Limitless Podcast

Ejaaz:
Do you guys remember when Mark Zuckerberg spent $300 million to hire a single AI researcher?

Ejaaz:
Well, this week he spent 10.5 times that amount, $3.5 billion to hire one person from his competitor.

Ejaaz:
At this point, I think it's evident that Meta is relentless with the amount

Ejaaz:
of money that they're spending to win the AI race.

Ejaaz:
They've given away tens of billions of dollars in AI models for free to try

Ejaaz:
and undermine their competitors, which failed.

Ejaaz:
And they've already committed to spending $600 billion over the next five years

Ejaaz:
here in the US to build our data centers to train frontier AI models.

Ejaaz:
But one question remains unanswered, Josh.

Ejaaz:
Is Metastock a buy or is it a sell?

Ejaaz:
And I ask that question because it's pretty clear that competitors like Google

Ejaaz:
and Open AI are eating their lunch.

Ejaaz:
They're beating them in apps. They're beating them in models.

Ejaaz:
They're beating them in data centers.

Ejaaz:
So in this episode, Josh and I are going to cover the bull case and the bear

Ejaaz:
case to investing in Meta stock.

Ejaaz:
Make sure you stay until the end because we have a special surprise for you

Ejaaz:
from our friends at OpenAI.

Ejaaz:
Josh, I want to show you a chart.

Ejaaz:
I want to show you the Meta stock chart. Over the last month,

Ejaaz:
it is down 5.6%, which

Ejaaz:
may not seem like much but that is billions of dollars um

Ejaaz:
whilst their competitors like google like nvidia

Ejaaz:
have been up only do you have any thoughts about why this is because i'm personally

Ejaaz:
confused right zucker spent i think 30 billion dollars now to hire like a killer

Ejaaz:
team to build out ai for the company they have released a bunch of models and

Ejaaz:
open source them and they're investing in data centers what like why is this happening

Josh:
Yeah, I think the market's trying to understand the new meta,

Josh:
because this is a very different company than what it previously was.

Josh:
Previously, it was a social media company, they sold ads, they made a ton of

Josh:
money, they had billions of users.

Josh:
Now they're pivoting to, I mean, first it was a pivot to the metaverse,

Josh:
where they started building the virtual reality goggles.

Josh:
Now it's more of a pivot into AI and fully putting the balance sheet on investing

Josh:
in these large infrastructure projects,

Josh:
investing three and a half billion dollars on a single developer.

Josh:
Their their capex is going through the roof when we're not

Josh:
really getting the results to see it so what i think we're seeing here

Josh:
in the meta price and you just if you move to the six month chart it's actually

Josh:
like fairly good i believe like they've been

Josh:
doing pretty well it's up well um people are trying to get a gauge for what

Josh:
they're doing right what they're doing wrong and how they could price this into

Josh:
the stock and i think this episode we could kind of walk through the different

Josh:
elements of meta's business and kind of talk about what we like what we don't

Josh:
like because the market very much feels wrong when it comes to evaluating some things,

Josh:
but it is kind of right when it comes to evaluating others.

Josh:
So I think we're going to just kind of diagnose why the market is wrong for

Josh:
specific things that we have like a pretty unique interest in covering.

Ejaaz:
Let's start with hiring, Josh, because like, sorry, I can't get this headline out of my head.

Ejaaz:
Let's give some context for the listeners here. This week,

Ejaaz:
Zuck is rumored to have spent three and a half billion dollars to hire this

Ejaaz:
guy called Andrew Tullock from a company called Thinking Machine Labs,

Ejaaz:
which coincidentally was founded by an OpenAI co-founder, Amir Amir Murati,

Ejaaz:
who left OpenAI and started his own Thinking Lab.

Ejaaz:
What's so interesting about this is Zuck already made this guy an offer about

Ejaaz:
two months ago for $1.5 billion, which he turned down.

Ejaaz:
But apparently everyone has their own price.

Ejaaz:
Why this is shocking to me, Josh, is

Ejaaz:
meta literally announced that they were not going to spend any more

Ejaaz:
money hiring people for their ai team and they've

Ejaaz:
gone ahead and kind of broken that rule and spent the most amount that

Ejaaz:
they they ever had um but number two and i have to be honest here i'm gonna

Ejaaz:
i'm gonna eat some humble pie i remember on an episode about two months ago

Ejaaz:
when zuck went on this spending spree i said hey we've got to give zuck some

Ejaaz:
time because it's going to take some time to build these ai models to build out some apps.

Ejaaz:
Now we're three months later and he still hasn't produced anything to kind of show for it.

Ejaaz:
So I'm kind of feeling like Zuck is misspending his money and he's not able

Ejaaz:
to execute on building out the grandeur AI vision that he promised us.

Ejaaz:
Where's the artificial general intelligence?

Josh:
Since they've started this huge hiring spree, the only thing we've really gotten

Josh:
is vibes, which was that like social media, TikTok scrolling based thing.

Josh:
Did it actually release you, Jess? Is it even out?

Ejaaz:
Because I haven't played with it if it is. No, well, I mean,

Ejaaz:
that says something about both of us. When was the last time you were on Facebook?

Josh:
I can't tell you. I'm not sure I even have Facebook still downloaded.

Josh:
It might be downloaded on my phone. I'm not logged in. But I do want to talk

Josh:
about the spending because there is the bull case and the bear case both to be made on spending.

Josh:
What we're seeing Zuck do is he's really going all in.

Josh:
And that level of conviction matters because the company needs to also be all in.

Josh:
And they're spending a remarkable amount of money in doing so.

