# Born Again. Is Tech Back?

> That Was The Week #3, 2023

**Published by:** [That Was The Week](https://paragraph.com/@thatwastheweek/)
**Published on:** 2023-02-03
**URL:** https://paragraph.com/@thatwastheweek/born-again-is-tech-back

## Content

A reminder for new readers. That Was The Week collects the best writing on key issues in tech, startups, and venture capital. I select the articles because they are interesting. The selections often include things I disagree with. The articles are only snippets. Click on the headline to go to the full original. My editorial and the weekly video are where I express my point of view.ContentsEditorialEssays of the WeekThe Big Tech Rebound is Underway -Mark Zuckerberg says Meta is making this the ‘year of efficiency’A New Bubble Is Forming for AI Startups, But Don’t Expect a Crypto-like PopThe Why of Tech Layoffs -What are we going to do about Generative AI content farms?ChatGPT reaches 100 million users two months after launch @Dan MilmoNews of the WeekIntroducing Substack Pledges -and in Conversation (Video)OpenAI Announces Paid Subscription for ChatGPTFacebook now has 2 billion users - Karissa Bell @karissabeMeta lost $13.7 billion on Reality Labs in 2022 as Zuckerberg’s metaverse bet gets pricier - Jonathan Vanian @JONATHANVANIANMusk’s Twitter Scores Super Bowl Deals, a Boon for Struggling Ad Business - Erin WooStartup of the WeekFTC Loses Antitrust Challenge to Facebook Parent Meta - Dave Michaels and Jan WolfeTweet of the WeekTwitter Itself…EditorialWhat a difference a week makes. From last weeks “Unicorns are Dying” headline we are forced to ask “Is Tech Back” this week. That Was The Week is a reader-supported publication. To receive new posts and support my work, consider becoming a free or paid subscriber. I almost didn’t notice but Facebook (Meta) stock has had a big rebound since its 52 week low in November 2022. Up over 100% since then.Before we get ahead of ourselves it is still down from its high of almost $380 a share, and this week’s uptick was preceeded by Mark Zuckerburg announcing a $40 billion share buy back and a new emphasis on “efficiency”, or cost savings. But on the other side, it reached 2 billion weekly users. Wow…. In a week where the Fed slowed its interest rate rises and most tech stocks are in a third straight week of gains it is right that declares that the "The Big Tech Rebound is Underway"Big Technology The Big Tech Rebound Is Underway Read more 2 years ago · 18 likes · Alex Kantrowitz In the same week ChatGPT reached 100 million users and also announced a $20 a month pro subscription. Microsoft announced it will be embedded in a pro version of Teams for $10 a month. Substack continues its product led growth and interviews in a wide ranging interview. The new feature is a "Pledges" service where va reader can show you they believe your work is valuable. This feature allows your subscribers to pledge to become a paid subscriber if and when you turn on paid subscriptions. Clearly That Was The Week already supports paid subscriptions, so pledges does not work here, you can just pay. More in this week’s video…. Essays of the WeekThe Big Tech Rebound Is UnderwayA moderating Fed, better cost management, and low expectations presage a carom off the bottom.Alex Kantrowitz Big Tech’s disaster scenario just played out, and now the bounce back is beginning. Inflation is moderating, the Federal Reserve is relaxing, cost discipline is back, and expectations are so low they’re getting easy to beat. Suddenly, the tech giants have momentum again. Already this year, Meta stock is up 51%, Amazon is up 31%, Alphabet is up 20%, Apple is up 20%, and Microsoft is up 10%. All are healthily beating the S&P 500, even with some muted earnings reports this week. As tech analyst Dan Ives put it in a DM Thursday, “Huge rebound underway.” Big Tech’s share prices are still well below their all-time highs — and the rebound will be slow — but they’re poised for a comeback now that certainty is returning to the economy. As inflation soared and the Fed raised interest rates rapidly, investors stayed away from the tech giants. Each rate hike made their undisciplined pandemic-driven spending look worse. And Wall Street couldn’t properly value them without knowing when the pain would end. Now that Fed chair Jerome Powell has started tailing off his rate hikes, using “deflationary” as a buzzword this week, investors are returning. Powell’s Fed raised the federal funds rate by .25% on Wednesday, ending a series of larger raises between .5% and .75%. This explains at least some of Meta’s 23% share price jump on Thursday. And Ives expects even more money will flow in soon. “So many institutional investors are underweight tech,” he said. “Now with earnings season showing more stability, cost cuts in motion, and ripped band-aid off on guidance, they need to reposition ASAP.”Mark Zuckerberg says Meta is making this the ‘year of efficiency’Laura Normand / The Verge - Meta CEO Mark Zuckerberg.He may still be burning billions of dollars on the metaverse, but investors are liking Zuckerberg’s focus on cutting costs and bureaucracy.By ALEX HEATH / @alexeheath During Meta’s fourth-quarter earnings call with investors today, CEO Mark Zuckerberg explained why