AI transcript
0:00:03 Support for the show comes from Atlassian.
0:00:05 Atlassian software like Jira, Confluence, and Loom
0:00:07 help power the collaboration needed for teams
0:00:10 to accomplish what would otherwise be impossible alone.
0:00:11 Because individually, we’re great,
0:00:13 but together, we’re so much better.
0:00:15 That’s why millions of teams around the world,
0:00:17 including 75% of the Fortune 500,
0:00:18 trust Atlassian software for everything
0:00:21 from space exploration and green energy
0:00:22 to delivering pizzas and podcasts.
0:00:25 Whether you’re a team of two, 200, or 2 million,
0:00:28 Atlassian software is built to help keep you connected
0:00:29 and moving together as one.
0:00:31 Learn how to unleash the potential of your team
0:00:32 at Atlassian.com.
0:00:36 That’s A-T-L-A-S-S-I-A-N.com.
0:00:37 Atlassian.
0:00:45 Support for PropG comes from Hestans.
0:00:47 Since 1852 and over six generations,
0:00:49 Hestans’ beds have been renowned for their craftsmanship
0:00:51 and use of high quality natural materials
0:00:52 to help ensure your body temperature
0:00:54 stays regulated while you sleep.
0:00:56 Hestans offers a range of firmness options
0:00:58 to suit different preferences and body types,
0:01:00 ensuring personalized comfort.
0:01:02 The team visited a Hestans sleep spa
0:01:04 for an in-person immersive experience
0:01:06 to try out some beds and found them
0:01:08 to be incredibly comfy.
0:01:09 You can visit one of their stores
0:01:12 or go to Hestans.com to book a personalized bed test
0:01:14 or order a catalog to learn more.
0:01:20 I’m Scott Galloway and this is No Mercy, No Malice.
0:01:24 One sign that the business cycle has reached a full bubble.
0:01:27 When companies begin washing their brands
0:01:29 in the flavor of the moment.
0:01:32 Right now, that flavor is AI.
0:01:35 And predictably, just about every company
0:01:39 wants the market to believe it’s an AI company.
0:01:43 AI Washing, as read by George Hahn.
0:01:49 I’m at Cannes, hungover as I went to Yahoo Beach
0:01:50 and saw the chain smokers.
0:01:54 Cannes is everything I wanted in my 20s and 30s
0:01:56 but didn’t have access to.
0:01:58 Since I was working all the fucking time
0:02:00 and had no money or influence.
0:02:01 Better late, I guess.
0:02:04 Anyway, the two biggest stories
0:02:08 of this year’s Cannes Advertising Conference will be,
0:02:12 one, the Musk-Yakarino Apology Tour,
0:02:14 which received a slightly cooler reception
0:02:18 than if Millie Vanilly showed up at Spotify Beach.
0:02:21 No, Elon, really, you can go fuck yourself,
0:02:23 says the ad community.
0:02:26 Two, my friend Michael Casson,
0:02:29 hosting the kickoff dinner for C3, his new firm,
0:02:31 on the terrace overlooking the party
0:02:34 for MediaLink, his former firm.
0:02:39 Pro tip, CEOs with ovaries don’t do this shit.
0:02:41 The definition of a dick move.
0:02:46 I said this verbatim on a panel with Michael yesterday
0:02:50 and he responded, you mean a big dick move.
0:02:53 But I digress.
0:02:57 The best founders articulate a vision of the future
0:03:01 and put their company’s business model at the heart of it.
0:03:03 It’s no different from Hollywood.
0:03:04 The sets and costumes change,
0:03:08 but the promise of a utopian or dystopian future
0:03:09 is a constant.
0:03:14 By the way, the headline that best depicts our world would be,
0:03:18 on average, things modestly better today, globally.
0:03:20 But that’s click-repellent.
0:03:24 Ironically, the hot movie trends seem to be biopics
0:03:27 about business, specifically successful products.
0:03:31 Studio execs recently greenlit movies about Blackberry,
0:03:34 Tetris, The Air Jordan, and presumably after Edibles,
0:03:37 Spicy Cheetos and Pop Tarts.
0:03:39 As the financialization of everything,
0:03:42 which has CEO signing breasts,
0:03:44 becomes a category seven hurricane,
0:03:49 expect an onslaught of movies about AI as UberVillain.
0:03:52 In the latest Mission Impossible installment,
0:03:53 Dead Reckoning Part One,
0:03:56 the villain is a sentient AI entity called,
0:03:58 wait for it, the entity.
