Rapid Recap: Google’s exodus, Spider-Man’s odyssey, Taco “Hell”, and more

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1:59 Hey, I'm Bob Safian, and we have a special episode of Rapid Response today. I'm joined by my senior producer, Alex Morris. Alex say hello to everybody. Hey Bob, happy to be back here doing this again. It's been a few months. Yeah, so I figured Every now and then Alex can ask me some questions and uh and we'll let you guys listen in on the kinds of conversations we have internally. Absolutely. We're in the middle of summer right now. Obviously, everybody's heard of like what is the song of the summer. What to you is the business story of the summer right now?

2:40 Thank goodness you didn't ask me the song of the summer. I definitely wouldn't have gotten that right. Listen I I can't Not start with the straight of hormuz. I think what's happening there in in the Mid East

2:53 No one knows what's gonna happen next. As we're talking now, uh it seems like maybe there's gonna be uh, you know, a resolution and the straits gonna open again. But by the time this reaches listeners, who who knows what, you know, what the situation is. It's gonna be we had a uh a guest on Amy Harder from Axios, as you recall, who who talked about like This it's never gonna go back to normal. And so anybody who thinks the oil markets and the energy markets and what's happening there are gonna go back to normal are kind of, you know, uh diluting themselves. I think she's Probably right. You know, we're we're in a different kind of world. And to me that's that's the story that

3:35 that a lot of different things are are hinging on. I've heard you say before that it's like the only certainty now is uncertainty. Um it's easier said than done. To tell a leader like that's what you need to now get comfy with. It's just that being the new normal. What advice do you have for CEOs to be able to kind of get comfier with that? Yeah. the international geopolitical environment. Everything is is moving really fast, right? And

4:06 And I just think that's what's required of a leader right now, you know, and it and if you're not comfortable being uncomfortable as a leader, then you have to Maybe ask yourself whether, you know, am I the right person to be leading this organization, this enterprise, this effort right now, because there's very little that we can rely on, you know, firmly, or or at least we have to be Extremely focused about what are the things that we can control. as opposed to the things that are, you know, that we're gonna have to respond to or moving uh you know, moving around around us.

4:40 I was surprised that you didn't answer the the Story of the summer is still AI. Are you feeling like AI is Not the main headline of the year right now? I guess I feel like AI is like it's it's less of a story and more of a deluge. This is a seismic shift that just keeps surprising us, right? We we had Uber COO Andrew McDonald on the show back in the spring, and he talked at one point about, you know, token costs for AI, which seemed kind of wonky in some ways, but

5:13 You know, suddenly it was everywhere, right? Everyone is talking about the cost of AI, which wasn't talked about just before that. We had Arvind Krishna, the CEO of IBM, I talked to, and he he talked about how people look at their AI like the wrong way. It's like if you took an eighteen wheeler to take your kid to school, you'd be like, Yeah, you could get to school that way, but it's not the right tool necessarily the right vehicle, you know, ideally for that task. And so that conversation is part of what's happening right now. What's the right kind of AI, what's the right price for you to pay, you know, and of course all gets all that gets more complicated by advances of open source or as they call them open weight models out of China that are so much cheaper. So all of that is, you know, just a piece of all the things that are going on in the world of AI.

6:10 Yeah. the fatigue around the cost right now. Do you think that is um A definitive shift, or is it just like a course correction? Oh, I I think it's a real shift. There was a point where

6:23 Everyone was like, I need AI. I need AI. And and I think what what Andrew McDonald was pinpointing is is businesses realizing like, hey, wait, this is costing me a lot of money. You know, am I getting There enough value for what I'm spending. Right. I think a lot of businesses are starting to say, What is the right expense, what return am I getting on it? Should I be paying for an eighteen wheeler? Should I just be taking a bike? You know, when should I walk on my own? Like those costs are real and I think that That the a sophisticated

6:58 uh assessment of that will be more and more important for how businesses deal with AI going forward. We are seeing so many of the major AI players being able to use competition with China as kind of an excuse to reach further and further. I'm curious. whether they could have done some of the moves that they're doing if they didn't have China's the big bad wolf to point to. What do you make right now in terms of the US government pushing for this framework to be able to review models before they're released. Certainly China sometimes is an excuse. I think there's also a clear reality that like

7:39 China's Technological prowess is much Better than a lot of you know, Silicon Valley and and US based technologists and and not just technologists, but sort of observers expected or were prepared for. You know, so there there is there is absolute reality in that competition. The Efforts by government and others to figure out how to

8:05 assess or oversee the development of AI like That is The wild west. The safety of AI, no one knows how these systems Really work.

