E35: Stability AI’s Emad Mostaque and Slow Ventures’ Sam Lessin Debate Investing in AI

I think the key question of this is like you know people say hallucinations I was like what does that mean well I mean it doesn't get every single fact completely right CPT is probably like 100 gigabytes down from like 10 trillion words the facts can get anything right is an absolute technical Marvel that no one's really sure exactly how that happens what if you had an AI tutor for every child what does that look like what if you had 100 AI teachers for every child for the first time every single person can have hundreds of characters that like and support them all the time basically you log into social media or whatever and you're like hey I'm Sam I was like cool what type of people instead of who do you want to follow it's like who do you want to follow you for example there aren't enough therapists in the world you know and it is a regulated industry but at the same time there is a gap for therapist just like you have the meditation apps kind of step in and they created calm and they created these other things that were huge hello and welcome to the cognitive Revolution where we interview Visionary researchers entrepreneurs and Builders working on the frontier of artificial intelligence each week we'll explore their revolutionary ideas and together we'll build a picture of how AI technology will transform work life and Society in the coming years I'm Nathan lebens joined by my co-host Eric tornberg hello and welcome back to the cognitive Revolution today's episode is a super interesting one on a number of levels as we're hosting a discussion between two super influential technology thinkers Sam lesson former VP of product at Facebook now early stage technology investor and writer Andy mod mustache founder and CEO of stability AI whose work at stability highlighted of course by stable diffusion has already been incredibly influential but has also come under intense scrutiny in the months since he raised a hundred million dollars at a one billion dollar valuation this conversation started on Twitter with a short essay that Sam wrote arguing that AI is mostly a bad investment for VCS Imad responded and suggested a podcast on the topic and Eric and I were naturally happy to volunteer to host Sam and mod talk fast this is a 1.5 x speed episode for me down from the usual 2X and both had a lot to say so we mostly let them speak directly to each other before I jumped in at the end to ask some concrete questions I think regular listeners to the show will know that I definitely share Sam's Point of View around investing in AI AI May well disrupt Society at large but it doesn't seem likely to disrupt many existing SAS markets between now and then there will as Sam says always be exceptions but for someone whose focus is on looking for those early stage companies with 100x potential investment returns I think he's quite right that there'll be few and far between at least at the model and application layers for what it's worth though I do think Sam is quite wrong to limit his thinking about llm function to the no real intelligence just association between words paradigm there is now ample mechanistic interpretability work that shows quite conclusively that AI models are indeed grocking much more than statistical correlation but that's a topic for another episode for today the subtext of the conversation seemed to be this question will stability AI prove to be one of those exceptional highly successful startups deserving of its unicorn status and valuation from my standpoint the answer may depend on your definition of success stability is as much a movement as a company and has already left an indelible mark on AI open source culture their impact goes beyond the groundbreaking stable diffusion including major data set releases such as the lion 5 billion image data set various language models and accompanying open source rlhf libraries which enable further Downstream training and customization and many many other projects across a wide range of modalities they've also established themselves as tremendous identifiers of and supporters of talent including another upcoming guest 19 year old PhD tanishq Matthew Abraham who just published a literal mind-reading paper that converts fmri data into reconstructed images of what the person saw truly mind-blowing work but perhaps more important than any of that has been ahmad's unique ability to articulate an inspiring vision for the future of AI while the positive vision of AI that we tend to hear when we hear one at all often centers around the possibility of large and Powerful agis of which there might only be a few presumably built and owned by Leading technology firms Ahmad is not only signed the AGI pause letter and the extinction risk statement but has articulated a very different positive vision for a panably of smaller AI models mostly presumably derived from the open source standards that he and the team at stability are creating but all highly specialized for specific purposes and localized to specific contexts and culture this is an extremely appealing notion to billions of people around the world who don't want to be beholden to American or for that matter Chinese corporations for their access to AI Ahmad has been criticized recently for allegedly exaggerating certain claims and affiliations and for some operational problems that's the ability that resulted in people sometimes being paid late and while some of that may well have happened I will say that I've followed Ahmad quite closely now for at least a year and have generally found him to be very reasonable he has for example always recognized the reality of openai and Google's modes and has projected that open source models will continue to lag leading closed Source models by a year or more all of this seems quite right and reasonable to me giving iman's comments about the centrality of stories I think it's safe to say he understands the task of developing a positive vision for AI a vision that others can really buy into as a core part of his role and strategy is quite different from other AI CEOs who often seem to be sharing their plans more for your information than for your input and it really does seem to be working I've joined the discords of many stability Affiliated projects and have been very impressed with the quality of people and conversations that they contain so weather stability will ultimately deliver a great return for the investors who bought in at that one billion evaluation is for me not the most interesting question about the company I'd be very surprised if they failed outright given the quality of talent that they have and so the question that matters more to me is simply what impact will they have will their push toward decentralization prove democratizing destabilizing or both if you fear centralization of power and you want to see a rich Ecology of AIS develop around the world you might expect their contribution to be extremely positive if on the other hand you fear chaos and see AIS as invasive species colonizing Niche after Niche and ultimately perhaps competing with humans you might feel quite the opposite indeed for my part as you can probably guess I expect the outcome will ultimately be a bit of both throughout this conversation you'll hear just how much change both Sam and Imad take for granted as they think about the future culture entertainment and relationships they agree are in for a shock the global South May well have LeapFrog moments in education and even medicine online communities may come to contain AI characters that we can't even identify as non-human given the magnitude of all these changes and the resources and talent that a mod has amassed the inspiration he's provided and the tremendous Global need that AI seems so well suited to fill I think stability has a real chance not only to become a great company but to help shape a global Universal basic intelligence standard a potentially historic development how humans ultimately wield the new power that Ahmad and others unlock and whether we can control AI long term at all is much harder to predict but can ultimately only go one way or the other now I hope you enjoy this fast-paced conversation with himadmo stock and Sam lesson I think that uh large language models and a lot of the AI stuff that we're seeing kind of start to get consumerized right now and become real it's super cool like there's no question about that and like there are absolutely going to be and great product experiences improved by it right and opportunities to create more efficiency create like better interfaces like I am not negative on how some of the stuff will find its way into consumer product experiences and make