption across every type of business role we had more than 2100 people answer 34 questions this year for the survey so full report is dropping next week during that webinar but i wanted to tease two really important findings today the first is one of the most striking numbers in the entire report 71 percent of respondents believe that ai will eliminate more jobs than it creates over the next three years that is just 13 percent

49:31expect net job creation and this is remarkably consistent across every role and seniority level ceos and entry-level employees alike agree in roughly equal numbers and this number we have measured for years in the state of marketing ai report it is going up by double digits the pessimism is going up by double digits every single year and we are seeing the exact same trajectory when we expand this to non-marketing roles interestingly when we asked respondents about the impact on their own specific

50:01role only 21 said they were seriously concerned so the workforce broadly expects disruption they just don't think it will happen to them so paul i kind of wanted to just highlight that as like a top line finding here just maybe get your initial thoughts i know we'll unpack all this a lot more on the webinar on thursday anytime we feature research we always say like understand how it was conducted who responded and so the thing mike and i are always very clear on with our own research especially when we do this

50:32state of the industry is the people taking this are likely people who subscribe to our newsletter who listen to our podcast who are part of our ai academy who come to conferences these are ai forward professionals who are seeking knowledge about ai is the the more likely person to take this right so while i totally get the 71 percent worry about elimination but the only 21 percent saying that they weren't concerned about their own that that could definitely be looked at as like okay maybe people are just aren't like registering that they're in the crosshairs too maybe it's also that that the people

51:09taking this feel that they have put themselves in a position to thrive through the disruption because they're doing all the things we always talk about as an ai poor professional and so they're looking around at their peers being like you ask me like are my co-workers in trouble i'm gonna say yes you ask me if i'm in trouble and be like i don't think so i'm good like i'm doing 5x the work i was doing last year i'm taking all the so you know it's just like it's something we always have to think about when we think about the data um but i'm super excited to to see the final report and go through with everyone

51:43because one of the things i found so fascinating mike is we have these qualitative questions at the end like you alluded to it this is 30 some questions it's not an insignificant um commitment of time i don't know it maybe takes like 10 or 12 minutes or something to go through it but the completion rate was through the roof it was loud but yeah but then the qualitative part where we ask questions like what concerns you about ai what are you most excited about what was the data point mike like 90 plus percent filled in all of these yeah so at the end of the survey after you've already

52:13taken all the questions we then ask you like open-ended to fill things in and 90 plus percent out of almost 2100 people took the time to write things and i saw a report it was like 70 some pages of just though what are you excited about when it comes to ai yeah so we have these this amazing qualitative data set that we're going to share as well that is like these insights people provided into their concerns their struggles there's like so it's like it's just amazing and so i'm so grateful for everyone who took the time to be a part of the research now you're you're gonna

52:45you're gonna be really um interested in seeing the final product and hopefully it helps you make the case internally to like pull other people along and you know paul i'm almost equally if not more excited for those qualitative responses the data is amazing we're gonna learn a lot from that but i think it's also so nice to be able to see because people were very candid they have responses i've reviewed you're gonna see that people feel the same things you're feeling and are struggling with the same things

53:16you're struggling with and maybe are hopeful about similar or different things than you're hopeful about and that's really helpful i think to feel at least like okay i'm not totally alone in figuring this out yeah and you know so much of what we talk about here like we say we're always trying to present all these different perspectives and we're trying to cut through the political sides of it like not taking sides of anything we're trying to just give the information as you know as factually as we possibly can and then you get an opportunity to do research like this where you can get thousands of people and now all of a sudden you have all these other perspectives um and then you know our goal

53:52is like help you form your perspective give you enough information as unbiased as we possibly can so that you can feel that and figure it out and like mike said like maybe you find those sentiments that aligns perfectly with how you're feeling it's like okay cool like make those connections so yeah yeah it's it's always like one of my favorite things we do each year is to you know do this research and then release this report yeah all right the same okay next up we alluded to this before a big announcement from anthropic and spacex because they announced this week that anthropic has signed

54:22an agreement to use all of the compute capacity at spacex's colossus one data center in memphis which is more than 300 megawatts and roughly 220 000 nvidia gpus on the same day the reason i mentioned that spacex's data center elon musk posted that xai will be quote dissolved as a separate company and folded into spacex with the combined entity rebranded spacex ai so this is interesting because musk even as early as this year as recent as this year earlier this year was calling