Josh:
Uh the thing though is is three and a half billion dollars

Josh:
is a drop in the bucket if they do this right if they actually do create

Josh:
really high quality ai experiences for

Josh:
their many billions of users that generates a tremendous

Josh:
amount of revenue and metastock is very very clearly undervalued

Josh:
now if they're actually able to deliver on that because when you

Josh:
think about the costs associated with building up these giant data centers they

Josh:
are tens to hundreds of billions of dollars that they're

Josh:
going to be pouring into this and if one single ai

Josh:
researcher can create one single algorithmic unlock or

Josh:
make a small incremental improvement that lowers

Josh:
the amount of compute required by even 10 percent that covers his entire compensation

Josh:
and then some with many multiples to spare so the leverage of the decision making

Josh:
of these employees is astronomically high and if you can get one person that

Josh:
could save you even one percent on a hundred billion dollars that's a billion

Josh:
dollars it's a lot of money how.

Ejaaz:
Much time are you going to give zuck to do this josh because like is it months

Ejaaz:
is it a year like like how long am i holding my metastalk for

Josh:
You have to give them time to release something i

Josh:
know vibes was something but it was very much not it was just kind of like a

Josh:
nothing burger i'm not sure why they did that um it was kind of a waste it left

Josh:
bad very very bad like optics and a taste in my mouth because it's just like

Josh:
what are you doing with all this talent you're making more ai social media um

Josh:
applications but i want to give them an opportunity to actually release something substantial.

Josh:
Like release a big model, release some sort of large product.

Josh:
I would say wait until version one of whatever they're working on to come out

Josh:
before evaluating is my take.

Ejaaz:
My gut wants to basically say that I want to sell my Meta.

Ejaaz:
I hold Meta, but my brain is telling me

Ejaaz:
like it took years to build the first version of

Ejaaz:
chat gpt and it's like no secret that

Ejaaz:
zux joined this race kind of late and he's

Ejaaz:
trying to make up for that by spending the money to hire the talent but

Ejaaz:
the talent needs time to cook as you

Ejaaz:
say right so put quite clearly i'm gonna reserve my judgment until the next

Ejaaz:
ai model that meta releases is out whatever that is if it's llama 5 or behemoth

Ejaaz:
or whatever the hell they call it i'm gonna wait for that because the model

Ejaaz:
the chat gbt competitor will basically determine whether they're good enough or not yeah

Josh:
That's that's interesting okay so disclosures ejs does have meta stock i

Josh:
have none but i do i guess i have a bull case to make for them um

Josh:
which is that meta has a couple billion users which is

Josh:
a ton they also have a ton of data on those users in terms of preferences what

Josh:
they like what they don't like they also have a algorithmic engine to serve

Josh:
those users exactly the type of content that they want and that pairs very well

Josh:
with their advertising engine which is world class i mean And Instagram,

Josh:
at least, because Instagram uses the same engine,

Josh:
they're able to serve me ads that are better than basically any other ad that

Josh:
I get anywhere on the internet.

Josh:
So they have this really vertically integrated stack of users,

Josh:
technology to serve users, and technology to serve their preferences.

Josh:
Now, if they can apply an AI layer on top of that stack, where they can now

Josh:
coerce these, I don't even know how many billions of users they have,

Josh:
but many billions of users to further embed AI into their lives,

Josh:
I think that's a really unique advantage.

Josh:
Nobody really has the software stack that meta does and also the hardware capability

Josh:
now meta is very bad we'll talk about them we've left a lot to be desired but

Josh:
they're doing it and they have a product and they're learning manufacturing

Josh:
and they are iterating quickly.

Josh:
And if they can combine this really amazing software stack with billions of

Josh:
users and combine a compelling hardware product, which would hopefully be the

Josh:
glasses, and create this really nice ecosystem around it where you can augment

Josh:
your entire life with AI,

Josh:
that's a pretty unique position they're in because there's not many other companies

Josh:
that have that type of leverage.

Josh:
I mean, OpenAI has the most users. They don't have the hardware.

Josh:
Google has a lot of hardware and kind of users, but their products suck.

Josh:
Zuck actually has both. they just both need to be good and they both need to

Josh:
work together so if they could do that green charts ahead.

Ejaaz:
Another thing that zuck has repeatedly shown

Ejaaz:
he's good at is taking all

Ejaaz:
of this data and these users that you mentioned josh and actually

Ejaaz:
creating really fun like social features or products or network effects from

Ejaaz:
that right he created facebook he acquired instagram you have the whatsapp thing

Ejaaz:
everything is like kind of cultivating this like um ecosystem of people just

Ejaaz:
like communicating with each other as much as they can and

Ejaaz:
Probably no one better at it, right? From a hardware perspective,

Ejaaz:
again, we'll talk about it in a second.

Ejaaz:
I'm hoping that he can pull this off for AI.

Ejaaz:
He's had a few shots on goal. And in my opinion, they've missed.

Ejaaz:
He's had the meta chat bot AI assistant.

Ejaaz:
And do you remember when news broke that all user prompts and conversations

Ejaaz:
were actually made public? Really weird decision.

Ejaaz:
He released the Meta Vibes app, which is kind of like a TikTok competitive with

Ejaaz:
all AI generated video. We're going to talk about that in a second.

Ejaaz:
And that has kind of also flopped.

Ejaaz:
So I commend him for trying. And he is like the master.

Ejaaz:
He has so much history behind this. So I'm still bullish that he will be able to pull something off.

Ejaaz:
And to be honest, and I know this will seem like a cop out, Josh, it is still too early.

Ejaaz:
Like no one's created a sick AI social media layer.