things better I mean you know my wife's company the publication the information like we've already deployed a bunch of AI stuff that makes search for the information go from absolutely terrible to like pretty good and like there's a bunch more stuff coming that will get better it's like I'm not I'm not against that I do think the things that I keep in mind one as a as an investor is I think the case about why a bunch of this technology is going to make meta and uh Amazon and Google and a bunch of big players a ass load of money are clear right um I think the idea that it is a wedge or an angle that's gonna allow a bunch of companies from zero to come out of nowhere and then become wildly profitable or compete with those guys types of big players I think is it much is much more sus as they would say um and it's because it means to really take advantage of the stuff you need a ton of distribution you need a ton of data and I I really see a lot of what I've seen is is opportunities to extend Innovation right that already exists versus kind of completely reshuffle the DAC right and so that's like my big thing like I am very bullish on crypto long term it's a crypto is undeniable whatever you think of in a daiquiri Shopper right Ai and what we're seeing is not a decorating from my perspective it's an extender so you know people come pitch me like we're going to be the the a uh the Adobe of AI I'm like but they'll be right like from that from the deployment so I think it's a very tough one to see will there be exceptions of course there'll be exceptions they're always exceptions right but I think it's a scene thing I think it's harder I'd also say as an investor a seed investor which is you know how how I earn my daily bread right I'd say that you know the opportunities to deploy a few million dollars turn over a card and have an experience like oh my God like there's something here now let's have a series a investor put a ton more money in and see it scale up I think are few and far between and because everyone's so excited everything's way mispriced right and so for me as an investor I think it's an extremely hard Market to get excited about what else can I say I mean like look I do think the the elephant in the room which I'm sure we can discuss or not right is you know for the companies that have gone out so far that you know talk about chat GPT I think there's huge regulatory problems which are becoming clearer and you know it's not about like the machine is going to eat us all I think that's a load of crap right um and it's been in the record for quite some time being very very negative and cynical about kind of a lot of those narratives I mean at the end of the day token guessing guess the next token is not a fundamentally dangerous piece of technology um I do think that the copyright issues are deeply real uh and complicated and there's a bunch of other challenges that these guys are going to face that you know again because the world has a general Viewpoint of like only one shame on you fool me twice shame on me is you know the era of from social media to Uber to whatever like I think people are going to be way more quick reacting to like what's going on from regulatory environment here I hope then that historically but I don't know that's that's a ton of ground and I don't know where do you want to go yeah no it is a ton of ground I think you know there's this question of is this a disruptive or sustaining Innovation and there's a question of what this is you know you have the classical big dates and then you extrapolate it to sell you ads that was good old internet really created these kind of behemoths in matter and Google in particular but then you have the application or computer vision and these other things largely to the incumbents so value was captured there I was in immobile Mobile's a great example of like just double down right yeah and that's why uh kind of Facebook's first shift mobile was good makeshift to matter I don't know maybe they'll rename themselves special or something um but you know this becomes very interesting because like um these models are something a bit different so like with stable diffusion we took 100 000 gigs of images and the output was a 2gig file and it was four of the top 10 apps on the App Store in December uh we're having that as the entire back end you put words in and images pop out and it makes pretty pictures of your face right but then they all dropped off and they disappeared because there are more features than apps there were cool features but they weren't kind of product experiences that is exactly what happened on the Astra launched right you had like forward apps as number one for 5.99 there's a brief model where it's cool and you're experimenting with it and you have these kind of Boop boops right but they're not real yeah they were like poops yeah you're right exactly literally um but it's not real because you have to have the user experience and build products like normal but where I feel right now is that we're at the Primitive stage and very boring interact it was one-to-one interaction is very boring I think um it is again very surface level without any memory and it's ephemeral and fleeting my thing is that probably the iPhone 2g iPhone 3G bit we're just getting copy paste because what's happened is you've got a technology that's gone from research and is now starting to go into engineering what are the design patterns for this how is it implemented was it good for I think the key question of this is like you know people say hallucinations I was like what does that mean well I mean it doesn't get every single fact completely right she actually PT is probably like 100 gigabytes down from like 10 trillion words the facts can get anything right is an absolute technical Marvel that no one's really sure exactly how that happens you know it's like you know Pied Piper from Silicon Valley like that Wiseman School would be even more intense if you depress all that knowledge because what these really are they're reasonably repeats they're not factors because we've got two parts of our room are there anything machines aren't they guess the next token machines like that's the I think I think that's a really fundamental thing like I I think the my model and the easiest way for most consumers to think about this I think it's basically accurate right it's like there's no actual intelligence to these systems right all they're doing is saying okay based on all the words I've seen in the graph of language that I've been able to observe here's the most likely next token and that's really cool to be clear that's like super useful but calling that intelligence is a real stretch in my mind well I think it depends on your definition of intelligence like are you applying the free energy principles of call Christian and where everything's just intelligence from energy kind of dropping uh to its last day to a different definition of intelligence I think well I look at it is like this one to one is getting the next token for language models for image models that are Fusion based and that generate all sorts of other architectures but it's about output and what can it do so one-on-one it's a bit dumb it doesn't have memory um you have the metapaker by Cicero whereby they had eight language models interacting with each other and it outperforms humans in the game of diplomacy you know you just like all that good old Alpha go type stuff which used reinforcement learning is that intelligence probably still not but it can augment intelligence that's something that we've been focusing on a lot because you can use it for actual intelligence augmenting things you can use it for reasoning things give it a PDF and say who on Earth is this PDF talking about you can do that right now and that's a useful thing that reduces frustration I used to invest in video games I used to look at time to function learn frustration I look at things like you know this podcast we're doing in a year it'll be automatically transcribed and edited and added to our launch base through next token prediction does that require AGI no yeah although interesting let's talk about this podcast I think it's a really interesting case you know in the early days of Clubhouse when Clubhouse was ripping I used to like go after Paul all the time and I wrote about this being like you are so stupid for not recording this stuff oh I was like look here's the reality these conversations in class are dribble right like 99 of them is crap and I don't want to listen to it however if you've created a magical pump that says the internet is full of SEO and Wikipedia we have a magic pump of people wanting to talk to each other a lot here's the thing people want to talk no one wants to listen