The Real Reason Why Companies Fail

They have come into visit so dinner, right? We're doing dinner. Yeah, we'll do it. There's lots of great places for us to go. We can, if we, if you want to go all the way up to the city, we can spend time together. Yeah, no, no. No, so my tail is like your favorite. Like, let's. Well, it was, I mean, I had like a few restarts. San Mateo has incredibly great restaurants because basically people get, they get pissed off with their boss in San Francisco and then they go to San Mateo and they start their next restaurants. There's always something cool in you coming up here. Up at coming chef. Yeah, it goes there. Yeah, the problem is all my favorite restaurants have gone out of business. Is that a you thing or the restaurant? No. No, it's a customer's way. Like what's going on? No, what? I know, yeah, it's a me thing. I just like if I walk into your restaurant, it's a sad, sad, sad, sad, sad, sad, sad. Don't renew your lease if you see me coming in. I'm Dave Pitnayek. And I'm Michelle Ratzimola. And you're listening to the Jump Podcast, the conversation for future-focused leaders. And today's conversation is all about like company's fail. And it's not the story we've been telling ourselves for thousands of years. Later, we're going to be discussing some headlines from the future. Are you ready, Dave? Let's go. They've just been an incredible first few months of 2026. The reactions to AI, what it's done to the market, to several companies. I mean, it's just been like some have been, you know, boon times for some folks, right? Especially if you're the big AI companies. But for the rest, there's a lot of a lot of reaction. There is a lot of pain out there. And that does not even count any sort of concern for world events of what's happening with the price of oil or anything else. But even if you just take what's happening with artificial intelligence, it just seems that there's suddenly people have lost faith in some core business models that, you know, we had a lot of wealth stored up in for many years. Yeah, definitely. I mean, just take the software market, right? Software as a service. I mean, I think we've been hearing because since chat GBT, like, okay, we're software going to go. And there's some concerns. But to your point, it really hit like a peak, right? I'm sort of like, this is not going to work. You know, the future of the software industry is dead. And you're seeing things like, you know, overall, one trillion of the market value is erased in the software industry, just as they pricing in AI shifts. Yeah, Salesforce work day. Oh my gosh. Adobe, right? Yeah. So many of these folks who've just gotten pummeled. I mean, 23 to 30% of your market share in your today. Yeah, right. Just just what are they calling it a SaaS apocalypse? Yes. I do. That is when the journalists are great though. You're like, that's a good, no, SaaS. Yeah, right. Now again, you know, there's good reason. Some people are saying that the market has wildly overreacted. And they they maybe write about that too, right? Yeah. And there's a few different possibilities. If you again, don't try to predict the future, prepare for it. And if you choose preparing over predicting, there's a few different options of what might happen. Right? Right. Let's say the counter series that say, like, listen, no company is going to trust their payroll to something that two engineers vibe coded over the weekend. Yeah, they just had fun doing and they're going to move all their tech stack over to that. That's right. Exactly. And so maybe there's, you know, there's there's some viability there. There's other people are saying, no, but, you know, these companies may still exist in terms of like holding a database and like keeping that. And all of the actions, that's all going to be done by agents on top of it. So there's not a whole lot of value added for that to provide. Right? That's another option. There's a third option, which is no, no, no, we're not going to need these kind of SaaS businesses at scale because we're not going to have people. We will have anyone in the seats to buy those products. Yeah. Well, that's the business model itself, right? Like they would. And I think that brings up the point is, you know, whether Salesforce itself continues or doesn't, I think there's probably reasonable belief that with the amount of capital and relationships that these companies have, that there is a way to hopefully evolve into this new space. Because I think regardless of what's going on, the idea that the software industry will continue the way it has been is definitely not, not the case. It's certainly going to change it. I think I think there's a question though of, you know, will Salesforce thrive if we don't have Salesforce teams anymore, right? I mean, among other things, right? Which is that if it becomes completely agentic, right? And you know, we may have a few niche spaces where you actually have a human being who shows up. But if so much of that stuff goes the way of, you know, travel agents, right? Do you need that anymore? And yeah, and I choose them as an example because there are still travel agents. They do exist in certain, you know, kind of like B2B situations or super high end luxury situations. But for a lot of people, they're just going on Expedia. They're not going down to their, you know, their little local, you know, travel agent, you know, on the corner on Main Street. Yeah. And I think that reminds me of, I mean, what, and recent, Mark and Dreson, what was it 15, 20 years ago saying, software's going to eat the world. Yeah. Right? That we had this vision that it would, and for a long time, it did, I guess, right? And in some ways, where a lot of it is, is this idea that it was going to eat the world. And now we're seeing this idea. To your point, regardless, you might evolve whether it's niche or shifting to those AI products whoever can do that faster, right? Like respond to the AI agents and work in that environment best. But it's not going to be like everyone has sales force. Right. And this is the, you know, Mark and Dreson, like a lot of the tech bros around here are incredibly confident in pronouncing things, you know, which may or may not. But be true outside of their narrow area of expertise. He's now incredibly confident that AI will now be eating the