0:04:00 I’m working on a film myself,
0:04:04 and given my Hollywood career, it will be in theaters soon.
0:04:06 Maybe.
0:04:09 In America, money is relevance,
0:04:11 and the most relevant thing in the world
0:04:15 is now a firm that designs GPUs.
0:04:19 NVIDIA has registered the greatest market cap growth
0:04:24 in history, $2 trillion in the past year alone,
0:04:29 becoming briefly the most valuable company in the world
0:04:34 as its chips are the literal heart of the AI revolution.
0:04:37 No storytelling required.
0:04:40 I appreciate that the folks from NVIDIA don’t come to Cann,
0:04:42 unlike Google and Metta,
0:04:45 to run their fingers through the hair of media execs
0:04:47 before shooting them in the face.
0:04:49 My favorite Cann moment?
0:04:52 Cheryl’s 2013 book signing,
0:04:54 which attracted hundreds of female execs,
0:04:58 even as her firm was depressing millions of teen girls.
0:04:59 Back to NVIDIA.
0:05:02 Think about this.
0:05:06 One company has added the value of the global auto industry
0:05:11 and the GDP of Sweden in 12 months.
0:05:13 Open AI and by extension,
0:05:17 its sugar daddy, Microsoft, are similarly benefiting.
0:05:19 But investor hunger for AI stories
0:05:23 can’t be sated by a few businesses.
0:05:25 CNBC makes an annual list
0:05:28 of the 50 most disruptive companies
0:05:32 and two thirds of the entrance on the 2024 list,
0:05:35 quote, describe artificial intelligence
0:05:38 as critical to their businesses, unquote.
0:05:43 The key word in that sentence is describe.
0:05:47 Every comms exec and CEO who can spell AI,
0:05:49 i.e. all of them,
0:05:54 has decided AI is the protagonist of their company’s story.
0:05:57 However, similar to Game of Thrones,
0:05:59 a lot of these leading men and women
0:06:02 aren’t going to make it to season two,
0:06:05 which brings me to Tempus.
0:06:08 I mean Tempus AI.
0:06:13 Tempus is a genomic testing and data company.
0:06:17 Doctors take blood or tissue samples from patients
0:06:19 and send them to a Tempus lab.
0:06:21 And Tempus sends back information
0:06:24 about the genes it finds in those samples.
0:06:28 In addition to testing, Tempus licenses the data it collects
0:06:30 to pharmaceutical companies
0:06:33 who use it to develop drugs.
0:06:35 Tempus specializes in cancer,
0:06:36 which is a great business
0:06:39 as fighting cancer is a noble thing.
0:06:42 AI, healthcare, cancer, disco.
0:06:45 I emailed the CEO who might sort of know,
0:06:47 strikes me as an impressive guy,
0:06:49 and asked if I could invest.
0:06:52 He said they’re only letting institutions invest.
0:06:54 Makes sense.
0:06:55 I was still interested however,
0:06:57 so I looked further into the firm.
0:07:00 Read, I asked my team to look into the firm.
0:07:02 And here’s what we found.
0:07:04 It’s not such a great business
0:07:06 in the sense of making money.
0:07:09 Tempus doesn’t make money, it burns it.
0:07:12 Since its founding in 2015,
0:07:16 the company has raised $1.5 billion in venture money
0:07:19 and spent almost all of it.
0:07:22 According to its IPO filing,
0:07:27 Tempus had $80 million left in the bank on March 31.
0:07:30 And it was burning $8 million per week,
0:07:35 suggesting it would run out of cash last week.
0:07:38 The company raised an additional $200 million
0:07:40 from SoftBank in late April,
0:07:44 otherwise it might not have made it to the IPO.
0:07:48 I’m wondering when the CIA is going to plant SoftBank,
0:07:52 Chimoth Polyhapitia, and Cathie Wood in Moscow
0:07:54 to take the Russian economy down.
0:07:59 Tempus AI stumbled across the IPO finish line
0:08:01 and fell into a pile of money.
0:08:06 It priced at $37, opened at $40,
0:08:11 and hit $44 before settling at $38,
0:08:14 giving the company a $6 billion market cap
0:08:17 after a day of trading,
0:08:19 a respectable IPO bump,
0:08:24 and a check for $411 million, aka a year of burn.