8:18 Right. So they are You know, in tests jumping out of their test sandboxes and hacking into things that we didn't expect them to hack into. So there is Nid for some oversight. Um But

8:34 development of the technology is happening so much faster than oversight discussions, let alone processes. And For those of us who are observers of all of it, you know Yes, everyone has an ax to grind. Right, like the US versus China, open I versus anthropic, you know, the federal government versus states or other regulatory or non-government or oversight. Like there's nothing easy in all this. It is all uncharted territory. That's why I say like this is a deluge. It's not just one story, it's multiple stories that all, you know, overlay around it. And uh I I mean

9:15 It's fascinating to cover as a journalist for business leaders and for us culturally, you know, and s as a society. It it's it's Tortuous. It's torturous.

9:28 We've seen these security risks from both open AI and anthropic. And You know, Anthropic has been able to have the reputation of being more of the responsible developer. I'm curious whether that actually Is

9:45 holding water or whether they're just telling a better story about their company more. Is there that much of a difference between the two right now? Well that's That is a great question. I I mean I think

10:00 There are clear sort of value and principle differences between some of these different organizations. And I don't think anthropic is simply playing a marketing and positioning game, although it has accrued to its favor, but now it's getting some backlash. And by the way, you did you didn't mention in this like Google, which is not to be discounted and is also a tremendous player that's continuing to advance dramatically in in these areas. I don't

10:34 Think you can necessarily trust that all of these businesses will always act in the way that is best. For everyone. They all have their own interests that inform and impact their worldview.

10:49 But is there like a qualitative difference between I'm gonna use Anthropic or I'm gonna use OpenAI or I'm gonna use Google. I I think that's very hard for us to To know for sure at this point. They're all doing work with the federal government.

11:07 They all have to be mindful that the federal government might regulate them. And so it's not that they're necessarily working together. They want to differentiate themselves from each other, but You know, I think for all the rest of us, we want to treat them as if they're a united entity. So we we know You know, where we're all going from here.

11:29 You brought up Google. There was news this week that Uh four members of uh top AI talent, including Jeff Dean, are uh leaving the company to form Discovery Loop, a startup that is a uh nonprofit research lab, where if we heard that before. Um we'll see whether it stays that way. Uh they will have no problem getting funding for sure. Um What does it say about the state of Google right now? And because of who this talent is, does it immediately make the startup want to watch? Obviously whenever we

12:06 You know, you lose talent. It's rarely a good thing. I'm not particularly worried about Google. They have a lot of talent. They have a deep bench. There are a lot of new players on the scene, and the new players need to be proven. That doesn't mean people aren't gonna You know, give them a fair amount of money to to get started if they need to, but we don't know who's gonna have staying power. I mean, we are still so early, you know, at this stage of of social media, the big players were like MySpace and Friendster. And Facebook was just small and like TikTok hadn't even been thought of. And so We're gonna see sort of similarly volatile and unpredictable developments with AI players. There is an advantage in compute, in having a lot of compute that may give you some advantage, but someone may come up with something new who hasn't even been created yet. That's gonna be the leading company.

13:00 We recently saw the record IPO from SpaceX. Since then, they have stumbl quite a lot in the market. Um Do you feel like SpaceX right now is Overvalued? Do you think it's a long term bet? The initial evaluation of the takeoff on SpaceX stocks was

13:20 Extraordinary and I don't think anyone really can be surprised that it has settled down. I think lots of tech companies are what we might call highly values. I don't necessarily want to say overvalued because it kinda depends on your time frame. You know? I think SpaceX is among the tech companies who are spending a lot of money on compute.

13:42 They're investing a great deal of of the capital that they have. Um, that is great. For progress. quote progress or terrifying as we discussed about, you know, not being sure where this technologies are gonna go. But there's also no clear line to return on that investment. I this is the fear uh that is the other side of all the optimism about AI because right now

14:07 AI is driving the economy. I wanna ask you about something a little bit more fun, Spider Man. I believe it beat the Avengers Endgame uh record for the opening weekend in North America. Is Spider Man A case study in that Hollywood isn't dead. Well, first of all, Spider Man's a New Yorker, so you know I I have to be in in favor of Spider Man and uh a very a very human uh superhero.

14:34 Right. Which I think is appropriate for these AI times. People were talking about You know, the Marvel universe sort of had run out of steam. And this seemed like Yeah, how did that happen? How did it happen? Like it's it's a good movie. You know, it's like a well executed movie with emotional overtones. It doesn't just rely on, you know, action. And CGI and AI and all those other things, right? And and that's what connects with people. And so that's why.