but if you transcribe and record it all and you can create an index out of it and then all of a sudden you just met with this next Generation search engine but that's interesting right here's the problem where Paul said at the time which I think turns out to be totally wrong given where AI has come he's like yes Sam but like there's no way to index it and blah I'm like there will be like there's clearly gonna be right we're just and it turns out I'd like to you know because I like saying I told you so like I told you so like they're definitely the way to do that right and like that would have been super sweet and I think would have created here's the problem though his with a lot of these visions of like oh well we'll just like take all the recorded podcasts right and then kind of put a front end inside of them and like compress them down and be done is there's no economic model to that I mean we can get the business models for a second that's going to make sense for anyone to publicly share anything right like the way the reason that like people put things on the web was because they were getting paid for it in one form or another because the whole ecosystem of Google right created was a trade it was okay like you get to Index this but you're gonna send me traffic and I can monetize it and like you know the Publishers got snowed by that for a while right and like almost lost almost went away like you know until they figured out pay walls right we're doing this now because it's kind of fun and and we'll learn right but we're also kind of doing it at least I'll do it it's like yes I'll post it maybe someone will follow me out of it it's upon an hour to spend with right but there's an economics to it in some form social or financial Capital this model I actually think that the interesting thing about AI if you take that view whatever you think is interesting is like it's already going to crush the information economy of the web right I think that if you roll it forward like this conversation will not be in the public domain right going forward because there'll be no there'll be no social economics to be a compression on top of it and if anything AI again if you take the model of oh it'll take a bunch of podcasts and compress them down into tweets right will end up kind of collapsing on itself if you need people which you do right to ultimately be the source of Truth and information about the world I'm not sure I entirely agree yeah because you can sometimes it's fun to shoot the ship and Tony you do have health podcasting they've got their ads and things like that but I think the attention economy is a very interesting element to this particularly because these models are based on attention so the differential of these models versus previous is that you have the attention to Resort you need paper where it's like from an information Theory perspective information is valuable as much as it changes the state so you take this whole podcast and compare this down to a few tweets that's all you need to see but sometimes people want to see the poor kind of thing no one really wants to do the whole thing oh no they do they do sometimes it's quite fun to kind of do it because I mean let's say the Christensen thing of a job to be done right you have a functional component a social component an emotional component you know why does everyone want to go to a concert you know why do people want to have collectors items things oh products have different aspects and different elements to it people still read foot books they don't kind of read the summaries of books they don't read the Civil locker rooms of it I mean like look to me there's there's two different again this gets into some more Facebook stuff but like I think we can talk about let's take Financial economy out of it and just talk about like informational and social there's the entertainment economy right for sure AI is going to crush in the entertainment entertainment right like there's no question about that right like you start with porn and go on through and the reality is is that you know we went from you know People magazine to your friends and your friends are more interesting Than People magazine and guess what's more impressing your friends there's professional friends who are like hotter and funnier and guess who's more interesting than hot funny professional friends it's going to end up being actually I said there's a mall or Tick Tock was it turns out algorithmically find the best person from the universe you'll find some Niche that's better what's better than that synthetic right we will get to the point and say hey like there will be like a hotter funnier more interesting more personalized AI thing which is direct like I totally buy that right and I think that's why actually some it's been funny to watch some pretty interesting influencers um who are smart be like oh my God this is the end of the world for us right I agree with that information is a very very different Beast right than entertainment though right because the value is not like engagement that is that is actually the in the broad sense the attention is everything where it's totally raw right which is like that is for sure true if you're trying to optimize for entertainment and is not true right if you actually know what you need to know what's going on in the world right or you need to like you're you're dealing with the real world and that interface between the real world and the digital world but the systems have no knowledge of what actually is truth is to your the point where I think this probably that argument falls down the most well I mean maybe this is why you know if you say that kind of hallucinations are kind of core and it's a creativity issue media is where it's more impactful where the truth isn't the element there right well it's happened a little bit to deed is a few of the air companies wanted to talk about themselves as information machines and they realize they can't and so they'll be like you're like we're not instead we're creative don't trust us for facts is like fine and I agree they'll be useful entertainment machines but I do I think that goes into the whole like what are we actually talking about here what are the actual value is and like how scoped it is which is not again it's not zero it's just not like everything we're societies are based on stories you know like all of my view on finance pretty much all the finances securitization and leverage telling stories and then how did you tell them like and we can see the power of stories as they move around so Silicon Valley Bank was a story that was true and led to an 18 billion dollar outflow like that all of us are kind of familiar with that probably listen to this podcast I think it's pretty cynical to say it's all in the stories I mean it's like I think there are there's reality in the world like the economy is not based just on storytelling no I mean the dollar is a story the economy is based on the dollar and so you have the FED confidence you have confidence in the stock markets it's kind of layers of these things and then you have this technology you need trust that's for sure true and Trust I mean ultimately goes all the way down to like is there a military behind it which is somewhat of a story and that I agree with but I think that's like a pretty abstract view right like companies earn cash flows they're real or not real they release products they do work that's real or not real it's not just storytelling what is the multiple now maybe it's because I'm gonna put my hedge fund manager so I always looked at what was the incremental story for a stop that adjusted the multiples and other things sure I agree that if you look at the world of multiples you say why do you get multiple expansion or compression right and that's based on people's feelings about the world and future cash flows right and in theory that that is a lot of Storytelling I don't think that's actually the vast majority of the economy right that's the stock market so I think that separating out what is the stock market from what's the economy is pretty important hey we'll continue our interview in a moment after a word from our sponsors I'm Niki uses generative AI to enable you to launch hundreds of thousands of ad iterations that actually work customized across all platforms with a click of a button I believe in omniki so much that I invested in it and I recommend you use it too use Cog rev to get a 10 discount and I think this is the important thing we separate it out we see where does this technology affect so when does it go to the incumbents versus startups or are these things kind of fundable right um and so we have one area of media we can discuss that very concretely I think it will