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EU says to invest two hundred billion in AI, but how?

The European Union announced this week at the AI Action Summit in Paris that it will invest two hundred billion Euros in the development of AI. Curious clicking on the link leads directly to a deleted YouTube video: 'Video removed by the uploader'. These brainiacs are going to invest two hundred billion Euros of taxpayer money in AI?

One striking aspect of the story, because serious plans are as yet unobtainable, is the creation of 'AI Gigafactories', or large-scale data centers to serve as the backbone for European AI development. When politicians start spouting texts about "hundreds of billions of investments" and empty phrases like "AI Gigafactories," because data centers are apparently not sexy enough anymore, it is advisable to be vigilant.

Of course, the European rhetoric is a reaction to the ambitious American Stargate project. That too is weighed down by a Boy Scout objective like "to build and develop AI - and specifically AGI - for the benefit of all humanity."

The communique states that priorities include “ensuring AI is open, inclusive, transparent, ethical, safe, secure and trustworthy, taking into account international frameworks for all” and “making AI sustainable for people and the planet”.
It is as if miss World and Buzz Lightyear were handing in a homework assignment together.

The Guardian wrote up a clear summary of the AI summit, with three things standing out: first, the global recognition that AI is having a huge impact on society and the economy; second, that developments in AI are accelerating; and, unfortunately, third, that there is no consensus on how to regulate developments internationally.

The fear among entrepreneurs in Europe is that bureaucrats without substantive expertise will distribute the planned budget, which will result in wasted money and slow implementation.

Smarter European approach: embrace open source AI

A better approach would be to not simply spend these funds on infrastructure or vague programs, but to invest in AI companies working with open-source technologies, not based on but inspired by China's DeepSeek. By starting with a fully open-source codebase, including transparent training data, the EU can build an AI ecosystem that is widely accessible to large companies, startups, researchers, businesses and hopefully even individual developers.

The most practical approach would be the creation of a fund to invest in AI applications that build on this open-source base. This would ideally be done in partnership with existing investment funds in the market to avoid wasting taxpayer money, rather than a top-down model in which the EU itself tries to drive innovation.

The current trend within AI shows that most investment is going to large language models (LLMs), with companies like Meta and Microsoft spending tens of billions a year on AI development. This means that if Europe is not more strategic with its investment, it risks remaining behind.

Focus on open-source AI and a smart investment model rather than a purely infrastructure-driven approach could yet help Europe achieve a competitive and sustainable AI ecosystem. But if the strategy is not sharply translated into tactical and operational decisions soon, this historic opportunity will get bogged down in inefficiency and political rhetoric.

Elon Musk's OpenAI bid not for real

Elon Musk has announced his intention to make a nearly $100 billion bid for OpenAI, but the question is whether this is a serious acquisition proposal or a strategic move to thwart his archenemy Sam Altman. Musk, who co-founded OpenAI but later left acrimoniously, vehemently opposes OpenAI's transition from a nonprofit to a commercial company. A bid of this size would make it more difficult for OpenAI to move the shares held by the non profit organization to regular commercial shareholders.

A major complication is that Microsoft owns 49% of the shares in OpenAI, meaning Satya Nadella's company has a decisive vote in any acquisition. For Microsoft, a sale would raise nearly $50 billion, but the company also has a strategic stake in OpenAI because most of its AI infrastructure runs on Microsoft Azure. This makes it unlikely that Microsoft will stand and cheer when OpenAI is acquired, unless a deal is struck in which Musk's AI company XAI along with OpenAI becomes a major customer of Microsoft.

Remarkably, Sam Altman himself owns no shares in OpenAI, giving him little direct influence over an acquisition. This highlights OpenAI's unusual governance model, with control largely in the hands of the foundation that founded the company. Musk's bid therefore seems less a serious attempt to acquire OpenAI and more a tactical move to disrupt Altman's plans and make OpenAI's future uncertain. Surely investors will be scratching their heads before they will fork over the forty billion sought by Altman on a valuation of three hundred billion in this situation.

You need a search engine to make sense of Google Gemini's choices. 

AI UI is horrible

You'd almost forget in all the fuss to take a good look at OpenAI's products. MG Siegler did not hold back about ChatGPT's sadly tuneful interface:

"Well, now we're up to eight options – six in the main drop-down and still those same two "left-overs" in the sub-menu. And technically it's nine options if you include the "Temporary chat" toggle."

At Google, the user interface (UI) is just as horrible. The makers of the most Spartan, and thus most successful, search engine ever, have managed to turn their ChatGPT competitor Gemini into an incomprehensible AI menu. It is downright woeful, because there are extraordinary capabilities hidden beneath this wretched interface. See, for example, how Google AI Studio phenomenally explains how Photoshop works.

So I asked Google Pro 1.5 Deep Research, what a name, to produce an investment strategy for the European Union based on literature research. A few minutes later, Deep Research produced this Google Doc. Far from perfect, but better than anything produced so far by the EU.

Ethereum under fire

Ethereum, for years the leader in the world of smart contracts and after Bitcoin the crypto currency with the highest market cap, is at a crossroads. Despite the rising Bitcoin price and optimism in the crypto market, especially since Trump's election victory, Ethereum remains far behind and is trading even lower than a year ago.

Ethereum's share price is suffering from the rise of competitors such as Solana and Sui

What are the causes?

  • Lack of major updates: after "The Merge" (the switch from Proof-of-Work to Proof-of-Stake), there has been no new breakthrough.
  • Increasing competition: Solana, Sui and Aptos are gaining ground with faster and cheaper transactions.
  • Negative publicity: Ethereum founder Vitalik Buterin's recent tweet about communism and decentralization was taken out of context and caused unnecessary uproar.

Ethereum is still seen as a fundamentally strong blockchain, but it may lose more and more market share to newer platforms that are more responsive to users' current needs.

Huge livestream error, token price rises?

In the third episode of the NFA Podcast, which Nisheta Sachdev makes with yours truly, she surprised me with the news that NEAR Protocol's token price had risen after a team member accidentally shared the wrong screen of his computer during a livestream, unwittingly treating viewers to carnal intimacy of the eighteen-plus genre.

The crypto world is known for its unpredictable market reactions, but what happened next was exceptional even for crypto: the price of NEAR rose 5.6% to $3.50. While it cannot be proven that the livestream incident is directly responsible for the price increase, it again raises the question of how much influence, if any, "fundamentals" have on the crypto market?

If a blunder like this can drive up the price, it means the market is guided more by hype than by the true value of a project. Even the Tinder Swindler, infamous since the Netflix documentary, is launching his own token. It is leading to increasing frustration among professional developers and investors in the blockchain world.

Nish explains the Near livestream incident

GameStop considers buying crypto

GameStop, the company that was bailed out by retail investors in 2021 during the WallStreetBets revolt, is now considering investing in Bitcoin and other crypto-assets. By the way, the movie about GameStop is particularly worth seeing, with splendid roles by Pete Davidson and Seth Rogen, among others.

San Francisco overrun by startup teenagers

When incubator Y Combinator recently had a party, the platters went around with glasses of soda instead of alcohol: many startup founders were simply too young to legally drink alcohol. San Francisco's startup scene is flooded with very young AI entrepreneurs, many of whom left college to start their own companies.

The cost of university education in the U.S. has risen so much that despite the low success rate, entrepreneurship is a legitimate option. Outside the U.S., university education often remains a more logical route because the cost of a university education is much lower and the funding and exit opportunities for startups are not as great than in Silicon Valley.

That and much more in the third episode of the NFA Podcast, in which I also share how my experiment with investing one hundred dollars last February went down, exclusively in tech stocks.

For the hasty viewer and clicker

00:00 Introduction to NFA Podcast and Hosts Nisheta and Michiel 

01:42 Surprising News in Crypto: Near Protocol Incident 

03:53 Market Reactions and Near Token Performance 

05:22 Ethereum's Market Sentiment and Fear Index 

08:09 Ethereum's Performance Compared to Other Blockchains 

09:29 Market Predictions and New Money Flowing In 

11:35 GameStop's Potential Move into Crypto 

12:42 Upcoming Launches: Tinder Swindler's Token 

13:06 Elon Musk's Bid for OpenAI 

14:44 The AI Summit and Global AI Treaties. 

16:49 Youth and Startups: The College Dropout Phenomenon 

20:44 Market Spotlight: Insights and Predictions 

22:34 Investing Strategies and Personal Experiences. 

24:44 Supermicro, Palantir and Nvidia 

25:20 Dutch Trance NFA Podcast Theme 

25:41 NFA Dutch Trance Theme Review 

25:59 Indian NFA Podcast Theme 

26:25 Indian NFA Theme Review

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AI invest crypto technology

The NFA Podcast is live and AI company with 1-page website is worth $20 billion

Despite the rise of competitors such as DeepSeek, OpenAI has not lost any traffic, unexpectedly growing faster than ever and leaving all competitors behind. The question is why OpenAI nevertheless needs $40 billion. We discuss this and much more in the new weekly podcast we are launching this weekend: The NFA Podcast, with co-presenter Dr. Nisheta Sachdev. The first two episodes have been online since this morning.

Also in this newsletter, we look at the final breakthrough of Palantir and the mysterious company SSI, which does not appear to have a product out, yet is valued at $20 billion.

Nish discusses the tokens PAIN and It Will Go UP, I talk about OpenAI's funding and the success of Palantir

New weekly podcast: NFA

In episode 1(viewable on YouTube here or on Spotify here), Nisheta and I introduce ourselves, talk about how we got into the tech and crypto world, and discuss the latest trends in web3 and tech, with a special focus on AI. According to Nisheta, the link between AI and crypto represents the definitive breakthrough of blockchain in the consumer market.

In episode 2(viewable on YouTube here or on Spotify here), we dive deeper into specific crypto projects such as PAIN, the token that last week raised $40 million in an instant and returned money to investors. We also discuss Palantir's extraordinary quarterly results and show footage of CEO Alex Karp, who in a jolly mood declares war on opponents of America and the West....

The name NFA was coined by Nisheta and stands for "Nish, Frackers & Anon" or "Anyone Else," because we hope to have interesting guests, but it also stands for "Not Financial Advice": we absolutely do not want to give financial advice.

Weekly, Nish and I discuss the most notable developments in crypto and tech, without trying to be pedantic or give investment advice. We share our thoughts, opinions and things we find interesting, such as interesting tokens and stocks that have come on our radar.

Whether you are a seasoned tech and crypto expert or an enthusiastic beginner, our goal with the NFA Podcast is to create a place to explore the market together and share experiences. All suggestions and feedback are welcome.

Who is Dr. Nisheta Sachdev?

Dr. Nisheta Sachdev, also known as "The Crypto Dentist," is a prominent figure in the blockchain world. Her inclusion in the "40 under 40" list underscored her breakthrough in this fast-changing world, where Nisheta stands out for her lucid analyses.

