Sam Altman is on the green mile. He's an innovator, not an operator. They need an operator. They need an adult in the room right now. He just clearly doesn't know how to handle employees who want to leave. He's made a fool of himself with certain statements that are just immature, quite frankly. He has not made the right moves in terms of relationships with other organizations. This is all going to lead, and I'm teasing my prediction here, we're going to have a new CEO at OpenAI within the next six months.
Today's number: 60. That's the percentage of Gen Z people who say they would find someone extremely attractive if they never used AI to make personal decisions.
I'll tell you, Ed, I am just sick of Gen Z's arrogance. They walk around and act as if they rent everything.
Have you heard from Michael Symbolist?
I may or may not have heard from him, but I love the direction that we're heading in, and I don't want to change a thing.
That's because you're some Princeton prude who wants a pimp's cup, doesn't know how to drink beer, tell a good joke.
You've had better dad jokes. I'll say this one was okay, maybe six out of 10. You've had some bangers last week. I forget what it was, but it really hit the spot. So we're trending in the right direction.
So I'm not going to tell you what my correspondence with Michael Sebast has or hasn't been. All I know is that he's been a blessing to the show.
I'm not going to say anything.
How are you, Ed? It's not coming home.
I hear you.
I'm struggling to find any silver linings or any positives out of that World Cup.
Well, it's not like you flew to the US with your entire family thinking you were going to go see England in the World Cup final.
Now I'm going to see Yamal and Messi, which granted it's great soccer, but do you think it's bad form? I'm going to wear my Team England jersey. Do you think that's bad form to wear that to the final, or do I show my loyalty?
We'll take any support we can get. I mean, you might get heckled and people might call you a wanker, but that's okay.
Well, that's called social media. That's called me. That's called a weekday for me, Ed. Have you read my comments?
I'm used to it.
Yeah, it is. I got to, I mean, it's hard to describe that feeling of just pure disappointment, but something I've been thinking about.
That's because you're young. Trust me, you'll get used to it.
Yeah. Have I told you about my divorce, my companies, my general, like every time I look in the mirror now, just the horror and disappointment? Just to give you my sort of takeaways on just being an England fan and also just being a football fan in general. Something I've been thinking about is it's so annoying how much worse it feels to lose
Yes. Losing, the intensity of the feeling of losing is so much greater than the feeling of winning. I mean, you know, we went to the England game and saw Norway. We had a great experience. I had an amazing time, don't get me wrong, but we got the win and then I'm kind of like, okay, on to the next one. Great. That semifinal loss, I couldn't dig myself out of the hole. And you never feel that way when you win. And what is that about human psychology?
That's alcohol. So, no, I'm serious. When I was young, when I was your age and I drank, it'd be like six hours of euphoria with a 10-minute hangover, a couple Advil, Diet Coke, and boom, I was ready to drink again. And as I've gotten older, the euphoria shrunk and the hangover has increased.
So just so you know, you're going to have more of that diminishment of upside with a dramatic expansion. I get excited about very little anymore, but I'm worried about everything, right?
Who are you rooting for? I don't even know who to root for.
Well, I know who I'm rooting for in the final, but it feels like, it literally feels like getting a hand job from my cousin at Thanksgiving. It's just not nearly what I was hoping for.
I don't know where that came from.
I don't know where that came from.
I like how I just kind of didn't really acknowledge, just moved on because it's kind of normal at this point.
Who are you rooting for in the final?