54:56anthropics models quote misanthropic and evil on x this past week though he wrote he had spent a lot of time last week with senior members of the anthropic team and no one set off my evil detector so as long as they engage in critical self-examination claude will probably be good anthropic ceo dario amade said at a conference that the company has seen abx growth in annualized revenue and usage in q1 alone is and is working as quickly as possible to secure more compute so this new capacity good news for

55:29anthropic users is letting them double claude code's five hour rate limits for pro max team and enterprise plans they're removing peak hours limit reductions on claude code for pro and max accounts and significantly raising api rate limits on opus so this is an addition to the enormous compute stack that anthropic is assembling they have an up to five gigawatt agreement with amazon a five gigawatt agreement with google and broadcom a 30 billion dollar azure partnership with microsoft and nvidia a 50 billion dollar u.s

56:03infrastructure investment with fluid stack and a reported 200 billion dollar commitment to google's cloud and tpu chips as part of this announcement anthropic and spacex also said they have expressed interest in partnering on multiple gigawatts of orbital ai compute capacity which is a fancy way of saying ai data centers in space so paul this is uh i didn't have this on my bingo card personally like what did you make of this and i have kind of a dumb question here like if they're using all the

56:35compute at this colossus data center does that mean xai doesn't need it doesn't want it yeah this is one of those ones i was like my timeline is just drunk like the the x you know i'm scrolling on may 6th and i was like what like you're seeing these like that stuff at the trial the evidence of the trial and then like the the dissolving of xai was like a reply to somebody's tweet it wasn't even like a it wasn't an announcement from spacex or xai it was just like yeah we're gonna dissolve it's gonna be you know separate company it's gonna become spacex i was like

57:07what by the way yeah yeah and you gotta like click through make sure it's actually elon musk and this is like really happening um so bizarre like just a series of just bizarre stuff um the only thing i initially thought was it seems like a concession that they're not going to try and compete with open and anthropic now right like it it truly becomes they're going to build the ai for spacex for tesla like it's it's just going to focus on product and you know the bigger thing versus trying to be a dedicated lab now the colossus 2 is going to allow them it has the more advanced

57:42nvidia chips um i think it's going to allow them to still train my understanding is that this memphis plant the colossus one has like a symphony of nvidia chips they're not all the same and thereby it's hard to do parallel training on these chips so they're better for inference than they are for training and it might be that that's cool with anthropic and my again just from reports they weren't fully utilizing the data center so you had like hundreds of thousands of nvidia chips just

58:15sitting around not being used okay and anthropic is shopping for compute wherever they can get it to do inference for clawed code and co-work and all the demand that's there and so it's like what i think i tweeted something like a few hundred billion can make you know hating people go away pretty fast especially if you're spacex and you're trying to ipo next month and you're losing six billion a year and all of a sudden you get a six billion deal that walks in the door and you can wipe out the loss and now your valuation at ipo jumps plus if you're selling with a data center that is not using it full

58:52capacity and instead you position yourself as a cloud company so now you're basically competing with azure and stuff um and google cloud and aws like you're an alternative to that now your valuation skyrockets again so i actually think it's probably a genius move by elon musk it's like well let's get rid of the like oh yeah they're fine like my evil technically didn't go off like it's all good we made up i still hate dario but like whatever um i think he like he was trashing uh amanda askill the lady like i mean just literally trashing them everybody calling them names everything like two weeks ago

59:23but it's like that all goes away and again from a business perspective probably super smart you're going to use the capacity you actually now have leverage over them if you decide they're evil again like yank their their compute power um and i think in the process he also gets to stick it to open ai it's like oh yeah i'm gonna go do a deal with your main competitor and give them the compute they're looking for so they can then improve their product and pricing and screw you guys so i don't i mean it's kind of evil genius shit from elon musk honestly it really is and you know total

59:55speculation because this is such a novice opinion but it is interesting to see these companies lean into their strengths here right because it's like nobody else i mean i who knows a data centers in space everybody becomes a thing but it's like there's only one company that can do that and that's the at his spacex there's many companies that can do decently good ai models so it's like why bother going toe to toe with anthropic and open ai there becoming the cloud provider is amazing plus then you can focus on robotics and then use people's models inside robots or your own right and then

