What the AI Backlash is Really About - Week in Tech

0:12Speaker 1:Honestly. One thing. Sometimes people are saying peptides because they just want to take a zempic, but they want to make it sound more biohackery. Like I think this is a super common phenomenon in the tech world, like peoplere experimenting with other ones, but fundamentally a lot of them are guys who want to diet.

0:24Speaker 2:Yeah, yeah, it doesn't even mean anything. It's just like you, I know.

0:29Speaker 1:It's like fifty or less amino acids in a chain or something like that, Like insulin is a peptide, like our diabetes patient saying like, oh yeah, I'm indructing my peptides.

0:38Speaker 2:Right, I got invited to the peptide party at the AGI house. That was what I thought to me, that was like the peak.

0:45Speaker 3:But it is interesting, like I mean, I feel like so much of it, but also like with the AI belief of like this superhuman you know, like we have to compete with the machines, Like it's all sort of tied up in that.

0:54Speaker 1:Whole other episode peptides, but very tense.

0:57Speaker 4:Fir, Welcome to tech stuff. I'm os Va Loosen and this is the week in tech where I'm joined by three of the world's most plugged in reporters to break down what's really happening in tech right now. Today, we're joined by Taylor lorenz if use a mag read, Albigotti, tech edit of Semipore, and Jasmine Son, whose excellent substack is a tech stuff favorite.

1:21Speaker 5:Welcome all, Thanks for having us. Great to be here, Thanks for having us read.

1:26Speaker 4:Last time you and I saw each other was in can at the Marketing Lions Festival where you interviewed Demis Hassabis on the Google stage. That was only just over a month ago, and now he's stepped down as CEO of Deep Mind. Did you have any inking about what was coming? I? You know, I have to say I had it. There was a there.

1:47Speaker 2:I had this gut feeling that he had there was a real change in him. I've interviewed him a few times over the last few years, and when I first interviewed him, like sort of soon after the chat GPT moment, he was so excited, like Google was going to battle, you know, against everyone again in this AI race and they're building these new models and they were behind and he was really the person in charge of that, and that you could tell he was like, you know, he was in he was into it when we talked about that sort of thing, like the actual productization of Google models, et cetera. He just wasn't that passionate about that. Ken and I and I came away from that week. That week and Ken thinking like man like demis is not like he's this part of the AI race is just not what he's passionate. He's passionate about the science. So I should have had the scoop is the boort on that he was stepping down. But obviously I'm a terrible reporter for not getting that. But no, I mean I wasn't.

2:46Speaker 2:It was a shocking announcement, but at the same time was not surprised like very few Nobel Prize winning scientists you know, are are passionate or great like you know, business leaders right at major corporation, Like it just isn't those two skill sets. I always thought of him as kind of unicorn for having those two things, but I think he was like a temporary unicorn, Like he just temporary.

3:09Speaker 5:During that time.

3:10Speaker 2:It was probably really interesting for him because he is very competitive, but it's not anymore.

3:14Speaker 4:Now it's just a horse again. Jasmine Special, first time, welcome to you. Thank you so much for joining us hot off the heels of a huge EZRA client interview earlier this week. Very excited to have you on the show and to hear about your reporting about what's really going on with the data center backlash. You went on a kind of cross country road trip to report this. But what made you go out into the field and what you in search of?

3:39Speaker 1:Oh? Yeah, so I spent about ten days in Wisconsin and Michigan visiting a bunch of different data center sites, four different ones, and talking to folks, whether it's local officials, activists, residents, workers, about data centers and the backlash around them. And the reason I went was, you know, I'd been tracking the AI backlash like a lot of folks have for several months, most of the past six months or whatever. You see these the booing at college graduations, you see assassination attempts at both tech CEOs and government officials. You look at the polls and it's like people are not excited about AI, They're worried it's going to take their job. They do not want a data center in their community. And this is incredibly bipartisan as a backlashing ways that are very unusual but at the same time, you know, I'm based in San Francisco and I do most of my reporting on the AI industry, and people here, myself included, just did not understand what it was that was making the public so incensed about data centers. Like we did not know if it was a water story or I hate AI story or a you know, electricity prices story. And

4:43Speaker 1:I was reading the news, but I just never got a clear sense of what exactly was driving things. And I felt like the only way to do it was to get on the road and just talk to people myself.

4:52Speaker 4:There's a parenthetical in your story. By the end of this trip, my friends and I felt slightly embarrassed at the caricatures we originally believed in. In general, one should be cautious about assuming your opponents are just reading fake news. What was the moment where in your reporting you kind of the pieces start to click, And what do you think other people in Silicon Valley are missing and what do you hope to communicate to them with the story.

5:13Speaker 1:Yeah, I mean, there's kind of an assumption in Silicon Valley that a lot of folks in the AI industry have that the main reason people hate data centers is because they watch too many tiktoks about like water and draining the ocean. And there's definitely a set of people who have in back watched too many tiktoks about chattpt draining the ocean, right, Like, you're not saying that's not real. But you know, as soon as I started talking to these activists and having long conversations with them, a few things became clear. One was just like a lot of these folks are a lot more informed than the caricatures would assume. People knew the difference between an AI data center and these old data centers for storing like hospital data.

