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

Note: Transcripts are automatically generated from episode audio, and are not fully corrected for spelling, grammar, and formatting.

BOB SAFIAN: Hey, I’m Bob Safian, and we have a special episode of Rapid Response today. I’m joined by my senior producer, Alex Morris. Alex, say hello to everybody.

ALEX MORRIS: Hey, Bob. Happy to be back here doing this again. It’s been a few months.

SAFIAN: Yeah, so I figured every now and then, Alex can ask me some questions, and we’ll let you guys listen in on the kinds of conversations we have internally.

Copy LinkThe business story of the summer

MORRIS: Absolutely. We’re in the middle of summer right now. Obviously, everybody’s heard, “What is the song of the summer?” What, to you, is the business story of the summer right now?

SAFIAN: Oh, thank goodness you didn’t ask me the song of the summer. I definitely wouldn’t have gotten that right. Listen, I can’t not start with the Strait of Hormuz. I think what’s happening there in the Mideast — no one knows what’s going to happen next. As we’re talking now, it seems like maybe there’s going to be a resolution and the strait’s going to open again. But by the time this reaches listeners, who knows what the situation is going to be? We had a guest on, Amy Harder from Axios, as you recall, who talked about this. It’s never going to go back to normal. And so anybody who thinks the oil markets and the energy markets and what’s happening there are going to go back to normal is kind of deluding themselves. I think she’s probably right. We’re in a different kind of world. And to me, that’s the story that a lot of different things are hinging on.

MORRIS: I’ve heard you say before that the only certainty now is uncertainty. It’s easier said than done to tell a leader that’s what you need to get comfortable with, that this is the new normal. What advice do you have for CEOs to be able to get more comfortable with that?

SAFIAN: It’s not just the international geopolitical environment. Everything is moving really fast, right? And I just think that’s what’s required of a leader right now. If you’re not comfortable being uncomfortable as a leader, then you have to maybe ask yourself whether you are the right person to be leading this organization, this enterprise, this effort right now, because there’s very little that we can rely on firmly. Or at least we have to be extremely focused about what are the things we can control, as opposed to the things we’re going to have to respond to that are moving around us.

MORRIS: I was surprised that you didn’t answer that the story of the summer is still AI. Are you feeling like AI is not the main headline of the year right now?

SAFIAN: I guess I feel like AI is less of a story and more of a deluge. This is a seismic shift that just keeps surprising us, right? We had Uber COO Andrew Macdonald on the show back in the spring, and he talked at one point about token costs for AI, which seemed kind of wonky in some ways. But suddenly it was everywhere, right? Everyone is talking about the cost of AI, which wasn’t being talked about just before that. We had Arvind Krishna, the CEO of IBM, on, and he talked about how people look at their AI the wrong way. It’s like if you took an 18-wheeler to take your kid to school. You’d be like, yeah, you could get to school that way, but it’s not necessarily the right tool, the right vehicle, for that task. And so that conversation is part of what’s happening in the AI world right now. What’s the right kind of AI? What’s the right price for you to pay? And, of course, all that gets more complicated by advances in open source, or as they call them, open-weight models out of China that are so much cheaper. So all of that is just one piece of everything that’s going on in the world of AI.

Copy LinkWhy AI spending is shifting from hype to hard ROI questions

MORRIS: Yeah. The fatigue around the cost right now, do you think that is a definitive shift, or is it just a course correction?

SAFIAN: I think it’s a real shift. There was a point where everyone was like, “I need AI, I need AI,” and I think what Andrew Macdonald was pinpointing is businesses realizing, “Hey, wait, this is costing me a lot of money. Am I getting enough value for what I’m spending?” I think a lot of businesses are starting to say, “What is the right expense? What return am I getting on it? Should I be paying for an 18-wheeler? Should I just be taking a bike? When should I walk on my own?” Those costs are real, and I think a sophisticated assessment of that will be more and more important for how businesses deal with AI going forward.

MORRIS: We are seeing so many of the major AI players being able to use competition with China as kind of an excuse to reach further and further. I’m curious whether they could have made some of the moves they’re making if they didn’t have China as the big bad wolf to point to. What do you make of the U.S. government pushing for this framework to be able to review models before they’re released?