have a massive impact on media that stability we have leading media team right and so we don't agreement there but we can dig into that the other area is a lot of these things are language models right now they're chat Bots and it's like it's nice but Bing is not the top search engine it's not even top 20 on the app store right because it's still a terrible experience relatively speaking yeah so even though some people like well I use it for all the things you don't really you know chat GPT Rose really fast and it's useful for things like doing your own work but do you really use it that much so what I find it interesting is really looking at where companies are trying to go beyond the basic search patterns and have the classical kind of feedback loops with engaging content and see how that grows so I think mid journey is a good example of that whereby David delivery built a community took it to like 14 million people and is making money hand over fist uh because he built even that Discord is freaking weird a good experience on an existing infrastructure Facebook app style but how many of those have you seen lucky across the entire AI space most of the stuff right now is terrible but again I tell the question is who gets the value right and I think let's talk about the internet because we actually agree on the entertainment thing like in a world of closed loop it's all about what's the most engaging thing and attention is everything everything right yes like these systems are like quite assuming that you don't end up getting into hell which I do think is a really big problem around human creativity and copyright and a bunch of other points of legal leverage on these things I agree that um you can make really compelling cases and it's going to hurt a lot of the human entertainment industry right that that I agree with but the question is who's going to win it is it going to be the Hollywood Studios is it going to be you know is it going to be the existing Publishers who just start adding incrementally more of this stuff in et cetera or is it going to be new startups or new people you know look there's always exceptions to the role but I think almost the entire pie is gonna be the people who have the distribution they have the IP they have like all the pieces they need to just plug this in well but I mean maybe we should look at it in terms of the consumption of content went to zero with streaming and kind of all these things that led to some winners coming um because you have Netflix you have to specify Etc the creation of content basically goes considered with this technology as well as you may see I believe in a few years who feature films using this yeah but I guess people own and distribute those right and like the reality is I think I'll be the Hollywood Studios because they have the distribution right like if you believe that's kind of the distribution mechanism but there's a whole ecosystem that can build around that things like dnag things like industrial Light and maggot do you need that when you have rendering you know at scale to be clear I think the the thing I think you could totally see changing or evolving is going to be the factory right so like you know um meaning like yes whether are there Capital Investments that people have made that will become less irrelevant because of AI absolutely um there's no question will you almost certainly still have human writer rooms for the foreseeable future for sure right like is what I mean so there's going to be hybrids I just I think saying that and but my basic point is that IP matters distribution matters like there are things that matter I agree with you that the factory Plumbing in some of these places gets a lot less valuable if you have better AI tooling I just don't think it matters well I think it's a bit of a disruptive innovation for that side of things increasing the pace of output so Pixar can do six movies a year rather than two so the question about the industry so a few weeks ago I was a can and I gave a talk so I used to be a video game investor and play it and I was like the video game industry over the last 10 years has gone from 70 billion to 170 billion the average school has gone from 69 to 74 movies are 40 billion to 50 billion the score is 6.4 on IMDb are you going to be able to make better movies and have a bigger Market there in which case there's more rooms for people to make money or is it going to be a case of it cannibalizes itself there's some key questions around kind of media right and media consumption in the end of the day the media consumption thing though again depending on like how you want to factor to look at it it really just comes back there's 24 human hours in a day right like and the reality is is like where time spent it shifts right as of this stuff like for sure Thai spent dramatically into social right off of other things right when that thing will Social get more compelling right with AI absolutely right and so will more attention shift into Instagram because of it absolutely do I believe there's going to be another platform that comes out of nowhere and swipes Instagram because the cost of production goes down yeah right like do I believe that like some new studio is going to come out and take out Pixar Napa so we'll just make a few more films right and like that's cool like I'm not I'm not against that happening I think that's completely fine and like people will make money on that in some places the the the level the cost of production and therefore the war of content gets more intense for sure you'll get to a point where like if you don't use this stuff you're gonna get but like just because the competition level rises doesn't necessarily change change the scorecard very much so that how these things go so but then this question of do you use Legacy systems or do you do new systems such as Runway ml such as window Dynamics and some of these other ones that are engineered differently I think there's a lot of kind of Legacy stuff where you used to Photoshop and you continue to use Photoshop and now they introducing features like info but is there room for a ground up kind of interface and we see that sometimes kind of a character and my assertion is broadly no but there will be exceptions and the broadly no is going to be it's just it's not to your point about innovate about is it sustaining or is it disruptive it's like Photoshop will get it 95 right they already have everyone's payment on file they already have the infrastructure this is not like the internet people like in the internet there was a bunch of companies that were fundamentally unprepared for this right I do not think that most of the incumbents are fundamentally unprepared for this yeah and you know there's a question of do you create brand new markets so I wasn't really invested in Korea the Chinese kind of twitch and there was two hours a day on average per user now on character AI I think it's still number two on the App Store we're seeing two hours a day on average of usage which is some insane kind of Engagement metrics it's quite nice you know you have a chat with it there's a question how that become then a product a network I think that we may be looking at some of the wrong areas here because what you have is you have the consumer experience the media experience and Enterprise experience I think one of the things that's most interesting for me in terms of where money could potentially be made is actually the regulated experience so at stability we make open models open source but actually what we do is open audible models for Enterprise private data governments Etc so we've got a whole bunch of stuff that doesn't have any web calls Etc employed via bedrooms but I think that's valuable data so one of the things we do is kind of Education um and that's where I look at some of these areas and they've been the main contributors to U.S inflation and CPI education and Healthcare and unlike you can do something different there now maybe that's where a significant amount of value will be I mean I think it's sad from the Silicon Valley story if the answer is like well the money's all going to need a regulation I don't disagree with you for what it's worth disrupting regulated Industries which is different I I do believe that someone's gonna make a lot of money on AI regulatory right there's no question AI Insurance there we go like you know like there's a bunch of things that are like really sad things that you have to do and like you know people will make money on there's no question that we'll find these markets they're super boring and not the type of thing I want to be involved in but like yes like some Enterprise investors will make Bank on like you know the whatever Europe comes up with