Nisheta Sachdev, blockchain by day, dentist by night - or vice versa

Nisheta came into contact with crypto in 2018 and worked full-time in the sector from 2020, when she and her sister Nikita started the soon-to-be leading crypto marketing company Luna PR in Dubai. Within the blockchain sector, Nisheta became a passionate advocate for technologies such as cryptocurrencies, NFTs, the metaverse and AI. Nish has a unique ability to articulate complex concepts simply, making her a popular and respected speaker at international conferences.

Despite her keen interest in the crypto and technology sectors, Nish recently answered a higher calling and resumed her studies in medicine, specializing in reconstructive surgery of patients who have lost parts of their jaw and face, mostly due to forms of oral cancer. For those interested in learning more about Nisheta, I recommend this recent interview with her on YouTube.

ChatGPT resurrected from never being gone

After a period of stagnation, ChatGPT has returned to strong growth, leaving competitors such as Bing, Gemini, Claude and Perplexity far behind. They are "Boom Times For ChatGPT."

By January 2025, ChatGPT reached 3.8 billion visits on desktop and mobile, more than double that of Bing and well above the rest. This marks a major turnaround after more than a year of stagnation. The upturn comes at a crucial time, when OpenAI is being challenged by DeepSeek.

DeepSeek, which rapidly gained popularity at the end of January, achieved 49 million visits in just one day, a third of ChatGPT's audience, despite the company being barely known outside China. This shows that new competitors can gain ground at lightning speed.

OpenAI benefits from ChatGPT's strong brand name. To reinforce this position, it is launching its first Super Bowl commercial today, while Google is doing the same for Gemini. If OpenAI succeeds in positioning ChatGPT as the standard for AI, it can maintain its lead even as chatbots become an everyday product worldwide.

Which competitors?

ChatGPT is way ahead of the competition. In January 2025, ChatGPT had 3.8 billion visits, compared with 1.8 billion for Microsoft Bing, 267 million for Gemini, 99.5 million for Perplexity and 76.8 million for Claude. Although these figures reflect Web traffic only, they show that OpenAI has built a huge lead. It's especially painful for Google, which just can't seem to "redirect" traffic from its search engine to Gemini.

OpenAI's quest for tens of billions

Journalist and investor M.G. Siegler, who is particularly prolific as a blogger again these days, explored why OpenAI needs $40 billion and how the relationship between OpenAI, Microsoft and Nvidia fits together in the excellent piece "The IPOpenAI."

As discussed last week, OpenAI plans to raise $40 billion, primarily to fund the massive computing power needed to train and run its AI models. Although there is a battle going on for talent in the AI sector which means staffing is also not cheap, by far the largest portion of this amount is going toward computing infrastructure such as power-hungry servers and data centers.

OpenAI in battle with Big Tech

The Big Tech companies, with Microsoft, Meta and Amazon leading the way, can invest tens of billions of dollars annually in their existing cloud infrastructures, funded from their huge profits. To compete, OpenAI must also raise tens of billions and has now ended up with SoftBank and sovereign wealth funds, mostly from the Gulf region.

To put it in perspective, according to Reuters, OpenAI expects an annual revenue of nearly $12 billion in 2025 at a loss of possibly $15 billion, at least if margins do not improve. It's going up against Meta with $200 billion in annual revenue, Microsoft with $250 billion, Alphabet with $300 billion and Amazon with even more than $500 billion in revenue this year. Even Oracle ($58 billion) and Salesforce ($38 billion) are profitable giants compared to the heavily loss-making OpenAi.

OpenAI raises more than historical IPOs

If OpenAI manages to raise $40 billion, it would be the largest amount ever raised by a company, even more than oil giant Saudi Aramco's $30 billion in 2019. By comparison, Visa raised nearly $20 billion in 2008 and Facebook $16 billion in 2012. But Facebook (now called Meta) did so at a valuation of under $100 billion, or less than a third of what OpenAI now considers itself worth.

The trend in the IPO market is that the biggest promising companies are choosing to remain private, thanks to the abundance of available capital. OpenAI's current funding round is an example of this shift, with companies raising huge sums of money without going public.

It is unlikely that OpenAI will succeed in becoming profitable any time soon, and then it will be a hell of a job next year to find parties willing to step in at a valuation of say $500 billion. It won't be possible to go much lower if SoftBank comes in now at $300 billion. How many investors will dare to explain to their shareholders next year that they are investing roughly $50 billion in OpenAI and not even getting ten percent of the shares in return?

Nvidia always wins

If SoftBank invests the $40 billion OpenAI wants, OpenAI will pay most of that money to Microsoft, on whose cloud services (Azure) it largely depends. In turn, Microsoft, with hat in hand and checkbook in its inside pocket, will be knocking on the door of Nvidia, which supplies the necessary chips and data center infrastructure.

In the AI world, it's simple: when it rains money at the top, it eventually pours down at Nvidia. SoftBank's pennies will end up, via OpenAI and Microsoft, at Nvidia..

This is precisely why I wrote last week that it makes no sense to expect Nvidia's revenue growth and profit margin to decline in the coming years; all doomsday scenarios from Wall Street notwithstanding. Microsoft is investing $85 billion in AI this year and Meta $65 billion. There are reportedly countries, not companies, that will also place such hefty orders with Nvida over several years.

The Big Tech companies have no choice but to order what Nvidia can deliver, because missing the boat in AI could mean the end of the supremacy of Microsoft, Google, Oracle, Salesforce and Amazon Web Services. But note that this is No Financial Advice!

Palantir's share price already rose 47% this year, especially striking compared to mere share price declines at Nvidia, Apple, Microsoft and Google

Winner of 2025 so far: Palantir

An exception in the software sector struggling with the rise of AI is Palantir, which I have written about many times. The data analytics company remains secretive, but it seems increasingly likely that Palantir is one of the few software companies in the world that, through the use of AI, manages to both improve its software and reduce operating costs at the same time.

Despite selling relatively little Palantir software in Europe due to privacy concerns, the stock has risen 350% in a year. This week Palantir announced impressive financial results, again leading to a hefty rise in its share price: 22% in one day.

For the fourth quarter of 2024, the company reported revenue growth of 36% over the previous year, with total sales of $827.5 million. The U.S. market contributed significantly to this, growing 52% year over year. Since 2009, the company has secured more than $2.7 billion in U.S. government contracts, and it is likely that under President Trump, the U.S. government is going to take an even much larger cut from Palantir.

Morgan Stanley raised the rating for Palantir from "underweight" to "equal weight"and adjusted the price target from $60 to $95, referring to the strong quarterly results and positive outlook for 2025. Nonetheless, concerns remain about the high valuation of the stock, which sits at a stratospheric price-to-earnings ratio nearing 600. Palantir has been part of the S&P 500 and the Nasdaq 100 since last year, so it will also have a stronger impact on the prices of index funds and ETFs.

Palantir has been led for years by quirky co-founder Alex Karp, who said confidently at the presentation of the quarterly figures that Palantir likes to help governments and goes far in doing so: 'when it's necessary to scare enemies and on occasion, kill them..'

Andreessen Horowitz invests (de)centrally

Due to the success of CEOs like Karp and before him people like Bill Gates, Steve Jobs and Elon Musk, the perception has emerged in the tech world that centrally managed companies are the most successful and best at innovating. In this excellent piece, Miles Jennings of investment firm Andreessen Horowitz argues the opposite. Yet even Andreessen Horowitz still invests the majority of its billion-dollar budget in traditional centrally organized companies, especially in the AI world.

No product, 1-page website: worth $20 billion

Safe Superintelligence, an unusual AI startup with a one-page website co-founded last year by former chief scientist and co-founder of OpenAI Ilya Sutskever, is fund raising at a valuation of at least $20 billion. Small detail: the company is not yet making revenue and apparently does not yet have a product.

Sutskever's track record and SSI's unique approach are enough reason for great interest among investors. I previously wrote about the extraordinary scientist Sutskever, who became famous in the tech world mainly because Elon Musk and Google founder Larry Page broke off their friendship over a dispute over whose company Sutskever would join.

Musk can get into an argument walking into an empty house, but his fight with Page showed that Sutskever must have special qualities. Musk said of this in Lex Fridman's podcast, "It was mainly Demis Hassabis (ex-founder DeepMind, now head of AI at Microsoft, MF) on one side and I on the other, both trying to recruit Ilya, and Ilya hesitated. In the end, he agreed to join OpenAI. That was one of the hardest recruiting battles I've ever experienced, but that was really the key to OpenAI's success."

The new funding round would quadruple SSI's valuation from the previous round less than six months ago (!), when the company was still valued at $5 billion and raised $1 billion from five investors, including Sequoia Capital, DST Global and, of course, Andreessen Horowitz. There are apparently enough investors in Silicon Valley who would rather buy a reasonable stake in SSI at a $20 billion valuation, than be fobbed off with a smurf sized share in OpenAI at a $300 billion valuation.

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Unexpected winners and losers after the week of DeepSeek

How DeepSeek would like the world to think about the youthful team. Image created with Midjourney.

It was the week of DeepSeek's CEO Liang Wenfeng, who seemed to appear out of nowhere to scare the hell out of everyone from Silicon Valley to Washington to Wall Street.

Apparently, not everyone has noticed that China is making the leap from an agricultural to a post-industrial society in record time. What chuckles there must have been in Beijing and Shanghai when Chinese New Year was celebrated last week.

Last week I wrote that Silicon Valley was rudely awakened by DeepSeek, and on Tuesday I added that Wall Street had overreacted. Today an attempt to chart the winners and losers, short- and long-term, of the rise of DeepSeek.

Who is Liang Wenfeng?

But first: who is Liang Wenfeng, the founder and CEO of DeepSeek? What is special about Wenfeng, as a startup founder, is his background as the founder of a hedge fund: High Flyer

"When we first met him, he was this very nerdy guy with a terrible hairstyle talking about building a 10,000-chip cluster to train his own models. We didn’t take him seriously" one of Liang's business partners told the Financial Times.

During his time at High Flyer, Liang began buying Nvidia equipment and learned the various ways to develop algorithms for AI applications, lessons he now applies at DeepSeek. More remarkably, DeepSeek's sudden success is driven by Gen Z newcomers from diverse backgrounds. Liang likes originality and creativity from young smart people and values experience a lot less.

Liang also talked about hiring literature buffs on the engineering teams to refine DeepSeek's AI models. "Everyone has their own unique path and brings their own ideas, so there's no need to direct them." This is especially interesting to read in the week that Mark Zuckerberg boasts that he is getting rid of all diversity programs at Meta, in an effort to appease the Trump administration.

OpenAI worth $300 billion after all?

According to the Wall Street Journal, Japan's SoftBank would lead a $40 billion investment round in the ChatGPT maker, part of which is to be spent on its Stargate AI infrastructure project. With a valuation of $300 billion, OpenAI would become the second most valuable startup in the world, behind Elon Musk's SpaceX, the major rival of OpenAI CEO Sam Altman.

