Companies bet on Wall Street’s bet on AI

The Future. It seems like every tech and media company is jumping on the AI bandwagon to appease Wall Street. While some of the integrations are novel and show promise, others are a bit gimmicky or dangerously unready for primetime. Moving fast without due diligence to how it will affect the company, the industry at large, or customers can often lead to a lot of heartbreak and backtracking. AI may be the future… but it maybe shouldn’t be everyone’s future.

Media meets the moment
Companies are pivoting hard to AI.

• Endeavor CEO Ari Emanuel used AI firm Speechify (which Endeavor has invested in) to generate the opening remarks of the company’s last earnings call.
• CAA, through its Connect Ventures, was behind a recent fundraise into Deep Voodoo — a deepfake firm founded by South Park creators Matt Stone & Trey Parker.
• Spotify has unleashed its AI-powered “DJ” on listeners to help curate personalized radio shows.
• Snap debuted a ChatGPT-powered chatbot called “My AI” for Snapchat+ users… which is already causing a lot of controversy over how it talks to teens.
• BuzzFeed is using AI to write content and create personalized quizzes (yes, BuzzFeed quizzes are getting new life), which led to its stock price doubling.

Future financed
AI may have a lot of kinks, but it’s the flavor of the month for Wall Street, with Morgan Stanley calling it a “$6 trillion opportunity” and Bank of America declaring that the tech is  “at a defining moment — like the internet in the ’90s.” So stock-price-obsessed companies feel they have no choice but to rush to integrate AI or get caught up in the narrative that they’re behind the times.

But some in Wall Street seem wary of jumping headfirst into AI after realizing they were a little too blinded by past innovations like streaming, crypto, and the metaverse. Goldman Sachs analysts Eric Sheridan and Kash Rangan warned that it might be just another “hype” cycle.

Sony gets a KO with Crunchyroll

The Future. While many in the entertainment world thought Sony paid way too much for Crunchyroll in 2020 ($1.18 billion), it has turned out to be a steal. Now combined with Sony’s Funimation, Crunchyroll has become a moneymaker for the company, winning the love of both creators and audiences. Considering that anime fandom has become something of a lifestyle, Crunchyroll’s diverse offerings could put it at the center of the ecosystem worldwide.

Anime is here to stay
Crunchyroll has what every streamer wishes it did.

• A flywheel of offerings. It’s not just the biggest anime streamer in the world but is also the biggest theatrical distributor in North America. It also has a live-events division, a merch division, and upstart mobile gaming and music divisions.
• A tiered approach. Crunchyroll offers a free ad-supported version and three paid ones that range from $7.99 to $14.99, with the most expensive giving subscribers perks to all the flywheel offerings.
• A passionate fanbase. With 300 million fans, anime has become one of the most popular art forms in the world. Crunchyroll only has 10 million paid subscribers (and is already turning a profit), so there’s a lot of room for growth.
• Expanding reach. While Crunchyroll has its biggest following in the US and in the under-25 age group, popularity in every age cohort is growing, and the company will soon expand into the hot market of Southeast Asia.

While every major streamer is making moves to get into anime, Crunchyroll has some big advantages: its deals cover the whole flywheel of offerings, it shares revenue and data with creators, and Sony is a Japanese company, after all.

Everyone will have an anime division soon enough… but Crunchyroll is already ahead of the curve.AI appeases Wall Street, T-Mobile buys Mint Mobile, and Sony gets a KO with Crunchyroll.

Silicon Valley Bank’s collapse drags down the tech industry

The Future. Last week’s failure of Silicon Valley Bank (SVB), the 16th largest bank in the US, has rocked the startup world — draining billions from companies, leaving workers without paychecks, and running a chill down the spine of the financial industry in a way they haven’t felt since 2008. With the cash spigot turned off (unless a buyer emerges or deposits are purchased), mass layoffs could start this week to keep companies afloat… just as the bloodbath of recent months had seemed to dry.

Empty pockets
The collapse of SVB is the biggest bank failure since Washington Mutual in 2008.

