Jeff Bezos Archives - Michiel Frackers

Summer is over so starting next weekend, this newsletter will again be weekly instead of monthly. With apologies for the late mailing, herewith the most notable recent topics covered in this newsletter:

OpenAI loses $158 per second yet is worth $100 billion
Nvidia breaks revenue records but is very silent on customer success
Shares of AI-driven companies rose sharply in August
Energy consumption of AI threatens climate goals of Big Tech companies, appear to try to change the rules of the game
Telegram and other social media are obviously being targeted by governments
podcast of Taylor Swift's boyfriend, and his brother, to Amazon for $100 million
Midjourney will make hardware

OpenAI loses $158 per second but is worth $100 billion

According to The Information, OpenAI, maker of ChatGPT, is fast heading for a $5 billion loss this year, or: $158 per second. This is a negligible run-up loss in the eyes of CEO Sam Altman and his supporters, as he appears to be successfully raising new funding at a valuation of $100 billion. That compares to the value Facebook had at the time of its IPO in 2012, but Zuckerberg did make $1 billion in profit!

Interestingly, the three most valuable companies in the world, Apple, Microsoft and Nvidia, apparently consider participating in this investment round. Thrive Capital as lead investor is doing $1 billion and Nvidia $100 million. That's a hefty sum, but how far does that take OpenAI?

How well is Nvidia doing?

At an annualized loss of $5 billion, OpenAI can go on for a scant week with that $100 million from Nvidia, which itself posted second-quarter revenue of $30 billion with a net profit of $16.6 billion. So it only takes the chipmaker thirteen hours (!) to earn the $100 million it invested in OpenAI. A nice tip for keeping a big customer happy.

Is Nvidia doing well or badly? Opinions vary.

Nvidia's performance is being interpreted in different ways. People from outside the tech industry, such as financial analysts, do not seem to understand that the manufacturing problems Nvidia is experiencing in producing the new Blackwell chip are temporary.

A company's performance is determined by a combination of revenue, growth and profit. Nvidia's sales will be fine for the next few years, due to a lack of competition and the huge demand from the Big Tech companies that develop AI applications or provide platforms for AI developers: Microsoft, Amazon, Google, Oracle and Salesforce are just a few of the customers who cannot drive their AI efforts without Nvidia. So aside from revenue, Nvidia's profit margin is in good shape for now.

A bigger problem for Nvidia is the growing doubt that all those customers can make healthy profit margins on their AI investments. So far, those hoped-for profits are failing to materialize, and that does represent a long-term concern at Nvidia. Top executive Jensen Huang is very quiet when asked about his customers' return on their AI spending at Nvidia. The question becomes how long for Huang silence is golden.

August was a fine month for AI companies.

AI Spotlight 9 rose sharply in August

While NVDA shares rose over 11% last month, it was also a fine month for many other companies benefiting from the rise of AI. Super Micro took a huge hit after it failed to produce its annual results on time.

My totally subjective AI Spotlight 9 has been updated and I have added Arm (chips), Arista (networking) and Marvell (chips). After all, Nvidia, Google and Microsoft are already in the "regular" Spotlight 9 of leading tech investments.

The S&P 500 closed very close to its all time high on Friday August 30th. Shares rose in the last 10 minutes of trading on Wall Street, with the S&P 500 up 1% and all major sectors on the rise. But the outlook for September is less bright.

Since 1950, the S&P 500 has generated an average loss of 0.7% in September and finished higher only 43% of the time, making September the worst month for stocks based on average return and positivity percentage. The past four September months have also been remarkably weak, with respective declines of 4.9%, 9.3%, 4.8% and 3.9% for the index. It will be interesting to see how tech stocks and especially AI companies do in the coming weeks.