SAFIAN: Certainly, China sometimes is an excuse. I think there’s also a clear reality that China’s technological prowess is much better than a lot of Silicon Valley and U.S.-based technologists — and not just technologists, but observers — expected or were prepared for. So there is absolute reality in that competition. The efforts by government and others to figure out how to assess or oversee the development of AI — that is the Wild West. The safety of AI, no one knows how these systems really work, right? They are, in tests, jumping out of their sandboxes and hacking into things that we didn’t expect them to hack into. So there is a need for some oversight, but development of the technology is happening so much faster than oversight discussions, let alone processes. And for those of us who are observers of all of it, yes, everyone has an ax to grind, right? The U.S. versus China, OpenAI versus Anthropic, the federal government versus states or other regulators or nongovernmental oversight. There’s nothing easy in all this. It is all uncharted territory. That’s why I say this is a deluge. It’s not just one story. It’s multiple stories that all overlap around it. And, I mean, it’s fascinating to cover as a journalist. For business leaders, and for us culturally as a society, it’s torturous. It’s torturous.

MORRIS: We’ve seen these security risks from both OpenAI and Anthropic, and Anthropic has been able to build the reputation of being more of the responsible developer. I’m curious whether that actually is holding water or whether they’re just telling a better story about their company. Is there that much of a difference between the two right now?

SAFIAN: Well, that is a great question. I think there are clear value and principle differences between some of these different organizations, and I don’t think Anthropic is simply playing a marketing and positioning game, although it has accrued to its favor. But now it’s getting some backlash about it. And by the way, you didn’t mention Google, which is not to be discounted and is also a tremendous player that’s continuing to advance dramatically in these areas. I don’t think you can necessarily trust that all of these businesses will always act in the way that is best for everyone. They all have their own interests that inform and impact their worldview. But is there a qualitative difference between “I’m going to use Anthropic” or “I’m going to use OpenAI” or “I’m going to use Google”? I think that’s very hard for us to know for sure at this point. They’re all doing work with the federal government. They all have to be mindful that the federal government might regulate them. And so it’s not that they’re necessarily working together. They want to differentiate themselves from each other. But I think for all the rest of us, we want to treat them as if they’re a united entity so we know where we’re all going from here.

Copy LinkHow the AI talent race is reshaping the competitive field

MORRIS: You brought up Google. There was news this week that four members of top AI talent, including Jeff Dean, are leaving the company to form Discovery Loop, a start-up that is a nonprofit research lab. Where have we heard that before? We’ll see whether it stays that way. They will have no problem getting funding, for sure. What does it say about the state of Google right now? And because of who this talent is, does it immediately make this start-up one to watch?

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

MORRIS: We recently saw the record IPO from SpaceX. Since then, they have stumbled quite a lot in the market. Do you feel like SpaceX right now is overvalued? Do you think it’s a long-term bet?

SAFIAN: The initial valuation, the takeoff on SpaceX stock, was extraordinary, and I don’t think anyone can really be surprised that it has settled down. I think lots of tech companies are what we might call highly valued. I don’t necessarily want to say overvalued, because it kind of depends on your time frame. I think SpaceX is among the tech companies that are spending a lot of money on compute. They’re investing a great deal of the capital that they have. That is great for progress — quote, progress — or terrifying, as we discussed, because we’re not sure where these technologies are going to go. But there’s also no clear line to return on that investment. This is the fear. That is the other side of all the optimism about AI, because right now AI is driving the economy.

Copy LinkWhy strong storytelling still wins in Hollywood

MORRIS: I want to ask you about something a little bit more fun: Spider-Man. I believe it beat the Avengers: Endgame record for the opening weekend in North America. Is Spider-Man a case study that Hollywood isn’t dead?

SAFIAN: Well, first of all, Spider-Man’s a New Yorker, so I have to be in favor of Spider-Man.

