How Muse Expands META's AI Capabilities, Put it in Spotlight for AI Software

SPEAKER_1 (0:00)

All right, let's go deep on Meta and this week's Connect Conference in our Tech Spotlight. Joining me right now, Andrew Graham, CFA Managing Partner at Jackson Square Capital. I'm so glad you are with us. Lots of Meta news this week, analysts raising targets. What were some of the big takeaways here from the Meta Connect Conference?

Andrew Graham (0:21)

I didn't get a lot from yesterday's keynote. There was some of the gadgets and things like that that were going on. I think today is where more gets done. It's more the developers conference part of the meeting.

I think that's what investors are focused on. It's the downloads of Muse and continued success there. Really, the story has just gone from a narrative, any rate of no AI strategy to potentially the most widely used consumer AI app since Chat GPT. So, it is a, I think it's a reason for a higher multiple and a reason for a good deal of optimism.

SPEAKER_1 (1:04)

And that's gonna be the key. The monetization, the adoption overall. You just mentioned that now, could this really challenge Chat GPT? We know the downloads have already, Muse has moved to the number one spot, surpassing Chat GPT and Cloud. So at this point now, 3.6 billion users under the Meta umbrella. Does that lay the groundwork for a real life experience with this fuzzy, furry, friendly, agentic AI character?

Andrew Graham (1:37)

I don't think I'm gonna wear one, Nicole, if that, you know, I'm gonna go ahead and make that statement. But I think, yeah, look, the people who are on the platforms trust the platforms, trust is an important component here, right? We, people still have the, excuse me, the hugging face incident pretty fresh in their brains. And so we're gonna wanna do business or have this done with a company that we trust. Google, I think, has that same trust element to a certain extent, and probably Apple is the top of the mountain, I think, when it comes to tech companies that consumers trust. So all those guys have a shot at having an agent, the first mover advantage is nice here. I would also say that Muse has iterated itself in the last two weeks with a series of improvements that it's kind of exciting, I think, and I think it's driving a lot of engagement. Moreover, Watermelon, their frontier model, their latest frontier model will be out in the next couple weeks, at least that's what the expectations are.

And that has the potential to maybe strengthen Muse through improved reasoning, and there may also be a chance to monetize more of Meta's API through that connection as well.

SPEAKER_1 (2:55)

What do you think about the glasses? You think they'll take hold and be of interest to folks at $1,300 for these glasses.

We also, as I mentioned, they have the wearable, the charm, which you're not particularly interested in, but some people might want to have their own AI agent and talk to it. And Mark Zuckerberg, in his keynote, he was actually just saying that these things now will be so ideal. Wearing the glasses, for example, he said, will be so ideal. You'll be able, it'll be able to see what you see, hear what you hear, and assist you throughout your day. And so you might be standing on the corner, which happens to me all the time. And I'm like, which way is the store box? You know, and it will tell me, make a right, right? It's pretty amazing. What do you think about some of these products?

Andrew Graham (3:42)

I think early adopters are going to probably get a little bit excited about it. I'm not, I don't think that's the big monetization opportunity for Meta. I think it's in transactions, take rates, which is eventually, I think, where they want to get to, right? They have their developers going out and building connectors at different companies. You saw that with Walmart and Sephora, Best Buy, Wayfair. These guys have already built Muse agents. You're going to see more of that. There's 2,000 Muse connector applications that are currently in the queue, probably more by now. I think that was yesterday's number.

As you build out this group of businesses that have their own Muse agents, you have the potential to have agent to agent transactions and that's just another way for Meta to monetize.

Meta was a one trick pony. It was just an advertising model 2 weeks ago, and now they have the ability to monetize through tiered subscriptions as well as a take rate. I think they'll wait on all of that. What they're trying to do is get the adoption going as much as possible. Going back to the products themselves, yes, for a small niche of people, I think it's exciting. It's going to take a long time for those to be adopted by the general public. I mean, a long time. There's a lot of slow inertia in the economy, especially from people who are opposed to technology, or a little bit scared of wearing a device and so forth.