AI versus climate

Due to the huge growth in data center energy consumption in pumping AI applications like ChatGPT and Google Gemini, tech giants risk missing their climate goals, usually ambitiously defined as "net zero," or carbon-free operations. There is great concern that smart techbros like Bezos are indirectly manipulating the definition of zero emissions

The Financial Times is particularly concerned about the influence of Amazon and Jeff Bezos's $10 billion Bezos Earth Fund on the carbon credits market, especially through its funding of the Science Based Targets Initiative (SBTi). The SBTi sets standards for corporate climate goals, but experts worry about potential conflicts of interest as large technology companies, including Amazon, want more flexibility in using carbon credits to achieve net zero targets.

This influence could change the way climate standards are set, potentially favoring cheaper carbon credits over actual emission reductions. Compare it to a penalty taker in soccer who often misses, upon which he decides to make the opponent's goal thirty feet wider and higher. And as a goalkeeper a garden gnome.

Telegram and X crackdown

Once upon a time, the credo of telecom operators was "we have zero responsibility about our customers' messages". For Internet service providers, I unfortunately know from experience, this was not such a simple matter. I wrote about that earlier. For social media, it is even clearer that they should intervene whenever possible if their networks are being used for criminal activity. The Washington Post explains it clearly:

"Global Internet regulators are no longer playing around. Two days after France sued Telegram CEO Pavel Durov on several charges, Brazil on Friday ordered the suspension of Elon Musk's X after it ignored an order to appoint a legal representative in the country. While the details differ in important ways, both cases involve democratic governments losing patience with cyberlibertarian tech magnates who perhaps turned their noses up at authorities a little too often.

The crackdown, which comes months after the passage of a law in the United States that could lead to the banning of TikTok, heralds the end of an era. Not the era of social media, which is still going strong. But the era when tech giants had free rein to shape the online world - and enjoyed a presumption of immunity from real-world consequences.

Although unfettered Internet companies have long clashed with authoritarian regimes - Google in China, Facebook in Russia or pre-Musk Twitter in Turkey - Western governments did not, until recently, consider social media and the vision of free speech they promoted to be fundamentally at odds with democracy. Politicians and regulators recognized that there were bad things on the Internet, condemned it and sought ways to limit it. But banning entire social networks or arresting their executives was simply something liberal democracies did not do. Now, for better or worse, they do."

The arrest of Durov in France is akin to firing a gun at a gnat. But until the full charges are revealed and it is clear what crimes Durov is accused of, it also remains difficult to vouch for his innocence. If Telegram is actually being used for pernicious activities and could well have intervened, appropriate punishment is warranted.

Friend of Taylow Swift and his brother podcast for $100 million

The Kelce brothers make a nice podcast, and the fact that the youngest brother is Taylor Swift's bearded arm candy also won't have deterred them from striking a $100 million deal with Amazon, which is trying to bring in more ad revenue. Actors Jason Bateman, Will Arnett and Sean Hayes struck a similar deal with satellite radio station SiriusXM early this year for their podcast, also for $100 million.

But Alexandra Cooper's podcast is the clear winner with the very well chosen name for her podcast Call Her Daddy, Cooper is reportedly getting $125 million from SiriusXM over three years.

According to Midjourney, I am more handsome than my reflection and I was typing this newsletter laughing on a beach. Then it must be true.

Battle over AI photos enters new era

While Elon Musk's picture maker Grok seems to know no limitations, spitting out everything from famous singers in lingerie to Kamala Harris with a firearm, the launch of the web version of Midjourney has been much less in the news.

That's a shame, because Midjourney is a fantastic tool that was previously only available via the cumbersome Discord. Fascinatingly, Midjourney also plans to get into hardware. Since hardware head (his real title) Ahmad Abbas previously worked on the Apple Vision Pro, some think it will be "smart glasses" but Midjourney CEO David Holz is far too smart for that. Everyone knows that if you want to make money in the smart glasses business, you might as well get in the shower, light up a cigar and burn thousand-dollar bills with it.

The question is, and all suggestions are welcome: what hardware is Midjourney going to make?