I look, to be honest, I don't like either of these teams. I think
I used to like Yamal, but something I've been thinking about. It's my problem with Argentina. My problem with Spain now is both of these teams are filled with very, very arrogant people and the celebrations. I don't know if you saw the celebrations of the Argentina players after the England game, but they put up this sign saying the Falkland Islands are ours and the way that they celebrated after the game, like there's just a sense of arrogance. I think Messi is an exception, but the rest of the team and the rest of the players, the way they carry themselves, they're just not very humble. The same is true of the Spanish team. I used to love Lamine because he was this kind of cute kid with braces who sort of no one knew why he was so good, but he just happened to be this incredible phenomenon. Now he's kind of bought into his own hype and you can sort of see him getting that sense of arrogance. I can feel someone saying the same thing about me. But regardless, I wanted quiet, English, humble people to go all the way and to do it for us. I wanted the Dan Burns and the Anthony Gordons to win. And instead, it's the superstars. It's the same old, same old. And I wanted to see someone else. I wanted to see someone else rewarded for being humble. And that's not what we're going to see. So I'm not going to support either of these teams. Messi is the greatest player in history. He's the GOAT. If he wins this, then it'll be kind of nice that we'll have just a conclusion to that debate, the undisputed GOAT. But I really can't get excited about either of them.
I didn't like the way the game ended either. I didn't, the vibes at the end of that game were distinctly different from the vibes at the end of other games. I was kind of disappointed.
It's, I mean, at this stage there's so much wrapped into it. Emotion, politics, patriotism. I mean, it's very intense. Plus that's such a historic game with the hand of God and Maradona in 1986. I mean, there was a lot in that. How much joy did we get from Team England though? I'm actually at that stage where I really am appreciative of the players, the coaches, and the fans because I got so much joy.
100%. The game I went to with you, the games I watched with my boys, I just thought that team was just, and in typical British fashion, they're just going to be second-guessing everybody and posting the coach. They had an amazing, I think they had an amazing tournament.
I agree. And everyone's saying that he made the wrong decision by putting on the defenders. It's the same decision he made against Mexico.
Take it to your fantasy football.
Let's give the guy a break, is my view. We'll get posted in the comments. That's okay. We'll get over it.
We have a lot to get into here, so I'm going to launch us into our first story. It was another brutal week for OpenAI. We've discussed the company's hell weeks before. This one might have been one of the worst yet. The headlines kept piling up. Apple first sued OpenAI, alleging that it stole intellectual property. The startup announced it is shutting down its Atlas browser less than a year after its launch. Its president of applications, Fidji Simo, said she is stepping down. Its first AI device leaked, and a movable speaker wasn't exactly the reveal that many people were hoping for. The company was also reportedly caught selling advanced AI models to Chinese firms blacklisted by the Pentagon. And then there were the financial and the competitive pressures. According to Emarketer, OpenAI's ad business is on track to miss its own forecast by 90%. S&P also recently downgraded Oracle's debt to triple-B minus, just one notch above junk status, citing OpenAI as a key credit risk. End quote. At the same time, Anthropic is reportedly gearing up for investor meetings ahead of a potential IPO as soon as October. So it appears Anthropic will win the IPO race. Plus, DeepSeek, the Chinese competitor, is preparing for its own IPO and it could file as early as this year. A successful public debut could make it even harder for OpenAI to attract capital.
So, Scott, so much went wrong for OpenAI at this point last week. And you can feel the schadenfreude on all sides of the spectrum here because in a lot of ways they've alienated the left from a political perspective because of cozying up with Trump after there was the falling out with Anthropic. At the same time, they're also kind of alienating the right. We've seen that Elon Musk has been posting about Sam Altman. They're alienating everyone. Then we get this Apple lawsuit where Apple accuses OpenAI of being, quote, rotten to its core. They said that their behavior of stealing hardware secrets was, quote, normalized and exemplified by leadership and was, quote, the tip of the iceberg. So that wasn't very good. We have the Atlas browser shutting down. We have Fidji Simo stepping down. We have the Oracle downgrade. We have OpenAI selling its models to these blacklisted Chinese companies, which doesn't put it in good books for the government. And that was, of course, kind of one of the only edges that it had over Anthropic. A lot to get into. A lot went wrong. Your reactions?