15:04 Like Hollywood As an industry maybe under different kinds of pressures And it may not be as big a business going forward, the box office, but

15:16 When you have a story that's well told that you know, makes it worth people spending their time in that theater, right? Then people will flock to it. We do love that experience together. I mean the the other movie that's been doing well this summer is the Odyssey. And I keep thinking like, who is in that pitch meeting where someone said, hey, there's this, you know, old mythic story from thousands of years ago. Why would that work? It works because you know Christopher Nolan figured out how to make it work. And again, it's the storytelling, it's the emotion, it's the romance, it's the action, it's all of those things coming together that you know, that's what ultimately drives Hollywood success. You can have a Spider Man fifteen and it'll work if it's a good story, but it won't work just because it's a f Spider Man fifteen.

16:04 Right. With it than that. Yeah. A not so good story that the Grammys didn't really want to tell is The boycott.

16:14 from BTS, the boy band. This is because of the Grammys launching a best Asian pop music performance category. We've seen how much the K pop community is ride or die. I'm curious whether you feel like this is gonna be a real hit for the Grammys in the ratings, in their reputation. Where do you see this going? So um

16:41 We had on the show the CEO of the Grammys, uh, Harvey Mason Jr., and he is the the villain in this story, right? And when he was he was on our show, he talked about how like the goal, his goal with the Grammys was to expand the audience and I I think as as far as I can tell, the idea behind creating an an Asian pop category was to expand, was to give more Attention to, you know, uh a genre of music that maybe wasn't getting

17:12 More or certain artists, I should say, because I don't want to describe Asian pop music as it's as a genre in that way, because that's part of what BTS was reacting to. But there there are artists that were not getting as much attention as uh from the Grammys is they're getting from listeners and from the public. Clearly the way this was Executed? uh didn't go well, right? It just it just it just didn't work out. And whether that's because You know, Harvey or others at the at the Grammys didn't have appropriate conversations with

17:46 BTS and others in that community. Um This is something that could have been avoided, I think, if Maybe the naming of it had been different. Maybe it had been a little clearer about what they were trying to do. I've seen Uh the Grammy's quoted as saying like

18:03 you know, w we respect BTS and you know, but it doesn't sound like they're rethinking this at all, which in some ways I think is a mistake. Maybe they should be having a conversation with BTS and trying to see like Is there some way they could resolve and sort of connect these things to make everybody a little bit more happy? Um But for all I know, maybe they've had those conversations and it wasn't as it wasn't possible. There was backlash when they created the Latin Grammys of The idea of whether it is um

18:32 Siloing versus celebrating. Yes. And You know, are you doing a better job to honor uh community or a genre by letting it have its own night or its own category. versus integrating and weaving it into

18:50 The core product. I remember having a our our versions of these conversations when I was at Fast Company and we were um talking about doing special coverage for women executives. You know, I had been at Fortune and Fortune does the most powerful women's series. It's like, well, should we be doing our version of most powerful women? And we decided instead Two

19:13 make it more of a priority to integrate women into some of the other coverage we were doing, right? To not set up a separate category. Um But You know, so that's the and the Harvey sh you know, the Grammys should have the lesson of, you know, their their experience with Latin music to try to address this. I also think maybe, you know, they just didn't communicate clearly enough that like the broad categories, you know, will still include artists that would be honored in this other category. Like it's additive, it's not it's not taking away that was the hope by the Grammys, but

19:53 You know, again, they the the communication wasn't executed the right way and they're they're paying for it. When you build substantial wealth through your business, it's often tied up in a single equity position. The upside is real, but so is the risk, and knowing when to act isn't always obvious. Creative planning works with business owners to build a strategy around concentrated equity.

20:22 When to diversify, how to manage tax risk, and how to protect what you've spent years building. Creative planning where wealth works together. Learn more at creativeplaning dot com slash masters of scale. Hey listeners, Bob here. If you listen to Rapid Response on Masters of Scale, you may be missing half the show. Because every Friday we release a second rapid response exclusively in the rapid response feed. The guests and topics are just as compelling and timely from Ford's CEO to NASA's administrator to the lessons from The Devil Wears Prada.

21:01 It takes about 10 seconds to find, just search rapid response wherever you listen to podcasts and hit follow to make sure you never miss an episode. I hope to see you there. Humans will never be more intelligent than AI. There's gonna be two types of companies. Those were great at AI and those that went out of business because they weren't. How do we build a future?