Ejaaz:
Some have taken some kind of bold attempts, but we haven't figured it out.

Ejaaz:
We haven't had the final hardware form factor we haven't

Ejaaz:
had the final kind of like perspective on what this

Ejaaz:
ai kind of like system will look like i'll be just talking to chat gbd for the

Ejaaz:
rest of our lives or is there kind of something else i think once that materializes

Ejaaz:
zuck is going to come in like a cannonball and absolutely blow everyone apart

Ejaaz:
um so i'm i'm still reservedly bullish i'm just short term i'm kind of like whatever okay

Josh:
Well you mentioned hardware doesn't have a form factor yet the final form factor

Josh:
at least we do have a form factor and that is what these meta glasses so can

Josh:
we please i'm dying to talk about that.

Ejaaz:
Okay please let's talk about

Ejaaz:
i wonder why josh is excited to talk about this okay right so some context um

Ejaaz:
we released an episode about a week ago where meta announced this new ai glasses

Ejaaz:
they're called the ray-ban meta displays and the reason why this kind of like

Ejaaz:
blew everyone's minds when they announced this news was

Ejaaz:
People kind of have like never seen something like this before.

Ejaaz:
It's a pair of glasses that you kind of wear, like a normal pair of glasses,

Ejaaz:
but you see a screen projected on the right side of your glasses.

Ejaaz:
So you can see things like apps that you see on your phone.

Ejaaz:
If you're like walking somewhere, you can have a Google Maps that tells you

Ejaaz:
where to go. You can answer texts.

Ejaaz:
You can take pictures. There's a camera embedded in the frame of the glasses itself.

Ejaaz:
You've got speakers in the handles that like kind of like project audio into

Ejaaz:
your ears, like an AirPod.

Ejaaz:
It was this new device that we haven't really seen since Google Glass,

Ejaaz:
which kind of like flopped way back when. But now supposedly is the time.

Ejaaz:
And this is the first bold step that Meta has taken. And we've got a tweet here.

Ejaaz:
And for the listeners, I'm going to read it out to you from Shil Monat,

Ejaaz:
which is, you know, he's been a Meta bull for a while.

Ejaaz:
And he goes, the Ray-Ban Meta displays are fulfilling the original promise of

Ejaaz:
Google Glass. Society wasn't ready for the glass, to be honest.

Ejaaz:
Now phones are out recording stuff all the time. Meta has done a better job of it. They look normal.

Ejaaz:
$800. dollars it's mine I'm gonna buy it um and then literally two weeks later

Ejaaz:
Josh I have to share this tweet from the same guy from Shilmanot and it goes as follows

Ejaaz:
First impressions matter, and Meta really blew it with the Ray-Ban displays.

Ejaaz:
I was ready to buy them on launch, but instead of letting me order them,

Ejaaz:
they forced me to book an in-person demo at Best Buy.

Ejaaz:
It was a complete disaster. And he goes on to explain his experience where the

Ejaaz:
rep didn't know anything about the product.

Ejaaz:
They couldn't get the glasses to work. And he told him to go away and come back

Ejaaz:
later where, you know, hopefully it works.

Ejaaz:
So long story short, I think it was all talk and no walk.

Ejaaz:
And I have to spend 20 seconds, Josh, before I pass the mic to you.

Ejaaz:
I need to eat some glass and humble pie again, because I was super bullish about this, dude.

Ejaaz:
I was bullish because I'm tired of buying a new iPhone with like a better camera every year.

Ejaaz:
I want something new. I want something that would blow my mind,

Ejaaz:
like when the original iPhone came out.

Ejaaz:
And so when Meta, when Zuck specifically took this step forward,

Ejaaz:
I was applauding him because I was like, no one's been bold enough to do something like this.

Ejaaz:
And I'm excited to see this work out. and it's and it's suck it's meta

Ejaaz:
like they can't like release a shitty product

Ejaaz:
right apparently the product is kind of

Ejaaz:
shitty and it's made me bearish about buying one dude um i told you like you

Ejaaz:
know you asked me like hey have you bought these yet i'm like they don't have

Ejaaz:
an appointment for me to walk in i have to walk into a physical store to buy

Ejaaz:
this thing instead of being able to order it online which sucks to start off

Ejaaz:
with so yeah i don't i'm confused josh help me make sense of this well

Josh:
I commend you for your optimism and in a way i envy it because i think when

Josh:
it came to evaluating these, the pragmatic part of my brain one.

Josh:
And I remember saying after watching the presentation, like,

Josh:
this is not a serious presentation. This is not a serious product.

Josh:
It's disappointing that that's the reality.

Josh:
Um meta really just has no business releasing these

Josh:
products to the public yet and i respect the fact that they're.

Josh:
Doing it in public they're shipping in public they're testing in public but these

Josh:
are very much uh developer versions that i

Josh:
mean if you could even call it that because they hardly work i mean we're seeing

Josh:
on screen now another disappointed review from uh

Josh:
robert scoble on x he's been wanting them for a really long time

Josh:
i think everyone is everyone kind of has this aspirational idea

Josh:
of what the next type of hardware interface

Josh:
looks like and it's very much glasses but meta is just releasing just

Josh:
like horrendous products one of the things that i

Josh:
think they made a really big mistake with is forcing people

Josh:
to go in store to purchase but forcing them to go into

Josh:
a store that they don't control you just if you

Josh:
remember the division pro with apple you you didn't need

Josh:
to go in store but you could go in store and get a demo but you go into

Josh:
an apple store and it is a beautiful experience they pulled

Josh:
out these brand new couches for it they give you this fully walkthrough

Josh:
guide it showcases all the amazing technology and it

Josh:
actually worked to go to a best buy and have

Josh:
like the the random guy from the neighborhood who hasn't been

Josh:
trained on this who just read a little pamphlet from meta and said okay go

Josh:
show people how this works and then to to have to

Josh:
have that person demo a half-baked product with like

Josh:
pretty mediocre software and horrendous hardware quite frankly

Josh:
um it just it it doesn't work and that paired with the fact that there's supply

Josh:
constraints where even if you wanted to go to most best buys they don't even

Josh:
have them in stock um the software doesn't work the hardware doesn't work it's

Josh:
a total disappointment i think zuck should do what they've been doing with the

Josh:
software and ai models and just just don't ship mediocre stuff like.