1:00:28you know throughout one other thing so you know we've talked about google owns 14 of anthropic they also happen to own six percent of spacex so it's like who who always wins google like no matter what we're talking about just assume there's a footnote that google also wins in this deal like yep okay so next up we have this past week jack clark one of anthropic's co-founders and head of the company's recently launched anthropic institute published an essay in his import ai newsletter arguing there is a

1:01:04roughly 60 chance that ai systems will become capable of end-to-end no human involved ai r&d by the end of 2028 so he says this is basically a model that can quote plausibly autonomously build its own successor with an early proof of concept expected on his end at the non-frontier scale within a year or two he said he believes we are living in the time that ai research will be end-to-end automated and that crossing this threshold means crossing into a nearly impossible to forecast future so he

1:01:39makes this argument based on a bunch of public benchmark data that he has seen going up and to the right over the last several years and he is talking about the idea that ai is already starting to improve ai and we can expect the code to be fully cracked here by 2028 so he talked about how on anthropic's internal llm training optimization task for instance claude mythos preview gets a 52x speed up over the starting code where a human researcher took four to eight hours to achieve just a 4x improvement

1:02:11anthropic also recently demonstrated automated alignment research where teams of ai agents beat a human designated baseline on a scalable oversight problem and he notes that the frontier model industry is openly chasing this outcome he talks about how open ai has said it wants to ship an automated ai research intern by september 2026 which we've talked about a new lab called recursive super intelligence just raised 500 million with the explicit goal of automating ai research and anthropic and deep mind

1:02:43are both publishing on automated alignment research so paul this really comes to this concept we've talked about recursive self-improvement and the importance of that it sounds like jack clark is pretty convinced there's a better than average chance we're going to get that in the next couple years what did you think of this i think it's important to again just stress this is a co-founder of anthropic this is not like this is someone who sees the future models before we all do he sees the trend lines of internal data now he's making the case with publicly available data but he also has firsthand

1:03:20knowledge and experience of where these models are going meter just dropped i think this was on friday their updated analysis of mythos and they said that it was like 16 hours at 50 but that they only have five benchmarks that exceed the 16 hour mark so they can't really even assess mythos until they create totally new benchmarks because it's basically like yeah it's off their charts like they have no way of actually assessing it um so yeah so the recursive self-improvement is one of those dimensions of ai

1:03:50progress we've talked about many times but the whole premise is like right now humans with ai are writing the code but then they clean the data they decide the experiments the recursive self-improvement does all this on its own like it just it starts doing everything and so you basically have ai that spends its day writing a better version of its own source code and then the better version goes live and then it's faster writing the next version so you you basically enter intelligence explosion where every day the model is basically getting smarter and then making itself smarter making the new version of itself and so this

1:04:25means the timeline accelerates you know this explosion the intelligence explosion timeline sort of moves out of sci-fi and starts becoming quite real and that presents near-term strategic challenges to companies governments workers educators like what are we we're having enough trouble dealing with today um what if these things start getting smarter fast um changes who can control ai progress so if the systems can perform ai r&d the frontier labs may gain enormous leverage so a small number of companies with the

1:04:58compute the data the talent and the deployment channels can move even faster so if one of the labs unlocks this unlocks this first in theory they can hit escape velocity from the other labs if they're months behind you can just basically like always now stay ahead of them it obviously raises immense safety and government governance concerns because again we're having trouble managing today's and figuring out the political systems and the oversight systems to keep those safe what happens if there's just like every week they're redesigning like is the government going to vet those like how do you

1:05:32how do you do that and then the upside becomes massive science medicine cyber security robotics energy like we're there like we're getting to agi and super intelligence and like all the insolvable problems become solvable but now the downside hits biosecurity risk market disruption concentration of power loss of human oversight so i mean the best way to think about it for me like to make it tangible is you know to go from gpt4 to gpt5 took like 18 months i think yeah we're now we've been on gpt5 for a while we'll be on it for a while longer we're just getting these point increases like 0.4 0.5

1:06:06whatever so you know let's say you're taking we'll just ballpark it's a nine to you know 15 months to get the next iteration of a model to move up a full point from five to six as an example imagine that the ai is able to do that for itself in months or days so like or weeks or days so something that was taking months or years technologically if it's provided with the right energy and computing power it can achieve those outcomes in weeks and days and so the