21:25 That is human centered. I'm Rana El Calyubi. And on my podcast, Pioneers of AI, we answer that question and so many more. As an AI scientist, entrepreneur, and investor, I know what it takes to build AI that works for everyone. Every week I sit down with the pioneers shaping our future.

21:45 and we take you behind the scenes of the AI that's transforming our lives. Find pioneers of AI wherever you tune in. Whenever we have any of these conversations, we're most excited to get onto sports business. We've just seen recently Um a lot of backlash to Gianni Infantino, who runs FIFA. Um the grow of FIFA. He tried to make a move to privatise part of FIFA, which in theory is supposed to be a not for profit organization. There's still as we record this right now a lot of pressure for him to resign. He's saying that he will not. Is this an age old issue for FIFA, whether it was Gianni Infantino, whether it was Set Plata before him.

22:32 Were they just getting too Greedy Was he feeling like there was enough goodwill so soon after the World Cup for him to do this? Uh first of all, I I love your uh your positioning him as the the crew of FIFA. For those of you who are not familiar with Despicable Me, check it out. Check it out. We always just want to promote Despicable Me, yeah. That's right. This year's World Cup there was a lot of

22:56 momentum that FIFA could build on. I think part of the reaction is because of some of the historical corruption, frankly, that has been part of FIFA. And a concern that like oh the culture of FIFA hasn't learned that lesson.

23:16 You know, there's a higher standard that That The World Cup represents and that FIFA could, I don't want to say should, but could represent to the world about sport bringing people together. And I think that's what Sort of rankled people like

23:34 Isn't there any place in this world where things aren't going to be corrupted just by how do we uh you know maximize the amount of money we make out of this? I hope that that spirit persists not just in FIFA, but for all of us as business people to to recognize that like Maximizing every dollar today. isn't next necessarily bringing us to a better place overall.

23:59 Uh especially when a lot of the people who are getting the money from that those extra dollars Don't really need them. Listen, I I love sports. You know I love sports, and part of the reason I love it is because it It connects us so well. And and so if you're gonna do something that's gonna disconnect people in sports, then maybe let it go.

24:19 One thing that is uh splitting sports fans right now is the treatment of Cal She, the prediction market, which has been uh sued by New York State for running an illegal gambling operation. The Prediction markets. to this point, able to

24:37 Run the same as most gambling companies without facing a lot of the same regulations. Do you feel like this is just About time, do you feel like the state has a good case here? Listen, there's no question that

24:52 You know Calci, poly market. People are using them for sports betting. That's undeniable. But because they have successfully gotten themselves to be already regulated as a futures market by the CFTC, that allows them to sidestep uh some of these other regulations is a very smart move. I think In the long run. These new

25:19 Models like Cal she They are gonna be real players. They are Uh attracting real audiences. And they're being used for some Fascinating stuff. I mean I uh uh uh thinking of your looking at your Knicks hat and thinking of the Knicks playoffs, I don't know whether you remember this story, but during the the Knicks finals run there was a a bar in New York City that decided to uh offer You know, a free bar tab of up to a hundred dollars for all of its patrons if the Knicks won the game.

25:48 Okay. And at the same time they place the countervailing bet on Kel she for, you know, that if the Knicks won. So they knew that like, well, I might be losing money here, but I'll make it back over here. It was like a this really creative hedge that they were using Cal she for that is in theory what uh uh you know an exchange like calchy could be used for, but I I don't think that that's what most Calci users are are using it for these days.

26:18 I wanna ask you about uh Saudi Arabia's public investment fund, which just acquired EA for fifty-five billion dollars. Um You know If I were Andrew Wilson CEO Um, I don't know how I would feel about this in the you have a big influx of money coming in. Obviously, this is what happened at Newcastle United in the Premier League. It's what happened to Live Golf. You know, with those, there are these big dreams of for Newcastle, all of this money could have them be a rival to a club like Man City.

26:51 For Live Goldfits, you could be a rival to the PGA Tour. Um But what we've seen over the past year is that Piff has frankly been fickle and they could lose interest when it's not showing returns quickly. And so for Newcastle, they've had an awful transfer season right now in the summer. Um for Live Golf, obviously Piff withdrew their investment. And so What would you be thinking if you were inside EA right now? How would you be preparing for working with the Saudis?