0:08:26 The valuation was down
0:08:30 from Tempus’s private market valuation of $8 billion,
0:08:34 but an 11x revenue multiple is still greater
0:08:36 than that afforded its competitors,
0:08:39 such as GardenT and NeoGenomics,
0:08:44 which trade at 6x and 2.7x respectively.
0:08:47 GardenT welcomed Tempus to the public markets
0:08:51 with a patent lawsuit three days before the IPO.
0:08:53 See above, dick move.
0:08:57 How did a money-losing business
0:09:00 facing a patent lawsuit in a competitive market
0:09:04 run by a guy whose previous company Groupon
0:09:07 trades at 6% of its IPO valuation
0:09:12 after burning through $1.5 billion of investor capital,
0:09:15 garner a multiple nearly double
0:09:18 that of its most richly valued competitor?
0:09:23 A, never underestimate the market’s ability
0:09:25 to provide a product or story
0:09:29 when people have cash in hand.
0:09:32 In this instance, it will likely again
0:09:35 be investors who get beamed in the face.
0:09:42 Tempus refers to AI 228 times in its IPO paperwork,
0:09:45 even tacking those letters
0:09:48 onto the end of its name last year.
0:09:52 Notably, the company first filed for an IPO in 2021,
0:09:57 and back then, it mentioned AI 78 times.
0:10:02 The AI hype refers to the third leg of Tempus’s stool,
0:10:06 its AI applications product line.
0:10:10 The idea is that Tempus will combine its lab testing
0:10:14 with a comprehensive review of a patient’s entire record,
0:10:17 other test results, physician’s notes,
0:10:20 family history, medications, et cetera,
0:10:23 and provide recommendations for patient care.
0:10:26 An AI doctor, which sounds amazing,
0:10:29 but it’s also sci-fi, i.e. fantasy,
0:10:33 which it is because the AI applications segment
0:10:37 currently provides 2% of the company’s revenue.
0:10:41 Tempus hasn’t had time to add AI to its logo,
0:10:43 and the only part of its website
0:10:45 that incorporates the new name
0:10:47 is the investor relations section.
0:10:51 The S1 reads like a venture capital pitch deck
0:10:55 written by an LLM with the following prompt.
0:10:57 Pull together a 30-minute slide presentation
0:11:02 for an IPO road show that positions us as an AI firm.
0:11:07 Second prompt, more cowbell if cowbell is AI.
0:11:13 I can’t decide if I should criticize Tempus or commend it.
0:11:16 The market wants AI companies,
0:11:18 Tempus wants the market’s capital,
0:11:21 and it pairs the trade via AI washing.
0:11:24 Everybody’s doing it,
0:11:27 and the company’s ability to attract cheap capital
0:11:29 may provide the steroids to turn it
0:11:31 from Carl Lewis to Ben Johnson.
0:11:36 Tempus AI isn’t the first company to play the name game.
0:11:40 C3.AI started life as regular C3,
0:11:43 had a cup of coffee as C3 Energy,
0:11:48 and jumped on the Internet of Things bandwagon as C3 IoT,
0:11:51 before going public as C3.AI.
0:11:57 In the UK, the largest domestic energy company, Octopus,
0:12:02 has jacked its valuation nearly 2X since 2001,
0:12:06 and its CEO can’t stop talking about AI.
0:12:11 Starbucks is using AI to nurture the human spirit.
0:12:16 Kellogg awards an MBAI business school degree.
0:12:22 At my online ed startup section, we offer an AI Academy,
0:12:25 but we haven’t changed the name to section.AI,
0:12:29 although GoDaddy is selling the URL for just $798,888,
0:12:36 a small price for a 2X valuation bump.
0:12:41 Even actual washing machines are in on the game.
0:12:46 LG introduced an AI-powered washing machine in 2020.
0:12:50 Goldman Bankers bring a washing machine to every road show.
0:12:54 We’ve been here before, and the cycle always turns.
0:12:56 Most recently, it was crypto,
0:12:59 and the NFT-ification of everything.
0:13:02 The dot-com boom in the late ’90s
0:13:05 saw the launch of businesses, including DrCoup.com,
0:13:09 the website of former Surgeon General C. Everett Coop,
0:13:13 which popped 38% on its NASDAQ IPO
0:13:16 before going under in 2001.
0:13:20 There are some signs the golden age of AI washing
0:13:24 is slowing from the spin cycle, coming to an end.
0:13:27 Regulators are paying attention.
