The announcement of a major funding round in the tech world is often accompanied by a clichéd photo of a group of men in light blue shirts and the occasional rebel in a black t-shirt, trying to look tough into the camera. OpenAI, in announcing its new funding round of no less than $6.6 billion, out of a $157 billion valuation, posted an abstract image without a source; probably because there is no management left except CEO Sam Altman himself.
The text was also dry by Altman standards: "This funding allows us to strengthen our leadership in AI research, increase our computing power and build tools that help people solve complex problems."
"The dawn, blah blah blah chocolate custard"
This is less prosaic than the Bouquet Series lyrics Altman recently posted on his own blog:
"We must act wisely, but with conviction. The dawn of the Intelligence Age is a profound development with very complex and extremely risky challenges. It will not be an entirely positive story, but the benefits are so enormous that we owe it to ourselves, and to the future, to figure out how to navigate the risks that lie ahead."
This almost seems like one from the oeuvre of the unsurpassed Kees van Kooten: "but enough about myself, what do you think of my hair?" Because here Altman is unabashedly trying to attach half of his own company name to a term that is supposed to mark the period after our current post-industrial era. It is, of course, rather the dawn of the TikTok era, but TikTok is not as good at PR.
OpenAI now bronze, after SpaceX and ByteDance (TikTok)
The funding round increases the pressure on Altman to live up to this high price tag, normally via an IPO. OpenAI is now worth far more than any other venture-backed company ever before at the time of their IPO, including Meta, Uber, Rivian, and Coinbase, according to a PitchBook analysis.
OpenAI is now the third most valuable venture-backed company in the world. Only Elon Musk's SpaceX, valued at $180 billion, and ByteDance, the owner of TikTok valued at $220 billion, are worth more.
Is there any competition for OpenAI?
To put it in Dutch perspective: OpenAI is worth five times as much as Philips, as much as Unilever and still only 20% less than Shell. OpenAI's competitors must look at the new funding with horror. xAI, founded by Musk, raised more than $6 billion earlier this year, but with a valuation of "only" $24 billion. OpenAI's nearest competitor, Anthropic, was valued at $19.35 billion as recently as January.
A few days ago there was brief enthusiasm in the market when Nvidia, nota bene the party that is going to earn the most from OpenAI's new funding because it supplies all the hardware under the hood of ChatGPT, introduced a proprietary Large Language Model that seemed open source, called NVLM. Unfortunately, the technology is not allowed to be used in commercial applications, making Google with Gemini the only real remaining competitor to OpenAI. Or Anthropic needs to find funders who dare to throw billions at it.
$4 billion credit facility for OpenAI
Early investors in OpenAI are obviously in jubilant spirits, including the legendary Vinod Khosla, who in this interview with Bloomberg almost even seemed to be caught smiling. Khosla: "It is the most important tool we have ever had in human history to create abundance and realize a fairer, more equitable, prosperous society."
Khosla also reported that he has used ChatGPT for more mundane tasks - from quickly learning complex material to designing his garden. The latter is especially impressive, as Khosla's garden has a mile-long beach that has been the subject of lawsuits for years.
On Thursday, it emerged that in addition to its $6.6 billion investment round, OpenAI also managed to secure a $4 billion credit facility from a number of banks. With over $10 billion, the company can go on for a while, although the question remains how far this pole reaches for the company that loses millions every day.
Mozart of mathematics
Anyone who throws around bombastic cries about AI being the savior of humanity brings criticism upon themselves. These range from substantive criticism of the quality of the technology developed by OpenAI, to the way Altman runs the company.
More and more is leaking out about how OpenAI is rushing, especially under pressure from competition from Google, to release products that are far from ready and insufficiently tested. Even before Mira Murati's unexpected departure from OpenAI, staff complained that the o1 model was released too early.
The Atlantic advocates putting aside Altman's turgid rhetoric and looking primarily at what OpenAI's products are currently capable of:
"Altman insists that the deep-learning technology that powers ChatGPT can in principle solve any problem, at any scale, as long as it has sufficient energy, computing power and data. However, many computer scientists are skeptical of this claim and argue that several more major scientific breakthroughs are needed before we reach artificial general intelligence."
Terence Tao, a mathematics professor at UCLA, is "a real-life superintelligence, the Mozart of Mathematics," according to The Atlantic. Tao has won numerous awards, including the equivalent of a Nobel Prize in mathematics, and analyzed the performance of the OpenAI-hyped o1.
Tao's conclusions are not positive for o1's math ability and even led Tao to apologize for comparing o1's performance to that of a doctoral student.
A broader analysis appeared In the book "AI Snake Oil: What Artificial Intelligence Can Do, What It Can't, and How You Can Recognize the Difference. "In it, the authors explain why organizations are falling into the trap of AI snake oil (worthless solutions), why AI can't fix social media, why AI is not an existential threat, and why we should be much more concerned about what people will do with AI than about what AI would do on its own. I haven't read the book but the reviews are positive.
Reuters made this overview of funding in 2024. Adding up to over $10 billion, it especially underscores how well-funded OpenAI is, which has such an amount at its disposal due to the investment round and the banks' own credit facility.
The Wall Street Journal reports that Apple has dropped out at the eleventh hour and will not participate in the investment round in OpenAI, which is expected to close next week. It would have been a rare investment in an unlisted technology company for Apple.
The question is whether not participating in the investment round will affect ChatGPT's possible integration into the new version of the iPhone operating system, iOS 18. Despite all the wonderful promo videos, it is still unclear what Apple means by its own interpretation of AI under the name "Apple Intelligence. Seeing first, then believing remains the credo in technology.
Perhaps Apple's enthusiasm for participation in OpenAI has been dampened by persistent reports that top designer Jony Ive, a former confidant of Steve Jobs and now co-funded by his widow Laurene Powell Jobs, is working with his new company LoveFrom and OpenAI CEO Sam Altman on a veritable iPhone killer: a mobile device with fully integrated AI features from, surprise, OpenAI.
An "iPhone for AI"
A major article in the New York Times reports in detail on the creation of the new mobile device, unfortunately without clarifying what kind of device it is:
"Mr. Ive and Mr. Altman met several times for dinner before they decided to develop a product, with LoveFrom leading the design. They raised money privately, with contributions from Mr. Ive and Emerson Collective, Ms. Powell Jobs' company, and could raise up to $1 billion in seed capital from tech investors by the end of the year.
In February, Mr. Ive found office space for the company. They spent $60 million on a 32,000-square-foot building called the Little Fox Theater, adjacent to LoveFrom's courtyard. He hired about 10 employees, including Tang Tan, who oversaw iPhone product development, and Evans Hankey, who succeeded Mr. Ive as chief designer at Apple.
On a Friday morning in late June, Mr. Tan and Ms. Hankey could be seen moving chairs between the Little Fox Theater and the nearby LoveFrom studio. The chairs were laden with papers and cardboard boxes containing initial ideas for a product that uses A.I. to create a computing experience less socially disruptive than the iPhone.
The project is being developed in secret. Mr. Newson (fellow designer Marc Newson, MF) said the product and release time have yet to be determined."
$60 million in office space for a startup
So nice, when you can begin a startup with $60 million dollars just for your office space. Apparently that took all the budget for the website of Ive's company LoveFrom. All that's there is an animated bear, the mascot of the state of California, who casually strolls over the company name.
Wired published a nice piece yesterday in which it almost talks aloud, asking questions to the reader, trying to figure out what kind of mobile device Ive and Altman are working on. After all, no one has an image of the so called "iPhone for AI." But to lure investors, an Altman specialty, that tag line will work wonders.