1:06:37bottleneck becomes moving from like i don't have enough smart ai human researchers there's only 10 000 in the world to well i got all the ai researchers i need i just don't have enough chips and energy yeah and then that's where you start to you know really deal with these issues so if the chips and energies are there if the government doesn't put the guardrails in place to slow the building down then you truly get the intelligence explosion which i i my mind has a hard time accepting that that will happen in that time frame i think technologically the labs will probably have

1:07:09the ability to make it happen i just feel like one of these obstacles if not multiple of them the chips the energy the government regulations something is going to not allow it to where by 2028 we're getting new models every three weeks like it i don't know it's it's but it's again to its point it's like it's so hard to wrap your head around an exponential and actually try and comprehend it it's like it's like looking up at the stars at night and trying to actually comprehend the size of the universe like you can see it like they're out there but like you cannot

1:07:43envision the size and that's kind of what an exponential feels like you just you can sit here all day and like wow that'd be weird it's like you have no idea how weird that would be yeah it's interesting to think that the two biggest bottlenecks are essentially like people and physics right at this age is like and those are really significant because they're not something that ai can get around by improving itself you have to build these things or you have to have people's minds change or incentives change yeah and i mean the only hope for humanity in society at the moment is that to do that you are going to have to be one of those five companies

1:08:16or the or the government like to to build at that scale you're going to have to but if you also build a man i don't want to think about this now if you also build an automated ai researcher and you can do it in an efficient way then in theory you could be an individual and build it and you just build it slower but you could do it with some gpus and man that would be weird like if you had an escape basically it escapes the lab like if if you enable any individual creator with some gpus

1:08:48in their basement to like have an automated ai researcher yeah and you take an open source model shit well look i mean we're thinking about that stuff today this is super sci-fi but genuinely it's like if you get to the level of systems we're talking about there may be some very creative and unanticipated ways a system like this would want to solve its own power and compute construct totally stuff like which is the concern of like you just what's that guy's name the the doomer guy begins with a y uh yudkowski yeah i mean this is the scenario it's the it's the lab escape yeah it's where it

1:09:24just it wants out and it wants out it wants it's smarter than us in a machine or borrow compute from every machine type thing and obviously this is like sci-fi but it's you can kind of start to see where you could get to that perspective from one yes yeah yeah yes interesting yes but in the meantime bringing things a little back down to earth here this past monday both anthropic and open ai announced nearly identical joint ventures that are aimed at selling enterprise ai services to portfolio companies of major private equity firms so these two announcements literally landed within

1:09:58hours of each other anthropic is producing a vehicle that is a 1.5 billion dollar joint venture it is anchored by anthropic blackstone and hellman and friedman each putting in roughly 300 million dollars goldman sachs is in for about 150 million general atlantic apollo global management leonard green gic and sequoia capital round out the cap table and what this does this entity basically acts as a consulting arm that helps mid-sized companies especially pe-backed ones incorporate ai across their operations now right on the heels of this or right at the same time rather bloomberg

1:10:34reported open ai is raising for a similar venture called the deployment company their vehicle is a bit bigger it's four billion dollars raised from 19 investors at a 10 billion dollar valuation some of the participants include tpg brookfield asset management advent and bain capital the structure of this is basically the same the jvs raise capital from alternative asset managers then channel that capital into building enterprise ai deployments inside those investors portfolio companies with the investors capturing more value from any resulting contracts so both ventures are expected to lean on

1:11:09the forward deployed engineer model popularized by palantir where engineers sit inside customer organizations to build into existing workflows so paul i found this super fascinating we kind of had anticipated we're going this direction they had announced a couple other initiatives to sell into the enterprise but what stands out to you most here i thought this is a really cool idea it seems like the at least one future that every organization is going to go towards there's a number of really interesting elements to this but i'll kind of keep it brief for now

1:11:43um so one is there's this concept that you know again if people are new to the show um i used to run a marketing agency and we were hubspot's first partner back in 2007 so we were sort of the origin of their um partner what are they called solutions partner ecosystem now today and so back in 2007 we were we were the first one and then they built it to like thousands over time and and hubspot always touted this research at least in the later years when i'm an agency that for every dollar of software there was

1:12:15six dollars of services and so that was what the solutions partner ecosystem was there to do so if hubspot sold 100 million in software there was 600 million in services to be done by this ecosystem yeah so i think that that's directionally where they're looking um they're also looking at for our our technology to be used fully for them to get the full value and us to squeeze more kind of traditional software type revenue out of them we need to go in and do the work not rely on