It would be downright amazing if Altman manages to raise money for his money losing company at that stratospheric valuation, in the week when its vision and technological architecture are being doubted worldwide. But let us not overestimate SoftBank: it is the same club and the same man, Masayoshi Son, who burned tens of billions in WeWork; all the way to bankruptcy. The question is: why won't anyone but SoftBank step in at this valuation?

Is Stargate science fiction?

Both OpenAI and SoftBank have declared they will invest tens of billions in Stargate, the $500 billion budgeted AI infrastructure project that is supposed to seal American hegemony in technology. The crazy thing is that OpenAI doesn't have that money at all, and neither does SoftBank. So when SoftBank invests in OpenAI, which thereby invests in Stargate, it's basically filling one hole with another one.

The Verge published a lucid analysis of the Stargate project. If Stargate fails, it would not simply be the end of a startup. It would be an expensive reality check for an entire industry that claims to transform the world through pure computing power.

Altman likes to present himself as the protagonist in a classic science fiction story: the visionary who promises to transform society through technological power. 

In say a year, we will know whether Stargate was the beginning of America's AI revolution, or just a techno-optimistic fantasy that could not survive in the real world.

DeepSeek's actual costs

Then to a much-discussed topic: the costs allegedly incurred by DeepSeek to develop the acclaimed R1 model. The wildest stories are circulating about this, while DeepSeek itself has been fairly transparent about it:

"Finally, we again highlight the economic training cost of DeepSeek-V3, as summarized in Table 1, achieved by our optimized co-designs of algorithms, frameworks and hardware.

During the pre-training phase, training DeepSeek-V3 on every trillion tokens requires only 180K H800 GPU hours, or 3.7 days on our cluster with 2048 H800 GPUs. This completes our pre-training phase in less than two months and takes a total of 2.664M GPU hours. Combined with 119K GPU hours for context length extension and 5K GPU hours for post-training, DeepSeek-V3 costs a total of only 2.788M GPU hours for full training.

If we assume that the rental cost of an H800 GPU is $2 per GPU hour, our total training cost is only $5.576M. Please note that the above costs include only the official training of DeepSeek-V3 and not the costs associated with previous research and tear-down tests of architectures, algorithms or data."

I highlighted the crucial part: all previous costs are not included in the cost calculation. It's like calculating the cost of a bodybuilder's meals on competition day without including how many meals it took to get to the competition. 

Cheaper AI: who benefits?

Even more interesting than the cost aspect, DeepSeek offers the ability to install the model locally and develop on it. Microsoft CEO Satya Nadella pointed directly to Jevon's Paradox.

In short, precisely because of the reduced cost, the use of an innovationwill increase. It looks like Nadella is going to be right about that. In the long run, the "commoditization" of AI models and cheaper inference as demonstrated by DeepSeek will benefit Big Tech. Microsoft, for example, needs to spend less on data centers and GPUs, while benefiting from increased AI utilization through lower inference costs.

Amazon is also a big winner: AWS has not developed its own high-quality AI model, but that doesn't matter when there are high-quality open-source models available that it can offer at much lower cost.

Apple also benefits

Drastically reduced memory requirements for inference make AI on iPhones much more feasible. Apple Silicon uses a unified memory architecture, with the CPU, GPU and NPU (neural processing unit) accessing a shared memory pool, argues Stratechery in an excellent piece. This effectively gives Apple's hardware the best consumer chip for inference. Nvidia's gaming GPUs, for example, reach a maximum of 32GB of VRAM, while Apple's chips support up to 192GB of RAM.

Meta the biggest winner

AI is central to Meta's long-term strategy, and one of the biggest obstacles to date has been the high cost of inference. If inference and training become much cheaper, Meta can accelerate and expand its AI-driven business model more efficiently. 

Sensibly, Zuckerberg has reportedly set up several war rooms to determine how Meta will react to the introduction of DeepSeek. Whereas in the short term DeepSeek is thought to be a threat to Meta's AI strategy with its Llama LLM, a structural reduction in AI development costs will actually lead to a huge advantage for Meta, which is on track to invest $65 billion in AI development this year alone.

Most of that is spent on hardware and data centers. If that kind of investment can be minimized by imitating DeepSeek's approach, Meta will see its net profits increase substantially without weakening its competitive position.

Google the loser?

While Google also benefits from lower costs, any change from the current status quo is likely to be a net detriment to Google. Every search in OpenAI, DeepSeek or a Meta agent, comes at the expense of a search on Google's search engine.

Despite all its efforts and hundreds of acquisitions over the last few decades, Google still depends largely on the search engine for revenue and profits. It remains to be seen whether Google will succeed in "redirecting" that traffic from the AI agents and chatbots the world so eagerly uses, back to Google's AI tools.

Nvidia not defeated by DeepSeek

Despite DeepSeek's breakthrough, Nvidia has two moats, according to Stratechery:

  • CUDA is the preferred programming language for anyone developing these models, and CUDA works only on Nvidia chips.
  • Nvidia has a huge lead when it comes to the ability to combine multiple chips into one large virtual GPU.

These two lines of defense reinforce each other. As mentioned earlier, if DeepSeek had had access to H100s, they probably would have used a larger cluster to train their model simply because it was the easiest option. The fact that they did not and were limited by bandwidth dictated many of their decisions in terms of model architecture and training infrastructure.

DeepSeek has shown that there is an alternative: heavy optimization can achieve impressive results on weaker hardware and with lower memory bandwidth. So paying more to Nvidia is not the only way to develop better models.

However, there are three factors that still work in Nvidia's favor.

  • First, how powerful would DeepSeek's approach be if applied to H100s or the upcoming GB100s? Just because they have found a more efficient way to use computing power does not mean that more computing power would not be useful.
  • Second, lower inference costs are likely to lead to wider use of AI in the long run. Microsoft CEO Satya Nadella recently confirmed this in his late-night tweet about Jevon's paradox.
  • Third, reasoning models such as R1 and o1 derive their superior performance from using more computing power. As long as AI's strength and capabilities depend on more computing power, Nvidia will continue to benefit.

Also, with a larger market, Nvidia will benefit from revenue growth in cheaper chips, although it will be hampered in that market by competitors such as AMD. 

My subjective "Spotlight on AI" basket took relatively few hits last month.

DeepSeek thought 28 seconds about a hot dog

Joanna Stern of the Wall Street Journal did a funny test of DeepSeek and discovered how it differs from OpenAI's ChatGPT and Anthropic's Claude. Unlike OpenAI's reasoning models, DeepSeek shows its full thought process. When asked if a hot dog is a sandwich, DeepSeek thought about it for 28 seconds and responded with: "First, I need to understand what the definition of a sandwich is." It illustrates that there is no specific form of AI that works best for all issues.

The advance of AI throughout society is irreversible and with DeepSeek's approach, which will be copied frequently, the market will only grow larger. Therefore, despite all the doom-and-gloom news last week on Wall Street, it is fascinating that over the entire month of January, the performance in what I consider to be AI stocks has been better than one would expect. 

ARM's 29% rise is remarkable and is largely based on ARM's participation in Stargate. The remarkable thing is that SoftBank owns ARM and therefore there is a good chance that Masayoshi Son will use the shares in ARM as collateral when raising loans, which SoftBank can then use to pay for investments in OpenAI and in Stargate. Time will tell whether this approach leads to a skyscraper, or a house of cards.

This is how the main parties of the DeepSeek crash closed on Wall Street yesterday

What did America's tech billionaires buy from Trump?

President Trump has often expressed hostility toward major technology companies and their leaders, calling Facebook an "enemy of the people" and labeling Jeff Bezos as "Jeff Bozo," for example. Yet these gentlemen were in the front row at the inauguration, having lapped up significant sums of money. This was obviously no coincidence, and the technology sector wants something back from Trump soon. Bloomberg looked at each of them and mapped out what they each want to accomplish.

As we take stock of the performance of Big Tech stocks in the month of January at the end of the second week in Trump's second reign, it appears that the short-term results are not yet what Trump's new tech pals had hoped for. Despite all of Trump's presidential decrees and appointments, stock market results have been rather mixed, to say the least.

What is particularly striking is that investors are sharply divided over the tech sector as a whole. Meta rose mainly due to good quarterly earnings, but how could Microsoft fall while Google rose? Did Apple fall in January due to the possibility of a trade war with China? It is strange that the financial media was mostly focused on last week's results and ignored what happened in terms of price swings earlier in the month. Consider, for example, Palantir, up nearly 10% in January and already up 385% in the last year.

Huang at Trump, Liang at Li Qiang

President Trump and Nvidia CEO Jensen Huang discussed the impact of DeepSeek and possible restrictions on AI chip exports to China during a meeting at the White House on Friday. Huang will certainly have been thinking about the possible impact on Nvidia's stock price.

DeepSeek's Liang Wenfeng also met with an important politician this week: as the sole representative of the AI industry, he met with Premier Li Qiang, China's second most powerful man. Both meetings underscore the importance of technology to economic power in the new world order defined in part by AI.

Palantir CEO Alex Karp told CNBC that the rise of DeepSeek is a sign that the U.S. needs to work faster to develop advanced AI. "Technology is not necessarily good and can pose threats in the hands of adversaries. We need to recognize that, but that also means we need to run harder, go faster and make a national effort."

Boring: success begins with homework

Europe is no longer a consideration in the geopolitical shuffling between continents; how can it be, with so much talent among half a billion people?

Malaysian comedian Ronny Chieng summed up the West's problem perfectly: people are willing to die for their country, but they don't want to do homework for it. Chieng is talking about America, but it applies just as well to Europe.

Categories
AI invest

Wall Street panic over DeepSeek exaggerated; Nvidia shares suffer historic record loss

On Sunday, I wrote that DeepSeek-R1 was a revolutionary, good and cheap AI product from China. But I had no idea that a day later Wall Street would react as if aliens had launched an attack on our planet.

The homepage of the Wall Street Journal on 'the day after' the DeepSeek crash

Yesterday, the technology sector experienced a sharp downturn, to put it mildly, with the chip sector hit the hardest. Nvidia's share price fell 16.9%, resulting in a loss of $593 billion in market capitalization. Broadcom saw a 17.3% drop, accounting for a loss of $198 billion. Advanced Micro Devices (AMD) lost 6.3%, a loss in value of $12.5 billion. Taiwan Semiconductor Manufacturing Company (TSMC) fell 13.2%, down $151 billion, and shares of Arm Holdings fell 10.2%, a $17 billion hit. Marvell Technology experienced the steepest decline, losing 19.2%, a whopping $20 billion. 

Apple smiling third

The drop pushes previously high-flying chipmaker Nvidia to third place in total market cap, behind Apple and Microsoft. Last Friday, it was still in first place. Apple now has the highest market value with $3.46 trillion ($3,460 billion ), followed by Microsoft with $3.22 trillion and Nvidia with $2.90 trillion. Shares of Apple, which has less exposure to AI, rose 3% Monday, while the tech-heavy Nasdaq fell 3%.