world. So, right. Well, and the question is like, did software eat the world or did software empower the world? Right? And there is a difference. It's not just semantic, right? Right. Yeah. What actually happened, right? In the ensuing years, right? And what gains were made in productivity. Yeah. Now, the problem was that with those gains, whatever profits we had just went to the, you know, rich bros like Mark and Dreson and everybody else is, you know, seeing it decline in wages. But that's another issue. Different podcast for different. Well, that's the world we're living in. Exactly. Right? But I hear your point that, you know, this is what we hope with AI, right? Is that we get to work with these things and it's increasing the productivity and the output not replacing, but we'll see. Yeah. I mean, you raise an important point, though, which is like separate from AI. There is a question of just business model disruption. Right. And usually if you're a SaaS company, if you are Salesforce or any of these others work day or the like, you are used being the disruptor or what we call the fracker. Yeah. They killed the business model, the original, you know, the whole seats idea, right, as a software thing. That's right. And so if you were, you know, you killed other people's business models, you fracked and disrupted other people, you were used to being in the, you know, the aggressor point of view. The person who's doing the fracking, not the people who it is being done to. Yes. And it's turned around now. Yeah. Turned about his fair play. I guess. But, okay. But the interesting part, right, like, you know, where they go, what they're doing to me, you know, something you and I have been talking about is this idea that what are the narratives? Like, how do we look at companies like this? And what is it that we say is happening because that in a bit self determines what we take away and what the rest of us learn from this. Right. Right. Even if you're not in SaaS, there's even if you're not in SaaS. Take away here, right? That, you know, that question of like, why do companies fail? Is something that CEOs and academics and strategy consultants have just struggled with and ached over for decades and decades? Because, you know, if I could figure it out, right? If I could figure it out, maybe I could do something different. Right. So they can avoid the same fate. This time, my fate will be different from the rest exactly. And, you know, there's whole groups of studies that were, you know, that were working on this. You remember Jim Collins? Yeah. Good to grade. Good to grade. Good to last. I love his work. Yeah. He's phenomenal, right? He's a great worker on this a few years back where, you know, he had listed out all these so-called visionary companies and built to last. And then did the same thing and good to great. But then he found that like some of the companies that he was holding up as his exemplars weren't doing so hot anymore. Was it like the 10 year period or 20 year period? Yeah, yeah. I was like, oh, you know, built to last. Right. Until about, right? But, you know, to his credit, he said, okay, I need to get in there and use the same kind of comparator methodology that I, you know, used and figure out, okay, what's going on and why do companies fail? And, you know, he wrote this lovely book, you know, a short thing called, you know, how the mighty fall, right? Good one. Which I think, yeah. Right? Which is like, okay, what happens? You know, not just, you know, companies that were doing okay, but if you were dominant, if you were Kodak or Panam, right? Like these things that were, it's like how could you? Motorola, yeah, you know, companies that were just dominant for years who often created the category that they then don't. It's like imagining Apple dying somehow. You're like I just can't even great. That's right. I can imagine Apple You know Getting crushed and yet we see this over and over again Mm-hmm, right and so he did you know some some great work. I'm trying to understand what what's the difference? Okay, so he figured it out is what you're telling me Yeah, you're telling me he figured out a reasonable Hypothesis he saw some patterns. Okay, right. Oh, what's there and right and he he kind of put it out Is kind of five stages of decline Okay Is to help the mighty fall. Uh-huh. Right stage one was they just they're so successful that they just get arrogant They just get complacent They just start to assume like you know that their past success is a predictor of future performance It's like you think too big to fail I know that yeah, that's right exactly We're gonna you know continue on forever up into the right right and then The second thing he said yeah, okay, but then what you do is you still need to feed the beast right? You just need to go for more and so in a drive to continue telling the street that we have more They start to expand into all sorts of things that don't play to their strands Yeah, I have nothing to do with what makes them great You know you think of it like when you know Coca-Cola lots of line of you know fashion weather Yeah, what is that right? Yeah, and so you it's just this you know what what he called just the undisciplined pursuit of more Yeah, the the white spacing, but you're it's not even strategic is just like let me just grab it all like we're gonna go Yeah, let's grab it all right because I'm really good right and so you know It's a little bit of this this this thing our brain plays tricks out. It's like well. I was so great that you know This I'm gonna go do something. Yeah, it's like when it's at a Donner Kruger effect right? Yeah, there's a little bit of it You know Donning Kruger effect where people believe that if I'm really great at this thing, you know I should be great at five other things because I'm just great That's what I believe so Despite all evidence to the contrary But it's I mean like even if you are really amazing at something It doesn't mean you're gonna be amazing at everything. It's you know, I I lived in Chicago when the bulls were just crushing it And I I would argue that Michael Jordan is you know the greatest basketball player ever to play the sport you went and Then there was that moment where he tried to take a baseball Right, so you know, so I think you know, he learned he brought it back Yeah, he learned he he brought