Hello again, dear readers!

OpenAI has recently spent a cool $1 trillion on partnerships that will secure it the computing power equivalent of 20 nuclear reactors. Altman has argued on the one hand that this level of spending is necessary because AI will continue to grow at an exponential rate. On the other hand, he recently admitted in front of a room full of journalists that we’re currently experiencing an AI bubble. What happens if it pops? Read on below.

Also, it’s fairly rare for companies to have two CEOs, but notable examples include Netflix, Oracle, Comcast, and now Spotify. What are the benefits of having two captains at the helm? What are the potential risks? Check out my exploration of this double-edged sword below.

This issue features the usual bunch of AI Insights and recommendations for the week's podcasts, books, shows, charts, and tweets, followed by a final chuckle.

Let’s get going.

Industry Highlights: OpenAI: Brilliance or Bubble?

OpenAI has made headlines with its jaw-dropping move to sign around $1 trillion in deals for computing power to support its AI goals. This massive figure overshadows the company's current revenue and raises serious questions about how sustainable these commitments really are. As CEO Sam Altman announced that becoming profitable is “not in his top ten concerns”, we have to ask: Is this what a bubble looks like?

The Scale of Investment

OpenAI's partnerships with big names like Nvidia, AMD, and Oracle are absolutely massive. These deals give the company access to over 20 gigawatts of computing capacity (roughly the output of 20 nuclear reactors) over the next decade. Each gigawatt of AI computing capacity costs about $50 billion, bringing the total to an astonishing $1 trillion. Analysts are already sounding alarms; Gil Luria from DA Davidson estimates that OpenAI could lose around $10 billion this year.

The size of these commitments is unlike anything we've seen before. OpenAI's agreements tie some of the largest tech firms to its future success. However, the structure of these deals is complicated, and many financing terms are still up in the air. That raises immediate concerns about whether OpenAI can actually deliver on these promises.

The Risks of High Stakes

OpenAI's approach seems like a classic case of "fake it until you make it," a common Silicon Valley attitude that encourages companies to secure investments based on future potential rather than current realities. Many industry insiders are worried that OpenAI's capital-heavy model is riskier than those of established giants like Google or Microsoft. One investor noted that OpenAI is in a more capital-intensive business than either of those companies ever were, adding that it has lacked cost discipline from the start.

This lack of financial restraint in such a high-stakes environment poses a significant risk, not just for OpenAI but also for its partners. After OpenAI's deal with Oracle was announced, Oracle's market value soared by $244 billion, while AMD shares jumped nearly 24%, boosting its market cap by $63 billion. No wonder market watchers are tossing around terms like “inflated” and “unsustainable”.

The Bubble Question

So, are we seeing the formation of a bubble in the AI sector? OpenAI and its partners are betting that AI usage will keep growing at an exponential rate. But as the FT article points out: 

"If growth plateaus, or even slows, the investor enthusiasm that has boosted share prices on the back of these deals could quickly falter." 

You might remember that Altman himself acknowledged the bubble exists during an event in August, saying: 

“When bubbles happen, smart people get overexcited about a kernel of truth. Are we in a phase where investors as a whole are overexcited about AI? My opinion is yes. Is AI the most important thing to happen in a very long time? My opinion is also yes.”

OpenAI's strategy relies heavily on a positive outlook for AI’s future. The company expects to significantly increase its current revenue of $12 billion by rolling out new products and doubling its subscriber base for ChatGPT. Yet, these ambitious plans come at a time when the broader economic landscape is uncertain. The tech industry is shifting, and many investors are becoming more cautious, taking a closer look at the long-term viability of high-profile ventures. I’ve lost count of the number of articles warning that AI may not live up to its hype, or that progress on AI models is beginning to stall. 