5:50Speaker 1:People could tell you the difference between a closed loop and an open loop cooling system. The other thing was that while environmental impacts were certainly one thing that people were worried about, actually like the focus on government process and the total lack of transparency with these NDAs, the way that these data center deals were done in back rooms, with this feeling of oh, these big tech companies are paying off your small town officials to like introduce this gigantic project without your consent. That was actually what I saw to be driving the backlash A lot more and again, these activists I was talking to, they were actually incredibly informed about the details of municipal finance and the city tax system, and it was just very clear quite quickly that you know, I think that there's a way where you can assume, in a lot of different contexts that your political opponents are just reading fake news or maybe there's a foreign influence operation, Like I think OpenAI published this report that was like, actually, it's a CCP, like the reason people hate data centers, it's like CCP propaganda,

6:44Speaker 1:and like this idea is just like frankly ridiculous to me, Like it kind of reminds me of twenty sixteen and sort of russiagaate and the idea that anyone who might vote for Donald Trump was just like reading Russian syops. And like, I'm not saying that foreign influence is not any factor whatsoever, but I think it's a way to get out of reckoning like the very real reasons that people are upset about something like a data center coming into their community.

7:05Speaker 4:Taylor Reed, I know you both read the story and and and what Jasmin on as your clients, so I'm curious for your feel questions for Jasmine as we have a special guest today.

7:13Speaker 2:Great reporting. I love I love it. I mean it's it's so interesting. I think what I wonder is like, is the data center kind of one issue and then this overall kind of like hatred for AI and really maybe technology really large, is that another issue? Like because I've always thought I mean, I see they're sort of bleeding into one another, but I've always thought that data centers is like these are kind of local issues that these these tech companies are going to.

7:38Speaker 4:Have physical manifestations, right, which makes them easy to.

7:41Speaker 2:Totally But at the same time, like I think, as Jasmine's I think getting at like these people have real, like legitimate, real practical concerns about like the municipal finance and like the noise pollution, the energy prices. They I think there are like these real worries and those are local issues that I think tech companies have to have to sort of in each individual case solve, right, this is like there's no solution that scales here but at this.

8:07Speaker 2:But then there is this like broader problem that the tech industry has that it's very bad at pr.

8:13Speaker 5:Like it's image around the world is horrible.

8:15Speaker 2:I mean, like I was walking through France, like, you know, when we were in France, I was like, you know, I saw spray painted you know, sort of murals about AI and how horrible I mean, which.

8:25Speaker 4:How to be good at pr when you live in the echo chain. But that's the thing, like you personally, I mean, just maic, curious toy you reflect on this actually.

8:32Speaker 1:I mean, you know, read and I both live in San Francisco and spend a lot of time with folks in the industry, and I feel like what happens so often is I'll be having a normal, like social conversation with people in tech or AI who are perfectly pleasant, curious, lovely, very smart people, and they'll just start saying things and in my mind, I'm just hearing the screaming. Do you hear yourself? Like, I think there's a thing where a lot of these people in the industry, they never leave San Francisco, all of their friends work in the AI industry.

8:56Speaker 1:They don't realize what sort of values gap has emerged between the things that they believe are true and the rest of the world. Another thing that I heard a lot of and was even again myself, like I live in this bubble too. Was a bit surprised by is in San Francisco, very few people think that AI is a bubble. They're all receiving this like immense like productivity uplift from using cod coding agents or design agents or whatever, and so if anything, they're like, I can't get enough compute.

9:19Speaker 1:There's two there's too little AI available for how much my company wants to use. Whereas you know, you go to the rest of the country, a lot of people are very worried that this is a high risk industry, that it's a bubble, and the way that crypto is a bubble, and I think that really informed a lot of the data center backlash too, is that this is seen as a high risk industry and like if it does pop, let's say, there's a twenty percent chances is a bubble. People aren't really sure. Am I going to be left with this gigantic stranded asset in my community like.

9:44Speaker 4:A new rust belt essentially of abandoned data centers.

9:47Speaker 2:Yes.

9:47Speaker 1:And I think that it was really salient that a lot of the places that I visited, the data centers were being built in cities and in towns and sometimes on the literal sites of abandoned like GM factories or whatever. And so the sort of raw lived experience of seeing what happens when a company comes in, goes bankrupt and sort of leaves you with a contaminated brown field like that is very salient to people and sort of informs the way that they think about do I want this new high risk industry coming in and building in my community?

10:14Speaker 4:But justin how did you pick those communities that you've visited? I mean, there are so many places where data centers are emerging and where opposition is brewing, Like what made you go to the Midwest?

10:23Speaker 1:A couple of things. So one was I really was interested in this sort of de industrialization history. Some folks I talked to imagine that maybe, you know, data centers are a rein industrialization of America. They are bringing back the skilled trades. A lot of the union folks and technicians I talked to were really excited. Some people are saying, like, you know, America can't build, but we can build data centers. And so I was pretty interested in that side of the story. And then the other thing was that politics are really interesting. So both Wisconsin and Michigan are obviously very influential swing states, right, you have very competitive races all the time. You also had two very interesting primaries going on where AI was playing a big role. And so, for example, in Michigan, as folks probably know by now, Abdul sayad this sort of progressive insurgeant just be Hailey Stevens, the moderate in the center race. And you know, in that race, maybe Israel was probably the biggest issue a pack spending, but that was something that Abdul linked very directly to the idea of say big tech spending or

11:14Speaker 1:DT spending in these races, the sense of how do we get money out of politics?

11:18Speaker 4:And he and Bernie and AOC came together to really kind of bash big tech as part of his campaign right now.

11:24Speaker 1:Yeah, And in Wisconsin, Francesca Hong, who is I think that elections on the eleventh, But she's a DSA candidate, frontrunner in the front runner Democratic frontrunner for governor in Wisconsin, and she is running on a data center moratorium and her case for how are you going to win over like rural farmers in you know, deep purple Wisconsin, in the deep red parts of the state, are I'm going to be the only one who's going to advocate for a data center moratorium. And so I found that fascinating and I got to talk with both Francesca and Abduel a little bit.