Josh:
With open source models, they were going to ship Behemoth, which was their very

Josh:
large open source AI model.

Josh:
And it never was good enough, so they never shipped it. And I think that's fine.

Josh:
I'd rather you just keep it to yourself.

Josh:
Don't ship garbage. What they're doing is they're shipping garbage.

Josh:
It's not a good product. It doesn't work well. And it's just disappointing.

Ejaaz:
To kind of like push on the bear case, Josh, it seems kind of desperate to me.

Ejaaz:
You know they're shipping half-assed products which

Ejaaz:
um look like something an infant used back

Ejaaz:
in the 1990s i mean like look at this like um this

Ejaaz:
is someone's perspective of what they can see using google maps

Ejaaz:
on the glasses and for those of you who are just

Ejaaz:
listening to this it looks like an old school projector that

Ejaaz:
you used to have at high school back in the day where people where

Ejaaz:
the teachers would move slides i don't know whether you guys had this here in america

Ejaaz:
but growing up in england this was like literally a lamp and a

Ejaaz:
piece of glass and you kind of like see what you see what

Ejaaz:
you see this is what it looks like it looks like something like um

Ejaaz:
some hacker made um in the early 2000s it

Ejaaz:
doesn't seem or inspiring so number one like the tech just seems rushed and

Ejaaz:
desperate um another point is the point that you brought up on the episode of

Ejaaz:
a week ago josh which is i don't know if meta is playing in the right field

Ejaaz:
like do they have the hardware chops to even scale this hardware out like who

Ejaaz:
are their partners who are their suppliers.

Ejaaz:
The fact that you have to walk into a Best Buy, a store that they don't even own, is kind of tragic.

Ejaaz:
And it doesn't speak very well of their brand.

Ejaaz:
Now, when I look at the bull case of this, I'm impressed that Mark is taking

Ejaaz:
the shot. No one else has taken the shot.

Ejaaz:
No one else at the major level of a Mag 7 company has produced a new device yet.

Ejaaz:
And it's brave of Mark to be the first one to step out. And

Ejaaz:
Knowing the amount of cash reserves that Meta has, they're going to invest in

Ejaaz:
this. They're going to iterate really hard.

Ejaaz:
They've got all these new AI researchers. They're going to work hard at making

Ejaaz:
this better really quickly.

Ejaaz:
And I wouldn't be surprised if version two or version three of this actually slaps.

Ejaaz:
Number two is they're making net new hardware as well. Don't forget the motion

Ejaaz:
wristband, which they created, which is so, so cool.

Ejaaz:
Like any kind of slight gesture of your fingertips and stuff will kind of like

Ejaaz:
translate into the metaglasses that you're wearing.

Ejaaz:
And that helps you select an app or move to the next track when you're listening

Ejaaz:
to music. So there is something here. I just think it's super early and it's super rushed.

Ejaaz:
Again, this will be a matter of waiting a couple more months or maybe six months

Ejaaz:
to see whether they can deliver on a second good version.

Josh:
Yeah, so here's probably where the market is wrong in the downside,

Josh:
where I'm looking at the stock right now.

Josh:
It's up 37.4% in the last six months. It's had an amazing run. The reality is that,

Josh:
they've never shipped a great hardware product they've haven't.

Josh:
Really shipped any great software products that use ai at all um the

Josh:
meta quest is just not that good

Josh:
these new meta ray bands are even worse um

Josh:
they have no track record of shipping anything good everything they've

Josh:
shipped has been poor there's no in the

Josh:
case that they do ship good hardware there's no ecosystem for it

Josh:
so in the case that these meta ray bands were fantastic i still

Josh:
don't use any meta applications like you said i just

Josh:
like i don't use facebook i don't use whatsapp i don't use i use

Josh:
instagram sometimes um but i love my phone as

Josh:
my camera to interface with that because it's a far better camera than

Josh:
the meta ray-bans so there's no world in which i

Josh:
would even want to invest in this ecosystem in terms

Josh:
of buying hardware products even if they were excellent so

Josh:
meta has two really difficult problems to solve one is building a

Josh:
useful software ecosystem that i actually want to participate in

Josh:
and the other is building actually good hardware products they don't have either so

Josh:
the fact that meta is up 40 without releasing any good

Josh:
software uh ai or not with their

Josh:
10 trillion dollars of employees or 10 billion dollars of employees

Josh:
they just hired and they shipped like a half-baked hardware

Josh:
product it's like why is this talk up 40 i think they

Josh:
they're betting on the fact that meta will be able to convert these users

Josh:
to cash at some point but like my god they have a very long way to go and zero

Josh:
proven track record the bull case like you mentioned uh just briefly is is they

Josh:
have cool technology like the potential energy is there they have unbelievable

Josh:
talent they have this really cool technology in the wristband that can predict

Josh:
your neural uh signals and it can know what you want to tap before you tap it.

Josh:
They have the foundation and the roots to build something cool.

Josh:
They just haven't done it.