it back, right? But you know, they're so so leaders sometimes try that it's this kind of Undisciplined pursuit of more right but then the warning science start to surface right and but rather than confronting them directly You know a lot of companies enter the stage of denial right where they're like no, it's okay It's gonna be fine. We're gonna pull it out. It's gonna be a they just find ways to explain away all of the data That says that things are not going well, right? Just wait till next quarter. I love that. Yeah, no, just wait till next quarter. Yeah Yeah, it'll be better next and then you know, but then performance deteriorates any even more and that's when you see the Hail Mary pass And that's when you see people try some huge bold initiative or Huge crazy acquisition attempt, right? Something that is just not going to work Because Hail Mary passes are that they don't You don't always work. Yeah, that's why they call them Hail Mary passers-by, right? And then you know often unfortunately what happens is that you fall into irrelevance or Martialization or or or death right or you're acquired for spare parts. Yeah, and it's too hard to claw back at that point It's claw is too hard to claw back up at that point now You don't have to go through all five stages and and part of what Jim Collins says is you know, it's easier to You know to turn it around in stage one than it is in stage two and stage two than it is in stage three Right, so the sooner you get ahead of it Yeah, you know, and it's an interesting narrative now I don't actually believe what he says Like okay said is everyone need therapy like we just need to ego check, you know like that's what's going on And like is that the takeaway right it sounds like Jim Collins take away is like Keep your head on the ground. Don't get too You know, stay humble stay humble and like you'll avoid this fate. Yeah, but I mean that that's you know That's the inherent issues like anyone who reads that and says it starts with arrogance and complacency Yeah, nobody looks at that and goes oh, that's me I identify. Yeah, I identify. I'm arrogant And so it's it's if nothing else. It's a wily unhelpful framework Right because no one looks at that and sees themselves as in the problem, right? That's true. Yeah But and you know let alone the fact that like you know We have spent a lot of time with a lot of leaders across a lot of industries Yeah, yeah, you occasionally meet somebody who's like you kind of follow themselves But the people I know are not complacent No, not nowadays. No, I don't know any CEO right now who's just like ah things are great. It's fun Say like man, do they seem like being chased you know like is the sense I get is just like or you know We're talking to people like I've been trying this for like 10 different times and I got to figure it out I mean this idea that like we've got to go we've got to figure this out I don't have a lot of people I talk to that are like Everything's good. Yeah I mean you see there is with with several of them this need to kind of assure you like no No, no, no, no, no, things are bad, but we'll pull it out we can get there right and Right there is that but it does not seem rooted in arrogance or complacency in the same kind of way That Jim Collins is is talking about and I I honestly think that he may be falling into what we call to say shared cultural narrative In Western culture that you know his brain is playing tricks on him Oh these are always my favorite you know professor They bring us some knowledge in Western culture. Please. No, I mean You think about the we we have stories in our head right and If you we all share stories right that there's all sorts of things that are true for years in a culture Right, there's this whole thing about like like I I hate to get up early Right, we have we have a story in Western culture, which is the early bird gets the worm. Yeah You should get up early and work hard. Yeah, and it's like yeah, maybe it's not exist in India. Do you guys not have It's just in my house, you know Existence Peru but do you do you wouldn't prove everybody's getting up early? Well, the edges we have a saying of like early bird gets the worm. Yeah, right. Yeah, like just that idea Right, but I think like so there are these kind of deeply held narratives and The longer that a culture holds on to a narrative the more deeply held it gets right right and and one of the stories that we have In Western culture is that if you get really successful At some point you get too big for your bridges and you get arrogant And you get complacent Yeah, and pride go with before the fall Yeah, for my me of like many movies and books I read yeah, of course is like and and it's it's just a deeply held there I mean you go this is nothing you you go back to the ancient Greeks Right and like go go watch what is that ridiculous movie 300? Oh God So it's it's early entertaining Like in that like the Spartans are like hardcore and tough Yeah, I think of the Greeks as the heroes, right? Yeah, all right And the Persians like you see their depiction of of Xerxes Who's arguably one of the greatest emperors of history like they make him look he's weighing all sorts of jewels and silks Roves and he's so cushy Yeah, the Greeks of over the earth All right exactly. Yeah, I mean never mind the fact that like the Greeks got there Ass is whooped at the bottom of thermopolis No, but they went down tough right right yeah and and you know when the When when the Persians would eventually get overthrown by Alexander the great It's because Alexander was tough right yeah And and the the Persians were you know arrogant and lazy and they were too successful and they were just too cushy Right and it's just We have had this story in our culture for literally thousands of years Yeah, I can see that with you know societies or companies or civilizations like you're saying that we're like oh they They lost their way and it definitely the moral Like depravity call it it seems to be a common theme moral depravity. That's it. That's a great word for it Michelle Right, it's just very you know no one says you know This civilization fell you know because they were too stingy You're like this civilization, you know fell because they were smart they were smart They're too dumb no, it's like this civilization fell because they got too