Tech Deciphered

Another election year and it’s already a dramatic one. Biden vs Trump turned into Harris vs Trump. An attempt on Trump’s life. What’s next? This episode will focus on the implication of the elections for Tech and its ecosystem in the US and globally.

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Our show: Tech DECIPHERED brings you the Entrepreneur and Investor views on Big Tech, VC and Start-up news, opinion pieces and research. We decipher their meaning, and add inside knowledge and context. Being nerds, we also discuss the latest gadgets and pop culture news

Nuno Goncalves Pedro

Welcome to Episode 58 of Tech DECIPHERED. Today, we will discuss the US election and what it means for tech. How will the upcoming US election affect tech and the entire ecosystem in the US and globally? To be clear, and just to put a disclaimer, this episode will not focus on policies by the candidates that do not relate to what we perceive to be implications to tech. For example, we will not be discussing topics like pro-choice versus pro-life, and other things that are obviously very central to the decisions that many of you will make in how you will vote for the next presidential elections in the US.

Nuno Goncalves Pedro

At the same time, we will also share with you what we know to the best of our knowledge. Obviously, policies change with time, and proposed policies definitely change a lot with time, as you know, with politicians. There might be things that we will share with you today that might be different when you listen to our episode. We are not responsible for that. People and candidates change their minds all the time, even after they’ve been elected. That’s not our fault. Just with those disclaimers, that’s what we’re going to share today.

Nuno Goncalves Pedro

The third and final disclaimer, obviously, there will be tonality on how we discuss and evaluate some of the policies, and if they’re good or bad or whatever. But from this, you cannot also take a conclusion on, “Oh, I should vote for Trump,” or, “I should vote for Harris,” because no, this is just a view around tech and tech ecosystem. We will share how we perceive the policies and the proposed policies, and that’s literally it. We’re not giving you advice on who to vote for.

Bertrand Schmitt

First, this is a recording made August 28. We’ll try to be as precise and as relevant as of this date. This is before the first debate between Donald Trump and Kamala Harris. As a reminder, a French politician once said that promises by candidates only engage those who listen to them. With that as a reminder, let’s start the topic. Maybe first, we can talk about the official platform. As of today, there is an official platform if we go to the page of the candidate, Donald J. Trump, there is a 20-point page, and there is a more detailed PDF as well on the Trump Republican platform. Some of our points will try to leverage what is on this official platform page, and we will also, of course, try to leverage what was done when Donald Trump was president, because sometimes actions speak louder than words. We also pick what we have heard from the candidates on the trail, if it diverts or if it adds to that platform.

Bertrand Schmitt

On the other side, VP Harris’ platform is not there. As of August 28, there is no official platform on her website, which, to be frank, it’s scary because if you cannot hold a candidate to their promise after they are elected, that’s a tough place to be. Obviously, she’s part of the Biden-Harris administration, so we will leverage for discussion what was done by her administration, what was also planned by her administration, and we will highlight whatever has been shared by her, since she’s running as a candidate.

Nuno Goncalves Pedro

Well, okay. That’s a great start. But based on speeches—obviously, Vice President Harris is in office right now, so she’s been part of a platform—based on what analysts’ say, we’ve looked at a bunch of comparisons across the board for where they stand on a variety of issues. Maybe we start with economic policy overall, and talk a little bit about how we see the Biden-Harris administration, and obviously what things have happened around there. We will later discuss other topics like taxes, labour, perspectives, for example, on gig working, immigration, antitrust, and a variety of other topics. The economic policy overall piece that we will share at the beginning is very high-level, as you will see, then we will go in details into a couple of other areas. Maybe starting on that, Bertrand.

Bertrand Schmitt

Actually, we have two, and when I say candidates, of course, we should think about the ticket, per se. If we take on Trump’s side, what’s interesting with both Trump and JD Vance is that they have both extensive experience in the private sector. Trump, obviously, as a businessman, who built a business empire. JD Vance, as an ex-VC, venture capitalist. Both have been in the trench of what it means to run a business, to be on the board of businesses, to be on the private side of things.

Bertrand Schmitt

On the other end, we have a stark contrast, because both Harris and Walz have actually never been on the private side of things. Harris has been on the legal side as a prosecutor, as attorney general. We have Walz, who had a long experience in the military, followed by running for different position at state level before becoming governor.

Nuno Goncalves Pedro

I would say one parenthesis on JD Vance. He was in venture capital for a short period of time, three years and a half or four years, which is not very long, for venture capital funds are normally 10 years, et cetera. But he does obviously have private sector business experience before that as well. He did write the book, and the book was made into a movie. There’s definitely a lot of private sector stuff in there.

Bertrand Schmitt

That’s true. Actually, I forgot to say that JD Vance also has a military experience.

Nuno Goncalves Pedro

Yeah, he was also in the military.

Bertrand Schmitt

The economic policy, if we look at what has happened under the Biden-Harris administration, I mean, obviously it has been hugely inflationary. The numbers have been terrible. I mean, if you have a basket of stuff to buy at the groceries, you have seen big price increase. Go to McDonald’s or any other restaurant, you will have seen a huge difference in the past four years. Whatever the Inflation Reduction Act was supposed to do, I guess it did the opposite of the name of the act. It was a more inflationary act instead of a reduction one.

Bertrand Schmitt

The latest has been Kamala Harris has shared, or some of her spokesperson have shared that she wants to put in place some level of price controls, which is pretty scary, to be frank. In some ways, it’s typical to first create inflation, and then to claim it’s the fault of the capitalists. If prices are increasing, therefore we need to put in place price controls. I think the last time that there were some level of price controls in the US was a long time ago, in the ’70s. It was not a good outcome, just to be very clear. It has rarely, if ever, be a good outcome if you go to price controls.

Nuno Goncalves Pedro

Yeah, I mean, price controls, I don’t think would be a great idea anywhere in the world. On economic policy, I would bring another element to the table, which is maybe stepping one step above. As you guys probably know, both Bertrand and myself are not American originally. I have since become an American citizen, so this will actually be the first presidential elections that I will have the pleasure and honor of voting in.

Nuno Goncalves Pedro

Bertrand is not an American citizen, but he does live in the US and has lived in the US for a very long time. Coming from different countries, Bertrand’s from France, I come from Portugal, with national health systems. We both lived in China, which is a bit funky in terms of health system. Again, different education systems, et cetera. I’d say the only point I would make is, at least from my perspective, coming out of Europe and having lived in Asia, there’s very little structural support on things that I do think are critical. For me, the three things that are critical, I always mentioned these three things, are health, education, justice. The health, education, justice system in the US is, let’s just say, very private sector-owned. It’s very private sector-led, and it’s uncommon for that in many countries in the world.

Nuno Goncalves Pedro

It has its pluses and minuses. But if I were to look at the minuses, the fact is, if I’m an American citizen, the level of protection I have in terms of, for example, having a health scare or whatever is not really comparable to, for example, I’m a Portuguese citizen, I live in Portugal. I do think there are a lot of factors that are put into economic policy to make some of these elements work in the economy, which, to be honest, the Democrats have had probably a better track record than the Republicans have had.

Nuno Goncalves Pedro

The whole notion of you take care of yourself, and if you have health issues, take care of yourself, and if you have diabetes, you take care of yourself, is very much a Republican speech motto thing. On the Democrats side, there’s more of this level of protection for at least certain elements. Now, we can have, as Bertrand was saying, also an argument that there’s been too much spend. The government is overspending dramatically. We have money that we don’t have the right to spend. We’re borrowing.

Nuno Goncalves Pedro

What happens at some point? Does the country default? What happens? There has to be somehow more of a moderate view on what is important and what is essential to citizens or not in the country. I do agree with the point that you were making that there has been extreme spend in US under this administration, too much spend under this administration. But at the same time, there are things that need to be taken care of in the US by the states, by the government, and particularly by the federal government in this case, because we’re discussing a federal election, that honestly do require spend. Sometimes I think the Republican piece of discussion is a little bit like, “Oh, no, we’re a capitalist country. Everyone takes care of themselves.” That’s not how a country should work. Why do we pay taxes? I think there should be something a little bit more in the middle.

Bertrand Schmitt

My take at this stage is that a lot of people talk about where is the money coming from, do we increase taxes? There is very little discussion on how well the money is spent, when at the end of the day, that’s all that matters. How well is it spent? My worry, and we’ll talk a bit on more specific points, but there are very clear specific points on, for instance, high-speed broadband or electrification of the US, where billions have been invested by this administration, Biden-Harris administration, and there is absolutely nothing to show for.

Bertrand Schmitt

That’s for me what’s totally scary, because when stuff is clearly identified, four years after, you see zero in terms of returns after spending billions. That, for me, is for sure the scary part, and a big question. I think there is some level of, from my perspective, a clear dysfunction overall, not just this administration, by the way, but there is, overall, a clear dysfunction. I think there should be way more discussion about how well is the money spent, and how well invested it is. I think, unfortunately, it’s not discussed. It’s more how much money do we tax, where should it go, and not, has it been well spent? My personal worry is that the majority of the money is actually not well spent.

Nuno Goncalves Pedro

I think that’s a good segue to the tax discussion. Let’s start exactly with the point you’re making, which is, I think of the countries that I’ve lived in, probably this is the country where I’ve seen the most delta between taxation and what’s deployed into stuff that you can actually see as impact. There’s a lot of leakage in deployment. Just to be clear, I lived in China, for example, like you did. There are other types of leakage in China, but the leakage here on tax credits, I mean, I live in California, you used to live here, Bertrand. It is absolutely incomprehensible where some of the taxes are going, because infrastructure needs a tonne of maintenance. Everything that gets done takes a tonne of time to be done. It’s super costly.

Nuno Goncalves Pedro

I mean, there’s all these incredible cases of the million dollar… Was it the million-dollar toilet in San Francisco or something? The way it gets deployed or something, it’s mind-boggling, and it is significant. I know people that left this country because of that, that left this country because they’re like, “I’m paying taxes. I don’t mind going somewhere else and pay even more taxes, but I know it’s being deployed. I know I have a national health service that takes care of me and takes care of other people. That mostly works. I know there’s education, guaranteed K-12, which is pretty decent. The variability is not huge across the board. I know where my taxes are going.” I think the accountability of taxation than in deployment is something that’s very interesting and very important to me. This country is definitely messing it up.

Bertrand Schmitt

It’s very surprising. I cannot say I’m a big fan of the French’s quasi-socialist economy, for instance. But if you pay more taxes in France, I personally feel you also get way more in return. You have functioning roads, you have high-speed rails, you have a great aerospace industry. Look at if you compare Airbus to Boeing, obviously, SpaceX is in the US. Yeah, that’s really a big question. Especially, I would say that one thing that personally surprised me was Kamala Harris’ support for the equality of outcome, not equality of chance, but equality of outcome. Because if you start with that mindset, and that started with a presidential election in 2020, that’s pretty scary. Because if that’s your mindset, if you want an equality of outcome, you are going to tax even more. Obviously, I don’t believe equality of outcome will work. That’s a scary part.

Bertrand Schmitt

If we go more precisely, it seemed to have been endorsed by Kamala Harris, it’s the last Biden-Harris administration proposal to increase corporate tax, to increase income tax. The worst of the worst is to dare to do a tax on unrealised capital gain. That one is like, from my perspective, I mean, batshit crazy. I will not use any other word.

Bertrand Schmitt

I’m coming from France, where we used to have a wealth tax, which had so many negative effects. The first negative effect was a tax that costs more to the state than it gained. Because people left France because of this tax. Wealthy people left France, and ultimately, France got less tax as a result of imposing a wealth tax. This is not only very bad in principle, but realistically it never works, but it certainly serves to damage the country. For me, that’s the most scary proposal of all. This is, as of today, seem to be endorsed.

Nuno Goncalves Pedro

This is to the best of our knowledge, right? I wouldn’t be shocked if she steps back a bit on that, but we will see, particularly in realised capital gains. A lot of people is like, “How does that work?” I have this stuff in stock—like Elon Musk has all this stock—and it’s worth something. Probably he’s getting loans from banks to do things, et cetera. Correct, he is. But think about, for example, the startup world, the world that we occupy for the most because we’re in venture capital. If I’m a founder of a company, I start the company, and sometimes I get paid literally zero when I start a company. At some point, I might get a meagre salary, and then that salary gets a little bit better and better, but it’s never a great salary. My compensation is I started the company, therefore, I have a big portion of the company in equity.

Nuno Goncalves Pedro

As I go through time, that portion of the company decreases because I’m raising money from third parties, and therefore, I have less and less ownership of that company. But let’s say I have, I don’t know, 20% of the company at a certain point in time. The company, as it goes through rounds of financing, is valued at different amounts. There are two types of valuation. There’s the valuation that’s done by investors that come in to get preferred chairs, and there’s the so-called 409A valuation, which is a valuation that’s applied because you have to give options to employees and other things to stimulate and give them as benefits.

Nuno Goncalves Pedro

If that valuation at some point, the valuation is always going higher. If the valuation at some point is higher, you’re being taxed on that increase in valuation on equity that you have done nothing with. You have equity in the company, but you have not done anything with that equity. That destroys that market. What’s my incentive? I’m a founder, and I’m getting taxed on stuff with cash I don’t have, because I haven’t sold the equity. In some case, I’m going to keep that equity for the next seven, eight, nine, 10 years. That part is what Bertrand is saying is idiotic. I think a similar thing is being done in the UK right now, which is creating a huge amount of noise and complaints and whatever. I looked at something recently, because people are, “Why does this matter?” Well, it matters for a variety of reasons. It matters because it has huge implications on the ecosystem and startup VC. I mean, it’s huge. I mean, Silicon Valley, this would be huge in Silicon Valley.

Nuno Goncalves Pedro

It has huge implications because the US has a tonne of millionaires. To this day, I just saw a chart from, I think, 2023. It’s net positive, the US. There’s more millionaires coming to the US than leaving the US. Last year, according to that chart I saw, the US was second in the world, only beaten by the UAE. I think UAE had a net positive of 7,000 millionaires. US had a net positive of 4,000 millionaires. For example, China’s last. China’s net negative, the most net negative. It’s in the top 10 of net negative. Portugal is in the top nine of net positive. It’s in ninth place. Of the top 10 of net positive, it’s in ninth place. What do you think would happen as well to millionaires? Because a lot of these people have participation equities in companies, the thing, whatever, your tax on unrealised gains.

Nuno Goncalves Pedro

I think that would be a massive destruction of value, and it would have a huge impact in tech ecosystem for sure. Extremely negative. I don’t know how we would go around that. How would we figure this out? I’m sure there are lawyers already thinking through that, but how would you work around these kinds of things? Going forward, it’ll have implications on VC funds, and how we hold the stock at because we would have to pay taxes ourselves, but we haven’t exited the company. We have the equity in our books, but we can’t do anything with that equity, either. We only do when there’s an exit, but then we have to pay taxes on it? This is dramatic. This is absolutely dramatic, and it’s absolutely idiotic in my perspective.

Bertrand Schmitt

Of course. The other piece, as you said, one of the biggest issue in private equity in venture capital as an entrepreneur is that the stock is not liquid. If you have to pay taxes, you cannot sell your stock because there is still not yet a market for it. Because by definition, it’s a private stock. It’s absolutely huge trouble. Are you forced to borrow to pay your taxes because you cannot sell your stock? Is everyone selling their stock at the same time every year to pay taxes? It’s destroying the valuation. It’s very shocking for me that there is even a discussion about this.

Bertrand Schmitt

As you say, for sure, there would be fewer millionaires or billionaires coming to the US. I mean, they will not come any more. I’m sure they were bringing not only cash, but their smartness and knowledge to the US. That would be a big issue. I certainly hope there will be a dramatic change ASAP on Kamala Harris on this part of our platform. But right now, that’s there, and that’s a big issue for anyone involved in entrepreneurship, from any side of the puzzle.

Bertrand Schmitt

On the other end, we have Trump proposing personal tax cuts at federal level. There were also some deductions that were set to automatically expire that would be probably extended. That actually is on Trump platform. These tax cuts would not be extended under Kamala Harris’ administration. I was surprised to hear that experts estimated this to be a 20% tailwind for the market, this personal tax cut. This simple one, once it’s expired, would have a very dramatic, immediate impact on the market. Trump is also planning to cut even more corporate taxes. I think the agenda could not be more stark in terms of their opposition on taxes.

Nuno Goncalves Pedro

It’s opposite in many ways, yes. It’s historically been one of the big things between Republicans and Democrats ever, always.

Bertrand Schmitt

True.

Nuno Goncalves Pedro

But in this case, to your point, it’s even starker, right?

Bertrand Schmitt

I would say, one piece I have not heard any candidate talking about that for me has some importance is the IRS Section 174 part of the code that has started to impact small businesses since 2023, if I’m not mistaken. This one is creating huge trouble for entrepreneurs because they have to, instead of deducting, amortise research R&D expenditures. That has a huge impact for a lot of business that are not yet profitable from a cash perspective, but are considered profitable from a tax perspective, and therefore end up having to pay taxes when they are not generating cash.

Bertrand Schmitt

I know a lot of businesses have been very significantly impacted. That’s also causing a lot of issues in terms of competitivity of smaller tech businesses in the US versus basically anywhere else in the world. I certainly hope candidates are going to work on it and change that. But so far, I’m not sure I’ve heard anything about it.

Nuno Goncalves Pedro

Maybe moving to labour, and that includes gig working. Vice President Harris does seem to be, obviously, more on the side that gig workers need to be treated more and more as actual workers.

Bertrand Schmitt

Employees.

Nuno Goncalves Pedro

As employees, effectively, with broader protections, and around what worker classification means, and how all of this works. Obviously, as always, the Democratic Party is much more on the side of unions, in principle. This has significant implications. I mean, both of us are VCs, just to be very clear. Hopefully, we don’t have too many biases, but I’m certainly investing in companies that have a significant part of their deployment is based on the fact that they can do 1099s, people that are seen as contractors, and sometimes they can do W-2s.

Nuno Goncalves Pedro

In this case, this company does both. The company has just got into someone’s pressuring them, in San Francisco County, whatever. It’s all sorts of things going on around this gig economy piece. Now, are there elements of the gig economy that need to be a little bit more thought-through? Yes. I do believe a lot of the elements of gig economy that need to be more thought-through should be thought-through for any person that is a citizen. In some ways, we’re trying to go after the gig piece because employers are easier to go after. Going after a corporation is probably easier to go after.

Nuno Goncalves Pedro

Obviously, former President Trump had adopted rules that made it easier for businesses to classify workers as independent contractors. He’s not a big fan of unions, as you can imagine.

Bertrand Schmitt

Actually, on this point, Trump was for the first time, there was a very visible union, Teamster Union, speaking at the Republican National Convention.

Nuno Goncalves Pedro

Interesting.

Bertrand Schmitt

I would say, for a Republican candidate, Trump is probably the most friendly to union workers of any Republican candidate ever. I think there is actually quite a significant change that is not widely acknowledged that union workers in industries, not in government—in government, I’m pretty sure they favour Kamala Harris—but in industries, I think there has been a very significant change where union workers are actually more massively voting for Trump than Kamala Harris, and there is more and more official support.

Nuno Goncalves Pedro

Are you saying overall, they would vote more for Trump than for Kamala more than before the delta would have increased towards Republicans?

Bertrand Schmitt

I think union representing industries—not government—employees are probably going to vote way more for Trump than Kamala Harris.

Nuno Goncalves Pedro

Okay, I’m not sure. It’s interesting to see where we end up once election day comes. But I do feel that part of this is, again, historical. The US historically has had very low unemployment based on a lot of sub-employments or under employment. People that have three, four jobs at the same time, they’re getting shifts here, shifts there. They’re not really employees of any company. They don’t get benefits through anyone.

Nuno Goncalves Pedro

I understand that, obviously, the Democratic Party and NDPRs believe that the situation should change, and that people should have employment and should have a protective net in terms of how that employment is done. Obviously, on the broader side, things have always been a little bit more around.

Nuno Goncalves Pedro

It’s the country. It’s a capitalistic system. This is how the country has had such low unemployment. This is how the country has had such low unemployment rates. Unemployment is part of the equation. If we had all these things in place, employers can’t employ people, and therefore, unemployment has to go up. It’s a fundamental religious fight almost on this. There’s a very different view on what’s at stake here.

Nuno Goncalves Pedro

I think in Europe, if we look at Europe, the right side and the right-wing parties versus the left-wing parties, certainly in the middle are the Social Democrats and the Socialists. They’re okay-ish in the middle. They do believe in protections for employees and all that stuff, et cetera.

Nuno Goncalves Pedro

The battle is quite a little bit in the middle. Here, we have a little bit more of an extreme battle. I think it does come from the notion that the US is in a very different place in terms of worker compensation, how people are treated as contractors, what rights are they entitled to, et cetera. There is a philosophical issue here.

Bertrand Schmitt

Totally. To be clear, I think flexibility in the US is flexibility of work is a feature, not a bug of the system. Ultimately, my guess is that the Biden-Harris administration or Kamala Harris-Walz and possible future administration wants more to follow the European path. Coming from Europe, I’m certainly not excited by this direction, because I personally think some of these choices and decision have a real cost to the economy.

Bertrand Schmitt

If you look at how Europe has grown, actually experienced lack, of course, compared to the US for the past 10 to 20 years. It’s very stark. It’s absolutely very stark. You can see that the efficiency in Europe has gone lower and lower. Productivity of workers has gone lower and lower. I would be really scared, personally, to go in the direction because I think it has been tried, and it has been shown it’s not working. You can say that, “Yeah, it’s harder here in the US.” Sure, but at least there is more wealth to go around. But at some point, it will come to each personal opinion.

Nuno Goncalves Pedro

It’s sad that we can’t get to a more moderate view, I think, would be my comment. It’s actually around most of the points we’re going to discuss today. Because honestly, I do think workers should have more protections in many cases. But at the same time, I agree with you, Bertrand, there are situations in Europe, in many countries in Europe, where you can’t fire people. You just can’t.

Bertrand Schmitt

Yeah. I can tell you very clearly from an entrepreneurial perspective, as a result of that, a lot of companies are making the decision not to grow as fast because they cannot take the risk to try to go too fast, and if stuff don’t work, you have to scale down, but then scaling down costs you so much money. You cannot afford it any more. You actually go bankrupt scaling down the business, where in the US, you can scale down the business in a matter of two weeks, save the business and turn it around, and basically manage the up and downs results of the global economy, which you cannot control on your own business and readjust.

Bertrand Schmitt

I have seen again and again that, at least in Europe for the growth economy, it’s simply not working. You cannot grow as fast in Europe because of these regulations than in the US. Another side effect is that it’s very slow to hire people because everyone has to wait for two, three months to give their resignation, leave the business. When you hire people, it takes a lot of time to hire people. This is again connected to the protection afforded, and you cannot fire too fast. But as a result, even if you wanted to hire, and you would take the disproportionate higher risk to hire fast, like in the US, you cannot because people cannot join you so fast. You will be limited practically on how fast you grow.

Bertrand Schmitt

Ultimately, if you have a business A in the US, and B in Europe, that is targeting the same market, has the same access to capital and stuff, you might deliver a much better result in the US simply because of the environment. I’m not even talking about also places like China, where you could also grow very fast. It’s a very tough place to be. At some point, you have to think about being globally competitive, and I think that that would be a mistake not to think about it.

Nuno Goncalves Pedro

Correct. I mean, it’s anecdotal. I do ask some gig workers, obviously Uber drivers, Lyft drivers, people that do any type of Taskrabbit, whatever. The feedback I systematically get is if the trade-off is there are fewer jobs available or whatever, honestly, I’m fine. Now, is there minimum benefits and minimum things that you need to put in place for these workers, even though they are independent contractors? Absolutely. You should. But I don’t think it’s going to be, honestly… Between you and me, Bertrand, I don’t think it’s going to be government regulation that’s going to make that much better or not. It’s going to be just natural competition if there are players in the market.

Bertrand Schmitt

I see so much flexibility in gig working, if we go on this specific topic. I mean, you have the ability to work whenever you want. If you’re an Uber driver, you can buy your own car. Not so long ago, you wanted to drive a taxi, you had to pay a medallion. You had to spend enormous amount of money. You have to get a loan, to be a shark loan, typically. You will be forced first to work for a taxi companies that will pay you very little. Basically, I don’t think all of this protection and so much were so great if you are really on the worker side.

Bertrand Schmitt

I think now, everyone has an opportunity to start quickly. It’s not a few taxi company bosses who are going to basically take advantage of you. I think the current system with Uber or Lyft is much more competitive, and give an opportunity to anyone. Personally, I’m very much in favour of this system. One thing I want to say, I think the overall functioning of the system in the US is not very efficient because a lot of it is dependent on the company paying for health insurance for different things.

Bertrand Schmitt

Instead, where I come from, Europe and other places, you have a system that is much more independent of the companies. If you’re a freelancer, and you want to work on your own, it’s very easy to get access to all the protection you want. You just pay a bit more on top of it, and you will get access to any protection. It’s very different. It has to go from the company that hires a worker.

Bertrand Schmitt

This is actually a weird distortion of the market coming from World War II, when employers were mandated in the US to not increase salaries to limit inflation. As a result, employers came up with some ideas to compete against each other by providing stuff on the side, from health insurance to other things. This is a very weird distortion of the market that happened, guess what, again, by government intervention. Where now, we have this system in the US where many things depend on the employer, making things more difficult in some ways for independent contractors.

Nuno Goncalves Pedro

A lot of the discussions we have today, it’s a country that has, at moments, at some point, historically, a very top-down industrial policy thinking, but then very large time periods of a couple of decades of bottom-up thinking. Because of the system in the US, with states, federal government, cities, counties, all of that. There’s all these flaws in it. It’s a very bottom-up thought. It has unintended effects that nobody ever thought about. People obviously take advantage of it, because the things are there to be taken advantage of. In some ways, I think part of how the country has evolved over time.

Bertrand Schmitt

On this point, it’s something we have not talked before, but the incredible complexity of the tax system in the US, for instance, is insane compared to most other countries. We are talking about a complexity of the system that is 2 or 3x more than most other countries, just to be clear. Most Americans don’t realise how complex is a system versus other countries.

Nuno Goncalves Pedro

Moving to immigration. Here, maybe we should focus around immigration that has an impact in tech. We’re talking about more specialised immigration.

Bertrand Schmitt

Yes.

Nuno Goncalves Pedro

I’ll throw the first stone. I mean, Trump was not cool when he was in power. Now he’s showing more openness around the H-1B visas, which are the specialised visas that are capped, for those who don’t know, which has been a huge engine of growth in Silicon Valley. There were some stats posted, I think it was probably around 2014, ’15, that for each H-1B person, there were 10 jobs created. I mean, that’s silly.

Nuno Goncalves Pedro

I think the cap back then was 60,000 H-1Bs. It’s silly. He wasn’t very kind, and he was tough on all immigration. In that sense, everything was slowed down. Green cards were slowed down, specialised visas were slowed down. Obviously, green cards are very important as well for specialised workers, because people want to be permanent residents.

Nuno Goncalves Pedro

Citizenships, I’m not sure if they were slowed down or not when Trump was in power, but I’d be shocked if they weren’t. He wasn’t very friendly to us here in Silicon Valley for sure, and had obviously a huge impact in that sense. Now, he’s speaking to a different tune, with JD Vance as the VP. Maybe they’re speaking to a different tune, but I’m not sure he has an amazing track record to show for on that side of the fence.

Bertrand Schmitt

That’s clear that it was not good in terms of legal immigration. It was also very strong in terms of illegal immigration, but this one has less direct impact on tech. It’s very sad for me that usually, those two go together. Either you’re open for legal immigration, and you’re also open for illegal immigration, or you are close to illegal immigration, and you are close for legal immigration.

Bertrand Schmitt

It’s very frustrating the two, illegal and illegal immigration, have to be linked somewhat by candidates. It’s either everything is open or everything is closed. I think it’s a dumb burst of [inaudible 00:32:53]. I’m personally quite happy to see and hear that Trump seemed to have a change of mind in terms of illegal immigration. He was extremely clear in an interview on the All-In podcast that he was open to legal H-1B immigration. I think it was before he picked JD Vance as his VP, so I’m definitely hopeful.

Nuno Goncalves Pedro

They need to believe him, but yes.

Bertrand Schmitt

Yes, of course.

Nuno Goncalves Pedro

We need the politicians, both sides. This is not a slap on Trump. I mean, to be honest, we need to then believe them. Everything we’re discussing today is we have to believe that they’re saying what they’re going to do, as I at the beginning of the episode.

Bertrand Schmitt

I would say, so far, my impression is that he tried to do what he said he would do in his first administration. I have some hope that if he claims to have a change in mind on this specific topic, it’s real. I think there must be some admission that if you want some support in Silicon Valley, you have to be more flexible on this. I think he’s trying to get that support, and he has more people around him coming from Silicon Valley. It might have helped change his mind, not just political calculations.

Nuno Goncalves Pedro

Yeah, this is definitely a big deal that matters. I’d say, probably, Vice President Harris would be a clearer view on this, as in what it affects tech, which is legal immigration, specialised workers, et cetera. Probably, she would have a stronger stance. We’re not going to discuss safety and security at the border, illegal immigration, and all that stuff, because as we talked about before, it doesn’t have a direct impact in technology for sure.

Nuno Goncalves Pedro

Shall we move to antitrust? Maybe just to frame my antitrust, this is obviously the ability for companies to be split because they’re too big, and they have monopolistic control of a specific market. But it also affects, for example, approvals on mergers and acquisitions. It has huge impact in tech in that sense as well. The ability for big tech companies to buy small companies, or other big companies, or do big acquisitions, and all of that.

Nuno Goncalves Pedro

I think on this, it’s pretty clear that with former President Trump being elected, it would be easier to get a more lenient antitrust rulings on a lot of things, and a lot more M&A would be approved. I had a conversation with a founder that I will not name, and he was telling me… Back then, President Biden was still a candidate, and he said, “I will vote for Biden, I won’t vote for Trump. But honestly, if Trump is elected, it will be much better for my company because I’m in the eye line of a top tech company to be acquired. The probability that it will get approved under President Biden is very low, and the probability it will get approved under President Trump, and that DOJ and stuff, it’s probably very high.” He’s like, “I’m going to vote for one, but I hope the other one win.” I was like, “That’s tough.”

Bertrand Schmitt

It has been a virtual ban on big tech acquisitions. If you are an entrepreneur or a VC in tech, that’s practically the end of the world. Because it’s either IPO, in a minority of case, or selling the business typically to someone with a lot of money if you want a big exit, so it will be to big tech companies. If suddenly, big tech companies cannot make acquisition, you cannot exit companies. If you cannot exit companies, you cannot provide a return, nobody can get rich, and nobody can reinvest. It’s a total nightmare right now. Again, as you said, it’s managed by the FTC, the DOJ. If we take the FTC, the chair, Lina Khan, named by President Biden, this administration has been totally following this policy. Interestingly enough, JD Vance was one of the rare Republican to support her. This is adding a level of intrigue to what will happen in a Trump-JD Vance administration.

Bertrand Schmitt

My guess is that JD Vance will fall in line with Trump policy, but we will have to see. We could also imagine that a more favourable acquisition policy could be connected, as it come out to other behaviour expected from big tech companies. I’m not sure it will be a free pass, but I would expect definitely a much easier situation and better outcome for entrepreneurs and VCs if the policies were changed.

Nuno Goncalves Pedro

Here, just to be thoughtful around the discussion, antitrust is obviously related a lot to the regulatory environment and regulation as we discussed in the past. It’s pretty structural part of regulatory environment. It’s who is controlling a specific market or who are the players that are controlling a specific market. Just to be a little bit more nuanced on the point, regulation is needed and things need to be regulated. There are things that are absolutely unacceptable. But I think what we’ve seen in this country in terms of antitrust policy is aggressive antitrust policy tends to not do much on actual regulatory constraints to the big guys. What it ends up actually doing is creating regulatory capture, which we’ve talked to in a previous episode. It creates the ability for the guys who are dominating a specific space to win in that space. It’s almost like a barrier than to entry. You’re like, “How does that work?”

Nuno Goncalves Pedro

If Google or Facebook cannot buy a smaller company, they cannot. It’s fine. They’ll live on. They won’t die. The small company might die as well. That space might implode in of itself. There are a lot of implications here that are pretty systemic in thinking through the system in a more complex way. These are very complex systems that are interrelated.

Nuno Goncalves Pedro

Startups with bigger tech companies, with investors, both private equity, venture capital, hedge funds, the public equity markets, all these things are related to each other. There are very systemic ripple effects once, for example, stuff like this is happening where antitrust is being more aggressively applied to the market. Again, I don’t want to be a sceptic, but I think in this country, you’ve seen it. If antitrust is very aggressively applied, the big guys win and there’s more regulatory capture in those industries. That’s it.

Bertrand Schmitt

I think that you’re totally right. That’s my big worry, when they care to wake up in terms of looking at what’s happening in an industry, usually it’s too late. It’s like you attack Google on a monopoly on search in 2024.

Nuno Goncalves Pedro

Well done.

Bertrand Schmitt

Well done. Just 15 years after the fact, maybe, and I’m generous. It’s like what’s going on? It’s like 15 years too late. Is it even relevant as of today? There is, of course, the question of what will you do about it? Do you want to split the company? How are you going to split the company? Even if you split it, is it better or worse? If we look at in the past when there has been the split of some monopolies, if you take some or all, or even the predecessor to AT&T and most telecom companies in the US, the resulting split entities became bigger than the original parent company in terms of revenues, in terms of market cap, and their founders and owners became actually wealthier. It’s not clear that competition was so much improved. It’s definitely raising question about what is ultimate outcome, but what is clear in our industry, keeping as it is today, we’ll start to have a very significant impact.

Bertrand Schmitt

Because if you don’t get exits, if you don’t get cashback from the investment, you cannot reinvest it in new investment. You cannot take risk, thinking that there could not be an outcome in terms of selling the business. 90% of the outcome is selling the business versus IPO. And by the way, IPO have been more rare, because it’s too taxing to go public. It’s too risky and not enough of rewards because of the regulatory environment of the past 15 years. What do you do? Do you stop the whole innovation pipeline that has been the core of the success of the US this past 30, 40 years? When you think about it, this is actually very dramatic. I think we have not seen a dramatic impact yet, because this is quite recent, what happened. But if we got one more administration playing this game, I’m actually extremely worried about where the tech economy is going. As you say, the big ones, the Apple and Google of the world, they would be good. But the rest of the ecosystem changing them? Good luck.

Nuno Goncalves Pedro

I think that’s the key issue that we have, and that has happened when antitrust has been very forcibly enforced. Moving to privacy and the digital divide, I don’t know if there’s a very strong view on what happens on that, but you want to share the SpaceX story?

Bertrand Schmitt

I think here, especially on the digital divide, there was a special program from the Biden-Harris administration to provide high-speed broadband to rural areas. I think there is real value to provide last-minute connectivity, high-speed to places that cannot get it easily. However, what’s very scary is actually this program has disqualified SpaceX to provide a high-speed broadband access and be part of that program.

Nuno Goncalves Pedro

This was the Internet for All, the 65 billion thing?

Bertrand Schmitt

It was a very big program spend, that’s for sure. And to be clear, this program has delivered, I believe, near zero in terms of connectivity after three years plus in activity. We talk about government waste. I mean, that’s one of the best example you can get in terms of government waste. But to think that not only such a total waste, but it actively excluded the best place private companies to deliver on this program is really insane. On top of it, when you think about it, it’s a program that was not needed because actually, private forces were at work to solve this problem, and the way to solve it was not to lay down miles and miles of fibre to nowhere, but to use space as a communication backbone if you want to go into more rural or areas with more limited access. Because fibre is workable in dense urban areas, but it’s not workable in extremely rural areas. You had to add another approach.

Bertrand Schmitt

For me, what’s interesting is that private market forces through SpaceX, I mean, saw that and saw that opportunity and worked on it. Instead of saying, “You know what? We are going to use the best provider for this, if we want to add an additional layer of subsidies.” No, they didn’t use the best provider, and as a result, they have nothing to show for, except paying some companies to lay fibre to nowhere. It’s very shocking because when you have a microscope to go into some programs, you see how bad it can be.

Nuno Goncalves Pedro

Yeah, I think on the digital divide, obviously, President Trump, when he was in power, did a few things, but not significant. I think he was trying to definitely reduce the regulatory oversight capabilities of the FCC. He didn’t invest much, from what I know. The only number I know for sure is 86 million to expand rural broadband through the Department of Agriculture. To your point, I think he was like, “Let’s let the market figure it out and just go after each other and get it.” I have to confess that the telecom market in US baffles me. That I pay the bill that I do, living so close to San Francisco, is mind-boggling to me. It has to do exactly with the fact of what you were saying. There’s no incentive to competition, and effectively, there are de facto oligopolies in certain areas, suburban and rural areas in particular. There’s de facto oligopolies. Maybe there’s a little bit of fight in urban areas, certainly on fixed internet access. But then I can only get high speed from Comcast Xfinity where I live. I can’t get it from anyone else. I could try DSL, some variant of DSL from AT&T.

Nuno Goncalves Pedro

I could try SpaceX as well as a back play, but it’s still not ideal. I love to have options, but I don’t have amazing options. I’m not part of the digital divide issue. We can afford internet and pay for it, and it is what it is. It’s just too pricey, it’s stupid, and it’s not competitive. We’re not here complaining. It is a first-world problem in that sense, but the market is messed up. It’s messed up. It’s too expensive in general, et cetera.

Bertrand Schmitt

I think you’re right. Coming from Asia or Europe, when you see the prices for fixed internet broadband or for mobile wireless, the prices in the US are insane. I’m not even going to compare it to India prices, where it’s probably the lowest.

Nuno Goncalves Pedro

Telecom is a classic example of a regulatory capture. You were mentioning they split into all of this, and then it all came together, and it’s bigger. It’s like the Terminator, right?

Bertrand Schmitt

Yeah, that’s an interesting comparison.

Nuno Goncalves Pedro

Just quickly on data privacy, just a couple of notes. Vice President Harris has supported the President’s call to action to pass federal data privacy laws, and it was linked to an executive order on artificial intelligence that their administration also put forward. We’ll talk about AI later on. On privacy, former President Trump repealed, when he was in power in 2017, an FCC rule that instilled online privacy protections for consumers from Internet service providers. That said, his administration was working on a consumer protection privacy policy in 2018 that never came to fruition. I think on privacy, it’s very unclear if any of the candidates has very aggressive thinking. Obviously, a lot more needs to be done around data privacy, but we don’t probably believe that there is a huge difference between the candidates. Maybe vice president Harris will be more protective and former President Trump will be less, but it doesn’t seem to be a huge area of a fight in terms of policy between both candidates.

Bertrand Schmitt

Yeah. To be clear, I’m absolutely not a fan of what happened in Europe with GDPR. As expected, it went way too far, and it benefited the bigger guys, the Apple of the world, the Meta of the world. I mean, it helped them to reinforce their market position compared to the smaller guys who had fewer data and therefore could not leverage as much in order to deliver advertising. They couldn’t even work together to try to compete against the bigger guys. The end result is a total opposite of what was claimed by Europe at the time. It didn’t create more competition. It didn’t push back the bigger guys. It actually helped entrench the bigger guys who, as usual, could afford thousands of lawyers on the payroll and could go around whatever regulation is put in place and could leverage the fact that there are bigger guys in the space. They have, by definition, more data to play with. They have access. Personally, I’m not a big fan. I don’t think it has helped. I don’t think it has helped in many ways. I know Europeans are more sensitive to that, especially the Germans, for some obvious reasons in their past. 

Bertrand Schmitt

But I don’t think it’s a good reason to not be realistic about the true impact of such regulation. For me, I’m glad that both Biden-Harris administration, and Trump, potential Trump administration, will not try to go the European way.

Nuno Goncalves Pedro

California has done some stuff, we’ll see, but it’s a place where we shouldn’t do dramatic things. GDPR is one step too far, very, very clearly. Free speech. I know this is a pet one for you, so I’ll let you go first.

Bertrand Schmitt

No, I think we already did actually an episode on news. Which episode was it? And the lack of truth in our news. Was it episode 54? I forgot.

Nuno Goncalves Pedro

It was 54. Can you handle the truth? The future of news. 54. Yeah.

Bertrand Schmitt

Yes. You can go back to our episode if you want more perspective on what we think about truth and free speech. Yeah, personally, I feel very strongly about free speech. I think what’s key is to be able to seek the truth, to discover the truth. For that, you need free speech, free experimentation. For me, it’s very critical. Obviously, the Republicans have been way more pro-free speech. If we take a big backer, and we’ll talk later more about the backers of each side, but Elon Musk has been now officially on the Trump side, he is one of the biggest person to push for free speech, and as a result, was a target for the Biden-Harris administration of a lot of lawfare. For me, it’s very sad to see that the Biden-Harris hasn’t signed. Harris-Walz ticket are definitely way more on the censorship side, and we have seen how much the White House have pushed for control, censorship from most major news networks, social network platforms. I think quite recently, Walz have been a very public in his support of a limiting free speech. I think it was before he was a VP candidate, but that was a very scary speech he did on this topic.

Nuno Goncalves Pedro

Actually, I think the case has been heard by the Supreme Court, and I think they ruled in their favour, around the fact that the federal government had actively participated in influencing social media platforms in how they showed certain content above others or certain content wasn’t shown much at all, et cetera, around feedback and commentary, in particular during COVID, that was not favourable to them. It was not favourable to the position that they were manifesting to the market in terms of how the market should behave. We’re talking like this is one of these situations where I feel we need to put a little bit more of a moderate perspective.

Nuno Goncalves Pedro

I think free speech should be given. It is part of this country’s view, and it is part of the First Amendment, and it’s there to be enforced. At the same time, what happens if free speech promotes violence and it promotes bad attitudes? It’s whatever… What then do you do? Obviously, if it promotes falsities and untruths, there are other systems as well. People can take each other to court and all that stuff, but what’s the boundary conditions around it? I think it is a valuable discussion to have. All free speech, and we can say whatever we want is cool as an ideology, but then who has checks and balances?

Nuno Goncalves Pedro

If someone’s saying that’s something that’s fundamentally false, and it affects people’s lives, or it creates an incentive to violence, et cetera. I think somewhere in the middle, as you guys can imagine, I’m a moderate, I’ve said that before, would be how you need to go. You still have to accept that there are people that are going to have views that you’re not going to support. That’s life. But they do have the right to manifest it. Why wouldn’t they not have the right to manifest it?

Bertrand Schmitt

I think that’s important to be able to have frank, open, and honest discussion. Each time a government has tried to limit that, I think we have seen the consequences pretty quickly. On this topic, you could argue that a recent example has been the UK. It feels like since a few weeks, we are closer to 1984. Happening in the UK, if you remember this book, now you get put to jail for two or three years for a comment on social media, while at the same time, bring real dangerous perpetrators of some pretty bad things in order to make space for the grandmother who express a comment on social media who has to go to jail for that for two or three years. For me, this is exactly the logical conclusion of what you describe. Once you start to put a limit on free speech, it becomes pretty bad and pretty hard, and it hits you. That’s why I’m much more on the side of being absolutely for free speech, because the other side is just too scary.

Nuno Goncalves Pedro

Just to be clear, for those of us who haven’t read the First Amendment recently, two threats of violence are outside the bounds of the First Amendment protection. There’s some complexity then around that. What is a true threat of violence? But it is outside the First Amendment, and there have been cases on this, and it’s gone to Supreme Court, et cetera.

Bertrand Schmitt

It has been described very clearly. The Supreme Court has a lot of position on this topic for a long time, so it’s pretty established about what’s okay or not okay. But my take is that what’s okay or not okay as described in the US, in the US system, is where it should be, at least from my perspective. Any change to that is scary. Again, the example of even a country as close to us as the UK, it’s a scary reminder of what happens if you decide to change that. I’m not even going far. It’s very obvious what happens in some truly totalitarian countries. But the things at a place like the UK, this can happen to this level where, to be clear, people were not talking about violence. That’s where it’s scary. You realise very quickly if the law is not clear, if the law is new, it could be taken advantage by some courts.

Nuno Goncalves Pedro

Moving to maybe less complex issues or more impactful, maybe, but less complex, I’m not sure. Who knows? AI. There have been executive orders, actually, former President Trump, when he was in power, did have an executive order on, I think it was called maintaining American leadership in artificial intelligence.

Bertrand Schmitt

It was a very positive order when you read it. It’s not trying to push it back, but it’s more to push it up and push for American leadership and investment in that direction.

Nuno Goncalves Pedro

Yeah. Then there’s the executive order for the safe, secure, and trustworthy development and use of artificial intelligence, which is done under the current administration, Biden and Vice President Harris. I think there’s a lot of discussion around protection of AI, protection of American dominance or American competitive advantage around artificial intelligence. I don’t think this is an area of extreme disagreement between both parties.

Bertrand Schmitt

Yeah. From my perspective, there is quite a stark difference. It feels like the White House has limited capacity, luckily, to push too much legislation. I mean, its legislation is still up to Congress. But I feel that the White House executive order from the Biden-Harris administration has been actually trying to move more in the direction of what Europe has been doing, which is pretty bad around AI. I’m more worried that the mindset of Kamala Harris and our administration would be to keep going further in controlling AI, and I think for all the wrong reasons, just to be clear, I think AI is absolutely not where some doomsayers are saying it is, and it’s not close to be there. The last thing you want at this stage is to push regulation. You want the field to develop, to expand, to grow, to be successful. For that, I believe you need as little regulation as possible. On top of it, I believe there are a lot of existing regulations that if you do AI, you will have to abide with already. Let’s not add regulation until it’s proven it’s really needed, versus just listening to the doomsayers who usually have no clue about what’s happening.

Nuno Goncalves Pedro

On that, probably a former President Trump would be more on the side of not too much regulation, and probably Vice President Harris would be more on the other side.