It's only a matter of time before a movie comes out about OpenAI, hopefully as good as The Social Network was about the founders of Facebook. Perhaps the entire film could be generated with AI from OpenAI's own products. Because that's what remains special about OpenAI: although only three of its eleven founders are left after years of rolling down the street fighting, it continues to develop extraordinary products. It is as if a car keeps winning Formula 1 races while most team members at every pit stop try to rip off their own driver's helmet, remove his steering wheel and puncture his tires.
Superman becomes Scrooge McDuck
Once upon a time, OpenAI was founded as a foundation with a noble goal: to advance humanity through artificial intelligence. Nothing is left of those altruistic values as it turns into a heavily funded, shareholder-value-driven commercial enterprise. The transition of OpenAI into a for-profit benefit corporation will reportedly earn CEO Sam Altman several billion dollars in shares in the company for the first time. It's like Superman transforming into Scrooge McDuck.
The tensions surrounding this transition apparently caused prominent executives such as Chief Technology Officer Mira Murati, Chief Research Officer Bob McGrew and VP of Post Training Barret Zoph to resign this week, raising questions about the stability of the company. Previously, I wrote about the extraordinary career of Mira Murati, originally from Albania.
Still, investors are eager to pump billions into OpenAI. The huge new round of investment, led by Thrive Capital, values the company at $150 billion. That's fifty percent more than Facebook was worth during its IPO, when it was already making a billion in profits. (I remember experienced investors talking shame about such a valuation, who must now surely grit their teeth at the fact that Meta has since become worth fifteen times as much, but let's put that aside.) Profit is a concept they will see at OpenAI in the coming years only when they enter it as a prompt in ChatGPT, but not in their accounting.
Open AI will do $12 billion revenue at a $15 billion loss?
Anonymous sources told Reuters that OpenAI revenue will rise to $11.6 billion next year, compared with an estimated $3.7 billion revenue in 2024. Losses could reach as much as $5 billion this year, depending on spending on computing power. If the operating margin does not improve very quickly, this means that, at projected 2025 revenue, OpenAI will lose over $15 billion next year.
I can't resist: $15 billion loss per year is $41 million per day, $1.7 million per hour and $476 per second. Loss.
With the new $6.5 billion in its pocket, that carries OpenAI only about six months, although its coffers will not be completely empty at this point. Shall we call it "remarkable" that a company can apparently be so promising that its market capitalization is not ten times its profits, but ten times its losses?
So much happened in the tech world last week that I briefly discuss ten news items that stood out to me the most.
1. Nvidia worth more than Apple
The day you knew who was coming was Wednesday: Nvidia passed Apple in stock market value and became the world's most valuable company after Microsoft. There are legitimate reasons why Apple's sales are stagnant, with limited access to the Chinese market in particular preventing Apple from realizing its full market potential.
But there is more behind Nvidia's impressive run. Because while Nvidia had been investing heavily in the development of AI technology for over a decade, with all the risks of such a relatively one-sided strategy, Apple waited no less than nine years since the iPad in 2010 and the Apple Watch in 2015, until 2024, before introducing a new category of products with the Apple Vision Pro.
Meanwhile, Apple did buy back hundreds of billions of its own shares.Investors were happy about it, but buying back its own shares remains a weakness. Apple could have bought all sorts of useful companies, but Beats. the maker of flashy headphones, was the largest acquisition in Apple history ten(!) years ago at a cost of three billion dollars. That seems like a lot, but put it in perspective: Apple makes that amount in net profit every two weeks.
Apple could have purchased content (like Disney, and then divested the channels like ESPN), content aggregators (Netflix, Spotify), a completely new product category (Tesla) or valuable sports rights (World Cup, NFL, Olympics, Premier League). But none of that. No, to satisfy shareholders Apple kept doing huge stock buybacks.
Beats only fun for Dr. Dre
Meanwhile, it hobbled along behind Spotify with Apple Music, and those ostentatious headphones from Beats by Dr. Dre pleased mostly Mr. Dre himself - and according to rumors, he's not even a real doctor. More than half of Apple's profits come from products, particularly the iPhone, that are more than a decade old and under pressure from cheaper competitors.
Apple, at its core, sells too few products to still grow sales independently, although it still managed to increase its profit margin by cleverly optimizing its sourcing, like replacing Intel as a chip supplier with Apple's own top-quality Silicon chips.
Nasdaq Composite beat Apple
Investors are punishing mediocre growth due to Apple's lack of innovation and are sprinting toward Nvidia. NVDA shares are up more than 150% in 2024 (AAPL: 6%), 214% in the past year (AAPL: 9%) and over 3,200% in the past five years (AAPL: 314%).
By comparison, during those same periods, the Nasdaq rose 14%, 29% and 126%, respectively. It was unimaginable a few years ago: the Nasdaq Composite rose more than three times as much as Apple last year .
For those looking for more background on Nvidia's growth, I previously wrote this piece. Why the Apple Vision Pro is technically fabulous but from a business perspective merely a drop in the bucket for Apple, is described here.
TikTok bypasses U.S. export restriction
Nvidia is so unique and crucial that all other major tech companies are clutching their hats to be allowed to buy chips from it. From Microsoft to Google, Meta and Amazon: without Nvidia hardware, they can't develop AI applications, especially processor-guzzling Large Language Models (LLMs) like ChatGPT, Google Gemini or applications on Amazon Bedrock.
ByteDance, the parent company of TikTok, also needs Nvidia to develop AI and has cheekily circumvented U.S. export restrictions: it rents cloud capacity from U.S. cloud services, including those of Oracle. Officially, none of these developments seep into China, but for those who believe that, I also have a nice used car for sale from a half-blind widow, barely used.
2. Tim Cook's AI moment
Tomorrow morning, 10 a.m. California time, Tim Cook will take the stage at Apple Park in Cupertino at a pivotal moment in his career. Cook has been through a lot in his more than 12 years at the helm of Apple, but never this. He must convince the world that Apple has an AI strategy.
It has already been leaked that Apple will not launch a single AI app, but will apply AI across the breadth of its product spectrum. With one crucial difference here, compared to Microsoft: everything at Apple is opt-in, so users have the choice to turn AI applications on or off.
In contrast to the fiasco at Microsoft this week, which, with the feature Recallunsolicited searched through a user's activities, including files, photos, emails and browsing history and taking screenshots of the user's computer every few seconds to search through as well. Well that's not creepy at all.
3. Elon Musk sent Tesla's Nvidia chips to X and xAI
"Elon prioritizing X H100 GPU cluster deployment at X versus Tesla by redirecting 12k of shipped H100 GPUs originally slated for Tesla to X instead,” an Nvidia memo from December said. “In exchange, original X orders of 12k H100 slated for Jan and June to be redirected to Tesla.”according to a leaked Nvidia memo from December.
By directing Nvidia to prioritize X (also known as Xitter, because formerly Twitter) over Tesla, Musk ensured that the automaker would receive more than five hundred million dollars worth of Nvidia GPUs months later. This likely caused additional delays in setting up the supercomputers Tesla says it needs to develop autonomous vehicles and robots.
A more recent email from Nvidia, from late April, said that Musk's comment at Tesla's first quarterly meeting "conflicts with bookings" and that his April post on X about ten billion dollars in AI spending also "conflicts with bookings and FY 2025 forecasts."
There is growing criticism of Musk's many hats, who, after all, is also CEO of aerospace company SpaceX, founder of brain-computer interface startup Neuralink and tunneling company The Boring Co. He additionally owns X, which he acquired in late 2022 for forty-four billion dollars, and AI startup xAI. Now Musk is even in danger of losing a fine bonus of fifty-six billion dollars.