More than just the headlines, what I'm thinking about is the pattern here and that every bubble seems to kind of pop in the same order. First, the applications disappoint, then the infrastructure gets overbuilt, and finally capital markets catch up and close. At the turn of the millennium, you know, Pets.com failed before WorldCom, and today the cracks are showing at OpenAI and the next is the infrastructure.
OpenAI is reportedly worth over half a trillion dollars. Yet almost every major narrative has flipped just in the last 60 days. Consumer products are struggling. Management turnover is accelerating. Monetization is proving harder than people expected. And competitors aren't dying. They're lining up to go public. So it's becoming sort of, we used to think they were spending as if this market's going to be huge and it's going to be win or take all, justifying this drunken, intoxicated spending. But it's become capital intensive, brutally competitive, and increasingly commoditized.
And the real risk isn't that OpenAI loses. It's that nobody wins enough to justify these valuations. And we see an unfurling of the collapse from B2C to B2B to infrastructure, similar to '99. And you know, again, history doesn't repeat itself, but venture capital sure as hell does. And it is massively overspent here and these valuations are going to come down dramatically. But I've always said, oh, it feels like '90, you know, you want to say it's '99, it's probably more like '97. This does feel like Q4 '99 and then March of 2000 is now in plain sight.
You were saying when we were talking about this offline that you think that we're going to have to see a management shakeup here just based on everything that Sam Altman's gotten wrong. And I think, I mean, there is the AI bubble question, which is like, does the AI business model actually make sense if you are in the front-end AI business? And that's something that has been kind of an open debate. I mean, if we look at the financials of OpenAI and Anthropic, these companies that are losing a lot of money, you would think it doesn't really work right now. Maybe it'll be kind of the Uber or the Amazon where they spend all of this money and then eventually they figure out how to make more money than they spend and eventually it turns into a viable business. But that's kind of an open debate and I don't blame Sam Altman or his execution on that reality. I mean, the reality is that compute is very expensive. Building the data center is very expensive and so far it's been very hard to market a viable product which is commensurate with the costs.
But there are some executional mistakes that we've seen from Sam Altman. One would be he's trying to launch this hardware business and apparently he's been stealing from a company that he had previously formed a partnership with. Like that's something you kind of have to remember about OpenAI is they used to be partners with Apple. The plan was that OpenAI was going to power Siri and then Apple turns around and announces, actually no, we have a new partner. It's Google. And now we learn why that is. It's because Apple thinks that OpenAI is, quote, rotten to its core and that they have been stealing trade secrets and poaching their employees. So just from like a relationship management perspective, like clearly that is a huge mistake. There was the issue with we're launching all of these side projects and now we're saying that none of these side projects are actually panning out, like the Atlas browser and like Sora, the image generator, which they shut down as well. I mean, it just in a remarkable way, Sam Altman is getting the entire world to hate him. And it's almost like nothing he says or does can go right.
And I've never really seen that from a CEO. A CEO who has become so unlikable, not to one faction of the country or one faction of the market, but literally to everyone. I can't find really anyone who is supportive of this company who doesn't have a financial interest in this company, and that's wild from a CEO perspective. I mean, there's just so many things here. AI has been the most poorly managed brand over the last 12 months, and I feel like the coup de grace of head-up-your-ass brand management was deciding that Kevin O'Leary should be the spokesperson for data centers.
I think he made himself the spokesperson, but I agree. They should have shut him down quick. He should have said, boss, if you want this thing built, just shut the fuck up. But look, I think the thing that really hurts here in terms of credibility and provides legitimacy to what is often perceived as just competitive wrangling is the lawsuit from Apple. And they're claiming that OpenAI stole trade secrets by poaching over 400 Apple employees. And OpenAI had recruits bring Apple prototypes, which by the way isn't illegal on its own, recruiting employees. There's been laws passing. You can't have Steve Jobs and I forget who it was, Bill Gates had a kind of a gentleman's agreement that later surfaced in emails that they wouldn't poach each other's employees and that's not competitive. All that is is a transfer of power from employees who want multiple bids on their labor and that's illegal. You're allowed to recruit other employees unless that employee is an executive and signed a garden leave or a non-compete which you have to compensate them for. But anyways, the strange thing or the irony of the suit is that Apple has a reputation in the industry for stealing other companies' ideas and they're one of the most frequently sued tech companies for patent infringement.