11:52Speaker 3:This is something that Rob Flaherty, who's the former head of Digital and a big strategist for Kamala Harris. You know, he's just been a big advocate of these, like Democrat candidates leaning really hard into the anti data center rhetoric, the data center moratorium, all of that, because it plays so well with voters, and I think voters, like working class voters that they are. The Democratic Party large has sort of lost over the past few years.

12:17Speaker 1:Jasmine.

12:17Speaker 4:You also heard from some people though, in these communities who are like obvious beneficiaries, right, and so how did some of the conflict play out in terms of like pro and con on the data centers? And I guess, you know, my connective question is around with this phrase as week benefits. And I remember, you know, during the Brixit campaign in England. In Britain, you know, the only kind of pro remain argument was like you'll be poor if you leave, and that wasn't very galvanizing. In fact, it made people angry, and so I'm sort of curious as to obviously, on a local level, people who are contractors and doing construction stuff of feeling the benefits. But is that is there a sense in these communities as a true debate over the pros and cons of the economic stimulus?

13:02Speaker 1:Yeah, I mean, I think the main case that these AI data center developers are making to communities is tax revenue, right like, we will pay a lot of property taxes. And I think the problem here is that American culture right now, and I know Taylor's done a bunch of reporting on this kind of thing. It's like suffuse with this sense of people are really worried about distribution and all concerns, right Like people have a felt sense based on the past few decades of the economy that just because you know, unemployment numbers look low and GDP goes up and like the stock market's doing really well, that does not mean that most Americans. That doesn't mean that working class Americans are going to feel the benefits of that.

13:38Speaker 1:And so when people see things like Okay, maybe in ten years after like this tax incentive district shuts down, if the data center is still around by then, it will start pouring property taxes into my city coffers, But do I also trust my city officials to spend out on the issues that matter to me? What are they going to do with that money. I think this sort of growth in the abstract like revenue and the abstract, is something that people have become a lot more skeptical of, and especially when that tax revenue is being positioned against like all of these much more tangible and sort of concrete sounding harms, whether it is like construction is really annoying, or whether it's you know, what happens if this becomes a stranded asset. But I think I felt a lot of frustration from local officials in these communities because they're trying to figure out how do I run the city and pay for public services like firefighters and like you know, like traffic services and whatever without continuing to raise taxes, right, And so everything's becoming more expensive to run. Education is expensive,

14:36Speaker 1:like infrastructure is expensive. But people don't want to pay higher taxes, and so they're thinking, let's bring in this data center. This is going to solve for cities tax problems. But again, that promise has not been as compelling to residents as many of the city officials would hope. And I think that's been kind of a yeah, it's been a frustrating experience because actually when I asked folk's like, hey, are you excited about the tax benefits, A lot of anti data center people say, well, like I don't believe they're going to hit, or like maybe that only starts again in ten years when the tax subsidy district closes, and maybe the data center is not even going to be around by then. Just like the phrase I don't believe them. I think this is just speculative with something I heard over and over and over.

15:12Speaker 2:One idea that's been thrown out there is that maybe people could be paid individually like they do in Alaska, right or New Mexico or where there's a sovereign wealth fund. And I think opening eyes even flow to this idea. I mean that, and that there's a reason they go to these stranded power you know, rest belt areas, because they have all this power infrastructure already there to build these data centers. So you know, the one idea is like we'll take the you know, somehow take that revenue and distribute it to the people.

15:41Speaker 5:Did that come up? But all like, are people asking for that.

15:45Speaker 1:I don't think I heard anyone ask for it is something I've had talked to folks in the AI industry about as a potential solution as well. I think it would be more effective than I think the current strategy. But fundamentally there's also a lot of folks just feel like they're being bribed.

15:58Speaker 4:I think, like one going to say of a UBI, like I think, like.

16:02Speaker 1:In Silicon Valid, there's assumption that if you just like make the checks bigger, then people will be happy about it. But actually the thing that's going on now, which has been a bit of a cultural vibe shift, is you make the checks bigger and people get more suspicious. Right, Like Abdul's like number one hit against Haley Stevens is look up all of this money she's getting from APAC. It has actually become advantageous in some races, like the Alex Bores race in New York, even though he ended up losing, Like the fact that Leading the Future was spending money on against him actually like helped his campaign, right, And so I think people have become just a little bit more suspicious of getting corporate paychecks. And to me, it's not that I think that there's no way to build a data center, right. I think that there definitely is a way to make these like good deals for communities, but you have to deal with the public trust stuff, and like the process transparency I think really.

16:44Speaker 4:Matters well, and how do you how do you do that? I mean, how do you deal Is there any way to deal with the public trust stuff that comes from the private sector or.

16:52Speaker 1:I mean, like I was talking to somebody in you know, the AI industry, who is like, why don't you look at this open a ideal in Effington County, Georgia. Right, they had one of the biggest community benefits packages that I've seen, frankly for a data center. And so in a way you might say, well, these community benefits are so tangible, they're so concrete, this is so much money. But they also sort of announced the deal after it was already done, and then how one public hearing after all the negotiations were over and no one had heard about it, right, And so people were furious. Thousands of people like showed up to protests. And to me, I'm not saying that the community benefits don't help, but it feels much worse when it's like we've already made this decision for you, and here's like a little here's a cookie to sort of shut you up. And I think that's the sort of sense of you didn't even care to ask, is really what's bothering people?

17:37Speaker 3:Well, it feels like people also blame big tech with like a loss of agency. You hear this a lot. Obviously. This is how they feel about social media, this is how they feel about AI. They worry about being sort of controlled by these algorithms. They feel like these big tech companies are sort of above us and controlling everything. And I think, I mean, I was just also reading about the Time story about the Louisiana deal that met I made too, and it's like, if you ask people about that, the backlash is basically like, we didn't have a say, we didn't have our we don't have any agency in this process because, as Jasmine was saying, it's sort of a predetermined outcome.

