Is Software Dead?

**Nathaniel Whittemore** (0:00)
Today on the AI Daily Brief, is software dead? Before that, in the headlines, why I think no one wins and everyone loses after the whole dust up around Anthropic's new Super Bowl ad. The AI Daily Brief is a daily podcast and video about the most important news and discussions in AI.
All right, friends, quick announcements before we dive in. One more chance, one more request for you to fill out the January AI Usage Pulse Survey. Again, this is a survey we're doing to try to figure out what models were most used, what use cases were most prevalent, where people got the most value, and generally put some real numbers and real experience around how we're all using AI. You can find it at aideallybrief.ai, and it'll be closing at the end of the day on Friday. Thanks to everyone who has participated. Can't wait to share what we've learned. Now, one last note, I will fully admit that today's headlines is, A, not really a headline, it's just about the Super Bowl story, and B, is way, way more ranty than my normal. There is a lot more op-ed than I normally put into this show. I unfortunately think that the impact of Anthropic Super Bowl ads, if anything at all, is likely to be quite negative for the industry. But hey, there's plenty of critique to go around. Now, I will not blame you at all if you decide to skip over that, because who cares? I certainly think the is-software-dead conversation is the much more pertinent one going forward. So however you decide to consume this episode, I appreciate it, and let's dive in.
Trigger warning. If you work at either Anthropic or OpenAI, you are probably not going to like the beginning of this episode. Yesterday, Anthropic absolutely took over the AI conversation when they dropped their first ever set of Super Bowl commercials. The commercials do not talk about the basically magic wand we now have in our pockets. They don't talk about all the things you can do. They don't talk about all the value that AI could be bringing to people's lives. Instead, all four commercials in the campaign are focused entirely on OpenAI's planned forthcoming ads. In one version, a user asks how to get along better with his mom. The AI, portrayed as a middle-aged female counselor, delivers some generic advice. Then the AI pivots hard into an ad for a mature dating site. Another version of the ad opens on a scrawny teenager struggling to do pull-ups in the park, copying one of the shots from last year's Sora commercials. In this one, the AI is depicted as a muscle-bound dude. It tells the teenager that it's achievable to get a six-pack quickly and offers to build a workout plan. Once the AI learns of the user's diminutive height, however, it offers a sale on a pair of insoles that quote, make short kings stand tall. The ads each feature an opening title splashed across the entirety of the screen. Betrayal, Violation, Treachery, Deception. They all close on the tagline, ads are coming but not to Claude. So OpenAI shrugged it off laughing, saying hey, those were funny, but we're going to do what we're going to do, right? Or they employed their god-given right to say nothing and to not have to comment on every single thing that happens, right? No, they did not. Instead, they decided to bite back and bite back hard. CMO Kate Rausch writes, Those ads are funny. Here's what's not funny. Calling ads a betrayal when your business model is selling paid subscriptions to companies. ChatGPT has more free users in Texas than Claude has globally. Real betrayal isn't ads, it's control. Anthropic thinks powerful AI should be tightly controlled in small rooms in San Francisco and Davos. That it's too dangerous for you. That the future should be built somewhere else by someone who is smarter. We don't believe that. Sam Altman wrote more than 400 words in response on Twitter, saying, I wonder why Anthropic would go for something so clearly dishonest. I guess it's on brand for Anthropic doublespeak to use a deceptive ad to critique theoretically deceptive ads that aren't real. He also dropped the same line around more people in Texas using free ChatGPT than total people using Claude in the US. He even went so far as to call Anthropic an authoritarian company. Now it does sound like OpenAI will also have a Super Bowl ad, so we'll see how that goes. But a couple quick thoughts about all of this. So first of all, let's talk about the response. The short of it is, this isn't how a market leader responds. There's a famous line in Mad Men where one of Don Draper's employees says, I feel bad for you. Draper looks at him deadpan and says, I don't think about you at all. That's the energy when you're the market leader. Or you make it playful when they're clearly trying to make it serious. What you don't do, I don't think, is ratcheted up to claims of authoritarianism. Or at least you don't before you take a night to sleep on it. But to be honest, in this particular case, I got more beef with Anthropic. This move is so out of character for them, and so wrongheaded in so many ways, that I'm actually trying to rack my brain to figure out if there's something that I'm missing. First of all, what I will say is, the ads are funny. And I actually think that if you look back at the history of Super Bowl ads, and I've actually done this numbers crunching before, because I made one a few years back, something like 90% of the top rated ads every year are humor. They're not serious. They're not uplifting. They're not tearjerkers. There are very, very few companies who can pull off that sort of highfalutin ad in the