Apple's rise is similar to a house rising in value because the neighbor's roof is on fire. Intrinsically, of course, nothing has changed in Apple's value, and a trade war with China still lurks, which would hit Apple hard. Bur that's for another day.

Barron's was the voice of reason yesterday

DeepSeek hits Wall Street

Investors blame the sell-off on the rise of DeepSeek, a only one year old Chinese company that last week unveiled a revolutionary Large Language Model (LLM), named DeepSeek-R1. DeepSeek's model is similar to existing models such as OpenAI's ChatGPT 4o or Anthropic's Claude, but is said to have been developed at a fraction of the cost. It also costs a fraction for customers compared to ChatGPT and Claude.

This has rightly led to concerns in investor circles that the U.S. strategy of heavy investment in AI development, often referred to as a "brute force" approach, is becoming obsolete. This brute force method uses extensive computing power and large data sets to train AI models, with the goal of achieving higher performance due to its massive scale. It is a billion-dollar approach that I wrote about earlier.

DeepSeek 'the Sputnik moment for AI'

A Wall Street Journal editorial clearly summarizes the competitiveness of DeepSeek-R1 with a catchy example:

"Enter DeepSeek, which last week released a new R1 model that claims to be as advanced as OpenAI's on math, code and reasoning tasks. Tech gurus who inspected the model agreed. One economist asked R1 how much Donald Trump's proposed 25% tariffs will affect Canada's GDP, and it spit back an answer close to that of a major bank's estimate in 12 seconds. Along with the detailed steps R1 used to get to the answer."

Venture capitalist and former entrepreneur (Netscape) Marc Andreessen described the launch of DeepSeek-R1 as the Sputnik moment for AI; similar to the moment the world realized the Soviet Union had taken a lead in space exploration.

OpenAI reacts anxiously

OpenAI CEO Sam Altman put on a brave face:

"DeepSeek's R1 is an impressive model, particularly around what they're able to deliver for the price. We will obviously deliver much better models and also it's legitimately invigorating to have a new competitor! We will pull up some releases."

(I myself took the liberty of inserting the capital letters Altman avoids, because otherwise I find it too annoying to read.)

Altman puts on a brave face, but in the last sentence it appears that OpenAI is accelerating product releases under pressure from DeepSeek. Or without capital letters just like him: altman blinked. Legit, you know, bro.

Sweat-soaked body warmers

They need to exhale and tuck in their body warmers up: a
on Wall Street. The claim that DeepSeek developed their R1 model with only a $5 million investment is not verifiable, and the Chinese media are not known for their transparency, nor for their critical approach to Chinese initiatives.

Western companies are unlikely to adopt Chinese AI technology, with all the geopolitical tensions and regulatory constraints, especially in critical sectors such as finance, defense and government. Chief Information Officers are increasingly cautious about integrating Chinese technology into critical systems. In fact, it only happens now if there is no other alternative.

Despite recent market volatility, major technology companies such as Microsoft, Google, Amazon and Oracle continue to rely on high-performance chips for their AI initiatives. No company is canceling its orders with Nvidia because DeepSeek has a different approach.

Because there is currently no Western equivalent of DeepSeek's R1 model that is fully open-source (as opposed to "open-weight," a term I discussed in my Sunday edition ), these companies will continue to invest in expensive hardware and huge data centers.

This means that shareholders in companies such as Nvidia and Broadcom can expect a recovery in stock prices in the coming months, perhaps weeks.

This is how the main victims of the DeepSeek crash closed on Wall Street yesterday

Panic at the vc's

The real impact of DeepSeek's innovation will likely be felt more profoundly by venture capital funds that have poured billions into AI startups without clear revenue models or, as VCs always so delightfully know how to put it from the comfort of their armchairs: a clear path to profitability.

Earlier I highlighted the precarious financial situation of OpenAI, which seems headed for a $15 billion loss this year: that's $41 million per day, $1.7 million per hour and $476 per second. Partners at Lightspeed, which last week invested $2 billionin Anthropic, the developer of DeepSeek-R1 competitor Claude, at a valuation of as much as $60 billion, will have slept terrible last night.

Does DeepSeek dare a frontal attack?

DeepSeek's approach to AI development, especially its emphasis on efficiency and the possibility of local implementation, running the model on your own computer, is remarkable. But globally, the AI community can only benefit from this methodology if DeepSeek chooses to release its underlying code and techniques. So far, DeepSeek-R1's codebase has not been made public, raising questions about whether it will ever be. It's the difference between open-weight and open-source I wrote about on Sunday.

If China decided to fully open-source DeepSeek-R1, it would pose a massive challenge to the U.S. tech industry. An open-source release would allow developers worldwide to access and build upon the model, greatly reducing the competitive advantage of U.S. companies in AI development.

This could lead to a democratization of advanced AI capabilities, reducing reliance on closed models such as from OpenAI and Anthropic and expensive infrastructure such as from Nvidia, Oracle, Microsoft and Amazon Web Services. Such a move would totally disrupt the current market dynamics and force U.S. companies to completely change their strategies in funding AI research and development.

China rules, Wall Street pays

How big an impact the technology sector has on the U.S. economy was once again evident yesterday when the total loss on Wall Street was estimated at a trillion dollars: a staggering thousand billion dollars.

It leads to the ironic conclusion that the first week of "America First" President Trump ends with a moment when China can determine whether to throw the U.S. economy into disarray. Wall Street is now watching every move from Beijing like a dear in the headlights.

Categories
AI technology

DeepSeek revolutionary: good, cheap AI product from China

OpenAI launched the AI agent Operator, initially useful for messenger and shopping services, while scientists such as Jan Leike and Nobel Prize winner Geoffrey Hinton are again warning of dangers of AI. Image created with Midjourney.

DeepSeek-R1, a new large language model from Chinese AI company DeepSeek, with a website that looks like a sleep-deprived intern pressed "enter" too quickly, has attracted worldwide attention as a cost-effective and open alternative to OpenAI's flagship o1. Released on Jan. 20, whether or not coincidentally on the weekend that "tout Silicon Valley" was eagerly clinging to the coattails of power in Washington, R1 excels thanks to "chain of thought" reasoning which mimics the problem-solving ability of humans.

Unlike closed models such as OpenAI's o1 and Anthropic's Claude, which this week raised another $2 billion from investors who are throwing pudding against the wall in AI hoping that some of it will stick, R1 is open-weight and published under an MIT license. That means anyone is free to build on the architecture. Unlike open source, the source code and training data used to build DeepSeek-R1 are not public, 

The model was developed for just five million dollars through algorithmic efficiency and reinforcement learning, significantly less than o1, despite U.S. export restrictions on advanced GPU chips, especially from Nvidia, on which U.S. competitors are primarily developing. Its affordability, with API costs more than ninety percent lower than o1, thus makes advanced AI more accessible to researchers with limited resources. It also offers a free chatbot interface with Web search capabilities, surpassing OpenAI's current features.

'Everyone is freaking out about DeepSeek'

By matching or even surpassing o1 in some benchmarks, R1 has highlighted China's advance in AI development. Its sudden rise has sparked discussions about the future of open, accessible AI and the need for international cooperation to move forward responsibly. 

International reactions to DeepSeek-R1 ranged from respect to dismay. Nature was analytical: 'DeepSeek-R1 performs reasoning tasks at the same level as OpenAI's o1 - and is open for researchers to examine.' MIT Technology Review remained tidy: 'The AI community is abuzz about DeepSeek R1, a new open-source reasoning model.' But VentureBeat said out loud what all of Silicon Valley was thinking: 'Why everyone in AI is freaking out about DeepSeek.'

By the way, anyone who asks DeepSeek about Tiananmen Square gets the reply, 'I am sorry, I cannot answer that question. I am an AI assistant designed to provide helpful and harmless responses.' Asked about the situation of the Uyghurs, a very elaborate answer first appeared that even used the word genocide, but a few seconds later that text was replaced by: "Sorry, that's beyond my current scope. Let's talk about something else.' DeepSeek wants to keep things light and breezy.

Stargate historic project in AI infrastructure

The focus on China's DeepSeek led to great chagrin from the American techno-elite, who wanted to use this very week to underscore American supremacy. OpenAI, Oracle, Japan's SoftBank and Emirates-based MGX are funding the Stargate Project, a $500 billion initiative described as the largest AI infrastructure project in history.

Announced by President Trump in the Oval Office, its goal is to build advanced data centers for AI in the US, which Trump says will create a hundred thousand jobs. They are a kind of Delta works forAI. The project currently has one hundred billion dollars in direct funding, with the remaining investment spread over four years. The first huge data center will be built in Texas.

It already led to bickering over Stargate funding between OpenAI CEO Sam Altman and Elon Musk. Forbes even made a timeline of the ongoing fitties between Altman and Musk, who should get into a boxing ring or a hotel room.

Will the real MGX please rise

In all the excitement, it was especially comical that overexcited investors bought the wrong stock in the belief that it is part of Stargate: biotech company Metagenomi (symbol: MGX) saw its share price shoot up even though it is not involved in Stargate. The MGX that does participate in Stargate, Abu Dhabi's sovereign wealth fund, this MGX, will have watched on in wonder.

It would be some feat if Trump succeeds in getting foreign investors to invest hundreds of billions in U.S. infrastructure with MGX and Japan's Softbank, without the U.S. taxpayer contributing. Investor Bill Gurley (Uber) publicly question ed the public-private partnership, which is unusual by American standards. The main question is whether Stargate will be accessible to all and who ultimately makes the decisions. OpenAI CEO Sam Altman often has problems with governance.

OpenAI with AI agent: Operator

In all the fuss over DeepSeek and Stargate, the news was snowed under that OpenAI this week introduced Operator, an AI agent that can independently navigate Web browsers and perform tasks such as online shopping, booking travel and making reservations. It marks the moment when AI agents are making their entrance into the mass market.

Operator uses OpenAI's Computer-Using Agent (CUA) model, which mimics human interactions with Web sites by using buttons, menus and forms. OpenAI is working with companies such as DoorDash, Uber and eBay for Operator to ensure it complies with their terms of use. 

Despite all its potential, Operator has limitations with more complex tasks such as banking and complex web interfaces or CAPTCHAs. Right now, unfortunately, it is only available to U.S. users on the ChatGPT Pro subscription of two hundred dollars a month, so I have not been able to test it myself.

Operator an echo of General Magic

OpenAI's Operator, nearly thirty-five years after the fact, is very reminiscent of the legendary company General Magic, known for the description as "the most important company to ever come out of Silicon Valley that nobody ever heard of. All of Operator's marketing copy seems to duplicate General Magic's slogans and claims from the early 1990s.

In the end, General Magic, which attempted to create a handheld computer with agent features before the Internet and digital mobile telephony got to mass adoption, proved too far ahead of its time. Like General Magic, Operator strives to integrate seamlessly into users' lives and function as a personal assistant and productivity booster.