18:13Speaker 4:Yeah, you had this line in your piece, Jasmine. My conversations made me wonder if the technical content of data center deals is mostly beside the point, what does that mean?

18:22Speaker 1:So before I left for this trip, I asked some folks I knew who were more in the Silicon Valley side. What questions should I ask people? And they would tell me to say things like, if we promised that electricity rates wouldn't go up, would you be okay with the data center deal? If you've got to check in the mail personally, would you be okay with the data center deal? If you were sure that this wouldn't use any water from the Great Lakes? Would you be okay with the data center? And so I asked these questions to people, but it was very clear, very quickly that I was operating on the totally wrong level of abstraction, because one was people were familiar with the whole host of issues with data centers, and they'd say, well, like, you know, even if that one's not a big deal, what about this?

18:55Speaker 1:What about this? And then the other thing was again that sort of reflexive I don't believe them. And so, you know, a company can make these promises about how much tax revenue they're going to deliver, but if there's no trust that it's going to happen, then it kind of doesn't matter what the terms of the deal are, because people feel this power. A symmetry where a giant corporation can write a carve out into a contract. Your part time city aldermen are not going to be able to be on a fair negotiating ground with this gigantic, mega corporation that's worth a trillion dollars, right, And so I think that sense is making people very suspicious. I mean, think about the fox Con fiasco and Wisconsin. That really informs the way that a lot of people think about these things. Fox Conn and Trump sort of and Scott Walker announced this, these thirteen thousand jobs that were going to come to Mount Pleasant, Wisconsin, and they pulled out and left the city in like over one hundred million dollars of debt they had taken out for infrastructure improvements.

19:47Speaker 1:They said those jobs were coming, and they just weren't. And so I do sort of understand. I empathize with the fact that these people don't want to believe those promises again because they've been burned before.

19:56Speaker 4:Yeah, there's also a scene in your piece that I loved where you're in I can't remember if it was Wisconsin or Michigan, but there's a kind of concreted over former industrial.

20:05Speaker 1:The GM plant in Janesville.

20:07Speaker 4:Yeah, and the soil is toxic and it's the cleanup operation is something that nobody can afford. And you sort of pose this question, would the local residents prefer to keep just concrete over toxic soil where this is or have a data center and they might prefer the former, which just shows you how incredibly stark this is.

20:26Speaker 1:Yeah, I mean that one surprised me because to me, I actually thought in that case, like this data center is promising to do the thirty million dollar cleanup project that nobody else has that is environmentally destructive to have all this contamination in the soil. The city was saying, this will help us remove our wheel taxes. We are going to see immediate benefits. And there are definitely some folks like this real estate broker who were on that side of the case. But ultimately, like the letter of intent from the data center developer in Janesville expired because there was so much opposition from local residents because what the GM story taught them was not, Okay, let's like bring a new corporation to build our economy around, but we should never have our city be that dependent on like a big company who can just up and leave ever again. And so that level of distrust which I think is baked into much broader questions than AI, much broader questions in technology is sort of informing the way that people think about data centers.

21:18Speaker 4:Well, if to me, there's only one thing missing from your piece, and that was a quote from Aaron Brockovic.

21:23Speaker 1:Yeah, I should have gone one.

21:26Speaker 4:When we come back, controversy over open AI's first brand trip stay with us. Welcome back, Taylor. You also covered the ai backlash this week, and in particular the reaction to open AI's first ever brand trip.

21:54Speaker 5:What went down?

21:55Speaker 3:So open ai took a couple dozen content creators to this really beautiful getaway in upstate New York where they all had these sort of luxury cabins. It was very pastoral. I heard people comparing it to Midsomar, where it was just kind of very curated.

22:12Speaker 4:Also horror film, though it is a horror.

22:14Speaker 3:Film, which I think is the joke. But yeah, they had this event where basically these content creators were brought They were not paid to be there, but it was effectively kind of like a media trip, right where they bring a bunch of people up, they put them up in these really nice digs, they feed them, you know, these really nice dinners, and they have open AI people come and talk about new technology, teach them how to use these products. They also did things like beatkeeping and hiking and you know, kind of other fun activities. It felt very similar to a lot of the stuff that Apple's been doing in terms of like cultivating these lifestyle influencers.

22:51Speaker 3:You know, this is not a new thing for brands, but the backlash was so intense. A lot of these creators have taken down their videos not posted about it, yet you know, been receiving just like an enormous amount of heat.

23:06Speaker 4:Let's play some tape from the backlash.

23:09Speaker 6:People in what appear to be five star hotels lexing about being on a chat GPT brand trip is so deeply disgusting and embarrassing and why we are truly in the end times. This chick Grace is like, this.

23:23Speaker 7:Trip is so amazing, it's so the seating is thoughtful, the activities are thoughtful. Yeah, you know, it's not thoughtful the way that, because of what is needed for data centers, places like this have to go in and infiltrate communities that you probably don't even think about, Grace while you're filling your baptob up with I think I need a little more crystal Sea salt in here.

23:43Speaker 3:Well, Gracie has been the most like, she's really been their strongest soldier. She's this content creator who who does a lot of work with tech companies. If you look in her bio, she's talking about her consulting work with Amazon Uber. So this is clearly somebody that is in the techa. Gracie basically provides sort of like leadership skills for women especially and kind of what she calls soft skills, basically executive coaching. But yeah, she she received a lot of a lot of hate and she doubled down.