Josh:
So, hey, hopefully they do. And I think that 40% gain is probably indicative

Josh:
of people being kind of optimistic and hoping that they will.

Ejaaz:
Let's talk about Meta's bread and butter, what they're actually good at.

Ejaaz:
They're good at making social media apps, right? That's how they've made all their money.

Ejaaz:
That's why they have all their billions and billions of users, right

Ejaaz:
um unfortunately when it comes to

Ejaaz:
ai meta apps it's actually my

Ejaaz:
most bearish argument for this entire episode for

Ejaaz:
my meta investment because um i think two weeks ago they announced their first

Ejaaz:
meta ai app it's called vibes which is basically kind of like a tiktok style

Ejaaz:
app except every single video that you scroll past is ai generated and they

Ejaaz:
had this kind of like cool promo video where,

Ejaaz:
you know, they explained that it's super easy to make AI videos.

Ejaaz:
You just type in a prompt.

Ejaaz:
And if all of this is sounding familiar, it's because it sounds like Sora,

Ejaaz:
OpenAI's app, which does pretty much the same thing, except,

Ejaaz:
Josh, there's one major difference between these two apps.

Ejaaz:
One of them hit number one in the App Store and is still number one in the App

Ejaaz:
Store, whilst the other has kind of like fallen down the App Store rankings as well.

Ejaaz:
And Like I said earlier, I don't remember the last time I opened the Facebook

Ejaaz:
app. Why didn't they just create a new app?

Ejaaz:
And so the point I'm trying to make here is how has...

Ejaaz:
A company with, you know, trillions of dollars of value and billions of dollars

Ejaaz:
to spend and some of the best social media app engineers ever to kind of coalesce in one single company

Ejaaz:
flopped on their opening AI app whilst, sorry, pun intended,

Ejaaz:
I guess, OpenAI's app, Sora 2, is absolutely killing it.

Ejaaz:
Like they've let like a newbie come in and eat their lunch.

Josh:
This is the tough thing with the ecosystem is I'm not even sure how to access

Josh:
the Vibes app. Is it a standalone app? Is it built into my Facebook app?

Josh:
I don't know. I haven't used it, nor do I have any incentive to.

Josh:
Because, I mean, even though Sora came out later, well, Sora,

Josh:
I use ChatGPT. In fact, I love using ChatGPT.

Josh:
And ChatGPT is very present on my timeline too. There's a lot of people talking

Josh:
about it. There's a lot of people using it.

Josh:
I want to be engaged in that community. There's nobody on my timeline talking about Vibes.

Josh:
There's nobody talking about how much they love their AI generated video on

Josh:
the Vibes app. I haven't even seen any screenshots or videos of it,

Josh:
which is why I'm not even sure if it's live yet.

Josh:
There's just this like huge disconnect between the velocity of,

Josh:
I guess, social acceptance of OpenAI's products versus Meta's products.

Josh:
And while they were both mostly the same, it would appear at least from the announcements.

Josh:
I very obviously just prefer OpenAI because that's where I am.

Josh:
They have my data. That's where my friends are. That's where I can scan in my face and make a cameo.

Josh:
And I think that's the most viral element of the Sora app versus Facebook's

Josh:
vibes, which just it's very sterile. It's very generic.

Josh:
So I think like Meta very clearly lost. This was the one on one they lost,

Josh:
mostly because of the social virality brought to the application through Sora's

Josh:
Cameo feature, where you can actually insert yourself into the AI content.

Josh:
And it's, again, it's just, it's a disappointment. You're sealing the announcement

Josh:
from Alexander Wang. They spent billions of dollars on him.

Josh:
He's in charge of this whole AI infrastructure plan. And they're just releasing

Josh:
something that, again, it's kind of like half baked.

Josh:
I'm not even sure how to use it. No one's talking about using it.

Josh:
There's nothing compelling about that product.

Josh:
So that to me is a swing and a total miss.

Ejaaz:
I actually think it's the biggest swing. I think this is the bullet in the chamber,

Ejaaz:
Josh, because of a few things.

Ejaaz:
Okay, so number one, I'm going to pull up this tweet from Alexander Wang,

Ejaaz:
who talks about this MetaVibes app.

Ejaaz:
And he says, for this early version, we're partnering with MidJourney and Black Forest Labs.

Ejaaz:
Okay, what this instantly tells me is this isn't fully thought out.

Ejaaz:
They've rushed this product once again, just to get something out there,

Ejaaz:
probably because they heard that OpenAI was going to release their own social media app.

Ejaaz:
Number two, this is kind of an emperor has no clothes situation, in my opinion,

Ejaaz:
because what it tells me is you need a really good AI model at your core product

Ejaaz:
offering in order to build any cool app on top of it.

Ejaaz:
So either you use someone else's AI model or you build it yourself.

Ejaaz:
And Meta has tried building their own model

Ejaaz:
in their llama models they open sourced it and the fact is

Ejaaz:
does anyone talk about it anymore i haven't seen it

Ejaaz:
on the timeline i haven't seen anyone of my friends uh software engineers using

Ejaaz:
it at all um so that kind of flopped and everyone's kind of being quiet about

Ejaaz:
it and it's translating into their apps now they don't have a good enough model

Ejaaz:
to create good enough ai video to compete with the open ais and the googles

Ejaaz:
of this world they have google has vo3 they're putting it in YouTube Shorts.

Ejaaz:
So Meta has the distribution, they have the users, but in my opinion,

Ejaaz:
they don't have the foundational key component.

Ejaaz:
And this, in particular, the Meta Vibes app, kind of revealed that the most to me.