For fans: a fine documentary was made about the rise and fall of General Magic, of which this is the trailer. The team behind General Magic was so special that dozens of books have been published and even a real feature film has been made in which they starred: Andy Hertzfeld was a prominent member of the team that developed the Apple Macintosh for Steve Jobs, after General Magic Tony Fadell became the developer of the iPod and co-creator of the iPhone at Apple, and Joanna Hoffman is such a special person that Kate Winslet went to great lengths to play her in Danny Boyle's film about Steve Jobs.  

Leike and Hinton with different warnings

In all the publicity about DeepSeek, Stargate and AI agents, the fact that two leading AI scientists once again warned against the misuse of AI with potentially disastrous consequences for the world snowballed. Professor Geoffrey Hinton, a leading figure in AI and winner of the 2024 Nobel Prize in Physics, discussed the risks of rapid AI developments in a fascinating conversation with his former student Curt Jaimungal. 

Hinton has frequently warned that AI could evolve and gain the motivation to make more of itself and autonomously develop a sub-goal to take control of the world without regard to humans.

The German Jan Leike, co-founder of OpenAI where he left disappointed, now puts it this way:: "Don't try to imprison a monster, build something you can actually trust!" I previously wrote extensively about Leike and Hinton's warnings in this blog post. 

Categories
AI invest crypto

Forget FANG, it's all about BATMMAAN now - or is it crypto after all?

Once upon a time, the acronym FANG (for Facebook, Apple, Netflix and Google) was the symbol for tech stocks. But almost unnoticed, Broadcom snuck into the club of trillion-dollar companies, and now there is a new acronym: BATMMAAN (Broadcom, Apple, Tesla, Microsoft, Meta, Amazon, Alphabet, Nvidia). Barron's came out with an excellent analysis including a price comparison. What does it show? Nvidia is the cheapest stock of the bunch.

BATMMAAN stock performance in the last year: up 66% on average.

Forget FANG, here's BATMMAAN

This is especially noteworthy since Nvidia was already by far the best-performing stock among the tech giants over the last year. Propelled by the AI hype, Broadcom (symbol AVGO) is also coming on strong, while Tesla is mostly driven by members of Elon Musk's cult.

The entire BATMMAAN club made an average return of 66% last year. In fact, Apple and especially Microsoft are doing substantially worse than the S&P 500, which has proven to be a solid investment at 25%. Both icons are suffering from the AI hype: Apple because it derives no identifiable revenue or profit benefit from AI and Microsoft because it is making tens of billions in additional investments in AI, the long-term returns of which investors doubt.

Return of top cryptocurrencies: 174%

Investors with a strong stomach have had a wonderful year in the crypto world, where the average rise of the largest crypto currencies measured by market cap, has been a whopping 174%.

The most frequently asked question in crypto remains: which coin should I buy? But the largest crypto currencies were already doing 174% year-to-date.

In addition to the rise of memecoin Dogecoin, carried in part by Doge fan Elon Musk, it is particularly notable that XRP, a Stone Age token by crypto standards, rose over 450%. Trump's upcoming presidency ensures that a new SEC boss will be appointed, following notorious cryptohater Gensler. The hope of XRP holders is that under the new administration, the SEC will end the ongoing legal proceedings against XRP.
 

Categories
AI technology

AI race erupts, gambling on startups, Google quantum chip, tips and help Bali street dogs

This is probably the last newsletter until Sunday, January 19, unless there is as much news in early January as there was last week. It is therefore an extra-long edition, which you can read (if you visit some of the links) over several days. 

Besides the usual attempt at news analysis, this time some tips for greater efficiency in the new year, a summary of last week's survey on this newsletter and a few reading and watching tips during Christmas. Finally, I draw your attention to a charity close to my heart: a contribution to the medical treatment of street dogs in Bali.

Google must hate OpenAI

It is no longer a coincidence: every time Google comes out with a new product, OpenAI launches something spectacular with which it attracts all the attention. Last week, Google launched Gemini 2, a so-called "Multimodal AI," or form of artificial intelligence that can process and integrate information from, for example, text, image, speech and video. 

The Verge highlights the interview with Google's AI front man Demis Hassabis, while VentureBeat published a detailed analysis. Gemini 2 is downright extraordinary, if not spectacular. Try it yourself by uploading a video, or sharing your screen live (for the brave ones among us), or your webcam. 

I used the webcam, asked and got tips on how to improve my workspace (rotate desk slightly and place a lamp from the front) and confirmation that the tree behind me in the garden is a banana tree. Generating time codes and captions to existing videos also worked flawlessly.

Marques Brownlee tested OpenAI' s Sora extensively. On X, he shared a number of videos he generated with Sora, with the news coverage in particular looking frighteningly good. His full review can be seen here. As usual with Brownlee, it is highly recommended viewing. Sora not only raises all sorts of ethical questions but appears to be possibly trained with game content, which could have legal implications.

Incidentally, sad news broke yesterday that 26-year-old Suchir Balaji, a whistleblower in the swelling wave of lawsuits against OpenAI over copyright violations, has taken his own life. 

A donkey with five legs

The launch of Sora took place during a 12-day period in which OpenAI presents something new every day, under the sad slogan "12 Days of Shipmas. Hopefully a name generated with AI, otherwise we should burn a candle this Christmas for the marketer who came up with it. 

Since OpenAI and Google speak so highly of their multimodal qualities and the initial tests with video are very encouraging, I expected them to have no problem with a test of a photo. Right? 

Image created with Midjourney.

I asked Google Gemini Advanced 2.0 Flash Experimental, another delightful name, if there was anything wrong with the above image I generated with Midjourney with the prompt "a man, a woman, a newborn baby and a donkey, two thousand years ago in the Middle East

Google Gemini 2.0 immediately saw that all sorts of things were wrong with the image:

"The image you have provided shows the traditional nativity scene, a religious representation of the birth of Jesus Christ. However, there are some historical inaccuracies in the image:

  • Palm tree: Palm trees are not native to Bethlehem, which is located in the Middle East. The climate in Bethlehem is more temperate and would not support the growth of palm trees.
  • Donkey: Although donkeys were common in ancient Judea, they were mainly used for work and transportation. It is less likely that a donkey would have been present in the stable during the birth of Jesus.
  • Architecture: The architecture of the buildings in the background may not be completely accurate for the period in which Jesus was born.
  • It is important to remember that the nativity scene is a symbolic representation and is not meant to be a historically accurate representation of the event."

Google and OpenAI both blind in plain sight

In itself it's clever that Google immediately recognized that it was a famous Biblical scene, though I had avoided all religious connotation in the prompt at Midjourney. Also commendable that it points out that there are few palm trees in Bethlehem and that the architecture may not be entirely accurate. I was waiting for Google to express doubts about the quality of the masonry and the shoddy paint job on the wall of the stable. 

What was especially striking: even after specifically asking several times if there was anything strange to see about the donkey, Google did not see that the poor animal has five legs. Likewise, ChatGPT 4o failed to see that this was a very special donkey; it noticed that only after specifically asking how many legs the donkey has. Midjourney generated more pathetic donkeys. It is typical of the state of AI: it is hit or miss.

Apple misfires 

Meanwhile, Apple released its flagship Apple Intelligence with very mediocre results for such a quality company. For example, one reporter's iPhone showed the Apple Intelligence-generated alert up: a
that the New York Times reported that Israeli Prime Minister Netanyahu had been arrested. The BBC, according to Apple Intelligence, reported that the suspect in the murder of the United HealthCare CEO had committed suicide. 

Hallucination, or wishful thinking by Apple Intelligence?

Except: the New York Times and the BBC hadn't reported that at all. Oops. It would be good if the leading tech companies took a little more time to test their products. Now it seems like the first year of each product is basically the global beta test.

Good use of AI

Useful AI applications, despite the mistakes of the big players, are increasingly appearing on the market for specific purposes. For example, a traffic camera described as a "state-of-the-art Heads-Up machine", a name probably coined by the same genius behind the word Shipmas. Based on an analysis of the driving behavior of road users, I suspect at least swerving, or playing Diddy songs, the camera advises police to pull over certain drivers. 

Another application of AI that directly benefits the world is a program in the U.S. that results in a 21% higher chance of detecting breast cancer. AI is also being used successfully in England to detect forms of breast cancer that elude the human eye.

Throwing pudding against the wall

The challenge of tech startups is getting the technology right, which is hard enough, and then turning that technology into products for the right market. How difficult that is is confirmed by the disastrous results of the Tiger investment fund that have been leaked:

  • Invested in 315 startups in one year
  • Downgraded from $93 million to $65 million
  • Negative 15% IRR (performance in the bottom ten percent)

Those who invest in hundreds of startups in a year are basically just gambling, although spray and pray sounds nicer; it is the financial version of throwing pudding at the wall hoping something will stick. 

Cruise stops driving

Not coincidentally, there is a startup that has made betting, excuse me, prediction markets a business model: Polymarket. After the prediction market on Polymarket proved to be better at predicting the US presidential elections than sophisticated polling, CEO Shayne Coplan's star rose quickly. Coindex published this portrait of Coplan. In cryptocurrency circles, Polymarket is being hailed as an example of an application of crypto that for once is not aimed at replacing the current banking system.

Multinationals, of course, also gamble on startups. In 2016, General Motors bought three-year-old startup Cruise, which developed technology for self-driving cars, for a billion dollars. Then GM threw another $3.5 billion at it, only to pull the plug on it this week. Cruise founder Kyle Vogt was clear on X: "GM are a bunch of dummies." 

I have always followed Cruise closely, having turned down the opportunity to invest in Cruise's seed round through a syndicate nearly a decade ago. "Too early," was my infinitely dumb judgment. So, of course, within two years Cruise was bought for a billion by General Motors. Cruise illustrates how difficult it is to properly assess the value of startups: from a technology and product perspective, my judgment was correct that it could be another decade before self-driving cars are widely used. 

I did still get the congratulatory email, very nice.

Except that market maturity does not always determine the value of an innovation. GM cannot innovate and so Cruise's purchase was predictable. As an investor, I should have thought that way. As a big believer in self-driving cars and someone who does not own a car himself, I keep waiting for the joyous moment when cars become available on demand quicker than pizza's. For Cruise's team, it is unimaginably sad that a decade of work is effectively being thrown away.

Google announces revolutionary quantum chip

Researchers at Google have developed a new quantum chip named Willow, an important milestone in the quest for quantum computers. The experiment, described last week in Nature, shows that quantum computers, with the right error-correction techniques, can perform computations with increasing accuracy as they scale up, with the speed of this improvement crossing a crucial threshold. Current quantum computers are still too small and error-prone for most commercial or scientific applications.

The importance of this technology is phenomenally explained by Ray Harishankar: watch his accessible explanation in this panel at last year's ATX Singapore starting at minute 35:05. There is much discussion about how acute the danger is that quantum computers can decipher all passwords and crack Bitcoin. That it can be done in theory is clear; the question is when and how much computing power (and cost) it will take. Forbes came up with a solid analysis.

