The AI IPO Race Is On
SpaceX acquiring xAI may not seem related to Anthropic unveiling a controversial Super Bowl ad. However, the two developments this week speak to a financial race that is unfolding with the finish line being successful IPOs.
Anthropic unveiled a series of Claude commercials designed to throw shade against OpenAI and its recent decision to brings ads to ChatGPT. The four commercials, part of the company’s “A Time and a Place” campaign, mark Anthropic’s Super Bowl debut. I found the commercials to be humorous but depressing as they humanize just how cold and sterile chatbots are to use. My now years-old call that we need something better than chatbots is very much alive and well.
At least on social media, there were a few debates surrounding the Claude ads. Some people were uncomfortable that Anthropic took out ads to essentially advocate against ads – a line of attack that strikes me as superficial. Others didn’t like how Anthropic focused on punching a competitor rather than talking up its own product. In some ways, such debates missed the point as Anthropic already
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Tesla Needs Bridges, but Elon Musk Refuses to Build Them
Earlier this week, Tesla released quarterly earnings. Instead of any specific number grabbing headlines, there was one line from Elon Musk on the Tesla earnings call that made waves. Tesla will be discontinuing both the Model S and Model X. The Model S put Tesla on the map prior to the Model 3, offering the longest range out of any Tesla vehicle. The Model X has been Tesla’s genuine SUV offering. The move is the latest in a string of strategy decisions that is causing the Tesla community to scratch their collective head. We have another example of Musk taking unnecessarily risky steps to chase a future that he’s painting as big, bold, and essential.
Tesla finds itself in a multi-year downtrend. Beginning in late 2022 with higher interest rates coming out of the pandemic, Tesla began to see notable weakness in demand for its vehicles. The situation then took a turn for the worse with Musk’s decision to wage a brutal price war with the competition. My thinking continues to be that the decision led to well-liked Tesla CFO Zach Kirkhorn to quit suddenly. It’s never a good thing when a public company CFO quits suddenly. The bottom then dropped when Musk decided to go full-blown into politics in the summer of 2024. Musk’s words and actions weren’t just turning off a good portion of his current customer base. They were dramatically limiting the pool of Tesla’s next marginal customer. Declining sales growth in deliveries eventually turned to actual declines in deliveries. Tesla saw its first full-year revenue decline in 2025 with total revenue just 17% higher than the total seen in 2022. Musk is now focused on changing the Tesla story away from car sales and to autonomous fleets and humanoids.
Musk’s latest decision is to discontinue Tesla’s most premium vehicles. The stated rationale is that Tesla will convert vehicle production space that had gone to the Model S and Model X at the Fremont factory to an Optimus factory. The decision is a
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Meta Pulling Back From VR Was Inevitable
Last week, Meta announced it was laying off 10% of employees in its Reality Labs division, which is home to the company’s VR/AR/MR/HW pursuits. The layoffs were aimed at VR: Quest headsets, Horizon Worlds / metaverse experiences, and first-party VR game studios. Not surprisingly, the news did not go over well within the VR community, which framed the layoffs as a doomsday scenario for the VR industry. When it came to a VR pullback, the writing had been on the wall for some time. Although expected, the pullback still provides some interesting observations as to where Meta stands when it comes to Reality Labs.
We knew that Meta was struggling with Quest sales. The company discloses Reality Labs revenue in its quarterly financials. Between 2022 and 2025, Reality Labs annual revenue has fallen by approximately 15%. The data pointed to Quest headsets not selling well in addition to overall weakness across Meta’s VR ecosystem. For a company that has sold approximately 20 million Quest VR headsets to date (a helpful data point for determining the ceiling for the Quest installed base), it was far too early on the adoption curve to be registering flat Quest headset revenue. For context, while Apple Watch revenue has been tending flat for the past four years, the installed base is 225 million people. With Quest, new user growth should still be strong enough to offset any headwind associated with declining sales to existing users.
In describing the Quest business, gaming and young people come to mind. Meta bought into this trend by investing in its own gaming studios to ensure more (gaming) content was available for the devices. The hope was
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Barnes & Noble Has Become an Antidote to Amazon
If someone said ten years ago that Barnes & Noble, the U.S. book seller, would experience a resurgence in the mid-2020s, few would believe the prediction. And yet, Barnes & Noble is doing just that by opening dozens of stores a year, defying consensus expectations of a there being a retail desert drained of water by Amazon.