Bertrand Schmitt

Totally.

Nuno Goncalves Pedro

Yeah, but on the trade side, to my point earlier, they’re probably relatively aligned, trade controls, export controls.

Bertrand Schmitt

I think we might talk a bit more in the China section, but yes. Maybe one other point is that JD Vance has been very pro-open-source AI, which also I believe is a good thing. I think it’s great to have an alternative open-source AI versus only proprietary model, because proprietary models, from my perspective, will only benefit the bigger corporations that can afford billions of dollars of investment. I’m glad he’s on the ticket, at least from this perspective. Maybe on AI to finish, there is a very scary California AI bill that’s also insane. This one is really bad. It’s very dangerous. It’s artificially limiting what AI can do. They want to create crazy commissions and programs as if we are dealing with nuclear weapons. This makes no sense. This is packed by doomsayers. I’m worried, because obviously Kamala is from California, is from the California Democrat establishment. Hopefully she won’t be influenced by this mindset, and hopeful California AI bill will be vetoed by giving you some, potentially it might land on the governor’s desk, and hopefully will listen to reasons. There will be enough influential voters who will push against it, so we’ll see.

Bertrand Schmitt

But that’s a scary development because this one might be even more crazy than the European AI bill, and that’s to say something. To be clear, this could have dramatic negative impact on California competitiveness in the US if this California AI bill is put in place. I mean, many companies might decide to California if they are involved in the act because the risk will be too high for them to stay and be regulated by this bill.

Nuno Goncalves Pedro

Yes. Maybe you can go a little bit faster through some of these, but crypto, it seems like Trump now is pro-crypto. The Biden administration wasn’t very pro-crypto, anti, if anything. But just to be clear, we’re investors. I have investments in blockchain companies, and we hold crypto assets and stuff as well. Just a disclaimer, so people know where this is coming from. But yeah, I think crypto is going to happen no matter what, so you might as well figure out how to create boundary conditions around it, et cetera. Obviously, the use of crypto for avoidance of KYC and all of these other things is negative. There’s a lot of money being laundered and moved around using some facilities for sure as well. There is need for regulation, there’s need for rules to be put in place, there’s need for a variety of things to be done. But on this one, I’m sitting a little bit more on the pro side that maybe things should be a little bit more positive towards crypto. At some point, have very clear boundary conditions as well. I think part of the issue with crypto over the last five, six years, also including former President’s Trump tenure, is there was very little clarity on many areas. 

Nuno Goncalves Pedro

Is this taxable? Is this not taxable initially? Is this okay? Is this not okay?

Nuno Goncalves Pedro

Now we’re getting all this slew of cases being judged back and saying, Well, that this is wrong. You shouldn’t have done that. I think clarity as well probably matters most, even beyond being pro or anti. Let’s be clear, I think, on boundary conditions. The whole crypto situation, it feels to me like, obviously, we have the more positive side on one side and then the less positive side on the other. I think what we’re missing is clarity. It’s an area where being more pro-crypto, anti-crypto, question mark, maybe more pro-crypto is better for investors and the crypto people, those who are involved in blockchain. But I feel for many years, what we’ve lacked is clarity. The lack of clarity goes back to former President’s Trump own tenure in the White House and continue through the last administration or through this current administration, rather. Clarity, I think, would be a good way forward on the crypto side.

Bertrand Schmitt

It’s clear that the current administration has been doing everything they can to destroy crypto. I guess lack of clarity is better than trying to actively destroy crypto. But I agree with you, we need both. We need to stop trying to destroy crypto without any good reason. We need more clarity so that people need to know what are the rules. I think that has been the complaints by a lot of players like Coinbase’s Brian Armstrong, saying, “Hey, just give me the rules and I will play by the rules. But if I don’t know the rules, and you try to hit me left and right without sharing any of the rules, then it’s impossible to do my business.” It wasn’t that, it’s extremely risky to do this business. That’s why many companies left the US because of that risk of being an actor in the crypto space.

Nuno Goncalves Pedro

There’s been a lot of post hoc decisions and rulings, and things that have happened where some of them were blatantly fraud and stuff like that, but others were like, rules were not specified. Now, I’m going after you because I think you broke rules that didn’t exist back then, which is interesting. Maybe we switch topics to the energy, electric vehicle space? Maybe starting with energy, maybe the higher level topic in terms of where they’re headed? Obviously, from a President Trump, not a renewable energy kind of guy.

Bertrand Schmitt

Drill, baby. Drill.

Nuno Goncalves Pedro

Drill, baby, drill. Good. So clear on that. On the other side, we’ve had anything from the Green New Deal, and how do we scale renewable energies. Obviously, from my end, I come from a country that… Portugal, originally, that is, they surpassed 51% in the use of renewable energies within the country by consumers, so what was actually by consumers. In 2017, we had six straight days last year where all the consumption was coming from renewable energies in Portugal, 100%.

Nuno Goncalves Pedro

I feel in Portugal, to be honest, there wasn’t a tremendous amount of government involvement. The original company that runs energy in the country still has a gold share from the state, but it was really motivated by market dynamics, the situation in Portugal, and the use of several other types of renewable energy. Question mark on whether the polls on renewable energies is enough. It’s very clear. For example, in Portugal, we had a very large coal plant that got shut down finally in 2021, 10 years late. We sometimes get things a bit late as well. But that accounted for Portugal for 12% of all the carbon emissions of the country, that plant.

Nuno Goncalves Pedro

Obviously, there are big gains here. There are big wins to be had. But it’s clear that we still have dependency on petroleum and oil-based products. That’s not going to go away. From a cost perspective, it’s still pretty essential. But there needs to be a move, at least in my opinion, towards more renewable energies in this country, even more. I’m not saying that necessarily means I’m siding on current Vice President Harris’s side, but probably, again, in the middle lies the right way to go on the energy side.

Bertrand Schmitt

It’s clear that there is a big gap on the other side. You have the Trump administration that was friendly on oil and gas, that was definitely not supportive of electric vehicle mandate and subsidies on that plan to actually keep it that way. But surprisingly enough, Elon is fine with that. From his perspective, actually, it will provide a more clean competition without any disruption in the real price of gas. I think it’s pretty stark. On one side, you have pro-green, anti-oil and gas, pro-electric cars, as long as they are made by unions. On the other end, you have a more pro-oil and gas position on the Trump side, even support for nuclear energy, actually, and fewer incentives for electric vehicles.

Nuno Goncalves Pedro

Yeah, and nuclear, I know you’re a huge fan of it.

Bertrand Schmitt

I am.

Nuno Goncalves Pedro

France, a huge fan of it as well. Certainly from a startup and venture capital perspective, it seems to have a renaissance of sorts in the last six years in the US. If I go back five to six years. Basically, Y Combinator, all the cohorts had several companies doing nuclear reactors, et cetera. The MARVEL Project, which I think was initially sponsored by the Department of Energy, has rippled a lot of startups out of it. There has been a spawning of startups out of it. There’s funding in it. I’m now starting to see companies that are coming up for Series Seed or Series A rounds at scale. We have a lot to go, but definitely, it seems to be a bit of renaissance of nuclear in the US, which I’m sure you will welcome.

Bertrand Schmitt

I’m French, and I think that one of the best example of a good governmental policy was a French investment going all in on nuclear in the ’70s, ’80s, which resulted in independence from an energy perspective. Mostly independent, with nuclear providing up to 70% of all electricity in France. France has been, from that point on, the most green country on Earth, probably, at least of a reasonable size country. I don’t think we have found any other source of energy as of today that is as a safe, as cheap in terms of resource, and as cheap in terms of overall cost of electricity, as long as we don’t have a long list of unnecessary regulations on top of it. These so-called regulations were just added and pushed by the green movement in order to make nuclear less competitive. What’s interesting, in terms of safety, is that with the latest generation of nuclear reactors—like the ones that are being deployed right now in China at scale, we’re talking about hundreds plus reactors—we can have reactors that are now extremely safe. Meaning, that if there is a breakdown in the reactor itself, now you have reactors that are going to safely shut down by themselves.

Bertrand Schmitt

In the past, they used to necessitate some external source of energy to provide a safe shutdown of the reactor. It’s not the case any more. It’s actually changing dramatically the nuclear energy business model, because you have completely decreased the risk level to zero. That changes everything, because let’s not forget, nuclear is a source of energy that is non-stop. It doesn’t stop when there is no wind, it doesn’t stop when there is no light. It’s always on. It takes very, very little space. You need very little resources. Ultimately, you can even use what’s left from a nuclear reactor to be used in some other types of nuclear reactor. It can be a very, very efficient process.

Nuno Goncalves Pedro

Maybe switching gears to China. Now, this is actually one area where probably Vice President Harris, and former President Trump will have fewer disagreements. We have to give credit where credit is due. I think it was under former President Trump’s administration that he went after China with tariffs, and a bunch of sanctions and things that were really put in place. I think the Democratic Party, President Biden, and Vice President Harris have followed suit on it. I don’t see dramatic differences between both sides in that sense. It feels both of them are going to be basically a relatively tight point of view on how China plays in the global economy. There will be pretty aggressive trade controls on China, not only on exports from the US to China, but also from importing stuff from China into the US. It doesn’t seem super mega dramatic, in terms of policies on both sides. This is probably one of the few areas where there’s relative agreement. As we know, Donald Trump is a pragmatist, so we don’t know where this will end up. Things might change, but it seems like this is an area where they’re definitely in agreement.

Bertrand Schmitt

Yeah, there seems to be an agreement. I would say, what’s more extreme is actually the stance of the two VPs. If you look at Walz, he apparently has a history of deep China ties, spending quite a lot of time organizing “exchange programs” in the late ’80s, early ’90s. We are talking post-China, Tiananmen Square incident. It’s surprising how long, how much time he has spent. On the other end, JD Vance has been pretty much very against China as a dominant power, so we will see. As you said, Trump started changing the view of the establishment against China in the US, and at the same time, he’s seen as a pragmatist. But it seems that he’s planning to put more tariff on goods from China that we currently have.

Nuno Goncalves Pedro

And TikTok.

Bertrand Schmitt

What about TikTok?

Nuno Goncalves Pedro

This is what we all want to know. TikTok. Can we keep TikTok, please? We want TikTok.

Bertrand Schmitt

I’m lost at this stage. Who wants to stop it, keep it going? It looks like they’re both happy to keep it running for the elections?

Nuno Goncalves Pedro

Yes.

Bertrand Schmitt

Both elections, I have no clue. I think it’s definitely a clear question for both candidates, but I don’t think anyone is committing at this stage.

Nuno Goncalves Pedro

We will keep our TikTok. That’s great. Let’s move maybe to DEI and ESG. DEI, for those who don’t know what it stands for, it’s Diversity, Equity, and Inclusion. ESG is Environmental, Social, and Governance. These are measures that have been adopted throughout the world, not just in the US, both around DEI and ESG, to enforce more equity or diversity on the one hand, on the other hand, more around either socioeconomic benefits or environmental benefits, et cetera.

Nuno Goncalves Pedro

Some examples of this might mean some enforcement, like we see in companies that are in a couple of stock exchanges. You have to have a minimum number of board members that are female. But there are countries that have obviously put in place a variety of rules around this. Very opposed views on DEI and ESG by former President Trump. I think Vice President Harris and President Biden have been all-in on this DEI, ESG trend, and former President Trump has been all-out on it. It’s a good way of saying it.

Bertrand Schmitt

Yeah, this is quite representative of the woke movement at large, DEI and ESG. Some of these policies have been proven in the US to be illegal. To be clear, you cannot discriminate when you hire people, when you promote people, when you fire people in the US. You cannot discriminate based on multiple categories: from sex to race to different things. That’s why some universities lost their appeal at the Supreme Court and had to change their hiring policies for new students.

Nuno Goncalves Pedro

For our listeners, because they may get confused, you can’t discriminate both ways. You can’t discriminate because the person is African-American negatively, but you can also not discriminate positively. Positive discrimination being also illegal is basically what was [inaudible 01:09:44] on. You can’t give a benefit because someone is African-American, Latinx, or whatever.

Bertrand Schmitt

Yeah, because by definition, positive discrimination is going to discriminate negatively on everybody else. Let’s not forget that piece of the puzzle, and that’s what Supreme Court in the US judged upon. So yeah, very clear opposite. Of course, this has an impact on businesses. At the same time, let’s not forget, especially in the US, most of the DEI, ESG regulations were not really low, per se. It was more what some investors have been pushing, what some NGOs have been pushing, some shareholders. But there is no legislation coming from Congress on this topic.

Nuno Goncalves Pedro

This is an area where I think both candidates are wrong, and let me explain why. I feel the piece of the puzzle that need to fit in is in the middle. There are some guardrails you need to put in place, both on the DEI and ESG, and behaviours that absolutely are unacceptable on both ends. But at the same time, I think having too much positive leaning in or too much negative leaning out is not advantageous. In some ways, the notion that by having some of these metrics, and big corporations are saying, “Oh, I’m doing this on DEI, I’m doing this on the ESG,” I apologise in advance for the terminology, but this is like putting lipstick on a pig. Not many structural things are being done, really, by some of these corporations. They’re filling checklists, they’re BS-ing some of their numbers, they’re massaging something else. They’re using it for marketing purposes. A lot of this has come out when people are using this specifically for marketing purposes. It’s very hypocritical, because maybe they were the guys who created the problem in the first place. In certain areas, that’s certainly the case, for example, in environmental stuff.

Bertrand Schmitt

Totally.

Nuno Goncalves Pedro

The core remains undone. Certainly at our firm, we’re very thoughtful, for example, around diversity. That’s a topic that matters a lot to us. But it doesn’t matter to us just because we want more gender diversity, or we want more racial diversity or background diversity. It matters a lot to us because the points of view that come from very diverse team members are very valuable for us in our job. We get angles that we might otherwise lose in the analysis of a company, the analysis of a market, et cetera. In all honesty, it’s a bit of a mixed thing. We don’t have any mandates. Our investors have not forced any mandates on us in terms of DEI and ESG, in terms not only of our own firm, but also in who we invest in. On the positive side, out of the gate, our fund, currently, first three investments, founder CEO is a woman. Our first three portfolio companies that we invested in, the founder CEOs are all women. On the other hand, we’ve tried to hire—for example, for our deal team—female associates, female analysts, even female principals were looked into, and it’s extremely difficult.

Nuno Goncalves Pedro

It has to do with the industry. It has to do with how many people are in the market. It has to do with maybe venture capital, still needs to go through its own moment of increased diversity in talent, which we all know it’s probably true. But how can one do more than that? If we had a mandate on number of people we had that are, for example, female in our team, how would that work? There isn’t enough talent out there for us to have the pool that we need to hire from, to have full equality in terms of 50/50 between women and men, for example, on that specific field. Again, it’s difficult. It’s a difficult conversation. It has a lot of nuances to it. I think creating the awareness of it and having very aggressive guardrails whenever there are issues of discrimination, for me, is pretty fundamental.

Bertrand Schmitt

I think we want to preclude the team to discriminate against special categories of people. However, I think you certainly want to hire, promote, and fire based on merit, and that should be the key criteria. Personally, at companies, the business I built over 10 years, it was key for me to, on one side, hire a very diverse set of people in terms of where they come from, their mindset, their approach, their nationality; at the same time, make sure everyone is properly motivated, and everyone sees we are hiring the best, we are promoting the best, and it’s a natural competition for talent. If we talk about some other topic like pay gap analysis, I still remember our new head of HR, when running an analysis, comparing male versus female, she was surprised to see a non-existent gap. I think it was less than 1%. I think that’s what ultimately happens if you are really focused on the merit. If you focus on merit, you end up, again, hiring, promoting, and paying people the same way as long as they deliver the goods. I think that’s what ultimately you will probably end up, but personally, I’m against some of these mandates.

Bertrand Schmitt

They are not natural. You don’t want to force them.

Nuno Goncalves Pedro

Maybe we move to how Silicon Valley and some of the larger tech business leaders are coming in and inputting onto this election. I think very different from previous elections, certainly in Silicon Valley, a lot of polarisation. I think Silicon Valley is historically extremely pro-democratic. Whenever there were manifestations, people were, “I’m for that Democratic candidate.” On this one, not true. I mean, we definitely have, obviously, JD Vance, who’s putting money where his mouth is, I guess, because he is the vice president candidate. Elon Musk, Marc Andreessen, and Ben Horowitz are very publicly saying why they are supporting former President Donald Trump. Peter Thiel, obviously a huge backer of Trump in this first election, and has continued in this one. David Sacks and Chamath at all-in, and a variety of other people.

Bertrand Schmitt

Yeah, Peter Thiel, and many other partners at Founder Funds. The whole team is pretty clear on this at that fund. I think we have Sequoia, Delian, and Shaun McGuire, who have been pretty pro-Trump.

Nuno Goncalves Pedro

I’m not sure, for example, that Marc Andreessen and Ben Horowitz represent Andreessen-Horowitz. I’ve seen Andreessen-Horowitz, general partners, signing up for VCs for Kamala website. I suspect it’s not a firm-wide view, but it’s certainly the two-names-on-the-door view, so that should matter, I guess.

Bertrand Schmitt

To be clear, I don’t think you can do a firm-wide view.

Nuno Goncalves Pedro

This is the Andreessen and the Horowitz.

Bertrand Schmitt

Sure.

Nuno Goncalves Pedro

As big as it gets, I guess.

Bertrand Schmitt

But I don’t think it would be fair to force anyone to vote in your team.

Nuno Goncalves Pedro

Of course not. Everyone should have their own individual perspective.

Bertrand Schmitt

Exactly, to vote or to contribute. We have to be careful as well.

Nuno Goncalves Pedro

But this is very uncommon. I don’t think I ever remember, certainly, since the time I’ve been here. Just in a nutshell, having become American a couple of years ago, first election I’m voting on, et cetera, I have followed previous elections, and I’ve never noticed so much on, “What camp are you?” kind of thing. People are like, “If you don’t talk about it, it’s because you don’t want to talk about it.” It doesn’t mean necessarily that you’re voting Republican, but right now, there are people very specifically saying, “I’m going Trump,” right? That’s the way I’m going. That’s sort of unheard of, certainly since I’ve lived here for more than 12 years, and since I’ve been following politics in Silicon Valley for some time and tech. Very unique. But there’s also people that are pro-Vice President Kamala Harris, some notable ones as well.

Bertrand Schmitt

Yeah, we have Rudolf Mann of LinkedIn Fame. We have Mark Cuban, now technically in Silicon Valley, Vinod Khosla of Khosla Ventures, Aaron Levie, from Box, Chris Sacca, Mark Suster, Ron Conway, even Steve Wozniak, co-founder of Apple, who have signed up a VCs for Kamala List. But honestly, it’s not so much clearly pro-Kamala in terms of big name VCs. It feels relatively balanced on the Trump side. We have also quite a few people from the crypto space like Winklevoss Brothers, Ryan Selkis. It feels pretty even. As you say, in the past, I think if you were a Republican, you would hide it, more or less, given how pro-Democrat was California and Silicon Valley at large. But yeah, I think it’s a very different trend. If we remember, in 2016, probably only Peter Thiel from Silicon Valley was pro-Trump, and I think he had to leave. He decided to move to LA first. I’m not sure if he had to leave, but he was definitely an outcast at that point. But it’s a very different game now. I mean, at the end of the day, you have the most talented entrepreneur of our time, Elon Musk, who very clearly show his weight behind Trump.

Nuno Goncalves Pedro

Again, to your point, which is, I don’t want to force it too much, but it is quite important. It’s not this love fest for Vice President Harris as a candidate in Silicon Valley as everyone probably would have expected it to be. If I had to hypothesise on the factors, one is the whole tax situation, in particular, the unrealised capital gains situation. I think that’s a super big deal for VCs and for startups here. It matters, right? It matters tremendously.

Bertrand Schmitt

That’s the key.

Nuno Goncalves Pedro

All the other taxation effect: How are you charging the things and capital gains? How are you taking them into account? Et cetera. Then, maybe second order, maybe the whole antitrust situation, and where the current administration has been, how aggressive they’ve been, et cetera. I do think that those are probably two of the largest levers at the table right now that are tilting things more towards former President Trump than one would assume in Silicon Valley. In Silicon Valley, you assume most people are going to go the other way, and… There are some shocking things. As I said, the Marc Andreessen and Ben Horowitz thing, we knew some of their leanings, but publicly? This is a huge deal. It’s very big deal.

Bertrand Schmitt

To be frank, I feel it’s time that people are not afraid to share their perspective on backing one candidate, one side or the other. I mean, 50% of the country, more or less, is for Trump, 50% is pro-Kamala, at least from the voters. I don’t think it’s okay that you have to hide yourself, that you are a pro one side or the other. Of course, it’s better if you have arguments to defend your position as usual, or to explain it. But at the same time, why one side should have to hide itself, especially at a time when, to be clear, as you just said, this tax unrealised capital gain has the ability to destroy this tech industry. I guess every side has some issues to deal with in the sense that I don’t think anyone is perfect.

Nuno Goncalves Pedro

The implications for the rest of the world, we discussed China already a little bit. Obviously, there will be more of an antagonistic perspective on China going forward. Yeah, maybe not a huge escalation, but maybe the same line that we’ve been in before. Obviously, it depends on who gets elected. If former President Trump is elected on certain aspects of, for example, taxation, it might be more beneficial for people that are quite wealthy, millionaires and above. Although the US has a lot of millionaires, someone was telling me this the other day, some pretty ridiculous numbers. Someone was telling me, I don’t know if this number is true or not, so I would fact-check, but that there’s one million Americans that have an asset and net worth above 10 million, and that’s mind-boggling to me. Anyway, if, for example, in that case, on the taxes side, there might be a little bit of an exodus of millionaires or very wealthy people outside of the US if there’s aggressive taxation. If there’s taxation on unrealised capital gains, I do think over the medium to long term, it will affect Silicon Valley, and it will affect how Silicon Valley can become and be still the centre of gravity of tech of the world.

Nuno Goncalves Pedro

There are some implications around that as well. We talked about immigration policies. And on that, obviously, Vice President Harris, if she’s elected, probably will be a bit linear or more pro-immigration than former President Trump. That’s probably a little bit more advantageous to Silicon Valley. But the rest of the world will have the effects of that. Everything that affects negatively Silicon Valley or the US in tech affects the rest of the world positively and vice versa. In some ways, the discussion you can have right now, you can take your own conclusion conclusions on who do you prefer to be elected. If you live in France, or if you live in Portugal, or if you live in Japan, or in Korea, or whatever. It’s a little bit of an à la carte decision in some ways.

Bertrand Schmitt

In terms of our take, I think we just wanted to make this episode to try to clarify the points of difference between the two candidates in terms of what impact they might have for the tech ecosystem. As you started the episode with, I certainly agree that all the points, when you vote for a candidate, are not just about the economics and your industry you work with. But we felt it was important to try to highlight these points, given the importance of the presidential election for the US, and by extension, the rest of the world. This is it for today. Thank you so much. Thank you, Nuno.

Nuno Goncalves Pedro

Thank you, Bertrand.

Did we go from a broad bubble to a gen AI bubble? What is the current state of AI and generative AI? What has been commoditized and what is still distinctive? What does the future hold?

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Our show: Tech DECIPHERED brings you the Entrepreneur and Investor views on Big Tech, VC and Start-up news, opinion pieces and research. We decipher their meaning, and add inside knowledge and context. Being nerds, we also discuss the latest gadgets and pop culture news

Bertrand Schmitt

Welcome to Tech Deciphered, episode 57. This episode will be about generative AI, and we will be asking the question, “Are we in a generative AI bubble?”

Bertrand Schmitt

In our last episode, we talked about AI, what was the latest happening in terms of endpoints, PCs, Macs, iPhones, and is it a risk? Is it a benefit? Today, we’ll talk about what’s happening with GenAI. Is it overhyped? Is it too much investment? On the plus side, we’ll be wondering, okay, maybe it’s not a bubble after all, or even if it’s one, is it such an issue because basically is it laying the foundation for a new stage, a new scale of AI for an act two of generative AI. Good to talk to you today, Nuno.

Nuno Goncalves Pedro

Nice to talk to you as well, Bertrand. I’ll start with my answer. It is a bubble and it isn’t. I’ll come back to that. I’ll leave you guys on that cliffhanger. Let’s start maybe a little bit with where we are in the state of AI and GenAI. Are we at commodity level or not? Adoption levels that we’re seeing in the market. Interesting report from McKinsey. Some around the state of AI, they did over 1,300 interviews. It was really a survey format around AI and GenAI adoption.

Nuno Goncalves Pedro

Some, like the conclusions, increased adoption of AI in at least one business function. Over the last year, this dramatic increase. I’m not really sure. Everyone that said, yes, we’re using it is actually using it. I take that with a grain of salt. This is self-reported, again, and so everyone has to be using GenAI, but everyone’s aware of it. I’m sure there’s an increase in adoption for sure.

Nuno Goncalves Pedro

The second piece that I feel is a little bit more exciting is what are the functional areas of companies that are using AI and generative AI more actively? Maybe not super mega surprising marketing and sales, which is core to some companies, but relatively support function. A little bit surprising to me that people are seeing product in our service development as number two. Surprising to me that software engineering is so low. Again, maybe no software engineer has actually filled in anything around that. That’s why it’s so low or middle of the board, or they don’t know what their engineers are doing, really, which is also interesting.

Nuno Goncalves Pedro

Then very low on strategy and corporate finance were business analysis, triangulation of data, or using ChatGPT, et cetera, I would have taken a little bit for granted that people would be using it. A bit surprising on that. Just feel it’s an interesting… Again, self-reported, it’s a survey. Some interesting conclusions on both sides in terms of the functions, et cetera. Some the conclusions as well on the rapid ascendancy of generative AI.

Bertrand Schmitt

Yeah, for me, what I’m quite impressed, I must say, is how fast generative AI has picked up. I don’t think I remember any new technologies that move so fast in terms of adoption, because here we are already talking about adoption metrics. I mean, it moved from nowhere in 2022, 33% in 2023, 65% in 2024. Basically, as high as the adoption of AI, the general AI adoption took seven years to get there.

Bertrand Schmitt

Here it’s two years. I’m not sure I remember any technologies that move so fast in terms of adoption. It took years and years for smartphone to get there. It took 5, 10 years for cloud computing to get there. It’s really fast, I must say for me, is my first reaction.

Bertrand Schmitt

In terms of function, marketing, I’m not surprised. That’s where you can use generative AI to generate content relatively easily. It’s not mission-critical content, it’s content you can review. At the same time, it can give you some clear benefits in terms of moving pretty fast and needing less resources. I guess for some other function like software engineering, I think right now, I guess the biggest issue is that you cannot trust it. It’s not something that you are ready to deploy in production so quickly, very different from content for marketing.

Nuno Goncalves Pedro

Maybe perhaps a little bit more interesting is the article from Tomasz Tunguz from Redpoint. I hope he’s still at Redpoint, and I didn’t say anything wrong.

Bertrand Schmitt

I’m not sure, actually.

Nuno Goncalves Pedro

Around the evolution. He was at Redpoint.

Bertrand Schmitt

He was.

Nuno Goncalves Pedro

Around the evolution of AI and this notion that it might be following the sigmoid logic, so log scale sometimes. Then sometimes exponential in terms of curves, so the exponential improvement and then log curve, which is flattening out for those who are not familiar with log curves. I would even say maybe it then looks a little bit linear, because if it’s exponential and then log, then it’s basically it looks a little bit linear. A little bit of argumentation around, are we going for the next S-curve? Are we going for the next log curve? Where are we on development? I think our intuition is probably telling us that there’s more stuff to come still on this technology stack.

Nuno Goncalves Pedro

Although this technology stack, as we know, the whole use of transformers to get us to where we got to buy OpenAI and all the other players is definitely, according to everyone that I talk to, not what’s going to take us to AGI. It’s definitely not what is going to take us to the big innovations, the big next themes and the next levels.

Bertrand Schmitt

I really like the way OpenAI has categorized the different level of AI similar to self-driving cars. As a reminder, level one was a chatbot layer, robots that can chat with you. You could argue, interestingly enough, this level one is what used to be actually considered something very hard and the proof we have made AGI, I guess everyone now realize that Turing test is absolutely not enough.

Bertrand Schmitt

Level two: reasoners, robots that use logic to solve problems. Level three: agents, robots that act independently of humans. Level four: innovators, robots that create new ideas independently. Level five: organizations, robots that replicate the work of AI.

Bertrand Schmitt

At this stage, where are we? OpenAI say it’s close to move from level one to level two. We will see. As you say, I tend to agree that at this stage, I feel that we are getting some plateau. Just to be clear, things keep improving. Don’t get me wrong, there are very clear metrics that we improve stuff, but it feels more an improvement through brute force. Let’s move from that many terabytes of data to 10X that terabytes of data. As a source, let’s move from 1,000 GPUs to 10,000 GPUs.

Bertrand Schmitt

Yes, of course, you are improving stuff and the magic things with the current foundational models is that they scale very well with more data as long as quality stays good, and they scale very well with more GPUs. I guess the only issue at this stage is that it doesn’t feel that there will be quantum leaps with this technology in terms of moving to level two, level three, without any separate breakthrough.

Nuno Goncalves Pedro

Yes. We know OpenAI is using other methods and other technology pieces into their technology stack beyond transformers, et cetera. It’s already very apparent that they are. But still, the analogy of this with the self-driving car levels, which if you remember, is also level one through level five. Magically enough, it’s very similar.

Nuno Goncalves Pedro

For those who are unaware, probably today, the best case scenarios that we see out there is like a level three. Some cars don’t even have beyond level two. It’s like they’re telling you, there’s a car on your lane or whatever, that’s nothing. A little bit like the Tesla experience today is on the level three thing.

Nuno Goncalves Pedro

We’re very far from level five. I’m sure, Bertrand, you’ve had similar stories. We’ve been promised self-driving cars for a long. I remember from my perspective, the penny dropped when I looked very heavily into the space, spent over a year looking at companies that were deeply embedded in the architecture of self-driving. Then at some point in time, I ended up spending time in this specific space with just simulation. The area where you simulate behaviour of cars to get those driving miles, but there are actually no cars on roads. It’s actually a simulation.

Nuno Goncalves Pedro

The first thing is, 80% of the players I said was just BS. It looked like gaming simulations using Unreal, and there was no factoids to it. There was no physics to it. There was nothing that they were really testing. Then you got to the other 20%, and you realized these guys are a little bit more legit. Then you realize, well, there’s things that they’re not simulating, for example, like rain and snow, and what happens if there’s ice on the road? At some point you’re like, “But that’s pretty critical, right?’

Nuno Goncalves Pedro

That’s when you realize I spent probably a lot of time around this, 2016, 2017, when you were like, “Oh, my God, this is going to happen.” You’re like, “No, not anytime soon.” Again, this promise that we’re going to achieve AGI with a stack right now, I feel is totally overblown.

Bertrand Schmitt

Yeah, I must admit that one of the rare times where I felt duped by a Silicon Valley bubble was about self-driving around 2015. At some point, I genuinely believe we are one or two years away from self-driving cars. Pretty quickly, I realized I was being lied to. I don’t know if it was really a lie or wishful thinking. For sure, it was a very strong reality distortion field in place. We are in 2024. Today, what we have is level three.

Nuno Goncalves Pedro

At best, it’s not pervasive, right?

Bertrand Schmitt

The latest version of self-driving for Tesla is not too bad, I must say. As long as one is there, I’m fine. I would say that we have one that managed to find out the way to do it. We are still not at level five for driving automation. As a reminder, the Tesla robotaxi has been delayed. We’ll see how many times it gets delayed. But to the point, 10 years. In 10 years, we are still not there.

Bertrand Schmitt

Here with generative AI, let’s not forget that these are the people who told us maybe a year ago that we were very close to AGI and you have to be very careful because these models can become very dangerous pretty quickly. I think it’s totally the same BS. Sorry, but this is not going to happen in one or two years. If it’s 10 years, I guess we’re lucky.

Bertrand Schmitt

I’m certainly not saying it will not happen. What I’m just saying is that there are ways to scale current models, bring in more data, bring in more GPUs, but we are still not at the stage where we can really provide some leaps that bring us to significantly higher level of autonomy and going to a full level five AGI, if you want to call it that way. I think that it’s a similar parallel. It’s a good parallel in a way, self-driving versus the current craze of GenAI.

Nuno Goncalves Pedro

We now have a name for this thing. I remember In previous episodes, I referred to this as the strategist dilemma. There’s a name called Amara’s Law, so a guy called Roy Amara, a futurist. Basically what he said is we tend to overestimate the effect of a technology in the short run and underestimate the effect in the long run. I’ve mentioned to this a bunch of times as a strategist dilemma. Apparently, there is a name for it. It’s Amara’s Law, and it’s absolutely spot on.

Nuno Goncalves Pedro

We tend to overestimate the effect of technology in the short run. We underestimate the effects in the long run. We don’t really know what’s going to happen in the long run. But right now, what we’re seeing is we’re grossly overestimating the impact of generative AI in this short run.

Bertrand Schmitt

I want to highlight that we just talk about AGI, how far we are, self-driving, perfect example of how bullshit it can be early on. Another recent example for me was Klarna. They put a press release not too long ago claiming that now they can handle two-thirds of customer service chats in the first month releasing their AI. I was like, “Seriously?” I have not heard any company being able to achieve that. They are the only one. I realized now that people keep talking about them, “Oh, look at how much they did.”

Bertrand Schmitt

Some people claim if the only reason they got great results were how bad was their automation previously. That any bank, any insurance, any other company that is a bit more advanced on any of this stuff, just by using the regular tools of the trade from the 2010s even, you will, of course, have improved a lot your autonomy in supporting customers, in providing some level of autonomy, self-service.

Bertrand Schmitt

Basically, these guys only got great numbers because their base were so bad. That for me is very interesting because most people just copy and paste to press release, it’s great, and don’t try to look deeply into, “Okay, how does it work? Where were they, really?” Of course, if you come close to zero in terms of how you manage stuff, you may make great improvement. But most industries, most companies are not in that spot.

Nuno Goncalves Pedro

Maybe just close the cycle on the BS around it, right? I think it’s a natural segue to what we’re talking about right now. It just takes a really long time. At the end of the day, product market takes a long time. Things to get nailed down takes a long time. There’s been a lot of risks taken in certain things, but honestly, this is the beginning. There’s going to be a lot of these BS stories. “I’m using AI, I’m using whatever,” and you’re like, “Are you really using any AI algorithms?”

Nuno Goncalves Pedro

Then in retrospect, also the other way around, there have been things are using what we now call AI for several years that we never called AI because they were just there. Someone was running algorithms on their data sets, and they weren’t calling it AI. But random force regression, for example, which is part of statistics, actually qualifies as deep learning. There’s all this nomenclature that will make all this bullshit emerge of BS stories around the table.

Nuno Goncalves Pedro

Moving to the structural issue of, are we on the commodity side right now or not of foundational models? Do we think foundational models are a commodity or not? Bertrand?

Bertrand Schmitt

I think that’s a big question because a lot of the craze started with foundation models. The first one to really be visible was ChatGPT. Probably ChatGPT V3 was really a breakthrough for sure. At this stage, my belief is that, yes, they have become a commodity. We have a few of them from OpenAI, to Claude, to Mistral to Llama, that are able to perform at similar level. If we take models of similar size, some of them being actually open weight and free, like Llama, like Mistral, some being closed source.

Bertrand Schmitt

It feels at this stage that if there is some regular improvements, like multimodality, for instance, using tools, controlling tools, in a matter of six months, the competition has reach similar levels of features and performance. It feels like the recipe now is well known. You build used data centres, you operate used data centres, you put in place thousands of Nvidia GPUs, you have a few hundreds, if not thousands of AI engineers, and you bring at scale a lot of data that you scraped from the internet. Sometimes it was authorized, sometimes it was less authorized. Basically, you run that for a few months. If you apply what is relatively state of the art, you end up at similar places.

Bertrand Schmitt

It’s not an indictment. I think it’s great what they are all doing. It’s not saying it’s easy. It’s not saying it’s cheap. It’s not cheap. But it’s saying that it looks like no one seems to have been able to really separate itself from the pack by more than a few months. As a result for me, it’s raising the question, is it a commodity? Probably an answer being yes.

Nuno Goncalves Pedro

I tend to agree with you. There’s anecdotal evidence. I was proposing an episode to Bertrand. I’m eventually going to convince him to do this episode, which is we, for a couple of weeks, run everything in parallel. With Claude, with ChatGPT, with Gemini, we see the answers across a variety of topics, and we start figuring out what are the ones we like the most, who’s performing the best in different topics, et cetera.

Nuno Goncalves Pedro

I started the inklings of that, running a couple of questions across the three, and honestly, it’s shocking how many of the answers are very, very, very, very similar. Obviously, same prompt, but very, very, very similar. These are very open questions.

Nuno Goncalves Pedro

I asked one question, which is, “What should we do in Tech Deciphered in our next episode as ideas?” They all came up with really great ideas. Magically enough, they were all very similar. It’s grand that they knew what Tech Deciphered was, so that was cool. It’s surprising to me in that sense. That’s the anecdotal piece of the puzzle. I don’t know. I just still think from a data set perspective, there’s still private data sets out there, et cetera. I’m not sure that extrapolation of it’s all commoditised, it’s truly there. There will be vertical AI applications with private data sets that people won’t have access to.

Nuno Goncalves Pedro

Today, we have copyright infringements on public data sets or relatively public data sets once people get access to them, which they shouldn’t. But certainly on private data sets, I don’t know. I’m mostly there with you, Bertrand, that maybe we are closer to commodity than we think we should be. But I can’t believe that all the data sets in the world have been encapsulated by these guys, so we’ll see.

Bertrand Schmitt

Yeah, we will see. Also, another piece of the puzzle is that we have seen a new wave of computing device that are natively AI-enabled, so new APUs, new CPUs with NPUs, neural processing units for the latest Windows PCs, for the latest Macs, the latest iPhone, iPads. They are all AI-enabled in hardware, at least the most recent devices. The software is also becoming there with the latest version of Windows, of macOS, iPadOS. But it’s not really obvious in terms of end user features that there are breakthroughs, to be frank.

Bertrand Schmitt

Of course, we have some improvements in how the camera is working, how noise-canceling is working, that stuff. But in a way, it’s more of a natural progression. Of course, there are some new tools to write documents, to generate some graphics. But it’s not clear-cut that we have seen some killer apps at this stage that justify this level of investment and new hardware deployment.

Nuno Goncalves Pedro

Yeah, and it might be that it’s just on a different curve, right? In some ways that this generative AI thing, which for us seems like it happened overnight, is now on the mass adoption curve, so it went very quickly through all these different hoops of getting with early adopters, then early majority, and now the mass majority.

Nuno Goncalves Pedro

In some ways, a lot of these tools, both on the software and on the hardware side, are going through similar cycles, but maybe they’re going at a slower pace. People are not then willing to take risks on those products that are out there. I, as a developer, am then not willing to use them because there is an intrinsic risk. It’s not an early majority play yet, and so I’m like, “I’m just going to wait and see what’s going to take off.” Because then you start having noise, right? Maybe that was the advantage that ChatGPT had. It didn’t have noise early on. It took a while for others to catch up. Maybe they just not jumped, but they went very quickly through the initial stages of adoption, whereas now it will be increasingly difficult.

Nuno Goncalves Pedro

Maybe for the huge elephant in the room, is there overinvestment in AI startups in public markets? Obviously, Coatue, for those who don’t know Coatue, they’re a significant hedge fund. They also have a growth equity practice that’s well known, and they, I believe, still have a Coatue Ventures, which is more focused on the venture capital side of the things. Philippe Laffont, the founder, and I don’t remember his title, but he has a funky title. He’s Portfolio Manager. I think that’s what he says in the interview. I’m a Portfolio Manager. I want to be a Portfolio Manager when I grow up then as well, like Philippe.

Nuno Goncalves Pedro

For you guys who haven’t watched it, there was an interview with him and David Rubinstein, who’s obviously super well known, mammoth of the investment industry as well. It’s worthwhile watching. It’s a really interesting interview. There’s a lot of little titbits that come through on how someone behaves, how someone takes it and scales it to the next level, et cetera. But his point is that we’re close to this notion of we’ll now have several companies at 2-3 trillion market cap when a trillion was the big number back in the day.

Nuno Goncalves Pedro

Then there’s all these market caps out there, like S&P 500 is at 50 trillion, and global market cap at the 110 trillion. Is this a, “Something’s got to give”? He talks a lot about this notion of the winner tends to win, the big tend to get bigger.

Nuno Goncalves Pedro

We used to have this rule of three, which is in a specific industry, depending on the industry, it might be on a specific geo as well, or geography as well. The number one wins clearly, the number two does super, super well, the number three barely lives, and then all the others over time get killed. Obviously, there has to be some market definition into this. What is a market? Is it just the geography? Is it very specific sub-sector, et cetera? But I feel that still applies.

Nuno Goncalves Pedro

The question is, “Is now everyone rising to the top because it’s unclear who the winner is?” But once the winner wins, then we have this notion, again, of number one, number two, number three, and therefore a lot of these valuations will need to get rebalanced? That’s one thing. If there’s that, then there may be some significant overinvestment. A lot of these players are getting kicked in the ass, pardon me for my French, kicked in the ass on their valuations immediately with their latest earning reporting.

Bertrand Schmitt

Yes. One point he was making is that AI was clearly the dominant driver for stock market return in H1 2024. That’s a very important useful metric to keep in mind. At the same time, it’s stock market return, so this can change. At the same time, what was true is that some of these big companies were increasing their earnings significantly as well. Of course, Nvidia is a clear leader, but in that quote-unquote AI space, a lot of other companies were included there, like Microsoft, like Google. It’s clear it has had a huge impact in H1, and not just H1, but also 2023. The question is, can it keep running that way? I think on the street, it feels less like this, to be frank. There are big questions. Can it really sustain itself?

Bertrand Schmitt

Another question he was raising was, is it too hot right now in terms of VC in AI funding? It’s clear that there are some significant questions you can ask yourself. Some metrics are pretty impressive, because if you take AI startups right now, it’s 3% of total deals, but it’s 15% of total capital. It’s 5x the valuation of other deals, and it’s 6x the round size. I mean, this is difficult to sustain, especially if you don’t generate the metrics that go with this level of expectations.

Nuno Goncalves Pedro

I think there’s definitely a bubble in AI VC funding. I mean, it’s silly. I mean, the numbers you quote are silly. Just to be clear on the valuation, the 5x, it’s for Series B and Series C equivalents. There is a capital intensity to it. But then there’s areas that are actually underfunded. I mean, semiconductor has received very little funding, because everyone believes semiconductor is very difficult to scale.

Nuno Goncalves Pedro

But there’s pieces of the architecture of delivery of AI that are just totally broken. Switching, et cetera. It’s like, shouldn’t semis also be funded and stuff? We just funded a company in the space, not on the switching side, but on another side. There’s a little bit of a parochial speaking to myself here in some ways, but definitely there’s underfunding. The rest of the VC market funding is stabilising, and then AI is nuts.

Nuno Goncalves Pedro

Part of it, I believe, is what I call intrinsic noise. People just want to get into the latest big thing and put a ton of money in the area. Shockingly enough, that’s been the best funded is the models area, according to the COA2 analysis, at 14 billion. That’s silly. If we believe that models are actually getting more and more commoditised, then it’s like, “Really?” Is this an arms race and someone’s going to buy these guys out, and are they going to buy them at the premium?

Nuno Goncalves Pedro

Again, it just feels like a tremendous bubble where in a very classic lemming mentality, because public equities have gone through the roof. We VCs are now jumping into this boat and just saying, “I’m going to put money in this, then money in that, money in that, and whatever.” Maybe. I think it is, honestly.

Bertrand Schmitt

I think the models space is not really a VC game, it’s a big tech game, because you can afford the scale, the size, the CapEx, the continuous financing that you need, and you just generate cash. That’s a way to use that cash. Actually, like Mark Zuckerberg was saying, if you are a big tech, you cannot afford not to do it, because you don’t want to depend on your competitions, competitions’ model and data centre and the like. You have to do it anyway.

Bertrand Schmitt

The space left for startups, and I would say that OpenAI might be a special case. They started so early. They have been there for so long. They have made so many breakthroughs. So they might be the exception to the rule. But it will be a tough one to keep investing. I mean, we might see a Mistral, because they are EU-based, they get EU financing, and that is a special category. Maybe xAI can have a different approach, more focus on freedom of speech, and that generates some interest from that perspective. But I think it will be a tough one, because you need to be able to convince that you are going to spend billions while you are facing the biggest competitors it can be, and performance just seem to converge.

Nuno Goncalves Pedro

Yeah. Again, to our question, why the hell are all these models companies getting funded? No answer yet. We’ll soon find out.

Bertrand Schmitt

I would not bet on this. Going to that Sequoia article a few weeks ago, that $600 billion question. I like big questions. It was a nice blog post from David Kahn, and basically was simply running some metrics. Nvidia, there is a run rate for the data centre revenues, that is around $90 billion for Q1 2024, estimated to be $150 billion by end of year for Q4. When you consider that it’s only one half of the cost of running a data centre, that means that the implied data centre spend is $300 billion for AI data centre, for AI spend.

Bertrand Schmitt

Then you have a software margin of 50%. That means that if you build software on top of this, then it’s $600 billion that are required for payback. From $150 billion of run rate revenues from Nvidia, that’s real, we need to generate $600 billion of AI revenue for that payback, $600 billion revenues. The big issue is that we see billions today from OpenAI, from Microsoft, from a few others, but we don’t see hundreds. I’m not even sure we have reached tens of billions.

Bertrand Schmitt

That’s a big discrepancy that everyone is talking about. It’s not new. It’s been a year that some have raised the question. To be frank, it’s normal. You start to invest first, and you have to do this CapEx investment, and step by step, you generate revenues. I think here, maybe the question is that we don’t really know where it will come, when it will come, and if the guy who has spent all that money are going to reap the revenues.