0:13:31 The SEC hit two investment advisors
0:13:34 with six-figure fines for falsely claiming
0:13:38 to use AI in their financial forecasts,
0:13:41 and the agency’s enforcement head made it clear
0:13:45 this was a warning shot for publicly traded companies.
0:13:50 Quote, “Public issuers making claims about their AI adoption
0:13:54 must also remain vigilant about similar misstatements
0:13:59 that may be material to individuals’ investing decisions.”
0:13:59 Unquote.
0:14:04 The SEC also brought fraud charges
0:14:07 against defunct recruiter Junco,
0:14:11 which claimed to use AI to identify diverse applicants,
0:14:14 but flamed out last year when its founder was revealed
0:14:19 to have inflated its numbers and concocted fake testimonials.
0:14:21 The FTC wants companies to know
0:14:24 that it’s watching their AI claims,
0:14:27 and the FDA is looking into regulating the use
0:14:30 of AI models in healthcare.
0:14:33 The market’s favorite citizen sheriff,
0:14:35 Hindenburg Research, recently pointed
0:14:38 at short-selling guns at Equinix,
0:14:40 accusing the data center provider
0:14:43 of selling an AI pipe dream.
0:14:48 Tempus AI’s IPO may be the latest signal
0:14:51 that the AI washing cycle is ending,
0:14:56 as its modest pre-orchestrated pop has evaporated.
0:15:00 And C3.AI’s stock is already off 80%
0:15:03 from its post-IPO high in 2021.
0:15:07 The line between AI opportunity and AI washing
0:15:11 is neither clear nor fixed.
0:15:14 Sure, it’s obvious for the outliers.
0:15:18 NVIDIA will continue to register upside-powering AI,
0:15:24 and shady brokers who claim to use AI to pick stocks will not.
0:15:25 But for most firms,
0:15:29 clarity will only come with hindsight.
0:15:33 Ironically, a year ago, the big story was how to detect
0:15:36 if someone was using AI,
0:15:39 news stories, student papers, lawyers.
0:15:43 Today, we’re attempting to discern
0:15:47 if a firm is not using AI.
0:15:52 Life is so rich.
0:15:56 (upbeat music)
0:15:58 (upbeat music)
0:16:01 (gentle music)
0:16:03 (gentle music)
0:00:05 Atlassian software like Jira, Confluence, and Loom
0:00:07 help power the collaboration needed for teams
0:00:10 to accomplish what would otherwise be impossible alone.
0:00:11 Because individually, we’re great,
0:00:13 but together, we’re so much better.
0:00:15 That’s why millions of teams around the world,
0:00:17 including 75% of the Fortune 500,
0:00:18 trust Atlassian software for everything
0:00:21 from space exploration and green energy
0:00:22 to delivering pizzas and podcasts.
0:00:25 Whether you’re a team of two, 200, or 2 million,
0:00:28 Atlassian software is built to help keep you connected
0:00:29 and moving together as one.
0:00:31 Learn how to unleash the potential of your team
0:00:32 at Atlassian.com.
0:00:36 That’s A-T-L-A-S-S-I-A-N.com.
0:00:37 Atlassian.
0:00:45 Support for PropG comes from Hestans.
0:00:47 Since 1852 and over six generations,
0:00:49 Hestans’ beds have been renowned for their craftsmanship
0:00:51 and use of high quality natural materials
0:00:52 to help ensure your body temperature
0:00:54 stays regulated while you sleep.
0:00:56 Hestans offers a range of firmness options
0:00:58 to suit different preferences and body types,
0:01:00 ensuring personalized comfort.
0:01:02 The team visited a Hestans sleep spa
0:01:04 for an in-person immersive experience
0:01:06 to try out some beds and found them
0:01:08 to be incredibly comfy.
0:01:09 You can visit one of their stores
0:01:12 or go to Hestans.com to book a personalized bed test
0:01:14 or order a catalog to learn more.
0:01:20 I’m Scott Galloway and this is No Mercy, No Malice.
0:01:24 One sign that the business cycle has reached a full bubble.
0:01:27 When companies begin washing their brands
0:01:29 in the flavor of the moment.
0:01:32 Right now, that flavor is AI.
0:01:35 And predictably, just about every company
0:01:39 wants the market to believe it’s an AI company.
0:01:43 AI Washing, as read by George Hahn.
0:01:49 I’m at Cannes, hungover as I went to Yahoo Beach
0:01:50 and saw the chain smokers.