And the reality, this goes to a larger, and I'm not saying they are or they aren't guilty, but the reality is the majority of companies that have outside shareholder gains, and this is true of an economy that's growing faster than 5% a year, they're essentially thieves or probably more accurately a strip miner. In that in the 19th century, the US stole manufacturing technology or tech for textiles and littered the eastern seaboard with manufacturing technology and capabilities and even actually kidnapped artisans from Europe. China has built an entire economic model on IP theft. And so most of these guys are suing each other. But when Apple comes for you in this case, their communications are very good. It's not an individual. They're not getting into a pissing match with this ego versus this ego. They're just saying, look, they're laying out an illegal kind of Android format. This company is guilty of, you know, kind of mass theft, if you will. But it is really incredible how the momentum has flipped on OpenAI.
And now we know that Anthropic is scheduling its IPO talk. Supposedly that listing is going to come in October, which is very soon. That's only three months away. And you know, there was a debate of like who's going to win that race between Anthropic and OpenAI. Who's going to sort of capture all of the energy and the capital in the room? It's clear that Anthropic is going to win that race. In fact, if we look on Kalshi, the odds that they will announce an IPO before 2027 are up to 74%. So this Anthropic IPO is happening. OpenAI is tabling theirs. But then the fact that in the same week we also learned that DeepSeek is planning its IPO. And to be clear, we don't really know anything about it. It's very confidential. We don't really know anything about their financials. But they're out there and they're planning this and it seems like the debate used to be, you know, who's going to get out first? Is it going to be Anthropic or OpenAI? That's not a question. Now the question is, will DeepSeek get out before OpenAI? And that poses a whole other slew of questions and risks for the company. I mean, what do you make of that?
Well, I think the biggest story that has got almost no coverage is what I would refer to affectionately as AI dumping from China. And that is free Chinese models went from less than a third of all traffic in late 2025 to about two-thirds recently. And it's much less expensive. I mean, essentially what's happened in the AI market has condensed what's happened to industrial economies in Europe, but instead of it taking two decades, it's taken two months. And that is they steal the IP on a cell phone tower from Siemens and then they manufacture it with cheaper labor and they sell it back to telcos for 40 cents on the dollar. And there are a lot of regional LLMs in China and they have access to cheaper power, cheaper chips, less power consumptive, and they're also subsidized by their own local governments. And I believe, and I said this before, that Xi has a vested interest that the ultimate Ohio-class submarine to be flipped against us is to engage in AI dumping. And I think it's happening. And you hear stories of VCs encouraging the portfolio companies to use these open-weight Chinese models.
But you're seeing the best business model in history is IP theft. A close second in terms of a pricing mechanism is 80% of the market leader for half the price. And DeepSeek and these Chinese open-weight models claim they're 90% of the market leader for a third of the price. I think this is going to be the next geopolitical pawn once Trump actually, if Trump actually figures out what's going on here quickly enough. But the entire economy right now is a giant bet on AI. And China has come in with a product that is near frontier for a lot less money. And Mia, our head of research, put together this graph that just blew my mind, one of those mountain graphs. And you see the frontier models at like 80, 90% share in China, you know, five or 10% these Chinese models, and the mountain of consumption of Chinese open-weight tokens has exploded and yet it's not getting that much coverage. It's as if, I mean, the US auto industry was hollowed out over call it 20, 30 years and it started with the Honda Civic and then they had an Accord and then, oh wait, but that's just one company. You know, it's Toyota, which became the largest auto company in the world in terms of production volume. What the Chinese automobile industry did to Detroit in about three decades, it feels like Beijing is doing to us AI frontier models in about three months.