Thanks to a multi-year expansion, the number of Barnes & Noble stores stands at approximately 700, close to the peak number seen in the late 2000s. As seen with the following new store openings trajectory, management is quite bullish about business prospects.
2023: 30 new stores
2024: 61 new stores
2025: 67 new stores
2026 (expected): 60 new stores
It’s a remarkable turn of events for a retailer that closed 20% of its stores last decade. The growth isn’t a result of Barnes & Noble reverting to its former strategy. Instead, we are seeing a retailer that has undergone significant change.
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Why AI Slop Worries Me
The feeling circulating on social media, where much of AI mania lives and breathes, is that AI slop is the next iteration of the short form video revolution. There is a certain level of inevitableness in the air that videos generated by text prompts are the future. Since complaints and worries regarding short form video didn’t stop TikTok, Instagram Reels, and YouTube Shorts from becoming giants, there are growing fears that nothing may stop AI slop momentum. I am genuinely concerned and worried about where things are headed.
By lowering the bar to creating videos, we are being introduced to visual stimuli designed to hijack our expectations and emotions. AI slop is causing us to become desensitized to genuine storytelling. An example of generative AI going astray demonstrates this dynamic. Prior to generative AI, a video of cars sliding down an icy street did well in terms of getting views on social media. The audience would be glued to such videos as the outcome wouldn’t exactly be known. For those of us familiar with winter driving, the videos likely caused us to think of our own close calls on ice or snow. Thanks to generative AI, one can now create their own “car sliding on ice” video. Anyone can create a video depicting an orange Lamborghini losing control on ice, hitting bystanders, and then, to add some spice at the end, sinking in a body of water. Watching the extreme scene (which never happened) unfold, we go through what has become the normal routine of initially being shocked by what we are watching but then quickly suspecting it’s AI and having our suspicions confirmed by checking the video’s comments section.
Some people may ask what harm is found with watching a fake Lamborghini slide on ice. Am I picking too much on AI slop simply because it’s new and different?
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Warner Bros. Discovery Won
While everyone is focused on whether Netflix or Paramount Skydance will acquire Warner Bros. Discovery, there’s a different way of thinking about the situation. Regardless of who wins (and we can’t rule out the appearance of a dark horse) the actual winner has already been determined: Warner Bros. Discovery (WBD). Legacy video IP is being overvalued in today’s landscape. WBD is right to sell, and I have my doubts that the acquisition is going to fundamentally change the variables that have already been set in motion in video streaming.
One reason why the WBD auction turned into what seemed to be such a free-for-all is the company pegged as having the lowest odds of winning ended up being WBD’s preferred acquirer.
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Wall Street to Silicon Valley: “Show Me the AI Money”
Earlier this year, we discussed how we were entering a new phase of AI mania in which more attention would be given to products and competition. The idea that a higher AI tide would lift all boats would become more nuanced. Wall Street, referring to a collection of different market participants, had given their OK to aggressive capex projections in exchange for this greater focus on product, and presumably, revenue and profit.
Due to ongoing questions on the product front combined with signs of some management teams possibly becoming intoxicated with AI mania, Wall Street appears far less willing to give Big Tech a financial pass.
In looking back over the past few months, we see that AI products have indeed received more attention. In addition, there has been a more serious discussion regarding competition. While there is evidence of text-based chatbots and generative media finding their way into the mass market, it’s been far short of transformational change.
Scattered AI-generated content like event fliers and fundraiser notices are appearing on social media feeds, pointing to growing casual usage of generative media models.
Many writing verticals have been infiltrated by AI assistants and text chatbots. It didn’t take long for education to fall victim to the creative writing killer.
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Neo’s Good, Bad, and Ugly Sides
At least for a few days two weeks ago, robotics start-up 1X captured hearts and minds with a humanoid robot called Neo. In a 10-minute keynote that went viral on X with 68 million views, 1X did its best to get people to envision themselves living with a 5’6” autonomous robot. Neo was shown doing everything from taking out the trash to being a companion. I didn’t mind the keynote. At a time when pretaped product unveilings and keynotes are being unfairly attacked, 1X showed the power of video in today’s content age. However, before 1X can count me as a Neo early adopter, the company may want to hold off on the celebration.
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Who Is OpenAI’s Competition?