1:12:46outside people to do the work um the other component is i'm sorry but like you're not doing deals with pe firms to just go in and optimize firms and and hire tons of people right this is this is explicitly to go after the six trillion in human labor of knowledge workers and so if you're a firm and you have 200 companies within your portfolio you you bring them in and then there's this compounding value because they can make sure that all 200 companies are utilizing open

1:13:22aeronthropic in a fully optimized way they're driving innovation and growth but you're also looking at the replacement of people it's like way easier to do if you have the people who know the models and know what they're capable of just come in and say okay let's look at the sales function and it's like okay we don't need these seven roles anymore we're going to build agents to do those roles and here's what it's going to evolve so i think it's just their play to figure out what the future of the org chart looks like but i mean pe firms are are there to maximize returns right um you know

1:13:53reduce costs increase revenue but do it where you want the revenue per employee number to skyrocket and so if you know let's say you have a portfolio and the average revenue per employee number is 400 000 just pick a number um what if it was four million instead right and so you're gonna go with these super aggressive goals to just like change the financial dynamics of all this stuff it's gonna be very disruptive i guess but long story short it is gonna be a very disruptive model it'll work like they're gonna generate a ton of money doing this um oh yeah i have a lot of other thoughts

1:14:28stop there i have lots of thoughts on this well to our coinbase conversation guys this one is not ai washing this is no this is the real deal what we're talking about not this won't happen at every company necessarily but this is going to lead to some of the reductions and streamlining we've talked about yeah i'm really curious what this does with like i mean mckinsey and yep right because boy is competing directly with the types of things they would be selling right right who also resell the models yeah like i i haven't really had time to like dive into that but i would be really

1:15:01curious to think through the competitive dynamics of this and yeah how the traditional consulting firms are responding so next up very closely related to this and this kind of we talked about forward deployed engineers um in the previous segment but we also saw this week stripe posted a new role called forward deployed ai accelerator marketing so these are this is a new role it's hiring for and each of these accelerators according to the job description is embedded with a cohort of about 20

1:15:33marketers organized by functional team shared workflow or location and the goal is to permanently change how that group works stripe describes it as a fundamental transformation in how its marketing organization operates so the success metric stripe defines for this role is the number of workflows the accelerator transforms and the extent to which the marketers in the cohort start every task with an ai tool so responsibilities include identifying the highest leverage workflow transformations building custom tools agents and automations tailored to each marketer specific work then coaching them

1:16:05through a maturity model that runs from awareness to first win to regular ai integration to full workflow transformation to self-sufficiency stripe says the role is meant to make ai the default mode for all work not an occasional tool but the foundation of how every marketer at stripe executes and to prepare marketers for an agentic future of designing building and overseeing autonomous multi-agent workflows so the role requires five plus years of experience and demonstrated hands-on ai building not

1:16:35chat not just chatbot use the base salary is 132 000 to 198 000 and stripe is hiring in toronto chicago or remote in the u.s or canada so paul we had talked about the fact this sounds a lot like the labs concept you were outlining on previous episodes that you've started to kind of toy with at smarter x yeah i definitely um i like this idea a lot i think combined with the coinbase stuff we were talking about this is exactly what i was saying like you just got to like look around right now people are starting

1:17:07to experiment with different things this is one of those you know where the job's going to come from this is kind of actually a cool example of being an ai forward marketer and let's say you're really really good at optimizing workflows and solving problems as a marketer um this isn't a job that existed a year ago and i could see this being a common thing now the forward deployed thing i'm kind of done with like i feel like we're just it's like jesus can we just call them like ai ops people or something like so i don't know it's like a little bit overdone already in my opinion but i

1:17:39might just be kind of sensitive to seeing that um and i watch i'm gonna like define a job title for us as a forward deploy thing like two months from now i don't let me if i put that in a job title mike just like to remind me that i don't like backlisted words yeah yeah um but anyway like someone whose job is to sit with a group within a company within a department and just optimize the shit out of that company or that team like that is that's a great role and that is not enough money to pay them like if i'm telling you right now like if you're if you're in an enterprise and you take like an ai

1:18:11forward marketer and you put them on a team with demand gen or product or whatever and their job is literally just to drive optimization innovation they're going to make a massive impact if they know what they're doing fast like if you allow them the freedom to do their job 132 000 years no way like first the person who does this is going to have to have like seven to ten years experience i would think to understand like deeply the marketing function and the role um they're going to have some unique knowledge set but if i'm that person i'm not taking that job for 130 000 i don't even know

