AI ‘no one wants’ and Google’s potential breakup | Equity Podcast

Introduction and Sponsors

• The podcast episode is presented by Mercury, a fintech company that simplifies operations for over 200,000 businesses. (0s)
• The hosts of the episode are Devin Coldway and TechCrunch senior reporter Margo McCau, with Anthony Ha joining as a guest. (25s)
• The episode discusses several topics, including deals from OpenAI, Dave Clark's new venture, and Impulse Space. (2m1s)
• There is a discussion on AI weaponry, questioning whether it is something that no one or everyone wants, and the potential breakup of Google. (2m7s)

OpenAI's Funding and Strategy

• OpenAI has closed a significant venture capital round of $6.6 billion, which is noted as the largest VC round of all time. (2m54s)
• OpenAI has stipulated that investors cannot back certain competitors, such as Anthropic and Glean, which is considered an interesting contractual play. (3m18s)
• The episode mentions a Tesla robotics event featuring humanoid robotics and possibly involving McDonald's, but notes that the event's details will be covered later by Rebecca Bellon. (2m19s)
• When investing in companies, it's generally considered unusual to invest in direct competitors, especially at later stages, but it's unclear how common this practice is in the industry (3m52s).
• In the case of big companies, it seems like they're balancing out their investments by placing bets on multiple companies doing similar things, such as General Catalysts investing in Andil and Hing AI (4m26s).
• There's a report that Open AI is restructuring and considering becoming a public benefit corporation, which would require the board to consider the mission when making decisions, but this change may not necessarily benefit the public (4m44s).
• Becoming a public benefit corporation is more of a signaling move, as it doesn't impose serious limitations on the company, and the difference between a for-profit public benefit corporation and a regular for-profit corporation is not huge (4m58s).
• Open AI is projecting significant losses, potentially up to $14 billion in 2026, and not turning a profit until 2029, which is speculative but still shocking given the expected increase in losses (5m39s).
• The company's plan to continue hiring and investing despite these projected losses is surprising, especially considering the talent that has left the company, including Ilia Sutskever, one of the co-leads of Sora, and the CTO Mira Moradi (6m30s).
• The operation of Open AI seems strange, with many key personnel leaving, and it's unclear how the company will continue to function with the remaining talent (6m49s).
• The numbers and amounts being invested in Open AI's valuation seem hard to believe and may not be based on rational calculations (7m0s).
• AI is anticipated to be a major technological shift, with OpenAI expected to become a leading company. There is significant investment interest in OpenAI, with expectations that its product, ChatGPT, will be highly influential and eventually profitable, potentially reaching the status of major tech companies like Microsoft and Google. (7m7s)

Dave Clark's New Venture: Augur

• Dave Clark, former CEO of Amazon's worldwide consumer division and briefly CEO at Flexport, has raised $100 million for a new AI-powered supply chain tool called Augur. The tool is expected to aggregate data and include a chatbot element, although details remain vague. (7m44s)
• Dave Clark's career has seen both successes and challenges, including his role in promoting robotic automation at Amazon and facing accusations of mismanagement at Flexport. Despite these challenges, he has secured significant funding for his new venture. (8m28s)
• Clark had considered running for governor of Texas but chose to focus on his AI logistics company instead. The logistics industry, while often seen as uninteresting, is complex and data-rich, presenting opportunities for AI to extract valuable insights. (9m27s)
• A significant issue in the retail industry is that 56% of retailers maintain weeks' worth of safety stock as a precaution against setbacks, which is seen as inefficient. There is a suggestion that improvements in logistics and supply chain management could address this inefficiency, especially with the potential impact of labor strikes. (10m34s)
• The importance of labor unions and strikes is highlighted, emphasizing the power of collective action in the global supply chain. Strikes are seen as a demonstration of the crucial role workers play and the consequences for companies that attempt to undermine them. (11m10s)

Impulse Space Funding and Space Industry Trends

• Impulse Space, a company founded by Tom Mueller, a former SpaceX employee, has raised $150 million in a Series B funding round. The company focuses on building orbital transfer vehicles that move satellites in orbit. (11m41s)
• Impulse Space has already completed its first mission and secured a contract with the US Space Force, indicating its progress and potential in the space industry. The company's connection to SpaceX and its founder's expertise are seen as significant advantages. (12m25s)
• The discussion touches on the broader opportunities in the space industry beyond SpaceX launches, with many startups emerging from former SpaceX engineers, similar to trends seen with former employees of other major tech companies. (13m19s)
• There is a discussion about the trend of employees leaving large companies like SpaceX to start their own ventures, leveraging their experience and connections. This is seen as admirable, although not every venture will be significant. (14m3s)
• The Founders Fund led a funding round, and Tom Mueller, a founding employee of SpaceX, is highlighted as someone with a strong connection to the company. (15m1s)

