E111: Microsoft to invest $10B in OpenAI, generative AI hype, America's over-classification problem

Now, that doesn't mean that ChatGPT can't figure that out, but it's those kinds of problems that are going to be a little thorny in these next few years that have to really get figured out.

So, ChatGPT and all these services must use citations of where they got the original work. They must link to them and they must get permission. That's where this is all going to shake out.

Well, forget about permission. I mean, you can't get a big enough data set if you have to get permission in advance, right?

I don't think startups are going to be able to create the AI themselves, but they might be able to benefit from the APIs.

So my point is, David's right, the huge companies, I think, will create the substrates.

That will cause Microsoft to have to catch up, and that will cause Facebook to have to really look in the mirror and decide whether they're going to cap the betting that they've made on ARVR and reallocate very aggressively to AI.

the biggest opportunity here is for Facebook.

And one of the advantages that I think businesses are going to latch on to, which we talked about historically, is novelty in their data in being able to build new systems and new models that aren't generally available.

If you can be the first out there in a given vertical with a proprietary dataset and then you get the advantage, the moat of reinforcement learning, that would be the way to create, I think, a sustainable business.

So to your point, that's really valuable because that's real work that Google or Microsoft or OpenAI won't do. Right. And if you have that and you bring it to the problem, you can probably make money. There's a business there to be built.

Well, it's definitely the next VC hype cycle. Everyone's kind of glomming on to this because VC really right now needs a savior. Just look at the public markets, everything we're investing in is in the toilets. So we all really want to believe that this is going to be the next wave.

And I think the problem with the hype cycle is that you're going to have to marry it with an economic model for VCs to really make money.

I don't think it's about being a hype cycle. I think it's about the investment opportunity against fundamentally rewriting all compute tools, because if all compute tools ultimately can use this capability in their interface and in their modeling, then it very much changes everything.

fundamentally every business model can and will need to be rewritten that's dependent on the historical, on the legacy of kind of information retrieval as the core of what computing is used to do.

There's about $2 trillion of debt owned by the developing world that has been classified by a nonprofit, The Nature Conservancy in this case, as eligible for what they called nature swaps. This is $2 trillion of the umpteen trillions of debt that's about to get defaulted on by countries like Belize, Ecuador, Sri Lanka, Seychelles, you name it.

I think that Google will open source their models because the most important thing that Google can do is reinforce the value of search. And the best way to do that is to scorch the earth with these models, which is to make them widely available and as free as possible.

Well, I mean, yeah. So what I'd say is $29 billion for a company that's losing a billion dollars in Azure credits a year.

That's one way to look at it. That's also a naive way to look at a lot of other businesses that ended up being worth a lot down the road.

So to the extent you're going to invest, it makes sense that you put money into OpenAI because that's safe.

And that's where business models like a Yelp, for example, or like a web crawler that crawls the web and then presents web page directories to you. Those sorts of models no longer make sense

Well, we were building silicon for machine learning. That's different.