successful and they're too arrogant and too soft Right and then and things collapse you know Voltaire had this great line about you know why civilizations fail or how they rise and how they fall and he said that You know that that they they go up the stairs and wooden shoes and they come down in silk slippers Right. It's just, it is exactly that. To your point, it's this idea of like the narrative of it's inevitable, right? Like the rise comes with hubris that leads to your decline. Yeah. That's just a story. That's fascinating because it is, you know, reminds me a lot of where my head's going is a lot of, you know, Hollywood or the music industry, you know, early, I mean, early versus Netflix or early versus Napster. And, you know, you and I, being a little more close to those industries, have seen, you know, some of how that went out. But I would say that the analyst story, like when we're, you know, even now when we look back at that, we'll say, you know, Hollywood got too comfortable, right? With the existing power structure. They just like did not believe that they could be disintermediated, right? Whether it was, like streaming as ancillary, right? It's just about library monetization. It's this little thing, right? To your point, denial, don't look at that, right? Yeah. But to your point, there might be something else going on. But our story of it, certainly is that whether it's the music industry or Hollywood or I mean, think of, like, AOL is this like we were so dominant. Yeah. And our gatekeeping is so strong that there's no way, you know, it's very, I, you know, the ultra right wing podcasts out there, like, you know, the guys are like basically Nazis. So let's go with that. They have like, they are so caught up in this myth too. I, you know, I heard something online. They were talking about how it was like hard times create hard man and hard men create soft times and soft times create soft men and soft men create hard times. And you're like, oh for God's sake. Oh God. It's like, it's, it's the 300 movie all over. Yeah. And it's all about how hard and soft men are apparently. Yeah, apparently. I didn't think of it in that term. Yeah. But it's just, but it's, but it's, it's not actually true. Right. And it's certainly not true in business. Okay. I don't see a lot of soft men running around saying things are cushy. It's going to be great. Get over yourselves. Yeah. I mean, let's, we'll put that on a side because one we're, it was like, let alone that it's like never one variable. And definitely it's certainly not only men. So we push aside that that, uh, yeah. But you know, they're commentary. But I, I, so what is it really? Like if it's not this idea of, because I, I buy it what you're saying, right? Like, is that this is a narrative? And more importantly, it's not helpful. Like I certainly feel like instead of it's like, you know, saying thank you, Jim Collins is a great, framework, very interesting. But, you know, again, beyond having a therapist and trying to keep my like, feet on the ground. Stay humble. Stay humble. Right. Like it, it feels like, at least when I look at some of those stories again, when I think about like an AOL or, you know, different company Yahoo, right? My space. Remember them. Yeah. It's, I don't feel like, at least from what I know of some of those stories that is just about hubris. Right. Like that seems, that seems confusing to, to the facts. Yeah. Look, I mean, like we love in our culture to sign everything to morality. Right. We, we like, you know, you, you, you failed because you got what was coming to you. Yeah. Well, we love that justice too, right? Like, it's a karma. Yeah. The world is a just place. Mm-hmm. Yeah. Right. As the thing. But, you know, like, we kind of, you know, and we used to think about that for all sorts of, you know, parts of society, which we've kind of gotten over. Like we used to think that like schizophrenia was caused by spiritual weakness. Right. Or, you know, demonic possession. Like there's a devil inside. Yeah. We don't need to be exercised. Right. Or if you had like a substance abuse problem, addiction was, was it caused by failure? Yeah. It's a failure willpower. Yeah. Yeah. Right. That's strong enough. Yeah. You're not strong enough. There's something like just not virtuous about you. Mm-hmm. We've kind of gotten over that in the social sciences. Right. We, you know, criminologists aren't, you know, talking about crime by talking about intrinsic evil. What evil looks in the hearts of man, you know, that kind of thing. Sure. It's, no, it's about systems. It's about incentives. It's about context. Right. But then when, when you, when you look at, you know, Kodak or Motorola or Panam or any of these guys, you know, even someone as, as, you know, kind of first rate of thinker is Jim Collins, I think and fall into that same trap of like, you know, you, you, there was a moral failing at this beginning of it. Right. As opposed to, do the symptom you would apply to criminology or schizophrenia, which is there might be a psychological failing that's going on. That your brain might be doing something that is leading you down the wrong path. Okay. Yeah. So psychological, not moral, right? Like, to the difference of those things, right? And so, like I have a, I'm talking to you for a long time. So psychological, I'm guessing you're going to go into some present focused, absolutely right? Yeah. That's the biggest thing, right? Which is it? Look, 70% of us are present focused. Right. We say this to them blue in the face, which is means most of us are thinking about the now. Yeah. And they're reacting to the now. And only, you know, a small percentage, 16% of us as best as we can surmise are our truly future focus where we're thinking about the way the world is going to be. Not just the way it is today. Yeah. And if 70% of us are present focused, that means, you know, give or take probably 70% of leaders are present focused. And so when you show them that the world is changing, they say, you're right, the world is changing, but we need to focus on this quarter. It sounds so reasonable. Yeah. But that's a death sentence, right? Because you're not thinking about what's coming next. Yeah. So I love it because it's, you know, again, psychological, not moral. Like there's not a we're not lazy. And that's why we're focused on the