For the past few years, consensus has landed on Google being the company that needs to be most concerned about OpenAI. On paper, the corresponding narrative isn’t too complicated. As people turn to ChatGPT to get answers to their questions, Google loses out as not being given the opportunity to deliver the answers. And in the near-term, there may be some truth in that idea. However, when thinking about longer-term competition, OpenAI seems to have a different Big Tech company in mind as its direct competitor. This upcoming potential competitor appears to already see OpenAI as a future threat.
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The Race for Our Eyes
Following Mark Zuckerberg’s Connect 2025 keynote, online reactions to Ray-Ban Meta Display were surprisingly upbeat. Most gadget reviewers seemed to say just enough in their initial impressions videos and articles to cover their bases if the glasses turn out to be popular. More importantly, reactions on social media suggested that smart glasses similar to what Meta announced are the future.
The idea of wearing a computer on our face is not new. Google Glass went on sale in April 2014 although the company never took distribution seriously, not that different from how Pixel faired. We won’t spend too much time writing Google Glass’s obituary other than to say it was a product meant for a world in which design doesn’t matter. Around this same time, Facebook acquired Oculus, which kicked off a decade of Facebook grabbing some goodwill among gamers and VR enthusiasts. Magic Leap was the leader among a handful of HW startups, at least when it came to capturing the hearts and minds of journalists and VCs.
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The Opendoor Craze
As someone who has spent nearly two decades following equity markets, we are seeing a new kind of craziness with little historical precedent. Individual investors on social media are seemingly replacing activist shareholders in overtaking public boards to push for change. With some time having passed since the YOLO meme craze came on the scene, the tactics involved are evolving. Opendoor takes things to another level.
Back in the 2010s, Opendoor positioned itself as tech meets the old world of real estate. People would be able to buy and sell homes via an app on their smartphone, skipping the long list of headaches found with house showings, bids, offers, inspections, and even financing. Instead of becoming merely a marketplace for real estate transactions, Opendoor got into the business of buying and selling homes themselves, becoming the largest “iBuyer” in the U.S.
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Content’s Long Tail Is Being Weaponized
Boomboxes offering nothing more than a cassette player and AM/FM radio have grabbed my interest. While on a short vacation recently, in lieu of screens, my children turned to a boombox collecting dust for some fun. Despite having access to just a handful of the 100 million songs that are available on my iPhone, this boombox from the early 2000s was able to produce a memorable music listening experience with my kids for a few days.
Instead of betting that boomboxes will become a thing again (they won’t), the takeaway from my week away is that algorithms have weaponized content’s long tail by picking and choosing what we consume. As a result, we are losing interest in pursuing or investigating the long tail. We are still technically able to navigate through the seemingly endless sea of songs, shows, podcasts, blogs, and videos, but algorithms are designed to remove our desire for such exploration. In the process, we are seeing the decline of long-standing content mediums ranging from music and video to magazines and blogs as our imagination for what is possible declines.
Overabundance has long derived its business validity from the long tail. More than 100 million songs, tens of thousands of TV shows and movies, and a countless number of goods can be listened to, watched, or bought online. The long tail premise involving power found with the niche was
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Elon Musk Should Step Down as Tesla CEO
Two weeks ago, Tesla unveiled a fast-food diner and drive-in theater complete with Superchargers in Hollywood. Seemingly out of nowhere, a wave of Tesla influencers descended upon the eatery to show off what it’s like to order a Tesla burger. It didn’t take long for the “Tesla is going to shake up the fast-food industry” takes to circulate on social media. The concept on display seems to be that as people charge their Tesla vehicles, they can also grab a bite to eat and become immersed in the Tesla experience. While it may come across as having a logical yet costly premise, the idea is ultimately flawed. More on that shortly.
With Tesla reporting one of its weakest earnings reports in years just two days after Tesla Diner opened, I couldn’t help but wonder if the launch was timed to distract from the earnings release. The idea of a Tesla diner had been in the works for years. Everything about the situation convinced me to formalize an idea that has been swirling in my head for a while now: It’s time for Elon Musk to officially handoff the Tesla reigns to someone else.
I don’t take calls for regime change lightly, having made only two prior calls over the past decade: Reed Hastings and Ted Sarandos (Netflix) and Bob Iger (Disney). Just nine months after my Netflix call was made, co-founder Hastings stepped down, elevating Netflix’s COO to take his place as co-CEO. Iger is still hanging on to power in what can only be described as an unfortunate situation at Disney.