The nice thing about Musk is that he often responds to critical reports on X, including now. His response is that Tesla had no capacity to do anything with those much-needed Nvidia H100 chips and they would have been stored in a warehouse. Hence the change of receiving address for this multi-million dollar order. Musk also says Tesla will install fifty thousand H100s at the Tesla Giga Factory in Texas to develop fully self-driving cars (FSD).
Nvidia Blackwell: no discounts
Just a quick calculation: an H100 reportedly goes out of the store for at least thirty thousand dollars, so Tesla alone buys one and a half billion dollars worth of goodies from Nvidia. Then consider that the new Nvidia chip, the Blackwell, has a higher base price and is quickly heading toward seventy thousand dollars, and it is clear that it is a matter of months, not years, before Nvidia also overtakes Microsoft in market value and becomes the world's most valuable company.
4. Wall Street Journal's Walt Mossberg on Jobs, Gates and Bezos
No one had the network of Walt Mossberg, the legendary tech journalist who built deep relationships with the founders of the world's biggest technology companies, including Steve Jobs, Bill Gates and Jeff Bezos.
In this podcast, the now-retired Mossberg talks about how Steve Jobs dealt with moments like Tim Cook is experiencing tomorrow, what Jobs focused on (everything was about the consumer) and how much Jobs cared about the stock market (not much, at least that's how Jobs made it look).
5. Majority of companies halt acquisitions because of ESG concerns
Sustainability considerations are becoming increasingly central to the M&A process, with more than seventy percent of M&A leaders saying they have abandoned potential acquisitions because of ESG concerns. An overwhelming majority say they are willing to pay more for targets with strong ESG characteristics, according to a new survey by professional services firm Deloitte.
The question is how Environment, Social and Governance is measured. Unlike traditional accounting, there are hardly any measurable criteria for ESG. Therefore, I hereby tell you: this newsletter is hugely social and is written by an almost elderly man with a dark complexion. A newsletter cannot be much more ESG.
6. OpenAI CEO Altman's weekly scandal
Sam Alman's opaque personal investment empire makes him rich and raises questions about conflicts of interest. For although Altman has no shares in OpenAI and earns only a modest income there, out of the goodness of his heart, meanwhile he appears to be awarding all kinds of companies in which he is a private shareholder good deals with OpenAI. Especially good for his own investment portfolio.
Vox rightly states, "It can be tempting to see the new proposal as just another open letter from "doomsayers" who want a break from AI because they fear it will get out of control and wipe out all of humanity. That's not all this is. The signatories share the concerns of both the "AI ethics" camp, which is more concerned about current AI harms such as racial prejudice and disinformation, and the "AI security" camp, which is more concerned about AI as a future existential threat. These camps are sometimes played off against each other. The goal of the new proposal is to change the incentives of leading AI companies by making their operations more transparent to outsiders - and that would benefit everyone."
At the same time, we should be aware that a large group of AI experts believe that the current generation of LLMs will not lead at all to the dreaded introduction of "Artificial General Intelligence"(AGI), the AI form that will be able to perform all human functions better than us and could replace us. Investor Benedict Evans wrote an excellent piece on this last month.
8. The AI elections instead of the U.S. elections?
Until AGI makes us humans obsolete, we had better worry about how AI affects democracy. Regulators can't decide whose problem it is. A federal power struggle in the U.S. and inaction by the U.S. Congress could leave voters largely unprotected prior to the 2024 election.
The chairman of the Federal Communications Commission (FCC) last month announced a plan to require politicians to disclose AI use in TV and radio ads. But the proposal is receiving unexpected opposition from a top Federal Election Commission (FEC) official, who is himself considering new rules on AI use by campaigns. But when?
The dispute - along with inaction at the FEC and Congress - would leave voters unprotected from those using AI to mislead the public or hide their political messages during the final phase of the campaign for the U.S. presidency.
9. BBC: audio deepfakes are worse than video deepfakes
It remains highly recommended: the movie Dumb Money about how YouTuber and Reddit user Keith Gill, better known as Roaring Kitty, propelled GameStop stock up and turned a few billionaires back into millionaires.
After disappearing from the face of the earth for a few years, Gill made his comeback on YouTube this week to over two million viewers. For GameStop stock, Gill's return was to no avail, but it is still extraordinary to see a grown man in sunglasses and a sling tell of his love for a dying retail chain while making hundreds of millions in the process.
In conclusion: in nineteen seconds to world fame
27-year-old Megan Boni asked on TikTok for remixes of her nineteen-second video that said, "I'm looking for a man in finance. Trust fund. 6' 5" ((1m96). Blue eyes. Finance. Trust fund."
Forty million views and a remix with David Guetta layer, she was offered a record deal by Universal and is invited to perform in Ibiza. The impact of going viral on TikTok is unprecedented.
Harari: "I’m a historian. But I understand history not as the study of the past. Rather it is the study of change, of how things change, which makes it relevant to the present and future.”
Colbert: "Is it real that we are going through some sort of accelerating change?"
Harari: "Every generation thinks like that. But this time it’s real. It is the first time in history that no one has any idea what the world will look like in twenty years. The one thing to know about AI, the most important thing to know about AI, it is the first technology in history that can make decisions by itself and create new ideas by itself. People compare it to the printing press and to the atom bomb. But no, it is completely different."
Technology that makes its own decisions
Perhaps my fascination with the work of Harari, best known as the author of Sapiens, stems from the fact that I am a historian myself (history of communication), but have found that study to be most useful in assessing technological innovations. Harari confirms the idea that many of us have, that current technology involves a completely different, more pervasive and comprehensive innovation than anything the world has seen to date.
With his conclusion that AI is an entirely new technology, precisely because perhaps as early as the next generation AI will be able to make decisions on its own, Harari identifies the core challenge and does so in the very week that Amy Webb presented the new edition of the leading Tech Trends Report themed "Supercycle.( The report is availablehere and this is the video of Webb's presentation at SXSW).
Supercycle
Webb: ""
- Amy Webb, CEO Future Today Institute
Webb, like Harari, believes that technology will affect all of our lives more strongly than ever.
OpenAI CTO said 'dunno'
If Harari and Webb are right, it is all the more shocking what Mira Murati, the acclaimed Chief Technology Officer of OpenAI, maker of ChatGPT and others, blurted out during an interview with the Wall Street Journal. The question was simply whether OpenAI used footage from YouTube in training Sora, OpenAI's new text-to-video service.
Now OpenAI is under pressure on this issue, because the New York Times has launched a lawsuit against the alleged illegal use of its information in training ChatGPT. So getting this question wrong could possibly provoke a new lawsuit from the owner of YouTube, and that is Google, OpenAI's major competitor, of all people.
Murati obviously should have expected this question and could have given a much better answer than the twisted face she now pulled, combined with regurgitating some lame lines that can be summed up as "don't call me, I'll call you. It's of a sad level at a time just after OpenAI already experienced a true king drama surrounding CEO Sam Altman.
These people are developing technology that can make its own decisions and are undoubtedly technically and intellectually of an extraordinary level, but as human beings they lack the life experience and judgment to realize what impact their technology can have on society.
LexisNexis, which builds profiles of consumers for insurers, turns out buyers of General Motors cars had every trip taken, including when they drove too fast, braked too hard or accelerated too fast. The result: higher insurance premiums. As if you needed another reason never to buy a car from this manufacturer of unimaginative, identity-less vehicles.