president because we just don't want to think about the future. It's because we're wired. Most of us are wired to focus on the president. And that might lead. I like, you know, it might start psychological, but I do think it leads to then, you know, our structures and our, the incentives we put in place and all the things then how we operate, right? So that idea going back to like, just wait till next quarter, right? Is both like the system or quarterly, you know, reporting structure as well as our mindset. That's right. And even if you can see that the world is changing, having an instinct to know what to do about it so you can build a bridge from the now to the next. Yeah. And I agree with you 100% like, what are the systems that you're putting in place? What are the incentives that you're putting in place? Is your board asking about this quarter, or are they asking you about five years from now? How much time are you literally spending in your board meeting? Right? If you spend, if you have a two day board meeting and you're spending all but an hour and a half thinking about the now, right? You're probably, you know, you are biasing yourself to the present, you know, as opposed to spending enough time thinking about where you're going from here. Right? I think that's so hard. This, this strikes particularly hard for companies that are I think at that top, right? Like going back to where it was like Jim Cosas, like I'm look at these companies that used to be so great, right? And then fail. And I think going back to that idea is that if you're at these, you know, you're, you invented the category. You're at the top, right? You know, we talked about like Lulemon a long time ago, right? You invented the category of Dundeson and you see that decline and you wonder, look, these large organizations have to operate. They have to execute. They're huge large organizations with multi billion dollars of revenue, right? And so there is, I totally understand that the system needs to lead to great execution, right? At that level. But I love the point you're making me, you're pointing to the board and most of the people we talk to as leaders that who, not everyone in the organization needs to be here on execution. A lot of people do, right? Like that's like, like make sure that we're operating and executing and optimizing the current business. But when it comes to the future of the business, I think that's where, I mean, the classic story, right? Kodak is like, I did not want to cannibalize my business. Yeah. Right? I didn't know how to give up at the top levels. I didn't know how to nurture the next. Okay. So that's a really good point that you're making, which is like, you know, one thing is it's, it's not more lit psychological. And you really need to think about, you know, being future focused. Secondly is to your point building up systems that are actually just in terms of how you're spending time, how are you budgeting and providing resources? Are you doing things to make sure you're focusing on the next? There's a third thing, which is, are you actually willing to give up what you've got going on today to get to the next? And that's super hard, right? Because again, psychology, right? All the, also version, no, you have to make sure you have to do it. I don't want to give up what I have now, right? To get to the next or that I have to go through a short term period of pain. Mm-hmm. To get to that longer term thing, like, you know, Kodak invented the digital camera. Yeah. But there was still making a lot of money, right? It was so making a lot of money. The film was making a lot of money, right? Yeah, film processing was making a lot of money. Yeah. So like, why would I want to bring this digital thing online? Right. That's right. Exactly. Why would I cannibalize my core like that? Right? Until you're like, okay, fine, I'm going to do it. But then by then it's too late. Yeah. I think that's why this is the key is, is what we always say, building that bridge is the trick, right? It's not, it's almost, it's not figuring out what's next in some ways. Like a lot of us, you know, a lot of people have got them really good at visioning and figuring out like new spaces. A lot of people have figured out they're current business. But how to build that bridge and actually navigating an organization. towards that is clearly the trick. And I keep coming back to you like saying, like it's because we're lazy, is not gonna help. Now let's go to, if we understand it's our wiring, or great, as many of us know, we can rewire our brains. - Yep. - It's actually something we can do something about. So this is helpful, like we're starting to see how this might be a little more helpful. And okay, so therefore what do you do about it? No one wants to get out of a warm bath as, you know, no one. So. - Can I tell that story for a second? - Actually, the warm bath is part of it. Just, would you be a reference to it, right? - Yeah, yeah. - We did a little bit of research in this several years ago. The question I had was, you know, Apple came out with the iPod, which is transformative to music, right? - But you look at it and say, that should have been a Sony product, right? Sony had the Walkman and the CD players. Sony, you know, co-invented the compact discs, so they read all sorts of money off of that. - Yeah, it's like, why didn't they invent the iPod? - Yeah, totally. - So we went, we did interviews with those folks and we looked at it and basically they in fact came up with their own version of an iPod. - Right. - They did, but when they presented it out to the senior vice president who's in charge of the compact disc business, they're like, are you nuts? - Yeah, I forgot that. - Do you not know how much money we make in royalties alone from every compact disc that is made around the world, right? And the exact, he said something to me in Japanese and I don't speak Japanese, but then he translated it. He said, there's a Japanese saying, that no one gets out of a warm bath, right? And I'm like, oh, I just, you know, like, there it is. Which is like, you're in a good situation. You wanna, you know, you're of course, - It's a very human thing to know. - Very human. You're waiting until the bath is cold to get out. - Yeah. - And then you just hope that, you know, that your towel's there. (laughs) - All right. - But that