24:13Speaker 1:You know.

24:14Speaker 3:I think while a lot of other influencers kind of paved and got nervous, Gracie was one of the few that kind of doubled down and said, listen, I didn't violate my moral code. I violated maybe your moral code, but I feel completely fine about going on this trip. But yeah, a lot of the criticism directed at her it was basically the data center stuff. It was I think the juxtaposition of this idea that data centers are destroying our environment, ruining the climate data DA and then that against this very sort of pastoral, beautiful upstate New York background where it was that so much of the trip was about experiencing nature, it felt I think, you know, it just triggered a lot of people in that to sort of leave those comments. And then also there was a lot of discussion about you know, open Eyes were with the Department of War and this idea of you know, there was this other person that made this parody version of it like come with me on a Palenteer brand trip, which is ironic because Palenteer is also doing influencer marketing as well.

25:12Speaker 4:Jasmine you and audience smiling, How did you? What was your take on this story?

25:16Speaker 1:Yeah, I mean so I had in tracked this, but then I was watching the video that Taylor made and I do feel like it was you know, we're studying the AI backlash from different angles. I do think that one of the things that struck me most was when open AI is sort of constructing this idyllic, utopian like aspirational experience. There is, as Taylor mentioned, so little tech and AI in that experience, right, Like, it's really interesting that when they sort of design like what do we want the world to look like? What do we want a brand to be about it's like nature and like very physical, tactile activities and socialization in person with like other human beings. And I think people probably felt that dissonance pretty strongly. But anyway, I just thought that was like a really interesting bit of reporting because I hadn't heard about the brand.

25:59Speaker 5:Trip read what about You?

26:01Speaker 2:You know, I think I think this, as I said earlier, the pr strategy of tech just has not worked. And and like it's kind of too late because now, you know, is Taylor's point, Like it's it's influencers, it's so fragmented, and it's and you cannot control the message. There is nothing tech is going to do to control the message.

26:22Speaker 3:But I would actually point to Anthropic as a case study. Anthropic has they hired this woman who has been really building out their influencers. She's an influencer marketer, and she has built out their influencers strategy over the past year. I have never seen this level of backlash even remotely towards any of Anthropics activations, and they do a lot, actually they do these dinners. They actually also work, you know. I saw a lot of people saying, oh, well, it was just the influencers they invited. There's these vapid life silent influencers. Anthropic has done tons of work with. I mean, I wouldn't call these women vapid, but life soil influencers that are sort of the you know, the West Village early archetype, right, Like Claude is this like elevated product.

27:04Speaker 3:I think it a lot has to do with the brand positioning as well. And this idea of like using Claude is smart, it's elevated. You're wearing your little Claude thinking cap, you know, like it actually has done well for them, And a lot of these other companies have done influencer marketing as well. I mean I point to like Google, Amazon, et cetera. These are companies that have just I think Microsoft like Legacy. I mean Microsoft worked with Alex Earl. Microsoft also has a very deep partnership with the Department of War. Literally that is how you know.

27:33Speaker 3:I think through the partnership with Microsoft is how the Pentagon is able to continue to access a bunch of these AI services. So I'm not saying that it's hypocritical, but I think it's interesting kind of how brand perception around these corporations is shifting and just the the real negativity around open it.

27:50Speaker 5:There's something about opening particulous? Is is it?

27:54Speaker 4:Because they got their first.

27:55Speaker 2:They're the winner in consumer chatbots, right, Like Claude doesn't even register it's not on the map, and like and yeah, Anthropics up. They you know, they had some good press around the Pentagon thing like just give it time to.

28:09Speaker 3:I know, but I just I don't I agree with you. But you know, there's a lot of people that will be very anti AI, but they are okay with Claude, and I seem.

28:18Speaker 1:Weird to me, Like do you think that Anthropic did something right or was it just that open AI screwed up that bad.

28:24Speaker 3:I think there's a couple of things. Number One, I think it's also important to look at like, okay, who's on the team at open AI. We have Charles Porch, who is the one who built Instagram into the cultural force that is today. But and you know, Charles is very senior leader at open ay now, but his job is to kind of change this positioning. I think he's mostly known for celebrity partnerships.

28:43Speaker 4:The Kylie, the Kylie Metup. What did he strike that before he left the Metro Ray Bounds partnership.

28:48Speaker 3:Yeah, exactly. Yes, So he's very into this like aspirational positioning, and I don't know that that's going to translate with a company like open Ai, because they're their public image is so belue Girn sam Altman is so reviled, almost in a way that Mark Zuckerberg was too. Though, But I think a couple of things that Anthropic has done right is Number one, Dario is coded as like liberal kind of and I think that like insulates him from backlash from large parts of the left, or at least the center left. They sort of view it as a responsible tech company, and I think just generally it is seen as I think the B to B positioning. People experience these products a little bit more, I think it's seen as just this like more elevated company. You'll note that even though Anthropic again has a chatbot that consumers use, as read said, it's not as popular, but if you look at the headlines around these lawsuits of chatbots or killing children, it's always open Ai. And so I think open Ai is just seen as this sort of unique villain.

29:47Speaker 2:Anthropics had plenty of public relations black eyes too, though. Right, there's the whole open source thing.

29:52Speaker 1:Right, there was these like policy folds fighting with the White House. They're fighting with Jensen.

29:59Speaker 5:What about burning the books?

30:01Speaker 3:That's the only thing, that's the only thing, interestingly, and you know what, I just made a video about that, and people continue to say that it is open.

30:08Speaker 5:AI doing that way.

30:10Speaker 4:Explain what happened, Taylor.

