Josh Wolfe on AI and the Breaking of Silicon Valley's Social Contract

Joe Weisenthal (0:02)

Bloomberg Audio Studios, podcasts, radio, news. Hello, and welcome to another episode of the Odd Lots Podcast. I'm Joe Weisenthal.

Tracy Alloway (0:23)

And I'm Tracy Alloway.

Joe Weisenthal (0:24)

You know, sometimes with the whole AI thing, it feels like the, are we back, is it over? There's been a few moments in the last year, whatever it was like, is the bubble bursting? Is there a bubble? I don't know what this week is. We're recording this September 3rd. There's a little, I don't know, there's some tremors. I can't tell what's real or not.

Tracy Alloway (0:41)

I feel like the hype cycles get shorter and shorter and more compressed. But you're right. I think there are maybe some more jitters than there have been previously. Like maybe.

Joe Weisenthal (0:52)

Only maybe.

Tracy Alloway (0:53)

It's hard to tell. But I think even if we're not there yet, we are getting maybe to that point where like the rubber needs to meet the road in terms of monetization. Like, you know, everyone got, maybe.

Joe Weisenthal (1:08)

Maybe.

Tracy Alloway (1:08)

Yeah, you're right.

Joe Weisenthal (1:09)

Yesterday or either this morning or yesterday, Anthropic, $183 billion valuation. This does not strike me as like...

Tracy Alloway (1:20)

People are worried about monetization.

Joe Weisenthal (1:21)

Suddenly people, well, or suddenly people are worried about valuation. It sounds like people really want to pour a lot of money into these companies.

Tracy Alloway (1:27)

Yeah. It is, it's a weird environment. Let's just put it that way. That's the only thing we can say with certainty that doesn't start with a maybe.

Joe Weisenthal (1:35)

That's right. Here's another thing we can say with certainty, alphabet.

The shares are up, as we're speaking, 8 something percent today. This was a company, people were worried about how they would do in the AI era. They're killing it. They're at an all-time high again today. Again, many things are like, it's tough to get a read on things.

Tracy Alloway (1:53)

It is indeed. Who do we turn to?

Joe Weisenthal (1:56)

I love this vague intro. We just want to have an excuse to get to the guest, and so we're going to vamp for a little while and then we're going to get to the guest.

Tracy Alloway (2:04)

I just tried to throw to the guest Joe, who do we turn to for a read on the true feelings of the market around AI?

Joe Weisenthal (2:13)

That's right. We do have the perfect guest. We're going to be speaking with Josh Wolfe. He's the co-founder, managing partner at Lux Capital, VC who's been in this space for a long time. A guy we like to turn to, to figure out what's actually happening at any given moment. He sometimes even has good insights in public companies too, not just private companies. Josh, thank you so much for coming back on the podcast.

Josh Wolfe (2:34)

Great to see you both.

Joe Weisenthal (2:36)

How are you guys doing? We're doing great. What's up with Alphabet? Some people thought they were going to be a big loser in AI because they have this legacy search business model, and O3 is so much better for searching things. Here they are searching. They're at an all-time high. What is the smart take on Alphabet right now?

Josh Wolfe (2:52)

I think they are crushing it. I think they are the dark horse underdog, and maybe the second that I would put it with that is Apple, which people are totally counting out.

Joe Weisenthal (3:00)

Yeah, totally.

Josh Wolfe (3:02)

The irony is, if you think about the big players, Meta with Zuck's crazy Pocha Palooza, which we'll get into. Where $100 million pay packages and trying to disrupt everybody and bring them all on. You're seeing talks about them. They've got mid-journey coming in for the images, so not relying on their own models. They're talking about Google for potential integration on search, and so it's interesting that Meta, having committed to first be the metaverse and change the name to Meta, and then Zuck going all in AI is actually going to be turning to some of these other players potentially. So I think that's surprise number one, that people thought that Meta was going to be in the lead, and I think that Google and Apple were both counted out, but both are very serious contenders. If you look at the top two video models that are out in the world today, one US company, which is ours, called Runway ML, and the other, which is Veo3, which is absolutely stunning and incredible. They are a force to reckon with. It is extraordinarily development. You can make an argument, by the way, they have this repository, exclusive to them, of being able to trade on every YouTube video ever produced. And that itself is a super valuable piece. Remember, it was what, a year and a half ago, two years ago, that people were mocking Bard. Bard was the laughing stock of all of this. Gemini 2.5 is crushing it.