certifying your models are compliant and GDP PR 8.0 to like deal with data request removals like that will happen as kind of this stuff happens I'm like pretty uninspired by that right like I think that's like pretty sad that that's if that's if the net income of like new opportunities in AI is just going to be like opportunities to like interface with government and Reign it in will be sad yeah but like I said regulation industry so the example that I have there is education and Healthcare so like what are the things you're working with a range of Charities and multinationals on is deploying tablets into entire countries in Africa with AI that teachers and learns you give every kid a tablet the young ladies Illustrated primer what does that do to an entire nation you know the only thing that's been provably to work in education is the bloom effect the two Sigma effect right now I'll try to assist a charity imagine worldwide has been deploying the global X price for learning adaptive learning and we're teaching 76 of kids literacy being receiving 14 months and one hour a day with older kids teaching younger kids I look at this technology and I'm like there are certain areas where there is a gap that nothing could fill before what if you had an AI tutor for every child what does that look like what if you had 100 AI teachers for every child I get it and like I do think that we can always go back to the industries that Tech has been trying to disrupt for a million years and like for lots of structural reasons has not and say ah but now with this new tech will disrupt it you know I'm I look forward to the um to the years of debate in the um we'll talk about the U.S between the teachers unions and people trying to deploy tablets for AI we could say oh no no we're gonna do it in Africa skip the regulator like the teachers but I'm just saying it's like yes there's always hope that the next wave of Technology will somehow unstick a bunch of problems technologists hate because of the regulatory or the structural issues with them but I I have no confidence that this one is meaningfully different but I mean this is the question structural issues right regulation is one thing um you look at kind of videos some of the other Indian kind of education companies you look at the Chinese ones across Emerging Markets maybe it'll be the case here I mean this is what I believe that much of the productivity enhancements aside from movie coding and things like that which we can get on to um and the biggest leaps will happen in the global South because they left to the mobile and there's a whole mobile economy and massive companies created from that what if they make a leap to intelligence augmentation with this technology because right now they can't service that now they could potentially service it given the decreased cost of creativity of Engagement and other things from education to help care to other things I think if your argument is that there's a bunch of countries outside of the US that have lagged in a bunch of infrastructure effectively or ability to like execute certain things and education Etc that will be able to allow the cell phone have like a leapfrog moment and move forward yeah I don't object to that I think that's like crazy um again it goes back to the thing where like I'm I'm excited about kind of like the US I think lives in the future relatively speaking to most other people and countries and like I think the thing most people are excited about is how like we can how AI changes like the top of the top I agree with that so I think if your argument is it doesn't change the top of the top but it does kind of catch up a bunch of the third world like I do think that there are places that will be true well so let's look at the top of the top then so um I think Microsoft put out that 50 of all code is AI generated on GitHub now from co-pilots Etc and there's 40 Improvement in efficiency I mean my top code is really enjoy it because they train their own models because we have code models too and they are showing more and better code what do you think about it with respect to that industry because that's obviously a large industry which is technology disrupted the only thing that I actually think is awesome for chat GPT effectively is I'll call it a stack Overflow 2.0 it's great for that right and like if you think about it why is it great for that like why right like I think it is the perfect problem for the existing technology we have you have a shitload of Open Source Code that these models can look at right plus you scrape all of stack Overflow which sayonara stack Overflow right and that goes back to the whole copyright issue as well as the issue of like where some of the inputs come from but most of the copyright issue plus the nice part about computer code right is that it it's test driven in a lot of cases either passes the test or doesn't pass the test right so you have like the perfect the perfect data set of digital only self-contained reality right which I totally agree like chat CPT is great at and frankly like I'm I'm the type of person who like Ico but I would never consider myself an engineer it makes coding for me so much more fun because all the I don't want to deal with like what the is this random error what package that's installed and manage this it's all great at now it does lie and it does make up the wrong answers and it's not perfect but I I fully agree that the co-pilot s thing is very powerful and like a really great specific case and I do agree that like talking about business models or you know what happens it's like like stack Overflow is the poster stack Overflow is the Yelp of this generation right you know how Yelp had this like huge lawsuit with Google it's gone on forever Google basically just stole all their results right like stack Overflow is going to be that of this because they are screwed right um and like it is a great example of a place where the tech is better because it was basically lifted yeah and you know it becomes very interesting as well because now what you have is regulation like they could all double Iris or the Dutch sandwich from taxation um whereby Israel and Japan have said you can scrape anything for any reason uh which is kind of crazy that's a martial law otherwise so it may be scraping one area you try it in another and you serve it up in a different country so I think this technology is kind of inevitable but then what is the implication of that like my take is that as we move through the next kind of five years or something like that the nature of coding will change like I started coding what 22 years ago we had like a sampler and subversion and stuff like that because these days have it so easy with GitHub you know and all these libraries what does it look like in a few years when you've got these technologies that you can describe something and it starts building apps you know what does the whole ecosystem look like again when the creation of these things it'll just make them like much less valuable right Like It Is What It basically comes down to what what is the remaining valuable is distribution right because like right now you can be a great engineer or solve a problem whatever and there's like a value in that you can create a product that's actually worth something everyone can make products this is just theoretically that are like cost nothing right or really easily then like there's just no leverage in that anymore and again this goes back to who wins who wins the people with distribution data right that's the answer like from existing now to your point of a regulatory Arbitrage and data I think this is really I think the sad part about a lot of this AI stuff everything is going private right like that's what the net of this is going to be is like any anything that has historically been an open data set or people are able to say like okay well like I'll share this but in return I get traffic or notoriety and that's like a fair economic trade over right and so what's going to end up happening is walls are going to go up everywhere everything's gonna go private and that's going to be the interesting question about where you end up from all this stuff from an economics perspective the next few years for what it's worth this has happened many times before right like this is not the first time in human history this happens that you know people you know if you look at the news industry you know people always like oh like the news industry used to be so great and then whatever it's like it's like the number of times that the history of news basically you had growth and distribution right things get super scammy the elites Retreat to private newsletters like in its Cycles it's happened like six or seven