1:18:46i'm taking it for 198 000 like your impact is going to be massive if you're in a big company um so yeah got it really fascinating again kind of on a number of levels here yeah i think about this a lot because it just feels directionally like the roles of whether we call it this or not it feels like how my role is evolving how a lot of people's roles at smarter x are evolving and i wonder too how much is important here for the accelerator themselves it's not just the ai builder and systems thinking which

1:19:18is critical but they're going to have to be pretty good at communicating and change management i don't know so you can just drop someone in who is like a wizard with the technology yes it has no change management sense or pairing them with someone who does because if you deploy this outside of stripe is a very unique example you deploy this in a more traditional organization which is amazing there's going to be a lot of questions about what you are trying to do to my job a lot of barriers that you're going to have to overcome that have nothing to do with systems i would argue yeah i think maybe that's

1:19:53my point on the the salary yeah is in my mind if this is one person then all those other things you just described are part of that person's capabilities and roles and that is not a mid-level hire um yeah that's if if it is literally just someone who can build automations like they don't need to diagnose the problems and things like that i don't have a deep understanding of business they're literally just like oh yeah i'll go and build that for you tomorrow and they build it and you know hand it to them that's a different story and great opportunity if that's you like get in get a job like that like just go build some stuff but like know your benchmarks ahead of time because your

1:20:26resume is going to look so damn good like six months from now it's like i went in and they're spending 150 hours a month on this thing i cut it to five i went in and they were doing this i cut to this like you're going to be able to show amazing impact right away and i would like try and negotiate some sort of uh performance-based comp as it really relates to that role yeah exactly okay so next up paul we have our ai use case spotlight of the week every week we give you a quick look under the hood at some real ai use cases we're exploring building or deploying in our

1:20:57own work at smarterx so i'm going to share one this week that i found particularly valuable so like i've mentioned a few times this past week we finished our 2026 state of ai for business report the full port report is over 50 pages of data charts graphs tables and analysis pulled like we mentioned for more than 2100 professionals but before we shipped it or finalized it internally we needed to verify the entire thing for two big things data consistency between the master data set

1:21:28and the final report uh pdf and also the text of it that we're going to be using in non-pdf ways and then a full line-by-line proofread of the report so this kind of pre-launch verification this step done a hundred of these types of things at this point this is super tedious it takes so much time for a small team to split up and do um we did have humans heavily involved in the process we always will but this year i actually gave both tasks to claude code i dropped the master data set in the

1:22:00report pdf on my desktop ask claude to cross check every number percentage chart graph and table in the pdf against the source data then had it proofread the entire pdf for spelling and grammar it returned everything as html as like a list of go check this go fix this go look at this that i could drop straight into a google doc to share with the team so just kind of notable here that again it doesn't replace the team going through with a fine-tooth comb but often i've found with this approach you can only stare at a pdf and like tiny text over 50 pages and compare it to charts and tables

1:22:34so long before you start to glaze over and hate your life and that introduces mistakes unfortunately you miss things quad code is very good at not missing things so it's kind of cool just to note here you could do this in a number of ways you don't need quad code but it is kind of cool to do it that way because you can give it you know access to a single folder with these files it ran code to kind of split things up and analyze it you could probably get similar results just dropping this into claude but i thought this was a pretty cool way to do it um i will note also paul this is the exact kind of like

1:23:08ai workflow design and like use cases we have been building into academy for instance like this past week we just dropped three new claude focused lessons we have claude skills for side decks claude co-work autonomous workflows and talking about claude desktop as a ai work partner so they don't teach how to do this exact thing but you can see how with these mini lessons these regular gen ai app reviews we do you can kind of learn sequentially not just hey what does the tool do but we're actually focusing on different use cases as well to hopefully help you do things like this increasingly

1:23:42with these kinds of tools yeah that was the vision behind ai academy we sort of reimagined it was it needed to move to real-time education so we have the you know the course series and the certificates and things that are more evergreen but yeah i don't know i don't know how you do online education these days without this real or any kind of education without this real-time stuff or something new happens like let's look at it let's do a 20-minute review of it let's get it out to people um yeah it's becoming invaluable for our own team just to stay up on what's going on and then hopefully help other people figure this stuff out too and this is a really cool example yeah it was super

