February 7, 2023

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0. Data and calendar

All values as of 3 AM PT / 6 AM ET, other than S&P500 close (1 PM PT / 4 PM ET).

All times are ET.

1. Google and Baidu announce ChatGPT competitors

Google Bard, available now only for exclusive beta testers. - Google blog post

  • Lightweight model of LaMDA: given the still high-cost of running AI models (some estimate a few cents per search), Bard will be powered by a simpler version of their AI .

  • Stock down 1.6%: markets are not particularly impressed.


  • Baidu's ERNIE bot out in March. - CNN

    • Stock up 15.6%. Of course, Baidu's market cap is around $50B, vs $1.3T for Google parent Alphabet.

  • Unclear whether any AI bot has a strong moat. This is starting to look more and more like a commodity-like market, which would be bad news for Google's competitors, who for decades have been unsuccessfully trying to take away their leading search market share.

2. Microsoft, Google, and Apple schedule AI events

  • Microsoft: today at 10 AM PT / 1 PM ET. They announced it minutes after Google announced its event for Wednesday. - The Verge

    • Exp: new Bing with ChatGPT. In contrast to Google, this could be a demo or a full public release.

  • Google: tomorrow at 5:30 AM PT / 8:30 AM ET. - Youtube live stream

    • Exp: new Google Search with their AI bot. Google just announced their its AI bot is only available for some beta testers, so we don't expect a public release any time soon.

  • Apple: next week, but it will be employees only. Expect details about it to leak anyway. Based on Apple's current Siri offering, it seems their AI capabilities lag behind Microsoft's and Google's, so it will be interesting to see what they have new to offer. - 9to5Mac

  • Meanwhile, Quora opens its Poe chatbot to the public. We tested it extensively and found its answers below the quality of ChatGPT's. - Techcrunch

  • And Bill Gates has a new interview on his work advising Microsoft and OpenAI. - Forbes

3. Getty Images sues Stability AI

  • Getty claims Stability AI illegally copied 12 million photos from Getty images for its Stable Diffusion open source software - The Verge, lawsuit

  • Expect this to reach U.S. and state supreme courts. Many similar cases are going through the U.S. justice system. Given the novelty of AI, it is unclear whether model training will be accepted as fair use.

  • End result likely bad for content producers. Even if the Courts rule that AI companies must pay content producers like Getty, next generation models will likely not need that many parameters, or simply leverage free databases like Wikimedia Commons.

4. Fed's Bostic says strong job market could lead to more than two 25 bps hikes

  • Raising more than projected: "[If a stronger-than-expected economy persists, it'll] probably mean we have to do a little more work. And I would expect that that would translate into us raising interest rates more than I have projected right now [5.1%]." Atlanta Fed President Raphael Bostic. - Bloomberg

  • 89.6% probability of 25 bps rate hike, from 76.5% yesterday, as per the graph below.

5. Twitter only has 290K paid subscribers, representing <1% of total revenue

  • In social media, ads are still the name of the game. With 290K paid subscribers, assuming $8/mo, that's $28M in annual revenue. The annualized Q4 revenue is $4.1B, meaning subscriptions are running at less than 1% of total revenue. - The Information

  • Meanwhile, users can now default to "Following". Given Following is their chronological timeline (unlike For You's AI filtered one), this can be seen as a decision to maximize user trust and experience, not revenue. - The Verge

6. DCG has a deal with Genesis creditors

  • The creditors are receiving a mix of DCG convertible stock and are refinancing some loans. - Coindesk, press release

  • Unclear whether Gemini Earn users will receive cash. Given the convertible stock is illiquid, it's not clear how much actual cash the creditors will be receiving in the short term. But if Gemini agreed to contribute $100M, we expect Earn users to be made whole. The Winklevoss twins are too rich to risk otherwise.

  • Barry Silbert still risks going broke. Now his DCG cap table includes secured loans and convertible preferred stock -- either or both could lead to his equity being wiped out in the future. Completely avoidable but for the use of leverage.

7. Binance pauses USD bank transfers

  • Likely related to Signature Bank. The bank has been trying to lean away from its reliance on the crypto industry after terrible quarterly losses. - Bloomberg

  • Opportunity for FTX 2.0? That was the main Twitter meme out of this news. We see a reboot of FTX unlikely in the short term, especially as FTX's new management is still investigating the so-far dangerous FTX code base, which could have unknown backdoors.

8. FTX judge adjourns examiner hearing to Wed

  • What was supposed to be a hot day wasn't. No major news came out of the Monday hearing. The Judge ordered the parties to reach an agreement by Wednesday. We will again be live tweeting.

  • FTX CEO John Ray paid $690K in 2023. At his $1,300 hourly rate, this translates to 75 hours a week. - Coindesk

  • SBF still blocked from Signal, but allowed other apps, as long as "monitoring technology is installed on his cellphone," according to a deal reached by SBF's lawyers and the Government, still requiring approval by Judge Lewis Kaplan. - Coindesk

9. Other headlines

  • Yellen said no recession with unemployment at 3.4%.

  • SOTU preview: Biden to support buyback tax increase from 1% to 4%.

  • Sequoia has $13.6B in its permanent capital structure Sequoia Capital Fund.

  • 200% tariff on Russia aluminum planned for as soon as this week.

  • Bed Bath & Beyond raising $1B to avoid Chapter 11 bankruptcy.

  • Activision announced better-than-expected results.

  • Vox is raising $100M from Penske Media for ~20%.

  • Super Bowl ads sold out (around $7M for 30 seconds).

  • CVS close to buying Oak Street Health for $10.5B.

  • Stripe positioning stay private for at least several more years.

  • Wikipedia unbanned in Pakistan, 3 days after ban.

  • Turkey hit with more earthquakes, death toll is 5K+.

  • North Korea stole $630M of crypto in 2022, according to the UN.

  • General admits past failure in detecting China balloons. Superpowers spy on each other, no surprise here.

  • DeSantis-allied consultants are launching a 2024 Super PAC.

  • Club for Growth doesn't invite Trump to its annual donor retreat.

  • Biden expected to visit Poland end of February.

  • Swiss to hold popular vote on preventing cashless society.

  • AI Seinfeld suspended from Twitch for anti-trans jokes.

  • The VC who uses GPT to automate repetitive tasks.

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