times and like I think this is just gonna be a hard in some ways like I think the biggest thing is that I'm very confident of is that AI will be the death of the public web and will be the deaths of a lot of open information specifically because of what you said right which they're just well not that it's me too valuable and two and two um too important the the reality is AI doesn't need any more information because the future short learners but it does if it does it doesn't for entertainment and that's why I think entertainment is screwed I think it absolutely the the Oracle problem in crypto where how do you keep a system a digital system in sync with reality and being meaningful is exactly the same problem that AI has which is it can go in any direction it wants as long as the data is self-contained the second it's not and it's time to sync to reality or a real world it does need more data it does need to be continuously updated it'll drifted in whatever Direction you know I can't carry his attention but then you know you have public broadcasting data you have some of these other things as well whereby the Oracle problem becomes a lot easier to do when you can do retrieval augmented models and other things like that I mean there are sources of verifiable data for leasing maybe it comes down to the use case my business one is going to be increasingly cut off right if there's no economic model for supporting them and they're all getting abstracted I would disagree with this so you know like um I made it deliberately open so that we could highlight how bad shapes now click the unsafe as well now we're the only coming to the last rocked out but we work with multiple governments of national data sets and National models using broadcasts to data and other things like that that are continuously updated as National infrastructure because I think these models are a form of infrastructure they're a weird type of primitive they're like a mega codec type thing where stuff goes in stuff comes out but people do want to have relevance and updates so I think you will have an open version that is updated continuously but then maybe again that's where value is which parts of information go private and are served up through models and who is providing them is this financial day too is it this is it that and what is the quality of these fine-tuned models because what you just described as well is a bit of a Armageddon for Consumer apps in a way right because it goes down to zero so then what becomes useful is it then the Apple takes a massive Leap Forward because they've got this in identity infrastructure and they have all the data to them they can do apps quicker than anything else yeah except for the fact that Apple's entire stick about encryption and privacy is going to make it literally impossible for them to play in this next thing Apple's role in the future of this stuff is going to be one of the most interesting questions because they have positioned themselves so hardcore against all the things you would need to get leverage right from AI that it's gonna be very interesting to see how they navigate Google fine meta fine you know um there but like you know I I am very I mean despite the fact I am very skeptical of what Apple's AI approach is going to be or I will say on the flip side they're incredible at government relations in PR so if they see you have to figure out a way to like totally recance on all their encryption and their approaches to this type of stuff and have a new model where they somehow are the Privacy Heroes but also doing AI I'm very curious how that's gonna work they can keep in protection then they can keep a customizable because again you don't need to take everyone's data to train it you have a generalized model I think local model mini models aren't your local device with like a general model behind it exactly or I think in practice we'll see how it plays with an embedding layer potentially but uh it is kind of very interesting because again the technology doesn't matter it's the use that matches what use can you get out of it so yesterday they had the thing um whereby they said oh it lands automatically with a little ml model in there it learned through a small embedding layer you know you know yeah they don't talk about the technology that much because Apple always just talks about what the use actually is so I think the question is you know what is disruptive what can engage more what could attract more and so I think that you've got apps coming down there which is why the bar generally Rises I think we see this with technology as it goes the bar generally Rises and so attention becomes even more difficult where it does come down to distribution things like that but I mean what's your take on the nature of morality in this type of image because these things are good at optimizing problem reality potentially right like again you can build better content you can build better engagement once you get the funnels down and that is the start of many of these apps yeah I just think virality is a war right in a lot of ways so like look I I think you know in the end of the day it's like will news feeds get more compelling for people absolutely right like will ads get more compelling individually absolutely right like like there's no question that these things are true in the existing players will get the vast majority of the pie of that type of stuff you know I do think you'll tend towards more and more Niche interests right so like let's talk about like porn for a second like porn is always fascinating as a Leading Edge thing on this type of it's like you you can go on Reddit and sign the weirdest porn in the world of all these sub communities that like have filtered into these like weird things that they're interested AI will make this 10 times weirder right and like or if a hundred times weirder right and like people are just going to keep filtering now why does this like weird filtering happen right like I mean there's a bunch of reasons and different things I think part of it moving away from corner for a second the broader ecosystem is people are desperate for a sense of purpose and place right and like the reality is the internet makes you feel very small because there's millions of people just like you and that encourages people to seek out right-sized communities that are smaller and smaller with AI right I think the interesting thing will be when it comes to attention and things like that is look for the first time every single person can have hundreds of characters that like and support them all the time right like the math of it all right you know you used to be okay like you're trying to find a community that's the right size that knows you that you have a price and you're valued in right but like it's hard to you're not necessarily the hero right so you go find out a smaller Niche or a different Niche or more of the hero or like you create a spit of it and try to lead that right I think a future where like basically you log into social media or whatever and you're like hey I'm Sam it's like cool what type of people is it who do you want to follow it's like who do you want to follow you right and like you end up with like hundreds of AI characters or frankly I think what's more likely is it the mix of humans AIS and you're not really sure which is which but they're caught they're the ones commenting on your posting like you're great but like here's a cool question or whatever like I think that's the world we're gonna end up on is like more and more segmented niches right where the ultimate end would be the her model where it's like you just have one AI girlfriend I'm not sure we'll go there I think that's really hard to pull off and I think like this that that's a tough thing but it told me that like in the future you know on Twitter good example you know everyone has a hundred thousand followers right you're not exactly sure who's a person who's a robot right and they all love you and it makes it super compelling and you feel great like that's a very plausible future oh man birth rates are gonna do that yeah have you seen that child of young man rigidity under 30 in the US for the Washington Post it went from eight percent in 2008 to 27 in uh 2018. did you see what happened with replica on Valentine's Day this year so replica was originally an app that was designed to be your mental health buddy right until they didn't realize you could charge 300 a year to erotic role play until the 13th of February 2023 when they get a message from apples they can shut this off so on Valentine's Day they shut that off and then 68 000 people joined the Reddit the day after and said why'd you do the bottom line for my girlfriend you know like uh it was quite a