00:24:58 · Jordi Hays, John Coogan
[00:24:58] S0: But I think semi analysis likes to be a little cheeky. [00:25:00] S1: That's true. That's true. But the but the other funny thing is that Ed Zitrin is taking shots at at this, like, oh, like, the the EBIT EBTIT is, like, so ridiculous. But, like, in that forecast, they had, like, net income of $1,000,000,000 in a quarter. So it's like it's like, okay. Well, yeah, you have this, like, funny metric that you could value the business on to get crazy in valuation. But if the business is making money and and actually, like, generating net income, you're not in a disastrous financial position. Yeah. So, you know, you you could debate about the valuation, but you shouldn't. The the whole idea of, this, oh, it's, like, so like, it's it's a very, very different discussion than than WeWork, which was not cash flow positive, which was not net income profitable, and and was using those terms to sort of skirt around the losses that were accruing from the business.
00:25:51 · Jordi Hays
[00:25:51] S0: So Yeah. I was looking back at Ben Thompson's earnings transcript or a script that he wrote for for Mark Zuckerberg. He has a good segment on why AI matters. Ben writes, forgive the long preamble, but this is necessary context for me to properly explain why AI is so important to Meta, and why I'm making the right choice to invest so heavily in both talent and infrastructure. And he goes on and on and on, but he says, what I've come to realize as I've embraced our status as an entertainment provider and ad purveyor is that our nature as a digital business, notwithstanding, we are remarkably well placed to thrive in an AI era. Remember what we learned about humans. They are obsessed with other humans and they wanna connect with them. That obsession and desire only going to increase as we interact more and more with AI. AI is gonna make our properties more essential, not less. Moreover, AI is a productivity tool, but productivity is not the end all be all of the human experience. I've talked over the last year about building super intelligence that helps you get things done, but that's a business story. What we can do uniquely is give people the experiences they want from connection to entertainment to shopping when they are off the clock. The fact that we are investing in AI but not selling solutions to businesses is actually one of our business' biggest advantages. So, of course, this is, just a sort of fan fiction for an earnings transcript. Meta is in fact selling to, businesses now. But who knows over time how big will the API business be
00:27:22 · John Coogan, Jordi Hays
[00:27:22] S1: Yeah. [00:27:22] S0: Relative to how much value they can unlock across their broader Yeah. Business with all of their infrastructure spend. [00:27:30] S1: Let me tell you about console.com. Console builds AI agents that automate 70% of IT, HR, and finance support, giving employees instant resolution for access requests and password resets. We have the perfect guest to talk about all of this with because Eric Souffer from Mobile Dev Memo is with us today in the TVP on Ultradome. Let's bring in Eric. How are you doing? Good to see you again. And congratulations. Is it doctor Seufert now? No. Masters. Right? [00:28:00] S0: Can you hear us?
00:28:00 · Jordi Hays, John Coogan, Eric Seufert
[00:28:00] S0: Can you hear us? [00:28:01] S1: Can you hear us? Okay. Let's bring him back in in a second because I want to hear his take about Meta's vertical integration, specifically with regard to their image model because their image model has the potential to feedback in the ads product where they are getting a signal from what ads are performing, generating new images, and then using that as fine tuning data and reinforcement learning data for the image model. And it's a very different cycle than what you see in ChatGPT images where, you know, they're trying to be useful, educational, sometimes funny. Same thing with Nano Banana. But Meta has a different job to be done, a different process, and a different different goal because that model although it might wind up being something that people use just to post on Instagram and people might just use it like any other image model, the real killer application of that is in the ads manager. And we also have Sean Frank coming on later in person to tell the more business side of that story. He's built Ridge into a 9 figure d two c brand, obviously, has been deeply ingrained in the meta ecosystem for probably over a decade now and and can comment on everything that's happening in AI generated advertising. But I believe we have Eric Souffert lined up now with audio. We'll bring him in to the TV panel with him. Eric, how are you doing? [00:29:27] S2: Hey, guys. Thanks for having me. It's good to be back. Sorry about the the It technical mess [00:29:32] S1: happens. It happens.
00:29:32 · John Coogan, Jordi Hays, Eric Seufert
[00:29:32] S1: happens. It happens. [00:29:33] S0: It's great to have you here. Question. Did you did you rebrand MobileDevMemo? [00:29:39] S2: What no. I didn't work out. [00:29:41] S0: To Heracles or is this is this an error on our side? [00:29:43] S1: This is an error on our side. It's mobile dev memo. Hercules is the fund. Is that right? [00:29:49] S2: Yeah. The fund. Yeah. [00:29:50] S1: Yes. Got it. Anyway Great. We were just talking about Meta. They just launched Muse Spark 1.1, their LLM. They're selling that over API. They're also selling some compute. But I wanted to I want your take on the image model specifically and why that is an important, technology for them, why vertical integration makes sense there, why specifically is is their image model like, it it feels like it has a different business case around it than a Nano Banana or a ChatGPT images.
00:29:50 · John Coogan, Eric Seufert, Bernt Øivind Børnich
[00:29:50] S1: Yes. Got it. Anyway Great. We were just talking about Meta. They just launched Muse Spark 1.1, their LLM. They're selling that over API. They're also selling some compute. But I wanted to I want your take on the image model specifically and why that is an important, technology for them, why vertical integration makes sense there, why specifically is is their image model like, it it feels like it has a different business case around it than a Nano Banana or a ChatGPT images. [00:30:21] S2: Yeah. So I think this is brilliant. Right? Like, this actually gives them the narrative firepower that they need to to sort of undermine the skepticism that investors feel about the AI investment. Right? So, like, I was at this dinner. I did these dinners a lot, like, these ideas dinners. Mhmm. Like, a a a research company will bring me in and talk to, like, much of their hedge fund clients. And, like, I was talking about, you know, why these investments that Meta's making right now are bearing fruit right now. Like, 33% advertising revenue growth last quarter on $55,000,000,000 in revenue. That's incredible. Like, you look at Google Search was 19%. Amazon, which is much smaller, was 24%. They're outgrowing everyone except for AppLovin and Reddit. And people don't believe it, and I asked somebody, okay. What would it take to convince you that these investments are actually productive in this moment in time? And they said 40%. 40% growth on 55 to $60,000,000,000 in revenue. Where did that number come from? [00:31:14] S5: This is