he wants to make this the “year of efficiency.” “I just think we’ve entered somewhat of a phase change for the company,” he said, noting that headcount steadily climbed for nearly two decades, making it “very hard to really crank on efficiency while you’re growing that quickly.” Now, after laying off roughly 11,000 employees and putting a pause on most hiring, he is focused on “increasing the efficiency of how we make decisions.” Practically, Zuckerberg said this means “flattening our org structure and removing some layers of middle management to make decisions faster.” As I reported in last week’s edition of my newsletter Command Line, he put it more plainly to employees during a recent all-hands meeting: “I don’t think you want a management structure that’s just managers managing managers, managing managers, managing managers, managing the people who are doing the work.” Indeed.A New Bubble Is Forming for AI Startups, But Don’t Expect a Crypto-like PopBy Kate ClarkFeb. 2, 2023 1:44 PM PST Venture capitalists have dumped crypto and moved on to a new fascination: artificial intelligence. As a sign of this frenzy, they're paying steep prices for startups that are little more than ideas. Thrive Capital recently wrote an $8 million check for an AI startup co-founded by a pair of entrepreneurs who had just left another AI business, Adept AI, in November. In fact, the startup’s so young the duo haven’t even decided on a name for it. Investors are also circling Perplexity AI, a six-month-old company developing a search engine that lets people ask questions through a chatbot. It’s raising $15 million in seed funding, according to two people with direct knowledge of the matter. These are big checks for such unproven companies. And there are others in the works just like it, investors tell me, a contrast to the funding downturn that’s crippled most startups. There’s no question a new bubble is forming, but not all bubbles are created alike. Fueling the buzz is ChatGPT, the chatbot software from OpenAI, which recently raised billions of dollars from Microsoft. Thrive is helping drive that excitement, taking part in a secondary share sale for OpenAI that could value the San Francisco startup at $29 billion, The Wall Street Journal was first to report. The Why of Tech LayoffsPhoto by Ussama Azam on UnsplashIt shouldn’t surprise anyone that “tech layoffs” have been on my mind, and I wrote a column for The Spectator to explain “the why of these layoffs.” An unprecedented boom in Silicon Valley that started with the once-in-a-generation convergence of three mega trends: mobile, social, and cloud computing, has peaked. It started in 2010, and it has been bananas around here for the past decade or so. The FAANG+Microsoft companies saw their revenues go from $196 billion to over $1.5 Trillion. Let that sink in. Booming stocks helped create an environment of excess like never before. The companies got into the business of what Paul Kedrosky calls “people hoarding.” The pandemic and the resulting growth revved up the hiring machine even more. The over-hiring of talent has led to wage inflation, which had a ripple effect across the entire technology ecosystem. Technology insiders are happy to tell non-tech companies to use data and automation as tools to plan their future. It is easier to preach than practice. What are we going to do about Generative AI content farms?Dave KarpfI’ve gotten a bad feeling lately. Like my spider-historical-analog-sense is tingling, y’know? It’s probably nothing. But I’ve been thinking about the digital journalism crisis circa 2009-2010. The Internet was awash in low-quality content, produced for pennies by an army of freelancers employed by content farms. The freelancers accepted the jobs because they were the only jobs to be had. The content farms were scooping basically all the money out of the online advertising ecosystem. It looked really bleak. Hopeless, basically. In 2010, Google stepped in and rendered the whole situation inert. If your business lives by the algorithm, it also dies by the algorithm. Bad news for the content farmers; good news for the rest of us. Relying on platform monopolists to protect the public interest isn’t a great way to run a civilization, but it’s better than nothing. Looking at some of the emerging use-cases for ChatGPT, it seems likely to me that we’re about to take a trip back to 2009. All the factors that made the content farms seem like a late-capitalism-financial-inevitability are back in play. But this time, the platform monopolists might not perform the deus ex machina role. …In other words, I think we’re headed for a big mess.ChatGPT reaches 100 million users two months after launchUnprecedented take-up may make AI chatbot the fastest-growing consumer internet app ever, analysts sayChatGPT is owned by Microsoft-backed company OpenAI. Photograph: Pavlo Gonchar/Sopa Images/Rex/ShutterstockDan Milmo ChatGPT, the popular artificial intelligence chatbot, has reached 100 million users just two months after launching, according to analysts. It had about 590m visits in January from 100 million unique visitors, according to analysis by data firm Similarweb. Analysts at investment bank UBS said the rate of growth was unprecedented for a consumer