Nuno Goncalves Pedro

Yeah, I think the points that are made, this is a revisiting. If you guys didn’t read the early articles from Sequoia, it’s a good read. I think it’s based on the Act 2 doc written by Sunyu Wang back in the day. I think he published something on AI’s $200 billion question, and now it’s $600 billion question. I agree with most of what he’s saying. I think there is a little bit of underpinning. When he talks about the infrastructural piece, maybe there’s a little bit conservativeness. There is this, for example, the notion that all data centres are going to be commoditised, that GPU computing, obviously, is turning into a commodity.

Nuno Goncalves Pedro

A lot of this is correct, but as things develop, there’s frames and things that come out of this that are not totally true. There’s pieces of this puzzle architecturally that don’t tend to commoditise immediately. I don’t know. I have some doubts that the notion of it is, “Oh, my God, this is all going to implode,” whatever. It’s, again, back to the Moore’s law, as I was saying, I think there’s pieces of what we’re building today that will be valuable in the future.

Nuno Goncalves Pedro

Now, obviously, there’s pieces of tech that will become obsolete, because as we know, tech becomes obsolete, and there’ll be new pieces of tech that will replace those pieces of tech. Chipsets, et cetera. But still, there’s a little bit of, I believe, the take it on the low side and, “Oh, this is not going to scale.” I’m not sure. There’s definitely still a lot of runway, and saying this is a tens of billions of dollars play. I can’t believe this is a tens of billions of dollars play. It has to be a hundreds of billions play. Now, the question is, are these the players that are going to dominate those spaces or not?

Bertrand Schmitt

I think that’s a big question. I agree with you that I also believe it would be hundreds of billions. The question is, is it in two years from now? Is it in 10 years from now? Do you need to spend even more to get there?

Nuno Goncalves Pedro

Maybe, yeah.

Bertrand Schmitt

Who will get the money ultimately? Because if you spend a lot of this money, but you are not yourself generating revenue, that will be definitely some issue.

Nuno Goncalves Pedro

There’s clearly a subsidisation right now of certain players in the market. Nvidia is definitely getting subsidised. It’s getting subsidised by the big players. It’s getting subsidised by VCs giving money to startups to give money to Nvidia. Definitely, there’s a huge amount of subsidisation going on. Now, well done by Nvidia, and it’s amazing what they’ve built, and we all count on them to be helpful to us and all that stuff.

Nuno Goncalves Pedro

But at some point, the money needs to ripple back to the other layers. If it doesn’t ripple back, this is not sustainable, therefore it implodes. The valuations don’t make sense, and all of this is write-off investment. I think that’s the question that in some ways David is asking. It’s like, “Are we sure, or are we going to have to write off 90% of all investments that we’re doing around some of this stuff?”

Bertrand Schmitt

It’s good to see a VC asking this question, because in some ways, you could argue they are part of the problem. Sequoia is one of the lead investors in a lot of AI runs. They put a lot of money to work there. I think it’s a good point in some way. I don’t know if it’s really raising the alarm, but definitely raising questions. Goldman Sachs also had a report recently raising similar questions. Are we spending too much money for too little benefit? I would say here that some that are writing that don’t seem to believe at all where AI is going. I think that’s a different issue and that does not make me afraid.

Nuno Goncalves Pedro

I read it thoroughly. It was more in an interview format, right? Talking to different specialists, some internal analysts and some external experts. There’s a little bit of naysaying there that I feel is more religious than truthful. It’s more like, “Oh, I’m not part of that religion.” I’m like, “Cool.” But it’s like, “This is happening like this.” If we’re asking someone who’s from a different religion, “Do you agree with this?” Well, of course, I don’t think it’s going to happen.

Nuno Goncalves Pedro

Some of the points I think that were made really around quantitative analysis and what’s happening are interesting to me. For example, around the energy lack that we have, the build-up of energy we need to have to develop these things and to get to that level. I think that analysis was quite interesting and strong. There’s a couple of things that are saying, “Look, even if you want to go really fast, guys, there’s a couple of other issues you need to solve first.” Like, “Oh, cool. Data centres, how do they get energy?” Right? “Oh, energy. Electricity.” I think there’s just this ripple domino of you touch one, and all of a sudden, you realise the problem’s down at the level that you thought was solved, but it’s not solved at all, right?

Bertrand Schmitt

Yes.

Nuno Goncalves Pedro

I think that part was interesting. That part of the report was quite interesting from Goldman Sachs.

Bertrand Schmitt

Yeah, I agree with you. I felt that some interviewees, especially one MIT professor, were disappointing in the quality of their analysis, their understanding of AI. But I agree the energy piece was probably the most interesting in this report. Energy is interesting, because it’s not as if you can launch new power station that easily.

Bertrand Schmitt

Interestingly enough, one point that resonated with me was they were explaining quite clearly why we didn’t have an energy issue with cloud computing. Basically, it is because cloud computing was a replacement for private data centres. Cloud computing actually is inherently more efficient than these disparate corporate private data centres. In a way, the transition to cloud computing was a net benefit in terms of energy consumption. Even if cloud computing itself increase in volume, the gain in efficiency was a huge compensation for this. Therefore, we didn’t get a real energy issue.

Bertrand Schmitt

However, we’re at this stage where we are back to where we used be with private data centres, because now cloud computing has scaled so much that it has not simply replaced, but it’s beyond in energy consumption. We’re adding a new layer with AI that is clearly new and was not there before, and that is consuming enormous resources in some cases.

Bertrand Schmitt

If we start to plant 10 years ahead in terms of what could be the need, if we see that ongoing growth in AI build-up, then we actually have issues. We have issues, because unfortunately, in the West, our capacity to build new energy power source is not good. We don’t build that much. We don’t build that reliable. The most reliable of all, most efficient of all, nuclear, is not being built at scale these days, unfortunately. We really have an issue in terms of how we scale our computing for AI if basically we have a wall in front of us in terms of energy consumption.

Bertrand Schmitt

Reading a recent paper from Meta, actually, it was interesting to see that it’s not just the energy consumption itself, it’s a grid. Basically, when they are starting and stopping some training exercise they do, when you are managing thousands of Nvidia GPUs at scale, and they need to be synchronised. When they all stop and when they all start, we’re talking about megawatts of powers going immediately up and down and apparently straining the grid significantly. It’s not just how much capacity you have, it’s also how you use the energy and how you learn how to better use the energy grid in new ways.

Nuno Goncalves Pedro

Indeed. Moving to the positive side, assuming this is not a bubble. This is really just the beginning. The bubble is really not there. I mean, one point that can be made is the classic Gartner Hype Cycle, because we’re going so fast through these transformations. We’re already at the peak of inflated expectations, and we’re about to go into the trough of disillusionment or value of disillusionment, as I used to call it back in the day, in the next few months, even a few years, because we’re just going faster.

Nuno Goncalves Pedro

Now, the good news is if we’re going very fast through the cycle, the next part is going to be the slope of enlightenment, and then we’ll have the plateau of productivity. Anyway, the cool stuff is maybe it’s just because we’re going so fast, we’re going to go thrust through the cycle as well. Therefore, all this money then doesn’t go to waste because of speed, right? The money doesn’t go to waste because of speed in some ways, and we go on the other end.

Nuno Goncalves Pedro

There is also a little bit of an argumentation that there’s other S-curves coming. That there’s a lot of tech that is and can be deployed and new methodologies that can be deployed today that will give us that next exponential acceleration of innovation in the space. Do you buy it, Bertrand?

Bertrand Schmitt

I certainly buy the fact that we are in a very, very, very typical hype cycle. It has been maybe the strongest hype cycle I have ever seen coming out of Silicon Valley. There have been many, and they try hard to make them very big, very fast all the time. But this one was insane, to be frank, totally insane in terms of scale, in terms of speed. I can see that we are past that peak of inflated expectations. I think we are getting soon to the trough of disillusionment.

Bertrand Schmitt

The question is, how fast will we go to that slope of enlightenment? That’s really the question. Is it 3 months, 6 months, 12 months, 24 months, 48 months? I don’t know. What is clear, however, is that if you look at the story of AI, there has always been some AI winters. Will it truly be a winter? I’m not sure. I think there is that belief that we have delivered something new. A new technology, a new layer of infrastructure has been put in place, that we will all benefit. In a way, you could argue it’s like laying down fibre in some ways. Now we have GPUs everywhere. We have put new tools to make them at scale.

Bertrand Schmitt

As you said before, definitely we have an issue that it’s not like fibre, that once it’s laid down, you can keep using it and improve it on both ends. Here, you have to replace the GPUs, and we know they improve very fast. An investment of $1 billion today might be worth $200 million in two years from now. There is that issue. But I feel we have laid down some very important foundations, and that is what is getting me probably quite excited for what’s coming soon.

Nuno Goncalves Pedro

Instead of a winter, which is three months, it might be like a Beijing autumn, which is like 1-2 weeks. It’s going through Beijing autumn. Best time of the year in Beijing. Very short, though.

Bertrand Schmitt

Very short, yes.

Nuno Goncalves Pedro

Very short. Other points that have been made is that there’s no bubble, because there isn’t a huge market in technical risk, that a lot of this is tagging along solutions set that are well known. They’re going to have immediate applications, et cetera. I have some view that maybe that is true for some of the stuff we’re seeing around consumer. Maybe that’s the reason of success for something like ChatGPT, because it really tapped into something that’s pretty core, that consumers are figure out, like question and answer chatbot interactions. I’m not sure that would be a great justification for why there isn’t an actual bubble. There still might be.

Bertrand Schmitt

Yeah, on this one that there is no tech risk and no market risk, I think it’s missing the point, because there is no tech risk, quote-unquote, yes, if you have billions to spend and if you just look at the current scaling law for foundation models, yes, you can keep improving by adding more data, adding more GPU. You will get better metrics. But as we discussed before, it’s still missing that piece around significant new change in algorithm in order to get to a totally different level. I believe that we don’t know, we don’t have a clue how to do the next significant jump.

Bertrand Schmitt

I think for me, it’s quite different if you compare to the history of computing. There is always some level of path to the next gen of CPU, the next gen of GPU, the next gen of modem. We know how to optimise the build-up, and we have passed to get there. Even if some people are pessimistic once in a while, there is always some new stuff coming up and some stuff that you see where it’s going, and it could help you in 2 or 3 years. I don’t think it’s true in AI. I think in AI, what we know is how to scale the current models approach, but we don’t know at this stage what could be next. That’s a layer of uncertainty in tech risk.

Nuno Goncalves Pedro

The product market fit part of the question depends on the product aligning well with the market need. I think there are areas where, again, we’ve already seen it, the channel is very obvious. I will use this because that’s just a different channel for me. It just gives me a better response and a different response. We’re talking about the consumer side and the ChatGPT use cases, for example, as just one of the examples on that. But then there’s other areas where it’s still very unclear, that business use level and where does it integrate and how does it use the data sets. Things are still moving very, very rapidly there.

Bertrand Schmitt

Yeah, I think the no market risk point makes no sense. I mean, it’s like saying that, “Yeah, because now everyone has a computer, everyone has a phone, there is no market risk. As long as it’s cloud AI, you can scale it to the world in a matter of months.” Yes, that’s true. ChatGPT demonstrated you can scale very quickly. At the same time, it’s clear they have retention issues. It’s clear they have usage issues.

Bertrand Schmitt

For me, it’s clear that there is still, as you say, a product market fit question for the foundation models as well as for apps on top of them, because it’s not as if we have seen thousands of them scaling. There is still a market risk, but yes, the underlying market is there for the taking.

Bertrand Schmitt

But it’s true of many things in tech today. It’s true of SaaS, it’s true of so many things. Yes, today you can assume that you have billions of smartphones, hundreds of millions of computers, and that they can be used to access your products, whether it be generative AI or something else.

Nuno Goncalves Pedro

I think also we’re potentially not in a bubble. We’ve mentioned this before in different ways. Obviously, we’re sharing some of our readings like the foundation Capital article and the Sequoia article, but it aligns well with some of the discussions we’ve had before at Tech Deciphered.

Nuno Goncalves Pedro

The build-up of this app economy, that’s how I would basically frame it. The fact that we have these foundational models that are more cheaply accessed today, but were sci-fi several years ago. The fact that as a startup, I can now figure out really more around what’s the application of the models. It can do a little bit of algos or algorithms on top of it, but I can really focus on the application of them and go after very specific use cases that generate value to customers in that space. For example, in B2B, to consumers in that space in the case of consumer, I think is a really good case.

Nuno Goncalves Pedro

I’ve mentioned several times. I do think there’s an app economy emerging. It’s an AI app economy. There’s good things about it and there’s bad things about it. Maybe we will get back to the bad things in a second.

Nuno Goncalves Pedro

But the good thing about it is there’s value. There’s value add there. There’s going to be SaaS companies that are going to emerge that are going to do well. There are going to be consumer apps that will emerge that will do well. There won’t be a lot, but there will be some. That’s one of the key pieces that I think is quite exciting about where we’re at. Now we have platforms that everyone can lever or leverage to take it to the next level.

Bertrand Schmitt

I totally agree with it. Myself, I’m very excited. In a way, I feel some of us are getting for free hundreds of billions of dollars of investment.

Nuno Goncalves Pedro

Well, some of us are investing as well, so it’s not totally free.

Bertrand Schmitt

To be clear, the models we’re having I mean, take that GPT-4, take Llama 3.1, I mean, it will have been sci-fi two years ago. Just two years ago, this will have been complete sci-fi. You will have asked people, When do we get this functionalities? People I’ve said maybe 10 years, maybe never. It’s clearly amazing what we managed to build. We have said a few times now that we don’t know where the next Leap in LLM is going to be in order to really improve the intelligence.

Bertrand Schmitt

At the same time, they Definitely, new features have been released that significantly change the game, like Multimodal models. Now you can combine not just text, but video, audio, presentations as input, and you can also generate that. It’s very exciting, and it certainly expands the type of products you can build as a result.

Bertrand Schmitt

Two, there are some new technologies like multi-agent systems, like new model architecture that are happening and that are being in place. I must say that there are stuff that feels next level. The question for me, if I’m putting my entrepreneurs at, my tech would be, today you have some new tools.

Bertrand Schmitt

If you had started a startup, let’s say, 15 years ago, your new tools in front of you would have been either cloud computing or mobile platforms. If you had started 20 years ago, your new tools would have been computing at scale, you would have new database capabilities.

Bertrand Schmitt

My point is that as an entrepreneur, you should consider some of these foundation models as new tools that you can leverage. I don’t think, personally, you should reinvent the wheel at this stage. You should let big tech spend hundreds of billions of hard-won dollars in building new foundation models at a relatively cheap cost for you and think about, “Okay, I have these foundation layers, there are customers in front of me. How do I bridge a gap between the two? How do I bridge a model that in itself has some value, some use?”

Bertrand Schmitt

But practically is very brutal. It’s very method in what it can do in terms of what it can truly solve today in the sense of stuff that is repeatable, that is useful, that can significantly increase human work or even replace human work and run with it. I think that’s the right approach, and I think that can generate actually a lot of returns.

Bertrand Schmitt

I mean, if you compare again with SaaS, at the end of the day, yes, the hyperscaler built a lot of value, generate value for themselves, but also the new class of SaaS companies to develop, to expand at a pace never seen before. I think that’s something similar that we’re going to see in the years to come. Companies that smartly bridge a gap between foundation models and real customer needs.

Nuno Goncalves Pedro

Totally in agreement. What’s our take, Bertrand? Do you want to go first? Do you want me to go first? Do we think we’re in a bubble or not?

Bertrand Schmitt

I guess I will say like you started, yes and no. I think we are in a bubble from a valuation perspective, amount-invested perspective, and expected return for the same actor perspective. At the same time, it might be the right thing to do. If you are the meta of the world, can you afford to stay on the side? Can you afford to depend on somebody else’s platform to run your business in the years to come?

Bertrand Schmitt

Probably not. You might have no other choice. You know what? Good news. You are printing a lot of money, so you have to use it. But it means also that your margins might decrease. On the bad news side, for sure, if you’re an investor who put a lot of money in some public companies or private companies, and the expectation that it might radically change our business? I don’t know.

Bertrand Schmitt

What I know is that there is a new business that is going to grow up. Is it OpenAI that will transform it business model? Is it some new actors that will, again, bridge that gap between foundation models and real customer needs? I don’t know, but personally, I would bet on some new startups, definitely.

Nuno Goncalves Pedro

My take is, again, I gave my take at the beginning, yes and no, we’re in a bubble. I think there are areas where we are in a bubble. Large language models, the guys who are going to disrupt the space around LLMs, et cetera. Not sure how are you going to make money out of that in particular, as you said, because the incumbents have a huge incentive of just putting the CapEx in and whatever. This is very interesting because it reminds me of telecom. It’s like when You launch 3G, and you launch 4G, you just have to do it because that’s the only way. That’s the only way.

Nuno Goncalves Pedro

These guys are doing the same. It’s like, “Okay, it’s Gen AI, we’re going to all do it. We’re all going to do Gen AI. It’s like the next platform for everyone to be served by us.”

Nuno Goncalves Pedro

In some ways, that’s the analogy. Pockets like, for example, large language models and the building of foundational models, I have a lot of skepticism around that. There maybe some areas that are less broad, that are more verticalized, that are interesting. I think in infrastructure, it’s badly distributed. The money is all going to NVIDIA, but we need more innovation in that space.

Nuno Goncalves Pedro

It’s clear that there will be stuff around FPGAs, ASICs, et cetera, that will emerge, that will in some ways address the methods of the future and will help us with things like inference and stuff like that. There are definitely a lot of things happening in the InfraSight that I believe it’s not in a that I believe it’s not in a bubble, but it’s just inadequately distributed.

Nuno Goncalves Pedro

It probably will still grow even more. There’s probably the need for more innovation there. On the app side, on the application side, I think there is a bubble. Again, it’s a bubble that is maybe unevenly distributed. There are companies that are raising a ton of money, and they are literally just apps. I’m not really sure. I don’t want to diss any specific investors, but I’m not really sure if their investors have figured it out yet.

Nuno Goncalves Pedro

If they’ve been confusing capital intensity due to actual development of platforms with the capital intensity of becoming a successful app, which are totally different things. One is a channel discussion, the latter, and the former one, it’s a channel discussion because it’s about getting users, customers, et cetera. Whereas the former, it’s a discussion around technology differentiation and moat.

Nuno Goncalves Pedro

If you’re in the ladder, and you’re putting a ton of money into a company, you should know. Because you might still not do well, and you don’t have a tech moat. Cool. 

Bertrand Schmitt

Yeah, it’s actually dangerous because you might create really bad habits and stuff to come back. It might not be clear at all. It wasn’t a necessary investment.

Nuno Goncalves Pedro

That’s where the subsidization to NVIDIA happens It’s probably at the most significant level. It’s not just subsidization to NVIDIA, it’s going to be subsidization to NVIDIA. It’s going to be subsidization to whatever cloud provider they have, to Microsoft, to Amazon or to Google. It’s going to be subsidization for the models that you’re using. You’re basically passing all your money as an investor to the startup so that they can pass it along to the entire value chain of big tech. It’s a waste of money.

Bertrand Schmitt

To be clear, I believe NVIDIA is a really fantastic company. I mean, it’s a company I follow for decades. It’s an amazing company. I mean, they made the whole AI revolution possible with invention of the GPU and leveraging the GPU as an AI computing unit. But yeah, a lot of money is going their way because everyone has to spend. But in some ways we are lucky they are there, and they enable all of this. I don’t know, to be frank, if it would be easy for anyone to compete against them because they have been at the game for a long time.

Nuno Goncalves Pedro

No, but people can… Again, the big guys, the apples of the world, not unknown for doing their own Silicon. At some point, might start doing their own Silicon. Why not?

Bertrand Schmitt

They are already doing their own Silicon.

Nuno Goncalves Pedro

That’s begs to say, I mean, I’d be shocked if Google is not looking into it. They’ve been doing a lot of stuff around ASICs for many years now.

Bertrand Schmitt

They have their own TPUs, Google.

Nuno Goncalves Pedro

At some point, these players, let’s see what comes out of it. In conclusion, this is episode 57 of Tech Deciphered. Are we in a Gen AI bubble? The conclusion, as you guys just heard, is we are and we aren’t. Great conclusion, but a nuanced conclusion nonetheless.

Nuno Goncalves Pedro

We went through the state of AI and generative AI. We discussed the case for the bubble, so the negative case. We discussed the positive case, the case that we are not in a bubble. This is just business as usual. It makes eminent sense. Maybe there should be even more investment. Finally, we shared our take on the bubble, whether we believe that we are in a bubble or not. Thank you for listening to us today. Thank you, Bertrand.

Bertrand Schmitt

Thank you, Nuno.

AI is literally everywhere… in our mobile phones, laptops, their chipsets, etc. As integrations increase, what are the implications for everyone? Why are all the announcements from Microsoft, Google, Apple, Open AI and others, important? One of those episodes that you really need to listen to, as this IMPACTS YOU and all of us

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Our show: Tech DECIPHERED brings you the Entrepreneur and Investor views on Big Tech, VC and Start-up news, opinion pieces and research. We decipher their meaning, and add inside knowledge and context. Being nerds, we also discuss the latest gadgets and pop culture news

Bertrand Schmitt

Hi, welcome to episode 55 of Tech Deciphered. In this episode, we will talk about open versus closed and proprietary. What does it mean in technology to be an open or closed application? You have all heard about open-source, I guess. There is a saying in Silicon Valley, if you are first, you close it. If you come late, you open it.

Bertrand Schmitt

Basically, it means that you might have an advantage being the first player on the field. You might afford to be able to close-source your product, your software, your application. But if you are late to the game, late to the party, and it’s difficult to fight the leading player in the marketplace, maybe an alternative strategy in order to gain distribution is to open-source your product. There have been many examples of this through Silicon Valley history. Today, we are going to talk more about all of this. Good to see you, Nuno, today.

Nuno Goncalves Pedro

Nice to see you as well. Shall we start with history—the history of open-source? It’s apparently the first known system that was supposedly open-source or in public domain was in the ’50s, the A2 system in 1953. Basically, it was a compiler. A compiler is what turns source code into binary code that gets run by a machine.

Nuno Goncalves Pedro

It’s what allows you to run apps on, for example, your phone and things like that, a compiler. I know some of you that are like, I’m a computer engineer. Is that a compiler really or is it an interpreter? Let’s forget that for a second. Let’s call it a compiler just to make life easier for everyone involved.

Nuno Goncalves Pedro

That was the first public domain open-source thing that we know. Then there isn’t much, ’50s, ’60s, ’70s, there isn’t much. Obviously, there was the summer of love at some point in the late ’60s, and maybe through the ’70s, people started thinking through, shouldn’t we be doing things that are more open? One of such people was a gentleman called Richard Stallman, who’s still alive, so you’d shout out to him. He was part of this “let’s call it hacker community” from those days and was doing some interesting things around it.

Nuno Goncalves Pedro

There was this belief that source code shouldn’t be closed, that if you were monetising something quite a lot, and you were putting even certain things in your code, that if, for example, you were using unlicensed applications, so unlicensed binary, that you would run into trouble and have other issues. So he manifested himself against it and came up with something that we’re still using till this day, the GNU or the GNU Project and GNU Manifesto. Now, GNU, this is the funny part—some of you will find it funny, others might not—stands for GNU’s Not Unix, which is a recursive acronym. You have to appreciate computer scientists and computer engineers coming up with things like that.

Nuno Goncalves Pedro

But its GNU is GNU’s not Unix, because at that time, Unix was a proprietary or had been made over time a proprietary platform by a couple of big companies in the market. There was this view that they wanted to, in some ways, get out of that space. The GNU project was born, and we, till this day, have what we call GNU general public licences, GPLs. You probably have heard about this. Now, it’s in the ’90s, early ’90s, that we have the biggest movement, I think, in the history of open-source with a gentleman called Linus Torvald.

Nuno Goncalves Pedro

I probably butchered his name. Linus Torvald, something like that, pushed a version of a kernel that he had. Actually, the first version he had was not open to the public, but then he released it to the public under a GNU licence. And that operating system was called Linux. And the rest is history. Linux has led to many other things after that. It’s a wildly used operating system globally, in particular on the server side, with many variations, and we’re off to the races.

Nuno Goncalves Pedro

That’s the shortened version of how we got here in some ways. Then there’s a lot of cool things that happen afterwards, but that’s like seminal moments are GNU and Linux. That’s the two things you need to remember.

Bertrand Schmitt

Yeah, and if I may say, Linux is really the kernel, and then you have by extension, Linux, the operating system are actually combining a kernel plus many tools from GNU or not GNU. Just to remind everyone, the Internet is running on Linux.

Nuno Goncalves Pedro

On Linux?

Bertrand Schmitt

We’ll talk later about a lot of our other open-source software. It’s not just Linux, but so many components of the Internet that are running on open-source software. Also, just to be clear, the first definition of open-source was coming from our friends at GNU, but ultimately, there has been competing initiatives to define or redefine what is open-source.

Bertrand Schmitt

One organisation in particular, the open-source Initiative, OSI, has tried to codify their own way and probably in a different way, what is considered open-source or not. They have this official definition they published in 2006, and they keep updating them for GNU, they keep generating new definitions and creating new or updating licences.

Bertrand Schmitt

We have multiple licences possible when we talk about open-source, which can create some misunderstanding about what is exactly open-source or not.

Nuno Goncalves Pedro

We’ll come back to the more bad use of open later in this episode where obviously there are people that use open, and it’s not open at all.

Bertrand Schmitt

Yes.

Nuno Goncalves Pedro

But these are seven moments in real open-source. It created a movement, it created a way of doing things. It created a mindset on how people can share each other’s source code. At the very nature, open-source starts from there. It starts from the notion that source code, not the binary, not what’s created by the compilers that then is run as an application, but the source code itself can be shared for free.

Nuno Goncalves Pedro

That’s incredible. That’s like the religion of the time was a religion of we have all these big monolithic companies like IBM, Microsoft emerging, etc. It’s someone that’s saying, “No, we don’t accept the closed ecosystem play. We want to have code that is shared globally.” In some ways, that movement is now probably the dominating movement in the world in terms of source code sharing.

Nuno Goncalves Pedro

Obviously, as we know, there’s a lot of people profiting out of code today. There’s ways of keeping your code intact and keeping things in-house. But the open-source movement has changed how things are done. It is a quasi-religious movement. It’s this notion of you have… There’s copyright. I enforce my copyright, the entitlement I have to this thing that I developed.

Nuno Goncalves Pedro

There’s copyleft, which is a term that came from open-source, which you are obliged to share under certain licences all the stuff that you developed around it. To your point, there are coexistent pieces. We’ll come back to that later when we talk about Android and Google and the Android open-source project versus Android itself. What is closed? What is open, and how do some companies do well in maintaining these two aspects working really well, like the openness and the closeness piece?

Nuno Goncalves Pedro

I think Google does a decent job on Android. We’ll argue later if that’s the case or not. And yeah, it all started, similarly, with this gentleman Richard Stallman, and then with Linus just giving us Linux, and everything changed.

Bertrand Schmitt

Yeah, it’s really amazing when you think about what was happening at the time. If you think about the ’90s, it was the rise of Microsoft, from DOS to Windows, and Microsoft becoming at some point one of the most valued company and at the time certainly fighting tooth and nail against.

Bertrand Schmitt

Open-source was considered evil by some corporations when actually no, it was just a movement and a different approach to business and willingness to develop things in a different way and a way that was more open, transparent, collaborative, and especially important you could argue in the age of deploying applications everywhere, depending on these applications’ stability over time. It is a significant evolution of the history of computers and programming.

Nuno Goncalves Pedro

Microsoft will keep popping up in this episode. Just to be very clear, this is not their first rodeo. They’ve been having these fights or antitrust cases, etc. In some ways, a lot of the reactions we saw, even with Linux, Linux becoming such an important operating system, certainly server-side globally, has to do with a fight to Microsoft.

Nuno Goncalves Pedro

Because obviously, as you said, Microsoft went DOS to Windows, and then they were really managing a closed ecosystem. There was this view like an operating system is critical. An operating system for those who are listening to us who are not computer scientists or computer engineers is what makes a specific device work.

Nuno Goncalves Pedro

An operating system for your computer, for your laptop, let’s say you’re running Windows or macOS, is what makes the device work. Without it, there’s nothing else. It’s the core. It’s what makes it boot up, and it shows something in front of you and all that stuff. And then there’s things on top of it. As Bert talked about it earlier, even in the case of Linux, there’s device drivers. There are things that make other devices that connect to that device work. For example, if you have a keyboard or a mouse, et cetera, you need to have device drivers that support certain types of keyboards and certain types of mouses.

Nuno Goncalves Pedro

And then on top of that, you have user interface, which in general is extended by the operating system, so it’s part of the operating system these days. But you could argue it’s a different logical piece of it. Then you have all the apps, what you run on it. Microsoft Word, PowerPoint, your email client, all of that are apps. They run on top of the operating system. Operating systems are critical because without operating system, the device is a piece of hardware. Nothing happens. There’s nothing happening to it.

Bertrand Schmitt

Yes, totally. Operating systems are critical. Maybe we can go a bit quickly about what is open-source. What is the definition of open-source. If I take the OSI open-source initiative definition, open-source needs to meet multiple criteria in order to qualify as being open-source. One is free distribution. You should not restrict any party from selling or giving away the software. It has to be a free distribution, no royalty, no fee.

Bertrand Schmitt

Then the source code must be included, and you must allow the distribution source code as well as in compiled form. That’s another critical part. You need to be able to inspect that software as a developer, be able to inspect it if you want, so that it’s clearly understandable, and you can make sense of it and potentially do something about it. The third condition is about derived works. It must be authorised. So you must allow modifications and derived works.

Bertrand Schmitt

You must allow them to be distributed about similar terms. Fourth, it’s about integrity of the author source code. There are different ways you can authorise that, but basically creative-derived worked might need to carry a different name or version numbers.

Bertrand Schmitt

There is still a support to make sure that It’s clear what is the initial author source code and what is not. You can modify it, but you cannot mislead people about what is the original product or not. No discrimination against persons or groups. No discrimination against fields of endeavour. You cannot restrict a program to be used in a specific field or in a certain way. Distribution of licence. The rights must apply.

Bertrand Schmitt

There should not be a need for additional licence. So what you distribute has to be all included. Licence might not force you to use a program as part of another product. You might not restrict other software. And it must be technology-neutral. That’s the OSI definition. So if you want to say and claim that your product is open-source, it has to follow these criteria laid out by the OSI.

Bertrand Schmitt

Typically, what people do is that they will choose a specific licence that has already been developed. Basically, instead of recreating your licence, you will pick an existing open-source licence that has been fine-tuned to follow these criteria.

Nuno Goncalves Pedro

Yeah, so there you have it. If you want to do something open-source, that’s basically it. We’ve talked about the terms of licensing already, copyright versus copyleft. Open-source is copyleft. You have to pass it on and it’s free. This gets a little bit muddy because we’ll discuss a few companies later on where some elements of openness, and then there’s some elements of closeness. We’ll talk about Android and obviously Google’s stake in that ecosystem on Android. We’ll talk about actual lies around openness when things are not open at all.

Nuno Goncalves Pedro

Maybe we’ll start with one firm that has gotten quite a lot of heat that now seems to be changing their ways, we’ll see. But certainly many years ago was getting a lot of heat for taking advantage of open-source but not giving back, which was Amazon, and in particular, Amazon Web Services. The reuse of a lot of code that was seen as open-source code, taking it, playing with it, doing things to it, forking it, as we call it, forking is creating an alternative version to it that goes into the future. Think of it as if you watch science fiction, parallel universes. In another universe, something else happens. That’s the fork. It’s like a fork on the road.

Nuno Goncalves Pedro

They got a lot of heat for it, certainly back in 2018, on the fact that they were using but not contributing. Recently, it seems that that attitude has changed, that they’re now much more strongly contributing, but that led to a variety of things from the market, from to the Commons Clause, to the server side public licence SSPL from MongoDB, which tried to address some of the concerns and issues that were happening with some of these big giants just reusing a bunch of code that was out there and then appropriating it as themselves but not contributing back to those repositories.

Nuno Goncalves Pedro

One important piece to take into account is we talk repositories, think of it as containers, things that have the code in it, that makes over time that code to be compiled and then to be executed, so to run as binary code, to make something then work. The importance of this is in all these open-source projects, there are different roles in the open-source projects. Open-source projects themselves have their own governance. There are people that can commit to the open-source project.

Nuno Goncalves Pedro

There are people that can review stuff for the open-source project, and there are people that at the end can approve changes for new versions of the code. Even in these things, even though it’s all open, et cetera, for some of these big repositories where there’s a lot of code being maintained, there’s still governance. It’s not like there’s no governance. This is an anarchical system and people do whatever they want. There is still a governance system.

Nuno Goncalves Pedro

The issue with Amazon is they were appropriating all this code, using it for themselves, which is fine, but they’re not giving anything back in the shape of things that they might have evolved and improved in the code that might have been valuable for the open-source repositories that they were taking source code from.

Bertrand Schmitt

Yeah, I think also in a way, and we’ll talk more later about business models, but it was in some ways probably connected to open-source business models. When you make open-source software, like the Linux kernel, everyone around it is going to help contribute to that kernel because at some point, they will have no direct real benefit except contributing for it or because the development is sponsored partially by big corporations, we intend to use a Linux kernel in some of their other products. So they see a benefit to help contribute to that. Because it reduces dependence on third parties.

Bertrand Schmitt

So you end up having more control. But for some of the open-source projects, let’s say a database, for instance, and we can take the example of MongoDB, part of the business model of that company might be, you know what? We are going to provide the software for free, MongoDB. But at some point, if users want us to host the database in the cloud, that sort of stuff, we are going to simplify and streamline and host it for them and manage it for them. It will be easier for them. And that’s how we are going to make money.

Bertrand Schmitt

On one side, they build a software for free, available for free. But in exchange, if you have some specific use, it was expected that you might use them for that specific host use. But when Amazon comes, take over the source code and host it, it becomes very difficult competition. As a result, your business model is not working any more. So that’s what many open-source companies were facing, basically. It’s the end of their open-source project. Because if they have no more money to deliver on it and Amazon is not contributing, the project is going to die.

Bertrand Schmitt

They felt they had to make a decision. The decision led to new licences or new clause added to existing licence in order to prohibit the Amazon use of just hosting the open-source software and making money out of it and at the same time destroying the business model that have evolved from the open-source community.

Nuno Goncalves Pedro

I know. Just to maybe finalise this discussion on this, this is when then lawyers get involved. Heather Meeker is probably well known. She’s based in the Bay Area, I think still. That’s where lawyers get involved because at some point there has to be a legal framework around all of these things. You can’t just operate outside some line. There needs to be a line on the sand that can be enforceable, where people can take each other to court. We had huge fights in the past.

Nuno Goncalves Pedro

The Oracle fight with Google because of the Java situation after the Sun acquisition. These things matter. Who owns something obviously matters when it comes to code as much as it does to anything else, like a house. That’s why these new rules that were put in place, these new types of agreements, were there to try and frame a different perspective on how things were evolving. Things were getting extremely complex, and there was a need to clarify things and make them more explicit.

Bertrand Schmitt

At the same time, not everything is all good and well under the open-source sky and environment. There might be some issues. Typically, the one people know in a tech industry is a risk of using some copyleft-licensed software. So for instance, if we take a GNU software, many are using the GNU General Public Licence, the GPL licence for short. This one can be pretty dangerous because it’s a copyleft licence. But the problem with a copyleft licence is that you are forced to share everything you built with this software with everybody else.

Bertrand Schmitt

If you are a closed-source business, create new software that is leveraging GPL software, you might be in trouble and might end up being forced to open-source your product and provide it for free. Typically, that’s something you want to be very aware. The GPL is not the only licence that might cause trouble, but it’s certainly the most common one. When you are developing a software these days, typically what do developers, if they are working for a closed-source company, is making sure that they absolutely never used any GPL-licensed software in the process, unfortunately, given the restrictions.

Bertrand Schmitt

As you said, there has been fights in the past. There has been some pretty famous fights of companies who tried to basically leverage new licensed software, GPL software, and that didn’t end up well for them. They had to either settle like VMware or some others like Verizon to open-source their product.

Bertrand Schmitt

As a company, what you do typically would be to scan your source code for different type of licence in order to understand what licence is being used, because sometimes you don’t know when your developers have introduced some software, libraries, copy-paste even some stuff. This stuff could be really dangerous. It’s a big question you have when you do, for instance, financing of the business. When you exit a business, you need to make sure you understand your risk profile and potentially have an alternative to some software before you can go to the next stage.

Nuno Goncalves Pedro

This is a big deal because it’s human nature. Developers can be brilliant, but at the same time, they can be lazy. They just copy-paste something. They’re like, “I have no clue where this is coming from”, and they just use it. That piece of code might have come, to be honest from something that is under a licence that is not beneficial to the company that they’re developing it for. Again, it’s a little bit like, people are like, “Oh, but that’s silly.” It’s not so silly.

Nuno Goncalves Pedro

I mean, think of it, if I’m developing something, it’s like writing a book It happens to be a book that manifests itself in many weird ways. If I’m reusing lines from another book, I need to know what I’m using it from. I tend to understand what’s the right quotation, what’s the right source, what’s the right licence. This is the analogy for this.

Nuno Goncalves Pedro

I know it’s a little bit more complex than that, but it’s the analogy for this. If you’re using and borrowing code from somewhere else, you need to really make sure that you understand where that code is coming from, so that you’re not infringing on anyone’s licences or not embedding your own code with stuff that can come back to haunt you as Bertrand was mentioning.

Bertrand Schmitt

I think the book reference, Harvard lost its President on some copyright issues. It was not copyright, but it was-

Nuno Goncalves Pedro

Quotations.

Bertrand Schmitt

Quotations that were missing.

Nuno Goncalves Pedro

I don’t want to get into a fight with Bill Ackman because I think… No, this was afterwards, right? This was the post. It started with quotations on his wife, and then it extended to Harvard, and obviously, they kicked out.

Bertrand Schmitt

I think it started with Harvard. No, it started with Harvard.

Nuno Goncalves Pedro

No, I think it was the other way around. Eager then got… Then they went after, no? Anyway, we don’t want to go into political quotation issues and have Bill Ackman tweet on us. We’re okay, we’re good. Bill, we love you.

Bertrand Schmitt

I think it’s proving the importance of basically copying someone’s work. It can be a book, it can be an article, it can be a reference, it can be source code. Source code is written work. You want to be careful before doing that. If it has the right licence, it’s okay. If it has not the right licence, then it’s not okay.

Nuno Goncalves Pedro

The open-source projects, and as you mentioned, mindset and movement, this is a movement, open-source movement, has given us a lot more things than just code. It’s given us a lot more things than just software innovation. Given us, for example, very deep organizational shifts. We now talk about remote teams as if it’s, “Oh my God! We discovered remote teams.”

Nuno Goncalves Pedro

The first guys at scale to have remote teams were companies or organizations or projects that were open-source. Because of the nature of it, because there were thousands of contributors from around the world, they were not co-located. In many cases, they were doing this part-time. They were doing development part-time. Linux is a great example of that.

Nuno Goncalves Pedro

These teams were what in the open-source world have come to be known as fully liquid teams. Everyone’s around the world. There’s no real hubs. It’s a fully distributed team. Those projects, those companies that were focused on open-source projects were the real pioneers on fully distributed. That shifted in many ways, for example, on how engineering is done today.

Nuno Goncalves Pedro

Because if you think about it, it’s not just the organization’s different and everyone’s working from around the world. How do you coordinate people on code? How do you bring code pieces together into something that works? When do you compile? When do you launch into production? Who’s doing the testing before all of this happening? How are they doing the testing? It changed everything around software engineering and software development.

Bertrand Schmitt

I guess no surprise that Git was created by Linus Torvalds to help him better manage the development of the kernel. Git is a way to basically to synchronize and historize and a branch source code. We need that first because of that unique aspect of very remote distributed teams that is inherent to many open-source project.

Bertrand Schmitt

It was open-source that created the need and ultimately found solutions to solve these needs. A scale development globally at any time zone, anytime, definitely an innovation from open-source and not just an innovation itself, but they build the tools to get the job done and the processes to get the job done.

Nuno Goncalves Pedro

Git, if it’s familiar to you guys, because you’ve heard about a company called GitHub that was a massive acquisition, and a few other companies, is a source code management tool. It’s a way to basically verify which control version are you guys on in the repository. We’re not putting pieces of code in the wrong version, effectively. Think of it as many of you might not be developers, but if I’ve had this issue, you’re working on one document, which version of the document are you working on?

Bertrand Schmitt

Yes.

Nuno Goncalves Pedro

It’s the same problem, right? You want to make sure that you’re working on the same version, and it’s properly maintained and sustained.

Bertrand Schmitt

If now we talk about open-source as innovative in business model, because again, as we discussed at some point, except some rare exception, there is a need for some business model. If you develop the Linux kernel, you might not do it directly for revenues, but indirectly you will sponsor developers, pay them, or they are employed by your company.

Bertrand Schmitt

They are working on the Linux kernel because your company benefit from the Linux kernel because maybe it’s building hardware that needs an operating system. You don’t want to pay fees to Microsoft. At the same time, you want this Linux kernel to leverage your new hardware. You need to have people who developed for that kernel. That’s one type of very indirect business model. There are other types. We talk briefly about companies like MongoDB that basically does a business model of hosting.

Bertrand Schmitt

Basically, we probably use a source code, but if you want to have a simplified hosting solution for it, we are here, and we are going to give you a subscription. Another typical business model has been around support, of course. The Red Hat probably innovated a lot in there, in terms of subscription model for what was at the source an open-source product, but ultimately became the Red Hat distribution, and they made you pay the subscription, mostly because they will provide you a high level of service and more advanced enterprise-class type of version of the products that were initially open-source.

Nuno Goncalves Pedro

Open-source is supposedly free, but there are hidden costs. If you have a release of something in open-source, the early releases of Linux were appalling, very difficult to maintain. How do you run, for example, a UI framework? UI framework is like you see windows in front of you instead of just text. On Linux initially, it was extremely difficult. You’d have to compile it, you’d have to attach things, et cetera. You need to decide which UI framework you’re using.

Nuno Goncalves Pedro

Then players like Red Hat with their distribution, simplify that greatly and created value for end users by making these things automated, more simplified for a regular user to be able to use at length and therefore charged for it, as Bertrand was saying, for the support of the ecosystem and support of their releases, et cetera.

Nuno Goncalves Pedro

In some cases, the other piece is enterprise-grade. You might have something that’s open-sourced, and it’s been compiled, and it works, but it’s like, does it have the right level of optimal security for you? That obviously generates some options for players to then make money on top of some of these stacks as they move along.

Nuno Goncalves Pedro

Buying large, as Bertrand said, people make money out of support or services, support services. Companies like Docker, for example, initially made a lot of money out of services. They make money out of other variations of the software as it scales and companies come into that ecosystem to create bundled versions of it that are more closed in nature.

Nuno Goncalves Pedro

There’s ways to make money, but the ultimate effect is this is for all mankind. The reason why it matters that there is open our software is, think about it, if it’s free at the point of consumption, it allows people that have less resources, companies that have less resources, countries that have less resources to be able to use software that is high-quality graded software. It allows for people to keep innovating on software without necessarily always having the objective of making money out of it. It’s because people want to contribute back in some ways, the hacker culture.

Nuno Goncalves Pedro

When I was in college, people had this strong objection to hackers, and we always used to distinguish between hackers and crackers. Cracker came from the term used for telephony systems. You tap into telephony systems and get free calls. Crackers were the bad guys. Hackers were not. Hackers, and today we use that white hat-black hat term. White-Hat hackers are the ones that identify issues and raise them and maybe get bounties out of it and do the proper thing. The Black Hat ones are the ones that make the news by taking over services, et cetera.

Bertrand Schmitt

Yes, totally. Going back to the business model, one that I found interesting was used by Databricks, where, for instance, you get the slow version of the software for free. If you want the fast version of the software that has been optimized for much higher speed, maybe 10X improvement, Then you have to pay for the Databricks version. It’s compatible. API is the same everything, but the engine itself is much faster, but you only get the fast engine if you pay your fees. I think that was another interesting innovation.

Bertrand Schmitt

To go back to your point about for all of mankind, that’s typically also one reason why you would pick open-source as a strategy, because as a distribution, open-source can be very strong because people get excited because it’s free, people get excited, they want to contribute, and you don’t even have to potentially pay the developers. It can be a very writer’s model if it finds its market and a very strong alternative to other business approach. Open-source can truly be not just a development approach, but really a go-to-market approach. It’s considered one of the very effective product-led growth strategy, open-source.

Nuno Goncalves Pedro

Indeed. Moving to open-source for the win. The big achievements of open-source. We already talked about one, so that’s pretty obvious. Let’s get the numbers in on Linux. Linux is one in servers. I mean, around 97% of the… Certainly in web servers, 97% of the top million web servers in the world run Linux, 97% of the top million. Top 90% of the cloud runs on Linux. That’s what I call a knockout win by open-source. There’s variations on the Linux that are deployed here. There might be some distributions, but we’ll take it as an open-source win. I mean, huge user open-source win.

Bertrand Schmitt

What’s amazing, we talk about Git that is also open-source and could be also a part of the internet infrastructure, or at least the world coding infrastructure. Let’s talk about some other tools that you might have earned that are open-source. Python, one of the most famous, most used development language is open-source. The Apache HTTP server, which is another part of the internet infrastructure. Nginx, the acceleration caching engine is also open-source. We have Node.js, which is another development language.