Thanks for the interest and see you next weekend, then hopefully just again on Sunday!

There was not one overarching news item this week, but these are the ten things in the world of technology and innovation that caught my eye.

1. Grand Theft AI

For writing this newsletter, I take notes during the week of topics that seem interesting to me. On Saturday, I ask four AI search engines to rank them in order of relevance: ChatGPT from OpenAI, Gemini from Google, Claude from Anthropic and Perplexity, from Grand Theft AI.

At least, that's what The Verge calls the creators of Perplexity by seemingly systematically committing plagiarism:

"Perplexity is basically a profit-seeking middleman on high-quality sources. The original value of search engines was that by collecting the work of journalists and others, the results from, say, Google, sent traffic to those sources.

But by providing an answer instead of directing people to a primary source, these so-called "answer engines" deprive the primary source, ad revenue, and keep that revenue for themselves. Perplexity belongs to a group of vampires that includes Arc Search and Google itself.

But Perplexity has gone a step further with its Pages product, which creates a summary report based on those primary sources. It is not just quoting a sentence or two to directly answer a user's question - it creates a fully aggregated article and it is accurate in the sense that it actively plagiarizes the sources used.

Forbes discovered that Perplexity bypassed the publication's pay wall to provide a summary of an investigation the publication did into the drone company of former Google CEO Eric Schmidt."

So Perplexity is stealing journalists' copyrighted work. Reason for Wired to launch an investigation that was summarized with the headline, "Perplexity is a bullshit machine."

Forbes has written a neat summary of the storm brewing around Perplexity's hijacking. According to Reuters, Perplexity is not the only AI company whose business model is to steal and sell other people's information, yet there is reason enough to ask Perplexity itself how it is. So I asked it this question:

Perplexity gives a painful answer about itself.

That is a clear answer, even with neat source citation above the answer.

Amazon by Jeff Bezos examines Perplexity by Jeff Bezos

The funny thing is that AWS, Amazon's hosting arm, has launched an investigation into Perplexity's practices. Because like many AI companies, Perplexity runs on AWS servers, perhaps also because it is partly funded by Amazon founder and major shareholder Jeff Bezos.

"AWS's terms of service prohibit abusive and illegal activities and our customers are responsible for complying with those terms," Amazon said, but in practice it won't be too bad because Bezos will never allow his own investment in Perplexity to be wiped out by Amazon.

2. MIT pioneer finds generative AI overrated

MIT Professor Emeritus of Robotics Rodney Brooks finds Generative AI, the type of AI based on Large Language Models (LLMs) such as Perplexity and ChatGPT, impressive technology, but perhaps not as capable as many suggest. " I'm not saying LLMs aren't important, but we have to be careful how we evaluate them," Brooks told TechCrunch.

He says the problem with Generative AI is that while it is perfectly capable of performing a certain set of tasks, it cannot do everything a human can, and humans tend to overestimate its capabilities.

"When a human sees an AI system perform a task, they immediately generalize that to things that are similar and make an assessment of the AI system's competence; not just performance on that task, but competence around it," Brooks said. "And they tend to be very overoptimistic, and that's because they're using a model of a person's performance on a task."

He added that the problem is that generative AI is not human or even human-like, and it is wrong to ascribe human capabilities to it. Brooks' view echoes analyses by Martin Peers and Jenn Zhu Scott, which I wrote about earlier this month.

By the way, some self-reflection is not foreign to Brooks: on his own blog, he tracks the accuracy of his own predictions. Including self-conceived color system, very interesting.

3. Applications for Solana ETFs.

Applications were filed on Thursday and Friday for permission from US financial authorities to launch exchange-traded funds(ETFs) for cryptocurrency Solana.

Solana dropped last month, but still rose 648% in the last year

It marks an extraordinary last year for Solana, in which it grew rapidly as a platform for decentralized applications due to high speed, low cost and good development tools, and also saw the value of the SOL token increase by as much as 648%.