Why is it time for Musk to step down as Tesla CEO?
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Ten Uncomfortable Truths in Tech
We will try something a little bit different this week: Ten uncomfortable truths that are currently found in tech. Each one of these can be turned into their own Inside Orchard essay, and that may very well happen in a few cases. But sometimes value is found in brevity.
The mass market doesn’t care about AI. It won’t come as a surprise that optimism surrounding all things AI is much higher in tech circles than with the general public, where concerns and skepticism remain elevated. Lofty AI-related projections and prognostications ignore how people care more about products than the sheer power found with LLMs. For most people not connected with tech, “AI” is increasingly associated with “Google AI says…,” referring to Google’s AI overviews. This is a big reason why AI mania will need to focus more on product (representing the next AI phase).
Chatty chatbots are a head fake. A byproduct of their shortcomings,
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It’s Time to Double Down on Digital Mapping
A short vacation last month showed me first-hand the limitations found with today’s digital mapping solutions. While things have come a long way over the past decade, we are now likely undershooting in terms of mapping potential and promises. Big Tech companies should dedicate more time and attention to intertwining digital mapping with their ecosystems. On the downside, we are likely on track to experience more siloed mapping solutions.
While away from home, our digital mapping needs shoot higher. In addition to directions and transit information, we are dependent on maps for getting a lay of the land for restaurants, shops, and businesses. Last month, a short leisure trip away from home led to one mini crisis after another when it came to figuring out where to grab a bite to eat. Hours of operation listed on both Google Maps and Apple Maps were incorrect while up-to-date menus were hard to find. For seasonal towns dependent on summer tourism, it’s not unusual for hours of operation to change day to day. Once those items were figured out – by calling the businesses directly - we then met resistance in terms of figuring out the vibe found with the food establishment. Dated reviews and photos found in current mapping solutions weren’t helpful. All of this assumed that we were able to narrow our food search down to a few locations in the first place. In a nutshell, the whole experience convinced me that Big Tech needs to increase its bets on mapping. We need more from current mapping solutions.
For the U.S. market, the digital mapping landscape reflects strengths and weaknesses found with the two big players.
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The Next AI Phase Is Taking Shape
We are a full two-and-a-half years into current AI mania, and signs point to us entering a new stage. There is a greater focus on product and competition as the most formidable AI start-ups go after branding and users. In addition, Big Tech companies are looking to keep existing users by integrating AI into current offerings.
AI mania could be grouped into three segments or eras:
ChatGPT chatbot comes on the scene. Late 2022. Several factors came together to produce something of an ideal storm including post-pandemic desire for something new and big (with growth in mind). Internal power struggles at OpenAI contributed to the mania by taking over the news cycle. The turmoil was partly driven by the growing fascination that was flowing to ChatGPT.
AI-related capex boom (the NVIDIA surge). 2023-2024. Every Big Tech company except Apple experienced a rethink of their capital expenditures trajectory with AI-driven data centers, cloud infrastructure, and related assets in mind.
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Receive Exclusive Essays. The cornerstone of an Inside Orchard subscription is access to Neil’s weekly essays on the latest developments in the technology industry. Weekly essays are ~1,000 words and sent via email. Essays revolve around the following topics: technology industry analysis, business model analysis, technology’s impact on societal and consumer trends. Create a free profile to read a few sample essays.
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OpenAI Will Need Screens
We are in a weird phase of consumer gadgetry as the more Silicon Valley tries to move us beyond our smartphones, the less promising such prospects look. This subject was pushed into the spotlight again with OpenAI’s big news of working with Jony Ive on screenless AI devices. There is both a massive under bet as to just how addicting our mobile screens have become as well as an overreaction to voice’s allure, as if talking to our computers will somehow help us overcome our video addictions. There is a way to move us past the smartphone, but it likely will involve more, not fewer, screens.
If there were a competition for “Most Likely to Fail” awards given to HW start-ups, Humane was in the early front running and never looked back. The November 2023 Inside Orchard essay, “Humane’s Unimaginative Pin,” published shortly after the company unveiled its hyped Ai Pin but before the product was released, went on to serve as an accurate autopsy of what went wrong with the company. In summing up Humane’s problem in a sentence:
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Receive Exclusive Essays. The cornerstone of an Inside Orchard subscription is access to Neil’s weekly essays on the latest developments in the technology industry. Weekly essays are ~1,000 words and sent via email. Essays revolve around the following topics: technology industry analysis, business model analysis, technology’s impact on societal and consumer trends. Create a free profile to read a few sample essays.