Bertrand Schmitt

In terms of database, we have MongoDB we talked about, but there’s also PostgreSQL, MySQL, as open-source version. Going back to coding or environment, we have Electron that is open-source. React as a front-end development language is open-source. And if we go to AI, it’s actually amazing to see how much is open-source. I mean, Python is a part of most AI projects, of course, but PyTorch, SensorFlow, Keras, all of this is open-source. In a way, AI was such a race that in order to participate, you better have to move very fast, convince others to use your product, and what better way than to open-source it.

Bertrand Schmitt

Obviously, it’s not the case of the CUDA language. That one is actually not open-source and has been developed over for a very long time by NVIDIA, and is still a key competitive advantage for NVIDIA.

Nuno Goncalves Pedro

On the consumer side, things that you use on a daily basis that are open-sourced, Firefox, if you use it as a browser, actually, it came from the Netscape opening of the world when the huge fights with Internet Explorer happened, and they decided to open it up. Chromium also came out of that, which is Google Chrome uses it, but Chromium is the open-source piece of it.

Nuno Goncalves Pedro

A signal on the messaging side, bring the fight back to WhatsApp and the big Facebook, which is funny because obviously it was largely funded by Brian Acton. After he made all that money within WhatsApp. It’s funny how these things happen, like Elon Musk with OpenAI and stuff. Anyway, we’ll get back to that later.

Nuno Goncalves Pedro

Open Office, obviously, was a potential alternative in a fight being brought to Microsoft Office, maybe less successful on that side of the fence. You have, I’m sure… Most of you today would have something open-source that you’re using on a regular basis. Again, even on the consumer side, It’s well noted. It’s not just a B2B tools or platforms discussion. It’s more broadly than that.

Bertrand Schmitt

We talked about Databricks, a closed-source company that is actually built on top of an open-source product that they initially built called Apache Spark. Docker was also part open-sourced.

Nuno Goncalves Pedro

Docker scaled on open-source, right? It was a company that was having tremendous difficulties. They scaled on open-source, and then obviously, they created a business model around it to make money themselves. They scaled on open-source. I mean, it’s incredible.

Bertrand Schmitt

Then we have some interesting stories. If we take AI, and we’ll go deeper in other situation, but one pretty famous model, Mistral, pretty new company actually, but already famous in term of models, I shared in an open-source way under Apache 2 licence, three different open-source models, Mistral 7B, 8X7B, 8X22B, that are usable and customizable for a lot of use cases. Again, we see open-source goes, of course, with the business model.

Bertrand Schmitt

If you want to use the optimized commercial models, then you have to pay. The commercial business models, them are not open-source, and you will buy them because they are more efficient, they have higher performance, they have extra capabilities, easily available, hosted. We can see that even with new LLMs, AI is trying to find its way. Open-source is trying to find its new definition in a way with AI and LLMs.

Nuno Goncalves Pedro

Exciting times. Obviously, open-source is one in many dimensions, and I think the world is better off because of it. Companies have been built on top of this notion of there’s an open-source component and ecosystem-building piece around it, but then there’s pieces that are maybe less well-framed. Maybe as a last example, Android. Now, Android, just to be clear, as a trademark, it’s owned by Google. If you put Android in your device, Google is saying this is Google-approved. Now, Android has a project behind it, which is the Android open-source project, a OSP, where you can pick up the kernel.

Nuno Goncalves Pedro

What makes it run effectively, and a variety of other pieces around it, and fork it, as we discussed before, create a new version of it and go your own separate route. There’s a couple of players who have done that. More recently, Huawei has had to go full fork because of the issues we know happened in the US, where Google was not allowed to give them a licence. Part of Android is open-source, clearly at its very core. And there are pieces of it, even some device drivers, et cetera, that are open-source as well.

Nuno Goncalves Pedro

There is an ecosystem around it. There are device manufacturers that make a living around variations, very strong variations on that project, on the AOSP. Now, there are pieces of Android that are absolutely closed. The way I think Google did it is, to be honest, for me, it’s clean. I think some people will probably disagree, but it’s clean. Google, when they launched Android, they launched, I think it was the Open Handset Alliance, OHA, right? Around Android to really make sure that it was going to be an open-source core operating system, etc.

Nuno Goncalves Pedro

Then obviously, Google is Google. There’s pieces that you guys that are using Android today on your mobile devices are running which are not open. Obviously, some of the apps clearly are not open, like the Snapshots of the World, etc. Even one level below, the Google Mobile Services and the Google Play Services piece.

Nuno Goncalves Pedro

The Google Play Services piece is what Google Play is implemented on the ability to develop your own apps on top of that framework is on Google, just shockingly enough. Google mobile services, which includes core services that you guys all properly use as well, like Google Play itself, the App Store, Google Chrome, et cetera, is owned by Google as well.

Nuno Goncalves Pedro

For you to run GMS, this is the issue that happened with Huawei, Google has to have a licensing agreement with you. That’s what allows you to then say, I’m running Android, because as I said before, Android is a trademark owned by Google. It’s open on certain extent. It’s closed on others, but it’s running the world now. It’s doing what Linux did on the server side. It’s doing the same in mobile devices. Obviously, the world is mostly running on Android today or a variation of it of the AOSP.

Bertrand Schmitt

Yes. Without going into too complex stuff, If you build, for instance, a handset on the base of Android. First, we just said that some services, Google services, might not be available if you don’t comply with some Google request, but also some Google apps might not be available. You might not be able to have YouTube, Gmail, and other stuff.

Bertrand Schmitt

That could be huge trouble. In a way, even if the operating system itself is free and available and the core libraries, if you want to be successful in the marketplace with device using Android, you better follow the different guidelines that Google is giving you in order to have their apps installed, to have Google Play, and even to have some apps compatible. If you don’t have these Google mobile services, that might be really big trouble for the success of your device.

Nuno Goncalves Pedro

I was on the other end of a couple of very significant negotiations with Google back in the day, early days, and it’s been always a little bit tricky. So It’s not totally clean, but I would still say for the most, it’s an interesting ecosystem that has worked relatively well for all involved, even when Google now is competing, obviously, through several acquisitions like the HTC smartphone team, and that sort of we want it, but we don’t really want it. Montreal acquisition where they got a bunch of patents. I think they’ve done a pretty good job, but maybe switching to Lies. Lies when open is not open, but it’s more of a [inaudible 00:39:59] or a bridge for a close, as I call it.

Bertrand Schmitt

Yes. I mean, not wanting to point fingers too hard. I mean, business is business.

Nuno Goncalves Pedro

Microsoft?

Bertrand Schmitt

Yeah. On this one, if you are old enough to remember the old Microsoft approach, embrace, extend, extinguish to open-source and open standards. That was in the late ’90s, early 2000s. At least it was alleged that Microsoft had this behaviour. If we’re on acronyms, there were many acronyms connected to Microsoft, fear, uncertainty, and doubt, presenting vaporware in order to block your competitors.

Bertrand Schmitt

At the time, there was a lot of approaches of Microsoft that were not so great, business-oriented, but definitely not very friendly. So at the end of the day, yes, Microsoft has been accused in the past by a lot of open-source promoters, companies to have a very negative approach to open-source. I think it has changed. I don’t think the new Microsoft is representative of the old.

Bertrand Schmitt

I mean, a great example, you talk about GitHub. GitHub was acquired by Microsoft a year ago. In a way, it was a litmus test for the open-source community because so many open-source projects were hosted on GitHub. And I would say it flourished. Microsoft, in a way, has proven that it’s very supportive of open-source project.

Bertrand Schmitt

Microsoft Visual Studio Code, for instance, is an open-source project and has taken the development world by storm. I’m still impressed how so many developers are using it, even people who might not have said good things about Microsoft years ago. It has been a revolution. The old Microsoft 20 years ago was not a friend of open-source, but now at least it’s not an enemy.

Nuno Goncalves Pedro

Just to explain to our listeners the Embrace, extend, and extinguish. It was based on a memo written internally at Microsoft, which said Embrace, extend, and innovate. The extinguish came as an adaptation for the trial.

Bertrand Schmitt

Yes.

Nuno Goncalves Pedro

Embrace is basically you go into a technology stack, open-source, you embrace it, you’re part of the community, you do commits, you involve your engineers, you do stuff back, et cetera. The extent is then you pick up from there, and you start extending functionality, creating your own functionality, the forking piece I was mentioning earlier. Creating your own functionality, added features, et cetera, that go well beyond the core capabilities of the initial repository’s code bases that you were using.

Nuno Goncalves Pedro

Then the experience goes without saying, what it is. Once you have the extra features, you’re like, “I close this, and now you have to pay.” I would allege, maybe I have a slight disagreement with… It’s nuanced, this agreement with Bertrand. I think they’ve changed their ways. They’re maybe slow-pacing us as well on GitHub.

Nuno Goncalves Pedro

I think what they’re doing with OpenAI right now is magically looking a lot like appropriation of something that initially was not an open-source project, but an open project for the benefit of humanity. Obviously, there’s the case in court that Elon has taken them to court because he obviously funded them originally, and he’s like, “This is not what I funded you guys for.”

Nuno Goncalves Pedro

Now, they’re acquiring a lot of stuff around the stack, inflexion, et cetera. I don’t know if they’re slow-pacing us or not. I’ll give Satya, a walk on that and suspension of disbelief. But I don’t know. It’s always the same name that we talk about from the late ’80s, well, even before, right? So ’80s, late ’70s, ’80s, ’90s. Microsoft keeps coming back, so I’m not sure if it’s in the ethos of the company or not.

Bertrand Schmitt

If I remember, actually long, long time ago, maybe was it in the ’80s, but Bill Gates was famous to write a letter explaining how bad was open-source. That was this lecture a long time ago. So, yeah, it’s a long debate.

Nuno Goncalves Pedro

The browser wars. There have been so many of these things that have happened, right? I mean, it’s incredible.

Bertrand Schmitt

It’s as long as a fight between Apple and Microsoft, I guess. The fight between Microsoft and open-source. I think there has been significant improvements, but it’s not as if Microsoft is fully embracing open-sources or built on open-source. Other certainly is being built more and more on open-source. Like a AWS. You were talking about OpenAI with Elon Musk. I mean, definitely, it’s a weird name for a company that is anything but open.

Nuno Goncalves Pedro

That’s not open.

Bertrand Schmitt

I don’t know. Your chips in a package like healthy good food. No, it’s on a healthy good to eat chips or drink Coke, but then they call themselves OpenAI. Personally, I don’t care, except that it feels very much like marketing that is, I mean, basically a lie.

Bertrand Schmitt

Obviously the first and the most important shoulder of OpenAI and the one who helped attract some of the best talent to OpenAI disagree as well with OpenAI and feels he has been cheated. So Elon Musk filed a lawsuit recently in March against OpenAI and actually even said that if you guys rename the company Closed AI, then I will stop my lawsuit.

Nuno Goncalves Pedro

We just call it Closed AI.

Bertrand Schmitt

We can see the power of a name. It can have in the public’s mind.

Nuno Goncalves Pedro

Just to be clear, OpenAI, to my knowledge, was not ever an open-source project. It was a non-profit. It still is actually. It’s a non-profit.

Bertrand Schmitt

It was a non-profit.

Nuno Goncalves Pedro

It’s always been a non-profit. It still is. Just happens that now the non-profit has a for-profit below it. That was created afterwards. As I said, I’ve been involved in something like this in the past. It’s not as shocking as it may seem. It sometimes happens, but it was never open-source. It’s open in the sense that it was a non-profit for the benefit of mankind kind of thing.

Bertrand Schmitt

When you accept donation in that context, I can imagine how it might be to see suddenly everyone trying to make huge money out of it. Actually, Sam Altman is not directly making any money, given he’s not a shareholder. But I understand that he has a way to leverage his OpenAI position to build all the stuff around, and then he directly benefit.

Bertrand Schmitt

What’s surprising is that a lot of general public, even developers or authors, might think that there is something open. But as far as I know, there is not much, if anything, open. There has been some tools that have been open-source, I believe, by OpenAI, but ultimately the core of the company is not open.

Bertrand Schmitt

Another company—and this time I would say that they are much, much closer to being open and being closed—is Meta with LLaMA 3, LLaMA 2. They have released the weights, so not the source code, but the weights of their LLMs. Basically, anyone can run it. They have put a few restrictions that limit you if you have hundreds of millions of users. There are some others for specific conditions.

Bertrand Schmitt

Ultimately, there are some constraints, so it cannot meet any definition of open-source. But I would argue that it can certainly claim some level of openness that is very valuable, especially in the face of OpenAI and other closed-source initiatives.

Nuno Goncalves Pedro

I was just at a session with Chris Messina, who obviously still credits with having invented the hashtag, and it’s like, yeah. When Meta talks about this, but then there’s a limit on how many users you have, is it really open? Then the stuff they’re doing around mixed reality and augmented reality now, I’m not sure I fully trust that this is an open-sourced endeavour.

Nuno Goncalves Pedro

It is for scalability purposes. I don’t know if it’s an embrace, extend, and extinguish playbook play, but it feels a bit like that. It feels a bit like let’s run the open-source gamut in the playbook and then see where we head. In the worst case, if it fails miserably, it fails miserably. If it works well, then I can’t possibly think that they won’t take over the ecosystem.

Bertrand Schmitt

It’s tough to say. Me, I’m just judging based on the licence of the current product. Apparently, there are rumours that they won’t share the weights of the new version with a huge number of parameters. So LLaMA 3 might be the last version, or maybe they will have different branch or pro-version. I don’t know. For me, I’m more judging them based on what they release.

Bertrand Schmitt

For sure, there is no source code, so again, it’s not open-source, but there is open weight. It’s huge because it means that a lot of use cases, 99.9% of use cases, you can use that and pay no licence for it. I would take it as a huge win.

Bertrand Schmitt

It’s definitely challenging the OpenAI of the world and others because when you see the investment from Meta to build this models, we’re talking about hundreds of millions and probably sooner in the billions. It’s not a small gift. It costs real money, so I cannot complain if Meta has a business strategy with that. As we have seen, most open-source companies have to have a business strategy to keep it sustainable.

Bertrand Schmitt

For the other piece, the mixed reality approach, Meta Horizon OS and Horizon Store. Here less clear about what’s really open. This one is certainly stretching it. There might be some openness in the sense that now you can access the store more easily as a developer. You are not relegated to a lab section of the app store for the Quest. That’s it. They are going to licence their operating system to other manufacturers. It’s open in the sense of windows is open. So this one you can laugh as much as you want about the openness, I guess.

Bertrand Schmitt

To be clear, I’m not judging. Every company has to have a business strategy. What you can, however, have an opinion like I have, I believe, is, what’s the marketing you use? To call it open when it’s fully closed in every way, but you are open to even third-party licensing your product? That’s a bit much on the openness.

Bertrand Schmitt

But I guess, you know what? Consumers, developers, companies just have to learn things through the marketing. But again, I will take what is really open and be happy about it. I think that on the mixed reality side, it’s a good strategy, to be frank, for Facebook to licence their product. It would be even better if they don’t push it too much on the marketing side.

Nuno Goncalves Pedro

Yeah, they keep talking about it like it’s open as well, and it’s not. I mean, it’s not their definition of open. It’s true already with LLaMA, right? I mean, with LLaMA 2, et cetera. There are special licences, there’s limits on what you can do, ton of limits, so it’s like…

Bertrand Schmitt

Not tons of limits. It’s not too much.

Nuno Goncalves Pedro

I mean, come on, prove it. It’s used for training other language models. Requires a special licence for deployment in app or service with more than 700 million daily users, which basically means the big competitors, right?

Bertrand Schmitt

Means Google cannot use it. But if you’re not Google, you can.

Nuno Goncalves Pedro

Then they can change the licence tomorrow. It’s not 700 million, it’s 100.

Bertrand Schmitt

No, they cannot change the licence. I mean, LLaMA 2, as is-

Nuno Goncalves Pedro

For future versions of LLaMA, they can.

Bertrand Schmitt

Sure, but that’s their prerogative. But that’s also because it’s not open-source. If it was open-source, it would be easier to-

Nuno Goncalves Pedro

But that’s why I’m saying they’re calling it all of these efforts open, Bertrand. They’re not open. They’re basically saying, “We’re investing a bunch of money into these things, and we’re making this super usable by you guys for free.” It’s like Facebook is open. Facebook is free to consumers, so they’re going to make money somewhere else. That’s the Facebook playbook, free at the point of consumption.

Bertrand Schmitt

But that’s fair. I think that the definition of most open-source businesses today, they have to find a business model.

Nuno Goncalves Pedro

But this is not even open-source, Bertrand. There’s no open-source here. Where’s the open-source of this?

Bertrand Schmitt

For me to have an LLM that I’m free to run in 99.99% of the use cases, as long as I’m not Google. I mean, it’s magic, to be frank. It’s a huge competition. That’s why we have probably some competition like Mistral, is going even more open-source. I’m all for it personally. Again, if you’re a developer, if you’re a company, what are your choices? To pay OpenAI, to spend a billion, to build your foundational model? You don’t have a lot of options, and this is super high quality. This is not trash what they are giving.

Nuno Goncalves Pedro

I don’t see how this doesn’t become an embrace, extend, distinguish play.

Bertrand Schmitt

Potentially, I cannot judge, and I can imagine that they have a strategy. Will it become that? I don’t know. For me, it’s tough to judge before something bad happens. Right now, I’m just, “You know what? Let’s use it, and if it changes, let’s not use it.” Or potentially, of course, let’s consider an alternative. You might say, “No, I’m going to use Mistral because I believe in their strategy, I believe in their approach, and I believe in years to come, they will keep doing that way.” But it’s a much smaller startup, so it’s also tough to know where it’s going.

Nuno Goncalves Pedro

There’s obviously the angle on geopolitics. You mentioned some of the tweets from Vinod Khosla recently on AI staying closed-source because of China, et cetera.

Bertrand Schmitt

It is obviously a famous investor, an extremely successful investor. Personally, I feel he’s defending too much his own investment. He has a big investment in OpenAI, and congrats on Vinod. By the way, I have nothing against OpenAI per se in their product, but is part of that regulatory push to even forbid open-source AI, which for me is insane. It’s like, “What? Are we serious? The world is built on Linux. Do you know the world is built on Android?”

Bertrand Schmitt

Open-source is part of our life. To suddenly say that you have to close AI for what reason? Sorry, can we repeat again? Because you fear the rise of CI robots or something? I’m pretty angry. I mean, it’s one thing to say, you forbid some exports, and you do some export control on some technologies. That’s one thing. But to say, “No, guys, because it’s AI, you cannot make it open anymore,” it’s pretty, for me, unacceptable. To see him with so much vested interest to lobby for this, it just doesn’t feel right to me.

Nuno Goncalves Pedro

I agree with your overall view. That obviously calling it with parochial interests at the table, et cetera, when there’s other things you can do, export controls. I think that’s true. I would also say that’s the advantage of closed. The advantage of closed is it’s closed. Nobody knows what is underneath it. Reverse engineering it is extremely difficult, et cetera.

Nuno Goncalves Pedro

Is there a geopolitical fight right now with China? Clearly. We’ve talked about it in previous episodes. Does that mean that there are areas of development in the US and other parts of the world, also in Europe, that need to be more cautious in how these instances are manifested to the rest of the world? Probably, yes.

Nuno Goncalves Pedro

Is it a matter of closed versus open? In some cases, it might be, actually. Obviously, it’s a little bit parochial. I feel it’s a little bit like a bit of a spin on the situation in terms of comms and communication. But honestly, some of it might be warranted. I think at some point people do need to have that notion and take into account.

Bertrand Schmitt

You’re right to have your opinion. Personally, I’m totally against it. I think it makes no sense. We accept what is next. Is he going to make sure that Linux is becoming closed-source and forbidden to export anywhere? I mean, it’s too late.

Nuno Goncalves Pedro

No, but because that cat is out of the bag. The AI cat is not out of the bag yet, right? I think that’s the difference.

Bertrand Schmitt

AI is similar. Chinese scientists are doing great work on AI. I mean, if you look at labs across the US, AI labs, how many from Chinese descent? It’s not fair for me at this stage to try to close it, to block some business model, and more important, this is based on total bullshit assumption.

Bertrand Schmitt

This is based on AI is going to take the world. AI is too dangerous. AI can be used by others. Others are going to invent and to invest, and I don’t see why forbidding open-source is going to help. What is going to help is going to entrench some corporate interest. That’s what we know for sure is going to happen. I don’t see that as good anyway.

Nuno Goncalves Pedro

The world goes around, Bertrand. That’s how the world goes around.

Bertrand Schmitt

No, the world had alternatives.

Nuno Goncalves Pedro

It is as it’s been around for the last many decades.

Bertrand Schmitt

No, that’s not true. The internet is running on Linux, not on Microsoft Windows. With initiative like this, it would have run on Microsoft Windows.

Nuno Goncalves Pedro

It’s running on Cisco routers and stuff like that, or people that have made a ton of money out of it.

Bertrand Schmitt

No, there are alternatives in terms of, and Cisco is a shadow of what it used to be.

Nuno Goncalves Pedro

Well, the Chinese also came into that market. That’s a different discussion. I feel it’s warranted, and it’s a decision of the company and the shareholders and who’s in there right now. I’m not here to opine whether OpenAI raised money under the wrong construct. It is the construct of the shareholders, and it is the definition of the shareholders.

Nuno Goncalves Pedro

They’re subject to regulations in the specific markets that they operate in, and they can get slapped if they break those regulations, but it is. The case of OpenAI, I think the situation is, I don’t know. I don’t know what was agreed and what is written down in terms of agreements between Elon and Sam and all these guys initially. What was the agreement they had? Is this a legally binding agreement or not? It’s as simple as that.

Nuno Goncalves Pedro

Are they now changing tech on OpenAI? The discussion is, can they now be fully closed or not? They were never really open. It was more of a non-profit or a for-profit.

Bertrand Schmitt

No, that was not my point. My point was about regulating and forbidding open-source AI. If you are talking about OpenAI, different story. I have no problem. They do what they want. But if they are pushing regulation to limit competition, that’s a different story.

Nuno Goncalves Pedro

But Bertrand, I agree with you. Regulation that makes it impossible for someone to have open-source AI in the US, I think is silly. Now, for many companies to close their stacks, it is what it is, right?

Bertrand Schmitt

I think we are not disagreeing. I don’t know what happened, but me, I have only been talking about open-source AI being forbidden by regulation and regulatory captures. That’s the only thing I talk about.

Nuno Goncalves Pedro

Should not be.

Bertrand Schmitt

OpenAI as a company, as long as they don’t cheat their shareholders, they do what they want and they follow regulation. But for me, what is critical is to let AI develop itself as it wants in a way so that we don’t add some level of interdiction by regulations. I’m very worried, to be clear.

Bertrand Schmitt

It’s not just that, it’s also regulations that are coming to AI. If you think about what happened recently in California, they are proposing some new regulations than are scary about blocking innovation in AI. I think we have to be very worried and careful and have our eyes open that a lot of regulatory capture is being prepared by some actors, and we have to push back, I believe.

Nuno Goncalves Pedro

I agree on that. But the option for specific companies and ecosystems to just say this is closed now, I think it is what it is.

Bertrand Schmitt

Companies, yes. I have no problem, so I’m not sure about that disagreement.

Nuno Goncalves Pedro

There’s going to be a point in time where I feel we’re going to have a discussion on more complex industrial policy, whether it is right for a country to nationalize the technology, for example, and say this tech is now owned by the country, or this tech is now forbidden to be taken by anyone else outside of the world. For example, we could have an argument also around imports and export laws. Is there a mandate that I could take on that? What I’m hearing from you is you’re okay with that, that within certain boundaries, they can do that.

Bertrand Schmitt

Yes, but again, it depends on what. I understand that there are some products you can limit, but to say I’m going to forbid open-source and forbid company to have an open-source approach is very shocking. After that, export regulation will say, “You know what? This product is open-source, but I’m trying to forbid some countries to access it.” Okay, sure. But again, the most successful open-source project is not American. It’s called Linux. What do you do about that?

Nuno Goncalves Pedro

I’ll solve the problem. Let’s charge $1. It’s not open-source. I’m sure there are lawyers working on a solution already if in case this ever happens, which I think will not, but yeah.

Bertrand Schmitt

I just think it’s important to not retroactively change the law, not retroactively change some business approach. But I understand some level of regulation and to consider that you regulate some use of some technologies, but I think you have to do it in a way that’s reasonable and achievable. I think that’s happening in some other sectors of the AI industry, not the software side. And that I’m fine.

Nuno Goncalves Pedro

On this violent agreement, maybe we conclude today’s episode, episode 55: What is Open versus Not Open in Tech? We went through history lane on open-source software. We defined it, we talked about some of the core innovations that happened in the space that were well beyond just software development, organizationally business model-wise.

Nuno Goncalves Pedro

We talked about lies when open is not open, but it may be a mode or breach for closed. I think a little bit more optimistic on Bertrand’s side, maybe a little bit less on my side in some areas. Then we got to some of the geopolitics of AI and what’s happening right now where we ended up on this violent agreement. Thank you, Bertrand.

Bertrand Schmitt

Thank you, Nuno.

When a company says they are launching a new product that is open, is it really? What does open even mean? The history behind open source, its successes and failures, and all the lies we are told all the time by some Tech players. The truth, unvarnished

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Our show: Tech DECIPHERED brings you the Entrepreneur and Investor views on Big Tech, VC and Start-up news, opinion pieces and research. We decipher their meaning, and add inside knowledge and context. Being nerds, we also discuss the latest gadgets and pop culture news

Bertrand Schmitt

Hi, welcome to episode 55 of Tech Deciphered. In this episode, we will talk about open versus closed and proprietary. What does it mean in technology to be an open or closed application? You have all heard about open-source, I guess. There is a saying in Silicon Valley, if you are first, you close it. If you come late, you open it.

Bertrand Schmitt

Basically, it means that you might have an advantage being the first player on the field. You might afford to be able to close-source your product, your software, your application. But if you are late to the game, late to the party, and it’s difficult to fight the leading player in the marketplace, maybe an alternative strategy in order to gain distribution is to open-source your product. There have been many examples of this through Silicon Valley history. Today, we are going to talk more about all of this. Good to see you, Nuno, today.

Nuno Goncalves Pedro

Nice to see you as well. Shall we start with history—the history of open-source? It’s apparently the first known system that was supposedly open-source or in public domain was in the ’50s, the A2 system in 1953. Basically, it was a compiler. A compiler is what turns source code into binary code that gets run by a machine.

Nuno Goncalves Pedro

It’s what allows you to run apps on, for example, your phone and things like that, a compiler. I know some of you that are like, I’m a computer engineer. Is that a compiler really or is it an interpreter? Let’s forget that for a second. Let’s call it a compiler just to make life easier for everyone involved.

Nuno Goncalves Pedro

That was the first public domain open-source thing that we know. Then there isn’t much, ’50s, ’60s, ’70s, there isn’t much. Obviously, there was the summer of love at some point in the late ’60s, and maybe through the ’70s, people started thinking through, shouldn’t we be doing things that are more open? One of such people was a gentleman called Richard Stallman, who’s still alive, so you’d shout out to him. He was part of this “let’s call it hacker community” from those days and was doing some interesting things around it.

Nuno Goncalves Pedro

There was this belief that source code shouldn’t be closed, that if you were monetising something quite a lot, and you were putting even certain things in your code, that if, for example, you were using unlicensed applications, so unlicensed binary, that you would run into trouble and have other issues. So he manifested himself against it and came up with something that we’re still using till this day, the GNU or the GNU Project and GNU Manifesto. Now, GNU, this is the funny part—some of you will find it funny, others might not—stands for GNU’s Not Unix, which is a recursive acronym. You have to appreciate computer scientists and computer engineers coming up with things like that.

Nuno Goncalves Pedro

But its GNU is GNU’s not Unix, because at that time, Unix was a proprietary or had been made over time a proprietary platform by a couple of big companies in the market. There was this view that they wanted to, in some ways, get out of that space. The GNU project was born, and we, till this day, have what we call GNU general public licences, GPLs. You probably have heard about this. Now, it’s in the ’90s, early ’90s, that we have the biggest movement, I think, in the history of open-source with a gentleman called Linus Torvald.

Nuno Goncalves Pedro

I probably butchered his name. Linus Torvald, something like that, pushed a version of a kernel that he had. Actually, the first version he had was not open to the public, but then he released it to the public under a GNU licence. And that operating system was called Linux. And the rest is history. Linux has led to many other things after that. It’s a wildly used operating system globally, in particular on the server side, with many variations, and we’re off to the races.

Nuno Goncalves Pedro

That’s the shortened version of how we got here in some ways. Then there’s a lot of cool things that happen afterwards, but that’s like seminal moments are GNU and Linux. That’s the two things you need to remember.

Bertrand Schmitt

Yeah, and if I may say, Linux is really the kernel, and then you have by extension, Linux, the operating system are actually combining a kernel plus many tools from GNU or not GNU. Just to remind everyone, the Internet is running on Linux.

Nuno Goncalves Pedro

On Linux?

Bertrand Schmitt

We’ll talk later about a lot of our other open-source software. It’s not just Linux, but so many components of the Internet that are running on open-source software. Also, just to be clear, the first definition of open-source was coming from our friends at GNU, but ultimately, there has been competing initiatives to define or redefine what is open-source.

Bertrand Schmitt

One organisation in particular, the open-source Initiative, OSI, has tried to codify their own way and probably in a different way, what is considered open-source or not. They have this official definition they published in 2006, and they keep updating them for GNU, they keep generating new definitions and creating new or updating licences.

Bertrand Schmitt

We have multiple licences possible when we talk about open-source, which can create some misunderstanding about what is exactly open-source or not.

Nuno Goncalves Pedro

We’ll come back to the more bad use of open later in this episode where obviously there are people that use open, and it’s not open at all.

Bertrand Schmitt

Yes.

Nuno Goncalves Pedro

But these are seven moments in real open-source. It created a movement, it created a way of doing things. It created a mindset on how people can share each other’s source code. At the very nature, open-source starts from there. It starts from the notion that source code, not the binary, not what’s created by the compilers that then is run as an application, but the source code itself can be shared for free.

Nuno Goncalves Pedro

That’s incredible. That’s like the religion of the time was a religion of we have all these big monolithic companies like IBM, Microsoft emerging, etc. It’s someone that’s saying, “No, we don’t accept the closed ecosystem play. We want to have code that is shared globally.” In some ways, that movement is now probably the dominating movement in the world in terms of source code sharing.

Nuno Goncalves Pedro

Obviously, as we know, there’s a lot of people profiting out of code today. There’s ways of keeping your code intact and keeping things in-house. But the open-source movement has changed how things are done. It is a quasi-religious movement. It’s this notion of you have… There’s copyright. I enforce my copyright, the entitlement I have to this thing that I developed.

Nuno Goncalves Pedro

There’s copyleft, which is a term that came from open-source, which you are obliged to share under certain licences all the stuff that you developed around it. To your point, there are coexistent pieces. We’ll come back to that later when we talk about Android and Google and the Android open-source project versus Android itself. What is closed? What is open, and how do some companies do well in maintaining these two aspects working really well, like the openness and the closeness piece?

Nuno Goncalves Pedro

I think Google does a decent job on Android. We’ll argue later if that’s the case or not. And yeah, it all started, similarly, with this gentleman Richard Stallman, and then with Linus just giving us Linux, and everything changed.

Bertrand Schmitt

Yeah, it’s really amazing when you think about what was happening at the time. If you think about the ’90s, it was the rise of Microsoft, from DOS to Windows, and Microsoft becoming at some point one of the most valued company and at the time certainly fighting tooth and nail against.

Bertrand Schmitt

Open-source was considered evil by some corporations when actually no, it was just a movement and a different approach to business and willingness to develop things in a different way and a way that was more open, transparent, collaborative, and especially important you could argue in the age of deploying applications everywhere, depending on these applications’ stability over time. It is a significant evolution of the history of computers and programming.

Nuno Goncalves Pedro

Microsoft will keep popping up in this episode. Just to be very clear, this is not their first rodeo. They’ve been having these fights or antitrust cases, etc. In some ways, a lot of the reactions we saw, even with Linux, Linux becoming such an important operating system, certainly server-side globally, has to do with a fight to Microsoft.

Nuno Goncalves Pedro

Because obviously, as you said, Microsoft went DOS to Windows, and then they were really managing a closed ecosystem. There was this view like an operating system is critical. An operating system for those who are listening to us who are not computer scientists or computer engineers is what makes a specific device work.

Nuno Goncalves Pedro

An operating system for your computer, for your laptop, let’s say you’re running Windows or macOS, is what makes the device work. Without it, there’s nothing else. It’s the core. It’s what makes it boot up, and it shows something in front of you and all that stuff. And then there’s things on top of it. As Bert talked about it earlier, even in the case of Linux, there’s device drivers. There are things that make other devices that connect to that device work. For example, if you have a keyboard or a mouse, et cetera, you need to have device drivers that support certain types of keyboards and certain types of mouses.

Nuno Goncalves Pedro

And then on top of that, you have user interface, which in general is extended by the operating system, so it’s part of the operating system these days. But you could argue it’s a different logical piece of it. Then you have all the apps, what you run on it. Microsoft Word, PowerPoint, your email client, all of that are apps. They run on top of the operating system. Operating systems are critical because without operating system, the device is a piece of hardware. Nothing happens. There’s nothing happening to it.

Bertrand Schmitt

Yes, totally. Operating systems are critical. Maybe we can go a bit quickly about what is open-source. What is the definition of open-source. If I take the OSI open-source initiative definition, open-source needs to meet multiple criteria in order to qualify as being open-source. One is free distribution. You should not restrict any party from selling or giving away the software. It has to be a free distribution, no royalty, no fee.

Bertrand Schmitt

Then the source code must be included, and you must allow the distribution source code as well as in compiled form. That’s another critical part. You need to be able to inspect that software as a developer, be able to inspect it if you want, so that it’s clearly understandable, and you can make sense of it and potentially do something about it. The third condition is about derived works. It must be authorised. So you must allow modifications and derived works.

Bertrand Schmitt

You must allow them to be distributed about similar terms. Fourth, it’s about integrity of the author source code. There are different ways you can authorise that, but basically creative-derived worked might need to carry a different name or version numbers.

Bertrand Schmitt

There is still a support to make sure that It’s clear what is the initial author source code and what is not. You can modify it, but you cannot mislead people about what is the original product or not. No discrimination against persons or groups. No discrimination against fields of endeavour. You cannot restrict a program to be used in a specific field or in a certain way. Distribution of licence. The rights must apply.

Bertrand Schmitt

There should not be a need for additional licence. So what you distribute has to be all included. Licence might not force you to use a program as part of another product. You might not restrict other software. And it must be technology-neutral. That’s the OSI definition. So if you want to say and claim that your product is open-source, it has to follow these criteria laid out by the OSI.

Bertrand Schmitt

Typically, what people do is that they will choose a specific licence that has already been developed. Basically, instead of recreating your licence, you will pick an existing open-source licence that has been fine-tuned to follow these criteria.

Nuno Goncalves Pedro

Yeah, so there you have it. If you want to do something open-source, that’s basically it. We’ve talked about the terms of licensing already, copyright versus copyleft. Open-source is copyleft. You have to pass it on and it’s free. This gets a little bit muddy because we’ll discuss a few companies later on where some elements of openness, and then there’s some elements of closeness. We’ll talk about Android and obviously Google’s stake in that ecosystem on Android. We’ll talk about actual lies around openness when things are not open at all.

Nuno Goncalves Pedro

Maybe we’ll start with one firm that has gotten quite a lot of heat that now seems to be changing their ways, we’ll see. But certainly many years ago was getting a lot of heat for taking advantage of open-source but not giving back, which was Amazon, and in particular, Amazon Web Services. The reuse of a lot of code that was seen as open-source code, taking it, playing with it, doing things to it, forking it, as we call it, forking is creating an alternative version to it that goes into the future. Think of it as if you watch science fiction, parallel universes. In another universe, something else happens. That’s the fork. It’s like a fork on the road.

Nuno Goncalves Pedro

They got a lot of heat for it, certainly back in 2018, on the fact that they were using but not contributing. Recently, it seems that that attitude has changed, that they’re now much more strongly contributing, but that led to a variety of things from the market, from to the Commons Clause, to the server side public licence SSPL from MongoDB, which tried to address some of the concerns and issues that were happening with some of these big giants just reusing a bunch of code that was out there and then appropriating it as themselves but not contributing back to those repositories.

Nuno Goncalves Pedro

One important piece to take into account is we talk repositories, think of it as containers, things that have the code in it, that makes over time that code to be compiled and then to be executed, so to run as binary code, to make something then work. The importance of this is in all these open-source projects, there are different roles in the open-source projects. Open-source projects themselves have their own governance. There are people that can commit to the open-source project.

Nuno Goncalves Pedro

There are people that can review stuff for the open-source project, and there are people that at the end can approve changes for new versions of the code. Even in these things, even though it’s all open, et cetera, for some of these big repositories where there’s a lot of code being maintained, there’s still governance. It’s not like there’s no governance. This is an anarchical system and people do whatever they want. There is still a governance system.

Nuno Goncalves Pedro

The issue with Amazon is they were appropriating all this code, using it for themselves, which is fine, but they’re not giving anything back in the shape of things that they might have evolved and improved in the code that might have been valuable for the open-source repositories that they were taking source code from.

Bertrand Schmitt

Yeah, I think also in a way, and we’ll talk more later about business models, but it was in some ways probably connected to open-source business models. When you make open-source software, like the Linux kernel, everyone around it is going to help contribute to that kernel because at some point, they will have no direct real benefit except contributing for it or because the development is sponsored partially by big corporations, we intend to use a Linux kernel in some of their other products. So they see a benefit to help contribute to that. Because it reduces dependence on third parties.

Bertrand Schmitt

So you end up having more control. But for some of the open-source projects, let’s say a database, for instance, and we can take the example of MongoDB, part of the business model of that company might be, you know what? We are going to provide the software for free, MongoDB. But at some point, if users want us to host the database in the cloud, that sort of stuff, we are going to simplify and streamline and host it for them and manage it for them. It will be easier for them. And that’s how we are going to make money.

Bertrand Schmitt

On one side, they build a software for free, available for free. But in exchange, if you have some specific use, it was expected that you might use them for that specific host use. But when Amazon comes, take over the source code and host it, it becomes very difficult competition. As a result, your business model is not working any more. So that’s what many open-source companies were facing, basically. It’s the end of their open-source project. Because if they have no more money to deliver on it and Amazon is not contributing, the project is going to die.

Bertrand Schmitt

They felt they had to make a decision. The decision led to new licences or new clause added to existing licence in order to prohibit the Amazon use of just hosting the open-source software and making money out of it and at the same time destroying the business model that have evolved from the open-source community.

Nuno Goncalves Pedro

I know. Just to maybe finalise this discussion on this, this is when then lawyers get involved. Heather Meeker is probably well known. She’s based in the Bay Area, I think still. That’s where lawyers get involved because at some point there has to be a legal framework around all of these things. You can’t just operate outside some line. There needs to be a line on the sand that can be enforceable, where people can take each other to court. We had huge fights in the past.

Nuno Goncalves Pedro

The Oracle fight with Google because of the Java situation after the Sun acquisition. These things matter. Who owns something obviously matters when it comes to code as much as it does to anything else, like a house. That’s why these new rules that were put in place, these new types of agreements, were there to try and frame a different perspective on how things were evolving. Things were getting extremely complex, and there was a need to clarify things and make them more explicit.

Bertrand Schmitt

At the same time, not everything is all good and well under the open-source sky and environment. There might be some issues. Typically, the one people know in a tech industry is a risk of using some copyleft-licensed software. So for instance, if we take a GNU software, many are using the GNU General Public Licence, the GPL licence for short. This one can be pretty dangerous because it’s a copyleft licence. But the problem with a copyleft licence is that you are forced to share everything you built with this software with everybody else.

Bertrand Schmitt

If you are a closed-source business, create new software that is leveraging GPL software, you might be in trouble and might end up being forced to open-source your product and provide it for free. Typically, that’s something you want to be very aware. The GPL is not the only licence that might cause trouble, but it’s certainly the most common one. When you are developing a software these days, typically what do developers, if they are working for a closed-source company, is making sure that they absolutely never used any GPL-licensed software in the process, unfortunately, given the restrictions.

Bertrand Schmitt

As you said, there has been fights in the past. There has been some pretty famous fights of companies who tried to basically leverage new licensed software, GPL software, and that didn’t end up well for them. They had to either settle like VMware or some others like Verizon to open-source their product.

Bertrand Schmitt

As a company, what you do typically would be to scan your source code for different type of licence in order to understand what licence is being used, because sometimes you don’t know when your developers have introduced some software, libraries, copy-paste even some stuff. This stuff could be really dangerous. It’s a big question you have when you do, for instance, financing of the business. When you exit a business, you need to make sure you understand your risk profile and potentially have an alternative to some software before you can go to the next stage.

Nuno Goncalves Pedro

This is a big deal because it’s human nature. Developers can be brilliant, but at the same time, they can be lazy. They just copy-paste something. They’re like, “I have no clue where this is coming from”, and they just use it. That piece of code might have come, to be honest from something that is under a licence that is not beneficial to the company that they’re developing it for. Again, it’s a little bit like, people are like, “Oh, but that’s silly.” It’s not so silly.

Nuno Goncalves Pedro

I mean, think of it, if I’m developing something, it’s like writing a book It happens to be a book that manifests itself in many weird ways. If I’m reusing lines from another book, I need to know what I’m using it from. I tend to understand what’s the right quotation, what’s the right source, what’s the right licence. This is the analogy for this.

Nuno Goncalves Pedro

I know it’s a little bit more complex than that, but it’s the analogy for this. If you’re using and borrowing code from somewhere else, you need to really make sure that you understand where that code is coming from, so that you’re not infringing on anyone’s licences or not embedding your own code with stuff that can come back to haunt you as Bertrand was mentioning.

Bertrand Schmitt

I think the book reference, Harvard lost its President on some copyright issues. It was not copyright, but it was-

Nuno Goncalves Pedro

Quotations.

Bertrand Schmitt

Quotations that were missing.

Nuno Goncalves Pedro

I don’t want to get into a fight with Bill Ackman because I think… No, this was afterwards, right? This was the post. It started with quotations on his wife, and then it extended to Harvard, and obviously, they kicked out.

Bertrand Schmitt

I think it started with Harvard. No, it started with Harvard.

Nuno Goncalves Pedro

No, I think it was the other way around. Eager then got… Then they went after, no? Anyway, we don’t want to go into political quotation issues and have Bill Ackman tweet on us. We’re okay, we’re good. Bill, we love you.

Bertrand Schmitt

I think it’s proving the importance of basically copying someone’s work. It can be a book, it can be an article, it can be a reference, it can be source code. Source code is written work. You want to be careful before doing that. If it has the right licence, it’s okay. If it has not the right licence, then it’s not okay.

Nuno Goncalves Pedro

The open-source projects, and as you mentioned, mindset and movement, this is a movement, open-source movement, has given us a lot more things than just code. It’s given us a lot more things than just software innovation. Given us, for example, very deep organizational shifts. We now talk about remote teams as if it’s, “Oh my God! We discovered remote teams.”

Nuno Goncalves Pedro

The first guys at scale to have remote teams were companies or organizations or projects that were open-source. Because of the nature of it, because there were thousands of contributors from around the world, they were not co-located. In many cases, they were doing this part-time. They were doing development part-time. Linux is a great example of that.

Nuno Goncalves Pedro

These teams were what in the open-source world have come to be known as fully liquid teams. Everyone’s around the world. There’s no real hubs. It’s a fully distributed team. Those projects, those companies that were focused on open-source projects were the real pioneers on fully distributed. That shifted in many ways, for example, on how engineering is done today.

Nuno Goncalves Pedro

Because if you think about it, it’s not just the organization’s different and everyone’s working from around the world. How do you coordinate people on code? How do you bring code pieces together into something that works? When do you compile? When do you launch into production? Who’s doing the testing before all of this happening? How are they doing the testing? It changed everything around software engineering and software development.

Bertrand Schmitt

I guess no surprise that Git was created by Linus Torvalds to help him better manage the development of the kernel. Git is a way to basically to synchronize and historize and a branch source code. We need that first because of that unique aspect of very remote distributed teams that is inherent to many open-source project.

Bertrand Schmitt

It was open-source that created the need and ultimately found solutions to solve these needs. A scale development globally at any time zone, anytime, definitely an innovation from open-source and not just an innovation itself, but they build the tools to get the job done and the processes to get the job done.

Nuno Goncalves Pedro

Git, if it’s familiar to you guys, because you’ve heard about a company called GitHub that was a massive acquisition, and a few other companies, is a source code management tool. It’s a way to basically verify which control version are you guys on in the repository. We’re not putting pieces of code in the wrong version, effectively. Think of it as many of you might not be developers, but if I’ve had this issue, you’re working on one document, which version of the document are you working on?

Bertrand Schmitt

Yes.

Nuno Goncalves Pedro

It’s the same problem, right? You want to make sure that you’re working on the same version, and it’s properly maintained and sustained.

Bertrand Schmitt

If now we talk about open-source as innovative in business model, because again, as we discussed at some point, except some rare exception, there is a need for some business model. If you develop the Linux kernel, you might not do it directly for revenues, but indirectly you will sponsor developers, pay them, or they are employed by your company.

Bertrand Schmitt

They are working on the Linux kernel because your company benefit from the Linux kernel because maybe it’s building hardware that needs an operating system. You don’t want to pay fees to Microsoft. At the same time, you want this Linux kernel to leverage your new hardware. You need to have people who developed for that kernel. That’s one type of very indirect business model. There are other types. We talk briefly about companies like MongoDB that basically does a business model of hosting.

Bertrand Schmitt

Basically, we probably use a source code, but if you want to have a simplified hosting solution for it, we are here, and we are going to give you a subscription. Another typical business model has been around support, of course. The Red Hat probably innovated a lot in there, in terms of subscription model for what was at the source an open-source product, but ultimately became the Red Hat distribution, and they made you pay the subscription, mostly because they will provide you a high level of service and more advanced enterprise-class type of version of the products that were initially open-source.