27:27 I think You know Yeah, electronic arts. I'm sure thinking that we are quite different than, you know, the Saudi investment in sports properties. You know, we're a much bigger business with renewable revenue in a different kind of way, and we're much more established. EA could have gone to the capital markets and raised capital in other ways. I I think

27:51 Again, this is my guess that they believe that they can Um remake and modernize EA to have it be a more valuable company. when they're private in a way that would be more difficult when they were public, that the value of the company would fluctuate much more dramatically, and maybe that they would become potentially subject to takeover efforts by

28:17 financial partners that they would feel were less supportive than the Saudi uh Public investment fund. In the case of Live golf. I just think You know, other players when When the Saudis come

28:33 with their money. I think those lessons are are there for people to say Let me make sure I'm asking the right questions. Let me make sure I'm pushing back the right way. And you know, let let me not get Too dependent. Perhaps on this

28:47 unending fire hose of money that may actually end. I wanna ask you about Taco Bell. They've been struggling with the cyclospora outbreak the last few weeks, and I've been surprised that this story has kept on going. People are still talking about it, there are still cases being reported. It's become a real brand tip for Taco Bell and its parent company, Yum Brands. If you were going into Taco Bell to advise them on recovering from this brand tip, what would you say? Yeah. The first thing they've gotta do is they gotta make sure that their supply chain is actually clean, right? Like w once you've

29:24 Uh a problem and a and a really a scandal of this magnitude, at least magnitude in terms of public attention. Um You can't afford any Other scares.

29:37 Right. And so any time anyone has any difficulties with Taco Bell food, if that gets publicized, it's just gonna it's just gonna reinforce this. I mean, this is something that uh Chipoli went through, you know, they had their own issues. with I guess a coli at some point, um that you know, that dog them for a while and it took them a while to get themselves back on track. I mean When I was younger, you know, we used to call it Taco Hell. Like everybody knew that the food there was, you know, you get sick. Yeah, of course, everyone would get sick of Taco Bell. I know. Taco Bell, don't get mad at me. That was just the talk that young college kids had about it. But they they really got the brand to be sort of trusted and relied on. And you know, they're just gonna have to do all that hard work over again and it's not gonna happen.

30:22 Quickly. You know, it's just not. I I you had asked me earlier, was this good for like Del Taco or you know, some of some of the other Uh the other fast brew brands. And And I think it's not. You know, I think it just makes people

30:36 question what am I getting when I go into a a a fast food restaurant. I I don't know that it's the only reason that Um, that Chipotle's stock has gone down, or the only reason that McDonald's is seeing a slowdown in traffic to their stores. But it probably contributes. It's certainly not a good thing. whole category has to be that much more careful about like What is the quality of our food?

31:00 You know, what is the quality of our service in responding to people who complain about how they feel after they've had our food. Those Bars go up. That's good for us as consumers if they if they actually live up to that. Um, that maybe we don't have to rely on uh regulation, which seems to be pulling back in some of these areas, but maybe, you know, market scrutiny will will keep folks in line. We're still in August, but as the summer begins to slowly wind down, I want to ask, what are you looking forward to?

31:32 Where is the puck headed what should we be paying attention to? I mean of course I'm looking forward to uh On October twentieth to twenty second the uh Masters of Scale summit taking place in San Francisco. For those listening or watching who have not uh looked into attending the Masters of Scale summit, you can Go to the website summit.masterfscale dot com. It's gonna be a a great gathering, and I am I am uh deeply looking forward to that. Uh am I looking forward to the elections that are coming later this year? I'm not sure.

32:07 I think it's gonna be noisy and messy and uh and all the resolution that people are hoping will be clarified about America's direction will not be clarified because as a country we have not clarified where we wanna go. But I hope I hope some things get uh a little clearer in that. And listen, Alex, I'm I'm always uh looking forward to whatever the next episode you and I are gonna do together. We've got a lot of uh we've had a lot of chance to talk to a lot of great folks and uh and I'm I'm curious to see who we get next. And

32:41 Share their ideas and sometimes their wisdom, sometimes their troubles, uh, but always interesting perspectives. Absolutely. Thank you so much, Bob, and to everybody listening and watching, we'll see you Friday. Thanks everyone for uh for listening to us all the way along. We appreciate it. Be well. Rapid response is a wait what original. I'm Bob Safian, our executive producer is Eve Tro.

33:18 Our senior producer is Alex Morris. And our associate producer is Masha Makutonina. Mixing and Mastering by Aaron Bastonelli and Brian Pugh. Our theme music is by Ryan Holiday. Our head of podcasts is Lital Malad.

33:35 For more, visit rapidresponse show.com.

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