Google Gemini does not do elections
Partly because of stock price pressures, tech companies are forced to release moderately tested applications as quickly as possible. Think of Google with Gemini, which wanted to be so politically correct that it even depicted Nazis of Asian descent. Sweetly intended to be inclusive, but totally pointless.
This fiasco caused such a stir that Google announced Tuesday that Gemini is not providing information about all the elections taking place this year worldwide. Indeed, even to the innocent question "What countries are holding elections this year?" Gemini now replies, "I am still learning how to answer this question." I beg your parrrrdon?
Google Gemini does know all about Super Mario
Use Google's search engine and you come right to a Time article that begins with the sentence, '2024 is not just any election year. It may be *the* election year.' According to ChatGPT, elections will take place this year in the US, Taiwan, Russia, the European Union, India and South Africa; a total of 49% of the world's population will be able to go to the polls this year.
So when providing meaningful information about the future of the planet, Google Gemini is not the place to be. Fortunately, I do get a delightfully politically correct answer to my question: 'Did Princess Peach really need to be rescued by a white man? Wasn't Super Mario just being a male chauvinist?' Reading the answer, I get the feeling that Google Gemini has been fed a totally absurd worldview by well-intentioned people. The correct answer would have been, "Super Mario is a computer game. It's not real. Go worry about something else, you idiot.'
Speaking of princesses, there is one who claims that, like us mere mortals, she sometimes edits photos herself. At least, so says the X account on behalf of Princess Catherine and Prince William. The whole fiasco not only draws attention to the issues surrounding the authenticity of photos, but also demonstrates the need for digital authentication when sending digital messages. It would be helpful if it were conclusively established that the princess herself sent the message that was signed with the letter C.
Where do we go from here?
Globally, people are wrestling with how to deal with and potentially regulate the latest generation of technology, which is also a source of geopolitical tension. See how China is reacting to the news that ASML is considering moving out of the Netherlands.
The possible ban on TikTok, or a forced sale of the U.S. branch of TikTok by owner ByteDance, will not happen as quickly as last week's news coverage might suggest. By the way, it is interesting what happened in India when TikTok was banned there in 2020: TikTok's 200 million Indian users mostly moved on to Instagram and YouTube.
India announced this week that a proposed law requiring approval for the launch of AI models will be repealed. Critics say the law would slow innovation and could worsen India's competitiveness; the economic argument almost always wins.
The European Union is beating its chest that the law for AI regulation has been approved, but it will be years before it takes effect. It is unclear how the law will protect consumers and businesses from abuse. Shelley McKinley, the chief legal officer of GitHub, part of Microsoft, compared the U.S. and European approaches as follows:
"I would say the EU AI Act is a ‘fundamental rights base,’ as you would expect in Europe,” McKinley said. “And the U.S. side is very cybersecurity, deep-fakes — that kind of lens. But in many ways, they come together to focus on what are risky scenarios — and I think taking a risk-based approach is something that we are in favour of — it’s the right way to think about it.”
Aviation as an example
Lawmakers often tend to create a new regulator in response to an incident, think of the U.S. Department of Homeland Security after 9/11. The EU is now doing the same with the new European AI Office, for which qualified personnel is being recruited.
It shows a far too narrow view of digital reality. As the aforementioned Tech Trends Report correctly shows, it's not just about AI: the "tech super cycle" is created by an almost simultaneous breakthrough of various technologies, such as, in addition to AI, bioengineering (submissions for a good Dutch translation are most welcome!), web 3, metaverse and robotics, to name just a few.
It would therefore be better to set up a digital technology regulator similar to the European Medicines Agency EMA or the U.S. aviation authority FAA. Not that things are flawless at the FAA right now, far from it, but the FAA has spent decades ensuring that aviation is the safest form of transportation.
It is precisely having oversight relaxed, coupled with the greed of Boeing management, that has created dire situations such as Boeing personnel saying they never wanted to fly on the 787 themselves. It is exactly the situation that should be avoided in digital technology, where already many former personnel are coming forward about abuses and mismanagement with major social consequences.
Spotlight 9: Bad week for AI, but what will next week bring?
It was a week of hefty corrections after an extremely enthusiastic start to the year in tech stocks and in crypto. Bitcoin lost 5% and Ethereum lost as much as 10%. My completely made-up AI Spotlight 9, or nine stocks that I think will benefit from developments in AI, also received hefty ticks.
On crypto, I like to quote Yuval Noah Harari again, this time on the Daily Show: "Money is the greatest story ever told. It is the only story everybody believes. When you look at it, it has no value in itself. The value comes only from the stories we tell about it, as every cryptocurrency-guru or Bitcoin-enthusiast knows. It is all about the story. There is nothing else. It is just the story."
Media critic Jeff Jarvis believes nothing of the doom-and-gloom talk about rapidly advancing technology and even scolded people like investor Peter Thiel and entrepreneurs Elon Musk and Sam Altman. It was striking to encounter Jarvis in one of my favorite sports podcasts. Jarvis apparently does not realize that just his appearance on this sports show to talk about AI underscores the impact of technology on everyday life. He is not invited to talk about the role of parchment, troubadours or the pony express.
Million, billion, trillion
Where startups once started in someone's garage, AI in particular is the playing field for billionaires. The normally media shy top investor Vinod Khosla (Sun, Juniper, Square, Instacart, Stripe etc) publicly opened fire on Elon Musk after he filed a lawsuit against OpenAI, not entirely coincidentally a Khosla investment.
OpenAI top man Sam Altman appears to still be in talks for his $7 trillion chip project with Abu Dhabi's new $100 billion sovereign wealth fund MGX, which is trying to become a frontrunner in AI with a giant leap. Apparently, Altman has also been talking with Temasek, a leading sovereign wealth fund of Singapore. These talks involve tens of billions.
From the perspective of Harari, let's look at Nvidia's story. That is offering developers a preview of its new AI chip this week. How long can Nvidia and CEO Jensen Huang wear the crown as the dominant supplier of AI chips in the technology world? Tomorrow, Huang will walk onto the stage at a hockey arena in Silicon Valley to unveil his latest products. His presentation will have a big impact on my AI Spotlight 9 stock prices in the coming weeks and maybe even months.
The shelf life of a giant
Payment processor Stripe, also a Khosla investment, reported in its annual reader's letter that the average length of time a company is included in the S&P 500 index has shrunk sharply in recent decades: it was 61 years in 1958 and it is now 18 years. Companies that cannot compete in the digital world are struggling. With the huge sums currently being invested in technology, that trend will only accelerate.
In conclusion
In that context, it is particularly fun and interesting to see that in Cleveland good old mushrooms are eating up entire houses and cleaning up pollution, even PFAS. Perhaps not an example of Amy Webb's bioengineering, rather bio-remediation, but certainly a hopeful example of how smart people are able to solve complex problems in concert with nature.
You surely remember the scene from the movie The Social Network where Justin Timberlake, in his role as Sean Parker, says to Mark Zuckerberg, "A million dollars isn't cool. You know what's cool? A billion dollars.' Ah, what simple, innocent times those were, looking back now. The CEO of OpenAI, Sam Altman, who was kicked out of his own company just a few months ago, has only been back in office for a few weeks but is laughing at millions and billions: Altman is looking for seven trillion dollars. Or: seven thousand billion dollars. For an idea, not even for an existing company yet. What's going on?
The Wall Street Journal reported on Thursday that Sam Altman, the CEO of OpenAI, is seeking five to seven trillion dollars to build a global network of chip factories. It was already rumored last year that Altman wanted to set up a chip factory competing with Nvidia under the code name Tigris, but at the time it was not suspected that trillions were involved. The now leaked seven trillion in numbers is 7,000,000,000,000,000, a seven with 12 zeros.