Nuno Goncalves Pedro

Open-source is supposedly free, but there are hidden costs. If you have a release of something in open-source, the early releases of Linux were appalling, very difficult to maintain. How do you run, for example, a UI framework? UI framework is like you see windows in front of you instead of just text. On Linux initially, it was extremely difficult. You’d have to compile it, you’d have to attach things, et cetera. You need to decide which UI framework you’re using.

Nuno Goncalves Pedro

Then players like Red Hat with their distribution, simplify that greatly and created value for end users by making these things automated, more simplified for a regular user to be able to use at length and therefore charged for it, as Bertrand was saying, for the support of the ecosystem and support of their releases, et cetera.

Nuno Goncalves Pedro

In some cases, the other piece is enterprise-grade. You might have something that’s open-sourced, and it’s been compiled, and it works, but it’s like, does it have the right level of optimal security for you? That obviously generates some options for players to then make money on top of some of these stacks as they move along.

Nuno Goncalves Pedro

Buying large, as Bertrand said, people make money out of support or services, support services. Companies like Docker, for example, initially made a lot of money out of services. They make money out of other variations of the software as it scales and companies come into that ecosystem to create bundled versions of it that are more closed in nature.

Nuno Goncalves Pedro

There’s ways to make money, but the ultimate effect is this is for all mankind. The reason why it matters that there is open our software is, think about it, if it’s free at the point of consumption, it allows people that have less resources, companies that have less resources, countries that have less resources to be able to use software that is high-quality graded software. It allows for people to keep innovating on software without necessarily always having the objective of making money out of it. It’s because people want to contribute back in some ways, the hacker culture.

Nuno Goncalves Pedro

When I was in college, people had this strong objection to hackers, and we always used to distinguish between hackers and crackers. Cracker came from the term used for telephony systems. You tap into telephony systems and get free calls. Crackers were the bad guys. Hackers were not. Hackers, and today we use that white hat-black hat term. White-Hat hackers are the ones that identify issues and raise them and maybe get bounties out of it and do the proper thing. The Black Hat ones are the ones that make the news by taking over services, et cetera.

Bertrand Schmitt

Yes, totally. Going back to the business model, one that I found interesting was used by Databricks, where, for instance, you get the slow version of the software for free. If you want the fast version of the software that has been optimized for much higher speed, maybe 10X improvement, Then you have to pay for the Databricks version. It’s compatible. API is the same everything, but the engine itself is much faster, but you only get the fast engine if you pay your fees. I think that was another interesting innovation.

Bertrand Schmitt

To go back to your point about for all of mankind, that’s typically also one reason why you would pick open-source as a strategy, because as a distribution, open-source can be very strong because people get excited because it’s free, people get excited, they want to contribute, and you don’t even have to potentially pay the developers. It can be a very writer’s model if it finds its market and a very strong alternative to other business approach. Open-source can truly be not just a development approach, but really a go-to-market approach. It’s considered one of the very effective product-led growth strategy, open-source.

Nuno Goncalves Pedro

Indeed. Moving to open-source for the win. The big achievements of open-source. We already talked about one, so that’s pretty obvious. Let’s get the numbers in on Linux. Linux is one in servers. I mean, around 97% of the… Certainly in web servers, 97% of the top million web servers in the world run Linux, 97% of the top million. Top 90% of the cloud runs on Linux. That’s what I call a knockout win by open-source. There’s variations on the Linux that are deployed here. There might be some distributions, but we’ll take it as an open-source win. I mean, huge user open-source win.

Bertrand Schmitt

What’s amazing, we talk about Git that is also open-source and could be also a part of the internet infrastructure, or at least the world coding infrastructure. Let’s talk about some other tools that you might have earned that are open-source. Python, one of the most famous, most used development language is open-source. The Apache HTTP server, which is another part of the internet infrastructure. Nginx, the acceleration caching engine is also open-source. We have Node.js, which is another development language.

Bertrand Schmitt

In terms of database, we have MongoDB we talked about, but there’s also PostgreSQL, MySQL, as open-source version. Going back to coding or environment, we have Electron that is open-source. React as a front-end development language is open-source. And if we go to AI, it’s actually amazing to see how much is open-source. I mean, Python is a part of most AI projects, of course, but PyTorch, SensorFlow, Keras, all of this is open-source. In a way, AI was such a race that in order to participate, you better have to move very fast, convince others to use your product, and what better way than to open-source it.

Bertrand Schmitt

Obviously, it’s not the case of the CUDA language. That one is actually not open-source and has been developed over for a very long time by NVIDIA, and is still a key competitive advantage for NVIDIA.

Nuno Goncalves Pedro

On the consumer side, things that you use on a daily basis that are open-sourced, Firefox, if you use it as a browser, actually, it came from the Netscape opening of the world when the huge fights with Internet Explorer happened, and they decided to open it up. Chromium also came out of that, which is Google Chrome uses it, but Chromium is the open-source piece of it.

Nuno Goncalves Pedro

A signal on the messaging side, bring the fight back to WhatsApp and the big Facebook, which is funny because obviously it was largely funded by Brian Acton. After he made all that money within WhatsApp. It’s funny how these things happen, like Elon Musk with OpenAI and stuff. Anyway, we’ll get back to that later.

Nuno Goncalves Pedro

Open Office, obviously, was a potential alternative in a fight being brought to Microsoft Office, maybe less successful on that side of the fence. You have, I’m sure… Most of you today would have something open-source that you’re using on a regular basis. Again, even on the consumer side, It’s well noted. It’s not just a B2B tools or platforms discussion. It’s more broadly than that.

Bertrand Schmitt

We talked about Databricks, a closed-source company that is actually built on top of an open-source product that they initially built called Apache Spark. Docker was also part open-sourced.

Nuno Goncalves Pedro

Docker scaled on open-source, right? It was a company that was having tremendous difficulties. They scaled on open-source, and then obviously, they created a business model around it to make money themselves. They scaled on open-source. I mean, it’s incredible.

Bertrand Schmitt

Then we have some interesting stories. If we take AI, and we’ll go deeper in other situation, but one pretty famous model, Mistral, pretty new company actually, but already famous in term of models, I shared in an open-source way under Apache 2 licence, three different open-source models, Mistral 7B, 8X7B, 8X22B, that are usable and customizable for a lot of use cases. Again, we see open-source goes, of course, with the business model.

Bertrand Schmitt

If you want to use the optimized commercial models, then you have to pay. The commercial business models, them are not open-source, and you will buy them because they are more efficient, they have higher performance, they have extra capabilities, easily available, hosted. We can see that even with new LLMs, AI is trying to find its way. Open-source is trying to find its new definition in a way with AI and LLMs.

Nuno Goncalves Pedro

Exciting times. Obviously, open-source is one in many dimensions, and I think the world is better off because of it. Companies have been built on top of this notion of there’s an open-source component and ecosystem-building piece around it, but then there’s pieces that are maybe less well-framed. Maybe as a last example, Android. Now, Android, just to be clear, as a trademark, it’s owned by Google. If you put Android in your device, Google is saying this is Google-approved. Now, Android has a project behind it, which is the Android open-source project, a OSP, where you can pick up the kernel.

Nuno Goncalves Pedro

What makes it run effectively, and a variety of other pieces around it, and fork it, as we discussed before, create a new version of it and go your own separate route. There’s a couple of players who have done that. More recently, Huawei has had to go full fork because of the issues we know happened in the US, where Google was not allowed to give them a licence. Part of Android is open-source, clearly at its very core. And there are pieces of it, even some device drivers, et cetera, that are open-source as well.

Nuno Goncalves Pedro

There is an ecosystem around it. There are device manufacturers that make a living around variations, very strong variations on that project, on the AOSP. Now, there are pieces of Android that are absolutely closed. The way I think Google did it is, to be honest, for me, it’s clean. I think some people will probably disagree, but it’s clean. Google, when they launched Android, they launched, I think it was the Open Handset Alliance, OHA, right? Around Android to really make sure that it was going to be an open-source core operating system, etc.

Nuno Goncalves Pedro

Then obviously, Google is Google. There’s pieces that you guys that are using Android today on your mobile devices are running which are not open. Obviously, some of the apps clearly are not open, like the Snapshots of the World, etc. Even one level below, the Google Mobile Services and the Google Play Services piece.

Nuno Goncalves Pedro

The Google Play Services piece is what Google Play is implemented on the ability to develop your own apps on top of that framework is on Google, just shockingly enough. Google mobile services, which includes core services that you guys all properly use as well, like Google Play itself, the App Store, Google Chrome, et cetera, is owned by Google as well.

Nuno Goncalves Pedro

For you to run GMS, this is the issue that happened with Huawei, Google has to have a licensing agreement with you. That’s what allows you to then say, I’m running Android, because as I said before, Android is a trademark owned by Google. It’s open on certain extent. It’s closed on others, but it’s running the world now. It’s doing what Linux did on the server side. It’s doing the same in mobile devices. Obviously, the world is mostly running on Android today or a variation of it of the AOSP.

Bertrand Schmitt

Yes. Without going into too complex stuff, If you build, for instance, a handset on the base of Android. First, we just said that some services, Google services, might not be available if you don’t comply with some Google request, but also some Google apps might not be available. You might not be able to have YouTube, Gmail, and other stuff.

Bertrand Schmitt

That could be huge trouble. In a way, even if the operating system itself is free and available and the core libraries, if you want to be successful in the marketplace with device using Android, you better follow the different guidelines that Google is giving you in order to have their apps installed, to have Google Play, and even to have some apps compatible. If you don’t have these Google mobile services, that might be really big trouble for the success of your device.

Nuno Goncalves Pedro

I was on the other end of a couple of very significant negotiations with Google back in the day, early days, and it’s been always a little bit tricky. So It’s not totally clean, but I would still say for the most, it’s an interesting ecosystem that has worked relatively well for all involved, even when Google now is competing, obviously, through several acquisitions like the HTC smartphone team, and that sort of we want it, but we don’t really want it. Montreal acquisition where they got a bunch of patents. I think they’ve done a pretty good job, but maybe switching to Lies. Lies when open is not open, but it’s more of a [inaudible 00:39:59] or a bridge for a close, as I call it.

Bertrand Schmitt

Yes. I mean, not wanting to point fingers too hard. I mean, business is business.

Nuno Goncalves Pedro

Microsoft?

Bertrand Schmitt

Yeah. On this one, if you are old enough to remember the old Microsoft approach, embrace, extend, extinguish to open-source and open standards. That was in the late ’90s, early 2000s. At least it was alleged that Microsoft had this behaviour. If we’re on acronyms, there were many acronyms connected to Microsoft, fear, uncertainty, and doubt, presenting vaporware in order to block your competitors.

Bertrand Schmitt

At the time, there was a lot of approaches of Microsoft that were not so great, business-oriented, but definitely not very friendly. So at the end of the day, yes, Microsoft has been accused in the past by a lot of open-source promoters, companies to have a very negative approach to open-source. I think it has changed. I don’t think the new Microsoft is representative of the old.

Bertrand Schmitt

I mean, a great example, you talk about GitHub. GitHub was acquired by Microsoft a year ago. In a way, it was a litmus test for the open-source community because so many open-source projects were hosted on GitHub. And I would say it flourished. Microsoft, in a way, has proven that it’s very supportive of open-source project.

Bertrand Schmitt

Microsoft Visual Studio Code, for instance, is an open-source project and has taken the development world by storm. I’m still impressed how so many developers are using it, even people who might not have said good things about Microsoft years ago. It has been a revolution. The old Microsoft 20 years ago was not a friend of open-source, but now at least it’s not an enemy.

Nuno Goncalves Pedro

Just to explain to our listeners the Embrace, extend, and extinguish. It was based on a memo written internally at Microsoft, which said Embrace, extend, and innovate. The extinguish came as an adaptation for the trial.

Bertrand Schmitt

Yes.

Nuno Goncalves Pedro

Embrace is basically you go into a technology stack, open-source, you embrace it, you’re part of the community, you do commits, you involve your engineers, you do stuff back, et cetera. The extent is then you pick up from there, and you start extending functionality, creating your own functionality, the forking piece I was mentioning earlier. Creating your own functionality, added features, et cetera, that go well beyond the core capabilities of the initial repository’s code bases that you were using.

Nuno Goncalves Pedro

Then the experience goes without saying, what it is. Once you have the extra features, you’re like, “I close this, and now you have to pay.” I would allege, maybe I have a slight disagreement with… It’s nuanced, this agreement with Bertrand. I think they’ve changed their ways. They’re maybe slow-pacing us as well on GitHub.

Nuno Goncalves Pedro

I think what they’re doing with OpenAI right now is magically looking a lot like appropriation of something that initially was not an open-source project, but an open project for the benefit of humanity. Obviously, there’s the case in court that Elon has taken them to court because he obviously funded them originally, and he’s like, “This is not what I funded you guys for.”

Nuno Goncalves Pedro

Now, they’re acquiring a lot of stuff around the stack, inflexion, et cetera. I don’t know if they’re slow-pacing us or not. I’ll give Satya, a walk on that and suspension of disbelief. But I don’t know. It’s always the same name that we talk about from the late ’80s, well, even before, right? So ’80s, late ’70s, ’80s, ’90s. Microsoft keeps coming back, so I’m not sure if it’s in the ethos of the company or not.

Bertrand Schmitt

If I remember, actually long, long time ago, maybe was it in the ’80s, but Bill Gates was famous to write a letter explaining how bad was open-source. That was this lecture a long time ago. So, yeah, it’s a long debate.

Nuno Goncalves Pedro

The browser wars. There have been so many of these things that have happened, right? I mean, it’s incredible.

Bertrand Schmitt

It’s as long as a fight between Apple and Microsoft, I guess. The fight between Microsoft and open-source. I think there has been significant improvements, but it’s not as if Microsoft is fully embracing open-sources or built on open-source. Other certainly is being built more and more on open-source. Like a AWS. You were talking about OpenAI with Elon Musk. I mean, definitely, it’s a weird name for a company that is anything but open.

Nuno Goncalves Pedro

That’s not open.

Bertrand Schmitt

I don’t know. Your chips in a package like healthy good food. No, it’s on a healthy good to eat chips or drink Coke, but then they call themselves OpenAI. Personally, I don’t care, except that it feels very much like marketing that is, I mean, basically a lie.

Bertrand Schmitt

Obviously the first and the most important shoulder of OpenAI and the one who helped attract some of the best talent to OpenAI disagree as well with OpenAI and feels he has been cheated. So Elon Musk filed a lawsuit recently in March against OpenAI and actually even said that if you guys rename the company Closed AI, then I will stop my lawsuit.

Nuno Goncalves Pedro

We just call it Closed AI.

Bertrand Schmitt

We can see the power of a name. It can have in the public’s mind.

Nuno Goncalves Pedro

Just to be clear, OpenAI, to my knowledge, was not ever an open-source project. It was a non-profit. It still is actually. It’s a non-profit.

Bertrand Schmitt

It was a non-profit.

Nuno Goncalves Pedro

It’s always been a non-profit. It still is. Just happens that now the non-profit has a for-profit below it. That was created afterwards. As I said, I’ve been involved in something like this in the past. It’s not as shocking as it may seem. It sometimes happens, but it was never open-source. It’s open in the sense that it was a non-profit for the benefit of mankind kind of thing.

Bertrand Schmitt

When you accept donation in that context, I can imagine how it might be to see suddenly everyone trying to make huge money out of it. Actually, Sam Altman is not directly making any money, given he’s not a shareholder. But I understand that he has a way to leverage his OpenAI position to build all the stuff around, and then he directly benefit.

Bertrand Schmitt

What’s surprising is that a lot of general public, even developers or authors, might think that there is something open. But as far as I know, there is not much, if anything, open. There has been some tools that have been open-source, I believe, by OpenAI, but ultimately the core of the company is not open.

Bertrand Schmitt

Another company—and this time I would say that they are much, much closer to being open and being closed—is Meta with LLaMA 3, LLaMA 2. They have released the weights, so not the source code, but the weights of their LLMs. Basically, anyone can run it. They have put a few restrictions that limit you if you have hundreds of millions of users. There are some others for specific conditions.

Bertrand Schmitt

Ultimately, there are some constraints, so it cannot meet any definition of open-source. But I would argue that it can certainly claim some level of openness that is very valuable, especially in the face of OpenAI and other closed-source initiatives.

Nuno Goncalves Pedro

I was just at a session with Chris Messina, who obviously still credits with having invented the hashtag, and it’s like, yeah. When Meta talks about this, but then there’s a limit on how many users you have, is it really open? Then the stuff they’re doing around mixed reality and augmented reality now, I’m not sure I fully trust that this is an open-sourced endeavour.

Nuno Goncalves Pedro

It is for scalability purposes. I don’t know if it’s an embrace, extend, and extinguish playbook play, but it feels a bit like that. It feels a bit like let’s run the open-source gamut in the playbook and then see where we head. In the worst case, if it fails miserably, it fails miserably. If it works well, then I can’t possibly think that they won’t take over the ecosystem.

Bertrand Schmitt

It’s tough to say. Me, I’m just judging based on the licence of the current product. Apparently, there are rumours that they won’t share the weights of the new version with a huge number of parameters. So LLaMA 3 might be the last version, or maybe they will have different branch or pro-version. I don’t know. For me, I’m more judging them based on what they release.

Bertrand Schmitt

For sure, there is no source code, so again, it’s not open-source, but there is open weight. It’s huge because it means that a lot of use cases, 99.9% of use cases, you can use that and pay no licence for it. I would take it as a huge win.

Bertrand Schmitt

It’s definitely challenging the OpenAI of the world and others because when you see the investment from Meta to build this models, we’re talking about hundreds of millions and probably sooner in the billions. It’s not a small gift. It costs real money, so I cannot complain if Meta has a business strategy with that. As we have seen, most open-source companies have to have a business strategy to keep it sustainable.

Bertrand Schmitt

For the other piece, the mixed reality approach, Meta Horizon OS and Horizon Store. Here less clear about what’s really open. This one is certainly stretching it. There might be some openness in the sense that now you can access the store more easily as a developer. You are not relegated to a lab section of the app store for the Quest. That’s it. They are going to licence their operating system to other manufacturers. It’s open in the sense of windows is open. So this one you can laugh as much as you want about the openness, I guess.

Bertrand Schmitt

To be clear, I’m not judging. Every company has to have a business strategy. What you can, however, have an opinion like I have, I believe, is, what’s the marketing you use? To call it open when it’s fully closed in every way, but you are open to even third-party licensing your product? That’s a bit much on the openness.

Bertrand Schmitt

But I guess, you know what? Consumers, developers, companies just have to learn things through the marketing. But again, I will take what is really open and be happy about it. I think that on the mixed reality side, it’s a good strategy, to be frank, for Facebook to licence their product. It would be even better if they don’t push it too much on the marketing side.

Nuno Goncalves Pedro

Yeah, they keep talking about it like it’s open as well, and it’s not. I mean, it’s not their definition of open. It’s true already with LLaMA, right? I mean, with LLaMA 2, et cetera. There are special licences, there’s limits on what you can do, ton of limits, so it’s like…

Bertrand Schmitt

Not tons of limits. It’s not too much.

Nuno Goncalves Pedro

I mean, come on, prove it. It’s used for training other language models. Requires a special licence for deployment in app or service with more than 700 million daily users, which basically means the big competitors, right?

Bertrand Schmitt

Means Google cannot use it. But if you’re not Google, you can.

Nuno Goncalves Pedro

Then they can change the licence tomorrow. It’s not 700 million, it’s 100.

Bertrand Schmitt

No, they cannot change the licence. I mean, LLaMA 2, as is-

Nuno Goncalves Pedro

For future versions of LLaMA, they can.

Bertrand Schmitt

Sure, but that’s their prerogative. But that’s also because it’s not open-source. If it was open-source, it would be easier to-

Nuno Goncalves Pedro

But that’s why I’m saying they’re calling it all of these efforts open, Bertrand. They’re not open. They’re basically saying, “We’re investing a bunch of money into these things, and we’re making this super usable by you guys for free.” It’s like Facebook is open. Facebook is free to consumers, so they’re going to make money somewhere else. That’s the Facebook playbook, free at the point of consumption.

Bertrand Schmitt

But that’s fair. I think that the definition of most open-source businesses today, they have to find a business model.

Nuno Goncalves Pedro

But this is not even open-source, Bertrand. There’s no open-source here. Where’s the open-source of this?

Bertrand Schmitt

For me to have an LLM that I’m free to run in 99.99% of the use cases, as long as I’m not Google. I mean, it’s magic, to be frank. It’s a huge competition. That’s why we have probably some competition like Mistral, is going even more open-source. I’m all for it personally. Again, if you’re a developer, if you’re a company, what are your choices? To pay OpenAI, to spend a billion, to build your foundational model? You don’t have a lot of options, and this is super high quality. This is not trash what they are giving.

Nuno Goncalves Pedro

I don’t see how this doesn’t become an embrace, extend, distinguish play.

Bertrand Schmitt

Potentially, I cannot judge, and I can imagine that they have a strategy. Will it become that? I don’t know. For me, it’s tough to judge before something bad happens. Right now, I’m just, “You know what? Let’s use it, and if it changes, let’s not use it.” Or potentially, of course, let’s consider an alternative. You might say, “No, I’m going to use Mistral because I believe in their strategy, I believe in their approach, and I believe in years to come, they will keep doing that way.” But it’s a much smaller startup, so it’s also tough to know where it’s going.

Nuno Goncalves Pedro

There’s obviously the angle on geopolitics. You mentioned some of the tweets from Vinod Khosla recently on AI staying closed-source because of China, et cetera.

Bertrand Schmitt

It is obviously a famous investor, an extremely successful investor. Personally, I feel he’s defending too much his own investment. He has a big investment in OpenAI, and congrats on Vinod. By the way, I have nothing against OpenAI per se in their product, but is part of that regulatory push to even forbid open-source AI, which for me is insane. It’s like, “What? Are we serious? The world is built on Linux. Do you know the world is built on Android?”

Bertrand Schmitt

Open-source is part of our life. To suddenly say that you have to close AI for what reason? Sorry, can we repeat again? Because you fear the rise of CI robots or something? I’m pretty angry. I mean, it’s one thing to say, you forbid some exports, and you do some export control on some technologies. That’s one thing. But to say, “No, guys, because it’s AI, you cannot make it open anymore,” it’s pretty, for me, unacceptable. To see him with so much vested interest to lobby for this, it just doesn’t feel right to me.

Nuno Goncalves Pedro

I agree with your overall view. That obviously calling it with parochial interests at the table, et cetera, when there’s other things you can do, export controls. I think that’s true. I would also say that’s the advantage of closed. The advantage of closed is it’s closed. Nobody knows what is underneath it. Reverse engineering it is extremely difficult, et cetera.

Nuno Goncalves Pedro

Is there a geopolitical fight right now with China? Clearly. We’ve talked about it in previous episodes. Does that mean that there are areas of development in the US and other parts of the world, also in Europe, that need to be more cautious in how these instances are manifested to the rest of the world? Probably, yes.

Nuno Goncalves Pedro

Is it a matter of closed versus open? In some cases, it might be, actually. Obviously, it’s a little bit parochial. I feel it’s a little bit like a bit of a spin on the situation in terms of comms and communication. But honestly, some of it might be warranted. I think at some point people do need to have that notion and take into account.

Bertrand Schmitt

You’re right to have your opinion. Personally, I’m totally against it. I think it makes no sense. We accept what is next. Is he going to make sure that Linux is becoming closed-source and forbidden to export anywhere? I mean, it’s too late.

Nuno Goncalves Pedro

No, but because that cat is out of the bag. The AI cat is not out of the bag yet, right? I think that’s the difference.

Bertrand Schmitt

AI is similar. Chinese scientists are doing great work on AI. I mean, if you look at labs across the US, AI labs, how many from Chinese descent? It’s not fair for me at this stage to try to close it, to block some business model, and more important, this is based on total bullshit assumption.

Bertrand Schmitt

This is based on AI is going to take the world. AI is too dangerous. AI can be used by others. Others are going to invent and to invest, and I don’t see why forbidding open-source is going to help. What is going to help is going to entrench some corporate interest. That’s what we know for sure is going to happen. I don’t see that as good anyway.

Nuno Goncalves Pedro

The world goes around, Bertrand. That’s how the world goes around.

Bertrand Schmitt

No, the world had alternatives.

Nuno Goncalves Pedro

It is as it’s been around for the last many decades.

Bertrand Schmitt

No, that’s not true. The internet is running on Linux, not on Microsoft Windows. With initiative like this, it would have run on Microsoft Windows.

Nuno Goncalves Pedro

It’s running on Cisco routers and stuff like that, or people that have made a ton of money out of it.

Bertrand Schmitt

No, there are alternatives in terms of, and Cisco is a shadow of what it used to be.

Nuno Goncalves Pedro

Well, the Chinese also came into that market. That’s a different discussion. I feel it’s warranted, and it’s a decision of the company and the shareholders and who’s in there right now. I’m not here to opine whether OpenAI raised money under the wrong construct. It is the construct of the shareholders, and it is the definition of the shareholders.

Nuno Goncalves Pedro

They’re subject to regulations in the specific markets that they operate in, and they can get slapped if they break those regulations, but it is. The case of OpenAI, I think the situation is, I don’t know. I don’t know what was agreed and what is written down in terms of agreements between Elon and Sam and all these guys initially. What was the agreement they had? Is this a legally binding agreement or not? It’s as simple as that.

Nuno Goncalves Pedro

Are they now changing tech on OpenAI? The discussion is, can they now be fully closed or not? They were never really open. It was more of a non-profit or a for-profit.

Bertrand Schmitt

No, that was not my point. My point was about regulating and forbidding open-source AI. If you are talking about OpenAI, different story. I have no problem. They do what they want. But if they are pushing regulation to limit competition, that’s a different story.

Nuno Goncalves Pedro

But Bertrand, I agree with you. Regulation that makes it impossible for someone to have open-source AI in the US, I think is silly. Now, for many companies to close their stacks, it is what it is, right?

Bertrand Schmitt

I think we are not disagreeing. I don’t know what happened, but me, I have only been talking about open-source AI being forbidden by regulation and regulatory captures. That’s the only thing I talk about.

Nuno Goncalves Pedro

Should not be.

Bertrand Schmitt

OpenAI as a company, as long as they don’t cheat their shareholders, they do what they want and they follow regulation. But for me, what is critical is to let AI develop itself as it wants in a way so that we don’t add some level of interdiction by regulations. I’m very worried, to be clear.

Bertrand Schmitt

It’s not just that, it’s also regulations that are coming to AI. If you think about what happened recently in California, they are proposing some new regulations than are scary about blocking innovation in AI. I think we have to be very worried and careful and have our eyes open that a lot of regulatory capture is being prepared by some actors, and we have to push back, I believe.

Nuno Goncalves Pedro

I agree on that. But the option for specific companies and ecosystems to just say this is closed now, I think it is what it is.

Bertrand Schmitt

Companies, yes. I have no problem, so I’m not sure about that disagreement.

Nuno Goncalves Pedro

There’s going to be a point in time where I feel we’re going to have a discussion on more complex industrial policy, whether it is right for a country to nationalize the technology, for example, and say this tech is now owned by the country, or this tech is now forbidden to be taken by anyone else outside of the world. For example, we could have an argument also around imports and export laws. Is there a mandate that I could take on that? What I’m hearing from you is you’re okay with that, that within certain boundaries, they can do that.

Bertrand Schmitt

Yes, but again, it depends on what. I understand that there are some products you can limit, but to say I’m going to forbid open-source and forbid company to have an open-source approach is very shocking. After that, export regulation will say, “You know what? This product is open-source, but I’m trying to forbid some countries to access it.” Okay, sure. But again, the most successful open-source project is not American. It’s called Linux. What do you do about that?

Nuno Goncalves Pedro

I’ll solve the problem. Let’s charge $1. It’s not open-source. I’m sure there are lawyers working on a solution already if in case this ever happens, which I think will not, but yeah.

Bertrand Schmitt

I just think it’s important to not retroactively change the law, not retroactively change some business approach. But I understand some level of regulation and to consider that you regulate some use of some technologies, but I think you have to do it in a way that’s reasonable and achievable. I think that’s happening in some other sectors of the AI industry, not the software side. And that I’m fine.

Nuno Goncalves Pedro

On this violent agreement, maybe we conclude today’s episode, episode 55: What is Open versus Not Open in Tech? We went through history lane on open-source software. We defined it, we talked about some of the core innovations that happened in the space that were well beyond just software development, organizationally business model-wise.

Nuno Goncalves Pedro

We talked about lies when open is not open, but it may be a mode or breach for closed. I think a little bit more optimistic on Bertrand’s side, maybe a little bit less on my side in some areas. Then we got to some of the geopolitics of AI and what’s happening right now where we ended up on this violent agreement. Thank you, Bertrand.

Bertrand Schmitt

Thank you, Nuno.

The truth, the whole truth and nothing but the truth. Can you handle the truth? What is the future of news? Are we at a Spotify moment? Do we even care about the truth?

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Our show: Tech DECIPHERED brings you the Entrepreneur and Investor views on Big Tech, VC and Start-up news, opinion pieces and research. We decipher their meaning, and add inside knowledge and context. Being nerds, we also discuss the latest gadgets and pop culture news

Nuno

In today’s episode of Tech Deciphered, we will be discussing the truth. Can you handle the truth and the whole truth? More specifically, we’re going to talk about the future of news, where we are today. Obviously, a lot of discussion around fake news, polarization of news.

Nuno

We will go into a conversation on whether we are close to the Spotify moment of the news space, and whether how we’re caring for the truth is still actually true. Do we still care for truth or do we just care about our own opinions and to reinforce them over time?

Bertrand

That’s a big question. I think to start about this topic, we probably want to start from this big debate that has gone pretty big over the past 10 years, but maybe even more the past five years. It’s maybe the mainstream versus niche news and all the dramatic changes that have happened in a way, thanks to internet.

Nuno

There’s the mainstream versus niche, there’s the mainstream versus speciality. Maybe let’s start with mainstream. What is mainstream news? Is it just news or do we get news through mechanisms that sometimes are not news anymore?

Bertrand

Is it still mainstream?

Nuno

Clearly, there has been a decrease in viewership of the newscasts, the news programs that we used to watch in our own countries, in the US. Now people can watch whatever they want whenever they want it. In some ways, there’s still maybe some flagship national news shows that people listen to. Obviously, there’s dedicated news channels like CNN, Fox News, of course, as well.

Nuno

Is it really where we consume our mainstream news? My view is obviously with the decreasing of viewership across the top channels, one would say maybe less so, but clearly still there is mainstream news. Fox News represents a specific side of the spectrum, but it is mainstream. CNN is as well. What’s your view, Bertrand?

Bertrand

I was asking this question only jokingly because I don’t know many people who still watch some of these mainstream news channels. My impression is that actually, first, the metrics are pretty clear. It’s a significant decline in viewership. You talk about TV, but the price is the same. A few managed to, I would say, stay somewhat relevant. Take a New York Times, take a Wall Street Journal, but even that definition of relevant is a very small viewership.

Bertrand

The numbers are extremely small in terms of who is paying for a subscription to these services. We are talking about millions at best, so that’s very small. One thing I noticed, I think that is pretty clear across the board is that, most of what we call mainstream media is more and more watched by the older generations, meaning people who have very long habits of watching their news that way from a TV channel. And two, who have not gone to the internet for their news because they were stuck in their old ways in some ways.

Bertrand

Obviously not everyone is like this, but my understanding is that they are all facing growing, older and older generations. Of course, there’s a question, what does it mean in term of advertising? Because if you’re not able to target 30, 40-year-old mom, that’s a problem. That’s really, for me, a big question. It’s not only becoming less and less relevant and mainstream because of the smaller and smaller viewership, but it’s also a different kind of viewership.

Bertrand

There’s, of course, a question of, is this viewership going to stick or actually just going to die? Sorry to be very abrupt, but if your target audience is mostly 70 plus and everyone younger doesn’t want or care or consume their news that way, that’s a huge trouble for these companies. Obviously, they know that.

Nuno

On the TV side, I think a couple of things. One, local news, in particular, if you look at the US, still has a bit of a role. If you want to know what’s happening, if there’s a storm coming, I think weather is a great example of why you check the news. In principle, it should have some directionality. Obviously, national news is a different ball game.

Nuno

I feel there’s many ways of consuming news today. In some ways, actually, news channels, the classic mainstream news programs, are competing with things, for example, like social media. A lot of people consume news, shockingly enough. We’ll talk about Twitter later, but a lot of people even consume news on TikTok. The latest thing that came out on TikTok, and people will share things, for example, on Instagram, on stories, et cetera.

Nuno

It’s just these tidbits that have very little context. I think TV is It’s a bit under attacked with low attention span. To your point, maybe, certain older generations, they have more the appetite to trust certain newscasters in what they say, the George Stephanopoulos at ABC, whoever else at Fox, et cetera. There’s this notion of maybe there’s a couple of generations that trust the newscaster for presenting news in a way that they think represents either some neutrality or whatever.

Nuno

If we step back on journalism, journalism was always supposed to be a counterpower. It was the fourth power, the counterpower. It was about keeping the powers in check, the judicial power, the legislative power, et cetera, in check. I think that’s changed. It’s changed because of the internet. It’s changed because of rapid access to information. Radio, for example, in some ways has been totally under attack. Podcasts have taken over on that side.

Nuno

Press has been under attack as well. Who are the publications that are still thriving? The publications that relatively thrive are the big guys, New York Times, Financial Times, The Wall Street Journal, The Economists, where there’s either a quality expectation in reading them, or there is a notion of the number of journalists that they can throw at specific articles.

Nuno

A little bit the opinion pieces and the investigative journalism piece of the puzzle is what I think still makes press work, because you have the time to put stuff together, the time to really go under the hood and generate newsworthy things out of it. In some ways, the clickbait thing has changed the world. It’s like, can you get my attention or not? If you can’t, I’m going to just tune out and go somewhere else, and I’ll consume my news in some other way.

Bertrand

Two good points. One, local versus national. The other one about the clickbait. Local versus national, that’s true. I register to my local newspaper to get the local news because I want to know what’s happening. Unfortunately, I find it biased, so I’m not always super happy reading that. The other piece that is clear is, I don’t care whatever they publish on national news.

Bertrand

For national news, I have my Wall Street Journal subscription, I have my Bloomberg subscription, and that’s what I will use for national or world news, actually. In the past, if we go back a long time ago, when you have to print newspaper and journals and stuff, there was some logic to combine national and local news because it’s not efficient to have different newspapers for everything.

Bertrand

I think now it’s quite clear that you won’t get the best quality, get national-wise, global-wise from your local newspaper. In a way, why bother? That has definitely been my approach. Clickbait, that’s a great point.

Bertrand

I also remember reading stories, not just stories, but data analysis about how the news in term of, not just what’s in the title, but once in the body of the news, how it has gone downhill in the past 50 years. The language has become worse and worse in terms of making it scary at every level, from car crash to the Earth is dying, the world is burning.

Bertrand

There was this famous comparison I think it was on German TV where they were showing a weather forecast basically on TV, it looked like everything was burning in Germany. If you take the same news report, weather forecast report five years back with similar temperature, there was certainly not this impression that was shared by making the graphics looks very dangerous.

Bertrand

There is definitely a change. My take is that, consumers are noticing. People are not as dumb as some of the people in the news seem to think. People might think by themselves, notice a change, notice when it doesn’t correlate with the reality they live. We might talk more about this, about the brainwashing that some news organization have been trying to do.

Bertrand

I think it’s also part of why mainstream media has been dying because that propaganda part is becoming more and more visible. It probably went overdrive and as a result has become more visible. I think that’s totally part of why people are looking for more, there niche source of information, or new internet platform to get access to consumer journalism.

Nuno

It’s a tale that is important. We define our own canons. We define what are the things that we trust and the journalists that we trust and the things that we don’t trust. I’m similar to you. I consume my per local news. Actually, I think it’s probably the only subscription I have. Obviously, we have some corporate subscriptions through our firm.

Nuno

My subscription that I subscribe to personally is a local review, which is the Half Moon Bay Review, which is the local newspaper. I consume it because I want to know news and what’s happening, et cetera. Then there’s canons that you build. You’re like, “What are the things that I trust?” If I want to read an in-depth analysis on macro, I can’t say The Economist is without flaw, but it’s pretty decent most of the time. There is actual research behind it. It’s well thought through, et cetera.

Nuno

Interestingly enough, if you’ve noticed on The Economist, those who have read, there’s no bylines. It’s like The Economist takes responsibility for articles posted. There’s a couple of exception on opinion pieces, but in general, The Economist, there’s no byline. It’s like I’m not saying it’s me or whatever. It’s basically assumed by the newspaper. The Economist looks like a magazine, but it’s a newspaper. That’s how they call themselves.

Nuno

Obviously, on Economic news, Financial Times, Wall Street Journal, in some aspects, I’ll look at New York Times, actually, for example, in arts, et cetera, I’ll go to New York Times. I will still consume breaking news as it shows up in my Google Now feature on my Android devices or whatever pops up on my Google Chrome first page, what’s the news of the day and whatever, just for breaking news.

Nuno

I do like to spend more time reading in-depth analysis, research, opinion pieces that are clearly put as such rather than the breaking news stuff, et cetera. Because to your point, it is there to make us feel a little bit more depressed overall. In some ways we’re all creating our little canons, our little things that we trust and the things that we don’t trust.

Nuno

There was this professor in Portugal. He wasn’t my professor, he was a humanities professor in university, quite well-known pundit as well on TV. He once came to a small group of university students. I was a university student back then, and I still remember this to this day, which is he said, “I always do this exercise at the beginning of my class.”

Nuno

It was on something, some critical evaluation of journalism, whatever the subject was that he was teaching. He said, “I always ask my students at the beginning of the course, have you ever been in a situation where there was news in a moment that you’re in? There was a situation that you’re in, a car crash, whatever, and there was news out of it that you saw later, either on radio, TV, press, whatever.”

Nuno

A very significant part of the class always raises their hand. Then I asked them to keep their hands up, and I said, “Do you think that the situation was accurately described by the journalist once you saw it later described?” Almost nobody keeps their hand up. I was a university student, so this conversation happened 20-something years ago. It didn’t happen in the time of Instagram and TikTok and fake news and all that stuff. It’s absolutely mind-boggling.

Bertrand

At the time when it was still somewhat trustworthy.

Nuno

Yeah, it’s absolutely mind-boggling, and this was back then.

Bertrand

That’s very interesting.

Nuno

Just to finish the story, his advice was, “If you want to have canonical views on things, doctrinal views on things, it is my doctrine that I believe in this versus that, read books. Read books, inform yourself. And anything that’s very short term, the last six months, the last three months, suspend this belief for a while. Create that doctrine over time in some ways.” I found it fascinating, but I think it’s really du jour. It works today. Today, that could be a good advice that we could give people.

Bertrand

To jump on that, actually, and I will go back on The Economist, but that’s one thing I notice more and more, and in a way, it’s obvious. The more you know a space, the more you know an industry, the more you realize that generalist journalists don’t know much at the end of the day. A specialized journalist might know more, but even then you see up to a point. It’s so much true of the generalist journalist, how bad it is at every level.

Bertrand

Still, they are designed to make you feel that they know a lot, and they spread stuff a lot. I think that’s part of the issue. Just to be clear, 20, 30 years ago, before Internet, you couldn’t spread one-to-one messages or one-to-few messages. You had to go one-to-many and broad, and so that might make some sense.

Bertrand

Today, I think the paradigm has changed. To go deeper on The Economist, actually, I stopped my subscription as The Economist, I forgot how long ago, but I actually disagree with what you say. I find them, first, late to the news. On any interesting topic, I will get better information on Twitter quicker.

Nuno

They’re not in that business, Bertrand. They’re in the business of investigative journalism, research-based stuff. They’ve never been in the breaking news business, The Economist.

Bertrand

No, because they will always have news that is relatively relevant to what happened a week ago, two weeks ago, three weeks ago. They do once in a while some deeper research, but it’s still timely news. They are not going to talk about stuff that happened some time ago. The most important point for me is that, as you say, there is no byline, and that’s something that they are known for.

Bertrand

I started to feel that actually I was certainly not in agreement with some of The Economist position and The Economist perspective. For me, they were just wrong in terms of perspective and analysis, and therefore more and more useless as a paper to follow what’s going on over the world because I certainly think they don’t represent basically the world and the economy and how it’s truly working, but they have this fancy perspective on how they think things works.

Bertrand

Personally, I’ve been disappointed over the years. I used to read that every week, 10 years ago. For me now, I don’t want to say it’s super bad, but it’s bad enough that, from my perspective, has become useless information.

Nuno

Slightly different perspectives, and maybe that is an actual thought to be had. At the end of the day, to your point, speciality journalism versus generalist journalism. But even in speciality journalism, there is more and more the tendency to create mythology. It’s mythology cells, in particular, negative mythology. We’ve talked about the myths of Silicon Valley in the past and myths of tech.

Nuno

I think tech journalism right now is going through this ‘tech is bad’ notion. Founders, in many cases, are bad. These people that were maybe five years ago idolised, and they were the best ever, and now they’re the worst ever. Why is that? Because it sells. Because people click through, and they go and listen to the last story about Elon Musk and the board still fighting his package. It’s like, cool, but it’s in some ways we know this as human beings. The reality, the truth is normally much more nuanced.

Nuno

It’s where we’ve gone. A lot of amazing tech entrepreneurs have been edified as the new people that are going to save us all just to be thrown down a couple of years later because maybe it sells more, maybe because there’s more clicks on it, and that’s the tendency of the market at that stage.

Bertrand

That’s really one of my issue is that, it’s not about long-term trend analysis. Most journalism that we see in the mainstream media, for instance, it’s always being sensational. It’s the news of the day, “This one was killed,” and, “Look at that big bad trend,” when actually there is no trend. Actually, typically, they will either show no metrics or they show metrics that have been manipulated so deeply that it’s totally untrustworthy.

Bertrand

I would advise anyone, obviously, who is looking at any stats shared by journalist, analyst, to truly take time to understand what it truly really means, and how it has been changed and tweaked over time. Actually, on this one, there was a very interesting tweet storm from the ex-Harvard President, Larry Summers, and he was showing a GDP metrics as they reported religiously from a Wall Street Journal to a Bloomberg to The Economist over the past 30, 40 years.

Bertrand

He treated that data by showing, you know what? Actually, there has been multiple change how GDP is calculated over the years. Obviously, it has been treated only one way. Sorry, I’m talking about GDP I wanted to talk about inflation rates. GDP also, by the way, is being manipulated over the years by changing definitions. Tricks of how GDP has been calculated for 70 years is also very interesting.

Bertrand

Going back to inflation and Larry Summers, he was showing how actually, if you were to use how inflation was calculated in the ’80s, and apply it to what happened the last few years, we will not have picked at 6%, we will have picked close to 20%. We were at 20% inflation rate based on previous definitions of inflation.

Bertrand

That’s pretty insane, because some experts will run this analysis, some hedge funds will run this type of analysis, but the mainstream journalists, even the specialized one in economy, they didn’t talk about that. They had no point about that. I don’t know if they didn’t care, they didn’t know, or if on purpose, they tried to play that game and keep misleading their readers about where we stand, really, by just publishing without thinking too much, government statistics, and without trying to make sense out of them.

Bertrand

That would be what I would call true journalism in my mind. I don’t think we get much of that anymore from this so-called journalist, to be frank. We need to get to the true experts who dare to share the truth.

Nuno

In some ways, and this is maybe a good segue for us to talk about niche journalism and niche news, et cetera, it was broken by the internet. Let’s be very honest. The internet broke everything. The digitization of how things get transmitted in a much more meaningful way, taking away the broadcasting aspect of it, which was radio and TV, changed everything.

Nuno

It changed it so dramatically that now we are looking for a couple of things. We’re looking for specialists or people that we perceive as potential specialists in a certain area to have an opinion on it. Sometimes maybe even misguided. Sometimes, to your point, you might be looking for something that is trying to reinforce a position that you have. It could be an educated position, or it could be an absolutely BS position. It depends on the person, I guess.

Nuno

That is where niche came in. Niche came in with speciality, with blogs, with people recording their own stuff on YouTube, with small channels that immerse to become relatively big channels. If you remember The Young Turks in the US. Guys that went after specific demographics in terms of news, shorter news, bites, et cetera.

Nuno

Everything changed there. Journalism changed because in some ways, to your point, we know the people that back in the day had the big scoops, that told us that Watergate had happened, people that changed how we saw government, and rightfully so. Now that’s not it. Now it’s like, how many followers do you have? How much click-through do you have? How much money do you make out of it? If you have a YouTube channel, how much are you making out of that advertising? That’s what matters.

Nuno

In that world, to be honest, being very truthful implies doing a lot of analysis and research, which implies a lot of time, which probably implies not putting as much content out. For example, just content cadence is a big deal. If you can’t put a lot of content out, you’re at the disadvantage. Monetising stuff, we’ll talk about business models later on, but monetising stuff, what are you monetising? Is what I’m seeing news? Or is what I’m seeing an advertisement for a brand or for something?

Nuno

What is your conflict of interest? Conflict of interest used to be a big deal around journalism. Are you trading stock on this company or whatever? It’s seemingly disappeared. We don’t talk much about it anymore. I’m like, “Surely now there’s more conflicts of interest than ever.” I might do a hatchet job on a founder of a company that I want to short, and I might actually be super supportive of a founder that I’m long on his stock or her stock.

Nuno

Honest, I feel we’ve lost the counterpower. News is no longer counterpower. News is another power, and it’s being exercised. We’ll talk about it later because some of these media platforms are very clearly an exercise of power, not a counterpower, an exercise of power.