idea, no one gets out of a warm bath, right? - Absolutely. - Yeah, okay, so, you know, number one, can you see the next and envision how things might change? Number two, can you build a bridge from the now to the next? And then the third is, are you willing to give up the now, to get to the next? - Yeah. - Right? And there are companies who have done that, but not a lot of them, right? - They support Taylor Codd. - More history of companies that have not figured it out than those who recently, I think you and I have called out like a Microsoft or a Disney, or even an Netflix trying to figure out how to navigate, right, but very few, very few. - Netflix had a beautiful annuity business. Like you signed up for these subscriptions. They mail you a DVD in the mail, right? Maybe you watch it, maybe you don't. For a lot of people that DVD just kind of like, sit side in the top of your television, and you forget to mail it back, right? But you know, read Hastings and Ted Cerendos, they can tell that the world is changing. It's not gonna be that forever. And so they have to make a transition to streaming, right? - Yeah. - And I remember like people were asking, but like, you know, read you get this great business, like doing this, why are you messing out of the whole of the streaming stuff? And he had a beautiful response, right? He said, we named the company Netflix. We didn't call it mailflix, right? It's like, you know, and he could see that there's another thing that we need to pay attention to. - And that he's not married clearly, right? Like he's not like married to the idea. It's like from the conception of the idea, it's this idea I can evolve. Right now, Netflix, I didn't never, I didn't name it mailflix. I named it something I can evolve. - Right, that would grow from here, right? And I think that is a beautiful example of, you know, there's a host of reasons why Netflix should have gone away of blockbuster at the minute that, you know, watching movies went from mailing things, you know, mailing DVDs to streaming, right? But, you know, that concept, okay, we are gonna give up this beautiful annuity to get to something in the future, to give out the now to get to the next. That is hard for a lot of people because the now is so profitable. - That is true. And if you're not doing that right now, it is not because you're lazy or too proud, or, you know, any of the things that are narratives, especially as we think about companies in the past, we like to dehumanize them and be like their companies. - Exactly, charity jerks. - Yeah, they're just arrogant jerks, they got too big. - Like Xerxes, yeah. - Right, just like those Xerxes. But that, so if you're having trouble now, just recognizing that it is about our wiring, right? That it is about the things that are the cash cows we don't wanna give up. And both for your own wiring and the wiring of your team, how are you going to start thinking, let's start pushing towards the future and building that bridge. - That's right, that's right. Which means changing your resource allocations, right? It's not all about putting things into your core product. You know, it's about running experiments, right? And trying stuff in areas where you might not be, you know, familiar with. It's recognizing that you might need to go through a period where your margins are gonna get crushed because you are so optimized for the now, right? That like things are gonna get a little ugly for a bit, you know, but you gotta buy a little bit. - Maybe don't tell the street, wait till next quarter, maybe tell them wait another year or two. - Yeah, right. Or wait a few years and here's where we're gonna be in the future long term, right? - Yeah, and to your point, telling the street is the challenge of it, right? You have to be able to articulate why this matters. - Yeah, that's gonna be a good narrative. Better one than moral failure. Stay tuned. - Better one than moral failure. (laughing) (upbeat music) - It's our favorite time of the day, headlines from the future. - All right, this is when you're gonna tell me all sorts of things that are cool and different in 2035, but it's actually happening today. - Yes, are you ready? - Can we please, please, please, not have all of the headlines be like, "Iky and Gross" or just terrible and sad? - I feel like that's in the eye of the beholder. So, you know, I have fun with these. Okay. - All right, here we go. - Headline number one, metasmart classes are sending intimate videos of users to overseas contractors and people are calling them pervert classes. (laughing) - Okay, that is "Iky and Gross", but it's still made me laugh. - But it's also funny. - Okay, so metas, glasses, 'cause they can record. - You know, they're a Rayban, like, yep, those glasses. - Okay, so Swedish investigators have been revealing that videos recorded by these smart classes are being sent to subcontractors in Nairobi, Kenya, for AI data annotation. So, just an aside, you might know this, and this is, I mean, this is interesting for a separate reason, is that all these AI companies are not being very truthful about how many humans are actually behind the process, right? So, supposedly with these AI videos, you should be able to, for example, they should blur faces. - Yes. - Right, like, so while it's recording, it should blur first, so they still have humans to train the model because it is not always working very well. Turns out it's not working very well at all, according to contractors. They're having to flag a lot of videos, and so the blurring faces has frequently failed, so these contractors have total unfiltered views of users' most private moments, and the users are probably not aware that they're recording at that moment. It's always on kind of the same. - And so, just this big thing that apparently, a lot of bathrooms, a lot of, so they're getting a lot of scenes, these contractors overseas, and they're, again, this is not the model learning, these are humans watching this, and then trying to teach the model that like you didn't do this well, and apparently they're not doing very well, I guess that's the point. - Okay, and, and, (laughs) so number one, but don't, you know, don't perform intimate acts with someone who's wearing a pair of glasses. - Don't put them in the bathroom with your metaglasses. - Yeah, number two, don't go to the bathroom