Here’s what went down:

• SVB invested a lot of its $175.4 billion in deposits in US treasuries and mortgage-backed securities to keep the money working while interest rates were low.
• But as the Fed raised interest rates, cash flow from new VC-backed startups stalled, and those bond investments turned sour, with losses from a $21 billion investment tipping the dominoes.
• So SVB tried to raise money last week and then tried to find a buyer… but that spooked customers, who started pulling cash in fear of a collapse, which led to a stock freefall — wash, rinse, repeat.
• By Friday, the California Department of Financial Protection and Innovation closed the bank and named the Federal Deposit Insurance Corporation the receiver to handle getting clients some of their money.

The SVB branch offices will be open under the control of a government financial vehicle called the Deposit Insurance National Bank of Santa Clara (if you want to know who has your money).

Bank bounce
The fallout of SVB’s collapse happened immediately.

• Customers, tech startups big and small, will get up to $250,000 of their money quickly (the amount insured by the FDIC), but anything over that is not guaranteed — about $151 billion of deposits in SVB are uninsured.
• Employees are already feeling the burn because, with hundreds of companies and VC firms having their money tied up in SVB, they aren’t receiving their due pay. Companies are looking for alternative ways to make payroll.
• Banks are feeling ripples of the unease now spreading in the financial industry, with the four biggest US banks losing $52 billion in value. Smaller banks similar to SVB may undergo a similar collapse.

Having been a partner to Silicon Valley for decades, expect the entire startup ecosystem to be forever changed. Last week was just the beginning.

Drinking and shopping is big (but shrinking) business

The Future. Alcohol is notorious for giving us loose lips, but, it turns out, also some loose wallets. A new study found that about 45 million Americans ran up a tab of $14 billion last year in purchases made while drunk or tipsy. Surprisingly, that’s a declining number from recent years, meaning that either alcohol consumption is on the decline or we’re just getting better at following our budget under the influence.

Both teachers and students find use for ChatGPT

The Future. After an initial outcry that ChatGPT could upend the education system for the worst (cheating, misinformation, plagiarism, etc.), students and teachers are saying they see its benefits. With the proper safeguards in place, ChatGPT could soon just be another tool to enhance the classroom — like a calculator for students or a TA for teachers.

Vibe update
A survey from the Walton Family Foundation found…

• 51% of teachers (K-12) are using ChatGPT for things like lesson planning, brainstorming, and “building background knowledge.”
• 33% of students ages 12-17 use it to “improve as students” and “hasten their learning process.” (read: get answers faster).

Overall, 88% of teachers and 79% of students who have used ChatGPT say it has a positive impact.

Study buddy
The hope is that ChatGPT and other AI platforms can help close the learning gap caused by school closures during the pandemic.

Romy Drucker, director of the K-12 Education Program at the Walton Family Foundation, told Axios, “What we see in the data is that teachers need better tools and resources to meet this moment, and that’s why they’re among the earliest adopters of ChatGPT.”

The wrinkle may be in catching plagiarized work and looking out for all the ways ChatGPT confidently spits out wrong answers from time to time. Always check your sources.

Axelrad pits humans against AI in a cocktail challenge

The Future. Texas bar Axelrad is testing whether human bartenders or ChatGPT is better at coming up with new, delicious cocktails. We won’t know the final score from customers until the end of the month, but the challenge is already showing new ways humans can lean on AI. It may also prove that the tech can be used as a fun tool for conjuring innovative cocktails at home, no matter the ingredients you have available.

BarBot
The battle between humans and AI is already being waged at a bar in Houston.

• This month, Axelrad has put up a “Humans vs. Machines” menu — four cocktails created by human bartenders and four similar ones entirely developed by ChatGPT.
• The four prompts were “a spicy mocktail,” “a berry cocktail,” “a fruity, frozen drink,” and “a legend of Zelda-inspired drink.”

Customers will be able to order half portions of each drink and then vote on which is the best — whichever wins gets their drinks a permanent spot on the bar’s menu.

The human touch
So, how’s the AI doing so far? Owner Adam Brackman says that ChatGPT goes a little heavy on adding all the liqueurs to every cocktail, makes them a bit too sugary, and lacks creativity overall. So, the human bartenders had to adjust the prompts to tone down these elements so that the drinks are… well… drinkable (Remember, AI doesn’t have taste buds).

But, the bar did already find some nice uses for AI, including naming new drinks or brainstorming ideas for themed cocktails. It’s all in good fun, but it’s clear that the experience of human interaction and the expertise of a great mixologist isn’t going anywhere.