Bertrand

I think that’s always the question when you say a counterpower is, who is the counterpower to this power of mainstream news organisation? There was no one actually until recently, where now you have what you could call citizen journalism or analyst experts sharing their opinions, either through their own newsletter or through Twitter, YouTube. That’s becoming the real counterpower. I agree with you. I feel that the mainstream media of today is not the one who would have investigated or published the Watergate. It feels the opposite. It feels the mainstream media that would have hidden the story.

Nuno

But I would push back on the niche thing is always a positive thing. Obviously, we have found people that are very thoughtful about their analysis and numbers and all that. There was this joke going on for a while that in some ways the comedians that decided to go and relate to news like Jon Stewart back in the day, well, he’s back now. John Oliver, et cetera. All of these guys, by making comedy out of news, are the new newscasters and investigative journalists.

Nuno

They have their own skews, and we know what their skews are and some of the stuff that they’ve portrayed. John Oliver, I used to be a huge fan of his program, but there have been a couple of shows that I’ve watched that I’m like, “This is a clear hatchet job, and it’s not comedy. This is not comedy either. He’s just gone after a company, or he’s gone after a person.” Sometimes he’s right, sometimes he’s not. You could see that in the way it’s translated if you have some information behind the scenes on what’s going on.

Nuno

But the citizen journalism thing, there’s pieces, again, of it that are good, like breaking new stuff, what’s happening, people doing a little bit more in depth, going behind the scenes, figuring out stuff that was said before. All of that, I think, is very, very powerful. But honestly, not everyone is a journalist, and not everyone should be.

Nuno

During COVID, we had this. Everyone was an expert on what was happening in COVID. Everyone was a virologist. Everyone was an expert on everything that’s just going. That’s not true. There should be a number of specialists that know what they’re talking about.

Nuno

I work in venture capital, I see these posts posted by people. Some of them are not even venture capitalists. They have no clue. They probably have never even made an investment in their life at scale. Some that post are very young VCs. They’re like, okay, this person has been doing this for six months. Why are we reading this?

Nuno

I call the attention to this because, for example, at Chamaeleon, we share news between the team members just to talk about strategy every week, et cetera, and sometimes one of the team members will share something. I’m like, “Who wrote this?” “It’s very well-written.” It’s like, “Understood, it’s very well-written, and it’s very compelling, but who wrote it?” I want to know. I want to attach credibility to the buy-line. Who wrote it? Who’s this person? What experience does this person have in this industry? What investments has this person made? Why are we listening to this person or reading this person?

Nuno

Even in mediums like ours, and just to be clear, the mediums that people right now are listening to are probably mediums like ours, people that are more educated, more thoughtful, that are willing to listen, that have a degree of openness that is a little bit superior to the mass market, so to speak.

Nuno

Even us, we’re being subjugated now because of noise, because there’s so much noise like, “You should read this. You should read this.” Sometimes I’m reading, I was like, “Why am I reading this thing? Who wrote this?” That generates fake news. That generates the worst of fake news. It generates things that are just fundamentally flawed in their analysis and their research. They’re just well communicated, but they’re flawed.

Bertrand

Of course. You could argue that the definition these days, more or less of mainstream media are well communicated, but not well thought and sometimes pure propaganda piece, I would say.

Nuno

You keep going back to mainstream. It’s niche as well, right?

Bertrand

It’s niche as well. But the big difference is about freedom. You have freedom of choice, freedom of information, freedom of speech. This platform, like Twitter, mostly a YouTube podcast, you are free to listen, you are free to read, you are free to watch from many sources. It’s not coming from the top, it’s coming from the bottom up.

Bertrand

Where I agree with you is that, of course, there is crap, but I much prefer to be able to filter out the noise by myself, find reliable sources of information, check over time how these guys are talking, explaining things, and does it match what I’m seeing from the world? Does it match my understanding of the world? Does it have some predictive power? If it has, then you know what? I’m going to listen and read more of this person.

Bertrand

We just talk about Larry Summers. He was one of the first to talk about inflation risk in the US, and he was right. I was certainly following his perspective, but at the time, he was widely ridiculed by his peers. I much prefer a situation where there are multiple choices, multiple voices, and I can use my brain to search, match and ultimately select, than the other old traditional approach where you had little choice. You were stuck with it, and you could potentially discover some issues, but it was harder because less voices to give you a different perspective.

Bertrand

But totally, there is total bullshit that can come up. For me, that was especially clear during COVID because you could see globally how things were changing very fast in terms of how news was spread, how stuff was explained. Let’s not forget how from one day to the next, COVID initially was not a problem. “Don’t worry, nothing will happen in your country, in your state.” The next day, everything changed in terms of story. Not just one journalist, one magazine, but every journalist, every mainstream media would change their mind and opinion in 48 hours. You would see that change because I’m reading news from multiple countries happening. That was pretty disturbing to see that level of control and manipulation from state entities at some point. That’s what it is.

Bertrand

To go back to your point, yes, of course, I want to hear from infectious disease expert when it was time of COVID, I was looking for this news from different experts and collecting on Twitter names of people who were interesting, trustworthy, and were sharing news before others.

Bertrand

I never become an expert, of course, but I learned to search for the truth in a way. It’s obviously not easy, but it was amazing how early you would get ahead of some news. How early you would get in terms of government perspective on, “You should do this, you should not do that.” It has been in a way, for me, a wake-up time to realise that the government was not right on so many topics in France, in China, in US, in multiple countries, in Australia. And at some point, you need competition for source of news in order to make your own opinion.

Bertrand

It has been proven time and time again that many things, many decision were actually not only wrong, but were pure propaganda in the sense of not based on science. At the time where we were told to trust science, decisions were not based on science, were based on misunderstanding, political calculations, many things, but certainly not always about science.

Bertrand

You don’t want to hear and listen from any crackpot out there, but at the same time, I learned that mainstream media, government sources, were not as reliable as you would thought they were.

Nuno

Maybe just as a bookend to this section, bundling of news has happened. It’s done. We went from maybe listening to that radio show in the morning that we really liked and the news of the day in the evening to the channel that we prefer to a world where we consume news whenever we want, however we want it, video, short form, articles, whatever.

Nuno

Maybe the biggest shift of them all has always been social because we share news with each other. We share things. If I agree with Bertrand on many things, I’m going to listen to Bertrand when he said, “You should read this.” That becomes our focal point, the trustworthiness of the person that sends us those news. But in a nutshell, We’ve gone from a very bundled world, very massage into broadcasting to us into a super unbundled world, super noisy, with the pluses and minus that we just discussed.

Nuno

Maybe switching to where we are today in terms of some of these new platforms, are we close to the Spotify-Netflix moment? Are we close to having news providers to us that find interesting business and business models and products that basically attract us in the same way that Spotify was able to revolutionise music or the Spotify model was able to revolutionise music, where we consume whatever we want, it’s not prepackaged, we know the cues that exist, and that’s it? Are we there yet, I guess, is the question?

Bertrand

It’s a good question. I’m fundamentally not so sure. Don’t get me wrong, YouTube is huge, for instance. Facebook is huge, but the news part of this organisation is actually quite small. If I pick Twitter, it has gone through some changes. Ultimately, in term of revenue generation, I don’t think it’s that big, that transformational at this stage. Even if for me personally, as a source of truth, X/Twitter is definitely a reference.

Bertrand

In term of business model, personally, I’m not so sure a true at-scale business model has been found. Of course, we have heard about other solutions like Substack to let writers monetise, but it’s still at a relatively small scale.

Nuno

The platform still owned today. We have obviously Apple with Apple News, which is almost like a loss-leader for them from a product standpoint. They just bundled it in. Either you want it or not, but it’s cool, and it’s not that pricey if you have a bundle. Google with Google News, obviously. Google News itself has a little bit disappeared from focal point, but they injected it into Google Chrome page, they injected into Google Now on the left side of your mobile phone on Android, so it’s there. They are serving you news that they think you want.

Nuno

I think those two experiences, honestly, you could argue they’re not great, they’re not fantastic, but they work. You’re being given news that they think you want to see. Obviously, we know there’s issues with that as well because they might be skewing towards your last searches and the last things you did, and they’re obviously mining your data. They’re doing a bunch of things. But those experiences in some ways have worked, but the platforms are using them as loss-leaders. They’re not really using them as the next Spotify. It’s another product that you get through a bundle that you consume. In the case of Google, it’s free because we then get other stuff from you, advertising, search revenue, whatever it is.

Bertrand

They want to be the gateway. I must say, personally, I used to use Google News back in the days quite a lot. Apple News as well at launch, but I’m definitely much more on Twitter or X, and specialised newsletter. I feel what they are distributing through Apple News and Google News is really one limited view of the world, not really providing wide perspectives.

Nuno

There is a new generation of players out there that are trying to bundle these subscriptions for things that you really want. Some of them are very creative. They give you credits and you can spend your credits. Whatever publications is attached to it, it’s a use of one credit if you want to read through one news, and you have a bundle of credits and that’s how you consume it, you just choose.

Nuno

There’s others that are trying subscription-based models with a baseline for certain publications. Then above that, you need to pay per article, or you need to maybe extend your subscription. It’s complex. The problem is why it’s complex is because of what we just talked about. It’s been unbundled. There’s a lot of news sources out there that you want to consume. Even on mainstream, we talked about a bunch, let alone on the niche ones.

Nuno

If I really want something that’s adequate for me, I might be interested in something that the Wall Street Journal published this month, but maybe not want to read anything by the Wall Street Journal for the next two months. Then I read New York Times every week, I don’t know. Maybe there’s this one economist article that I want to read every three months, I don’t know. How do I bundle for that as a product?

Nuno

In that experience, I’ve seen some interesting attempts at it, but I haven’t seen the untapping of that. One problem I see on this is when it’s product. It’s just generally product. How do you make the product seamless? How do I interact with the article? How do I make sure that I access the article under whichever browsing experience I’m having or every consumption experience I’m having?

Nuno

It’s complex because every provider has their own app, and then what browser are you on, and then how are you going through the paywall, and how is the paywall treating you, and how you register? It’s not easy to make a seamless experience work. I think that’s a product issue, and I haven’t really seen beautiful solutions to it. Maybe Apple News is one of the more elegant ones, but I haven’t seen any beautiful solutions.

Nuno

The second piece is actually business model. It’s like, “What do I charge for?” I charge a subscription, which people understand. That’s how news has always been working, even newspapers back in the day. Do I get money out of advertising? Again, very well understood, et cetera. Sponsored content, which for a while was tricking us all. They started making you have to put that little sponsored content down there. It’s like, “This is actually not news. Someone paid for this article.” Mysteriously, the company that they’re saying good things about.

Nuno

There’s all these business models. In my opinion, subscription probably is the way to go if we believe this will go the route of other content streaming, like video and audio, but it’s still not nailed because of the multifaceted nature of the providers, very unbundled.

Nuno

Every time we look at the space as a VC, we have this doubt around market size. How big is the total addressable market? How big is the serviceable addressable market? How easy is it to scale to that level? Everyone’s like, “This is huge.” I was like, “I understand it’s huge if you put everything together, but if you put everything together, how fragmented is everything you just put together?”

Bertrand

That’s a big question. Let’s not forget, one big issue with all these models is that you have a wealth of free information, free news, either reading Twitter or YouTube or just browsing the web. The Reuters of the world, the CNN, ABC of the world. I mean, it’s free content. You have to fight against that. Of course, you don’t just have to fight against that. You have to fight against other opportunities from watching a movie, watching a TV show, listening to music. Many sources are fighting for your attention. It’s a tough place to be.

Bertrand

Maybe going back to the business model, obviously, there has been some tentative from some governments. We can talk about Canada, Australia, trying to force Google News and other platform like them, Facebook, to do some revenue share or direct taxation of their news activity, which has led to some of these companies stopping their product in some markets.

Bertrand

California looks like if they can pick any bad idea somewhere, they will. They are looking into that as well. It has been somewhat a trend, but I have the impression it’s not going too far in that direction. What do you think of this one, that revenue share?

Nuno

If the music industry is anything to go buy, if some of these news providers do have some strength, which to be honest, some of them are relatively big, as I said, the market’s quite fragmented, there will be more and more legislation around those ways because you’re giving content that we developed that we are charging for, for free to your users. While that’s wonderful to your users, we’re getting nothing ourselves, and we develop the content, we own the content.

Nuno

Interestingly enough, the problem becomes even more difficult with AI and with ChatGPT-like functions like Gemini, et cetera, because then I’m searching for it, it could tell me the source, and then what happens? Does it send me the source? Then the source has a paywall, but I just saw the result synthesised for me. It defies the purpose. How do you deal with that? I think we’re going to have even a next wave of issues, which is with AI and summarisation, and you ingested this content, and you couldn’t have ingested this content, and whatever.

Nuno

I think this is going to happen more and more. The big search providers, et cetera, we’re going to have to figure out a way of compensating some of the content developers and content providers, not just, to be honest, news providers, but also people that do their Substacks or whatever. I think we’re going to have a little bit of that going forward. I think this is the beginning, not the end.

Nuno

It happened in music as well. Music was less fragmented. Obviously, the big record labels were the big record labels, and there was more power. Maybe it won’t go that direction. It was very person-to-person driven. The issue with music started when people were just able to share stuff between themselves, the Napsters of the world, et cetera. Here it’s different. It’s the big players in the middle that are acting as the hub.

Bertrand

I would disagree actually with that perspective because music is pretty obvious for me. When you share the full song, high quality, you have to find a way to make people pay for it.

Nuno

But why is that news not the same? Didn’t someone spend a ton of time developing an article, and it’s shown by someone?

Bertrand

I will tell you why, because they are linking to free news. If the news on cnn.com is free and available to anyone, it’s free. You are not paying for it. I don’t see the problem. Obviously, you don’t get The Economist news from Google News because they have put a paywall. If you want to read their news, you have to go through their paywall. Whether you are Google or you are directly a consumer trying to get access to The Economist, and the same for Wall Street Journal and other sources.

Bertrand

If they are pointing to free news sites, I don’t see why they should pay for anything. If these sites want to close themselves down and put a paywall, sure, go for it. I have no problem with that. But I don’t see the problem when the base source is free and freely accessible, what is the issue?

Nuno

I think there’s two problems. One is years ago, maybe before today, the crawlers and scrapers that these guys were to get their searches were going into information that was not supposed to be publicly available.

Bertrand

I don’t think so.

Nuno

They did. No, that’s true. You can go back in history and see it. Google was showing you news that were behind paywalls for certain players. You could say, “Maybe they didn’t define their paywall in the right way. Maybe their security wasn’t done in the right way.” I don’t know, but they did. There have been cases in court because of that.

Nuno

The second thing is now, and we’re seeing the same thing now with AI, the building of these large language models, where are the data sets coming from? We already saw this issue with things like Getty Images, where you have images that are Getty Images being used, and there are specific licensing agreements to it that are not being respected because AI doesn’t care. It’s just basically putting that forward.

Nuno

I think you’re oversimplifying the discussion. “There’s a paywall, whatever.” The data set is a data set, and it’s getting just worse because you’re getting underneath these data sets, and you’re getting information that probably you shouldn’t be able to share.

Bertrand

First, I don’t think as of today, you have any trouble to put a paywall that would block Google Crawler to scan your content and publish it on Google or Google News. All news maybe, but today it’s irrelevant. Two on AI, I think it’s an extremely different topic and happy to talk about it. I cannot say I have a firm opinion at this stage on the AI side, except that you have to remember there are two questions. Are you training a model and are you trying to get paid for feeding that model?

Bertrand

I think from my perspective, it’s the same story. Do you have a paywall or not? If you want to block from a scraper, you should be able to decide to block and the scraper should agree to follow this direction. If Google Scraper has a clear instruction to not scrape, it should not scrape, and it should not use that as a source for its training and the same for OpenAI and others. For me, it’s pretty basic. Obviously, you can have a bigger, more complex paywall, and that should be even more clear that you cannot access it. If you go around that, there is an issue.

Bertrand

After that, as an IP provider, you might decide to say, “You know what? I don’t care if these people are scraping, even if technically they are not right, I let them do so.” Apparently, that’s what YouTube is doing. OpenAI seems to ingest YouTube content. We saw a specific approval from Google, and I’m sure Google could block OpenAI from doing that.

Bertrand

The other question is output. What type of output are we talking about? If we have an AI system that’s going to replicate a song, for instance, or a book, we obviously have an issue. If it’s not replicating, but following some styles or some approach, I think it’s a different story because you could argue that’s how humans are creative. They are not creative out of nowhere. They are creative based on their histories, their culture, by listening, by reading, by somewhat copying.

Bertrand

Of course, if it’s go too far, you’re in trouble. But there is a lot of inspiration done by artists, so you could argue AI is the same. It’s taking inspiration. We could say, you know what? Even if it’s a similar process as an artist, we decide we want to treat that differently because it’s an AI, and that would be a fair discussion.

Nuno

Maybe at some point we should have the news being done by AI agents. They have video, they look at it, and they make a decision, and they summarize what happened.

Bertrand

It’s coming. We are talking about months, probably, before we have, and I’ve seen already, some prototypes, I mean, some AI broadcaster taking a piece of news, ingesting it, and showing you a virtual news anchor, reading the news, presenting it. I don’t know which form it will be, but it’s for sure 100% coming.

Nuno

Going to happen, yeah.

Bertrand

Is it a good thing? I don’t know.

Nuno

We shall soon find out.

Bertrand

Maybe it will be forbidden. But from a technical perspective, it’s becoming possible. For sure, we are talking of months, potentially.

Nuno

We shall soon find out if it’s good or not. Actually, the reason why we decided to do this episode in the first place was we saw this emergence of incredibly talent once in a generation, twice in a generation kind of entrepreneurs going into this space.

Nuno

The more obvious one is Elon with his acquisition of X and Twitter. We could have an argument whether it was for free speech or whatever, but it is a key media platform, and Elon went after it. Clearly that’s number one, and it cost him a bunch to go after it.

Nuno

Noam was the original CEO from Waze that then sold to Google, is doing post news. Unclear how much money is raised. I know he’s raised some money from Andreessen Horowitz and Scott Galloway. Unclear how successful they are today, but again, a great, great entrepreneur, a great executive, an amazing person.

Nuno

Kevin and Mike from Instagram did Artifact, which actually was just bought by Yahoo undisclosed. We suspect it wasn’t an amazing acquisition. Also, unclear how much money they raised in the first place. But I mean, Kevin and Mike that did Instagram going after news was a big deal.

Nuno

Back in the day, Eve Williams, obviously, of Twitter Fame, did Medium, which is obviously still out there, probably the biggest evolution after Blogger that we can think of, and a bunch of other things that have happened in the space that I feel are quite exciting. You have people like Kevin Systrom, Noam Bardin, Elon Musk, going after this space. Back to the point we made earlier, it is the power. It’s not a counterpart to the power.

Nuno

I would be a mess if I had forgotten to mention Jeff Bezos bought The Washington Post for a bunch of money, 250 million, or something like that. Clearly, news, there’s interest in this. There’s interest in big media and news platforms.

Nuno

We would expect a lot more innovation by now. We’ll see what Noam can come up with, what Apollo acquired, Yahoo will do with Artifact, how does Medium scale further, Substack, and all these guys. It still feels for all this talent that we haven’t had that seminal moment, the moment that changes everything, which is interesting.

Bertrand

Yeah. To jump on that, Elon Musk acquiring Twitter, from my perspective, there was a lot of uncertainty, but I feel at this stage, there’s definitely some stability from the platform. From my perspective, getting a lot of value from X, I should stop saying Twitter. But in a way, it was the biggest billion type acquisition by a billionaire of a media organisation when you think about it.

Bertrand

At the end of the day, it has been very typical of extremely wealthy individuals, at least some of them, to want to have some impact in politics. Let’s call it that way. The way to do that has been through acquisitions of magazine, newspapers, TV station, that, quite frankly, if it was just from a cash flow perspective, would not be such a good acquisition, such a good investment.

Bertrand

My point that it has been happening forever. I can tell you that in France, for instance, most of the press of a significant size is owned by specific family who have been very successful in their business life. I’m not saying that was a good thing or bad thing. I cannot say I have a strong opinion on this topic, actually. It has been very typical.

Bertrand

When people were surprised of Elon Musk acquiring Twitter, yes, it was a lot of money, but at the same time, as you say, Jeff Bezos acquired the Washington Post and so many other magazines, press, TV stations have been owned by billionaires as, I believe, a way to influence politics. Is it for personal gain or is it just because they care? I guess it depends, and you will have to ask them.

Nuno

There’s political notions. If it’s weaponized in a specific way, it’s propaganda. It just drives people’s opinion, it drives how they vote, it drives how they do things, it drives their mindset and how they think through things. Obviously, it’s very powerful. We’ll talk about state-owned and government-owned and government-linked news and how that’s been used, but it’s historically been that.

Nuno

There’s a couple of dimensions. There’s the dimension of ownership and these big players owning them, there’s the dimension of innovation, big entrepreneurs that go into the space and try to innovate the space and create new products that radically look different.

Nuno

There’s also the people that are the journalists that write things. I remember Ignacio Ramonet was the Chief Editor of the Le Monde Diplomatique. I think he was the guy who actually spun it out from the editorial Responsibility of Le Monde. He wrote a book called Geopolitics of Chaos, I think I’ve mentioned in a previous episode. This notion that because of historical reasons, certain parts of the world might have media that is skewed towards a specific political preference versus other parts of the world. He was talking about most parts of Europe.

Nuno

There was a strong left-leaning view by a lot of journalists in Europe. It had to do with Europe having been under Nazi rule and having had a World War II that was devastating to Europe. That was the counterpower. The counterpower was left. Therefore, he had this notion of the gatekeepers. I think he called it the worst thing that I’m going to say here. But the gatekeepers, they tended, at a certain point in time, that might not be true today, but when he wrote the book, it probably was, that it would be much more lenient on left-wing governments in specific countries than on right-leaning governments in specific countries.

Nuno

That still exists. If your country, for example, is coming out of a dictatorship, or it’s moving from a quasi-dictatorship to democracy, et cetera, it’s likely that the journalists that are writing these articles, that are writing these pieces, that are putting them together on TV, et cetera, will have their own skews. It’s not mutual. It probably never was, but that is the ultimate piece of it. It’s the person who wrote it or who put that piece together.

Bertrand

That’s pretty interesting. I would say the big counterargument on this is the US because there was no dictatorship, there was no war, but still, we have a very left-leaning mainstream media and journalist in general. I’m not sure how Europe has really gone through a different, I would say, exercise. I don’t know if it’s left-leaning people being attracted by media or vice versa. I’m not so sure.

Nuno

Maybe talking about the propaganda and the fact that we have had some recent news that are bombastic on programs and entities that we thought were amazing and walking on water in terms of their neutrality. We’re coming to a conclusion that they probably are not like NPR.

Bertrand

I think that a very interesting piece for me is I’ve always been surprised being originally from France, how much the state owns still some media organisation. You have many French TV stations that are owned by the state, France 2, France 3, you have radio station. It has always surprised me, and it’s quite significant. I don’t know the exact percentage, but it’s significant in term of viewership. One thing personally I like about the US is that there is no such thing except NPR and the Voice of America.

Nuno

There’s a couple of others, like the PBS stuff, et cetera. There’s a couple of other things that are owned.

Bertrand

Yeah, there might be. I think in term of viewership, it’s just dramatically different to what you would have in France and maybe some other European countries. The Voice of America, I believe, has been more targeted about outside the US, so news from America to the rest of the world in a way.

Bertrand

NPR has been more very local. I had some respect. I’ve known some people from that organisation long time ago. For this news organisation, it has been a bombshell a few days ago, and we’re already planning to make this episode, so it was timely.

Bertrand

A journalist, Yuri Berliner, published a bombshell report about his organisation, NPR, where he has been a senior journalist for 25 years. It’s really damning. When we say it’s left-leaning, it’s like 100% left-leaning in the sense that there is not a single Republican in the news organisation on the journalistic side.

Bertrand

It’s very clear that you don’t dare to question the leaning of the organisation and the diversity of thoughts and opinion of the organisation. If you dare to question, then obviously you are going to close about the dirty secret about how it’s functioning.

Bertrand

Obviously, there has been, following this report, some digging about Katherine Maher, the new CEO. It’s pretty horrible, to be frank, to discover that such a person will be leading what should be being state-owned, a relatively neutral news organisation. She’s incredibly clear about personal allegiance. She’s incredibly clear that the truth doesn’t really matter. It seems for her an old concept, so it’s pretty shocking.

Bertrand

In some ways, for me, it’s representative of a lot of mainstream media news that I’ve learned to basically not think too much about because there is no point reading it, given how biased it has become. But to see that so clearly exposed, so clearly expressed in term of opinion by a CEO, and to have all of this, from my perspective, paid by taxpayer dollar, it’s pretty shocking.

Bertrand

If it’s private, their choice, their decision, me as a citizen, as a listener, viewer, my choice to read it, not read it, I have as long as I have options. But in that situation where my tax dollar should pay for that, it was always a big question for me in France. It’s now a question in the US.

Nuno

Maybe because of the tax situation, obviously, I’m coming from Portugal originally, and there’s that type of commentary as well. That we have a relatively state-owned broadcasting company, et cetera. Obviously, there’s now a lot more diverse ecosystem, but back then there wasn’t.

Nuno

We’ll come back to this topic when we talk about polarisation and the truth. There is fundamental polarisation. Some would allege that what we’re seeing with some channels like CNN and others is a response to the Fox News effect of going fully to the right and turning news in some ways, maybe into too much entertainment, some cases, maybe too less facts. Others would say, like you said earlier, that maybe the US is always very left-leaning on news, and Fox News was the knee-jerk reaction to that.

Bertrand

It is potentially true, actually.

Nuno

Which could be true I’m not sure. I’m not a Fox News watcher. I have difficulty watching it for a variety of reasons. I can go into in a more informal context, I think what’s happened to the news is that notion, the notion that it’s difficult to watch neutral news. I couldn’t really point you to many newscast, news programs where I’d say there’s an intrinsic neutrality. If there’s no intrinsic neutrality news, you have to go either to the edges that you’re more comfortable in.

Nuno

If you’re looking for reinforcement, you’ll go to my right-leaning or left-leaning news in terms of public opinion, policy, etc. Or if you’re more moderate, and you want to stay more in the middle, you have to find things on both sides that you can still consume and then educate yourself as much as you can to figure out, where do I lean on this? What do I believe in? What do I don’t believe in? What is important to me? What is not?

Nuno

Or you stop watching the news altogether, which is also a possibility. I have to be honest, I did it for a while. I consumed very little news for a period of time. It’s great. Your happiness levels definitely go up. The world is like, fine.

Bertrand

That’s a great point. My big issue is a lot of news from the perspective that if it’s not based on historical perspective, data analysis, for me, it’s not really interesting because ultimately it’s just an opinion. That’s why I don’t especially watch more Fox News than CNN, for instance.

Bertrand

To your point, I think more about Murdoch being a smart businessman. He probably saw that not as a knee-jerk reaction, but more like, “Hey, there is a business opportunity. This space is wide open. They are all on the left, or they all move to the left or to the centre left. If I go full in on the right, there should be an opportunity for me.”

Bertrand

I think it was more very calculated as rational, in a way, business decision, whether you like it or not. But again, from my perspective, it’s a private organisation. You are free to watch or not watch. You can subscribe for it, not subscribe for it. It’s an easier perspective. But to your point, I personally go back way more into, I want to find experts that over days, weeks, months, become more and more credible because what they say ultimately connect well to reality. That has been my perspective.

Bertrand

I must admit that X has been a great source for me of finding experts. From there, potentially subscribing and paying for newsletter to find not just news, but stuff that help me understand what’s happening in the world, what happened in the world, and potentially give me insights into where the world is going.

Bertrand

I want from my perspective, at least as close to the reality, because I care about the reality where I live, and I care about being able to predict where the future is going in some ways. That sounds maybe arrogant, but as someone who has a foot on the VC side, a foot as an entrepreneur, understanding where the world is going, I believe, is pretty important.

Nuno

Just to qualify a little bit, obviously, when we talk about left and right, these things are not magical things that we are pundits on that we can identify, but I would say there’s always a nuance on how we describe it. Left in the US is not the same as left in Portugal or France. The US, you cannot have a Communist Party. Full stop, done. Portugal, there’s still a Communist Party. They’re not very big. They’re not super significant.

Bertrand

Is it still true, actually? Is it still true? I don’t know.

Nuno

We’re talking about things in a nuanced manner, based on the history that they are. Again, we’re not political pundits. We’re not the best guys in the world to give views on this, but we’re just trying to frame the discussion in our perspective based on that, based on those nuances between countries and how we see them evolving, having lived in a bunch of different places all over the world, including, as you guys know, in China, both Bertrand and myself have lived in China. Maybe that’s a good segue for our next thing around polarisation and censorship and all that stuff. I have to be honest, I forget the name of the newspaper. What’s the name of the English newspaper published in China?

Bertrand

China Daily.

Nuno

China Daily, yeah. Everyone’s like, “Why do you read China Daily?” It’s like, “Because I know what their perspective is.” The great thing is once you know what the editorial perspective is, and then everything you see has a skew. It’s like there’s always a skew.

Bertrand

It’s like the old truth about the Pravda, the official magazine of Communist Russia. It could not be further from the truth in term of journal. I still remember that joke where they apparently made this article, I guess, in the ’80s.

Bertrand

Of course, it was well known that in Russia at the time, good luck finding bread. People would line up in front of bakeries to try to get some bread if you had the money to get some. At some point, they run a story about, you know what? It’s the same in France. They picked a very trendy high-end bakery where actually, indeed, people were lining up because it was considered the best bread of Paris. All the crazy is about bread. We go there and wake up early and get bread. But the Pravda version was, “That’s the same in France. They’re also in trouble to find bread, so they have to line up.”

Nuno

Yes.

Bertrand

From my perspective, yeah, China Daily is probably quite similar, unfortunately. But you’re right, at least you probably know what to expect.

Nuno

I know what’s the perspective. I think it would be great if everyone just published. This is most of our editorial team. This is how we’re leaning. That’s how we lean. Maybe they don’t put names, but like an anonymised data so that we have a view.

Bertrand

I actually have some anecdote I want to share about. You talk about stories where you have seen the news, and you have I have seen how it’s reported. I have seen that on China Daily. It’s pretty interesting to say the least.

Nuno

Obviously, news can be censored, and in many markets, it is. It can be used as propaganda. It can be even used as brainwashing. Totally changing how reality seen in certain places in the world. I suspect there aren’t many people listening to us in North Korea. Hopefully, we’ll be safe on that. Clearly, there is a specific line of what is being said and how they’re living versus the rest of the world. It’s a hard core brainwashing at the end of the day that the news can provide.

Nuno

I feel the more nuanced thing that’s happening nowadays is news is being used as a polariser, as something that pushes you to an edge or the other because of what we discussed earlier, because of that incentive to make money out of news that pushes you to go two extremes, you either really hate it or you really love it in some ways. Normally hate is more powerful. Normally a negative is more powerful. That is aimed at reinforcing your own beliefs.

Nuno

In the case that I was making earlier, either you’re moderate, and you want to read stuff in the middle, or you don’t read news at all because you don’t trust it at all. Or the other two extremes, you go one way or the other in terms of your view and what you read and what you listen to and what you watch.

Nuno

I’d say the one that’s winning is clearly the latter. That’s why, for example, this country is becoming so polarised because people want to listen and read and watch things that reinforce their views of the world. The pundits, the podcasters, the newscasters that play to that tend to win because it’s easier. It’s a path of least resistance.

Nuno

We talk about it in startups and consumer investing all the time. It’s the path of least resistance. Is this the path of least resistance for the consumer? Is this user flow, as we call it, the path of least resistance? News has figured it out as well.

Nuno

I think right now there’s a lot of stuff that just reinforces people’s beliefs. That dialogue in the middle is very difficult to find it, very, very difficult to find. To Bertrand’s point, then you need to have the people you follow on Twitter, see what we call Twitter is X now, people that have agreements, disagreements, maybe some more interested and instructed panels and discussions out there where you put people with very significantly different views with an amazing moderator and see what comes out of it.

Nuno

I don’t know, but certainly that is less and less. What we have more is more and more the pedalling up of animosity, extreme views, polarisation.

Bertrand

Yeah, it’s a good point. It’s very tough to see some very good, intelligent questioning discussion with strong moderators who are smart enough to really understand both sides of the equation and to understand that sometimes actually each side could have a point. To be clear, I think there are some truth that in some ways are self-evident based on maths and physics, and it’s pretty tough if you start questioning that.

Nuno

Even science changes, though, but yes.

Bertrand

You’re right. The definition of science is that you have to keep questioning it. At the end of the day, if you stop questioning it, it’s probably not science anymore. To be clear, it cannot be just dumb questioning. It has to be with relevant arguments, relevant experiments, relevant data, making sure that all of this is right. Again, personally, I think that way because that’s who I am, but that’s also who I want to be, and that’s also the world I want to live.

Bertrand

From my perspective, the truth matter 100%, but there would be, obviously, some points where people have to disagree. If you take religion, for instance, some will have strong opinion based on religious belief or lack of religious belief, it’s very tough to argument at some point. You have your opinion on this. It might be tough to say that is an obvious truth.

Nuno

It’s not that people can’t have opinions and strong opinions at that, I think my hope is that there’s just more dialogue than we’ve had in the last maybe 8-10 years. It feels like there’s less and less capacity for people to just stop and say, I’ll listen to you. I currently don’t agree with you, but I’ll listen to you. Let’s have the conversation.

Nuno

There’s less appetite to do that, and it’s a shame because I agree with you, the truth does matter, and in some cases, there is a truth that you can get to. Either because you were there, you saw it, or because you have enough data points to make that call. Sometimes it’s a little bit more tricky to know what the truth is, but the truth does matter.

Bertrand

To this point, I think you want to strive to find the truth. Ultimately, you talk about dialogue, and I totally agree, but I think dialogue has to be informed as much as possible. Part of being informed means running experiments or talking about the results of experiments or having deep data series on some specific topics, trying to understand carefully the data, trying to make sure the data is as clean as possible, and base your discussion on that. Because it’s okay to disagree about what should be done about some topics, but if at the root, you don’t even have the same data to comprehend, to share, to discuss, it’s hard. It’s very hard.

Bertrand

I’m always surprised when some topics have actually data available, but it’s not going back on that. On the contrary, when there is very few data, where there is questionable data, but this data is constantly put in front as if it was the truth.

Nuno

Yeah, the manipulation of data, the cherry-picking of data. There’s the famous book, the How to Lie Using Charts. Just change the perspective on charts and how you present it-

Bertrand

Totally.

Nuno

-and numbers. There’s many ways to do it. It’s getting worse because now we have deep fakes. Now you’re like, what do I trust?

Bertrand

There is manipulation and there is a fake. But data series is a great example. You can tell a story if you pick data for the past 20 years, if you pick data for the past 50 years, if you pick data for past 100 years, and you will have another story for the past 200 or 2,000 years.

Bertrand

For me, this one is really amazing because it’s very interesting how right now, for instance, I’ve noticed, I won’t go into details, but a lot of instances of data manipulation just based on how far back are you looking at? I would strongly suggest people listening, look at how far back is the data going, try to go as far as possible. From going as far as possible, usually you will be quite shocked by what you discover.

Nuno

Maybe just to end, what is the new counterpower? What are the checks and balances to news that has been hijacked by clickbait and other things out there? I’m not sure. I’m not sure I have a great answer. I think it’s hopefully more educated people over time. I don’t know.

Bertrand

I think it’s certainly part, as I was going to say, it’s you using your judgment to do that. People have to be educated and want to be keen on looking for the truth. I also believe that some platforms, if they are free of censorship, can be a solution for that. Personally, I see X as a solution for that. YouTube, partially, but there has been more censorship on this. Facebook as well, I seem to have had more censorship. For me, it’s combined with freedom of speech. If you don’t have freedom of speech, ultimately, very quickly, it might take you don’t have freedom of thought either.

Nuno

Very interesting. Education seems to be the key to this, or a founder that comes up with the ultimate solution that shows us news in probably not its raw state, but probably showing the cues that news have, what’s the balance of opinion. I think there was an app trying to do that. I’m not sure they’ve done well. Hopefully, maybe there will be some technology solution to this as well. Year of election in the US is always a bit of a tricky thing.

Bertrand

I think every election seems to have some story related to the spread or actually the blocking of news, depending on where you look at. I guess this year will be somewhat the same. I think from my perspective, it goes back to freedom of speech as a solution for that. It goes back to you doing your own judgment and analysis about the news. I think these two parts are critical because as you say, there is a lot of stupid thoughts out there more than before, and you have to filter more.

Nuno

I just had a conversation with a very good friend of mine who was someone very connected to public administration, public sector throughout his career, and actually owned a couple of local publications. I was telling him, this year I’m so concerned about what’s going on. My only wish is there’s no violence, that nobody dies, I think was the exact words I said, that nobody dies because of these elections.

Nuno

It was interesting the way he put it because I was quite concerned up until the election. He was like, I’m quite concerned on the after the election. I’m less concerned on the up to the election. I’m very concerned after the election.

Nuno

Obviously, January 6th and what happened last time. We were discussing the scenarios. Trump wins, Trump loses. I’m like, “I don’t see a good scenario here at all.” I still keep my wish that I hope nobody dies because of this thing, because an exercise of a democracy that should be relatively mature. Again, young country, but relatively mature democracy, hopefully. I hope not. I hope certainly that the news and media don’t have special effect on that. Maybe it’s just wishful thinking.

Bertrand

I don’t know. I feel it’s definitely critical I agree with you. I don’t know if nobody dies. I expect the US to be a quite stable democracy. I think at the end of the day, there is also, obviously, it’s not just news. If you go further in term of election, a big question for a lot of people, obviously, is around, is the election safe from interference?

Bertrand

Talking about interference, you can interfere with the news, with the discussion and all of this, but you could also interfere directly with the election. From my perspective, there is always a question of how safe is it from this, from interference?

Bertrand

I’m always surprised you cannot vote in France. I don’t think any other European country or Japan without a state-issued ID. The fact that it’s even a discussion is really a big question mark for me here in the US. I don’t really understand.

Bertrand

Obviously, we have more and more technology, counting vote, machines to convert. Being a computer engineer, I know stuff can be manipulated. Unfortunately, hacker can do stuff. I hope we are careful enough as this is important enough, make sure that we don’t just trust machines, but we can have a separate counting on paper to confirm anything coming.

Bertrand

Maybe the last piece for me it’s also, again, always a question mark, why don’t I get the results? I’m clear and certain the next day. This is what happened in most democracies, Western democracies, so I’m not sure why we cannot get that in the US. It feels like each time it’s adding to an additional layer of uncertainty that, again, I don’t feel I’m having in Europe.

Nuno

Indeed, and hoping for the best in the elections, at least, that the news doesn’t influence it too dramatic. I’m sure it will influence it, but not too dramatically, hopefully.

Bertrand

Going back to election, I think news is one part of the story. News are always influencing. The question is, do we have a nefarious actor or not? I guess some will always try, but the vibrancy of a democracy is measured to how it can withstand attacks, so I’m certainly hopeful.

Bertrand

In term of news, for me, the mainstream media is, if not totally dead, certainly a former shadow of itself. But that’s okay. That’s life. That’s evolution. There is not a single reason why one industry should be preserved from technology.

Bertrand

Technology enable, as you say, it’s not just about broadcast anymore. We can go one to few, one to one. That’s what happened with technology. I think ultimately it’s for the better. I feel I’m a more informed person now, today in that situation. I have to put more work, but by putting more work, I’m better informed. Sometimes the truth might be harder to take, but I prefer that.

Nuno

Very good.

Bertrand

Thank you, Nuno.

Nuno

Thank you, Bertrand.

Is Technology intrinsically good, bad or neutral? In this episode, we will go into the depths of Technology Philosophy & Ethics, what it actually is, its historical developments, the current movements of the present and what the future likely holds. What is e/acc, what is EA? What is Degrowth? We will also discuss spiritual and religious elements, in as much as they relate to Science and Technology.

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Our show: Tech DECIPHERED brings you the Entrepreneur and Investor views on Big Tech, VC and Start-up news, opinion pieces and research. We decipher their meaning, and add inside knowledge and context. Being nerds, we also discuss the latest gadgets and pop culture news

1. Intro

Bertrand Schmitt

Welcome to episode 53 of Tech Deciphered. This episode will be about technology philosophy and ethics. This is a bit far from our usual topics around investment and building companies, but we felt it was an interesting moment in time, especially with the development of AI, to talk about some of this, I would say what’s behind some of the reflection in tech around where we should move forward, how much we should accelerate, should we even consider a pause in some developments?

Bertrand Schmitt

Is technology intrinsically good, bad or neutral? We’ll try to go into the depths of some of these questions. We’ll also talk about e/acc, about EA, about degrowth, and we will also discuss some spiritual and religious elements in so far as to how they relate to science and technology.

2. What is Technology Philosophy & Ethics?

Nuno Goncalves Pedro,

Wonderful. Let’s start with what is technology, philosophy, and ethics? Basically, define the philosophy of technology as a subfield of philosophy. We have a good start there. It’s part of philosophy. Let’s start there.

Nuno Goncalves Pedro,

It actually studies the nature of technology and its social effects. It has several branches. Ethics is probably the one that’s been most published about recently. What are the ethics of AI, et cetera? Relations between science and technology, human-technology relations, there’s been some interesting debates as well around that, in particular in countries like Japan who always seem to be at the forefront of some of the stuff that happens around virtual and digital things and actual humans.

Bertrand Schmitt

Are you thinking about virtual girlfriends?

Nuno Goncalves Pedro,

Virtual girlfriends, virtual wives. You could get married to virtual wives. Obviously, the political dimensions of technology has also been hotly debated recently. Who owns semiconductors? Who owns AI? Is AI centralised or not? Is this an arms race? Is this going to be a source of geopolitical danger?

Nuno Goncalves Pedro,

Obviously, there’s different views around technology. There’s obviously the view that technology is autonomous, but it does determine society. It’s a human construct. It’s co-evolutionary, so it evolves at the same time as we should, and there should be boundary conditions around it and how we evolve.

Nuno Goncalves Pedro,

Basically, this leads to anything between technophobes, people that hate technology, people that are technophilia, I’m not sure that would be the right word, but that have technophilia, that love technology like you and I, Bertrand, we love technology in some ways. Then there’s people at the edges of this that go on different angles like technology anarchy and a bunch of other things.

3. Historical Developments

Nuno Goncalves Pedro,

That’s basically a very broad definition of technology philosophy. But maybe moving to a little bit of more of an understanding how we got here, let’s go through history, Bertrand.

Bertrand Schmitt

I must say, first of all, people who really hate technology, I guess they should go back to living in huts with no fire.

Nuno Goncalves Pedro,

Maybe even before huts, maybe before there were huts, there was fire, there wasn’t huts. There were caves.

Bertrand Schmitt

Go back to caves or go on trees, I guess, because at the end of the day, the story of humanity is connected with technology. Obviously, we will not be here talking on Zoom about technology and philosophy if we are not believer in some ways of technology. At least, we have to be the children of technology.

Nuno Goncalves Pedro,

If we go back, the history of technology philosophy actually goes back to the Greeks. Even the Greeks have been talking about this technology thing, about how there are these things that we create, technology, we human, that try to emulate nature. If we go back in time, just the beginnings of technology philosophy are really related to Greeks. The first notion is that technology should in some ways emulate nature, or it’s trying to emulate nature.

Nuno Goncalves Pedro,

Then at some point, I think this is around Aristotle, he starts saying, “Wait a second. No, that’s not quite accurate. Technology should not be trying to emulate nature. There should be a fundamental distinction.” They call it an ontological distinction between what is created by nature and what is created by human beings. Therefore, technology should be what is created by human beings.

Nuno Goncalves Pedro,

Out of that, there’s been this fundamental difference that we still have today, what was man-made versus what was not man-made. Today, it’s even more complex because there’s what’s nature-made, what’s man-made, and what’s machine-made. Just to make life even more complex, we have all these different ontological distinctions.

Bertrand Schmitt

What’s inspired by nature, what’s a copy of what nature could do, but done automatically by machine. In this [inaudible 00:04:44] from what could be done by nature. It’s not as easy as it used to be in some ways.

Nuno Goncalves Pedro,

For a long time, I think we’ve had this notion of history where technology in some ways, and I think this is related to something we’ll talk in later, which is medieval times and all these, we’ll talk about it later as well, the [inaudible 00:05:04] and these fake news from very, very far back of what happened in medieval times. But science and technology has always been alongside us.

Nuno Goncalves Pedro,

There’s this notion that around medieval times that religion and the church hampered the development of technology. That in some ways was promulgated by a late Renaissance. A lot of people that then came much later than that, such as Bertrand Russell and a few others, that in some ways, Catholicism, Christianity, later with Protestantism, hamper the development of science. And that in some ways, men were being held back from all their potential by developing tools that would increase, one, their productivity, but would also increase the classic utilitarian notion of the product itself that we were creating.

Nuno Goncalves Pedro,

Obviously, one of the most famous examples is the famous heresy Declaration on Galileo, that relates to science in particular, to the fact that at some point the church came against science. And this gentleman, Galileo, was wronged.

Nuno Goncalves Pedro,

We have even this famous sentence that he would have said after his condemnation to heresy. Even people think that he was condemned to heresy and he was killed, and that he would have said, “Eppur si muove”, which in Latin would mean, and still it moves.

Nuno Goncalves Pedro,

This is all related, obviously, to the theory of whether the Earth was the centre of what we now know to be our solar system or not. Obviously, now we know that it’s a solar system, so the sun was the centre.

Nuno Goncalves Pedro,

It relates to Copernicus, who had been one of the first guys to figure it out. I’ve now heard that actually there was someone before Copernicus who had put forward that theory. The interesting thing about all of this story is it’s bullshit. It’s all bullshit. He never said “Eppur si muove”, he wasn’t killed.