New app from Blogger, Twitter and Medium founder Ev Williams: Mozi

Each time it seems like there are too many social media outlets, a new one comes along. Most of them flop, of course, but Ev Williams previously founded Blogger, Twitter and Medium so his new app Mozi deserves attention. The idea of Mozi is that you can meet up with acquaintances in places where you might not expect each other. You actually share your future location.

In terms of marketing-speak, Mozi is just fine: it's described as "A Place For Your People" and its slogan reads "See You Sooner. Investor (at Google Ventures) M.G. Siegler, better known as Paris Lemon at Techcrunch with a pen like a razor, judges harshly: he doesn't like it. I like the idea, so if you want to find me and other acquaintances and friends on Mozi, this is the link

Freedom of speech on the Internet in 2024.

I had a problem with that other Ev Williams company, Medium. The company, which prides itself on being a medium for free expression, turned out to censor my newsletters because they contained links to Coinmarketcap, the cryptocurrency prices website. Medium simply refused to send out my newsletters because Coinmarketcap was allegedly used for spam. That's as absurd as refusing newsletters that link to the Weather Channel because you hate the weather forecast. The situation has since been remedied, but I started publishing on Substack.

Note the total lack of apology to a paying customer.

Survey results

There were far more responses to last week's survey than I expected, for which I thank you! The conclusions and recommendations are clear, but to make some sense of them it is important to remember that many readers of this newsletter have a specific profile.  

I still reach few students.

The percentage of startup founders, owners, CEOs and board members is disproportionately high (almost 25%) and the responses I receive via email also show a lot of interest in funding and investing. Only, among many other readers of this newsletter, there is much less interest in these topics. Although, of course, I still write based on what I noticed during the week, I do like to choose from these the topics that readers find interesting. That remains difficult, which is why the survey responses were very helpful:

  • over half of the readers who responded appreciate work tips that are useful to them 
  • for coverage of startups, there is much less interest (less than 50%)
  • there is a lot of interest in AI though, may even be highlighted more
  • there is enough coverage of crypto/Web3, no need for more
  • there is also sufficient focus on investing, no need for more 
  • only 12% would like to receive a newsletter more often during the week
  • more than half are interested in a podcast

Interestingly, from the "open suggestions" very different sounds were heard again: over a third of them asked for more attention to blockchain and tokenization. Of the readers who did not object to being mentioned, Stephan Fellinger asked for attention to passive income and Jeroen Verkroost suggested paying more attention to startups, especially in the field of AI, that could be helped by the readers: "That would be my definition of 'More information that is useful in your work'. And we all support entrepreneurs as possible. How nice is that."

Another suggestion that I'm definitely going to do something with is to ask a few questions weekly to specialists in my network. I want to make that interactive: what questions would you like to see answered? Mail me those questions and I'll put them to an expert in my network. 

Tip for higher efficiency in 2025

Let me take a recommendation from the survey to heart and share my most important work tip. This is not a smart app, difficult AI tool or savvy life hack. No; I haven't had a single notification turned on on my phone for over a decade. After going crazy from the red light indicating a new e-mail in the BlackBerry era, once I switched to an iPhone I decided to turn off as many notifications as possible.  

There's a nice tool online, the Trail Making Test, which shows right away how much harder it is to do tasks interchangeably. But you can also do this with a colleague or partner: 

  • clock how long it takes to write down numbers 1 through 26
  • Then measure how long it takes to write out the alphabet
  • add up the two times
  • Finally, measure how long it takes to write out 1a, 2b, 3c, 4d, 5b etc until you are at 26Z

I found the results baffling and think you will also be shocked.

The biggest misconception these days is that many people think you have to reply to messages immediately, or at least very quickly. That's not true. In fact, the unannounced phone call is almost extinct because it is not convenient when people who are communicating have to do so at the same time. Use the advantages of asynchronous communication and check your phone once every half hour. Your colleagues, your partner, friends, children, parents; no one cares if you answer after half an hour or an hour. We are all much less important than we think.

Reading and viewing tips for the holiday season

Here are some viewing and listening tips to go with the oliebollen:

  • A comprehensive look behind the scenes at OpenAI around the launch of ChatGPT two years ago; and a look ahead. Every company is moderately organized chaos, and a startup is by definition a gang trying to find its way. OpenAI is not any different.
  • Buy and read the debut novel by pleasant human and loyal reader of this newsletter, Nart Wielaard, about AI: Painless Barbed Wire. In this novel, Wielaard asks necessary questions about how artificial intelligence is getting a grip on the world and how humans are in danger of developing "machine-like" traits as a result.
  • Why AI is going to eat the browser. "For most of us, it’s hard to imagine life without an internet browser. But as AI disaggregates information from text, video, and music into unique remixable AI chatbot answer streams, it’s clear to me that over the next decade the browser will need to adapt or die.
    A characteristically strong essay by former journalist, now investor, Om Malik.
  • Another great behind-the-scenes look at an extraordinary startup: OpenSea. Interesting read about a chaotic work environment, constantly changing priorities and problems with the SEC.  
  • I'm repeating myself, but want to emphasize that quantum computing is becoming very important, even if you think you won't have to deal with it: watch Ray Harishankar's explanation of the importance of quantum computing (starting at minute 35:05). Takes a few minutes and like me you may still not understand how it works, but you will understand why it is so important.

These are just two of the thousands of dogs Rhonda Lepsch has saved from a cruel death

Finally, my Christmas wish

This newsletter is and will remain free, because I write it to keep myself informed; and admittedly also from a lack of modesty, under the delusion that people will find it fun or interesting to read my opinion. 

I will never ask for tips, subscriptions or a donation for myself; but I do kindly ask you to support this special woman in paying her bill at the vet: Rhonda Lepsch, of JSP. You can follow Rhonda on Instagram here.

Rhonda is American, married to a Balinese and has lived in Bali for many years. Many people dump (literally) sick dogs with her knowing that Rhonda just cannot send dogs away. She gets them vaccinated, sterilized at her own expense, and takes in the sickest dogs herself that no one wants. No matter how crippled, blind, deaf or ugly they are: to Rhonda, every dog is equally special.

Help hundreds if not thousands of dogs

Not surprisingly, Rhonda is fantastic with dogs, I learned from her how to handle our own street dog Nala, whom we found at our doorstep last year more dead than alive.

At this point in time, Rhonda herself has 87 dogs, 25 of which live at her husband's dive center, which unfortunately went bankrupt during the Covid pandemic. She pays everything out of her own pocket.  

But in addition to taking care of those 87 dogs, Rhonda also pays for vaccinations and sterilizations of street dogs, and the costs of these are skyrocketing. Precisely this work is enormously important: of course it is good to adopt a street dog, as we did, but by supporting Rhonda you actually take care of many more dogs. Because vaccinated, healthy street dogs can have a good life in Bali. Unfortunately, unvaccinated, sick dogs have little chance and stand a chance of ending up as sate.

Right now, unfortunately, Rhonda and her street dogs are in trouble. She has helped so many street dogs this year that the outstanding bill at the excellent veterinarian Sunset Vet is already five thousand dollars. Therefore, Rhonda cannot have any more animals helped there. It means many sick street dogs on Bali will remain untreated in the middle of rainy season, with their lives at risk. 

You can support Rhonda and the dogs in Bali by helping pay the bill at Sunset Vet. Once she gets above zero, the balance is used by the clinic exclusively for medical assistance to new dogs brought by Rhonda. By supporting Rhonda, you are helping hundreds, if not thousands, of dogs.

This is how you can help

  • Click here for veterinarian Sunset Vet's donation form
  • very important: please enter "for JSP" in the description. Only then will your donation be used for Rhonda's account
  • choose the amount you want to donate
  • choose PayPal or a debit or credit card

My thanks are already great, regardless of the amount you donate. And if you don't donate anything, no problem, only I hope your gourmet set gives out on Christmas Eve.

I wish you and all your loved ones all the happiness, love and health in 2025! Thank you for your interest and see you next year.

Categories
AI investing crypto NFTs technology

Bitcoin over $100,000, but still beaten by Ethereum and Nvidia

Please participate as happily as this reader and complete the short survey about this newsletter. Who knows, maybe it will help! Image: generated with Midjourney.

This week I'm asking for your help via a survey about this newsletter. Also: a look at Bitcoin's jump above the $100,000 mark, Ethereum and the start of altcoin season, Hawk Tuah girl is in trouble, AI applications to watch out for and crypto gifts for the holidays.

You ask, we deliver 

Well, maybe 😉 After almost two years and eighty newsletters with what I used to send to friends and colleagues completely subjectively, it's time to gauge which topics are found most and least interesting. Therefore, I invite you to fill out this short survey, which takes less than two minutes. The main results will be shared next week. The last question allows for suggestions, comments and statements. The survey is anonymous, but if you appreciate it, I am happy to include your name and LinkedIn profile in valuable feedback.

Bitcoin over the $100,000 mark and back again

It is always enjoyable when something huge happens in an area that the BBC heartily dislikes but has to report on. Think of Max Verstappen winning the world title and thwarting Briton Lewis Hamilton's record.

With the face of a spoiled child being served Brussels sprouts and chicory, the reporter filed this report, about the moment Bitcoin became worth more than $100,000 this week. Most media only report the investment risks, but have been completely overlooking some crucial elements of Bitcoin for years.

What is unique about Bitcoin is that it is a completely decentralized network with no central party controlling the number of coins in circulation, so unlike a system with a central bank. As a result, there is also no "crypto-bank account", but you have complete control over your own assets.

How important that is, Netscape founder and investor Marc Andreessen explained in Joe Rogan's podcast through a detailed explanation of the concept of being "debanked;" what happens when you lose your bank accounts and credit cards as a person or company without any explanation. This has happened to many entrepreneurs in the fintech and crypto world in recent years. More and more people worldwide, and not just in undemocratic countries, therefore value self custody of their assets.

Big difference between 2018 and 2024

The often-quoted brilliant Jennifer Zhu Scott recalled last week a panel she participated in at the 2018 World Economic Forum in Davos, when Bitcoin first took its place on the main stage. Zhu Scott debated with Nobel prize winner Robert Shiller and a top executive from Sweden's central bank:

"At the time, coming out openly for Bitcoin was a career risk. But I believed in the ideal. I understood its powerful implications for the world and chose to champion it. Many of the ideas I shared six years ago have become reality.

  • Bitcoin has disrupted gold more than the dollar.
  • Smaller countries have begun to include Bitcoin in their national reserves.
  • Bitcoin wasn't going anywhere-it embodied the ideal of decentralization, and that ideal remains incredibly powerful.

While the rise of Bitcoin has been extraordinary, the ecosystem has evolved in ways I had not fully anticipated:

  • Decentralization vs. Centralization: Bitcoin was born from the ideal of decentralization. Today, however, the ecosystem is becoming increasingly centralized, with figures like Michael Saylor exerting excessive influence.
  • The Obsession with Price: Six years ago, I argued that price was the least important aspect of Bitcoin; its real strength lay in decentralization. Yet Bitcoin is now seen as an asset and the conversation is almost entirely about price movements.