Ejaaz:
It's where I'm most bearish on it, on Meta as an investment at this moment.

Ejaaz:
Now, I need to force myself as an investor to look at the bull case, right?

Ejaaz:
Because either Meta stock's going to zero, because I don't care what anyone says, AI is the future.

Ejaaz:
If your company doesn't execute on it effectively, you are going to zero.

Ejaaz:
So is meta going to zero or are they going to swing things around?

Ejaaz:
One thing that I've seen suck

Ejaaz:
Um perform really well at josh is not

Ejaaz:
only creating things from zero to one but taking things

Ejaaz:
from one to 100 right we saw

Ejaaz:
it when snapchat came out right and zuck was like uh

Ejaaz:
let's try and buy them and they were like no and they

Ejaaz:
were like okay cool we're gonna just do our own thing we're gonna create snapchat

Ejaaz:
competitor and here we go and you had instagram stories he

Ejaaz:
did the same thing with tiktok they created reels

Ejaaz:
and now all the famous soar videos that

Ejaaz:
are released in the last week are getting shared on ig reels and they have millions

Ejaaz:
and millions of views right so i'm still confident that zuck will kind of like

Ejaaz:
take this hit on the chest and be like okay cool well whatever the good version

Ejaaz:
of this ends up becoming we're going to build a better app and maybe again that is meta vibes 2.0

Josh:
Yeah it's getting harder to copy because like you mentioned having that brain

Josh:
at the core of your infrastructure matters and i think a big difference that

Josh:
we see between open AI and Meta is that OpenAI builds that brain first,

Josh:
and then they figure out a vessel to wrap it up with a product and ship that

Josh:
as a way of distributing the brain.

Josh:
That's what we saw with Sora. They developed this amazing video generation software.

Josh:
They packaged it up into a product. They shipped it. They created this amazing LLM.

Josh:
They packaged it up into ChatGPT and they shipped it. So they developed the

Josh:
technology prior to developing the product.

Josh:
What Meta is doing is they're starting by developing the product,

Josh:
but they don't quite have the technology to place inside of the product,

Josh:
nor is the product particularly good.

Josh:
So, OpenAI, in this case, they beat Meta on product because they had the Cameo

Josh:
feature, which was amazing for virality. Meta.

Josh:
Didn't have anything uniquely compelling about it and

Josh:
it's clear from this that they had to outsource the brain the thinking

Josh:
to mid-journey and black forest labs so they only

Josh:
had to make the product they failed at making the product and they tried

Josh:
to make the brain but failed and had to outsource it so from from

Josh:
my perspective they just they're getting just like crushed at all

Josh:
fronts and i think it's increasingly difficult

Josh:
to see a company like snapchat and crush it because

Josh:
you can't just copy a code base and run on a cpu you

Josh:
need a gigantic gpu cluster in order to

Josh:
to copy these with the actual level of

Josh:
vertical integration that we see from a company like open ai so in

Josh:
a world in which zuck's competitive advantage was just crushing his competitors

Josh:
by copying them and making it slightly better it's getting increasingly challenging

Josh:
to do um so that would be my concern as i'm just kind of observing the the meta

Josh:
stock is like hmm okay you haven't shipped a great product you haven't shipped

Josh:
any good ai you haven't shipped any good hardware like when is this going to happen?

Josh:
That's my big concern. It's like, when are you actually able to do this?

Ejaaz:
Well, let's take a peek under the meta head, shall we?

Ejaaz:
Let's actually look at the brain that they have right now, which is their AI model, LLAMA, right?

Ejaaz:
The reason why we haven't heard from the LLAMA models for like the last,

Ejaaz:
I think, three or four months, which in the AI world is a heck of a long time,

Ejaaz:
is because they just suck, Josh.

Ejaaz:
Like, I'm going to pull up this this uh this

Ejaaz:
um bar graph which basically compares um

Ejaaz:
maverick 4 which is that you know their best thinking

Ejaaz:
reasoning model and it sucks compared to an old gpt4 model to gemina to gemma

Ejaaz:
sorry and through claude 3.7 sonnet and if you're wondering hey ijaz why are

Ejaaz:
you talking about old gpt models gemma models from google and um claude models

Ejaaz:
Because Lama hasn't released anything that is as good as the latest models from

Ejaaz:
those same companies, which tells me that Zuck and Meta are in a bit of a rut

Ejaaz:
when it comes to forming that brain that you're talking about, Josh.

Ejaaz:
Their AI model isn't good enough. And you mentioned that they were secretly

Ejaaz:
working on a much, much bigger model, right, called Behemoth.

Ejaaz:
And they didn't end up releasing it, supposedly, because it just wasn't good

Ejaaz:
enough. And then coincidentally, they went on this hiring spree,

Ejaaz:
spending $30 billion to hire, I don't know, whatever.

Ejaaz:
50 people or however many people they hired. And that was by already having

Ejaaz:
an AI team, which has now gone quiet.

Ejaaz:
Who was the guy that led that old AI team at Meta? Do you remember his name, Josh?

Josh:
Oh, I am forgetting. I know what his face looks like.

Ejaaz:
I'm forgetting his name. But all I remember is he would argue against all the

Ejaaz:
top AI researchers at competitive companies who were saying,

Ejaaz:
no, you have to be aggressive.

Ejaaz:
We need to spend a lot money in this.

Ejaaz:
And he would just be like, nah, like there's a different architecture we can use.

Ejaaz:
I haven't discovered it yet, but I'm almost confident that the way that you

Ejaaz:
guys are doing it isn't the right way.

Josh:
That's Jan, Jan LeCun.