Nuno Goncalves Pedro,

He was actually sent to a farmland house that he had. Think of it as a domiciled prison thing. The reality is he wasn’t the guy who came up with it. Copernicus and many others before actually came up with it. Funnily enough, he was Catholic, and he was very close to the Curia at that point, to the Vatican at that point. He was very close to the Pope, effectively.

Nuno Goncalves Pedro,

The reason why he got condemned for heresy was he basically took up on the theory. This is a very funny story. You guys should look it up. He took up on the theory, and he took it upon himself to say it was his theory. Then he started doing analysis on it. Then he basically came and said, “I’ve come up with this logic that the sun is the centre. It’s not actually Earth. What’s happening on Earth is based actually on the movements of the moon and the waves, and there’s a relation in that.”

Nuno Goncalves Pedro,

Anyway, his theory was actually fundamentally totally wrong. He kept being asked by the church of the time, “Can you provide proof?” Because we’ve heard from… Copernicus, by the way, was religious as well. The guy who came before Copernicus as well was also religious. It was nothing against the church. The church at that point was willing to potentially believe that actually we were not the centre of the universe, as we assumed it at that point. But they were asking for proof. Could you prove it? It was a series of these political things and indrominations with the church that actually led Galileo to be, in the end, condemned by heresy.

Nuno Goncalves Pedro,

He actually did publish a document that was considered a reticle because he tried to go back to the Bible and prove there was something in this theory that was in the Bible as well, which is actually also BS.

Nuno Goncalves Pedro,

Then he wasn’t condemned for heresy for that article that he wrote. He continued pushing it, and the church kept asking him for proof. Finally, that hearing, he could not provide any proof that was seen as scientifically accurate. Therefore, some parts of the church was at that point so pissed off at him. He managed to even piss off the Pope who happened to be on this side when this whole thing started as well. He did get condemned at the end for heresy. The funny thing is, apparently, some of his best scientific stuff actually came out of that exile in the farmland, where he finally did do some science hardcore.

Nuno Goncalves Pedro,

Anyway, the psychotomy between church and religion, whatever, I just wanted to finalise on that point is actually inaccurate. There’s a really interesting book you guys should look at called Bearing False Witness, which shows this mythology that medieval times were the destruction of science.

Nuno Goncalves Pedro,

Actually, that book promulgates that actually it is incorrect. That certainly the last century of medieval times was a tremendous advancement into science. They were building a lot of universities, and there were a lot of scientists that actually evolved science dramatically. The shocking thing is most of them were either Christian or Catholic. They’re either Protestant, Christian, or Catholic.

Nuno Goncalves Pedro,

A lot of the money that went into it, the creation of universities that we actually know for a fact, came from the church. Churches created universities. Actually, they were some of the first that created universities.

Nuno Goncalves Pedro,

Anyway, the interesting thing all this story, this dichotomy between science and religion and this linked back to the philosophy of technology, et cetera, is fake news. It’s just, sadly, very old fake news promulgated by, as I said, people, in particular in the late 19th century, that had a vested interest in showing a secular attitude and an anti-religious attitude towards it. Again, not to defend that the church didn’t make many mistakes throughout the years, but that was not really one of them.

Bertrand Schmitt

Interesting, that’s the first time I’m hearing the fake news part around what happened to Galileo, Galilei. Obviously, I knew he was not killed, but just put under arrest. If I remember well, at the end of the day, it really started for him when he studied the moons of Jupiter.

Nuno Goncalves Pedro,

Correct.

Bertrand Schmitt

After building one of the first… I forgot if he built himself, or he bought one of the first telescopes, and instead of pointing to the horizon, basically, to look for a ship, he might have been one of the first to look at the stars and look at the planet and discover the moon of Jupiter. From there, obviously, that raise a lot of questions. Then suddenly the Earth is clearly not the centre of something, given that these moons of Jupiter were around Jupiter.

Nuno Goncalves Pedro,

He apparently flip-flopped. This is the interesting thing, again. During the hearing itself, he flip-flopped, and went back to saying, actually, then the Earth is the centre of the universe, et cetera.

Nuno Goncalves Pedro,

This was edified as religion in the church standing behind. He took his actual theory of tides, as you were mentioning it, to a new Pope at that point, who I think was Urban VIII. Basically, I think it was even the Pope himself who said, “I don’t think that makes sense.”

Nuno Goncalves Pedro,

It’s always this assumption that the Church, the popes, the clerical people at that point had no knowledge, when we know that is actually factual and correct. Monasteries developed a lot of knowledge.

Bertrand Schmitt

Yeah, of course.

Nuno Goncalves Pedro,

For a while, that was the problem, is they held the knowledge, and they were not sharing the knowledge with the rest of the world, that’s why universities were created, to open it up outside of clerical environments, monasteries, nunneries, et cetera.

Bertrand Schmitt

Yes. Some knowledge was obviously very important in terms of practical nature, understanding tides, understanding seasons. There was a lot of stuff that would be useful. I think the question was mostly… Ultimately, what people might remember from this was not that the church was not knowledgeable, but more is a church accepting some knowledge that might be against some official perspective or view.

Nuno Goncalves Pedro,

But even that was not true. I think that’s the point of… If you guys are up for it, read the book, read the Bearing False Witness. It was not true. There was significant resources put by the church behind these inventions, right?

Bertrand Schmitt

I certainly need to read the book. I have not read the book, so I cannot say. You could argue what’s interesting is, of course, even if it’s not clear what exactly happened, we have a lot of documents, materials, which is not typical in a lot situation when we’re talking about 500 years ago, so that makes things interesting.

Nuno Goncalves Pedro,

I will close there on this chapter of why there have been some misrepresentations. The guys and girls who are now listening to our podcast, to go and Google it. Who first came up with the Big Bang Theory? Bertrand. Do you know? Who first came up with a theory, if you Google it, literally Google it, was Georges Lemaître, who was a Catholic priest. He was a Catholic priest. He was made fun of. People were like, “That doesn’t make any sense.” It was just stupid. They made fun of him. Anyway, I’ll shut up now. We’ll go back to our regular technology discussion.

Bertrand Schmitt

One can argue the church of the 20th century is not the same as the 15, 16, 10th century.

Nuno Goncalves Pedro,

Yeah, but I feel there’s been a lot of mess representation through the time, and some stuff there was just an idea behind it that at some point got promulgated, and then we go back in time and if we actually do the analysis, we realise it’s fake news. It was just fake news back then. It just got promulgated over the centuries because it made sense to promulgate.

Nuno Goncalves Pedro,

Again, I’m not defending the church, Catholic or otherwise, from any wrongdoings. I’m just saying there are some wrongdoings that should not be attributed to the church.

Bertrand Schmitt

Going back, an interesting point in terms of historical development for me is probably the development of atomic weapons. Because for the first time, humanity has the ability to destroy itself. Even if originally it might not have been seen like this, but after one, two, three decades, it became obvious that, yes, you can officially destroy humanity with all the atomic weapons in existence if they were ever to be used. I think that has raised a new class of questions or put in front of us some possibilities that were too big to even consider in the past.

Bertrand Schmitt

Obviously Einstein, Oppenheimer, thought about this and maybe later changed their mind about what they have done or help introduce in terms of concept. That has also raised the stakes for a lot of scientists in terms of how they analyse their work, how they think about their work, how they think about the potential of destruction for their work.

Bertrand Schmitt

Not just destruction, but we are talking about the potential for total annulation of the human race. This is not anymore about killing some people, destroying a nation. It’s way beyond that. I guess, yes, it started in the ’50s, started in the US and expanded the more nations got weapons.

Nuno Goncalves Pedro,

I think it’s the notion that we could easily destroy ourselves. It’s when we start developing technology that started creating this notion, maybe we can actually easily destroy ourselves. Because to be honest, technology development was always linked to, at some point in time, also to military development. It was always about gaining terrain, going to a specific place, et cetera. To your point, this was a moment where we developed this technology that we weren’t even sure it wasn’t going to kill us all. Would we all die from the first nuclear bomb or atom bomb? I don’t know.

Nuno Goncalves Pedro,

I feel it’s that notion that we finally started creating technology that we couldn’t fundamentally fully grasp the implications of, which I think is a good maybe link to this discussion we’re having today in the present time around AI. It’s when we started understanding ethics at a different level.

Bertrand Schmitt

Maybe, if I may, it goes even a bit further. It’s for the first time in history, an individual can near directly send that signal to send thousands of atomic weapons in one go. My point is that, yes, there is a chain of command, yes, there are a few people involved in this, it’s not just pressing the button, but it’s very close to one individual leaving a button to press and being able to basically destroy the world as we know it. That’s also raising the stake. It’s not just you can destroy yourself, but one guy, one girl can really change the whole history of humankind very quickly.

Bertrand Schmitt

I think that’s something new, that part where you don’t need these people on the ground, you don’t need these tanks, you don’t need these planes. It’s remote, it’s through machines, it’s near instant. This is a command that can basically work its way in a matter of minutes and have an impact in a few more minutes. It has changed how you think about war in a way and humanity and its stability.

Nuno Goncalves Pedro,

Indeed. Be it atomic bombs, be it hydrogen bombs, be it nuclear fission, be it nuclear fusion, whatever it is, obviously, these are weapons of mass destruction, and there’s a lot more. Now we have chemical weapons. I think part of the concern is now we have other types of weaponry, like cyberattacks, electronic warfare, et cetera. I think that’s when we start also having the added complexity and concern, because if then there’s AI on top of that, how do we control this? How do we step away and control this?

Nuno Goncalves Pedro,

Let me just go back a second just to close the chapter on the history, because we’ve gone through many, many epics of history very quickly, but there’s one that I did want to talk about, which is the so-called First Industrial Revolution.

Nuno Goncalves Pedro,

The First Industrial Revolution, obviously, we always link it to these machines, to the machines that led us to where we are today, the trains, the steam engine, and where we are today in terms of manufacturing, in some ways came from that.

Nuno Goncalves Pedro,

There were a lot of strong reactions back then as well. We can’t forget that. Late 19th century into early 20th century, there’s a lot of reactions. The term Luddite that we still use till this day, actually, I just realised, actually comes from that group of people, the group of people back then that didn’t want new technologies to be used in the field and wanted to destroy them.

Bertrand Schmitt

Actually, Luddite were early 19th century in England, and it was around weaving.

Nuno Goncalves Pedro,

Even before the Industrial Revolution.

Bertrand Schmitt

Yeah. It was at the time of the automation of weaving and the first machines to help accelerate the weaving process. Yes, it was before the Industrial Revolution itself. You could argue it’s the very start of putting machine to work. And it was pretty violent. They killed people were owning some of these factories. Ultimately, the British government made an example and managed to, I think, ultimately kill 30 people or so that were demonstrated leaders. “After a due process,” but this was a pretty aggressive reaction to this movement.

Nuno Goncalves Pedro,

We always had this tension between advancements in technology and what’s right for society. Malthusianism, from Malthus, that was effectively defending that all of this stuff, we can’t have this population growth. Population growth is ultimately going to be exponential. Then obviously, the growth that we have in food supply and other resources is more linear, so we can’t possibly have so much population in the world. There’s still arguments around it today, actually, that we can’t keep growing population, that we need to control population in the world.

Bertrand Schmitt

Typically, it’s from people who told us we could never be 1 billion people on Earth, we could never be 2 billion, 3 billion, 5 billion. They will always find a new post that after that, it won’t work.

Nuno Goncalves Pedro,

Yeah, but then there’s the people on the other side that say the technology will solve all of the problems, which we also know that’s not true. Technology will increase productivity, et cetera.

Bertrand Schmitt

It has been true so far. We have never had so many billions people on Earth, and we never had people living in such better conditions as well.

Nuno Goncalves Pedro,

It has solved a lot of problems, and it has allowed for there to be a dramatic population growth in the world. But we have other problems because of technology as well. We have things like pollution. Clearly, we have pollution. There are side effects to progress. At least that’s my perspective. I don’t know if Bertrand agrees with me or not. There’s clearly side effects to progression. I think weapons of mass destruction we have today and the things we can do and kill each other globally, this is not a good thing. But we have those weapons. We have that technology to do that. I don’t think all technology is good. I don’t think technology is intrinsically good. We’ll have that discussion maybe in a bit.

Bertrand Schmitt

Yeah, I think technology can be used for good, can be used for bad. That’s probably true since the history of mankind. Your first stone that you managed to cut so that you can use it as a tool has also become a weapon. The same for fire. So talking about dual-use technology, it has always been the case since the dawn of mankind. And for me, humanity has shown a great capacity so far to focus on the good side of technology and benefit and profit from it. But yeah, unchecked use of technology can go pretty bad.

Nuno Goncalves Pedro,

I think it’s been, from my perspective, net positive. We have evolved very quickly, in particular in the last few centuries.

Bertrand Schmitt

Oh, totally.

4. The Present

Nuno Goncalves Pedro,

And it’s been net positive. I think throughout history, we’ve had to have this discussion around whether there need to be some more aggressive boundary conditions around its use. Maybe this is a good segue to talk about the present and the discussions that are happening on X today and on social media and different people, different things that are almost effectively the repatching of philosophies that have been around for many centuries. They’re not new.

Bertrand Schmitt

Yeah, that’s a good point. I think these days, there are three main categories of philosophy around technologies that have been formalised and have some level of following. The first one, e/acc, is very new. e/acc or EACC, depending on how you pronounce, it’s pretty new because it was maybe officially launched a year ago in 2023, but it managed to gather followers like Marc Andreessen, Garry Tan. I don’t think Yann LeCun is officially declared on this, but the way he talk and what he could talk about would make me think if he had to pick, he would be following this philosophy.

Bertrand Schmitt

Basically, it’s a philosophy that believes AI is mostly good in the development of technologies, therefore, accelerating technology is a good thing for everyone. We’ll share more of our views, but to be frank, that’s probably the philosophy I feel the closest aligned with.

Bertrand Schmitt

There is a second one called effective altruism, EA, that has been around for 10 plus years. This one has become controversial a bit thanks for a large sponsoring from Sam Bankman-Fried, SBF, who has made pretty controversial donations and also tried to align his philosophy of life with EA, at least officially. What happened with him has caused some issue for the philosophy at large.

Bertrand Schmitt

Here, it’s about thinking that you have to think about the long term and be careful about limiting risk to the long term because the long term is full of future human beings, and you have to wait any decision versus what could impact and how it could be impacted basically on descendants over not just centuries, but potentially thousands, if not millions of years. They try to compare everything to that, and their approach as a result can be quite special. It’s around decreasing risk, controlling risk.

Bertrand Schmitt

A third approach, I’m not sure it has officially a name, but you can call it anti-progress. Some call them degrowth and deceleration. Obviously, there have been multiple movements. You talk about Malthusianism. A more modern version was from Paul Ehrlich. It’s horrible, to be frank, to listen to him. You can see old interviews or newer interviews. There are people, you wonder how close they are to try to kill people, to reduce population on Earth. I’m myself very surprised that they have any publicity. Of course, all the recent fearmongering coming from the Green Movement is a version of this anti-technology.

Bertrand Schmitt

Obviously, another one has been all this movement connected to the Greens against nuclear technology, nuclear fission reactors that have been closed, unfortunately, all over the world, thanks to their fearmongering and lack of science and analysis. That’s basically the three movements, e/acc, EA, and degrowth.

Nuno Goncalves Pedro,

In a simplistic manner for those who are trying to understand what are the difference between e/acc, EA, and degrowth, and at the risk of getting totally flamed and attacked by people that say that what I’m about to say is incorrect. In my mind, e/acc is very much pro-technology. Technology will solve all the problems of the world. We have clear problems. We have clear problems with war, with poverty, with climate change, with a bunch of other things, but all problems will be solved by technology. There’s no other way to solve them, and therefore, we need to accelerate rather than put more and more binding conditions to technology.

Nuno Goncalves Pedro,

EA, effective altruism is… Some would defend it’s more moderate, others would say it’s not. In some ways, I think e/acc is a reaction to EA rather than a reaction to degrowth. But EA defends itself as relatively fact-based, evidence-based notion of, should we adopt these technologies or these systems of technologies for the advancement of men to make men, men and women, of course, but to make human beings better or not? Basically saying we should understand the impact of technology in the decisions we’re making and how it affects human beings. I think in principle, everything that we do, I think that’s what EA defence, should be for the betterment of human beings.

Nuno Goncalves Pedro,

Then degrowth is saying, “No way in hell we can continue growing. No way in hell that this notion of capitalism and growth, economic growth in particular, we can continue it. We need at some point to stop and step back and reassess what are the right metrics for us. Is it GDP growth? Maybe not. It’s something else. What’s the level of things that we need to do?”

Nuno Goncalves Pedro,

I wouldn’t say that degrowth movement is defining or defending that we need to go back to living in Hudson stuff, but it is saying we can’t continue just growing at the sake of growing. Maybe at some point we need to reassess what our primary notion is. In my mind, those are the three views that are presented here. If I were to be as neutral-positive as I can about each of the movements.

Nuno Goncalves Pedro,

Now, what people will defend is the following. I mean, with EA, when has history been very good at analysing a new technology? Never, ever. Never, ever. That’s how we got the atom bomb. Never, ever. We don’t know. We just don’t know. Some theoretical physicist comes up with something, and we don’t know what’s going to come out of that. We start experimenting. It’s effectively how science and technology advances. It’s through experimentation. We experiment and we discover new applications. If we’re going to do like hardcore EA, can we actually do hardcore EA? Because we never know the side effects of a new technology or a new scientific breakthrough until we’ve experimented, right?

Bertrand Schmitt

Maybe to add on this, a good example for me of EA was this anecdote of there was this debate, a public debate from one of the leading prominent speaker about EA was presented a scenario. You can either save a child from a burning building or save a Picasso painting and sell and donate the proceeds to charity. The question was, “What should you do as an effective altruist?” The answer was, “Of course, you should sell the Picasso, because in the long run, I’m going to sell it, make money, and can invest this money to create more good that will impact a lot of people. Of course, I don’t care about this dying child.”

Bertrand Schmitt

For me, that’s so shocking as an answer. There is no word to it. That’s my worry we see here. It feels like totally disconnected from reality, and you can manipulate numbers in so many ways to end up to what some people really want. It feels something designed to be manipulated, basically. That’s what my worry is with effective altruism.

Bertrand Schmitt

Another good example, long-termism is connected to EA. Some people like Nick Bostrom, infamous from my perspective.

Nuno Goncalves Pedro,

Infamous, right?

Bertrand Schmitt

Infamous, yes. From my perspective, at least. It’s basically connected to EA. Part of the long-termism view, again, look at our impact in thousands of years, which personally makes absolutely no sense because thousands of years, we have seen how 200 years of technology have changed the world as we know it. Good luck guessing the next thousands of years. It’s impossible.

Bertrand Schmitt

But he’s famous for this example about AI and the paper clip scare. Basically talking about one day in AI, we could ask it a question to, “Hey, I need a lot of paper clips.” The AI just keep making paper clips and ultimately consume all the Earth’s resource and destroy all of humanity in the process of making more paper clip because the AI was not grounded enough in common sense.

Bertrand Schmitt

That’s very worrisome for me because, from my perspective, a lot of stupid thinking around AI is coming actually from this type of fallacy. You are going to build a super smart machine, but it’s lacking so much common sense. It’s also awesome, powerful and controlling of everything that it cannot even understand what it’s doing is wrong and should not be done and no one is able to stop it.

Bertrand Schmitt

Basically, it makes no sense. But it does actually fuel a lot of the growth of EA, a lot of the issues, so-called issues, surrounding AI. That’s why I’m reacting to highlight some of the points behind EA because it’s one thing to talk about. Overall, the philosophy and from far, it looks okay, but when you go closer in the example they share, it starts to be worrisome from my perspective.

Nuno Goncalves Pedro,

Maybe just to finish my… I’ll attack each of them without being too personal about it, but just state what people say about each of them. Just to close on EA, I think one of the issues with EA is, even if you’re an amazing strategist, and I’ve I’ve said this before, what I call the strategist blind spot or the strategist dilemma, which is strategists always overestimate the speed we get to a revolution. They always underestimate impact. The problem with something like EA is even if we have the best minds thinking through the impact of technology, et cetera, they likely will under-represent the impact. And they will overestimate the speed at which we get the revolution. In both cases, it’s not ideal because we’re missing two really important angles, timing and impact on a specific technology.

Nuno Goncalves Pedro,

Again, leaving EA to the side, I’d say it attacks on degrowth. There are several visions of degrowth. There’s the notion that the working week should be basically reduced, that people should have less hours of work per day, potentially per week as well, that leads to more gender balancing by itself, et cetera. There’s a lot of elements of degrowth that are based on interesting facts that might actually apply.

Nuno Goncalves Pedro,

I don’t think, by the way, degrowth, EA and e/acc are all opposed to each other. They have moments of opposition and areas of opposition. I don’t think they are fundamentally all opposed on everything. Just to be clear, it is not a perfect distinction between these three movements.

Bertrand Schmitt

I will argue that there is very, very strong, deep opposition between e/acc and degrowth.

Nuno Goncalves Pedro,

Yeah, but then you go into the details, and you have argumentation around, “Well, really, shouldn’t you still think about some level of regulatory implementation for technology, even on technology?” I’m sure a lot of the e/acc guys would still define, “Yes, there needs to be something.” I feel it’s now put as a religious fight. Actually, the funny thing is religious fights shouldn’t be religious fights because actually, even between religions, there’s a lot of commonality. What I’m saying is I think everyone just says it’s an actual opposite view of the world. I don’t think it is. I think there’s stuff in between.

Bertrand Schmitt

Maybe we have to agree to disagree. I feel that that might be true with EA, what you are saying, but I don’t think so with degrowth. I think degrowth as a mindset is fundamentally against growing humanity around growth, economic, technological, everything. Wants to go back, God knows where. Is it 10 years ago, 20 years ago, 50 years ago, 200 years ago? I don’t know.

Bertrand Schmitt

If these people had any clue about what life was 200 years ago, I think they would probably not propose that. But I think it’s truly opposite. One is about being optimist about not just technology, but humanity, the future, building a better future and keep working like this. Another one is negative. I guess, to be quite frank, is probably being manipulated itself by, I’m not sure who, but ultimately, it’s going to bring us nowhere and brings only, from my perspective, a terrible, terrible world. Because at the end of the day, the world is working through growth. People want to be better than their parents, than their grandparents used to be. And if suddenly you inverse that equation, I think the world would be a very, very difficult place to live. I don’t see anything where e/acc or degrowth can agree to be franker.

Bertrand Schmitt

In term of EA, I think, yes, they might be the guys who propose regulations who are okay with technology but wanting control, manipulated, censored, managed by a central state. But I don’t think they are against per se technologies. They don’t want to take too much risk, existential risk, that’s for sure. But I don’t think the mindset is to grow negatively. I think the mindset might be more to decrease the risk. Yes, if it has an impact on growth rate, maybe. I don’t think it’s so opposite.

Nuno Goncalves Pedro,

You heard it from the horse’s mouth, someone who clearly has a strong view against degrowth, and he already shared it with all of us, so we don’t need to reshare it. I would add one thing to degrowth. There are some elements of this that resemble Marxism and resemble a lot of the notion of division of assets and all that stuff. One of the key issues with a methodology or with a system like this is what I call arbitrage. It’s because the likelihood that one player will play by these rules, but all the rest will not is 100%. It’s like game theory, right? It’s like, you guys do your degrowth thing, and we’ll continue growing, okay?

Bertrand Schmitt

Yes. That’s a great point because ultimately, that’s obviously the issue with all of this, is that you have to be pretty dumb to believe in some of this mindset. Degrowth is pretty obvious, but I would argue even yeah. Because at the end of the day, if only this country does EA, or if only Northern Europe does EA or whatever, then the rest of the world will not bother.

Nuno Goncalves Pedro,

Yeah, but the existential crisis part might prompt people to be a little bit more thoughtful about it, I guess. Even on a global basis, hopefully.

Bertrand Schmitt

Yeah. I would just say that humanity has learned to live and survive and manage a situation where, again, we have had for the past 70 years, whether we like it or not, whether we want to remember it or not, we have been living and are still living in the risk of total destruction of humanity through nuclear weapons. We don’t need a pathogen, we don’t need an AI, we don’t need anything. It’s very quick, unfortunately, one guy pressing a button, and it could be the end of humanity.

Bertrand Schmitt

I feel some of these fears are quite unreasonable versus something that has, unfortunately, much higher probability and risk and has absolutely no equivalent in term of violence.

Nuno Goncalves Pedro,

But I’ll throw something at you. I don’t know if you’ve been, but I’ve been to Bhutan, a country with 700,000 people. You’re going soon, right?

Bertrand Schmitt

I’m going there soon.

Nuno Goncalves Pedro,

You’ll tell me if I’m right after you. You go to Bhutan, it’s 700,000 people by the Himalayas, and it’s like, “My God, this is heaven.” It would be completely, I would say, a poster child for degrowth. After I went to Bhutan, I was thinking, Should we do this in the world? Should the world say, “There’s a couple of countries for a variety of reasons that we would like to explore the possibility that their development is different from the rest of the world.” Their development is different from the rest of the world because of historical reasons, so nothing was imposed on them.

Nuno Goncalves Pedro,

But could we A, be tested? Could we say, look, can we keep Bhutan, Bhutan, not growing at the speed of light, thinking through gross national happiness instead of dramatic GDP growth, et cetera. Could we see what happens? And are there other countries in the world where we could see that happen? Would the local citizens and governments be open to that experiment?'”

Nuno Goncalves Pedro,

I know this is profoundly against all freedom of anyone.

Bertrand Schmitt

Yes.

Nuno Goncalves Pedro,

But for me, that would be an interesting experiment. It’s like, I do feel Bhutan, certainly when I went there, which was now 15, probably years ago or something like that. No, it was maybe 2010, I think. So 14 years ago. Is there a case to be made that maybe as human beings, we would be happier in certain environments or not? And colour and contrast and understand in other places in the world, et cetera. I understand everything you just said. I’m not saying it’s wrong. I don’t think we can go back to 50 years ago. We can’t. It can’t happen because we’ve moved. But at the same time, I think it’s an interesting thing to think about. Would we all be fundamentally better?

Bertrand Schmitt

I think the two questions is first, I was reading about Bhutan, and I’m definitely keen to discover the place and how it’s working. One thing I was reading was, apparently, the young people leave the country in droves.

Nuno Goncalves Pedro,

Because they want to go where there’s this technology and the TikToks and all this crap, right?

Bertrand Schmitt

I don’t know. But going back to your experiment, yeah, if you lock people in.

Nuno Goncalves Pedro,

You can’t, right? You can’t lock people in.

Bertrand Schmitt

If you put barriers, maybe you can run your experiment, but then it will go against some other perspective on human’s life and respect.

Nuno Goncalves Pedro,

We can’t lock people in. That’s clear. Is there some experiment where we don’t lock people in that we could see if there are countries like that that could still thrive?

Bertrand Schmitt

There are some remote islands that still exist, that have blocked all communication with the modern world and stay where they are. And the local government, I forgot where it was exactly. I think it’s close to India. But there are these islands where basically the original people still live like before and no contact has been authorised with the outside world because they don’t want it. You try to go, you get killed. And the government has not done anything to change that. In a way, you could argue it’s-

Nuno Goncalves Pedro,

Dictatorship.

Bertrand Schmitt

Yeah, in some ways, to let them do that and not open, it’s taking a decision for them because people locally don’t know about the outside world. They’re just worrying, but they don’t know. They have no idea. I don’t know. I would feel horrible if one day you wake up, you discover there is a world around you, but you are put in a bubble and separate from the rest of humanity for decades. That’s a good question. I think what a lot of people would like is a simple life, less stress, less problems, living closer to nature, but at the same time have all the benefits from technology.

Bertrand Schmitt

You want your car, you want your video, you want your food.

Nuno Goncalves Pedro,

But you can’t.

Bertrand Schmitt

Exactly. Then my guess is that they end up with degrowth because they believe that degrowth will bring them that, when my take is that degrowth will bring just absolute chaos and misery, and none of this. In a way, you could argue the opposite is that more technology might make the technology more embed, more invisible, more automated.

Bertrand Schmitt

Could it bring actually a situation where, yes, you could have at some point the benefits of technology with less of the hard work to get there, maybe. But I think going back in time is not the solution, and people don’t fully realise what it truly means to go back in time.

Nuno Goncalves Pedro,

I’m doing the pros and cons of this, Bertrand, because I don’t belong to any of the three movements. I can just go pros and cons on all. Then let’s go for E/acc, see how you defend the E/acc. I think the biggest attacks on the E/acc is obviously that it tells, we don’t really think governments and industries should self-regulate or regulate, and who are governments to regulate technologies, et cetera, et cetera? That’s the point of governments in some ways, unless we eliminate governments.

Bertrand Schmitt

I don’t know.

Nuno Goncalves Pedro,

What’s the alternative? Let me finish. I know you’re the defender of this, so let me go through this. What’s the other side of this? The other side of this is what? Companies self-regulate, individuals self-regulate? That’s worked really well for us for the last many thousands of years, the self-regulation thing. We’re all very good at that, companies, businesses, people self-regulating? How does that work?

Nuno Goncalves Pedro,

For me, I understand why you’d say, get the government out of this, be more libertarian, all of that stuff. I understand it because there’s elements of it that I am in favour of. There shouldn’t be oppressing regulation. I would even say that actually the worst elements or the worst entities to regulate a technology are governments because they don’t understand shit about technology. But that’s what I’ve been saying for many years.

Nuno Goncalves Pedro,

Then governments should at least basically regulate, for example, use cases. There should be use case regulation. You should say, you’ll never do this with consumer stuff. You’ll never do this and have access to these systems. Why isn’t there a regulation like that? Technology, I understand. Ai is so new, how can governments regulate AI when even the companies producing it don’t sometimes understand what it’s doing fully? I understand that. But Surely there should be some regulatory oversight by some element in societal present.

Nuno Goncalves Pedro,

What element is that? I guess governments. What else would do it? Not companies, for sure. Because companies, their objective is profit. Their objective is that their stakeholders, in particular, their shareholders, make maximum profit. That’s the objective. That should be the objective for them.

Nuno Goncalves Pedro,

I don’t understand how Yack also can work. How can e/acc work, Bertrand? Before you tell me how E/acc can work, what elements of e/acc do you think others could still attack on, could still say bad things about?

Bertrand Schmitt

First, except if you have a degrowth mindset, effective altruism mindset, I don’t see what you can critique in e/acc. E/acc is just to say, okay, let’s use as much as-

Nuno Goncalves Pedro,

You have to be intellectually honest, and there should be things that could be criticisable about it.

Bertrand Schmitt

Give me a specific example.

Nuno Goncalves Pedro,

I just told you this whole regulatory thing.

Bertrand Schmitt

No, I think regulatory is just horrible. At the end of the day, regulatory capture is everywhere. Each time you have regulators, especially in the US, but in many other countries.

Nuno Goncalves Pedro,

There should be no regulation. Government shouldn’t intervene on anything. Google, OpenAI, guys, go do whatever you want.

Bertrand Schmitt

There should be, I believe, as little regulation as possible. At the end of the day, it just goes back to the origin of the Constitution, the US Constitution, if you live in the US. It’s not about wing-meeting shit. It’s letting people do their stuff and provide a minimum framework of justice, of domestic tranquillity, of common defence of promoting general welfare and securing the blessings of liberty. That’s what is the government and what it should be about.

Nuno Goncalves Pedro,

I can’t accept there is no one on my behalf that goes and tells fucking Facebook, pardon me for my English, because I do use Facebook, fucking Facebook, to stop using my data the way they did. Someone needs to go and tell them that. I can’t. I can’t. I can’t, so someone needs to go and tell them that, saying, “This is not okay. What you’re doing here is not okay.”

Bertrand Schmitt

But you are assuming the government is going to do that. The government is just going to try to get some money out of Facebook. That’s the game. They want to get money out of companies to claim a win. They don’t care about serving the needs of the people, just to be frank.

Nuno Goncalves Pedro,

But in a democracy, I get to elect them, right?

Bertrand Schmitt

For sure. One step further is that some of these constraints are actually making Facebook stronger. That’s what has been demonstrated again and again and again with these regulations is that they make running a business so much more difficult that good luck competing against Facebook, good luck about replacing Facebook with a better alternative.

Bertrand Schmitt

You haven’t changed Facebook so much in the system. Facebook, as thousands of lawyers, can fight government regulations in ways that benefit to them. Of course, they will advertise they made a win about regulations, Facebook that. At the end of the day, what you don’t see is what’s written in small letters in thousands of pages of documents that actually, no, Facebook got a win on the long term against their competition.

Nuno Goncalves Pedro,

Bertrand, you’re talking about the whole spiel around regulatory capture, which I agree. In the US, in particular, if you look at what happened in telecom-

Bertrand Schmitt

This is what happens again and again.

Nuno Goncalves Pedro,

Health care, etc, etc, the big guys basically used it for their own purposes, and therefore, they created a moat around regulation. I understand that, and I understand it’s been true.

Bertrand Schmitt

You get a short-term win for a long-term lost.

Nuno Goncalves Pedro,

No, but then needs to be a change in government. If we can’t promulgate that change in government, then what else can we do?

Bertrand Schmitt

You have to change countries if you believe another country is a better place.

Nuno Goncalves Pedro,

What I don’t trust, what e/acc is defending, and I do not trust, is what, companies self-govern? No. No way in hell they can self-govern.

Bertrand Schmitt

I don’t think they promote that.

Nuno Goncalves Pedro,

They do. They promote that.

Bertrand Schmitt

I think you are putting words in their mouth.

Nuno Goncalves Pedro,

They promote that.

Bertrand Schmitt

No, no, no, no. I don’t even think they are against regulation per se. I don’t think so, but for sure, they are more optimists, and they believe that many regulations are hurtful. The biggest joke right now is governments trying to regulate AI without any understanding of AI, of what AI can do, how AI can work, where AI is going. As you say, maybe to regulate some use cases at some point.

Nuno Goncalves Pedro,

Use cases and interfaces, it’s what I’ve been telling you everyone for a long time, that should be the focus.

Bertrand Schmitt

Yeah, and I don’t disagree if there is some needs of regulation, even if I’m not a big fan by default. But that’s not where they are starting. They are starting with the models, they are starting with the low-level stuff. It’s like trying to regulate physics instead of regulating atomic weapons.

Bertrand Schmitt

There is such a huge gap between both. Again, guess what? Everyone can assume that right now what’s happening is pure regulatory capture. It’s the OpenAI and Microsoft of the world that are trying to block the path for their competitors. That’s what is happening right now. That’s one more example of regulatory capture. It’s just much more early than we are used to. Usually, it takes 10 years after maturity of a tech to get there, but now they managed to get that from the starting block.

5. Our Views

Nuno Goncalves Pedro,

Understood. Maybe we switch to what you guys can already imagine, which is, what are our views? I guess Bertrand, very clearly is on the E/acc column, right?

Bertrand Schmitt

Yeah, I feel that most of the good today, most of our standards of living are coming from technology and the smart use of capital and supported by democracy. I think that trifecta has been key to less human suffering and more human happiness.

Bertrand Schmitt

People usually don’t like to think what was life just 200 years ago, but life was you’re a woman, you have a chance to die at giving childbirth. You are a child, one out of three doesn’t make it up to age of five. You are becoming old, your life is pure suffering if you managed to live old because we didn’t know how to do anything. We didn’t have antibiotics. We didn’t know how the human body was working. Life was truly dark, cold, horrible. Let’s not forget, 99% of the world was horribly poor.

Bertrand Schmitt

I see mostly benefits to technology. I think that if you slow down the growth of technology, and I feel that in some space, like in pharma and other spaces, yes, there has been abuse, but in some ways, the pace of technology has slowed down the past 20 or 30 years.

Bertrand Schmitt

I’m pretty scared because, again, if you want to live longer, if you want to live better, if you want to have better life, you need the pace of technology not to slow down at all. At the same time, I see what I would call in some ways, some forces of darkness that want to slow down technology.

Nuno Goncalves Pedro,

As you guys may have grasped by now, I’m not exactly an E/acc fan. I found a philosophical movement many years ago that fulfils me better than any of the movements we discussed today, which is Catholicism. I follow a religion, and that’s my philosophical view of the world.

Nuno Goncalves Pedro,

In terms of E/acc versus EA versus degrowth, I don’t think the solution is degrowth. It would be an interesting experiment to do it in certain countries. But as I said, the arbitrage of the play and the root of everything is a bit more complicated.

Nuno Goncalves Pedro,

I’m definitely pro-technology. Anyone that’s listened to all our podcasts or part of our podcast know that I’ve done a career in technology. I work in technology. I love technology. I love experimenting with technology. I think technology will get us to a better place.

Nuno Goncalves Pedro,

I do think technology has gone to a point where there needs to be a lot more investment in its understanding from the outside, in how it affects people in a social manner, in its ethics or lack thereof, in the way that people are used or misused for its purposes. That’s, I think, what concerns me right now. If we’re looking at philosophical movements around technology, maybe I’m between e/acc and EA, in between both.

Nuno Goncalves Pedro,

I see all the things you said, Bertrand. The world, our life lifespan, the discoveries we’ve made, our understanding of the world around us, and without going religious and saying we’re all under God’s one roof and all that stuff, which I could, I would say all of that has been extremely positive. The ability that people have to ascend and have mobility economically to get out of where they are, to get more means, to thrive in life, and to go to the next level, for me, all of that is extremely positive.

Nuno Goncalves Pedro,

But we systematically should understand the implications of technology and science. As I said, we won’t be able to understand it at its core. We’ll have to understand it at its interfaces, at its use cases, and how it affects businesses, and how it affects people.

Nuno Goncalves Pedro,

To be honest, there should be as much money, if not more spent on that than we spend on technology today, and that is not true. Today, we don’t spend much money on that. We have maybe one subchapter of IEEE that looks into technology philosophy, and we have some companies in AI looking at explainability, and we have some stuff going around understanding the ethics.

Nuno Goncalves Pedro,

I feel this should be discussed at the centre, and that concerns me. It concerns me when the top technologies of today don’t say, “Let’s spend a billion dollars in doing stuff that is really just assessing what’s happening with AI right now.” How is that going to change the world? Just understanding that, and then trying to get regulation out of that, and then trying to get understanding of boundary conditions on the technologies that are being developed.

Nuno Goncalves Pedro,

We need to spend that much amount of money because that’s the money that’s being spent on developing these technologies. It’s these orders of magnitudes, it’s in the billions. That’s the thing that concerns me, that we are saying, no, it’s fine. Technology will figure itself out. I think we’ve now hit points where at some point we don’t quite understand what technology will do to us.

Nuno Goncalves Pedro,

We’re not there yet. We will all agree that AGI is not going to happen tomorrow or probably in the next few years. But we should understand what’s happening, and we should spend money on it, and we should improve the ability that we have to understand how technology affects people’s lives globally. I don’t think there’s enough spent on that.

Nuno Goncalves Pedro,

That’s why I say, I’m clearly a technology-positive person. I believe technology will solve many problems that we have ahead, if nothing else, because nothing else will solve it, but we need to have more boundary conditions. We need to understand how things are being developed and why.

Nuno Goncalves Pedro,

It’s not about regulatory capture versus non-regulatory capture. It’s about this notion of we do all of these things—to your point—to have a better life down here. If we’re not doing that, then why the hell are we doing it? We should understand the implications. How is it affecting people? Deeply, deeply understand implications.

Bertrand Schmitt

Thank you for your perspective.

6. Conclusion

Nuno Goncalves Pedro,

In conclusion, we had a heated debate today on technology, philosophy, and ethics. Who would have known? Is technology intrinsically good, bad, or neutral? Is it whatever human beings want it to be? What is e/acc? Maybe you have heard talk about e/acc. What is EA? What is degrowth? Are there spiritual and religious elements that should be brought to this conversation? Thank you for listening to us today.

Bertrand Schmitt

Thank you, Nuno.

The Apple Vision Pro is out and we each got ourselves one… Our first impressions on the early days of the Vision Pro. Will it change the world forever, like the iPhone?

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Our show: Tech DECIPHERED brings you the Entrepreneur and Investor views on Big Tech, VC and Start-up news, opinion pieces and research. We decipher their meaning, and add inside knowledge and context. Being nerds, we also discuss the latest gadgets and pop culture newsIntro

Nuno G. Pedro

In this episode, episode 52 of Tech Deciphered, we will talk about the Apple Vision Pro. It’s now out, and both Bertrand and myself got ourselves one. So what are our first impressions on the early days of the Vision Pro? Will this revolutionise the future of input and output? Is this the new iPhone? Is this finally the product that Tim Cook has developed that shows us that he is the future of Apple? Let’s start with the overall impressions, Bertrand. What are your overall impressions?

Bertrand Schmitt

What are my overall impressions? It’s a mixed bag, that’s for sure. It’s a very impressive piece of tech. I think my worry is that it has been oversold by Apple, but also by a lot of YouTubers. When you keep looking at these YouTube videos of people using it for eight hours a day, I think it’s totally, utterly bullshit. There is no way in hell any normal human being will put that on their head eight hours a day unless forced to do it.

Nuno G. Pedro

Unless you’re working on your neck like you’re a Formula One driver or something.

Bertrand Schmitt

Exactly. You are working on your neck. Yes, it’s neck training. No, more seriously, overall, and we will go more in depth later on this episode, I feel it’s a great device for maybe two use cases. One is if you want to watch 3D content. To watch 3D content, 3D movies, potentially at some point 3D sports, when we get that, we don’t have that yet so far, 3D concert, then I think It’s awesome.

Bertrand Schmitt

Watching 90 minutes of 3D movies, it’s just an insane experience for me. It’s just amazing. It’s your best way to consume a Blade Runner 2049, a Dune. It’s actually maybe better than in a movie theatre if you combine it with a proper headset because the audio is quite good, the bass are pretty poor. For me today, as a mainstream consumer, that’s the best main use case. For businesses, there might be some reason to look at, if you are doing 3D design, to look at 3D objects in the middle of your room, I can see that as well.

Bertrand Schmitt

Beyond that, I think we’re talking about very stretch use cases. One of these could be to record a video of what you are doing and sharing that with other for training. I could see that probably for training purposes. But beyond that, at this stage, I’m not sure what’s the point to put 2D panels in the middle of a 3D vision with a headset that’s very heavy and very uncomfortable.

Bertrand Schmitt

I don’t know your experience, wearing the headset, but anyone telling you that this headset is nice to wear, do they have a metal head to wear that comfortably? I have no clue. I mean, I’m hopeful there will be better straps, but for me, it’s still a nightmare to wear it.

Nuno G. Pedro

Yeah, this has been tested by 007 villains, so they all can send away the thing on their head. Fully agree with your assessment. It’s impossible have it on your head, to be honest, even for more than an hour-and-a-half, two hours. An hour-and-a-half and two hours is already a lot. So even watching that movie, you might have to take a little break to watch that movie, in particular if it’s over two hours, which many of the Sci-Fi movies actually are, or at least the canonical ones.

Nuno G. Pedro

I agree that for the consumer side, I think the consumption of content will be great. Maybe I would say besides immersive content, immersive communication, we’ll get back to that later on the Zoom experience and the FaceTime experience, so I won’t unravel that whole discussion right now, but the immersive communication piece, I think, will get finally started at some point.

Nuno G. Pedro

For me, those two pieces are the pieces that are going to be core to the early use cases of the Vision Pro. Business, agree with you. Some collaboration tools, some consumption also of immersive content for business is quite powerful, but it’s $3,500, right? It’s so expensive. I mean, it’s more expensive than a really good laptop or an iMac.

Bertrand Schmitt

It’s a price range of your high-end MacBook Pro.

Nuno G. Pedro

Yeah, it’s the price range of the best-in-class laptop that you could use out there from Apple. It’s just expensive as hell. I feel, maybe giving it the other angle, I feel it’s a platform. The Vision Pro is a platform that they launched where they don’t have any killer apps yet, almost. Except maybe for the content, immersive content piece, they have no killer apps day one.

Nuno G. Pedro

As I said, I think they will have immersive communication day two, day 100, whenever a lot of these bugs are sorted out. But day one, that’s it. They launched a platform, which is the Vision Pro. It’s really exceptional. As you said at the beginning, it’s great technology. It’s really incredible. It does show us a glimpse of the future, but it’s not the future yet. I agree with you because of the size and how heavy the device is, I’m not sure as a platform, it would stand a test of time, even with software updates, et cetera.

Nuno G. Pedro

I have a bunch of things that I have issues with this on. We were just before recording this episode, trying to sort out My Persona, which is in beta trial, but it needs the optical ID thing, and the optical ID thing for some reason is not working for me, and I don’t know why, and maybe I need to clean it better. I’m not sure.

Nuno G. Pedro

It’s just there’s still all these little quirks at the core of the experience like optical ID piece that are just like, “Guys, why did you launch it?” Maybe you should have waited a little bit more and have that ecosystem a little bit more prepared.

Bertrand Schmitt

Yeah, I think the usual way to launch a product where we present you a bit in advance. We share with you a developer conference the details of the API, you can learn how to compile on your Mac, make it work, but you cannot access the device, and you have to wait so long before you can access the device.

Bertrand Schmitt

Basically, most developers who have developed any app for the Vision Pro probably didn’t have any access to the Vision Pro itself. You are guaranteed a few months of horrible bugs trying to just make it work. Surprisingly enough, even as you say, the Apple apps are actually not working so well. You’re having issues with Apple ID.

Bertrand Schmitt

Me, I’m facing a contact page that’s empty, and everything is actually properly linked on my account and everything, but it’s empty by default. I have to manually add everyone so that I can FaceTime them. It’s just pretty insane, so it’s not a bug per se, it’s just horrible design. It’s very weird out-of-the-box. I still want to say that out-of-the-box, that media consumption with Apple TV if you’re watching 3D content, it’s totally insane.