1:24:16valuable um all right paul our final segment as always is ai product and funding updates so i'm just going to rapid fire quickly through a bunch of these and if anything jumps out obviously stop me and we can discuss um first up open ai has launched gpt 5.5 instant as the new chat gpt default model this past week the company says it produces 52.5 percent fewer hallucinated claims than its predecessor on high stakes prompts in medicine law and finance while using about 30 percent fewer words per response open ai also launched chat gpt for excel and google sheets this is a

1:24:52sidebar app that lets plus pro business and enterprise users build edit and analyze spreadsheets in natural language alongside their connected chat gpt apps and data anthropic released clod for financial services including 10 ready-to-run agent templates for tasks like building pitch books screening kyc files and closing books at month end plus a deeper microsoft 365 integration that connects clod directly to excel powerpoint word and outlook anthropic also updated clod managed

1:25:22agents with three new capabilities there's a research preview quote-unquote dreaming feature that reviews past sessions to extract patterns and improve agent memory over time there's an outcomes mode where a separate grader evaluates agent work against a custom rubric and sends it back if it falls short and multi-agent orchestration that lets a lead agent delegate work to specialist sub-agents in parallel uh microsoft has expanded copilot co-work with ios and android support they have reusable co-work

1:25:55skills that capture how a user wants a recurring task done they have new connectors to things like monday.com and s&p global energy and claude's opus 4.7 is now selectable as a model option right within co-work google has quietly shut down project mariner the web browsing ai agent it had highlighted alongside the gemini 2.0 launch in late 2024 bloomberg has reported that apple plans to let users choose which ai model powers apple intelligence features in ios 27 ipad os 27 and mac os 27 this fall via a new

1:26:33extensions framework that will support models from google anthropic and open ai bloomberg also reported apple's camera equipped airpods have reached an advanced testing stage as the company pushes towards ai native consumer devices uh brett taylor's startup sierra raised 950 million dollars in a round led by tiger global and gb uh this is the agentic customer experience ai startup and their post money valuation is now above 15 billion dollars just months after its previous fundraise hubspot has

1:27:06published its vision for an open agent ecosystem committing to making every action that can be done inside hubspot also accessible through apis and mcp server and other emerging access methods so that external agents can both run on hubspot and run hubspot harvey released the legal agent benchwork and open source benchmark rather an open source benchmark of more than 1200 agent tasks across 24 legal practice areas evaluated against 75 000 plus expert written rubric criteria and this has backing from

1:27:40nvidia open ai anthropic mistrawl and deep mine and finally deep seek is seeking up to 7.35 billion in what could become the largest funding round ever for a chinese ai startup as the company shifts from pure research to commercialization so as a result the lab is accelerating model releases hiring product talent from companies like byte dance and building enterprise tools as competition and computing costs rise uh paul one final note here we mentioned uh the ai pulse survey at the top of the episode go to

1:28:17smarterx.ai forward slash pulse to go try that out and take it for yourself takes just a couple minutes and the two big questions we're going to talk about are your kind of position on if powerful ai models should be vetted by the u.s government and talking about your own organization are you actively replacing any roles today with ai so super excited to see the results of that one see what the courtroom drama brings us this week yeah tuna it's gonna be crazy i i feel like we're still just scratching the surface on how weird this is gonna get yeah yeah i don't know what else they

1:28:50can do it's like it's always a surprise but yeah another busy week um like we keep saying just the product and funding alone could just be the episode each week there's so much to unpack there so always make sure to go check the show notes if you heard mike list or something i mean we're moving pretty quick the airpod stuff's super fascinating to me the cameras in the airpods like there's tons of interesting stuff the dreaming thing from anthropic is fascinating research um yeah don't glaze over them just because we're running through those real rapid at the end if there's something that catches your interest grab the show notes and you know go do some extra reading or check out

1:29:23the newsletter each week there's uh yeah just so many things you can pursue each week with ai these days so thanks mike again especially for doing this on a saturday making this work and thanks everyone for joining us we will be back i think we have one episode this week pretty sure so yeah okay so we'll be back next week uh all right thanks so much have a good week thanks for listening to the artificial intelligence show visit smarterx.ai to continue on your ai learning journey and join more than 100 000 professionals and business leaders who have subscribed to our weekly newsletters

1:29:55downloaded ai blueprints attended virtual and in-person events taken online ai courses and earned professional certificates from our ai academy and engaged in the smarterx slack community until next time stay curious and explore ai