Category: Media/Tech Business Models

Comparing OpenAI’s Ad Platform to Early Google and Facebook Growth

Watching OpenAI promote its ads business puts me in something of a nostalgic mood. When I saw OpenAI’s thirsty announcement this week proclaiming a billion-dollar revenue run rate in its advertising business, I had myself something of a chuckle. We’ve seen this movie before – I wrote an early script for it in The Search, which among other things chronicled Google’s rise to a spectacular IPO in 2004. But is it really the same movie? The answer is no – but if you squint, and take a few reasonable liberties with history, it’s clear Altman & Co. are hoping for a sequel.

The Race to A Billion Trillion

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AI Is Just (Currently Bad) Software

An image from SasSpocalypse.com

Last week I ran into an old pal at a party who asked me what I thought of the “SaaSpocalypse” – the AI-driven correction that hit nearly all software stocks over the past few quarters.  My friend has bought and sold software companies for most of his career and is a sophisticated player in private equity markets. Like everyone in finance and tech, he reads just about everything he can about AI’s impact on our economy, and in particular on formerly predictable sectors like software. “Software companies are cheap right now,” he said, before adding that he wasn’t sure it made sense to buy them, because everything he was reading was saying the software party is over.

It might have been the cocktails talking, but before I had a chance to think, I said “AI is just bad software. It’ll get better, once companies figure out what to actually do with it.”

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What’s up: DOC!

Back in 2024 I helped to launch a new events and media series focused on the science of longevity. We called it DOC. Over the past two years, DOC has thrived, and a fascinating community of leaders in medicine, finance, policy, and entrepreneurship has flourished. This year we’re hosting our third annual DOC October 21–23 at the Fairmont Sonoma Mission Inn, with a focus on the intersection of medicine and AI.  

At the time we launched DOC, many of you asked me why I was involved – I’ll admit it seemed like a bit of a curveball. But beginning with the Internet Summit back in 1998 and continuing through The Standard’s rooftops, Web 2, Foursquare, Signal, and NewCo Shift, I’ve always loved curating an influential group of people in the context of a larger, high-impact narrative. It’s journalism in a live setting, and if you get it right, it can catalyze a nascent industry and drive it forward. 

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I’ll Be Framing My AI Check

This is a fake check!

I’ve always loved writing, and took to this form – the “thinking out loud” version of blogging – more than 20 years ago. I started Searchblog after I sold my first book, which focused on the impact of search on business and culture.  I decided I’d chronicle my reporting and build my voice by posting as often as I could, and the experience proved to be a watershed moment in my career. I built an audience that numbered in the hundreds of thousands, noticed scores of others doing the same, then launched a new company (Federated Media) based on insights from the experience.

The early 2000s marked the apex of what is now called “the open web,” and today two stories may as well be considered obituaries for the era.  The first, by Kate Conger at the NYT, lays out the mechanism for the open web’s demise: “Google Is Building an A.I. Fence Around the Internet It Once Championed.” The second brings news of a $1.5 billion settlement in a massive copyright infringement lawsuit targeting the AI industry. As an author, I’m a party to that suit – and at some point in the next year, a check from Anthropic will wend its way through the mail to me. A coda, of sorts, for an era already passed.

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Again, What About the AI Ads?

Last month the FT reported that OpenAI was going all in on a “super app” that combines agents and coding, a move clearly designed to compete with Anthropic, which dominates the “get work done” market with Claude CoWork. “Chat is dead” as the principle interface for ChatGPT, according to OpenAI execs quoted in the FT piece.

At the time, I wondered out loud: If “chat is dead,” what happens to OpenAI’s promises of $100 billion in advertising revenue by 2030? Given the “surface” for that revenue was supposed to be chat, it seems contradictory to fold it into a paid subscription product focused on white collar workers.