Bertrand Schmitt

For me, it has replaced my home cinema at home. I’m putting a big high-end headset. I have a really good bass as a result, and the Vision Pro, and it’s the best movie theatre experience I ever had. It beats a movie theatre because there is no one around blocking my view. I’m in the perfect spot, and it’s better 3D that you can have in a movie theatre. It’s better colour. You have an OLED screen versus a projection.

Bertrand Schmitt

For me, there is one use case, I’m very surprised that they have not pushed hard on it, because a lot of their other use case are simply not there. Another piece I see a lot, I mean, Apple is showing off, you are watching your Apple Vision Pro in a plane. Come on. I mean, this stuff is the size of a backpack. When the box to put your Vision Pro in, it’s on backpack. We’re seriously going to transport that in a plane? You don’t take any other luggage, it’s just your Vision Pro with you? I mean, this is nuts.

Bertrand Schmitt

People will say, “Oh, yeah, it’s great. It’s an external screen for my Mac.” Come on, you can get an external screen that’s a small, slim light and put in your backpack on top of your Mac and everything else. That’s not a realistic alternative. At home or at work, of course, you have an external screen if that’s what you need. Don’t tell me you need a Vision Pro for an external screen. I think this use case just makes zero sense.

Bertrand Schmitt

For me, at this stage today, makes zero sense. But that media consumption has really shocked me because I’m doing it only once every day at night. The other piece that has shocked me is the quality of the special 3D. If you start watching a 3D object in your home, it can be a Formula One car, it can be a human body, it just sits there perfectly at the right height with the right lighting in a very good pass-through environment in the middle of your living room, for instance, it’s awesome. I don’t have a real use case for it, but it’s super, super awesome. I’m sure some 3D professionals will have use case for it. That is also very, very well nailed. But everything else at this stage, it’s like whatever.

Nuno G. Pedro

There’s this video with the Apple Immersive video stuff that has all their nature videos that are available for free. Also the Alicia Keys.

Bertrand Schmitt

Yes, the Apple Immersive videos are awesome, awesome.

Nuno G. Pedro

The Alicia Keys recording thing, whatever. I had a friend of mine test it over the weekend, and she was afraid because there’s one where she’s doing some tight rope walking over a cliff, whatever. She was like, “I can’t watch anymore. I’m out.” I was watching, and I’m a huge fanboy of Alicia Keys. I know she’s well-married, but I’m a huge fanboy of hers.

Nuno G. Pedro

This was before, obviously, the Super Bowl, which was part of the performance as well with Usher. I was like, “This is so cool,” because I could literally see her. She’s talking to us, to the camera, or to the cameras. You’re like, “Wow, this is different ball game in terms of experience.” That was really amazing.

Bertrand Schmitt

I want to add on that because I believe that as of today, the best 3D content for the Vision Pro is actually what Apple calls the Apple Immersive Video, which is a rebranding for a standard that has been around for a while, which is VR 180, except that Apple did it in 8K, 90 FPS. It’s just absolutely awesome because this one compared to a 3D movie, it’s totally filling your field of view, horizontally and vertically and beyond.

Bertrand Schmitt

You can slightly turn your head, which you do normally. Your head doesn’t stay fixed like crazy watching something. It’s a very, very nice experience. Because it’s Apple, you can still see your hands. I don’t know if you notice, but the fact that you can move your head normally, see your hands normally as you would in a movie theatre, it doesn’t feel like an off-body experience. It feels normal and natural.

Nuno G. Pedro

The baby rhinos, we all want to touch the baby rhinos. When the baby rhinos come, it’s like everyone, my friend was also wanting to touch the baby rhinos.

Bertrand Schmitt

You didn’t want to touch the big dinosaur? I didn’t get to the big dinosaur yet. You will see it’s cute. Another type of cute. It was not a baby. But this one was also a very shocking experience and quite impressive because it’s mixing a AR passthrough. You can get a glimpse of what proper quality content will generate. I must say the Alicia Keys video, what was especially awesome is that you got really the impression to be with her and her team.

Nuno G. Pedro

She was there, yeah. We were there with her.

Bertrand Schmitt

Yeah, she was there, and it felt like for the first time, you are properly watching a normal humans in video. It’s so much more awesome in 3D than in 2D. That was really my take. It’s so much more awesome. I don’t know if you notice with all these immersive videos, it’s a very different game than recording 3D movies because there was no special effect.

Bertrand Schmitt

The camera is just sitting there watching at human-height. It’s very immersive because you are at the normal height, you are looking at her as if you were in the room. There is no special effects. It’s really enabling you to be immersive as if you were somewhere. It’s either with Alicia Keys or it’s watching baby rhinos, or it’s watching someone walking on a cliff.

Bertrand Schmitt

But that for me is very impressive that the proper 3D immersive experience does not require special effects. You could argue maybe it’s the end of special effects because now that you can be with someone in the middle of that movie, there is no need for special effects. You don’t need to zoom in, you don’t need to do anything.

Nuno G. Pedro

You still need it for Sci-Fi and stuff, right? You still need it for movies that require fundamental changes to environment.

Bertrand Schmitt

Yeah, sorry. You might need CGI, but you don’t need that out-of-focus, in-focus, sudden big zooms, that stuff. I feel movie making is totally different. Actually, that’s what the experts say. I used to do this type of video, is that it’s a totally different way of doing 3D movie making. I’m very excited when we see more of it because I think it might be the ultimate media consumption experience, actually. To be where you are without anything special beyond potentially CGI.

Nuno G. Pedro

To bring it all together and overall, maybe from my perspective, immersive, huge thumbs up. In the last two weeks, I’ve done the two most interesting immersive experiences, probably of my life recently, which was watching you two at the Sphere and now Apple Vision Pro. This is intimate. This is yourself. It’s individual. Obviously, the Sphere is you’re with a bunch of other people.

Nuno G. Pedro

But this is incredible. I think this is the first time, to your point, Bertrand is like, I was smiling at Alicia Keys. There’s no way in hell she was smiling at me because obviously, she’s just looking at a camera. That’s incredible. It’s like that level of intimacy, I think the Vision Pro is incredibly good at proposing. I still believe maybe the communication thing they’ll nail for intimacy as well and for immersion.

Nuno G. Pedro

I agree that, as a platform, this is maybe just the beginning. It’s going to be a V2 or a V3 that’s going to be the next thing. I’m relatively optimistic. I told you I felt the Vision Pro, the first version was going to be somehow a bit limited and clunky. It is really exceptional the way they did it.

Nuno G. Pedro

There’s pieces of the software that you could see if they sort out the edges, it might actually work really well. The price, I think, is the big showstopper of this thing. I mean, 3,500 bucks for this, it’s just silly. You have some very strong views that this might be one of the worst products in Apple’s history in terms of returns.

Bertrand Schmitt

Yeah. I think, again, I have some very strong, positive thoughts. As of today, it is the best way to experience any 3D movie or immersive video format. What about 2D, you could ask? Yeah, I think it’s a good way to experience 2D, but that special thing is with 3D content. Of course, you can still watch well on 2D content. I think there is a real use case to say, “I’m going to replace my home cinema,” or, “That’s when my spouse is using home cinema, I have my own, and we can watch two different stuff and no fight.” That might be the way to look at it.

Bertrand Schmitt

Again, if you’re a professional doing 3D design, I think that there is huge value. You might still be missing the tools. Just to be clear, you can watch stuff. Open 3D files with some additional apps, but I don’t think you have any creation app, but I’m sure it will be coming in one or two years. Again, for travel use case, forget it. I think another big piece is that it’s not a social experience at all at this stage. You need friends who have an Apple Vision Pro, have set on their personal well, and you can call them in FaceTime, and you can have somewhat of something social.

Bertrand Schmitt

But what is clear is that it’s not for something to enjoy with people around you. I mean, forget the height-side stuff. It’s useless. It’s really not social at this stage. For me, that’s also another issue I have with it. On the plus side, it’s very private. You want to do stuff privately, watch stuff privately. No one can watch above your shoulder. That’s a positive.

Nuno G. Pedro

Yeah, but they can see what’s being projected in your thing. It’s actually less private than other solutions out there, certainly the VR Immersive.

Bertrand Schmitt

How do they watch, sorry?

Nuno G. Pedro

I can watch in front of you and there’s things going on on the screen. I could see at least some stuff that’s going on on the screen from the other side.

Bertrand Schmitt

But if I don’t decide to share, you cannot see anything.

Nuno G. Pedro

No, no, no, no, no. If I on the other side of your lenses, I could see stuff that’s going on in your lenses.

Bertrand Schmitt

No, you can block. You see eyesight, but I don’t think you see anything. Eyesight is not showing what you see.

Nuno G. Pedro

Are you sure of that?

Bertrand Schmitt

Yes.

Nuno G. Pedro

Okay.

Bertrand Schmitt

You only see what Apple want you to see on the outside, and they want you to see that you are doing something, watching something, showing your eyes, but it’s not showing what you are seeing. It’s totally blocked.

Bertrand Schmitt

Overall, my take is that it might be the highest return rate of any Apple product, because, I think, you talk about price, people will be very critical. Is it worth $3.5K? I think there are some use case where, yes, it is.

Nuno G. Pedro

I don’t think it is today. I mean, for sure.

Bertrand Schmitt

But yeah, I think overall, a lot of people will be either, “I’m a huge fanboy, or, “I’m a VR developer,” or, “I love to watch 3D content and all that’s my best device. But beyond that, every other use case, I think It’s not there. Why keep it instead of returning it, waiting one year for a better version? Again, the whole environment, app ecosystem, it’s just not there.

Bertrand Schmitt

I think it was one question to say, you know what? Your first iPhone, it was expensive it was expensive, but only 600 bucks in comparison. It was working for the base use case, which was phone and Safari. You had these three use cases. With any of these use cases, email on mobility, Safari and mobility, and phone, it was… Like, yeah, all combined, it was a game-changer, and the UI was, of course, amazing.

Bertrand Schmitt

I think it’s a very, very different ball game. I’m a believer that Apple will improve hardware and software, don’t get me wrong. All the bugs we are talking about and stuff, even the weight and size and bulk will decrease. I’m more pessimistic that we will get in a reasonable price range quickly, but that in three years, we have removed most of the issues and the price is a bit better, yes.

Bertrand Schmitt

In five years, it’s quite game changer, probably. In 10 years, it gets to some scale similar to tablets, yes. That’s where I see this. I would say overall, cautiously optimistic on the mid-term. I think what they should have called it is not the Apple Vision Pro, but the Apple Vision Developer Edition. I think that would have been a more fair expectation. But right now, I think it’s an issue. I think YouTubers, for instance, are really too much spinning this stuff out.

Nuno G. Pedro

Yeah, this is a developer tool. This is not a ready, full-on consumer, let’s-go-do-stuff.

Bertrand Schmitt

Yeah.

Nuno G. Pedro

I think they’ve positioned it as a consumer thing, and that’s their fault.

Bertrand Schmitt

I think it’s a mistake.

Nuno G. Pedro

It was a mistake, agreed. Let’s go in-depth analysis.

Bertrand Schmitt

Let’s go about the pros first. Again, I think as a first pro, that’s really the best way to watch a 3D movie. You have a huge screen size, you have the 3D quality you have ever experienced. As long as you combine that with a proper high-quality headset for big bass, then you have something quite magical, I must say. Especially if you start with the Apple Immersive content, you have some 3D IMAX content as well, and you have your 4K Dolby Vision 3D. For this use case, it’s amazing.

Bertrand Schmitt

I think the big question is, is that enough for you to keep it? It’s that one killer feature right now.

Nuno G. Pedro

I think so. For me, the whole experience you get from movies is amazing. I agree with you, you need earphones. I started using my AirPods with it when I’m in it. The demos are incredible. We’ve already talked about a few of them, so we won’t belay too much on it. There will be, I believe, some interesting experience for basic gaming, I think, to start with. I’m not sure I would see mid-core coming anytime soon because of controllers.

Nuno G. Pedro

But I feel in gaming, we’re going to have some interesting casual things coming up as well that would be developed well for the Vision Pro. But overall, I was blown away with the immersive nature of the content, blown away. It is impressive.

Bertrand Schmitt

I don’t see anyone buying a Vision Pro for casual gaming.

Nuno G. Pedro

Yes, we already discussed nobody’s going to buy the Vision Pro for any reason whatsoever because it’s too expensive. But if you have a Vision Pro, I feel the experience of potentially starting to play with casual games is something that will come your way. That’s how I see it.

Bertrand Schmitt

I have tried a few casual games from one music game to some more traditional game improved or remastered for Vision Pro. I think it’s a nice addition. No one in his right mind should buy that for this use case at this stage. I would say, and we will talk later about this, that’s where the Quest 3 actually shines quite a bit. There is some proper high-quality VR game content that you don’t find in the Vision Pro and you might not find until they decide to add controllers.

Bertrand Schmitt

Again, in the pros, I think there is amazing stuff to watch in your living room or your office. Take that Dinosaur demo app, take that Jig app where you can watch any 3D design, basically from a car to an engine to a plane and human body. You can watch that in detail in your room. It’s amazing. This stuff is amazing. That’s where the passthrough is for me truly shining because there is a use for the passthrough.

Bertrand Schmitt

You can move around, watch around without tripping in your living room or in your office. That is amazing. I don’t have a use case for it, but I’m sure some have. The more we have tools to not just watch that content, but edit it, correct it, shape it, that would be amazing step by step. I see a future there if 3D design is one of your priorities. Or you have stuff to learn that benefit from 3D.

Nuno G. Pedro

The Nature, the episodes that we talked about earlier, the Nature series in 3D, the Alicia Keys, recording room thing, et cetera. There’s a couple of really cool things for you to do it. In any case, start with the Apple Immersive demo for content. It’s relatively short, and you’ll get a feel for some of the key scenes in all of these videos. Maybe audio. I think the audio is great. As I said, it’s just the headsets themselves are not, so you need to add headsets to it.

Bertrand Schmitt

Personally, I feel the audio is absolutely amazing. It’s just that it’s lacking pass. But if you forget the pass part, this audio is crystal clear. When you talk to someone else, we see it actually on FaceTime, it’s actually the best audio I’ve done remote with anyone. Out of the box, the audio of the other person was absolutely perfect. It was like being with him in the room. That I was quite shocked. A human voice doesn’t require too much pass, actually. That’s why it was great.

Bertrand Schmitt

Again, for movies, it’s not good enough, but for YouTube videos or talking to someone, it’s actually quite amazing. I have not tried, but apparently it’s extremely good at excluding any other audio but your own audio. Some people say that I’m in the middle of a train station and no one is hearing I’m in a train station.

Nuno G. Pedro

The audio is great, but what we’re saying is the speakers are great. If it’s just voice stuff that you want, if you want immersive, you need to put your earphones on or something like that. Yes so, it’s basically the speaker nature of the device rather than the audio itself. The audio is actually really good.

Bertrand Schmitt

I think hands are working really well. You see them, it’s always visible, even in the middle of the movie, theatre environment. You can use your hands in some apps to move objects, but the fact that they are always visible, you see your own hands, and it’s very different from a Quest 3 experience, for instance, where it’s fake hands. It’s pretty impressive. It’s well done.

Nuno G. Pedro

The hands are great. The sensitivity of them is okay. I think we’ll talk about keyboard later on, but the keyboard experience is not so great.

Bertrand Schmitt

Oh, yeah.

Nuno G. Pedro

But otherwise, the hand stuff is actually great. To your point, from a UX, UI perspective, it’s definitely ahead of the other things that are out there in the market. The ability that you have of moving stuff around, how intuitive it is to close windows and do things around it is pretty significant.

Bertrand Schmitt

The passthrough is overall also a great experience. It has virtually no lag. It’s good, not great image quality, but it’s good image quality. It’s difficult to see stuff close, just to be clear. Yes, you can read your watch, but forget about reading stuff on your iPhone. Yes, you can read a password on your iPhone, but you don’t want to read anything on your iPhone.

Bertrand Schmitt

It looks like the main issue is a lack of autofocus for the camera. I’m not clear I think they have a fixed focus, so they are not able to focus at something close. That’s the main reason. That’s something that can be corrected and is actually available on a high-end, it’s called the Varjo XR-4, where you have a special version with autofocus, and this one is only 10K.

Nuno G. Pedro

It’s slightly more expensive, I guess. I agree on the passthrough, very difficult to do things on your phone while you’re doing it. It needs to be minimal. It needs to be, as you said, a password or something you need to approve. A bit of a problem because your face ID is gone. You’re like, then you need to put the code again for the pin for the phone. I hope Apple at some point starts this out as well. I’m not always using my Apple Watch and all that stuff. I don’t know. It felt a little bit clunky the whole experience.

Bertrand Schmitt

That’s when having a Samsung phone with a fingerprint reading.

Nuno G. Pedro

Yes, I’m on a Samsung phone right now, actually today. We’re definitely giving value to that, but I fully agree with you. It’s a great experience, the passthrough experience. It feels like you’re seeing through, and effectively you’re just being given images of what’s on the other side. There’s no way you’re going to bump into someone when you’re doing it. Even if you’re in your home or against the wall, it’s very clear what you’re seeing.

Bertrand Schmitt

Yes, I would agree, but I would say to people, be careful because it’s not the same field of view. You are missing your normal real-life field of view. Because of that, there is stuff you might bump into that you might not have seen because vertically, horizontally, it’s not the same as human eyes. Be careful even at home and absolutely never use that outside your home. It’s crazy, just to be clear, it’s dangerous. If you are seated in a plane, that’s okay, but don’t use it walking anywhere outside. That’s a danger.

Nuno G. Pedro

On top of that, two things to put into context here. One is if you’re in full immersive mode, like we were talking about some of these videos, like the Alicia Keys one and some of the Nature ones, you are in full immersive mode, right?

Bertrand Schmitt

Yes.

Nuno G. Pedro

You can see your hands, but that’s really it. You’re not seeing through anything. That then obviously blocks your view. You’re more in a VR type of mode. Then the second piece is obviously the windows. If a window is stuck in front of you on your line of sight, you don’t see through those windows depending on the window, opacity, et cetera. It might be that you don’t see through the window either. Again, don’t use it while you’re walking outside. I guess that’s the message there.

Bertrand Schmitt

On this one, the only good news and downside of Apple special technology is that if you have a window, and you are walking, the window is to quickly disappear because it’s stuck in space where you put it. That’s the very odd part. I was expecting some experience where you walk with a window that stays in your field of view.

Bertrand Schmitt

For instance, let’s say you have a video. You move around your home or your office while the video stays in your headset. No, that’s not how it’s working. The video disappears step by step because it’s still where you put it. It’s amazing, you can come back, and the video is exactly where you left it. Their tech is insane versus anything that happened before. One thing that you truly get while calling it special technology is not a gimmick. It’s truly what they have achieved.

Nuno G. Pedro

It is truly special.

Bertrand Schmitt

It’s truly special. But at the same time, there are a lot of stuff I would like to keep in my field of view. Like, again, a video. I’m chatting with someone, I’m moving around my home. I want that person to still be there with me, not gone.

Nuno G. Pedro

They should have some lock mode, spatial lock mode where I lock my field of view. Yeah.

Bertrand Schmitt

Given that is purely software, I guess they can do it. There is no restriction. However, given it’s a change of UX, and it’s Apple, maybe they will refuse to change that for the next five years.

Nuno G. Pedro

I hope they don’t because, again, they’ve done the more difficult piece, which is the tracking and spatial recognition, the state of the art, as you said. Doing the lock is actually the easier part, which just stays in your view. Yeah. Hopefully, they won’t this fundamentalist religious fight with us again and say, “Oh, no, you can’t lock it.” It’s like, “Why?”

Bertrand Schmitt

But exactly that’s what I’m wondering, that it would be a philosophical fight.

Nuno G. Pedro

Maybe because of what you said earlier in the episode, because you should never use it walking in blah, blah, blah.

Bertrand Schmitt

Yes. Let’s go to image quality. I think, again, this stuff is amazing. That’s the first time, and I’ve used a lot of VR headsets over the years, that’s the first time that the resolution is perfect. You don’t see the pixels. The colours are great. The brightness is insane. Actually, there are some movies I’m watching. I have to close my eyes. It’s too much brightness for me. My eyes need time to adjust.

Bertrand Schmitt

For the FOV, I think it’s good enough. Of course, I wish a bigger FOV. I don’t know if it’s around 100 degrees. I wish bigger, but it’s big enough for the current experience you get from the Vision Pro. Give me more, no question, but good enough for everyone.

Nuno G. Pedro

Yeah, it’s the image quality is stellar. You can’t have a fully immersive experience if the image quality is not stellar. I think they’ve taken us to the next level. The bar now is at a different level altogether.

Bertrand Schmitt

For me, to that point, we got more and more used with our laptop screens external screens, 4K TVs, iPhone, to have a retina quality image in front of you. I would say in VR, in AI, it’s even more important because it’s always in front of you, this screen. Everywhere you look at, if you see pixel, it’s horrible. Especially that it’s been 5, 10 years in your normal life, you don’t see the pixel any more. I think they were absolutely right to wait to launch this device until they can achieve retina level quality. That was the right decision.

Bertrand Schmitt

Battery life, I don’t know for you, but for me, it’s really not an issue. People are complaining. I don’t see any normal human being watching more than three hours of content every day in this device. Maybe you are not a normal human being, and you want to use that more than three hours, but you get around three hours of battery life, more than two, definitely, two hours and a half maybe. It’s easy to plug it if you’re not moving too much while you are watching something. I think it’s a non-issue. Of course, I would prefer to have the battery on my headset, not in a pocket, but I think it’s no big deal and completely overblown at this stage.

Nuno G. Pedro

Yeah, I agree. But I think it’s more because of the limitation. The battery is not fine if you could wear it for 4 hours. It’s just because you can’t. The battery is fine.

Bertrand Schmitt

You’re right.

Nuno G. Pedro

It’s not a feature. It’s like the-

Bertrand Schmitt

It’s part of the-

Nuno G. Pedro

The negative, it’s a bug that then makes the other thing feel fine.

Bertrand Schmitt

True.

Nuno G. Pedro

It’s so heavy, it’s okay because you’re going to have to take it off anyway, so you might as well charge it.

Bertrand Schmitt

To this point, I think that that’s the realization that compared to an iPhone, an iPad, a laptop, a computer, it is not designed to be used eight hours a day. This is not designed for that as of today. You are a madman if you believe you buy that, you replace a Mac. That’s total madness.

Nuno G. Pedro

Moving on maybe to the cons. We’ve already mentioned a few because we couldn’t help ourselves. Well, head, weight, comfort. It is relatively comfort, but for a short period of time. Then it’s heavy as the crown, I guess, is what comes to mind. It’s fine if you have a little bit of some backing, like to your point, reclining chair. If there’s something behind our heads, it’s a little bit easier. If you’re on a sofa and there’s nothing behind, you still feel a bit the weight as well.

Nuno G. Pedro

You get tired quickly. I think my max right now, to be very honest with you, is maybe 30 something minutes. I’ve never gone past an hour. 30 something minutes, if you remember, is what everyone was saying for the quest in general because of VR and all that stuff. I’m yet to watch a full on movie on it. I realized the Dune movie you’re talking about is the first one.

Nuno G. Pedro

I want to watch the second one, so I want to wait until the second one is out.

Bertrand Schmitt

Yeah, that was episode one.

Nuno G. Pedro

Maybe I’ll try with the stuff It’s available for free and watch a few of them in a row. I didn’t have as much time this weekend as I expected to have because I had friends over for Super Bowl and all that stuff. I was on the road. There’s a lag here on the analysis between Bertrand and me because I was on the road for a little bit longer, so I got mine later. Bertrand was sending me all these tips and all these things, and I’m like, okay, but I still need to test a little bit more. Definitely, it’s a device that I see myself going back to unlike, to be honest, my Meta Quest 2. I haven’t used it in a long time.

Bertrand Schmitt

I think that the fact they nailed the media content is a big one, media content consumption. Me, to your point, I use it up to 90 minutes in a row. I would say for movies, it’s okay because if it’s a long movie, I would just split it in two, to be clear, because I rarely have three hours in a go available to watch something. But split into a long movie, that’s actually perfect. But yeah, three hours in a row, I’m not sure I would be ready for that in the current version.

Bertrand Schmitt

Another piece I want to be careful. If you’re doing basic media consumption, it’s fine. But if you’re trying to do more, it can be very tiring for the eyes because using your eyes to control a UI is actually very bad for your eyes. Your eye muscle are not used to do that. Your eyes are used to keep moving around and stuff, not to be locked in place, look fixately at a UI element in order to control it and then snap it with your fingers. I think if that UI is very well done, I’m actually I’m worried to use that UI on a regular basis, like for work, for instance, because I’m very worried your eye muscle are not designed for that, are not used to it.

Bertrand Schmitt

Another piece I was reading, people were saying you are blinking less in that type of environment, which is also an issue because your eyes should be blinking regularly. That’s something to be seen. Again, it goes back to if you are using it 90 minutes a day for media consumption, it’s not a If you are planning, again, to use it for eight hours a day, I’m not sure you really know what you are getting into.

Nuno G. Pedro

Yeah, there will be other side effects because of the weight and the sight and stuff.

Bertrand Schmitt

Yes.

Nuno G. Pedro

Definitely, I think this is going to be a little bit of a backlash at some point on that. Definitely tiring for the eyes. The hands, I feel, are interesting for you to do, obviously, the things in terms of user interface, but there’s very limited UI interactions, to be honest. There’s very few things. There’s three movements that matter. Then can you do other things with your hands? Is there any other thing that you could use it for? I don’t know if we’re getting this because it’s early days, and so Apple has ideas on what else they want to do with your hands. I hope so. Otherwise, right now, it’s pretty limited.

Bertrand Schmitt

Yes, that’s the part I feel odd because your hands are always visible and nicely so. It’s well done because it’s not easy in push through your hands, but they are barely used. Touching two fingers to click, okay. But we have hands, we have evolved with millions of years of evolution to use our hands to do stuff.

Nuno G. Pedro

To be honest, some of the stuff should be even better. They measure when you put your eyebrows up. You could say, I’m looking at something, it’s pointing at the thing, and the click is when my eyebrows go up. I’m not even sure you need hands for everything, but still, if you have your hands, what do you do with your hands?

Bertrand Schmitt

I just feel, yes, that your hands are underutilized.

Nuno G. Pedro

I think your eyebrows are underutilized as well.

Bertrand Schmitt

Yeah, maybe. I think it’s a big issue when you look at your computer, use your hands. When you use your iPad, your iPhone, you use your hands. It’s the first device where your hands are mostly useless, I would say. I don’t think it’s natural. It’s not natural.

Nuno G. Pedro

There are things that are funny, like the recentring, you need to go back to the button. Why can’t we do recentring with your hand? Why can’t I do some movement with a hand to re-center?

Bertrand Schmitt

Yeah, you could put your hands with a special movement to show, “Hey, this is where I want that position.”

Nuno G. Pedro

Yeah.

Bertrand Schmitt

Agreed. Another piece, again, we talk about it, but that situation where all your apps windows stays in place. I don’t follow you, that’s super, super odd in a lot of situations. I hope they will find a way to change that at some point. We talk about recentring, but I don’t think that’s enough. You cannot have a video or audio call and have this calls following you. For me, it’s very odd.

Nuno G. Pedro

It is super odd, and I think it would be easier for them to just do the lock position.

Bertrand Schmitt

I hope so.

Nuno G. Pedro

Hopefully, this is not a religious fight with Apple again because we are fed up of that. I think controllers in general, we’ll talk about controls and input and output. Some VR controllers, there’s also no proper VR games yet there. I think input and output in general, the ability for me to connect other things to it, like a keyboard, a mouse, whatever, that I could use it actually as a tool where I’m writing text on something, and I’m consuming content on the other side.

Nuno G. Pedro

I feel a lot of people when they saw the demo of the Apple Vision Pro felt this potentially could replace my computer or at the very least my iPad for certain productivity things. It can’t really, if you can’t connect a keyboard or a mouse or something, because the keyboard experience on the Vision Pro is relatively atrocious. It’s very much a view one experience. It’s very, very atrocious.

Bertrand Schmitt

It’s horrible. If you talk about the virtual keyboard, using your eyes to press on a key. Or using your finger and typing in that virtual keyboard, it’s just one of the worst UI experience I’ve had to type a keyboard. Yes, you can connect with Bluetooth a keyboard. Usually I’ve not done that. What I have done is connect my Mac to my Vision Pro and my Mac itself connected to a keyboard and to a mouse. That’s working. Usually that’s how I use a keyboard, maybe a Mac connected to my Vision Pro, but you can directly connect a keyboard. You cannot connect directly a mouse.

Bertrand Schmitt

You can connect a mouse to your Mac, but you can directly connect a mouse to your Vision Pro. You can connect on your trackpad for some reason. That It doesn’t seem to work well. There is always weird stuff with your virtual keyboard and stuff. For me today, if I want to type anything on a Vision Pro, I connect my Mac to the Vision Pro and then type as I would on my Mac, and that experience will work, and the same using my mouse.

Bertrand Schmitt

But excluding my Mac from that interaction, I don’t think I would bother connect a virtual keyboard. Because all of these apps and stuff are still buggy, not working correctly in terms of input. It just It doesn’t feel serious about it. This is not a device that will let you forget your Mac if you are serious about doing work. You will still connect your Mac to it if you are serious about doing work.

Nuno G. Pedro

It’s strange because I feel that was one of the key things that the iPhone did so well.

Bertrand Schmitt

Yes, I totally agree.

Nuno G. Pedro

The first iPhone, the keyboard experience was radical. That’s the problem we had with PDAs and other smartphone-like things that were in the market, the keyboards were crap. If it wasn’t a BlackBerry, if you didn’t have a physical keyboard, the virtual keyboards were all crap. Then Apple came in, it was like, “Oh my God, you could do a good keyboard.” This is the opposite, we’re going back. This is like a PDA experience on an Apple device. It’s like, “Why doesn’t this work well?”

Bertrand Schmitt

It’s worse than any PDA. It’s a level of a PDA before multi-touch, when you had to use a stylus and click one by one on keys on a keyboard. But even that experience might have been better than on a Vision Pro, and we will go back to this. Using a Quest 3 controller is a better experience to type on the keyboard. Can you believe it? I’m still in shock how bad is that keyboard, especially coming from Apple. A few other stuff, the Persona is still very much a work in progress. It’s odd-looking. At some point, you get used to FaceTiming someone with a Persona, it’s still very odd.

Bertrand Schmitt

What is very odd is, actually, the Persona is in 2D. It’s projected on a 2D plane. I understand the use of Persona as a camera. You are visible on the camera, as a result, it can work with any app even if it’s not really optimized; take Microsoft Teams, Zoom. But in FaceTime, I would have expected a Persona that is in 3D, and it’s not. Not only it’s kind of lifeless, it’s in that uncanny valley where it’s close enough, but not close enough.

Bertrand Schmitt

On top of it, you’re in a 3D environment, and it’s presented to you in 2D. I guess they will correct it, they showed a beta tag on it, so let’s not be too hard. I think it has potential to Persona. It has potential to get better.

Nuno G. Pedro

It’s still beta. I’m a little bit less negative on it. I feel it’s going to evolve, it says beta on the cover. I’m pissed off like hell that it still doesn’t work for me because of the optical ID thing. I’ve created, now, two Personas, but it looks virtual. It looks like an avatar, not fully three-dimensional, but it’s an avatar that is interesting. I’m a little bit less negative on that. I feel it will evolve and right now it’s fine. But I want the optical ID thing to work. I think that’s the only thing I want.

Bertrand Schmitt

For it to work. I will say, it still requires serious work, but in a V4, it’s probably going to be great. Again, it’s too big to transport. You can’t leave home or your office with it on a regular basis, just too big, and you don’t want it to get stolen. Forget about this use case, it will be my take. Hopefully, at some point, it changes.

Nuno G. Pedro

Apple being Apple didn’t give us an accessory to transport it because, obviously, they want us to pay for it.

Bertrand Schmitt

Yes.

Nuno G. Pedro

I mean, at $3,500 in such a developmental stage, it would be cool if they’d given us some bag to transport it on.

Bertrand Schmitt

Let’s not forget that base prices with the base storage, it can go up to more than that, and there is tax and stuff. Image quality, I want to say, I have one issue, it’s glare. There is glare, and especially visible when you have some bright image, and you are in that dark movie theater mode, you see that glare in media consumption, and that’s my biggest negative in image quality. I managed to get over it, but once in a while it goes back and you see it. So they still need to fix that. For me, that’s my biggest issue before limited field of view, which I think is acceptable. Please fix the glare.

Nuno G. Pedro

It’s grainy for the reasons I think you were already pointing to earlier, but the graininess is also a bit… I don’t know if they can ever sort that out.

Bertrand Schmitt

For the passthrough, you mean?

Nuno G. Pedro

Yeah.

Bertrand Schmitt

For the passthrough.

Nuno G. Pedro

For the passthrough.

Bertrand Schmitt

It’s not an easy one. I think it’s the worst when you have no natural lighting, when it’s at night, it becomes more grainy. That’s the negative of the passthrough. You can see some distortion. If you look at carefully the passthrough, you can see some distortion happening. I see that being relatively easy to fix with better tech, basically. What is an issue is really reading anything close because of that lack of autofocus. It becomes blurry, so they need to add autofocus. Hopefully, it’s going to come, because if you need to watch at any external screen or book or anything or passport, whatever, it’s trouble to see it close.

Nuno G. Pedro

We haven’t mentioned one important aspect of all of these things that relate to the passthrough and the image quality, which is the lenses. Both of us got lenses because we wear eyeglasses, that make the experience be seamless. We take our glasses off, we put the Apple Vision Pro on, and it’s just seamless. That part of the experience for me was particularly a pro. It was just so seamless to do the whole thing through Carl Zeiss. They sent it at the same time. In my case, they sent it at the same time, at least. I got it, put it on, it was just working. So very, very cool the way they did that.

Bertrand Schmitt

On that, I’m a yes and no, because, it forced me to remove my glasses, find a spot to put them; when I remove the headset, I have to find my glasses again. I realized that I have a Quest Pro where I’ve not bought the insert, it’s actually more painless because I truly take it on, take off without touching my glasses, finding a spot for them. I don’t know if it’s such a good idea. Obviously, it has additional cost.

Nuno G. Pedro

For me, I feel it’s a nicer experience. Having done the one with the Quest, I feel it’s a little bit more Mickey Mouse. The quality then of the experience with your glasses on is not as perfect.

Bertrand Schmitt

It might reduce quality.

Nuno G. Pedro

Everyone has different eyeglasses that have different formats. It will always fit in a funny way. I understand why they took this decision. That was sort of saying, “You can try and do it like that, but it won’t be very good.”

Bertrand Schmitt

I like the alternative because with Quest, you can also buy your inserts if you want, so you have a choice.

Nuno G. Pedro

Yeah.

Bertrand Schmitt

Video 3D recording, Apple has put that as a big thing. You can video record with your Apple Vision Pro, and actually, you can also do that with an Apple iPhone 15 Pro. This is bad, and I will tell you why it’s bad.

Bertrand Schmitt

You are used to this crazy immersive video recording from Apple. You can see glorious 4K, 3D movies. What you have recorded with your Vision Pro or your iPhone 15 Pro in 3D is just super small. I mean, it’s 1080p, I’m not joking. It’s 1080p at 30FPS. 30FPS in VR is actually too slow if you want that immersive, like the 8K Apple immersive video, forget it, it’s just too slow. But more important, that 1080p is just too small. If you watch it in your big 3D universe through your Apple Vision Pro, it’s like a tiny vignette. Yes, it’s in 3D, but it’s a tiny vignette. Why would you want to watch a photo or a video as a tiny vignette on your Apple Vision Pro? There is no point.

Nuno G. Pedro

Do you think this is a software thing that they’ll solve at some point or no?

Bertrand Schmitt

I mean, they need better cameras. It’s hardware. I mean, with better hardware, they will be able to achieve.

Nuno G. Pedro

It’s not software-solvable, you’re saying.

Bertrand Schmitt

No, it’s not. I think they went to the max they could do with the current hardware, and it might be just the hardware to record natively. Ultimately, I’m not saying it’s an easy one to do. You still need to do dual video recording with two different eyes, you need to merge them in real-time, there is work to be done to do that. But my point is that until they move to at least dual 4K, it will be quite a crap experience. Right now, it’s a crap experience.

Bertrand Schmitt

The iPhone Pro 15 is actually even worse because the two lens are not… To do proper video recording, you want the two lenses spaced like normal human eyes. That’s what they do with the Vision Pro, the two recording cameras are spaced properly. But on the iPhone Pro 15, they are not spaced properly, they are too close to each other. It’s actually a very poor 3D effect.

Bertrand Schmitt

It’s not only too small a window, too small a recording; but on top of it, it’s an improper recording. I think they can correct this in hardware, but it will come with Vision Pro 2 or 3. It will come with an iPhone Pro 16, 17, I don’t know. But for me, the need to change that for 3D video recording to be a real thing, and right now it’s not. It works, to be clear, but it’s just too poor.

Nuno G. Pedro

Maybe to finalize on the cons side, obviously, we’ve talked about the external pieces, input and output. It applies, also to-

Bertrand Schmitt

It’s missing USB. It’s missing one USB support.

Nuno G. Pedro

It’s missing support to get it in and out. We’ve already talked quite a bit about audio limitations. Maybe you want to elaborate a little bit, Bertrand?

Bertrand Schmitt

Yeah, maybe again, one point, we’re missing VR controllers, that’s a big thing. That for me is huge, I just want to insist on this one. Yes, you can use your PlayStation or Xbox controllers, but it’s not the same. They need VR controllers.

Bertrand Schmitt

Audio limitation. I mean, the audio is excellent, amazing, but we are missing bass from the speakers, so you need to connect something else. You are forced to connect in Bluetooth, which is a pain because it will be lossy; this is some level of lossless with AirPods too. But ultimately, just give me a wire. USB-C or 3.5 millimeter, or even better on higher end, 2.5, 4.4, but give me something high quality.

Bertrand Schmitt

Right now, I have to stream in Bluetooth to high-end wired headset, which is crazy to enjoy proper movie environment. Just give me a proper output, Apple, USB-C would be best. Also, right now, apparently the audio output is only stereo. There is no multichannel if you want to enjoy proper multichannel audio.

Nuno G. Pedro

Maybe we switch to apps, the apps that are currently available on the Vision Pro. I’ll open hostilities with the content apps because those are the ones where I spend most of the time, Netflix, YouTube, definitely the Apple TV app, Disney+, HBO Max. I’m a bit disappointed by almost all the apps. I think the Apple TV one is the cool one because you have all these things with the immersive content.

Nuno G. Pedro

I’m a bit surprised that there’s no content released, Disney+ and HBO Max, at least that I could find that it was fully immersive in 3D. So a little bit disappointed, I feel. Just day one apps that got quite a lot of attention and really the only one that seems to be doing well, shockingly enough, is the Apple TV one. That was my experience, at least on the content side.

Bertrand Schmitt

On the content side, it’s really a poor experience at this stage because you are looking for 3D content. If you look for 3D content on the Apple TV, you can find it. But actually, when you want to launch them, if you have that content on another app, it will launch it on the other app, and you don’t realize you don’t have the 3D version of the content.

Bertrand Schmitt

For instance, Max, you can watch Dune on Max app, but it won’t launch in 3D. If you want to watch Disney 3D movies, great. You have Disney+, you go to the 3D section, you watch the 3D movies, and then you realize, “Hey, there’s something wrong. Oh, yeah, what’s going on?” You don’t have the movie theater option that Apple TV has. It’s only with the movie theater option, you can watch 3D movies properly in big size.

Nuno G. Pedro

You’re seeing like it’s a TV at 3D. It’s a TV at 3D, you’re not seeing the whole immersive experience.

Bertrand Schmitt

Yes, exactly. It’s just not close enough, big enough. It’s as if a bug, and you’re like, “Okay, so it means that to properly, fully watch as intended these 3D Disney movies, I have to buy them one by want to watch them inside my Apple TV app.” I’m sure it will get corrected. Again, I’m just surprised of that quality at launch with partners. As you say, there is no new content. The IMAX app works great, but only three movies and two that you must rent. It’s limited, but it’s working.

Bertrand Schmitt

One big miss is YouTube because YouTube has a lot of VR content, but there is no YouTube app. There is some app called Juno to replace YouTube if you want, and you trust them. But it’s not doing VR, for what I know. We’re still waiting for YouTube to wake up. It looks like they’re working on it. They see it’s on their roadmap, but it’s YouTube. Roadmap means six months, two years. Who knows Yeah. I don’t know. But that’s a big piece of content missing. This is a huge piece. People don’t realize there is so much 3D content on YouTube.

Nuno G. Pedro

Also, Netflix, Spotify are not available, which is also interesting. I mean, with spatial sound and stuff.

Bertrand Schmitt

That is a big miss. I mean, you could argue that Netflix has no 3D content anyway, so you can watch it on the web, but you cannot download content, for instance. Spotify, it’s a big miss. I mean, why would I watch Spotify on the web? It’s just very odd.

Bertrand Schmitt

Of course, we know where it’s coming from. It’s a content developer war against Apple, and they want to hold their apps. At least that’s the assumption. The same for Facebook, WhatsApp, Instagram, it’s not there. A lot of apps are missing. Basically, communication apps are not there beyond FaceTime. Some will say Signal is there, but practically it doesn’t work. So sorry, Zoom.

Nuno G. Pedro

Yes, your pet peeve.

Bertrand Schmitt

An optimized one for the Apple Vision Pro. It’s a joke. The state of where it is. It’s cutting audio.

Nuno G. Pedro

Well, it is allowed to have the Persona. You can have the Persona on it, but it only lasts five minutes.

Bertrand Schmitt

But they have nothing to do that because the Persona is coming for free. It’s what is Apple pumping out as a camera connected to your device. There is no work to integrate it. First, the app is absolutely not optimized. You cannot move people around that you are talking to inside your VR environment, just one big window.

Bertrand Schmitt

It’s total let down. The biggest thing right now is that it’s totally unusable because the audio randomly cut every 10–20 minutes. So you are losing audio, and you have to restart the app, so it’s just horrible right now. But once it’s fixed, we’re still missing a proper app that take advantage of the 3D environment. I don’t know if it’s going to take months or years. It’s not clear to me.

Bertrand Schmitt

A big issue, to be clear, for app developers is a very small user base. At this price point, it’s guaranteed to be a very small user base. I think it goes back to that. For the next one to two years, you can expect this to be a playground for developers, a great playground for developers, a great playground for 3D video addicts. But beyond that, why as an app developer, we do develop apps for a user base that will be in millions at best in two years from now?

Nuno G. Pedro

We have the fundamental chicken-egg issue. The issue of take off of AR and VR, in particular, VR, has always been linked to the attach rates, to the number of devices available in the market that can allow you to have that experience. I think everyone in their mind, because we’re optimistic like that, thought, will Apple be different because they have an incredible ecosystem of players around them, etc.

Nuno G. Pedro

But still, the attach rates of the Vision Pro, specifically, which is the device that allows you to do this in, are going to be crapped for a long time. If I’m a developer, why would I develop for it? I mean, it’s Apple, cool, but it’s like, “I’m not going to have many users. Why would I develop?” That’s the same issue, same issue.

Bertrand Schmitt

That’s a big issue.

Nuno G. Pedro

We have the same chicken-egg issue.

Bertrand Schmitt

I think what might help Apple, and that was what they were careful for, is that any iPhone and iPad app is technically more or less compatible, except that a lot of developers are choosing not to make it compatible. Basically, even the iPad app or iPhone app, they unchecked so that it’s not available on the store. That’s what happened with Netflix, with Spotify, with Facebook, even Dropbox is missing.

Bertrand Schmitt

I was going crazy that I cannot use Dropbox on the Vision Pro. For me, that one Dropbox missing is like, “Okay, out as a proper device I can use because I’m using Dropbox quite a bit.” It was very frustrating. I think some will be fixed by developers, because in the next 12 months, they will say, “Okay, if I have to fix two or three things to make it compatible on the Vision Pro, I will do it.” But to really leverage that properly and make native apps, might be a gap.

Bertrand Schmitt

I think if you’re a media app, you should definitely do it. You don’t want to lose your brand. But again, my Netflix might decide to hold out for a while because they say, “Hey, Apple is not playing nice with me in some other environment, so I’m not going to help them launch their device. I’m going to create pain for them.” That’s an assumption, I don’t know for sure the logic.

Nuno G. Pedro

But it’s like, if I’m Disney, if I’m HBO, et cetera, why wouldn’t I just say, “You know what, guys, if I make it available, I’m going to charge for it because it’s a different screen and there’s so little take rate. Why would I do it for free and make that content available and render it for free like that?” I think that’s the problem. I mean, why would they want to have goodwill?

Bertrand Schmitt

I think it’s a subscription business. You want people to be able to attach to every screen.

Nuno G. Pedro

Yeah, but it’s not really…

Bertrand Schmitt

I think you might do like Netflix. You charge a higher rate if you want the higher quality. You want that 8K, you want that 3D option, it’s higher rate. I would be fine with that. I would be fine. It’s fair.

Nuno G. Pedro

But to my point, it’s going to be charged for. Either they’ll charge per movie or they’ll charge per subscription, or they’ll charge for both, which Disney has done in the past. It’s like, “Welcome to the new world. We’ll charge for both subscription, and we’ll charge per movie.”

Bertrand Schmitt

Yeah, maybe. I will say at this stage, if 3D content is there, I’m happy to buy a bit more per subscription. Just to be clear, actually, when you buy a movie on Apple TV, if you remember in the past, you got for free your 4K version. Here, it’s the same thing. You get for free your 3D version. So my movie library, I got surprised to actually get for free a lot of 3D content because I already bought a movie on Apple TV. That was a great surprise.

Bertrand Schmitt