I am proud to have been one of the early pioneers in this field. Thanks to Satoshi Nakamoto's revolutionary vision, we have witnessed the birth of countless breathtaking projects aimed at enabling scalable decentralization. In an era where AI is consuming our data, creating deepfakes and undermining trust, I am grateful for the emergence of Web3 technologies-those offering solutions such as data sovereignty, immutability and authentication. These tools provide a counterbalance in a world increasingly defined by unchecked digital power.

To those who rejected the picture I painted eight years ago: I smile today. Bitcoin's journey is far from over, and this milestone is just the beginning of what is possible."

From Davos to Hong Kong

The debate, in which things got especially feisty between Zhu Scott and Schiller, can be seen here. In retrospect, it is downright scandalous to see how crypto was portrayed in a certain light at this conference, where supposedly free exchange of ideas takes place.

First of all, the panel was called "The Crypto Asset Bubble." That is especially hilarious when you consider that the price of Bitcoin at that time was $11,000; so anyone who had bought Bitcoin at that time would have seen that investment increase in value nearly tenfold within seven years. Do me a bubble like that more often!

But the text with which the moderator introduces Bitcoin really defies all standards of decency: "Bitcoin emerges from the world of nerds and criminals." As a half nerd, I then always think, "what if you replace the word 'nerd' here with Jews or Asians?" Suddenly the same sentence is a lot less acceptable.

By the way, 2018 was the last time I attended the World Economic Forum. Next month, the media will again report in full on the party in the mountains, which I wrote about earlier:

"Participants reported that the number of women they encountered in Davos was as high as the number of MMA fighters at the annual Women's Hairdressing Day. Women are almost as rare during WEF as dark-skinned people. Like motorcyclists on a Sunday ride or penguins in a zoo, I caught myself in Davos politely waving back or nodding to other fellow pigmented people.

A week later, no WEF participant can remember what else was discussed or agreed upon, because unlike the COP climate conferences, for example, Davos is not about jointly formulating measurable goals. There is old-fashioned networking and job hunting.

Because I am sorry to disappoint the conspiracy thinkers, but there is no talk at WEF of world domination by a small, ruling elite at the expense of the common people; there is not much thought about the future at all. WEF excels mainly in zizagging into the future, looking in the rearview mirror - with glasses dipped in the cheese fondue."

In fairness, the "Swiss network effect" was very useful to me personally. I got to know Zhu Scott just before WEF at a crypto conference in St. Moritz, after which I concluded through her appearance on the panel with Schiller that she has a special gift of being able to position her immense knowledge of even the most intricate technical details, within global trends and developments.

Zhu Scott was kind enough to spend a few hours in Hong Kong a few months later to tutor this rather useless Dutchman on decentralization and blockchain. In my experience, this accessibility and willingness to share knowledge is more often seen in the crypto world than in the traditional IT sector, not to mention the financial world.

No one expects it to happen again, but over the last five years Ethereum has been a much better investment than Bitcoin and even better than Nvidia.

Ethereum did much better than Bitcoin

By investors worldwide, including those from the traditional financial industry, Bitcoin has been accepted this year as an investment product that is best compared to investing in gold: it is not used as a means of payment, but as a long-term investment. That is why it remains striking that if you look at the market with a view over five years instead of five minutes, Ethereum has appreciated more than twice as much as Bitcoin.

Indeed, if we compare the performance of the two largest crypto currencies with that of the three most valuable companies in the world, it appears that Ethereum has even outperformed stock market darling Nvidia. That's not saying it will be the case again in the next five years, but it's still interesting to keep in mind.

Christmas season? It's altcoin season

When Bitcoin's price rise has been very rapid, as it has been in recent months, it is usually a matter of time until some profit taking happens and the proceeds from that sale of Bitcoin are invested in other cryptocurrencies: altcoins.

That happened last week, when many altcoins peaked, including BNB, Dogecoin (DOGE), XRP and Chainlink (LINK). In the previous cycle, in 2021, altcoins outperformed Bitcoin for nearly five consecutive months.

In the crypto world, it's not Christmas, but altcoin season. Source: Coinmarketcap.

The question, of course, is which sectors within cryptocurrencies will benefit the most from the upcoming altcoin season. To the frustration of all sincere blockchain developers, at the moment it seems especially all meme coins, all crazy coins without any underlying value, will benefit the most.

Hawk Tuah Girl goes crypto

She was world famous for a few days this summer: Haliey Welch, better known as hawk tuah girl. Last week she was accused of involvement in large-scale scams by releasing a coin called HAWK that became worth nearly half a billion dollars in a short period of time, after which it collapsed completely(91% drop).

Now, few will have expected the same stringency of monetary policy from Ms. Welch as from Alan Greenspan, but this was pretty ugly. Stephen Findeisen, better known as YouTuber Coffeezilla, was quick toexpose the so-called  rug pull. But also completely unknown or random people can issue tokens, even kids.

Teenager makes meme coins

"On the evening of November 19, art adviser Adam Biesk was finishing work at his California home when he overheard a conversation between his wife and son, who had just come downstairs. The son, a kid in his early teens, was saying he had made a ton of money on a cryptocurrency that he himself had created.

At first, Biesk paid little attention to it. He knew his son was experimenting with crypto, but the thought that he had made a small fortune before bedtime seemed far too unlikely. "We didn't actually believe it," Biesk says. But when the phone started ringing incessantly and his wife was inundated with angry messages on Instagram, Biesk realized that his son was telling the truth-albeit not quite the full story."

In an excellent article, Ars Technica explains how and why Pump.Fun appears to be a new home for anyone looking to quickly release their own meme coin. The method is simple: the potential profits with meme coins are always coupled with immeasurable risks. Only suitable for the gambler with a strong stomach.

Interesting crypto categories

As every week, I want to emphasize that I am not providing investment advice, but these appear to be interesting categories of cryptocurrencies:

  • Real world assets (RWA): These are cryptoprojects that represent tangible, physical objects, such as gold, real estate, art or commodities that are "tokenized." By converting these into digital tokens, they can be more easily traded and managed, while ownership is transparent and verifiable in the blockchain.
  • AI tokens (which may or may not actually have anything to do with AI): This refers to crypto projects that capitalize on the theme of artificial intelligence, but do not always actually incorporate substantial AI technology. Some projects attempt to actually integrate AI applications, such as "smart contracts" with machine learning functionality, while others simply use the term "AI" from a marketing standpoint.
  • DePin or DePIN (Decentralized Physical Infrastructure Network): This is a blockchain-based model for decentralized management of physical infrastructure. This could include networks for Internet access, energy or mobility, in which the infrastructure is not controlled by one central body. Imagine: Uber with only drivers and customers, with no central organization taking 20-30% of revenue.

Venture capital firm Andreessen Horowitz published a nice overview yesterday of what it believes to be promising sectors in 2025.

Short news

Tesla is buoyed by Musk's bromance with President Trump, but Ethereum also rose strongly this week.
  • Tesla, Ethereum, Amazon and Meta are the winners of the stock market week, which actually had no losers. Yes, the S&P500 lagged behind tech stocks and crypto stocks, but the risk profile is also lower. At 28% up, the S&P500 is having a phenomenal year. Especially compared to savings accounts...

It's a funny contest run by AI experts and scientists: get an AI bot to declare its love to you and win thousands of dollars.

"It can be helpful to agree on a 'proof of humanity' word that your trusted contacts can ask you," Near wrote. "Should a strange and urgent voice or video call from you come in, this can help them confirm that they are really talking to you and not a deepfake/deepcloned version of you."

When someone suggested this on X last year it may have seemed far-fetched, but now the FBI advises  families to put together their own secret password, or security phrase. When scammers and criminals then try to impersonate a member of the family over the phone, for example a supposedly lost child asking her parents to send her money quickly, the family password or security phrase can be used to verify who is on the line. My guess is that many families will choose to use phrases from popular movies as security phrases, such as from Harry Potter or Home Alone.

As many as 87% of all startups that participated in Y Combinator's program, which ends with a pitch to investors, were AI-related in some way. But while the focus is mostly on consumer applications, the greatest use of AI is actually taking place within enterprise environments. Techcrunch advises companies to look closely at CTGT, Galini, Raycaster and HumanLayer.

Most analysts overestimate energy demand and underestimate technological advances. That is the gist of an argument by The Economist, which has looked at estimates of the global cost of an energy transition to a carbon-free world made by various economists, consultants and other researchers-the kind of estimates that are routinely used as the basis for policy.

These estimates range from about $3 trillion a year to nearly $12 trillion a year, huge sums. But these figures are grossly exaggerated. The good news, according to The Economist, is that the energy transition is going to be many times cheaper.

I don't claim to put all of the suggested products on my wish list myself, but you'll agree that this description of a Christmas gift does grab attention: "the Chipped Social Nail Set includes NFC-equipped nails that can connect to blockchain experiences and crypto wallets, creating an interactive way to show off your crypto style. It's the perfect gift for the bold, stylish crypto fanatic in your life." How did we ever live without NFC nails connecting to your crypto wallet?

I close with once again the kind request to complete the short questionnaire about this newsletter. Thank you very much in advance!

Categories
AI invest crypto technology

The big trends of 2024: AI, crypto and carbon removal

There are currently three major trends in technology driven by technological, as well as sociological and political currents: AI, crypto and carbon removal. These groundbreaking developments, like any major innovation, are received with skepticism, a pattern that has been evident for decades.

PC: "too expensive and useless"

In the 1980s, when the personal computer emerged, personal computers were mostly seen as too expensive for a device without many relevant applications. That quickly changed thanks to price reductions and standardization of software, after MS-DOS became the world standard thanks to a sophisticated licensing model by Microsoft. The word processor and spreadsheet quickly made the PC indispensable in the office.

Internet: "too difficult and dangerous"

In the 1990s, this pattern repeated itself with the Internet. The personal computer was seen as a work tool, not a potential mass medium. Bill Gates even declared that the Internet suffered from lack of standards, it was insecure and far too complicated, which is why he did not use the word Internet even ten times in his book The Road Ahead.

Bill preferred to talk about the information super highway, which he was going to build himself with the closed MSN, which we never heard anything more about. Yet within a few years, email, the Web browser and applications such as eBay, Amazon and Google made the Internet accessible to consumers.

In the Netherlands, it took until late 1996 for the NOS Journaal to understand that the Internet was about to become a serious mass medium, although Joop van Zijl still compared computer penetration to that of the microwave oven.

Smartphones: "only for representatives"

When the iPhone hit the market in 2007, the Blackberry reigned supreme in the business market. Although most of the population in developed countries already had a cell phone, often a Nokia, criticism of the iPhone was not muted. "Too expensive, only useful for sales representatives," was the verdict of a friend from the world of IT. Incidentally, the same chap who ten years earlier judged the cell phone as "only useful for drug dealers," a common sentiment.

