Hiya, I’m Jake Swearingen, a deputy editor on Insider’s tech analysis desk, stepping in for Diamond Naga Siu.
Bubbles! It’s always fun to predict them, because if you’re right you look smart and if you’re wrong nobody remembers.
So it’s also fun to wonder if the surge in funding for generative AI may be the start of a bubble, as ChatGPT maker OpenAI becomes one of the most valuable startups in the world in just a few weeks.
It’s the hunt for big paydays that keeps VC markets a little frothy when new tech like generative AI hits the scene. And a bubble is only a bubble in the rear-view — in the moment, it’s just making sure you don’t miss out on the future.
Let’s get started.
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Generative AI tools can be used to create a variety of texts and images like this one, which was produced by OpenAI’s DALL-E 2.
1. Tech’s next boom — or next bubble? OpenAI’s release of ChatGPT has put generative AI on the map for venture capitalists and tech firms eager to put money into a smart idea during a downturn where smart ideas feel scarce. VC and others want to get in early on something that has the potential to be transformative. But could generative AI be the next bubble in tech? Let’s take a look.
- Valuations are getting wild. Marketing firm Jasper AI secured a $1.5 billion valuation from $75 million in revenue, a x20 multiple.
- OpenAI may pull in $10 billion in funding for a $29 billion valuation. Its revenue in 2021 was in the “tens of millions.” That means a multiple of somewhere between x290 and x2,900.
- These valuations would make sense if there was a clear path for AI firms to make money. But the current state of AI is still expensive — OpenAI is burning cash — and profits are theoretical.
Click here to read whether the next tech bubble is already here.
In other news:
In this Sept. 24, 2013, file photo, just cut stacks of $100 bills make their way down the line at the Bureau of Engraving and Printing Western Currency Facility in Fort Worth, Texas. Big U.S. companies have been piling up cash for years, but have spent little of it on buying equipment and raising wages and other things to grow the economy. Republicans say they know how to fix this: Give companies even more money by cutting their taxes.
2. Cash is king. Slumping stock prices and a dismal market are hurting tech execs’ pocketbooks. Since high-profile execs fleeing for the doors is a terrible market signal, insiders say tech companies will be looking to structure comp packages that include cash payouts for sticking around as a way of inducing loyalty in the C-suite.
3. Meta momentum. It’s easy to miss amongst all the talk about the Metaverse, but Meta’s really just a very large advertising company, and advertisers say they’re spending more with the company thanks to its AI-powered tools and tracking. The bad news for Meta: ad spend on the ol’ big blue Facebook is still sagging.
4. Learning to live with Musk. Top brass at Twitter is quietly telling advertisers to get comfortable with CEO Elon Musk’s unpredictability because it’s not going away, as per The Information. The world’s largest ad-buying company has cut spending on the social media platform by 40% to 50%. Telling your main source of revenue to like it or lump it is a bold strategy, let’s see how it plays out for them.
5. New Apple TV+ boss. Oliver Schusser, Apple’s VP Music and Beats, will take on oversight of the streamer. It’s the latest shakeup since Peter Stern, one of Apple’s top subscriptions executives, resigned. Apple TV+ has had some big wins — Ted Lasso was a phenomenon, and it won an Oscar for “Coda” last year — but its viewership numbers have been described as a “rounding error.”
6. Cook’s pay cut. Tim Cook is taking a 40% pay cut, at his own request, after activist investors raised a stink about Cook’s compensation. Before you start a GoFundMe, his salary is still $49 million a year, so we’re pretty sure he’s going to be able to make rent this month.
7. Guarding Zuck. Brooks Scott is a former state trooper who spent time as an executive protection manager at Meta. What’s an executive protection manager, you ask? Basically, he was a part of Zuck’s security detail. He tells us what the job was like, and how he knew he needed to leave to find a job he loved.
8. H-1B blues. The US’s mismanaged visa system already stymies the American tech industry’s ability to remain competitive on the global stage. Raising the cost of the H1-B visa used by foreign-born tech workers during a massive season of layoffs makes a bad situation worse.
Odds and ends:
Bill Gates attended the 2022 TIME 100 Gala on June 08, 2022 in New York City.
Dimitrios Kambouris/Getty Images
9. Bill Gates: Still a nerd. During a Reddit AMA, Bill Gates revealed he’s still Team Android — his daily driver phone is the very dorky Samsung Galaxy Z Fold4. It’s great to see an icon stay so on-brand.
10. TikTok’s “food godfather.” Meet Keith Lee, the pro fighter who has become the savior of local Las Vegas restaurants in a matter of months thanks to his wildly entertaining food reviews.
Curated by Jake Swearingen in New York. (Feedback or tips? Email email@example.com or tweet @jakeswearingen.) Edited by Hallam Bullock (tweet @hallam_bullock) in London.