Ejaaz:
Yeah, Jan LeCun, exactly. And fast forward six months and you've had people

Ejaaz:
like Elon Musk, who was late to the race, much later than, you know,

Ejaaz:
Meta or AI when they were kind of already focused and created this team with Jan LeCun heading it,

Ejaaz:
race ahead of them and beat them and spend more time on compute and more money on compute.

Ejaaz:
So I guess the point that I'm making at is they've dropped the ball creating the brain.

Ejaaz:
Now, that's my bear case. The bull case is they've hired away all the smartest

Ejaaz:
AI researchers from the competitors that give them the best shot at building

Ejaaz:
the best brain in the future.

Ejaaz:
And my bull case tells me that they're not gonna create it in a few months.

Ejaaz:
They're probably gonna create it in six months because remember, they're

Ejaaz:
not trying to create Llama 5 they're

Ejaaz:
trying to leapfrog all the existing models that exist today that's going to

Ejaaz:
take a bit of time that's going to take a ton of money and he's spending the

Ejaaz:
money and hopefully he's spending that money on compute so my guess is the next

Ejaaz:
model that Llama that meta releases is going to be killer it's probably not

Ejaaz:
going to be open source but it's going to be killer

Josh:
Well, we'll know it's better if it's not open source, because open source,

Josh:
as we've seen from China, is very much a signal of you being at a disadvantage.

Josh:
So if Meta comes out, they release a closed source model, it starts crushing benchmarks.

Josh:
That's a good signal to look out for.

Josh:
But this, I mean, the episode, this leaves me with a lot to be desired.

Ejaaz:
I'm like, man, Meta,

Josh:
There is a bull case. And the bull case is if Meta can execute,

Josh:
they are better positioned than basically anyone else. They have the hardware

Josh:
manufacturing capability. They have the software capability.

Josh:
They have more users than anyone in the world.

Josh:
If they are able to hit a home run, it is going to be a grand slam.

Josh:
That feels like a low probability. The reality is they haven't shipped any great software.

Josh:
They haven't shipped any great hardware. They have never created an original

Josh:
product that is compelling, at least in my personal opinion.

Josh:
And they have spent tons of billions of dollars on talent that seemingly isn't

Josh:
making any progress fast.

Ejaaz:
Okay, so what you're looking at here is a

Ejaaz:
graphic or a video showing how big

Ejaaz:
the data center that meta is building currently

Ejaaz:
will look like it is the size of manhattan

Ejaaz:
pretty much or like the good stretch of the main island so it's

Ejaaz:
huge um and this is set to produce i believe it's five gigawatts of uh compute

Ejaaz:
which is don't get me wrong a huge amount but if i were to compare it to colossus

Ejaaz:
2 which is what elon musk's company xai is building right now to power their next Frontier model.

Ejaaz:
I think that's going to be between five to 10 gigawatts.

Ejaaz:
And, you know, Elon's already thinking about what the next data center is going to look like.

Ejaaz:
And he's delivering on that really, really quickly, by the way.

Ejaaz:
Like, I think I read a statistic, Josh, where in the first five months of building Colossus 2,

Ejaaz:
he had already delivered 500 megawatts of power, which is just crazy and unforeseen,

Ejaaz:
because usually it takes like a couple of years to even set the foundations

Ejaaz:
before you can start powering this up.

Ejaaz:
And, you know, Jensen has said many times that Elon is the best at scaling these things.

Ejaaz:
Zuck, I haven't heard of Hyperion, their data center, since they announced it.

Ejaaz:
Like, they had an extended timeline of going, and they gave a vague post about

Ejaaz:
this, Josh, 2030 and beyond.

Ejaaz:
That's when we're going to be kind of done with it. With the first gigawatt

Ejaaz:
sometime in the late 2020s.

Ejaaz:
And I'm like, dude, you need to ship this now.

Josh:
Yeah, I can say this with 100% levels of conviction that if...

Josh:
Meta has to compete directly with other companies uh with no edge and they have

Josh:
to compete on the front of building data infrastructures they are going to get

Josh:
absolutely destroyed um there's just no way uh xai is moving at an incredibly

Josh:
fast velocity open ai has partnered with the entire planet to help them build these data centers 25.

Ejaaz:
Gigawatts at this point

Josh:
Yeah 25 gigawatts they're getting money from saudi arabia they're getting money

Josh:
from broadcom they're getting they have custom chip fabs they're vertical integrating

Josh:
they are going to absolutely slaughter meta on this front

Josh:
so if meta is competing one-on-one on this and they're trying to win here

Josh:
it's just not possible um they have to win elsewhere they

Josh:
have to win on the software stack they have to win on the hardware integration um because

Josh:
this is cute but like okay go build it go build your five gigawatts i love that

Josh:
you are aiming for that go go build the damn thing they're not making progress

Josh:
so yeah it's disappointing on the data center front which is which is hard because

Josh:
it is so critical and they have the the wherewithal to build it they just clearly

Josh:
are not building it and just can't really compete at these levels can i.

Ejaaz:
Give you my low iq bold thesis given that we've spoken about everything meta ai right now why i'm

Josh:
Normally this is what moves the lower iq the better so what do we got okay okay.

Ejaaz:
I have two simple arguments for why i think meta is a good buy right now number

Ejaaz:
one i've never seen mark so aggressive as he is today.

Ejaaz:
And he's putting his money where his mouth is literally.

Ejaaz:
He's committing to spending hundreds of billions of dollars,

Ejaaz:
probably hitting a trillion dollars over the next five years to win at this game.

Ejaaz:
So that gives him a high probability of winning.