app. “In 20 years following the internet space, we cannot recall a faster ramp in a consumer internet app,” UBS analysts wrote in the note, reported by Reuters. By comparison it took TikTok about nine months after its global launch to reach 100 million users and Instagram more than two years, according to data from Sensor Tower, an app analysis firm. News of the WeekIntroducing Substack PledgesA simple way for readers to express their support for writersHamish McKenzie Today we are excited to announce Pledges, an easy new way for readers to support your work. Pledges help writers build confidence that readers love and value their writing, and that they could succeed with a subscription model. We started rolling out Pledges in December, and the feature is available to all writers today. When I was a full-time writer, I obsessively looked for signals that my work mattered to people. I constantly refreshed the stats dashboard to see how many views my posts were getting and how those numbers compared with my peers’. I’d then go to Twitter and search for the post URL to see if anyone was discussing my piece there. It was needy and uncool, I know, but most writers do this. We’re driven by doubt and insecurity. We want to know if we are producing something that someone—anyone—finds valuable. When positive feedback comes, it peps us up a bit, a small high that lasts almost until the next post. Those highs are expensive on today’s internet, and the lows are cheap. Often, the work we pour our souls into goes unnoticed or unremarked-upon. Sometimes the only feedback you get is negative—a drive-by comment from a stranger who casually, unknowingly ruins your day. The worst is when the negativity is performed on social media, especially in the hands of a possessed mob. We curl into balls, protecting our vital organs from potential attacks. Many of us forget to unfold again. But what if there were a social system on the internet that rewarded great work? With Substack, we are trying to build a system that incentivizes exceptional thinking and writing. Our new feature, Pledges, advances that vision. Pledges give readers the power to proactively express their love and support for writers. When subscribing to a free Substack, readers can now pledge and commit to paying for a future subscription to that publication. The writer then knows that they can rely on those recurring payments if they enable paid subscriptions. Writers can do all of this without changing what they publish. They just need to flip a switch. Brent Leary and Hamish McKenzie of SubstackOpenAI Announces Paid Subscription for ChatGPTPublished Feb. 1, 2023 By Andrew Hutchinson Content and Social Media Manager ChatGPT, the AI content tool that’s taken the world by storm in recent months, is switching to a freemium model, with a new paid tier, priced at $20 per month, which will give users better access to the tool. As explained by ChatGPT maker OpenAI: “The new subscription plan, ChatGPT Plus, will be available for $20/month, and subscribers will receive a number of benefits:General access to ChatGPT, even during peak timesFaster response timesPriority access to new features and improvements”A version of the ChatGPT interface will remain free to use, but you may be subject to delays at peak usage times and/or outages depending on circumstance.Facebook now has 2 billion usersThe social network is still growing even as Meta has made significant cuts.LIONEL BONAVENTURE via Getty Images Karissa Bell @karissabe Almost 20 years in, Facebook is still growing. The social network now has 2 billion daily active users, Meta reported alongside its fourth-quarter earnings. The report marks the first time Facebook, which added 16 million users last quarter, has reached 2 billion daily users. While Facebook isn’t the first Meta-owned platform to reach 2 billion daily users — WhatsApp recently crossed 2 billion DAUs — it does show that the company’s biggest source of ad revenue is still growing, even while Meta has made significant cuts to its business in recent months. CEO Mark Zuckerberg alluded to the company’s recent restructuring, which resulted in the elimination of more than 11,000 jobs, saying in a statement that “our management theme for 2023 is the 'Year of Efficiency.'”Meta But while Meta’s revenue has shrunk over the last year, the company’s $32.2 billion in revenue for the last quarter of 2022 was still slightly better than expected even as it was down 4 percent from last year. During a call with analysts, Zuckerberg suggested that Meta will continue to make cuts as it prioritizes efficiency. “We're going to be more proactive about cutting projects that aren't performing or may no longer be as crucial,” he said. The CEO also said that generative AI would be a priority for Meta in the year ahead. “Generative AI is an extremely exciting new area with so many different applications,” Zuckerberg said. “And one of my goals for Meta is to build on our research to become a leader in generative AI.” Meta also continues to lose vast amounts of money on its metaverse investments. Reality Labs, the division overseeing its VR, AR and metaverse projects, lost $4.3 billion in the fourth quarter of 2022, and nearly $14 billion for the whole year, Meta