0:01:54 Cannes is everything I wanted in my 20s and 30s
0:01:56 but didn’t have access to.
0:01:58 Since I was working all the fucking time
0:02:00 and had no money or influence.
0:02:01 Better late, I guess.
0:02:04 Anyway, the two biggest stories
0:02:08 of this year’s Cannes Advertising Conference will be,
0:02:12 one, the Musk-Yakarino Apology Tour,
0:02:14 which received a slightly cooler reception
0:02:18 than if Millie Vanilly showed up at Spotify Beach.
0:02:21 No, Elon, really, you can go fuck yourself,
0:02:23 says the ad community.
0:02:26 Two, my friend Michael Casson,
0:02:29 hosting the kickoff dinner for C3, his new firm,
0:02:31 on the terrace overlooking the party
0:02:34 for MediaLink, his former firm.
0:02:39 Pro tip, CEOs with ovaries don’t do this shit.
0:02:41 The definition of a dick move.
0:02:46 I said this verbatim on a panel with Michael yesterday
0:02:50 and he responded, you mean a big dick move.
0:02:53 But I digress.
0:02:57 The best founders articulate a vision of the future
0:03:01 and put their company’s business model at the heart of it.
0:03:03 It’s no different from Hollywood.
0:03:04 The sets and costumes change,
0:03:08 but the promise of a utopian or dystopian future
0:03:09 is a constant.
0:03:14 By the way, the headline that best depicts our world would be,
0:03:18 on average, things modestly better today, globally.
0:03:20 But that’s click-repellent.
0:03:24 Ironically, the hot movie trends seem to be biopics
0:03:27 about business, specifically successful products.
0:03:31 Studio execs recently greenlit movies about Blackberry,
0:03:34 Tetris, The Air Jordan, and presumably after Edibles,
0:03:37 Spicy Cheetos and Pop Tarts.
0:03:39 As the financialization of everything,
0:03:42 which has CEO signing breasts,
0:03:44 becomes a category seven hurricane,
0:03:49 expect an onslaught of movies about AI as UberVillain.
0:03:52 In the latest Mission Impossible installment,
0:03:53 Dead Reckoning Part One,
0:03:56 the villain is a sentient AI entity called,
0:03:58 wait for it, the entity.
0:04:00 I’m working on a film myself,
0:04:04 and given my Hollywood career, it will be in theaters soon.
0:04:06 Maybe.
0:04:09 In America, money is relevance,
0:04:11 and the most relevant thing in the world
0:04:15 is now a firm that designs GPUs.
0:04:19 NVIDIA has registered the greatest market cap growth
0:04:24 in history, $2 trillion in the past year alone,
0:04:29 becoming briefly the most valuable company in the world
0:04:34 as its chips are the literal heart of the AI revolution.
0:04:37 No storytelling required.
0:04:40 I appreciate that the folks from NVIDIA don’t come to Cann,
0:04:42 unlike Google and Metta,
0:04:45 to run their fingers through the hair of media execs
0:04:47 before shooting them in the face.
0:04:49 My favorite Cann moment?
0:04:52 Cheryl’s 2013 book signing,
0:04:54 which attracted hundreds of female execs,
0:04:58 even as her firm was depressing millions of teen girls.
0:04:59 Back to NVIDIA.
0:05:02 Think about this.
0:05:06 One company has added the value of the global auto industry
0:05:11 and the GDP of Sweden in 12 months.
0:05:13 Open AI and by extension,
0:05:17 its sugar daddy, Microsoft, are similarly benefiting.
0:05:19 But investor hunger for AI stories
0:05:23 can’t be sated by a few businesses.
0:05:25 CNBC makes an annual list
0:05:28 of the 50 most disruptive companies
0:05:32 and two thirds of the entrance on the 2024 list,
0:05:35 quote, describe artificial intelligence
0:05:38 as critical to their businesses, unquote.
0:05:43 The key word in that sentence is describe.
0:05:47 Every comms exec and CEO who can spell AI,
0:05:49 i.e. all of them,
0:05:54 has decided AI is the protagonist of their company’s story.
0:05:57 However, similar to Game of Thrones,
0:05:59 a lot of these leading men and women
0:06:02 aren’t going to make it to season two,
0:06:05 which brings me to Tempus.
0:06:08 I mean Tempus AI.
0:06:13 Tempus is a genomic testing and data company.
0:06:17 Doctors take blood or tissue samples from patients
0:06:19 and send them to a Tempus lab.
