E126: Big Tech blow-out, Powell's recession warning, lab-grown meat, RFK Jr shakes up race & more
All-In with Chamath, Jason, Sacks & Friedberg Podcast Recap
Published:
What Happened
Google announced a massive $70 billion stock buyback plan, alongside the first profitable quarter for its cloud unit. However, other areas showed mixed results: search revenue increased slightly by 2% year over year but fell 5% quarter over quarter, while YouTube revenue dropped 2.5% year over year and 16% quarter over quarter. Google's leadership, particularly Sundar Pichai, faces scrutiny amidst a controversial merger of DeepMind with Brain, positioning Google with a strong AI advantage over Microsoft, which leans heavily on OpenAI.
Jerome Powell's hoax interview revealed concerns about the economic outlook, predicting less than 1% growth and a possible recession. He emphasized the necessity to cool the labor market to control inflation, pointing out the US's current $2 trillion annual deficits and low labor force participation. This economic backdrop contrasts with big tech's strong performance, as shown by Meta's 12% share increase after earnings.
AI is transforming knowledge work, with Jason experimenting with AI tools for tasks like fundraising and newsletter creation. AI's deflationary effect could reduce knowledge work costs by up to 90%, with predictions that 30% of such work might be AI-driven by year-end. The debate continues over building vertical AI apps versus integrating them into platforms like ChatGPT4 or Bard, as PricewaterhouseCoopers invests a billion dollars into AI, indicating the technology's future impact on productivity and wage growth.
San Francisco's commercial real estate faces challenges, with high vacancy rates and some properties losing up to 80% of their value. Remote work is driving salary normalization across countries, and AI's cost reduction is further impacting the sector. Public growth stocks and private companies have experienced valuation declines similar to the real estate market, reflecting broader economic shifts.
Alternative proteins, including plant-based, recombinant DNA, and lab-grown meat, are evolving, each with unique challenges. Beyond Meat and Impossible Foods struggle with taste and cost issues, while recombinant DNA offers potential improvements in taste and health benefits. Lab-grown meat remains expensive due to production challenges, with biomanufacturing capacity highly limited and costly, driven by a high demand from synthetic biology startups.
RFK Jr. is gaining traction in the Democratic primary with 19% support, critiquing Biden's handling of the Ukraine war and the CIA's role in politics. Known for his environmental activism, he challenges Big Pharma's influence on vaccines, although his campaign is not primarily focused on this issue. His presence in the race introduces new dynamics, with Marianne Williamson polling at 9% as another notable candidate.
Key Insights
- Google's cloud unit turned profitable for the first time, indicating a strategic shift towards high-margin areas amidst declining YouTube and 'Other Bets' revenues.
- Jerome Powell warns of potential recession with sub 1% growth, urging economic slowdown and labor market cooling to manage inflation, amidst $2 trillion annual deficits.
- AI could automate 30% of knowledge work by year-end, potentially increasing productivity by 30% and normalizing salaries across borders, but requires significant upskilling from workers.
- Lab-grown meat technology faces high costs due to limited biomanufacturing capacity and reliance on expensive inputs like fetal bovine serum, despite advancements in CRISPR and DNA sequencing.
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