Shield AI and AI in Warfare

• A profile on Brandon Tseng, co-founder of Shield AI, is mentioned. Shield AI is a defense tech startup that creates AI pilots for military use, leading to discussions on AI ethics in weaponry. (15m41s)
• There is a debate on whether Shield AI would create fully autonomous weapons. Brandon Tseng is firm that they would not, as Congress and others do not want such technology. However, there is a perception that Silicon Valley is more open-minded about this issue. (15m59s)
• The conflict in Ukraine has changed the landscape by providing combat data and creating a demand for maximum automation, which accelerates AI development in military applications. (16m40s)
• Warfare is increasingly influenced by technology, particularly with the development of autonomous weapons, which raises moral and ethical concerns. The deployment of such technology is a significant decision, and there is potential for substantial financial gain in its development. (17m29s)
• The inevitability of errors in AI, such as hallucinations, is concerning, especially when applied to high-stakes environments like the battlefield, where mistakes can result in loss of life. This highlights the need for more robust and reliable AI systems in such critical applications. (18m1s)
• A quote from a Russian diplomat at a UN AI arms conference emphasized differing priorities regarding human control over AI, suggesting the need for new international conventions to address the appropriate use of AI in warfare. (19m1s)
• There is often a disconnect between the optimistic projections of AI's benefits and its actual performance, which can lead to unrealistic expectations and potential risks, especially in defense applications. (19m33s)
• Defense technology founders often look to the US government for guidance on developing autonomous weapons. Although the government has issued voluntary guidelines requiring approval from top military officials, there is no outright ban on developing or selling these technologies, leading to concerns about transparency in collaborations between private companies and the Department of Defense. (20m15s)
• There is a lack of transparency in government programs related to AI weapon development, which is a source of frustration. The importance of conducting these developments openly is emphasized, as the public will eventually become aware of them. (20m51s)

Antitrust Case Against Google

• An antitrust case has been proposed against Google, suggesting the breakup of its businesses due to anti-competitive behavior. Despite previous attempts to regulate Google, which resulted in fines, the company has continued to maintain its monopoly in advertising. (21m24s)
• There is no specific proposal for breaking up Google, but the government has identified areas where it wants to reduce Google's dominance. The possibility of a breakup seems more likely now than in the past, although it would involve significant legal challenges. (22m22s)
• The discussion highlights that Google's power in certain areas is significant, and while a breakup may not be the ultimate solution, government efforts to scale back Google's influence are seen as positive. The timing of the antitrust case is debated, with some suggesting it should have occurred earlier. (23m15s)
• Google's integration of various businesses and services makes it challenging to consider breaking up the company, as it would be like trying to separate ingredients from a baked cake. However, future changes in their AI ecosystem might make it more feasible to separate certain business areas, such as AI tools from advertising tools. (24m1s)
• Google's AI development, particularly its Gemini project, is perceived as lagging behind competitors like OpenAI and Anthropic. It lacks popularity and is not widely used by different groups, despite being integrated into Google Search. (25m0s)
• There is skepticism about the integration of AI into search results, with some users preferring to bypass AI-generated answers in favor of more reliable information. Google is noted for providing sources for its information, which can help verify the reliability of search results. (26m17s)
• The potential breakup of Google might become unnecessary as the industry evolves, and new dominant players could emerge, changing the landscape of technology and AI. (27m6s)
• The potential breakup of Google due to antitrust scrutiny could take around five years, creating turmoil in the tech industry. This situation presents opportunities for startups, investors, and consumers to explore new technologies and platforms. (27m16s)
• The current environment, where traditional platforms like Facebook and Twitter are losing users, encourages the discovery of value in alternative software and networks. This shift is reminiscent of how investing in companies like OpenAI was once considered unlikely. (27m57s)
• Antitrust scrutiny is making it more challenging for startups to be acquired by large companies, as regulatory bodies like the DOJ are closely monitoring potential anti-competitive practices. This pressure is pushing startups to focus on becoming significant, disruptive companies rather than aiming for acquisition. (28m29s)
• The regulatory environment is causing dissatisfaction among venture capitalists, but it is also fostering a competitive landscape where startups must genuinely compete with major companies like Google, Facebook, and Amazon. (29m3s)

Conclusion

• The podcast episode concludes with acknowledgments to contributors and information on where to find the Equity podcast online. (29m26s)