30:11Speaker 3:So Anthropic basically was there was this viral video of this like what looks like a book guillotine. It's really just the way that they slice off the spine of a book in order to feed the pages into an AI scanner. Anthropic is doing this to millions of books. Now, these are books that have that are that they buy buy the palette for like cents on the dollar, and they are books that are going into the trash. I personally think that it's better to have books scanned before going into the landfill.

30:39Speaker 5:Some of them were rare books, right like that.

30:41Speaker 3:You know, no, no, no, none of them were written. No, let's be clear. You cannot buy rare Yes, you cannot buy rare books, buy the palette, right, and so this is just a ridiculous sort of conspiracy. Also, rare books are not protected by copyright because most of them are old, right, so it wouldn't. So this is basically books from the twentieth century that are not rare, that are out of print some of them because they're just like an old training manual for Microsoft ninety five or something. Right, it's not something people miss. Somebody made the adjudication to throw that book away, is my point. So I just put a video about this this week and I've gotten multiple messages about it, and it's driving me crazy because I'm like, it's anthropic. It says aanthropic in the video.

31:21Speaker 2:It's a meme though, right, And it's interesting that they're confusing them with Opening Eye, but I think that gets this point, like, yeah, anthropic could do a better job of pr than Opening Like they're not. It's not having an effect on the overall perception of AI and tech, right, and that's that's an issue.

31:38Speaker 4:Well, what's the influence a piece of all this though, because Taylor, you alluded to the Nantucket no Influencers sign in your video as well, and I feel like there's kind of like error when it was like quite acceptable and aspirational to get loads of free stuff and unbox it from the like fashion influencer industry world, which somehow when it's like juxtaposed or superimposed onto the tech industry like makes it kind of particularly inflammatory perhaps, Or do you think just the social modes are changing, like what is the influence a piece of this and how does it relate to the tech piece.

32:11Speaker 3:I think the influencer piece to me, because it's not just they're not just getting backlashed for the tech partnerships, although that is sort of unique, but I think overall, it's this feeling of inequality and I think a lot of people are struggling. Jazz Jasmine was mentioned earlier. You can tell people, Look, the GDP is going up, Look these you know this is happening, but they feel this visceral frustration with our economy and the way that things are sort of unevenly distributed. And so when you see these lifestyle influencers living this very aspirational life online, of course they're going to be a target of people's ire because it's like, well why does this person get like all they're doing is flying around and getting free brand trips, free opportunities, and I'm here struggling. And so I think we've seen a shift whereas like previously so much of the influencer industry was built around aspirational lifestyle. Now it's built a lot more. You see the rise of commentary influencers.

33:03Speaker 3:It's people that you have to have a little bit more.

33:06Speaker 4:I think, Jasmine, this is your kind of second big, big media moment of the year. The first one was your Permanent Underclass piece for The New York Times a couple of months ago. Does how do you see all of this tying in to what you wrote about the concepts of permanent underclass and how it's understood and perpetuated by Silicon Valley.

33:28Speaker 1:Yeah. I mean one thing that is weird about the AI industry, and in particular, probably anthropic more so than the other companies, is that they talk constantly about the mass job displacement that their products, their coding agents, their enterprise agents are going to cause. And they do this handbringing thing that's like, oh, we're so worried about it, Like Dario will write these twenty thousand word essays about how AI might lead to I mean, sal molment does the same thing. Might shift power from capital to or from labor to capital, might increase in equality, might concentrate power in the hands of a few companies might create an underclass of people of quote unquote lower intellectual ability, and there's this very strange dynamic where people see that and they're like, Okay, you're doing all this hand ringing, but why are you building the technology to put us all out of work? Right? And so there's this sense of like, oh, these companies they don't even care about their impacts, right, They don't care about the kind of destruction they're causing. And of course people already have a

34:25Speaker 1:sense that the economy is quote unquote rigged against them or something like that, and so the fact that the AI industry both seems aware of this and is the kind of indifferent to it or not slowing down in any way really freaks people out. I mean, I also have this sense, for example, that with there the creative stuff, like with fiction authors and writers who tend to be very anti AI, for example, people will talk about like, oh, AI like can't really write, like it doesn't have like the true essence of art or something like that. But I think a lot of the creative criticism is really economic anxiety, and a lot of the general backlash to AI is actually rooted in economic anxiety. You might say like AI is actually not very good at writing, but really there's like an underlying fear, which is like I'm a freelance illustrator and I'm getting fewer gigs now, Like this thing poses a threat to my livelihood, to my work.

35:15Speaker 1:I think if the technology was not one that was taking away people's jobs, it would be a very different story. I mean, even when I talked to Kathy Hochel about her data center moratorium, one thing that was really surprising about how she thought about it was she thought about it as almost like jobs for megawaw or something, which is like these data centers, sure they create like five hundred or one thousand temporary jobs, but the number of jobs for megawah is not good enough, and so it's not a good trade off for people when this thing is going to put them out of work or threatening to put them out of work, and you're bringing it into your community to use your resources.

35:51Speaker 4:When we come back at night, my scenario losing billions while you greet your wedding guests. Stay with us, Welcome back. Read for our final story this week. I feel a little bit like I'd put my TMZ hat on because there was a major drama last weekend at a wedding in Carmel.

36:20Speaker 5:What happened?

36:21Speaker 2:Yeah, so Leopold Ashton Brenner, who was a former open Ai employee who kind of blew the whistle on security concerns there, got fired and then he writes this essay called Situational Awareness, which is all about how, you know, AI is essentially going to take over the world faster than anybody thinks it goes. You know, everyone is reading this thing. He's hailed as sort of this genius, right.

36:45Speaker 4:I feel like that was the first like hot take, viral essay that permeated my about AI. I mean, there was a deluge to them after us, but I feel like that was like the kind of a moment of these like.