Wait, how much?
To put this in perspective, in 1995 the Internet hype started with Netscape's IPO, much to the dismay of the traditional investment market because the browser maker was not yet making a profit, even though it had millions of users of the popular browser Navigator. On opening day, Netscape raised $82.5 million with the stock sale.
So Altman wants to raise eighty-five thousand times more money from private investors for his idea, for that is all it apparently is yet, than Netscape fetched on the Nasdaq. Times are changing.
To make another attempt to indicate how much money is involved: Altman wants to raise more than a third of the GDP of the entire European Union, the second largest economy in the world, with $7 trillion. The GNP of this planet, by the way, is $88 trillion; Altman would like 8% of that, so he can make a nice clean start.
According to the Wall Street Journal, Altman is in talks with the United Arab Emirates sovereign wealth fund, among others, and then I suspect it's not Dubai, which is better at marketing than making money but the wealthy oil-producing Abu Dhabi. Primarily through its sovereign wealth fund, Mubadala, Abu Dhabi is looking for new sources of revenue as oil wells appear to be slowly but surely closing to retain a chance of a livable planet.
It is plausible that Altman is also swinging by the Emirates' friendly big neighbor, Saudi Arabia, which is gaining traction with the sovereign wealth fund PIF (note the windmills at the top of the page, apparently Saudi Arabia is famous for those).
What do you spend 7 trillion on?
Altman seeks to address a critical bottleneck to OpenAI's growth: the scarcity of advanced graphics processors (GPUs) essential for training advanced AI models, such as his extremely popular ChatGPT. Despite the success of OpenAI and competitors such as Google Gemini and Anthropic, all of these billion-dollar companies are standing hat in hand at the doors of chipmaker Nvidia, whose lead as as maker of the best GPUs seems unsurmountable. But there's one thing: Nvidia can't handle the demand. And Altman doesn't want to be dependent on one supplier.
Altman announced on Twitter, a day before publication of the Wall Street Journal article:
Solid plan or pipe dream?
His ambitious plan involves setting up a network of several dozen chip factories ("fabs") that would ensure a steady supply of the crucial chips not only for OpenAI but also for other customers worldwide. The plan involves cooperation between OpenAI, investors, chip manufacturers including market leader TSMC, data centers and power producers. Because without their own power plants, chip factories cannot operate on this scale.
What is striking about Altman's tweet is his specific mention of data centers. That means he not only plans to reduce his dependence on Nvidia, but also wants to get rid of his reliance on cloud-based solutions like Microsoft now runs for OpenAI and Google for Anthropic. Microsoft owns 49% of OpenAI's shares and was instrumental in allowing Altman to return to OpenAI after the Palace Revolution in November, so that will be an interesting issue to follow.
If this initiative becomes a reality, it would mean that the AI industry and many other computing power-guzzling industries could realize their ambitions. But regardless of the money, it will result in a complex ownership structure where it is still unclear who will control and own the intellectual property, aside from all the chip factories, data centers and power plants.
Sustainability and geopolitics major challenges
Sam Altman's plan to radically scale up superchip manufacturing has significant sustainability implications. The environmental footprint of chip factories is significant; they are energy-intensive facilities that also require large amounts of water and produce harmful waste.
The unprecedented scale of Altman's idea would put enormous pressure on natural resources and energy networks. The environmental impact is compounded by the need for new power plants, which will increase CO2 emissions unless renewable energy sources are used exclusively. With financiers from the Middle East, that does not seem a reasonable priority.
Just last week, the Biden administration proudly announced a new initiative in which the U.S. is investing $5 billion in a public-private partnership aimed at supporting research and development in advanced computer chips. This initiative was completely drowned out by the WSJ article on Altman's plan.
President Biden's move underscores once again that the U.S. government recognizes the importance of high-performance chips, and therefore Altman's plan could quickly fuel geopolitical tensions. By attempting to expand chip production within a U.S.-led framework, China will surely respond, as it has also been explicitly pursuing high-end chips with Huawei playing a major role in recent years.
Superchips are a matter of national security and long-term economic growth. China will not stand idly by in the face of a concentration of production of these chips by US allies, possibly leading to retaliatory measures in which US companies and their partners will find it even more difficult to access the Chinese market. Altman's project therefore already casts the shadow of an intense trade war between China on the one hand and the U.S. and its allies on the other.
A few days after the kings drama at OpenAI, let's try to look over the ruins at this company whose mastermind, Chief Scientist Ilya Sutskever, has said that AI could herald the downfall of the world. Far too often it is forgotten that Sutskever and his colleague Jan Leike, also no slouch, published this text on OpenAI's official blog in July:
And oh yes, they have over $10 billion in the bank to figure out if they are going to save the world, or end it. Yet there are few serious attempts to seriously monitor, let alone regulate, OpenAI and its competitors.
Imagine Boeing developing a new plane with a similar PR text: 'this super-fast plane will fly on spot-cheap organic pea soup and could help humanity make aviation accessible to all, but it could also backfire and crash and blow up the earth.' The chances of getting a license wouldn't be very good. With AI, things are different; the tech bros just put the website live and see how it goes.
Move along, the turkey was great
What is the media reporting on now at OpenAI? About the Thanksgiving dinner where reinstated CEO Sam Altman sat down with Adam D'Angelo, one of the board members who had fired him just six days earlier. Both tweeted afterwards that they had a great time together. They are so cute.
Despite the media's tendency to quickly lapse into picking a hero and a villain when conflicts arise, the much-lauded Sam Altman is increasingly being viewed as demonstrating some odd behavior from time to time. According to the Washington Post, Altman's dismissal had little to do with a disagreement over the safety of AI, as first reported, but mostly with his tendency to tell only part of the truth while trying to line his pockets left and right.
Even if they would be Granny Smith green
Meanwhile, then, Altman is back with a new board about which there are many doubts. Christopher Manning, the director of Stanford's AI Lab, noted that none of the board members have knowledge of AI: "The newly formed OpenAI board is presumably still incomplete,” he told TechCrunch. “Nevertheless, the current board membership, lacking anyone with deep knowledge about responsible use of AI in human society and comprising only white males, is not a promising start for such an important and influential AI company."
I don't care what color and what gender they are, even if they are Granny Smith green with three types of reproductive organs, but I do prefer when they have an understanding of the matter that their own experts say has the potential to put humanity over the cliff.
Five conclusions after the chaos
1. The AI war has been won by America.
Look after a week of craziness and fuss at OpenAI and we see that Microsoft, the old board and the new board are all Americans. The competitors? Amazon, Google, Meta, Anthropic, you name them: Americans. The rest of the world watches and holds meetings and speeches, but it's a done deal.
2. Good governance is nice, but bad governance is disastrous.
By this I do not mean that the people who fired Altman were right or wrong, because no one still knows that; the crux of their argument was that Altman had not given full disclosure, and if that is true, that remains a mortal sin.
But the root of the problem was deeper. The OpenAI board had been appointed to safeguard the mission of the OpenAI Foundation, which, in a nutshell, was to develop AI to create a better world. Not to create maximum shareholder value, as has now become the goal. The problem arose because of those conflicting goals.
3. Twitter, or X as it is now called, remains the only relevant social network in a crisis.
Elon Musk went on a rampage again last week and that seems to cost him $75 million in revenue, but Altman and everyone else involved still chose X as a platform to tell their story. Not Threads or TikTok – although I would have liked to have seen this mud fight for power portrayed in dance.