OpenAI is also exploring complex financial arrangements with its partners. For example, Nvidia plans to invest $100 billion over the next decade, and AMD has offered warrants that could let OpenAI buy shares at a fraction of their value, depending on meeting specific targets. Talking of AMD, that’s an incredible story in itself. The chip company’s market value has rocketed from under $3 billion in 2014 to $330 billion today, shooting up 24% on the back of the OpenAI partnership announcement. OpenAI will buy tens of thousands of AMD chips, destined for powering computing capacity for inference functions. Even with these impressive numbers, AMD still trails Nvidia, which is nearly 14 times the size.  

Locking in $1 trillion in computing deals could put OpenAI at the forefront of AI innovation, but it also exposes the company and its partners to significant financial risks. The excitement around AI could quickly turn into skepticism if growth doesn’t meet expectations.

In the end, whether we’re looking at a bubble or a brilliant strategy will depend on how the market reacts to AI’s evolution in the coming years. For now, all eyes are on OpenAI.

The Future of Work: Co-CEOs: A Double-Edged Sword?

Recently, Spotify announced that its founder, Daniel Ek, will be succeeded by not one, but two co-CEOs: Alex Norström and Gustav Söderström. This isn’t an isolated case. Companies like Oracle and Comcast have also jumped on the co-CEO bandwagon. But is this really a smart move, or are companies just complicating things?

The Idea Behind Co-CEOs

At first glance, having two people at the helm seems like a good idea. After all, two heads are better than one, right? The thinking is that each CEO can bring their unique skills to the table, providing a more rounded approach to leadership. For example, in the case of Netflix, co-CEOs Reed Hastings and Ted Sarandos have (so far) complemented each other well, with one focusing on data and the other on programming.

Some founders, perhaps drunk on their own importance, might feel they’re irreplaceable and want to avoid handing the reins to a single successor. Others worry that one person alone may not be able to handle the responsibilities they’ve accumulated over the years. But while the idea sounds great in theory, reality often tells a different story.

The Reality Check

Despite some success stories, co-CEO arrangements have a mixed track record, as reported by the WSJ. Many companies that have tried this model end up abandoning it because of power struggles or unclear roles. Salesforce, for instance, experimented with dual CEOs but ultimately decided to stick with Marc Benioff as the sole leader. Research  shows that co-CEOs typically last only about 2.6 years, while solo CEOs hang in there for an average of 5.6 years.

Raheela Anwar, a corporate advisory expert, puts it bluntly: “You’re asking two human beings to be one human being.” That’s a recipe for potential confusion and conflict, like two chefs trying to run a kitchen but constantly arguing over the menu … and it’s not hard to see how things could go south fast.

Then there’s the diversity factor. Two CEOs, evidently, will offer more diversity of thought than one. But how diverse are these appointments? Boards may typically seek to place two of a certain type of leader, rather than taking a risk on appointing two people with significantly different backgrounds. Forbes pointed out recently that women leaders are, in the main, excluded from the “Bro-co-CEO-club”.  

The Benefits of Co-Leadership

That said, there are some upsides to co-CEOs. Research suggests that companies with dual leadership can perform better. An HBR study found that firms with co-CEOs posted better returns than their peers. This could be because they can tackle issues from multiple angles, leading to more informed decision-making. Another advantage is retention. When a founder steps down, companies may hesitate to choose one internal candidate over another, fearing the one who doesn’t get the job will leave. Appointing co-CEOs can mitigate that risk, smoothing out the transition. 

At Spotify, Daniel Ek is stepping back but still staying influential as executive chairman. By having two co-CEOs, he’s hedging his bets while ensuring that the company isn’t left without strong leadership. This approach seems to reflect a European-style governance model, which might be more collaborative than the traditional U.S. setup. However, it’s crucial to remember that Spotify is not just throwing two people into the ring and hoping for the best. Ek will still oversee both co-CEOs, which might help avoid some of the pitfalls associated with shared leadership. But how long can that balance last?

In the end, whether co-CEOs succeed or fail often comes down to the personalities involved and the clarity of their roles.

AI Insights

1. Personalized stock tips from OpenAI: OpenAI has acquired Roi, an AI-powered personal investing app to integrate personalized financial insights into ChatGPT. As one commenter asks, what’s going to happen to Wall Street as regular investors start using more powerful AI?