After Bitcoin, Ethereum and BNB, Binance's token, Solana is now the fourth largest cryptocurrency in the world measured by total market value. Judging by developments, Solana will pass BNB before the end of this year and become the third largest cryptocurrency in the world after Bitcoin and Ethereum, not counting stable token USDT (the digital counterpart to the dollar).

SEC vs. Metamask

It wasn't all celebration in the world of Web3, as the crypto world likes to call itself these days. On Friday, it was announced that the U.S. securities watchdog SEC is filing a lawsuit against Consensys, best known as the maker of the popular Metamask wallet.

According to the SEC, Consensys operates Metamask as an unregistered broker. A substantively nonsensical argument, since Metamask provides a technical service where users exchange cryptocurrencies with each other. The SEC's argument would mean that the sale of envelopes is also subject to regulation because people sometimes put money and sometimes gift cards in them to give or sell to each other.

Rather, the value of the SEC should be to use meaningful definitions to determine the difference between when a cryptocurrency is a means of payment, when it is an investment and when it is a voting card. The difference between a love letter or a death threat is in the content of the text, not the form of transmission.

President Biden and his comrade Gary Gensler, head of the SEC, are as savvy in the crypto world (excuse, Web3 world) as Don Quixote and Sancho Panza are in the fight against windmills. In a presidential race that, at least until last week's debate, still seemed difficult to predict, it is also politically awkward of Biden to continually battle Web3 (I'm learning).

The percentage of voters among people active with technology and Web3 is high, while few votes can be won by continuing to kick against Web3 in this way. Smart politicians do not make neck-and-neck issues about which at best they can stumble and with which they can win little. Meanwhile, Trump appeared as a cheerful guest on a popular technology podcast.

Tesla fell 24% in the last year, but rose 7% this week

It was otherwise a rather soporific stock market week, with Nvidia recovering slightly from a share price decline due to profit grabs earlier this month. Microsoft is again the world's most valuable company, Apple number two and Nvidia number three.

As often said, let's look again at the end of the year. Unlike Professor Brooks, I hardly ever predict anything, but the prediction that Nvidia, unlike Microsoft and Apple, will come out with downright spectacular third-quarter earnings, I dare you.

4. Three tons of damages due to faulty facial recognition

The U.S. city of Detroit is paying three hundred thousand dollars in damages to a man who was wrongly designated a shoplifter due to improper use of facial recognition technology.

It won't be the last time that too much reliance on complex technology leads to the wrong conclusions. With facial recognition, more often a problem is that people of color are confused with each other.

iPhone users can test it for themselves on their own photos. If there are no dark-skinned people among them at all, it might be a clue to get out of one's own bubble more often.

5. Electric car battery charges in 4 minutes 37

British start-up Nyobolt has charged an electric car's battery from ten percent to eighty percent in just four minutes and thirty-seven seconds. This breakthrough, demonstrated with a purpose-built concept sports car on a test track, surpasses the current performance of Tesla superchargers, which take about fifteen to twenty minutes for a comparable charge.

The question, of course, is what this technology will cost and how soon fast chargers will be available en masse. Tesla recently had to sharply scale back its ambitions to install an infrastructure for fast chargers across the United States. So the question is with which partners Nyobolt will do the rollout.

6. 'Apple builds cheaper Apple Vision Pro'

The plan was to make a standard version of the Vision, as with the iPhone, and a more expensive Pro line. However, the plans seem to have changed and the result seems to be that a new Apple Vision will be on the market for just over half the money, but with a much worse resolution.

Unlike with phones, resolution is critical with a VR device. It is that very aspect that was rated so highly when the Vision Pro was introduced. But the device is too expensive and apparently that quality cannot be mass produced at a lower price for now.

Not plagued by false modesty, for a comprehensive analysis I gladly refer to my piece from last May in which I wrote:

"All the omens are that the Apple Vision Pro will be a flop - a flop by Apple standards, that is. But that's not a bad thing at all. At least Apple is trying to develop something new again, and that's better than unimaginatively buying back its own shares for hundreds of billions, as it has in recent years."