4. Microsoft wins.
Under Bill Gates, I already thought Microsoft was a funny name, because the company was neither micro nor soft then either, but in the nearly 10 years under CEO Satya Nadella, Microsoft has become a dominant force in all kinds of markets.
While Amazon, Google, Meta and also Apple are struggling to develop a coherent AI strategy, Microsoft seems to have found a winning formula: it is investing heavily in OpenAI, which uses the Microsoft Azure cloud, returning much of the investment back to Microsoft. Meanwhile, Microsoft does enjoy the capital appreciation via its 49% stake in OpenAI.
5. AI should be tested and probably regulated
Precisely because companies like Microsoft, Google, Meta and Amazon also dominate in the field of AI, the development of AI must be carefully monitored by governments. The years of privacy violations, disinformation and abuse of power taking place through social media, for example, show that these companies cannot regulate themselves.
The tech bro's motto remains unchanged: move fast & break things. But let them do that nicely with their own planet, not the current one. The potential impact of AI on the world is simply too great to let the mostly socially limited minds running tech companies make the choices for society.
An initiative like the AI-Verify Foundation can be a vehicle to achieve responsible adoption of AI applications. I close with the same quote as last week from OpenAI's Chief Scientist, Ilya Sutskever, which shows the world's AI leaders almost hope that future AI systems will have compassion for humanity:
"The upshot is, eventually, AI systems will become very, very, very capable and powerful. We will not be able to understand them. They’ll be much smarter than us. By that time, it is absolutely critical that the imprinting is very strong, so they feel toward us the way we feel toward our babies."
Sam Altman is gone as CEO of OpenAI, the company he co-founded. There will be much speculation about the reasons, because the departure of the CEO of the most successful company of the last decade, in the midst of an investment round that values the company at nearly $100 billion, must have been extreme.
I will elaborate on Altman's departure in my Sunday newsletter, but it is more interesting now to look at the woman who will replace him, albeit probably temporarily. I wrote a few months ago about this Mira Murati, a 35-year-old Albanian woman. Who is this mysterious woman, who has disappeared from LinkedIn but will attract many visitors to this page from a Swedish receptionist of the same name?
More on Sunday, but here's the link to what I just wrote on LinkedIn about this very special woman.
What a week in tech: Mark Zuckerberg talked with Lex Fridman in 3D, U2 was incredible in the Sphere in Las Vegas, Sam Altman and Jony Ive could be working on an "iPhone for AI," Amazon is putting billions into AI, Spotify is translating podcasts into all kinds of languages and Taylor Swift was in a football stadium. And oh, I almost forgot: French authorities raided an Nvidia office.
U2 opened the Sphere - and how!
First, the most striking images from last week. U2 on Friday opened the Sphere in Las Vegas, the spectacular event space that cost a whopping $2.3 billion. With a height of 112 meters and a maximum width of 157 meters, the Sphere has a total area of 81,300 square meters, making it the largest spherical building in the world.
Visitors to U2's opening concert seem unanimously enthusiastic about the Sphere on social media. Obviously, a cell phone does not offer a good impression of the experience of seeing thousands of square feet of screen around the band in 16K resolution , but even so, the images of Where The Streets Have No Name and With Or Without You were impressive. The sound also seemed to be outstanding, quite useful at a concert and yet often overlooked. My brother was there and is so excited that he immediately bought tickets for the final concert of U2's twenty-five-concert residency at the Sphere.
Zuckerberg and Fridman were not exactly winning souls for the Metaverse
Lex Fridman once again had Meta chief Mark Zuckerberg as a guest on his podcast, and this time the conversation took place in an unusual way. Both wore the Quest Pro VR headset and were not in the same room, but hundreds of miles apart. Yet the conversation looked and felt lifelike. The picture quality exceeded my expectations.
At the same time, the gentlemen's podcast painfully exposed the Achilles' heel of this technology. Spending so much effort, time and money to create a realistic avatar of someone's face and then spend an hour schmoozing with each other is the digital version of shooting a mosquito with an F-35 or putting on a princess dress to drop your kid off at kindergarten: it can be done, but it's a tad over the top.
I do not get the impression that people are so eager for higher image quality from their video calls that they are willing to put on VR glasses. Meta's technology looks like a technology in search of an application. If Steven Schnaars wrote his phenomenal book "Megamistakes: Forecasting and the Myth of Rapid Technological Change" now rather than in 1987, he would certainly devote a chapter to the Metaverse aspirations of Zuckerberg, who keeps trying to make VR a common conversational experience, rather than being happy that it already provides a brilliant experience in online games, a billion-dollar industry.
The French invasion
There were so many developments in the AI field this week that they seemed hard to pinpoint, until it was announced that French authorities on Tuesday had raided "a maker of graphics cards." And by that they did not mean those parchment scrolls that Napoleon marched toward Moscow with, but Nvidia's highly sought-after chipsets needed for the current generation of AI applications.
The official position is that European governments are trying to control the actions of Big Tech companies in thwarting competition. And let those Big Tech companies just happen to all be American; they are Apple, Meta, Google, Amazon and Microsoft, and as of this week, Nvidia may also count itself among this list of companies suspected by Europe.
It appears the French authorities may be looking for mischief in all the wrong places. In fact, the whole AI playfield has become much more complex than it seems, with all the players smilingly shaking hands and tripping each other up at the same time.
In AI you compete your customer and supplier to death
Seen from the "bottom up," AI is a whole separate industry. Nvidia is the undisputed king of shovels and pickaxes: Microsoft, Google and Amazon all buy billions worth of Nvidia chips for their cloud services.
But since those companies announced they wanted to reduce their dependence on Nvidia and are developing their own AI chips, Nvidia has begun investing in AI startups that compete directly with Microsoft, Google and Amazon. Nvidia is doing so partly with money and partly by putting these startups at the top of the customer list for its sought-after and scarce AI chips.
Nvidia's hope is that these startups, such as Coreweave and Lambda Lambs, take market share away from the big three so that Nvidia can continue to supply as many chips to this sector as possible.
Those who now think that Nvidia and, say, Google can drink each other's blood will have watched with raised eyebrows as Nvidia and Google recently jubilantly announced a new collaboration to improve Google Cloud.
Alphabet CEO Sundar Pichai even said less than three weeks ago that Google and Nvidia will still be working together a decade from now. Partnerships in AI are sort of like open marriages where you express that you love each other immensely, but leave your profile open on Tinder, always ready for the swipe.
The key question before European authorities is whether it is illegal for Nvidia to try to make their current customers' competitors more powerful. Expensively paid anti-trust lawyers are rubbing their manicured hands with delight.
It continues to rain AI billions
Amazon announced that it is investing as much as $4 billion in Anthropic for a minority stake, with the intention that Anthropic will use the cloud services of Amazon's AWS, the world's largest cloud provider. It's buying market share in a disguised way, but in a potentially smart way, because it's not out of the question that Amazon is going to make hefty profits on the shares in Anthropic.
Character.AI, a startup that offers chatbots that can mimic virtually anyone (one popular bot is Super Mario, including a very sad version of an Italian dialect), is in the process of raising hundreds of millions of dollars in new funding round that could value the company at more than $5 billion, according to insiders. Usually, those anonymous sources are the founders themselves, who thus put pressure on investors and semi-openly shop the deal around.
That $4 billion in Anthropic and $5 billion valuation of Character.ai are small beer for market leader OpenAI, which is seeking a $90 billion valuation in a deal in which executives sell some of their shares. This valuation is as much as three times higher than ... six months ago, when OpenAI raised $300 million on a valuation of $29 billion.