massacre that sort of going and look there's a whole history I mean again like we'll go back to porn for a second like the whole it's always fascinating it's like such an interesting base human thing but it's like look it's like the whole dynamic of like you know you know how Tinder has affected sexual inequality right it's like fascinating like there's all these really interesting studies on this like technology has a deep impact right but if people ultimately like care about validation titillation whatever it's going to be there's no question that I place one place you you and I will agree is that AI does dramatically shift the power on these things it will end up with weirder sub communities and he says things here's my question to you though we talk about power new mix I still think and and this I might be wrong about I will admit because it's a little bit of a niche weird industry but my that is that PornHub is still the winner I actually I assume they're the biggest porn the place porn is doesn't shift the platforms don't shift it's just going to be like weirder and weirder stuff and more and more AI generated I don't know I mean like to tell us PornHub is an Optics the Mind geek is the company behind it um they were just bought by ethical Capital partners because you know life is weird um Reddit could be a big winner of this but I think you know I've been already like Reddit has already just fall apart right so it's like I just assumed you'll be more full I'm sure they're gonna be very smart about this you know an engaging porn but really what you're saying is going along AI wife is you know like this kind of loneliness that they fill in that could be a good investment Theory because again you have the whole hollow life stuff that then emerges to these engaging people I think it's gonna happen but I don't think it's a good investment and like let me just go back to like just because it's gonna happen doesn't make a good thing to invest in and like to me it's really unclear where the Leverage is in that right like it's like you're you'd have to believe that somehow you're going to have dramatically more compelling characters than like the next company also providing them right or you'd have to reuse it like I just don't lose any lock-in I think and I don't think there's any like other and so it's really unclear just because it's gonna happen doesn't make it an investment well I think there is kind of if you kind of look at hook Dynamics there's kind of that trigger reward kind of immune rush and lots of stuff that you invest into each characters there's probably gonna be a lot of personal Advantage here on the other side you have the licenses you have the IPS that can be brought to this mic not on the porn side there's a whole gamut from God to your mental health buddy right I mean I think ultimately if you're basically saying is there a solution to loneliness and solution to making you feel good there's a whole gamut of different things that can happen here where you've got IP where you've got these other things so again the example I think that comes from that is the hollow life influences they're going up like that not to push you with it I mean it sounds like you're agreeing with me which is like the Leverage is in IP right or the leverages in distribution right right for this type of stuff because the pure tax stuff to it it's like yes it'll be gajillions of you know virtual girlfriendy whatever things but it's not those are not platforms you can invest in and they're like they're not clearly valuable even if there's a lot I think bringing it all together is something that will take time so I think there will be a lot of first memory Advantage so like with stability again data distribution a key right so my thing is take the best of the movement which needs to be like and we find lots of build the stable series of models of urban data and distribution to it so open data license data National Data and then we take it through cloud system integrators on-prem and I take a share of all that Revenue so I agree that's kind of cool to a good business but what I'm saying is I don't believe in this particular area going from Port one end to mental health bodies at the other end there are established distribution networks um I think there'll be a lot of opportunity there for first mover advantage in the history of investing first Advantage is generally turned out to be a pretty bad investment okay maybe not trust me the advantage let's say first proper entity advantage that takes advantage of classical good company Dynamics there aren't good companies there yet yeah maybe again I I think it's a little hard to know exactly there's a huge Spectrum here so it's hard to like exactly react but I would say like look I think we're agreeing that like entertainment's gonna get more entertaining right and it's cheaper to produce right I think we're agreeing that IP is very valuable and maybe it's more valuable like so maybe the answer is you buy Disney stock because like because Elsa is going to be a way cooler character when like that's kind of obvious kind of obvious right and like I think we can all agree on that I think what is not clear to me is outside of the it plays outside the district existing distribution plays like what IP what AI really unlocks is a new disruptive Vector for this type of stuff because I don't I do think that there are some pure aie type things you can do again we'll talk about the AI girlfriend thing it's just unclear what the payoff is there because they don't need any modes well I think if you look kind of you can scale a certain type of human endeavor shall we say good example there aren't enough therapists in the world you know and it is a regulated industry but at the same time there is a gap for therapists just like you have the meditation apps kind of step in and they created calm they created these other things that were huge now this is more engaging so I think one of the areas to look at is where can you not find as much people that can fill in some of these things and then build good experiences rather icky looking at companies that can come to the poor because there is an existing solution this is why like I said for me I look at the global South I'm like there's lots of gaps they look at kind of here and there's again gaps where are the gaps that you want to go because you can basically create a market you need to fulfill a key customer need and so again I looked at mental health in particular and that goes again from the porn AI license all its way through to proper mental health um kind of therapists there's a huge gap in that particular market and there's a huge Chasm of loneliness and a lot of products that could be built that are generally useful and that can go quite fast enabled by this technology where they were not enabled before I think this has been fascinating I have kind of a handful of concrete prediction questions that I kind of want to get you guys on record with if you're up for it and see if you have similar concrete predictions or different and then we can obviously check back in on in the future how does the market for inference Shape Up and for a jumping off point how do you think it might look different from the current cloud infrastructure Market um I think inference will be the vast majority but I think it's like GPS to assets for Bitcoin mining because these are Big research artifacts that are probably torch them but the output is a little tiny file of binaries and that's not a complicated thing to add inference on it's inference you too on Amazon Cloud you see kind of the TPU V pives and others I think there'll be more and more customized Solutions how do you move from that research to engineering a bit and then the costs competition goes massive in a few years time over the next few years I think there'll be a shortage because everyone will try to use this technology there won't be enough and then eventually it'll move towards the edge because I think there's just orders of magnitude optimization that we can do from here yeah I mean this is a little bit beyond my direct wheelhouse but I think in the end of the day what I'd say is like I highly suspect because the distribution is indifferent right and the patterns aren't different in any of this stuff that what you're going to see is everything from chipsets all the way through to Cloud providers things look basically the same as they do today everyone's just making more money yeah I think inference is also interesting because in the cloud you just move to wherever the cheapest inference is for these models and so it's quite a mobile thing so you've got Nvidia coming hard for that reason question two what happens to the price of Primary Care Medicine in