2. Bezos predicts space-based data centres: Jeff Bezos predicts that within the next 10 to 20 years, gigawatt-scale data centers will be established in space, leveraging continuous solar energy to outperform those on Earth. He sees this development as a natural progression in response to the massive energy demands of artificial intelligence and cloud computing. He’s not alone. Sam Altman and Eric Schmidt are also considering the idea.

3. OpenAI’s first physical device is delayed: OpenAI and Jony Ive are facing significant delays in their collaboration on a new palm-sized AI assistant, struggling with software, privacy issues, and the necessary computing power.

The Supply Aside

📕 Read - 10 Leadership Virtues for Disruptive Times

Tom Ziglar breaks down ten essential virtues that leaders need to coach their teams effectively through rapid changes: qualities like kindness, humility, persistence, and the ability to lean into change. Ziglar shows how these traits can help create a positive work environment where everyone reaches their full potential … even in the toughest of times.

Why should people read this book? Because it’s packed with practical advice and real-world insights that make leadership feel more approachable. Ziglar’s focus on “coach leadership” helps bridge the gap between leaders and their teams, making it easier to navigate challenges together.

What Else I’m Reading

• Harvard Business School is the world’s most coveted MBA program: Despite political attacks and eye-watering annual tuition fees (currently $87,608), over 20% of surveyed students and alumni named HBS their dream school. It’s also highly attractive to international students, with 31% naming it as their top choice. 

• Walmart CEO’s AI Warning: Walmart expects to grow, which is great news for jobseekers, right? Wrong. America’s largest private employer expects its workforce numbers to stay flat as AI replaces and eliminates future roles, while every existing role will be transformed in some way.  

• Why Your Boss Doesn’t Have Time to Talk To You: In the last edition I wrote about “the great flattening”, where AI efficiency is removing the need for middle managers. This article explores how companies are responding to this shift by increasing employee-to-manager ratios, resulting in overwhelmed bosses who struggle to connect with their teams. Have companies jumped too soon in terms of AI capability?

📺 Watch - Hard Hat Riot

Hard Hat Riot delves into the explosive clash that erupted on May 8, 1970, when Lower Manhattan construction workers violently confronted students protesting against the Vietnam War. Highlighting the broader class struggle of the era, it explores how these two groups, workers bearing the burden of the draft and students advocating for social change, symbolized a deep divide in American society that reshaped the political and cultural landscape.

Watch this documentary to gain insight into a pivotal moment in American history. As with any well-written documentary, you’ll find plenty of parallels between what happened in 1970 and what’s going on today.

👂 Listen - Marc Andreessen on AI, China, and Tech Culture

It’s worth listening to Next Up  podcast guest, Marc Andreessen, because IMO he’s one of the smartest technologists out there. I found myself nodding along with his insights across four fascinating topics:

1. Why some people thrive with AI while others fall behind. 

2. China’s dangerous edge in AI and manufacturing.

3. The work culture that made Silicon Valley a global force.

4. Futurist breakthroughs that could soon upend the way we live, work, and compete.

💡 Think - The Dimon District

Jamie Dimon’s megatower opens this month; a $5 billion power statement in the middle of Manhattan. Pub with an imported Guinness tap? Check. Committees on everything from elevators to executive lounges? Double check. The JPMorgan campus now rivals Goldman's footprint across both Americas.

At a time when most CEOs are shrinking their office space or doing "hybrid," Dimon went the other way. Full tilt. All in. Office culture, centralized and codified. Dimon didn't outsource it. He personally shaped the layout, culture, and skyline. When your office becomes a monument, you're leaving your mark. 

The bigger message? In an age of hedging, conviction still counts, especially when it towers 60 stories above Park Avenue.

Charts of the Week

Quotes of the Week

Tweet of the Week

The Final Chuckle

Thanks so much for reading. I’d love to know what you think about this issue and how I can make it more useful to you. If you have suggestions or topics you want to see me address, email me at [email protected]!

-- Naseem