A version of the super app (called “ChatGPT Work”) launched this week and early reviews are mixed: chat has been demoted, the UI is messy and confusing, but the “work” portion of the app is cheaper than Claude and quite good overall.  I’m sure the app will quickly address those UI issues, but I’m still left scratching my head: What about the ads? If I were considering investing in OpenAI’s ads, I’d certainly want an answer to that question.

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The Rhymes of Tech History

Big Brother, indeed.

It seems ridiculous now, but when I was a cub reporter covering the tech industry, our publication had an entire beat focused on word processing – and it was one of the most sought after assignments in the newsroom. We had another reporter who focused on spreadsheets. Because I was the new kid, I covered databases – databases! – and other reporters covered desktop publishing software and utilities. At just one publication, that’s a half a dozen full-time reporters tracking and analyzing applications that have mostly faded into the background noise of today’s tech industry. At the time (late 1980s), there were at least a dozen outlets doing the same thing.

Think about that – nearly one hundred journalists covering workplace software!

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Who Stole My Alpha?

Have you seen Alex Karp’s rant on CNBC? I fielded this question about a dozen times over the past week. If you’ve not yet watched, it’s well worth your time. In a conspiratorial diatribe against the evils of monopoly-crazed frontier labs, the founder of defense-tech giant Palantir asserts that OpenAI, Anthropic, and Google are ruining our economy by “stealing our alpha” (more on that in a second). And because he’s a founding member of the Valley’s newly emboldened MAGA elite, Karp manages to toss in a few unhinged political dog whistles, implicating both UC Berkeley and “wealth taxes” as complicit in the downfall of civilization as we know it.

Despite obviously talking his own book – Palantir sells an application layer that sits above frontier models and ensures clients will not have their “alpha” stolen – Karp makes a point that has resonated deeply across not only tech, but the entire economy. “He’s not wrong…” is how several of the emails I’ve received have begun. “He’s got a point,” they continue, “even if he is kind of toxic.”

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The Economics of AI Are Shifting

CNBC chart

One of the best ways to find signal in the noise of a major technological shift is through the time-tested journalistic tactic of following the money. Back in January I predicted that in B2B markets, AI Can’t Cost This Much. I argued that “pricing the future based on the cost of the present is a losing bet … However many trillions will be spent on AI over the course of the next decade, one thing will remain constant: There are huge opportunities to be exploited in finding more efficient and less expensive ways to deliver technology to both consumers and businesses.”

Nearly three years before writing that post, I made another prediction, this time in consumer markets: It would soon be normal for consumers to pay as much as $200 a month for AI services. Combined, we pay more than that for mobile phone, cable, and internet services, after all.

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How Can You Trust the News?

The single most essential ingredient of good journalism is trust. By that measure, journalism is in a very bad way: According to The Reuters Institute’s annual survey, only 37 percent of the global public trusts the news industry, down nearly 20 points from ten years ago. In the US, that figure stands at 25 percent.

Reuters also reported that for the first time, more than half of respondents get their news primarily from algorithmically driven platforms like Instagram, TikTok, and YouTube. And the fastest growing new “surface” for news consumption? AI chatbots like OpenAI’s ChatGPT and Anthropic’s Claude.

The central story of journalism in the digital age is one of collapse. Platforms and their algorithms have cleaved audience from traditional news brands. The industrial-scale AI that runs sites like Instagram and YouTube are tuned for engagement and advertising sales, not trust or truth. Personalized AI of chatbots like Gemini or ChatGPT seem destined for a similar fate.

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Will AI Ever Become a True Platform? Not Without Us….

Yesterday Microsoft CEO Satya Nadella published a fascinating essay that reads as both a rebuke to frontier AI model companies like Anthropic and OpenAI, as well as a call to arms to the entire business community.

Nadella is worried that OpenAI and Anthropic are about to eat everyone’s lunch – Microsoft included. “I’ve been thinking a lot about the future of the firm in an AI-driven economy,” he opines. “The last thing any of us want is a world where every company across every sector is ceding value to a few models that eat everything they see.”

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