Microsoft CEO Steve Ballmer laughed off the iPhone in a video in which, as he was taught by PR people, he quickly switched to promoting the company's own Windows Mobile which we also never heard anything more about. It makes CEO Satya Nadella's feat of completely revitalizing Microsoft after Ballmer all the more galling, but about that another time.

AI, crypto and carbon removal on the turn

Right now we are seeing the exact same patterns as before, but now about AI, crypto and carbon removal:

  • AI is often dismissed as useful for work, but without useful applications for consumers.
  • Crypto is criticized with comments like, "Name an application." Meanwhile, the first application lies in something as basic as redesigning the banking system, with each user managing their own account and making banks obsolete. Apparently, the significance of this is missed by many. Tip: Never get into an argument with people who were too lazy to read the Bitcoin white paper but have an opinion.
  • Carbon removal is often characterized as a fraud, referring to familiar examples such as inefficient cooking ovens, without knowing or understanding the complexity and potential of projects that do actually remove carbon from the atmosphere, such as ocean fertilization. This kind of removal of carbon from the atmosphere is the biggest task facing the world in the coming decades. Tip: Never engage in climate change discussions with people who were too lazy to read the summary of recent IPCC reports.

Admittedly, I have a personal fascination with how innovations break through or fail. That's why both my 1993 graduate thesis and my 2001 book were both called "In Search of the Holy Grail," although some weirdo photoshopped the cover of my book which, by the way, is still on sale in large numbers. And not because of its great success.

I learned more from Megamistakes than Megatrends. Everyone knows Rodgers' adoption curve, but it remains mysterious why one innovation catches on and another flops mercilessly. For carbon removal, crypto and AI, there are several key success factors, some of which I want to highlight.

CO2 success was not during COP29

Breakthroughs in carbon removal require political will. All media were focused on the COP29 climate summit in Baku, but in the meantime, successes were being made in Brussels and Washington in the fight against climate change.

In Brussels, the European Council approved the creation of the first EU-wide certification framework for permanent carbon removal, carbon farming and carbon storage in products. This voluntary framework is intended to create a certification system that can quantify, monitor and verify carbon removals and counteract greenwashing; carbon farming. The EU's adoption of the new rules marks the last major legislative step to give the green light to the creation of the new certification framework for carbon removal.

Now in Dutch: standards are being introduced that will allow companies and citizens to actually offset their carbon emissions, and not by planting or preserving flimsy forests, but by measurably reducing CO2 emissions or even better, removing CO2 from the atmosphere.

Democrats and Republicans together for carbon removal

In the United States, a bill was introduced by Senators Lisa Murkowski (Republican, Alaska) and Michael Bennet (Democrat, Colorado) seeking to expand carbon removal subsidies for a wide range of technologies intended to permanently remove carbon dioxide from the air and seas.

The bill is unlikely to be passed by the current Congress yet due to time constraints, but its introduction indicates that subsidies for carbon removal will be expanded even under President Trump. The fact that the bill was introduced by senators from both parties, a rarity these days, is hopeful.

AMCs for CO2

In coming years, watch for the term Advanced Market Commitment (AMC), explained here by the Economist: no matter how the political winds blow, the pressure from society for decarbonization is so great that smarter companies are independently seeking to remove or minimally offset their own carbon footprint, by funding techniques that remove carbon for the long term; preferably forever. Salesforce, Google, Meta and Microsoft are just the first from a long list of companies that will fund AMCs.

As another example, it was announced last week that Planetary Technologies has removed 138 tons of CO2 through "Ocean Alkalanity Enhancement (OAE)," which, by adding minerals or substances, increases alkalinity, the ocean's capacity to absorb CO2e, with the goal of sequestering CO₂ and combating climate change. Buyers of the associated carbon removal credits were Shopify (96 tons) and Stripe (42 tons) under a "pre-purchase agreement. In Scrabble, you don't put it easily, but it really exists and will be used a lot.

Old school tech compared to AI and crypto

Stock market valuations are a reflection of market expectations, and the enthusiasm around AI and crypto shows that investors have confidence in their longer-term potential. I have created four virtual "baskets" that I have posted about before:

  • 'MANAAM': the old school tech companies
  • Spotlight 9: the nine I believe to be leading tech investments
  • AI Spotlight 9: nine companies benefiting from AI
  • Crypto Spotlight 9: the biggest nine cryptos measured by market value

Old school tech MANAAM: +36%

In the broader tech sector, established players continue to dominate. At one time investors were fans of the term FANG (for Facebook, Apple, Netflix and Google, as if Microsoft meant nothing), but let's take the "MANAAM" group consisting of Meta (formerly Facebook), Apple, Microsoft, Amazon, Alphabet (formerly Google) and Netflix. The average increase in shares of this now classic little club this year is a whopping 35.9%. That's phenomenal from an investment perspective, until you consider that the S&P 500 is also up 27.19% this year.

Spotlight 9: +63%

Microsoft(14%), Alphabet(22.28%) and Apple(27.84%) are not even outperforming the index. While investors buy tech stocks for the higher price appreciation, compensating for the higher risk.

Not a buy recommendation, but indicative: the Spotlight 9 is +63%

However, those who had bought the Spotlight 9, which consists of the major tech companies and the two largest crypto currencies Bitcoin (+119%) and Ethereum (+57%), would have already seen their investment portfolio rise 63.37% this year. Compared to the MANAAM, Netflix is missing from the Spotlight 9, while Nvidia (+187%) has obviously been added as the world's most valuable technology company.

AI Spotlight 9: +76%

The valuation of AI-driven companies such as Nvidia, which play a key role in the development of AI infrastructure, has reached record highs. This shows that the market recognizes the speed at which these AI-powered companies are seeing their results soar.

Despite AMD, Gigabyte and Super Micro, the AI Spotlight 9 does as much as + 76%

Since Nvidia is already included in the Spotlight 9, I left out the market leader in my also completely arbitrary "AI Spotlight 9," consisting of nine companies that I suspect AI will allow them to grow faster than the leading large tech companies (the MANAAM group) and perhaps even faster than the Spotlight 9.

With 76.11% growth, that is certainly the case this year, with it being entirely remarkable that this increase came about despite Super Micro (which saw the auditor go the distance), AMD (-1%) and Gigabyte, hardware parties that did not keep up with the growth of the rest. Software company Palantir (+305%), which I wrote about in early November, more than makes up the difference.

Crypto Spotlight 9: +191%

Since the approval earlier this year of Bitcoin ETFs, tens of billions have already flowed from the traditional investment world toward crypto. The wait was for the moment when the "alt rotation" would begin, the moment when more money flows into other cryptocurrencies than Bitcoin, which counts as the unofficial kickoff of "altcoin season. That moment occurred yesterday, when the Ethereum Spot ETF net inflows, outpaced those to Bitcoin.

Crypto Spotlight 9: +191% and this does not include memecoin.

So the real daredevil is now stepping big into the craziest coins that often have no underlying value at all, but that is as risky as putting everything on red or black in a casino. A less risky strategy, insofar as that is possible in crypto, is to spread out in the biggest cryptocurrencies and take advantage of overall sentiment.

The "Crypto Spotlight 9" consists of the largest crypto currencies measured by market value, excluding stable coins, memecoins (crypto giblets) and tokens linked to crypto exchanges such as BNB.

That group, listed alphabetically as Avalanche, Bitcoin, Cardano, Ethereum, Solana, Stellar, Toncoin, TRON and XRP, achieved a 191% increase so far this year. So is this a buy recommendation? Absolutely not.

What I do recommend to anyone active in technology and innovation is to look into AI, carbon removal technology, blockchain and crypto-currencies. Just like in the 1980s with the personal computer, the Internet in the 1990s and the smartphone 15 years ago, these are developments that are unstoppable worldwide.

A practical way to stay informed is to then invest a bit in those sectors, with my advice being to do so only with money you don't need for rent, mortgage or other daily concerns. Even within technology and crypto, it certainly pays to look closely at what the intended investments actually involve; what does Palantir actually do, is Ethereum threatened by Solana and SUI; and isn't it funny to take a small gamble on memecoins after all?

Anyone who puts in some money will start to inform themselves. The alternative is to write a weekly newsletter about tech and innovations, but that also requires a huge ego.

Warm regards, thanks for your interest and see you next week!

Categories
AI crypto technology

Links from Nov. 17 to 24, 2024: Chopping, not hacking, Anthropic raises $4 billion, Marques Brownlee reviews Apple Intelligence, Phantom beats Coinbase and the six-million banana

A number of links to notable cases that unfortunately lack space and time to cover at length.

Chopping, not hacking?

Are we spending years using cybersecurity to keep the enemy out of our critical infrastructure, they just wreck the submarine cables. Quite by accident, there was a Russian captain on the Chinese ship, which had absolutely nothing to do with anything anyway. Those cables attacked the ship.

Anthropic raises $4 billion from Amazon

Most of us spend money at Amazon during this nonsensical Cyber Monday, Freaky Friday, Soupy Sunday or whatever these commercial holidays are all called. The creator of Claude just raised money there and, with Google Gemini, is basically the only remaining direct competitor to OpenAI. Tens of billions are going into this type of LLM, when the world would benefit more if such sums were invested in carbon removal technology.

Marques Brownlee reviews Apple Intelligence

Brownlee neatly emphasizes that he can only review what is available in the iPhone so far of all the AI tools announced by Apple; only to burn them down mercilessly. A nice moment in his review is when Brownlee summarizes Apple Intelligence by referencing an absurdist moment from a recent Apple video: a man sees a woman on the street with a dog, and instead of asking her what kind of dog it is, he takes a picture of the dog and asks his iPhone. "You can do that," Brownlee smiles. "But do you have to want to?" And that's his summary of the current state of Apple Intelligence.

TikTok helps Phantom get past Coinbase

In recent years, the number of downloads of the Coinbase app has been a good gauge, or grazier, of interest in Bitcoin and other crypto currencies. But now something unusual is happening: because of advice videos on TikTok, more people are downloading the much more complex Phantom app, which also allows the purchase of memecoins, which is not possible with Coinbase. Does this appear to be the starting gun to a bull run on cryptocurrencies other than just Bitcoin and the other major tokens?

The banana of six million

Few will have failed to notice that last week a banana and a piece of tape sold for over six million dollars. That, too, is indicative of the current bull run in crypto: buyer, after all, was Justin Sun, a crypto entrepreneur who rarely sees a mirror he doesn't like.

Banana-gate is indicative of the amount of money circulating in the crypto market and the increased self-confidence in the sector, where egos had been badly dented last year by the falling prices and prison sentences of former wonderboys like Sam Bankman-Fried (FTX) and Changpeng "CZ" Zhao (Binance). CZ is making a tentative comeback, although he prefers not to be interviewed by journalists, but by Nikita Sachdev, owner of Luna PR.

Thanks for the interest and see you next week!