36:55Speaker 5:Yeah, that's right.

36:56Speaker 2:There was like AI twenty twenty seven and things like that, but this one was really, you know, was the big one. And he's going you know, he went on like the Duarkesh podcast, which is super influential in the tech industry and sort of became this like stage about you know, the development of AI and like a true believer, right, but he's also an effective altruist, an effective aultra. You know, he worked for FTX like they love sort of making market bets and huge risky market bets based on these like these beliefs about what's gonna happen, and you know, sort of throwing caution to the wind. And that's exactly what he did. And he starts a fund which is you know, called Situational Awareness based on this idea that the AI boom is is, you know, we're getting to agi faster than anybody thinks. And if you just invest in all the companies in the stack, from you know, chips to memory to data center provider, you know, to to neo clouds, you're gonna make a ton of money.

37:50Speaker 2:And a lot of people invested in this thing. He was making a huge amount of money. Like his story, I mean, I think it's the Wall Street Journal and a huge profile on him. It was, you know, this this amazing investor. At some point like an insane it was like, you know, of course, if you if you bet on this hot area, you put all all this money into it, you're going to do really well in the short term. He was also betting on margin, right, which is like you know we all remember from history class in school, right, the nineteen twenty nine crash was all about this, right, So if you borrow a bunch of money and you and you bet it and you bet it all and then the market goes down and you have to the you cover those loans, things turn out badly. So the market has been down and so his fund basically nearly imploded while he was at his wedding.

38:39Speaker 2:This was a great detail. And I think another Wall Street Journal article that you know, his wedding where they were by the way they were, like the most important, I think interesting detail in that story was that they were having breakout sessions for discussions at his wedding and he's like, but he's dealing with like, you know, essentially his fund about to you know, implode, you know, while this is all going on, and he eventually sells all these positions to Citadel. But actually, remarkably, he's not it's not his fund didn't implode. Like he's actually still up apparently eighty percent on the year, which is which is incredible.

39:14Speaker 2:Like he's he's still He's going to actually be fine.

39:17Speaker 3:It seems like, yeah, but he had to sell all that all those assets off to Citadel.

39:22Speaker 4:But he got to keep his androp his big position in anthropic, I think, which was the key metel ground.

39:26Speaker 3:Yeah, he got to keep his anthropic position. But I'm just saying, like the fund is like significantly weakened.

39:32Speaker 2:I was smaller, but it's still it's still positive though, like he didn't like it didn't implode, Like his investors are are on paper making money right now in his fun which is like in which is crazy. But you know, I think, to me, what was so interesting, Like and your your TMZ joke oz is like perfectly illustrates this is like since when does the TMZ crowd care about, you know, some fund manager going bust. It's it's the cultural significant. It's like what he represents that made this story really interesting. Both I think from the outside world perspectively, he's this tech industry person and there's a lot of shot and freud, but also within the tech industry there was a lot of like anti EA, like anti effective altruist sentiment that I saw on Twitter, and I'd be curious, you know, you get Taylor and Jasmine's opinion on this as well, but like it just kind of showed that like this is he represents this sort of culture that I think, you know wants it. It gets back to like the broader discussion we've been having on this whole show, which is like people just want to see people like this fail.

40:36Speaker 1:Oh yeah, it's it's it's like he represents billionaire Hubris. He's also super young. I think, like that's worth mentioning. He's like in his mid twenties. His Beyonce wife, I suppose now, is the chief of staff Ta Dario at Anthropics, So she's also a very very influential AI person, right, and he was taking these crazy bats, got fired and somehow build this gigantic fund. People want to see the avatar of sort of tech bro billionaire wonder can fail, right, And so I think people had a lot of fun with that. One fund detail is I heard that at his wedding during during the ceremony, they first think guests and then they thanked Ken Griffin.

41:17Speaker 5:It sounds like a Semiphore event. They were also great, Yeah, we did have Ken Griffin in an event.

41:24Speaker 2:You know, there are all these like great conspiracy theories too that like that somehow Sitadet like tanked the market on purpose.

41:30Speaker 3:I mean to me, Ken Griffin is the big winner in the situation, and you're right read it's talking that his fund is even on life support. But I would say that's because, like I think this kid should have just gone into like VC, because then it doesn't really matter. You don't have to worry so much. And also people are comfortable with these like long term bets and they'll give lots of money to like twenty five year olds, I think in the hedge fund world. I mean the fact that he got all these like margin calls. I think that it's just like a shark your kind of environment.

41:57Speaker 3:It's tough for someone to navigate like that, and I think he actually is quite underqualified for that.

42:02Speaker 1:But they love that right like they love being like again, he worked for sam bankmuin free. The whole thing is not making these crazy high risk, crazy high expected value bets that could totally go bus. But man, it must feel so good to succeed, you know.

42:14Speaker 2:It's part of like the EA ethos to like to just bet it all. Like it's like better to take like high risk on some great outcome than sort of head your bets.

42:24Speaker 4:There is a crazy thing here that he literally worked for SBF. We all know FDx ended and then people, I don't know how much of the forty five billion was actually cash people put in. How much of that was appreciation on the cash they put in. But even so, like it's kind of it's kind of remarkable that like people, as much as some people want to like tear this down, tear this down and oppose it in every way and like find you know, data centers and Leopold Ashan Brenner's and opening our influencer trips to like object to there's another group of people who just want to absolutely whatever the risk be associated with this.

42:57Speaker 3:Well, those are the rich silicon value people, right, those are the investors, Like, those are the people that is like, it is the existence of that class of people that I think makes the rest of the public so angry.