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Slate Made People Dream Again
Last month, the auto start-up Slate came on the scene in grand fashion with an unveiling that took social media by storm. It was the biggest one-day shock in the auto space in at least a decade. The company introduced something of a modular EV platform in which consumers begin with a pickup truck but then can personalize their vehicle using four different bodies or kits, ranging from a more classic-looking SUV to a 5-seat hatchback open air body. People couldn’t get enough of the announcement, with some exclaiming Slate is what Apple should have aimed to be all along. Regardless of what happens to Slate – the hoopla also disappeared just as quick as it came – the craziness surrounding the company tells us a lot about the auto industry and how it’s not living up to expectations.
The mid-2010s was an exciting time in the auto space. Tesla, still a few years away from selling the Model 3, was gradually converting mindshare that EVs were going to be a thing.
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Receive Exclusive Essays. The cornerstone of an Inside Orchard subscription is access to Neil’s weekly essays on the latest developments in the technology industry. Weekly essays are ~1,000 words and sent via email. Essays revolve around the following topics: technology industry analysis, business model analysis, technology’s impact on societal and consumer trends. Create a free profile to read a few sample essays.
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CoComelon for Adults
The rise of algorithm-driven short-form video has ushered in a concerning trend. Billions of adults are being fed a never-ending stream of stimulation via 15-second video snippets consumed on smartphones.
The rise of algorithm-driven short-form video has ushered in a concerning trend. Billions of adults are being fed a never-ending stream of stimulation via 15-second video snippets consumed on smartphones. The implications of this continue to be underestimated, likely on purpose given the inability to do anything about the behavior. We are seeing the adult version of CoComelon spreading through society, and it’s right to be alarmed.
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Member Privileges and Benefits
Receive Exclusive Essays. The cornerstone of an Inside Orchard subscription is access to Neil’s weekly essays on the latest developments in the technology industry. Weekly essays are ~1,000 words and sent via email. Essays revolve around the following topics: technology industry analysis, business model analysis, technology’s impact on societal and consumer trends. Create a free profile to read a few sample essays.
Access Exclusive Private Podcast. Listen to Inside Orchard essays via an exclusive private podcast. After becoming a member, all previously-published podcast episodes become available in your favorite podcast player. Podcast episodes never become available to the public.
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Big Tech’s Missing Growth Story
Wall Street loves a good story, and there appears to be an absence of catalysts capable of supplementing AI mania as Big Tech’s growth story.
Earlier this month, we talked about DeepSeek breaking AI mania fever on Wall Street. In thinking through that essay further, it’s possible that we underestimated one key question found with AI mania fever breaking: What comes next? Wall Street loves a good story, and there appears to be an absence of catalysts capable of supplementing AI mania as Big Tech’s growth story. This may already be impacting Big Tech stock price valuations, which tariff news would be masking. Management teams and boards will likely have no choice but to respond.
Heading into this week, we witnessed one of the most sudden and severe contractions in Big Tech valuations in years. While the drawdowns may not pack the same kind of punch given the volatile news cycle found with tariffs, other sectors saw more in the way of valuation floors being established. For U.S. homebuilders and energy companies to outperform Big Tech companies that have finite exposure to tariffs raises an eyebrow.
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Choose either a monthly or annual membership. Payment is processed by Memberful and secured by Stripe. Apple Pay and other mobile payment options are accepted. Special bundle pricing is available for Above Avalon members.
Member Privileges and Benefits
Receive Exclusive Essays. The cornerstone of an Inside Orchard subscription is access to Neil’s weekly essays on the latest developments in the technology industry. Weekly essays are ~1,000 words and sent via email. Essays revolve around the following topics: technology industry analysis, business model analysis, technology’s impact on societal and consumer trends. Create a free profile to read a few sample essays.
Access Exclusive Private Podcast. Listen to Inside Orchard essays via an exclusive private podcast. After becoming a member, all previously-published podcast episodes become available in your favorite podcast player. Podcast episodes never become available to the public.
Inside Orchard Support. Play an active role in supporting Inside Orchard as an independent source of analysis and perspective. Inside Orchard is 100% supported by its subscribers.