0:06:21 And Tempus sends back information
0:06:24 about the genes it finds in those samples.
0:06:28 In addition to testing, Tempus licenses the data it collects
0:06:30 to pharmaceutical companies
0:06:33 who use it to develop drugs.
0:06:35 Tempus specializes in cancer,
0:06:36 which is a great business
0:06:39 as fighting cancer is a noble thing.
0:06:42 AI, healthcare, cancer, disco.
0:06:45 I emailed the CEO who might sort of know,
0:06:47 strikes me as an impressive guy,
0:06:49 and asked if I could invest.
0:06:52 He said they’re only letting institutions invest.
0:06:54 Makes sense.
0:06:55 I was still interested however,
0:06:57 so I looked further into the firm.
0:07:00 Read, I asked my team to look into the firm.
0:07:02 And here’s what we found.
0:07:04 It’s not such a great business
0:07:06 in the sense of making money.
0:07:09 Tempus doesn’t make money, it burns it.
0:07:12 Since its founding in 2015,
0:07:16 the company has raised $1.5 billion in venture money
0:07:19 and spent almost all of it.
0:07:22 According to its IPO filing,
0:07:27 Tempus had $80 million left in the bank on March 31.
0:07:30 And it was burning $8 million per week,
0:07:35 suggesting it would run out of cash last week.
0:07:38 The company raised an additional $200 million
0:07:40 from SoftBank in late April,
0:07:44 otherwise it might not have made it to the IPO.
0:07:48 I’m wondering when the CIA is going to plant SoftBank,
0:07:52 Chimoth Polyhapitia, and Cathie Wood in Moscow
0:07:54 to take the Russian economy down.
0:07:59 Tempus AI stumbled across the IPO finish line
0:08:01 and fell into a pile of money.
0:08:06 It priced at $37, opened at $40,
0:08:11 and hit $44 before settling at $38,
0:08:14 giving the company a $6 billion market cap
0:08:17 after a day of trading,
0:08:19 a respectable IPO bump,
0:08:24 and a check for $411 million, aka a year of burn.
0:08:26 The valuation was down
0:08:30 from Tempus’s private market valuation of $8 billion,
0:08:34 but an 11x revenue multiple is still greater
0:08:36 than that afforded its competitors,
0:08:39 such as GardenT and NeoGenomics,
0:08:44 which trade at 6x and 2.7x respectively.
0:08:47 GardenT welcomed Tempus to the public markets
0:08:51 with a patent lawsuit three days before the IPO.
0:08:53 See above, dick move.
0:08:57 How did a money-losing business
0:09:00 facing a patent lawsuit in a competitive market
0:09:04 run by a guy whose previous company Groupon
0:09:07 trades at 6% of its IPO valuation
0:09:12 after burning through $1.5 billion of investor capital,
0:09:15 garner a multiple nearly double
0:09:18 that of its most richly valued competitor?
0:09:23 A, never underestimate the market’s ability
0:09:25 to provide a product or story
0:09:29 when people have cash in hand.
0:09:32 In this instance, it will likely again
0:09:35 be investors who get beamed in the face.
0:09:42 Tempus refers to AI 228 times in its IPO paperwork,
0:09:45 even tacking those letters
0:09:48 onto the end of its name last year.
0:09:52 Notably, the company first filed for an IPO in 2021,
0:09:57 and back then, it mentioned AI 78 times.
0:10:02 The AI hype refers to the third leg of Tempus’s stool,
0:10:06 its AI applications product line.
0:10:10 The idea is that Tempus will combine its lab testing
0:10:14 with a comprehensive review of a patient’s entire record,
0:10:17 other test results, physician’s notes,
0:10:20 family history, medications, et cetera,
0:10:23 and provide recommendations for patient care.
0:10:26 An AI doctor, which sounds amazing,
0:10:29 but it’s also sci-fi, i.e. fantasy,
0:10:33 which it is because the AI applications segment
0:10:37 currently provides 2% of the company’s revenue.
0:10:41 Tempus hasn’t had time to add AI to its logo,
0:10:43 and the only part of its website
0:10:45 that incorporates the new name
0:10:47 is the investor relations section.
0:10:51 The S1 reads like a venture capital pitch deck
0:10:55 written by an LLM with the following prompt.
0:10:57 Pull together a 30-minute slide presentation
0:11:02 for an IPO road show that positions us as an AI firm.