Super Bowl setting. It's the one time a year that people actually want to be advertised to, but they want to be entertained. So I am sympathetic to wanting to do a funny ad. Here's where things go off the rails, though. I don't think anyone's going to really get the context. Expecting that users know that OpenAI has said that they're going to do ads and ChatGPT is just not realistic. It would be one thing if ads had already premiered in ChatGPT and everyone was complaining about them. But the entire basis for Anthropic's campaign is a critique of something that doesn't exist yet. It's a pain that people aren't feeling yet. I think that's going to significantly diminish the impact. Second, and this is where I start to move from having critique of strategy to being actively annoyed, my strong guess is that a pretty big chunk of people who like these ads are going to like it because it confirms their suspicion that AI is just the latest way that tech billionaires have come up with to control your life and take your money. I think that Anthropic is with this ad, not primarily taking down a competitor, but feeding into a critique of the industry as a whole. I think that these ads make things worse, not better, in a US that is already more skeptical than basically any other country in the world of AI. Now, as I've said before, people are allowed to be skeptical of AI, and the technology industry has made the bed that we now all lie in. But there is a tidal wave coming to shore, and the net impact of people being annoyed at AI is just another tech thing, is that they're not paying attention to it, and they're not being prepared for it. And I think in that we are doing them a massive disservice. Finally, this is just the opposite of the brand vibe that Anthropic has spent three years building. It's petty, small, doesn't tell any of the stories that it made Claude such an insurgency recently, and ultimately, I just kind of think it's sad. It's not gonna stop me from using Claude Cote for 24 hours a day, but I think when you take all this together, it is a big L for the entire industry. Now, the funny thing is, for as much as we're talking about these Anthropic Super Bowl ads, they actually weren't the biggest impact Anthropic had on the world this week. That came when a Claude Cote plug-in wiped billions of dollars off of the global markets. So for there, we will end our headlines and move on over into the main episode. Welcome back to the AI Daily Brief. One of the things that happens pretty frequently on this show is that I will start clocking a theme that I think is having some amount of narrative resonance, either in conversations on Twitter slash X or starting to break into the mainstream media, but which I don't think demands a full deep dive yet. Sometimes those themes dissipate, but sometimes they lurk and grow until they can no longer be ignored. That is absolutely what has happened with today's theme, where concerns about AI disruption have turned into a full on market panic as software sells off. Now, the basis for this won't surprise any listeners of this show. We have been tracking ever since coming back from the holidays, the extent to which people are embracing that a fundamental inflection point on the capability set of AI around coding has shifted the world that we live in. What's important to note is that this belief set has not been constrained to AI early adopters. It has started to find its way into other circles, particularly business and financial circles. A couple of weeks ago, the narrative really started to find its way into Wall Street. SaaS companies in particular began sliding, and things have now reached a full-on fever pitch, with Bloomberg and the Wall Street Journal publishing dozens of articles so far this week. To give a sense of what's happening, Salesforce is down 21% on the year, Snowflake is down 23%, HubSpot is down 36%, and Applovin is down 37%. In each case, the fiercest sell-off happened over the past few days, giving a sense that this narrative is only accelerating. Jeffrey Favouza, who works at the Equity Trading Desk at Jeffery, said, We call it the SaaSpocalypse, an apocalypse for software as a service stocks. He added that the trading flow he's seeing across his desk is very much get-me-out style selling. And what's important to note is that it appears, at least at first glance, that many of those racing for the exits have a genuine belief that something meaningfully changed over the past month. Michael Roark, the chief market strategist at Jones Trading, said, I don't think it's an overreaction. For two years we have been talking about how AI is going to change the world and that it is a multi-generational technology. In the past few weeks we've seen signs of it in practice. It's also important to note that this isn't a broad-based tech sell-off. Apple, for example, is up 2% so far this year and 12% from a local low two weeks ago. The iPhone stock seems blissfully unaware of the disruption going on around it, even as Apple fails to put forward a meaningful AI strategy. At the same time, it is notable that we've had a dozen AI-related sell-offs since the release of ChatGPT in late 2022 They basically ping-pong between a narrative that the technology is overhyped or that it's wildly disruptive and some portion of big tech is failing to keep up in the AI race. This is the first time we've seen the market try to price in broad-based disruption that could kill off an entire sector. And while the focus has mostly been on SaaS, another example showed the market's concerns about AI disruption last week.