with your metaglasses, right? But I think this is really interesting because it's pointing out a few different things about the future, right? Which is, are we gonna be in a, like privacy is over, get over it? - Yeah, you can't even control it, right? - Where we can't control it? Will there be a backlash to this? Right, I mean, there was for like Google Glass, you know, with kind of press situations. - Yeah, right, I mean, like, you know, people in San Francisco who are wearing that would get thrown out of a bar for having those on, right, 'cause you can still with that. It's a little harder with the meta ones because they do have rayband frames, so they look like real glasses. - They're more subtle, yeah, exactly. - They're more subtle, right? But it does point out to, you know, okay, the AI will get better, but how will people's notions of privacy change as we undergo this, right? I mean, is it, and I do, again, that's being AI, deny, I believe AI will get better, but I do think one of the things this article's pointing out is that with a lot of the systems that we're betting a lot on and betting a lot on the future, these companies themselves are not being as clear about where humans are in the system. And so we don't know at which rate they're gonna grow or how good they're getting, right? Especially compared to what we're being told. So I think the third party investigation of where your video is going is an interesting thing here too. And we may see more of this, right? This is the classic. Can you remember the mechanical Turk? - No, yeah, yeah, exactly, right? - For people who don't remember in the 1800s, someone created this mechanical, it was like a little arcade machine kind of thing. You could go up and you could play chess against this guy in a turbine who was like, you know, with the pieces, but there was actually, you know, it was the mid 1800s. So they didn't have the technology. So what they had was, it was like, a little guy was like sitting inside the room underneath. - Just a costume, really. - Pulling the strings on the turt, like to make the robot work. It's a, there may be a little bit more mechanical turkism going on for a while. - Certainly seems so. - Certainly. Although I gotta say, right? I mean, this is the challenge that Anthropic is going through with the Pentagon right now, where some of the AIs got so good that you don't need a human in the loop at all to do drone strikes on. - Exactly. - By civilians, right? And Anthropics entire thing of saying, like, no, we need to continue to have a human in a loop there, is not a bug, it's a feature, it's a good thing that we need to, so where are appropriate places for a human in any sort of workflow? Where are the places where we're gonna trust a an automated system? Remains to be seen, these are like the big, hard, complicated problems for us to work out on a case-by-case basis. - For sure. - Let's do a one. - All right, give us another one. What do we got? All right, headline number two, a new global survey finds Gen Z men are twice as likely as baby boomers to say wives should obey their husbands. - What? Gen Z men think wives should obey their husbands. - See, I'm hopeful for my son, 'cause he's not Gen Z, so I'm hoping, you know, it'll change, but you've got two Gen Z kids, babe. - I'm gonna slap my Gen Z kids. What are you talking about? That's number one, my Gen Z daughter is not gonna put up with that crap. - Well, I'm like, your Gen Z daughter's never gonna find, let's say if she's interested in men, she's never gonna find anyone, 'cause what's going on with men? But, you know, we should talk to your son too, but this is just like, it is fascinating to me. I mean, we've been seeing this and sort of gender disparity has been going on since last year in terms of gender differences, right? But it's been fascinating to see, you know, I think we have, speaking of narratives, this idea that generation sort of progress, right? That they progress in their views, whether it's marriage or having kids, or equality between men and women. And it seems like now several studies or surveys and things like that around Gen Z's is that there's studies like this around Gen Z men and the difference between Gen Z men believes in Gen Z women's beliefs, right? And they seem very apart. - Okay, so that's important. I didn't catch that part of the headline. So like, Gen Z men are like, you know, the women should listen to us and the Gen Z women are like, no. - No. - Yeah. And so that's sort of the difference, right? But you have things like 24% of Gen Z men think women shouldn't appear too independent, you know? 21% believe a real woman should never initiate sex. - No, I'm not kidding. - It's just like very traditional views. - Not even just traditional just reactionary, like going back to a past, you know. - Exactly, it feels like your grandpa's talking to you. And, you know, but I think young men in America are certainly, but in the West generally, are in a world of hurt, right? - Yep. - We have not given them, you know, we took away the old macho script, talk about narrative, we took away the old narrative. And we haven't given them a reasonable replacement for that. And so a lot of them are running around, you know, they can't get a job, they're not necessarily feeling productive, they don't have the old model of being a provider. - Yeah. - We haven't given them a new model of what it means to be a successful, happy whole person in the modern world. And so it doesn't surprise me that many of them are going, you know, to the place of the Nick Fuentes nonsense, right? And then the other, you know. - I just personally, I mean, we won't make it about this, but I personally struggle with that a little bit because my understanding is that we didn't give women an idea of what, you know, a different kind of woman in the 21st century would look like. That was a lot of like sort of taken in some ways or pushed. - I don't think so, I would push back on that. I think like the project to reinvent women hood has happened since the, you know, since the 1950s. - Well, by women. - By women. - Right. So I think what's interesting is the reaction by men is to bring men back, not figure out a new identity. - Well, yeah, well, some men, right? - Yeah, sure. The great manosphere, some men. - Yes. - But what has to look and say like the manosphere may