So, it begins
And, remember when we were worried about real AI demand?
Welcome to Cautious Optimism, a newsletter on tech, business, and power.
📈 Trending Up: Political violence … WTAF … iPhone sales in China … Chinese AI models … Le Monde and X … BNPL in Italy … Computer Use, from OpenAI …
Trending nowhere: The current technology IPO calendar
📉 Trending Down: AI hardware … Immigration raids, for now … exit valuations …
So, it begins
Don’t worry, we’re not going to go over every single Trump executive order here. A sampling for flavor, however, is worth our time.
The existence of our trans brothers and sisters remains a potent accelerant for right-wing politics, so it’s not a shock that they got hit early (nothing like reducing our armed forces during a recruiting crisis). Pulling out of the WHO, and leaving the Paris Accords fits with my thesis that Musk’s politics — ergo, the new politics of the right today — will continue work to end agreements with supranational organizations.
Free speech got a nod — good — but the EO in question (as do others) contains a carve-out for “the functions of the Director of the Office of Management and Budget relating to budgetary, administrative, or legislative proposals,” which I find a little ironic.
DEI is getting deleted across the Federal government. The EO included the following: “[T]he Director of OPM, with the assistance of the Attorney General as requested, shall review and revise, as appropriate, all existing Federal employment practices, union contracts, and training policies or programs to comply with this order.”
The Biden AI EO is kaput.
There’s also a hiring freeze and a return-to-work initiative in the mix. Neither are a shock, but I do find it very funny that a man who is once again working from home is commanding his entire staff to do the opposite.
Continuing, there’s new trade policy, notes on how DOGE will work, an attack on offshore wind energy, plans to smash state-level rules that conflict with new Federal energy goals, meddling in California’s water management, new border policies, and a ploy to end birthright citizenship in certain cases starting in 30 days (the EO contains factual errors, and is already being challenged).
What else? There’s more, but perhaps the most interesting thing to not develop is Trump’s tariff threat. These have stretched from large, blanket tariffs, and targeted, even larger tariffs aimed at particular nations. The current reporting indicates that 25% tariffs on imports from Canada and Mexico could come in ten days’ time. Let’s see.
Trump is also working to save TikTok, which is such a hilarious turn-about from his first administration that you have to wonder if he even recalls fighting to ban it.
Remember when we were worried about real AI demand?
Concerns that billions were being spent to train ever-better models that weren’t, per se, market-useful were once material. Apart from summarizing documents and playing around, what would the world use AI for. That’s over. The what will you use it for era of today’s AI rush is far, far behind us.
The answer, as it turns out, is a fusillade of things. So many things that OpenAI rival Anthropic is struggling to keep up with demand. The WSJ spoke with Anthropic’s CEO Dario Amodei:
“The surge in demand we’ve seen over the last year, and particularly in the last three months, has overwhelmed our ability to provide the needed compute,” he said in an interview at the Journal House in Davos, Switzerland. He added that this will improve the rate limits that users of its popular Claude chatbot often run up against.
The CEO, the Journal continues, says that his company’s “revenue grew tenfold last year.”
So much demand that you can’t keep up with servicing it is a good working definition of product-market fit. It also reminds me of this riff from Microsoft CEO Satya Nadella during his company’s late October earnings call — recall that inference is the act of using an AI model to generate new responses:
[T]he good news for us is that we're not waiting for that inference to show up, right? If you sort of think about the point we even made that this is going to be the fastest growth to $10 billion of any business in our history, it's all inference, right? One of the things that may not be as evident is that we're not actually selling raw GPUs for other people to train. In fact, that's sort of a business we turn away because we have so much demand on inference that we are not taking what I would -- in fact, there's a huge adverse selection problem today where people -- it's just a bunch of tech companies still using VC money to buy a bunch of GPUs. We kind of really are not even participating in most of that because we are literally going to the real demand.
Throw in the titanic fit that folks on Twitter throw whenever OpenAI has an SLA hiccup, and you can kinda get your arms around how much people are using AI today.
Lately, the things that have caught my eye the most are Deep Research from Google’s Gemini team — I interviewed its PM here — and o1. I need to get more deeply into Anthropic’s offerings, but life is busy.
When the layoffs come home
The other day my beloved TechCrunch underwent a round of layoffs. Having had the privilege of working for TC twice, the cuts hurt. Not only did they impact people I know and love, but it’s also painful to watch a place, a publication, a home, that I love go through what appear to be tough times.
All media is in the shitter, to use the proper French. Vox is cutting, the Post is trying to find its way, the list goes on. You can bring your own examples.
To understand the cuts, we have to go back in time a little. I return us to early 2024, when TechCrunch decided to shutter its subscription product, TechCrunch+. I was Editor in Chief of that work, a job I was lucky enough to have held for a few years.
Here’s AdWeek’s coverage from the time:
Technology publisher TechCrunch laid off around eight staff members Monday, part of a larger restructuring at the title as it seeks to refocus its coverage around the investors, founders and startups of Silicon Valley, according to an internal memo obtained by ADWEEK.
The publisher also plans to wind down its paid subscription product, TC+, as part of this effort, editor in chief Connie Loizos told staff.
“We’ll be sunsetting the TechCrunch+ subscription product in the coming weeks and will refocus our talented writers and editors on strengthening our core product,” Loizos wrote. “Building around two businesses hasn’t allowed us to focus where we can win.”
Focus is a real virtue. TechCrunch had two paths before it once it decided to choose just one: Double down on having as large an audience as possible to sell premium ads against, or double down on its subscription product to replace variable advertising incomes over time. Connie, someone whom I very much like, went with option one over option two.
I won’t lie; my preference went the other direction. But leaders make calls and she was the new boss. So, TechCrunch moved away from subscriptions, and my team was folded back into the main blog.
Sadly, the advertising market for media is still messy. Sure, big tech corporates are crushing the advertising game, but that’s because they are closer to the consumer — and the moment of purchase. My hope is that TechCrunch’s current fortunes — as evidenced by the layoffs — turn around, and advertising dollars rain down from the sky in short order.
But there is a reason why there’s thus far been no advertising here on CO, and I wouldn’t mind if you found your credit card and chipped in; subscriptions mean that media properties work for readers, not advertisers. And I think that, net-net, that will work out better for us in the end.
Onward to everyone still at TC. Please kick maximum ass and keep the puckishness coming.