reported. and the company, once again, confirmed that it expects to lose even more money on Reality Labs in the year ahead. "We still expect our full year Reality Labs losses to increase in 2023," Meta CFO Susan Li said. "And we're going to continue to invest meaningfully in this area given the significant long term opportunities that we see." Meta lost $13.7 billion on Reality Labs in 2022 as Zuckerberg’s metaverse bet gets pricierJonathan Vanian @JONATHANVANIAN KEY POINTSMeta’s Reality Labs unit recorded a $4.28 billion operating loss in the fourth quarter, bringing its total for 2022 to $13.72 billion.The business houses Meta’s ambitious metaverse technologies, which CEO Mark Zuckerberg has said will be the company’s future.Facebook changed its name to Meta in late 2021, but the company still relies on advertising for substantially all of its revenue.Michael Nagle | Bloomberg | Getty ImagesMark Zuckerberg, chief executive officer of Meta Platforms Inc., demonstrates the Meta Quest Pro during the virtual Meta Connect event in New York, US, on Tuesday, Oct. 11, 2022. Mark Zuckerberg’s dream of a future in the metaverse is costing investors a boatload of money. In its earnings report after the bell on Wednesday, Meta said its Reality Labs division, home to the company’s virtual reality technologies and projects, posted a $4.28 billion operating loss in the fourth quarter, bringing its total for 2022 to $13.72 billion. It was a tough first full year for the new Meta, the company formerly known as Facebook. In late 2021, Zuckerberg changed the company’s name and said its future would be in the metaverse, a digital universe where people will work, shop, play and learn. But for now, it’s just a cost center, and Meta is still an online ad company. Reality Labs generated $727 million in the fourth quarter, and $2.16 billion in revenue for all of 2022 — a decline from $2.27 billion in 2021 — including sales of Quest headsets. In other words, the division lost more than six times the amount of money it generated in revenue last year, while accounting for less than 2% of total sales at MetaMusk’s Twitter Scores Super Bowl Deals, a Boon for Struggling Ad BusinessBy Erin WooPhoto Illustration by Shane Burke. Photos by Getty and ShutterstockAfter weeks of turmoil and layoffs, Twitter’s sales team in recent weeks has reorganized to focus more on big advertisers and launch new ad products, such as its recently released digital confetti. Now Twitter faces its biggest sales test since Elon Musk took over the company: Super Bowl Sunday, historically Twitter’s highest-grossing advertising day of the year. With the Super Bowl less than two weeks away, two major advertisers, PepsiCo and Anheuser-Busch InBev, have pledged to making big outlays: PepsiCo has committed to spending more than $3 million on Twitter takeover ads—Twitter’s flagship ad product—on the day of the Super Bowl, according to a person with direct knowledge and an internal document viewed by The Information. And Anheuser-Busch InBev has committed to spending $2.4 million on takeover ads, including at least four in the weeks leading up to the big game, according to internal messages viewed by The Information..Startup of the WeekFTC Loses Antitrust Challenge to Facebook Parent MetaJudge denies agency’s request for injunction blocking Meta’s proposed acquisition of virtual-reality startupMeta Platforms has made a big bet on immersive virtual worlds, or metaverses.PHOTO: PETER DASILVA/REUTERS By Dave Michaels and Jan Wolfe WASHINGTON—A federal judge declined to halt Meta Platforms Inc.’s META 23.28% increase; green up pointing triangle acquisition of the virtual-reality startup Within Unlimited, delivering a setback to antitrust enforcers at the Federal Trade Commission seeking to block the deal, a person familiar with the ruling said. In a sealed court decision issued overnight, U.S. District Judge Edward Davila in San Jose, Calif., denied the FTC’s request for an injunction blocking the proposed merger, the person said. The judge’s opinion, which isn’t yet public, is a boost to Meta’s virtual-reality ambitions and appears to vindicate for now the Facebook parent’s claims that the FTC overreached by bringing a flawed antitrust case. The FTC could continue to try to block the deal through a separate lawsuit filed in its in-house administrative court, where a trial is scheduled to begin on Feb. 13. But antitrust enforcers have in the past often abandoned such administrative litigation once a federal judge denies the request for an injunction. The lawsuit has been closely watched because it is based on an unusual theory of competitive harm focusing on potential future competition in a nascent industry. The case is also widely seen as emblematic of FTC Chair Lina Khan’s opposition to the expansion of big technology companies.Tweet of the WeekTwitter Dev @TwitterDev Starting February 9, we will no longer support free access to the Twitter API, both v2 and v1.1. A paid basic tier will be available instead 🧵 6:05 AM ∙ Feb 2, 202316,901Likes16,672Retweets That Was The Week is a reader-supported publication. To receive new posts and support my work, consider becoming a free or paid subscriber.

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