the United States over the next 10 years unfortunately given the issues I think is correct it should go down but the regulatory capture is far too strong uh and there's something major major happens question three you guys have both you know have kind of said there's a ton of junk out there it seems like broadly we're not expecting that many major incumbents to be disrupted what would you guess would be like the most likely incumbents to be disrupted if you had to pick some stack Overflow yeah 1.6 billion by process right whoever I mean I think it's process is probably why you know you've seen disruption in Czech and other things um we didn't really get into this but I do think that some SAS companies with less switching costs will be at risk from some of these higher context window companies where you can put 10 000 words of the instructions in because some of them are relatively basic um in that way I agree actually for what it's worth I think we once again mostly agree the only thing I think is at risk for things like zapier right or somebody like kind of like and they they're they're it's kind of a 50 50 because they also get way more powerful but I think there's a bunch of SAS tools that um probably end up looking more like features where they used to look maybe like companies because of AI but real incumbents like public big multi-billion dollar companies I mean I don't think any of them are really at risk disruption I think they're all just going to get stronger I think a bunch of startups or series a companies are going to get swiped out or all of a sudden not going to be able to grow right because of the big guys will just get better faster will the big tech companies that are currently open sourcing for example meta Salesforce will they continue to do so or will they stop well I think matzo has moved to non-commercial open source for all their open source now the Salesforce is kind of continue to do full open source I think it's just very difficult because the regulatory environment become tougher and tougher and it's not cool to their business to open source I think it would be a hundred percent driven by business models right so like Neta if you think about it he's incredibly well positioned should generally the level of AI continue to grow in the world right if you think about it it's like the way they're going to monetize that is having dramatically better ads right and like dramatically better content in a bunch of ways and so I think they have a heavy incentive you think about it to like keep up and sourcing it they want the talent they want you know the reason companies also open source is like there's like a real internal external interplay right in terms of how you build an ecosystem that attacks great talent so I think we'll still keep happening but I think I think the list of people who are supporting open source stuff will shrink right if that makes sense as people get super competitive about this stuff and the battle lines are drawn if you had a billion dollar company you know of any of any kind could you come up with a story could you identify a type of company that should not you know where it wouldn't make sense or let's even frame it more uh decisively where it would be defensible to not be investing say at least a million dollars in figuring generative AI out today in other words is there anywhere where this is not relevant I mean I'm sure there is but nowhere I can think I've lost hands I I think it's relevant Justified everywhere just because you always get a level of productivity increase but you know as Sam said for a lot of Industries this is a sustaining Innovation it's just the next stage as opposed to massively world-changing shall we say what happens to the marriage rate and the birth rate in say the United States as AI Companions of All Sorts uh become available it clearly goes down everywhere I mean like look at South Korea they're at 0.8 now on the fertility rate thanks to video games and a few other factors there are negative and positive ways this Fitness actually like I think I personally I have the negative take on this like I think it's bad for the future and a bunch of other things but here's the reality it's just a simple economics thing which is like if the world is more entertaining then like that makes doing unentertaining hard long things like having kids and raising them like less appealing right it's like Tinder Tinder is gonna hurt the birth rate like AI is gonna hurt again it's a sustaining Innovation which is technology generally is going to hurt the perfect yeah and then you see places like Japan where you've got declining birth rates really embracing this because they want the productivity increase which is the other flip side of this so it'd be full productive less people yeah I mean that's the irony that you talk about a lot living in the the Diamond age you referenced earlier like the really long-term sci-fi so it was pretty simple which is like highest highest highest level like technology will drive there to be fewer people and then because there are a few people we need more technology right and like it becomes a symbol I think that's the really sad part I mean like it's also people thinking about like oh like the entire human population is going to fall off a cliff right it's because they're like entertaining ourselves to death do you think any AI leader you know open AI right now or somebody who takes you know the leading position from them in terms of having the best model can sustain super high gross margins for a few years into the future base purely on the AI no it needs to be distribution and data I think that proprietary side it's yes unless it's super data unique you're going to zero I think that you have Google and open AI is uneconomic actors and that's incredibly difficult in it so just to unpack that you mean that basically they won't allow they don't intend to make a ton of money on this and they won't allow anyone else to either because they're going to provide it at cost to get the data you know again they have different business models Google cost shifts all the time right this is why I went to the other side for open models to private data and standardizing that no one's making money on open models alone well I mean there is a way there is a way so what basically what I do with my business model is uh standardizing it um and then providing all the services around it as a blueprint for my partners to take forward yeah I mean there's a Consulting Nexus version of this like that you can probably pull off again Consulting models I think are again obviously saying you're pursuing but very difficult I build the models I gave it to my Consulting partners and they take it forward that's my business my theory of stability has been a partial Theory uh it's obviously a lot of facets to the the organization but I kind of view stability as the the provider for like the non-aligned countries if you will like those that are like we definitely don't want to buy from Corporate America we want to own our own we want control those folks seem like they have nowhere close to the resources domestically to build their own systems but they do have kind of a point of Pride and also just practicality right like if you're a African government and you want to get your own legal system into a language model you know who's going to do that for you that feels like a a real sweet spot for stability how much of the future do you think is kind of serving that kind of third set of countries no I mean look we're creating subsidiaries in dozens of countries bringing all the top family offices for data and distribution and National models National data sets based on broadcaster data where we take a subset of that make that open and we've got the rest of that for our commercial side so I think the global South is the focus for us plus some of these big multinational companies building dedicated teams for them because we're the only company in the world that can build you a model of any single modality or type is that sustaining who knows but it's a decent business and so my thing was built a decent business doing decent stuff doing something different to other people I'm sure there'll be more competitors but again let's see how it goes omniki uses generative AI to enable you to launch hundreds of thousands of ad iterations that actually work customized across all platforms with a click of a button I believe in omniki so much that I invested in it and I recommend you use it too use Cog rev to get a 10 discount foreign

Channel: Cognitive Revolution "How AI Changes Everything"

Views: 4,009

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Id: mOOYJONenWU

Length: 63min 40sec (3820 seconds)

Published: Tue Jun 13 2023