Entirely coincidentally, Mistral is launching its first model
I find it a bit suspicious that the raid by French authorities on Nvidia occurs the week that the French pride in AI, Mistral, presented its first model claiming that it outperformed one of Meta's smaller models, the Llama 2 13B. (By the way, can't anyone at Meta come up with better names than Llama 2 13B? Maybe Zuckerberg can ask someone on Fiverr for help.)
Naturally, Meta could not just let that happen and spread the word that Llama 2 Long AI (another delicious name) outperformed OpenAI's GPT 3.5 Turbo and Claude 2, Anthropic's product that just raised that $4 billion from Amazon.
'The AI race is weird'
The Information rightly concluded; "It makes me wonder what race all these companies think they are running. So far, it seems to be mostly about money and distribution. Technology seems to be coming together more and more, meaning that the winners are not necessarily those with the best technology, but those who figure out how to get the most money out of it.
And that race will certainly favor incumbents such as Google, Microsoft, Amazon and Meta, whose existing products already make billions. No wonder OpenAI is seriously considering building a device. If it continues like this, it will take a new wedge to really open the battle."
The "iPhone for AI"?
Indeed, the Financial Times reported Thursday that ChatGPT maker OpenAI is in advanced talks with legendary former Apple designer Jony Ive and SoftBank's Masayoshi Son to build the "iPhone of artificial intelligence," backed by more than $1 billion in funding from the Japanese conglomerate.
Jony Ive was Steve Jobs' favorite designer, spent more than two decades at Apple and led the design of the brightly colored iMacs that helped Apple rise from a near-death experience in the 1990s, as well as the design of the iPhone.
The news of the possible collaboration between Ive and Altman, funded by Son, was widely reported worldwide, but I missed reflections on what kind of device an "AI hardware device" should be. I can't imagine it, because smartphones have already become so powerful and have an installed base of billions.
ChatGPT more current and learning to see, listen and speak
In all the financial news, you would almost forget that major improvements to products are being introduced at lightning speed.
ChatGPT reported last week, "Voice and image give you more ways to use ChatGPT in your life. Snap a picture of a landmark while traveling and have a live conversation about what’s interesting about it. When you’re home, snap pictures of your fridge and pantry to figure out what’s for dinner (and ask follow up questions for a step by step recipe). After dinner, help your child with a math problem by taking a photo, circling the problem set, and having it share hints with both of you."
(I conclude from this that ChatGPT is not yet trained in the life of a childless man living in Singapore and Bali, where hawker centers, warungs and food delivery services dominate daily life.)
A major objection to ChatGPT was the lack of current data, as the model had previously only been trained with data through September 2021. It was announced this week that ChatGPT will become topical, meaning that some premium users will be able to ask the chatbot questions about current affairs and access news. OpenAI said the feature would soon be available to all users.
At the time of writing, Oct. 1, none of the listed features are available to me and ChatGPT's training data ends in January 2022. Hopefully this will change soon.
Spotlight 9: Ethereum wins again and is Microsoft underrated?
It is downright striking how little serious coverage is given to the important blockchain development platform Ethereum, especially compared to the panting coverage of AI companies.
With all the hubbub surrounding AI, it does make sense that Wall Street is finally starting to see that Microsoft's stake in OpenAI could affect Microsoft stock.
For two reasons: first, purely financial, because if Microsoft actually owns 49% of OpenAI's shares, that stake currently represents a value of $44 billion. Out of Microsoft's $2.35 trillion ($2,350 billion) market value, that's less than 2%, but there are days when yours truly doesn't have it lying around.
In addition, OpenAI uses Microsoft's Azure platform so that, with OpenAI's billion-dollar spending on these cloud services, Microsoft is also earning heavily from OpenAI again.
Fortune reported in January that in exchange for the $10 billion investment in OpenAI, Microsoft also obtained the right to 75% of OpenAI's profits until it recouped those $10 billion; plus an additional $3 billion it had already invested in the company in previous years. Don't let the French authorities hear it or they'll be invading Microsoft's office for a morning coffee too - with croissant.
The results are surprisingly good. For example, this is Lex Fridman in Spanish talking to Yuval Noah Harari, who suddenly sounds more like a Spanish flamenco dancer rather than an Israeli historian.
Renowned investment fund Andreessen Horowitz is opening the Crypto Startup School (CSS), a 12-week acceleration program in London for startups that offers expert guidance, capital and resources tailored to crypto founders.
Linda Yaccarino seemed frustrated and upset during an interview that was at times strange, uncertain and confrontational. Someday I'll get used to the fact that Twitter is now called X, but not yet.
With a gold medal in Street Fighter or FIFA, South Korean men have a chance to be exempted from military service. I searched to see if exemption was also given to winners of Grand Theft Auto, but alas. It would be a bit absurd if you could avoid military service by committing high-speed casualties in a mall in GTA.
Scientists are learning more about "sesquiterpenes," vapors from trees that could make clouds, cooling the earth. "It's a feedback loop, the climate affects cloud formation, and the clouds affect the climate."
If social media is to be believed, football player Travis Kelce is said to be reaping huge rewards from his liaison with La TayTay; Taylor Swift. I looked on his Instagram and Tiktok and saw an increase from less than half a million followers to 3.6 million, so it's not too wild. By comparison, Swift has 273 million followers. Funny, though: the meme where wives filmed their husbands telling hubby with a serious face that it was so sweet of Swift that she had put Superbowl winner "Kelce on the map". This man's dismay, combined with his self-control, is commendable.
The technology industry is increasingly suffering from excessive attention to tech founders. Elon Musk continues to dominate the spotlight, whether he is reviving Twitter or tearing it down, depending on whom you ask. Still, the most significant news of the past week was the unveiling of Worldcoin. This project drew attention because of its shiny "orb," which scans the iris of new users, and because of the involvement of co-founder Sam Altman, also the CEO of OpenAI.
Two months ago I wrote about Worldcoin and the company behind it called Tools for Humanity, which then presented itself on its 1-page website with the slogan "a technology company committed to a more just economic system" and raised as much as $115 million for the Worldcoin project.
The goal, the founders say, is to create a global identification system that will help reliably distinguish between humans and AI, in preparation for when intelligence is no longer a reliable indicator of being human. At Worldcoin, verification of humanity is ensured through the use of an Orb, a sphere: a biometric iris scanner.
But according to Alex Blania, CEO and co-founder of Tools for Humanity and Worldcoin project leader, there is a bigger purpose than just identification as a human being:
The definition of a pyramid scheme?
Who is not moved to tears by this noble endeavor? Who is against being welcome on earth? Coindesk visited Worldcoin's headquarters in Berlin and from this brilliant article, "Inside the Orb," the impression emerges that Altman and Blania possess a unique combination of talent, otherworldliness and opportunism.
So they talk about Worldcoin as a crucial step toward a Universal Basic Income (UBI) for the entire world population, because these men think big.
But they are particularly vague when the question is asked who should then pay for that universal basic income for our planet. Altman says of this:
Aha, so the influx of new buyers funds the system. That rings a bell, and I asked ChatGPT, the product of Sam Altman's other company, OpenAI, what the definition of a pyramid scheme is. Here it is:
'A pyramid scheme is a business model in which members are recruited through a promise of payments or services for enrolling others in the system, rather than providing investments or selling products. If recruiting multiplies, recruiting soon becomes impossible and most members cannot benefit; pyramid systems are therefore unsustainable and often illegal.'
I'm not saying Worldcoin is a pyramid scheme. Only that ChatGPT says it looks a lot like one.