Ejaaz:
It may not look like he's winning in the first couple of months,

Ejaaz:
but who cares on the grand scale of things if this thing is going to be a life world changing thing.

Ejaaz:
Okay, number one is his aggressiveness. Makes me

Ejaaz:
Meta is kind of too large to fail. And I might end up eating my words a year or two years from now,

Ejaaz:
but they have so much money that is coming in from other sectors of their platform

Ejaaz:
that isn't AI related that they can use to keep funding this thing until they

Ejaaz:
hit it. So will they hit it the first couple of times?

Ejaaz:
Maybe not. It might suck, but I bet you they're going to hit it on the second,

Ejaaz:
third, or maybe even fourth time.

Ejaaz:
Those are my two reasons why I'm bullish on Meta.

Josh:
Okay, so we have a fun surprise to give to the listeners. But before we do,

Josh:
um i just i need to ask you the final question which

Josh:
is yes as a meta stock holder are you planning to continue

Josh:
holding meta stock uh yes i

Josh:
am okay nice i i feel like that that's

Josh:
interesting because to me i concluding this

Josh:
episode i'm i'm bullish on meta stock in the sense that i believe

Josh:
the number will go up on a relative basis compared to

Josh:
other opportunities i am very bearish to invest

Josh:
in meta at a 1.8 trillion

Josh:
dollar valuation when a company like tesla is

Josh:
at 1.3 uh it just feels like a misallocation

Josh:
in terms of potential returns risk adjusted returns

Josh:
perhaps but i do believe the case that meta will absolutely go up because ai

Josh:
is growing so fast the gdp of the planet is growing so fast and they will most

Josh:
certainly capture some percentage of that just by being just by their nature

Josh:
like you said just being such a colossal company they stand to benefit from the up wings of AI.

Josh:
So I guess at the end of the day, we're both probably bullish on meta.

Josh:
We both believe the company will go up. Regardless of where their downfalls

Josh:
are, the stock price, if we're just talking on a basis of that,

Josh:
seems like it's going higher.

Josh:
But let's get to the little gift that we have, EJ. You have sourced us some

Josh:
magical codes, right? For the actual good product.

Ejaaz:
Yes, we have. Okay, so if you remember, my most bearish take on this episode

Ejaaz:
was like the Meta Vibes app sucks, but their competitor, OpenAI Sora, is absolutely awesome.

Ejaaz:
And I'm loving it. And I'm still creating videos on their app and it is like

Ejaaz:
AI generated TikTok, but Josh, I'm sorry, it makes me laugh.

Ejaaz:
And I love making cameos with my friends. and I have seen so many Sora videos

Ejaaz:
go viral on TikTok and Instagram Reels that it's just too good to use.

Ejaaz:
But there's an issue with this. Not everyone has access to it.

Ejaaz:
They're keeping it super locked down and you need an invite code.

Ejaaz:
So we went to our friends at OpenAI and we said, hey, like, you know,

Ejaaz:
we have a bunch of really awesome listeners who listen to this episode right

Ejaaz:
till the end, like you guys are right now and they deserve something special.

Ejaaz:
And they were like, you know what?

Ejaaz:
We'll give you 500 Sora codes. and that's what we have.

Ejaaz:
And if you guys want a Sora code, we just have a few very humble requests.

Ejaaz:
If you enjoy our episodes, if you enjoy listening to The Limitless Show,

Ejaaz:
please like, please subscribe to the videos and to the episodes that you listen to.

Ejaaz:
But most importantly, give us a five-star rating on whatever listening platform

Ejaaz:
that you listen to this on.

Ejaaz:
Or if you're on YouTube, give us a thumbs up, subscribe to us.

Ejaaz:
And if you DM Josh and I or The Limitless account, proof of this, you can reach us out.

Ejaaz:
On x or on our personal profiles or whatever that might be or if you comment

Ejaaz:
and tell us that you have done this we will send you a code josh is that fair

Josh:
I think that seems fair. Yeah. So the intention is like, okay,

Josh:
we're starting, we have a fairly small show.

Josh:
We're trying to grow a small show. And what's really helpful in growing a small

Josh:
show is when people who enjoy it, they signal to the platforms that amplify

Josh:
our shows that they enjoy it.

Josh:
So therefore the platforms will want to amplify our stuff more.

Josh:
So when you go on a platform like Spotify and you rate it five stars,

Josh:
it really helps us kind of elevate the rankings and get more distribution for

Josh:
more people to hear the show.

Josh:
So as a thank you for the service, I said, it doesn't even have to be five stars.

Josh:
If you think we're four stars, fine, I'll take it. But if you have a five star,

Josh:
that's really appreciated.

Josh:
But if you can take the time to do that, it is so very much appreciated.

Josh:
Ejaz was like very gracious in getting us these codes from the OpenAI team.

Josh:
And it's like a fun little exchange that we could do. So we have plenty.

Josh:
We'd love to give them out. We'd love to let you try them.

Josh:
As always, thank you for making it to the end. This was a little longer than usual.

Josh:
So thanks for sticking with us and just being here for the journey.

Josh:
We are on a one-way trajectory up and to the right. and it is thanks to all

Josh:
of you supporting us through the way so tell.

Ejaaz:
Us if you're gonna buy or sell meta stock please

Josh:
Yeah and are you bullish or bearish on meta stocks i'd love.

Ejaaz:
To know yeah give me some crazy crazy crazy like

Josh:
Maybe i'm just delusional just living in this bubble but yeah that's that's

Josh:
been the meta episode thank you all so much for watching for supporting for

Josh:
all the things and uh yeah we'll see you on sora if anything yeah and also the

Josh:
next episode all right peace guys.