43:09Speaker 1:And all these young people in Silicon Valley they're thinking AGI is going to come in three years. It's going to eliminate all of the jobs and freeze everyone in their current economic positions. That's the permanent underclass belief that folks like Leopold believe. And so I better accumulate as much capital as fast as possible in the next two to three years, like starting this crazy high risk catch fund. I mean I talk to folks, to other twenty somethings in Silicon Valley all the time who have this mindset, who look to people like Leopold of Yeah, if we think that the world is going to get frozen into a permanent overclass of people with capital from AI and a permanent underclass, my only goal is to make sure I'm going to be on top. And if the whole economy goes crazy in two years anyway, it's okay for me to take these high riskpects.

43:49Speaker 2:It's the classic it's the classic mistake that everybody makes. It's almost a cliche that people, you know, overestimate the short term, underestimate the long term, and it's like it never ever isn't true. And like the market right now, look at the rewarding people, the rewarding the companies like Microsoft that are taking like the long term bet that this technology is gonna it's going to take a while for adoption to occur, you know, to build the data centers, et cetera. So you know, it's it's funny that they just that just people keep making the same mistakes.

44:19Speaker 4:Jasmin, do you know Leopold? And I guess I'm curious. We had Theo Baker on the show a few weeks ago, and it was interesting to hear him sort of reflect him being a kind of participant observer in this in this world, which I guess in some ways, I'm not sure if you would feel like that describes you as well, but like, what's it like to move through this world while also documenting it? And yeah, do you know Leopold And what's the kind of what should we know about him?

44:44Speaker 5:Were you at the wedding?

44:45Speaker 1:Was not at the wedding. I had friends at the wedding. I heard reports from the wedding they put all their phones in a bag, so there are no photos. Also big gen Z trend. I think it's a good one, to be clear, So not a lot of photos from the wedding. I don't I don't know Leo. We've met before, but I would not say that I know him or am friends with him. But yeah, I mean it's really interesting. I like THEO. I went to Stanford. I had a lot of friends in the tech industry who are now AI millionaires, multimilliaires, DECA millionaires. It's interesting right now to be in the city because you have this again wealth bifurcation where two people like me and my old classmate from undergrad whatever. We were roughly as smart as hard working, took the same path. And then one person goes and works at open AI in twenty eighteen or something, and the other doesn't like learned. I started learning about and following the AI industry in twenty eighteen. That was when GBT two came out and the LM started seeming really interesting.

45:39Speaker 1:Was already very clear this was going to be a big deal, and I was like, no, I'm going to become a journalist question mark. And so all of a sudden, you have this thing where in your friend group half of the people are like one hundred times as wealthy as the other half of the friend group, and it really causes a bunch of like strange psychologies. It's a very odd experience, I think for people. You know, Silicon Valley has always been a place where some people end up found me wealthy for a mix of like skill, luck and privilege, and AI has magnified those gaps. And so yeah, it's a very strange time to be uh in this city. As sort of like a young person in the Chechamlio.

46:15Speaker 5:I have advice.

46:17Speaker 3:I want to hear Read's advice.

46:19Speaker 1:Yeah, I got I need some advice.

46:21Speaker 2:I have some advice as someone who also made the mistake of becoming a journalist, is just don't marry another journalist. I married a lawyer so I can survive in the Bay Area.

46:29Speaker 1:Oh god, that is good advice.

46:34Speaker 3:It's just interesting, how like I mean, it's Jasm said, I feel like there's this it like San Francisco is so small, and there's all these quite small like social scenes as well, and I feel like there's that Stanford social scene, but also the EA world. Like it's just so funny to look at like the degrees of connection between Leopold and all these other major figures in AI and it's it's like one degree.

46:54Speaker 1:Oh yeah, I mean everyone knows each other like again, like it's like, oh, Leopold went to the door Cash podcast. They're very good friends. They do a happy hour every Friday. I've been to the happy hour, like like Dorkush lives with Dylan Patel and Sholto Douglas and like this third or fourth other guy. You know, Like everyone knows each other. It's an extremely small city. Everyone knows everybody's business. And I think, like to the point about like Sanford and Tec journalists or whatever. I think a lot of it is like, at least for me, you show up at this crazy world of Silicon Valley. All of a sudden, the frat boy down the hall is raising like millions of dollars from Marissa Mayor for a startup that he knows is fake, and everyone knows his fake. He's waving around his Brex card, buying everyone tequila shots. You're like, what the hell? Like that guy's just like another like freaking like nineteen year old brack eye, Like what are we doing here? And you developed this anthropological fascination with like what is going on here? I have to write about it?

47:43Speaker 2:But at the same time, it's like nothing compared to what it was when when like I got out here in twenty third the end of twenty thirteen. Yeah, more like that, Like I just and probably even more in the nineties, right, like people were just going nuts and for with all these startups, and I feel like that aspect of it like hasn't even happened yet with AI, Like I think we're gonna see more of that. It's gonna be insane, and.

48:07Speaker 1:They don't drink anymore. They're less fun.

48:10Speaker 5:Maybe that's the issue.

48:11Speaker 3:The frat guy is injecting peptides.

48:14Speaker 5:Nobody eats, nobody drinks.

48:16Speaker 1:Oh yeah yeah, I mean literally.

48:27Speaker 4:For tech stuff, I'm as Voloshin. This episode was produced by Eliza Dennis. It was executive produced by me and Julian Nutta for Kaleidoscope and Katrina Norvel for iHeart Podcasts. Jack Insley makes this episode and Kyle Murdoch rotel theme song. A special thank you to Jasmine's son Taylor Lorenz and read Albergotti. Please check out all the work they put into the world. We're very lucky to call them friends at the pod