Free coins for your iris
A cult of personality is emerging around Sam Altman reminiscent of the golden years of Steve Jobs and Elon Musk. Entire articles are devoted tothe 400(!) companies in which Altman has invested.
Partly for this reason, people lined up in several places around the world last week to have their eyes scanned by Worldcoin's orb. The media cheerfully helped make the hype as big as possible, with service journalism like this article in India, "Sam Altman's Worldcoin is here: how to get your free coin.
Because the system works stunningly simple: download the free Worldcoin app, scan your eyes at an orb, get a World ID and your Worldcoin app instantly receives 25 free Worldcoins; except in America, as Gizmodo experienced. But it's customer onboarding with a simplism and efficiency that would be the envy of a schoolyard drug dealer.
Critics have a point
Twitter would not be Twitter (oh no, it is also no longer Twitter but is now called X, but more on that later), if it were not for a number of astute critics who have analyzed Worldcoin well, such as here and here.
Ethereum founder and widely acclaimed ethicist within the blockchain industry Vitalik Buterin immediately warned of the possible, unintended, bad consequences of Worldcoin's approach:
For now, let's believe Blania and Altman's promise that iris data will be immediately deleted from the orb and not stored. But how many fake orbs will be used by criminals to defraud consumers of their iris scan?
In any case, the question is justified whether a centrally run company should undertake this kind of initiative. World ID is effectively a universal passport, why should it be developed by a commercial company?
Remember, for all the fancy promises and goals, this is a commercial organization and the founders and backers own 25% of all Worldcoin. That's a higher tax rate than VAT. Even stranger: from Asia, I cannot see the pages in the white paper that deal with these tokenomics at all, because they are shielded. A problem more people faced. Why are they shielding information from the same people who are allowed to have their eyes scanned?
'Proof of Personhood' is relevant, but not in this way
Cybercrime will only increase in the age of AI, so there is a need for proof that you are dealing with a human being and not a computer program. Just not in the way Worldcoin is tackling the problem. Michael Casey of Coindesk puts it this way:
'The risk is not with the technology per se - we have known for years that AI is capable of destroying us. It is that if we concentrate control of these technologies with a handful of overly powerful companies motivated to use them as proprietary "black box" systems for profit, they will quickly move into dangerous, humanity-harming territory, just as the Web2 platforms did.
Still, there is at least one positive aspect that can emerge from the Worldcoin project. It draws attention to the need for some sort of proof of humanity, which may give impetus to the many interesting projects that seek to give people more control over their identity in the Web3/AI era.
The answer to proving and elevating authentic humanity could lie in capturing the "social graph" of our online connections, relationships, interactions and authorized credentials through decentralized identity models (DID) or initiatives such as the decentralized social networking protocol (DSNP) that is part of Project Liberty.
Or it could still lie in a biometric solution like what Worldcoin is working on, but hopefully with a more decentralized, less corporate structure. What is clear is that we need to do something.
Portable identity and reputation
Casey's line of thinking leads to a system of identification and reputation, where you can use services anonymously, but share your identity and reputation if you wish. My Uber score, for example, is 4.96, but if I want to book a room through Airbnb, I do so as a completely unknown individual.
This is why a landlord is the first to ask for a passport copy, while it would also be valuable for Airbnb and the landlord to know that at least as a passenger in an Uber, I did not demolish or vomit under the cab. Such a system where you as a user carry your online reputation with you and decide for yourself to share at a time you deem appropriate would be extremely useful in the digital economy.
Universal basic income for the world's population is so far-reaching that it should be introduced through normal democratic processes. Let's not leave that kind of major social issue to a few men from Berlin; historically that has not proven to be a happy combination.
Twitter becomes X
It can't have escaped anyone's notice, Elon Musk is turning Twitter into X. What a romantic he is, isn't he, to name his company after his youngest son? He explains that in the coming months "your entire financial world can be orchestrated" from X. Because Musk wants to make Twitter a "super-app," an all-encompassing app that merges information, communication and transactions. Similar to China's highly successful WeChat. Musk wants to get rid of the hated ad model as soon as possible.
Musk will look eagerly at South Asian Grab and GoJek, which will allow users to not only order cabs (on cars or scooters), but also pay their bills and even hire personal shoppers to go to the store of your choice to do your shopping. Of course, with a margin for Grab and GoJek on each transaction.
Every second Musk spends on the overrated Twitter remains a waste of time and a waste of his talent. I still hope one day Musk gets angry about Alzheimer's, cancer and the mental health of humanity and uses his undeniable talents to solve those problems, for example with a biotech company. Musk has mastered development of software, hardware and mechanical innovations, how hard would biotech be for him?
The informative podcast More or Less, from the couples Morin and Lessin, discussed Musk's plans for Twitter in detail this week. It's the only podcast I know of, by the way, in which two couples discuss a specific industry, noting that ex-Wall Street Journal reporter Jessica Lessin is the astute founder of the online trade magazine The Information and Dave Morin is an investor who previously started Path, the most beautiful app of a failed social network I've ever used.
Notable links this week
Bill Gates has a podcast
Speaking of notable podcasts: Bill Gates has started a podcast called Unconfuse Me, and the first edition featured actor Seth Rogen and his wife Lauren as guests. Apparently that's a trend, to appear as a married couple on a podcast. I can hear you thinking, "Bill Gates has a podcast with Seth Rogen, doesn't that sound like Kermit the Frog with Scooby Doo as a guest? It certainly sounds that way, but it turned into an unexpectedly candid conversation about Alzheimer's, home care and recreational drug use, among other topics. Playback at double speed is not recommended.
Barbenheimer does nearly $1.2 billion in a week, Oppenheimer breaks IMAX projectors
The box office success of Barbie and Oppenheimer is unexpectedly huge: Barbie is expected to end the weekend with sales of $750 million and Oppenheimer is approaching $400 million. Even more strikingly, I found that the 70 millimeter version of Oppenheimer in the IMAX is so complex that the film is sometimes out of sync with the sound and even literally breaks. So much for all the doomsday scenarios that "old-fashioned" cinemas would lose out in the streaming era. Good feature films are drawing more audiences to theaters than ever.
Barbenheimer, but made by AI
If Barbie and Oppenheimer were squeezed into one movie, this would be the trailer. I say it too often about AI applications, but it's incredible that this was created entirely by AI: image, sound, video. Above all, the speed at which these kinds of applications are developing is unparalleled. The last time I was so stunned by a technology on the Internet was over 25 years ago when George Michael presented video in a Web browser.
Spotlight 9: Party Q2 at Google and Facebook
Yes, I know they are actually called Alphabet and Meta these days, but admit it, who reads on when those names are in the headline? It was the week when the second quarter results were released so there was a lot of movement in the stock markets. This web page contains a short, handy overview of the results of the major tech companies.
The short-sightedness in the stock markets was demonstrated for the umpteenth time this week. Alphabet and Meta made sharp price jumps, due to higher-than-expected sales while partly driven by currency differences. Granted, Alphabet made 28% more sales on cloud services and that will only increase in the AI era.
However, Meta lost a whopping $21 billion in 18 months on investments in Reality Labs, Meta's business unit that is doing something with all the buzzwords of the last two years, including Web3, Metaverse, AR, VR and anything with difficult glasses. Result: 10% share price gain. How is it possible?
Microsoft, which has taken a tremendously strong position in the field of AI by incorporating OpenAI into the Bing search engine *and* invested as much as $10 billion in OpenAI, a guaranteed hit, was not understood by investors because the investments in AI "do not lead to higher sales right away. Result: 2% decline.