Broc: Let’s talk about the current status of AI. Now I have this little graphic here, and I’m not gonna go over everything, but there’s a a kind of a main thing I wanna look at here. So if we look, this is this is the circulatory funding machine that is fueling open AI. So Chat GPT and its extremities, you could say. So we start with NVIDIA here. Nvidia agrees to invest. Up to a hundred billion in open AI. So they’re investing in open AI. Open AI is paying Oracle, owned by Larry Ellison. Not gonna get into that guy, but he’s evil. Big fan. Yeah, Larry Ellison, fan of the show, friend of the show.
Joseph: They just laid off thirty thousand people.
Broc: So OpenAI inks a $300 billion cloud deal with Oracle. So they’re paying Oracle, and Oracle is spending tens of billions of dollars on NVIDIA chips. So the the money just is getting passed around. And OpenAI, all of these companies I believe, but OpenAI for sure is using this money that they’re receiving from companies like Nvidia. And I’m sure there’s more, obviously you can see this graph is very complex. I’m sure they’re getting more money like this, but I just wanted to point out that that little triangle there.
Zach: To like visualize this, let’s say you have like a bunch of like monopoly guys standing in a park. One of them has like a big sack of money. Yeah. He hands it to the guy next to him. The dude’s like, Look at all this profit I just made. Yeah. He then takes that and divides it into like two sacks, hands it to two other dudes, and they’re like, dude, look at all this profit we just made. Yeah. They combine it back into one sack and hand it to a third guy. He’s like, dude, look at this. Yeah. Eventually it wakes up makes its way back to the first guy. He’s like, Look at how much my investment returned. Yeah. But it’s the same sack of money that’s basically.
Broc: Yeah. So everybody’s kind of taking on debt and then paying it off with their own money essentially. So it’s just getting passed around and they’re inflating their the value of their company. So on the outside, if you didn’t know any of this, you would say, Wow, open AI is really because I would see all these articles saying open AI is valued at however many billion or million and I’m like, Really? Why? What what is their how do they make money? And this is the answer because Legitimately I’d be interested to see the numbers how many people pay for Chad GPT subscriptions. I don’t think it would be enough. No, if I’m not mistaken, I think companies pay open AI to use their platform for their for their companies, but I’m not sure how much money that
Zach: None of that comes from pro membership.
Zach: They have like enterprise level subscriptions, but still I don’t think that’s going to account for that many. And then they’re starting to roll out like ads and stuff, but again, it’s not going to account for this giant bubble that’s being passed around. They’re all that’s all negligible.
Joseph: Do you guys know which of these companies are doing going public this year?
Broc: NVIDIA.
Zach: They’re already public, bro.
Joseph: Yeah, NVIDIA’s already public. So OpenAI is gonna do an IPO. Okay. So is Elon’s AI company. Scrock. Yep. Pick one of them. I think Anthropo, yeah, Anthropics one. So why would why would they all need to raise money, do you think, same year when they already have this much money coming in?
Zach: They’re all fighting for that government contract.
Joseph: Yeah, exactly. Well, that’s what that’s what it’s shown as, but I think it’s a lot simpler than that. Like, think about it. If they’re if they’re all saying, we’re if they’re actually worth a trillion or whatever their inflated number is, and it’s privately owned right now, would you sell? Or would you pull a Zuckerberg and be like, I’m gonna sell like ten percent of my stock for a huge amount, but then when it keeps going up, I own most of the world, right? So these guys aren’t stupid. So why go public where you’re selling the majority of your stock? And now you have a board of directors you have to answer to. They can fire you. Like to me, it’s really, really simple. Everybody’s stoked. Everybody’s like, AI’s the next big thing. You don’t want to miss out like you did on NVIDIA, right? Everybody buy the stock. So if they can sell 300 billion or whatever worth of stock to all these doofuses who are just buying on that. They’ve now cashed out and they don’t have to pass money around anymore, but they’ve just sold. And Facebook actually, similar thing. When they did their IPO, do you guys remember what happened with their stock price? They went up all this hype and then they crashed to like six bucks a share when they figured out that that Facebook just never made money. Yeah. It was like worth nothing. They had all these users, but it was worth nothing. Now they’re they’re the one though, like this is where I could get myself in trouble because economists would be like, well, here’s was their genius model. I mean, nobody knew that it was gonna nobody knew that the genius model was know everything about everybody, so you can sell them crap. And you can control them by creating addictive social media accounts, right?
Broc: Yeah, The Age of Surveillance Capitalism, it’s a good book. Go check it out.
Joseph: Yeah, yeah. So I think I think we’re in a similar spot where no number one, they’re worth nothing. So they’ll do their IPOs and I’m expecting them just to crash and burn when people realize these are worth nothing. And then it’ll basically be determined: can they take all these freeloading users and make money off them? Because that was really why Facebook recovered was because they figured out how to sell to all these freeloaders. But think about it, like ChatGPT. Most people that are on there that that are are this is gonna write my essay is gonna do this for me and if they were like, hey, can you give us a buck? they’d be I don’t have any money. Yeah. And so if that’s your entire user base, you’re worthless. Yeah. Unless you can figure out a way to make money off of them. And I don’t think their model’s set up the same way that like Meta is. Meta is set up where they s they freaking track your eye movement, how long you pause if you’re scrolling, if you act scroll back to something and and then of course all the likes, shares. They track every single purchase to where now they can put ads out at the exact timing that they know you’re gonna purchase so that people will optimize for that. And they’re one of their are they the biggest advertiser now online? Do you know Zach? Like they they make they have millions of advertisers paying them huge amounts per month. So they’re clu that’s why they that’s why Zuckerberg could drop eighty billion on his metaverse and it doesn’t matter because
Zach: Yeah.
Joseph: He had the money to do it, right? And so personally I think they’re trying to all go public so that they can cover this up, get paid out so they’re like, Look, see three hundred billion.
Broc: So I mean there there’s a lot of parallels between this and and the dot com bubble. It’s the same thing. It’s just hype being inflated by by people’s money. This one is kind of interesting because all these companies are evil and they’re linked to other evil companies, but we won’t get into that. This isn’t a conspiracy podcast, guys. This is a tech
Zach: Look at it from the standpoint too of like how much AI has grown in the last five or six years. It’s gone from like, do you did you ever see that video of Will Smith eating spaghetti, the the original one that went viral? That was like one of the first AI created videos, and it was Will Smith eating spaghetti, and it was like hilariously bad. terrible in all the right ways. it’s gone from that to where now you can make anything look semi-legit using AI videos. It it’s improved directly. Fantastically in that time, but that’s basically we’re at the point now where AI has consumed all of human media. Like everything we’ve put out in the last thousand years, all our works of art, literature, it’s all been consumed by AI, whether it was copyrighted or not. They took it without asking. Where do you go from there? There’s nothing else to feed it other than just trickling in new organic content that people create. You’re running into the issue now where a lot of the content created is partially or wholly created using AI. So that’s going to dilute the quality. It’s just I think n the next five years, the only real way to get AI to improve is just to increase the processing power behind it, to get it to put out more complex equations and faster. I don’t think you’re going to improve the creativity of it at all, just because it’s already consumed everything.