The good news for Apple is that the iPhone 16 does appear to be a sales success. Not only because of a new "capture" button, but because the expected AI features will only work on the iPhone 15 Pro with the A17 Pro chip.

No less than two hundred and seventy million iPhone owners have not updated it for four years, but if they want to use AI they will now have to. And that's good news for Apple.

7. Bad news for people with fear of flying

It's not because the media have seen articles about it click extremely well and thus there is a lot of media coverage of the phenomenon, it also turns out to be reality: Clear Air Turbulence (CTA), turbulence in clear weather, is more common than ever.

Last month, one person was killed and several passengers seriously injured when a Singapore Airlines plane bounced up and down for a minute. Surprisingly, for once it wasn't Boeing's fault.

This research from the University of Reading shows that severe turbulence in clear weather in the North Atlantic, for example, was 55% more frequent in 2020, than in 1979, "consistent with the expected effects of climate change.

8. Marc Andreessen looks back on Mosaic and Netscape

Marc Andreessen and Ben Horowitz, founders of investment firm Andreessen Horowitz (known for Facebook, Airbnb, Instagram, Zoom and many other successful companies), look back at the breakthrough of the Internet, when Andreessen co-founded Mosaic (the first Internet browser with, how is it possible, pictures!) and Netscape, the company that launched the dotcom boom.

The recap is especially interesting because the gentlemen both share many insights relevant to anyone working in the field of innovation and technology. This podcast is highly recommended.

Also frequently recommended by me: the two books Ben Horowitz wrote about entrepreneurship. First, The Hard Thing About Hard Things, about building a startup, with especially sharp analysis about what he did wrong with his company Opsware and what lessons he and the reader can learn from it.

But What You Do Is Who You Are, on how a company can build (or tear down) its own culture, is also very worth reading; even if you don't work at a startup but value a good company culture and a pleasant place to work.

9. Why women need less exercise than men

There is a difference between the sexes, which I have suspected for some time; but this time research has been done on how much exercise we need for a healthy heart and for once it is in favor of women.

A study of four hundred thousand people shows that men need to exercise five hours a week to achieve maximum positive effects for their hearts, compared to women only two and a half hours a week.

Why men are more likely to have heart attacks and at younger ages than women and what we can do about it to prevent heart failure is clearly explained in this short video from the BBC.

10. Tracer webinars: Wednesday, July 3, July 10 and July 17.

This is the sixty-first edition of this newsletter and except for the Christmas period, the appearance has always been weekly. During the summer period I switch to a monthly newsletter, so the next editions will appear on August 4 and September 1. Only on a special event will I send an update in between if possible.

True enthusiasts 😉 Don't have to miss me all month, because this summer I'm presenting a series of webinars on the Tracer token and the Carrot (carbon removal) smart contract.

Next Wednesday, July 3, at noon Dutch time is the first webinar, in which Tracer Chief Business Officer Gert-Jan Lasterie will cover Tracer's tokenomics and explain why the token still costs $0.75 cents in the current private round and double, $1.5 cents, at the public sale later in the third quarter. Sign up for Wednesday's webinar here.

The next webinar, on Wednesday, July 10, at noon, with Tracer Chief Technology Officer Philippe Tarbouriech, will focus on the Carrot (carbon removal) smart contract and how the carbon removal credits are tokenized, and then qualified based on "grade": the duration of CO2 removal. Sign up for that Wednesday, July 10 webinar here.

Special webinar: marketing and PR in Web3

On Wednesday, July 17, there will be a webinar on the latest developments in marketing and PR from Web3 projects with a very special guest. Who that is I will announce on X and LinkedIn, so follow me there for that information and other smaller updates over the summer.

Hope to see you in the webinars and if not, see you August 4!

Happy summer,

-Michiel

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