be like an intense violent counter reaction to a longer trend. - Sure. - And so big picture stepping back, I always think of it like that. If you, you know, like what happened on 9/11 in Al Qaeda is an intense violent pushback to a longer trend, which is globalism. - Yeah. - Right? - That you can see this. And you see this again and again, that whenever the world is shifting in a big way, you know, you have these, you know, small moments of violence, even the trend overall is going. - Yeah, physical violence, right? But like the trend continues. - Yeah. - Right? So like I look at all of the folks who were, you know, of the term that you're thinking about as more that blip. It's very hard to think that all those Gen Z guys are not gonna, you know, run straight into the new expectations of smart, successful women. - Yeah, well, I think that's why it'll be interesting for the trade-led rights in this, you know, in our world for marriages, for work, for relationships, right? So I think it's an interesting thing to watch and see how it develops. - Yeah, exactly. Bet none of the girls. The boys have got to get on board the hair. - Again, you do have one of each. So trying to hopefully, hopefully they don't listen to this podcast. - No, but, no, honestly, like I want my little guy to like, you know, realize that, like, but you know, that's the thing is like, his older sister is so dominant that like, - Yep. - This is how the new idea for him. (laughing) - Let's just make sure he doesn't get red-pilled until that's all. - Oh God. - Oh, yes. All right, what do you got? - All right, headline number three. Okay, this one's truly, to me, the most sci-fi we want to brought yet, ready? - Okay. - A company put 200,000 human neurons on a chip. And it may be a cheaper, faster alternative to the AI we know today. - Oh, okay, human neurons. So this is a bio chip. This is, you know, what the kids used to call wet wear. - Oh, okay, not in that. - Yeah, this is, yeah. - So I, not from the computer world, they've, you know, have been tracking this a little bit because I find it fascinating the idea of like, this biological processing, right? This idea of like, human, the true bionic, right? Is like this computer with our neurons. And so you might recall that a few years ago in 2022, the, this same team that is called, - What is the team? - They're called cortical labs. - Cortical labs. - Mm-hmm. - Had done the same thing, put a few neurons on a chip and taught it to play pong for a few minutes. Okay, and it did it, it did great. So now they have done it with a much more complicated and a game called Doom. - Okay, I know Doom. - Uh-huh, okay, so much more complicated than your typical pong. - Why they chose, why they chose a super violent, first versus shooter game. (laughing) - Why are you re-velting these things this way? - Okay, so this is the fascinating part, right? Is like, so in context with AI is that one of our thoughts is that AI and processing will continue to grow with the silicon chips that we talked about, right? Well, we know now, purely manufactured silicon chips, those will continue to get smaller, more efficient, better for AI processing. - For sure. - And, but as we know, the way to train those chips, let's call 'em out, the processing of it, is with a ton of data. - Yep. - A ton of ton of data. - Reinforcement learning, baby. - Reinforcement learning, where the idea here is to say, hey, could we have it do, have it learn in the best way we know people learn, which is with our brains, right? Like, actually use the way our brains learn, which we don't quite honestly understand well. But say, our brains are really good at learning, just like a child is really good at learning. So what if we put these neurons, they literally grow on a chip, right? And like nutrient rich broth, imagine, right? And they're sending electrical signals between the game is sending it feedback, or like you died, right, in the game. And the neurons are somehow understanding this and sending signals back to say, restart, you know, kill this person. And it's learning every time it's getting better. What they're seeing is that it's a winning doom. And it didn't take that long for it to learn, right? And so that idea that this is, it uses a fraction of the energy of today's dead ass centers and scales much more cheaply because biology grows exponentially in a way that Silicon never can. - Wow. Okay, that is fascinating. You know, it does seem to like at the end of the day, are we just gonna grow a human brain, right? And say, wow, look, we created art or art or art or art or art or art or art, just by just creating natural intelligence. - I mean, this just feels like the most, like I said, sci-fi to me, right? It was like, like it's already happening to your point. I mean, they've sold, they launched commercially, the idea that people can like tap into what this thing is learning. - Okay. - Like, so like kind of open sourcing it a little bit, not like, you know, like, but for 35,000 per unit. So. - Okay. So they have found at least a placeholder economic model of how they would actually make money from this thing. - Right. So I think it's fascinating. - So interesting. We gotta continue to monitor this as things progress because everything we've been doing with chat bots up until the state has been mind blowing. And what you're saying is like, that's just a scouting party. It's only gonna get weirder and weirder. - Absolutely. - All right, weirder and weirder and weirder, we could keep going with this, but we gotta go. Thank you so much for listening. Thanks so much for spending time with us. And remember the conversation doesn't end here. Every Saturday, you can hear from Dave in your inbox with his future focus letters for clients and friends. And you can always connect with us on LinkedIn, jepassociates.com. You know how it goes, likes, shares, subscribers, etc. for more thought-provoking content and how new around get good at Doom. - Your host, sir, they've put back in Michelle Redtomola. This episode was produced by Peyton Gleason. Research was developed by this SAC person. Art work was created by Sierra O'Carry and music was composed by Avi. - The Jump Podcast is brought to you by Jempo Associates, the strategy for him for future focus leaders. - Stay focused on the future because it'll be here before you know it.