0:11:07 Second prompt, more cowbell if cowbell is AI.
0:11:13 I can’t decide if I should criticize Tempus or commend it.
0:11:16 The market wants AI companies,
0:11:18 Tempus wants the market’s capital,
0:11:21 and it pairs the trade via AI washing.
0:11:24 Everybody’s doing it,
0:11:27 and the company’s ability to attract cheap capital
0:11:29 may provide the steroids to turn it
0:11:31 from Carl Lewis to Ben Johnson.
0:11:36 Tempus AI isn’t the first company to play the name game.
0:11:40 C3.AI started life as regular C3,
0:11:43 had a cup of coffee as C3 Energy,
0:11:48 and jumped on the Internet of Things bandwagon as C3 IoT,
0:11:51 before going public as C3.AI.
0:11:57 In the UK, the largest domestic energy company, Octopus,
0:12:02 has jacked its valuation nearly 2X since 2001,
0:12:06 and its CEO can’t stop talking about AI.
0:12:11 Starbucks is using AI to nurture the human spirit.
0:12:16 Kellogg awards an MBAI business school degree.
0:12:22 At my online ed startup section, we offer an AI Academy,
0:12:25 but we haven’t changed the name to section.AI,
0:12:29 although GoDaddy is selling the URL for just $798,888,
0:12:36 a small price for a 2X valuation bump.
0:12:41 Even actual washing machines are in on the game.
0:12:46 LG introduced an AI-powered washing machine in 2020.
0:12:50 Goldman Bankers bring a washing machine to every road show.
0:12:54 We’ve been here before, and the cycle always turns.
0:12:56 Most recently, it was crypto,
0:12:59 and the NFT-ification of everything.
0:13:02 The dot-com boom in the late ’90s
0:13:05 saw the launch of businesses, including DrCoup.com,
0:13:09 the website of former Surgeon General C. Everett Coop,
0:13:13 which popped 38% on its NASDAQ IPO
0:13:16 before going under in 2001.
0:13:20 There are some signs the golden age of AI washing
0:13:24 is slowing from the spin cycle, coming to an end.
0:13:27 Regulators are paying attention.
0:13:31 The SEC hit two investment advisors
0:13:34 with six-figure fines for falsely claiming
0:13:38 to use AI in their financial forecasts,
0:13:41 and the agency’s enforcement head made it clear
0:13:45 this was a warning shot for publicly traded companies.
0:13:50 Quote, “Public issuers making claims about their AI adoption
0:13:54 must also remain vigilant about similar misstatements
0:13:59 that may be material to individuals’ investing decisions.”
0:13:59 Unquote.
0:14:04 The SEC also brought fraud charges
0:14:07 against defunct recruiter Junco,
0:14:11 which claimed to use AI to identify diverse applicants,
0:14:14 but flamed out last year when its founder was revealed
0:14:19 to have inflated its numbers and concocted fake testimonials.
0:14:21 The FTC wants companies to know
0:14:24 that it’s watching their AI claims,
0:14:27 and the FDA is looking into regulating the use
0:14:30 of AI models in healthcare.
0:14:33 The market’s favorite citizen sheriff,
0:14:35 Hindenburg Research, recently pointed
0:14:38 at short-selling guns at Equinix,
0:14:40 accusing the data center provider
0:14:43 of selling an AI pipe dream.
0:14:48 Tempus AI’s IPO may be the latest signal
0:14:51 that the AI washing cycle is ending,
0:14:56 as its modest pre-orchestrated pop has evaporated.
0:15:00 And C3.AI’s stock is already off 80%
0:15:03 from its post-IPO high in 2021.
0:15:07 The line between AI opportunity and AI washing
0:15:11 is neither clear nor fixed.
0:15:14 Sure, it’s obvious for the outliers.
0:15:18 NVIDIA will continue to register upside-powering AI,
0:15:24 and shady brokers who claim to use AI to pick stocks will not.
0:15:25 But for most firms,
0:15:29 clarity will only come with hindsight.
0:15:33 Ironically, a year ago, the big story was how to detect
0:15:36 if someone was using AI,
0:15:39 news stories, student papers, lawyers.
0:15:43 Today, we’re attempting to discern
0:15:47 if a firm is not using AI.
0:15:52 Life is so rich.
0:15:56 (upbeat music)
0:15:58 (upbeat music)
0:16:01 (gentle music)
0:16:03 (gentle music)
As read by George Hahn.
AI Laundromat
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