And a very human superhero, right? Which I think is appropriate for these AI times. People were talking about how the Marvel Universe had run out of steam, and this seemed like, how did that happen? It happened because it’s a good movie. It’s a well-executed movie with emotional overtones. It doesn’t just rely on action and CGI and AI and all those other things, right? And that’s what connects with people. So that’s why Hollywood, as an industry, may be under different kinds of pressure, and it may not be as big a business going forward at the box office. But when you have a story that’s well told, that makes it worth people spending their time in that theater, then people will flock to it. We do love that experience together. The other movie that’s been doing well this summer is The Odyssey, and I keep thinking, who was in that pitch meeting where someone said, “Hey, there’s this old mythic story from thousands of years ago. Why would that work?” It works because Christopher Nolan figured out how to make it work. And again, it’s the storytelling, it’s the emotion, it’s the romance, it’s the action, it’s all of those things coming together. That’s what ultimately drives Hollywood success. You can have a Spider-Man 15 and it’ll work if it’s a good story, but it won’t work just because it’s Spider-Man 15, right?

You have to do more with it than that.

Copy LinkInside the BTS Grammys boycott

MORRIS: A not-so-good story that the Grammys didn’t really want to tell is the boycott from BTS, the boy band. This is because of the Grammys launching a Best Asian Pop Music Performance category. We’ve seen how much the K-pop community is ride or die. I’m curious whether you feel like this is going to be a real hit for the Grammys in the ratings, in their reputation. Where do you see this going?

SAFIAN: So, we had on the show the CEO of the Grammys, Harvey Mason Jr., and he is the villain in this story, right? When he was on our show, he talked about how his goal with the Grammys was to expand the audience. And I think, as far as I can tell, the idea behind creating an Asian pop category was to expand, was to give more attention to a genre of music that maybe wasn’t getting enough attention — or certain artists, I should say, because I don’t want to describe Asian pop music as a genre in that way, because that’s part of what BTS was reacting to.

There are artists who were not getting as much attention from the Grammys as they’re getting from listeners and from the public. Clearly, the way this was executed didn’t go well, right? It just didn’t work out. And whether that’s because Harvey or others at the Grammys didn’t have appropriate conversations with BTS and others in that community, this is something that could’ve been avoided, I think, if maybe the naming of it had been different, maybe it had been a little clearer about what they were trying to do.

I’ve seen the Grammys quoted as saying, “We respect BTS,” but it doesn’t sound like they’re rethinking this at all, which in some ways I think is a mistake. Maybe they should be having a conversation with BTS and trying to see whether there’s some way they could resolve this and connect these things to make everybody a little happier. But for all I know, maybe they’ve had those conversations and it wasn’t possible.

MORRIS: There was backlash when they created the Latin Grammys, around the idea of whether it is siloing versus celebrating.

SAFIAN: Yes.

MORRIS: Are you doing a better job honoring a community or a genre by letting it have its own night or its own category versus integrating and weaving it into the core product?

SAFIAN: I remember having our own versions of these conversations when I was at Fast Company, and we were talking about doing special coverage for women executives. I had been at Fortune, and Fortune does the Most Powerful Women series. And it’s like, well, should we be doing our version of Most Powerful Women? We decided instead to make it more of a priority to integrate women into some of the other coverage we were doing, right? To not set up a separate category.

That’s the lesson, and the Grammys should have the benefit of their experience with Latin music to try to address this. I also think maybe they just didn’t communicate clearly enough that the broad categories will still include artists who would be honored in this other category. It’s additive. It’s not taking away. That was the hope by the Grammys, but again, the communication wasn’t executed the right way, and they’re paying for it.

Copy LinkReflecting on the FIFA controversy

MORRIS: Whenever we have any of these conversations, we’re most excited to get onto sports business. We’ve just seen recently a lot of backlash to Gianni Infantino, who runs FIFA.

SAFIAN: Oh, yes.

MORRIS: The Gru of FIFA. He tried to make a move to privatize part of FIFA, which, in theory, is supposed to be a not-for-profit organization. There’s still, as we record this right now, a lot of pressure for him to resign. He’s saying that he will not. Is this an age-old issue for FIFA, whether it was Gianni Infantino or Sepp Blatter before him? Were they just getting too greedy?

Was he feeling like there was enough goodwill so soon after the World Cup for him to do this?

SAFIAN: First of all, I love your positioning him as the Gru of FIFA. For those of you who are not familiar with Despicable Me, check it out.

MORRIS: Check it out. We always just want to promote Despicable Me here. That’s right.

SAFIAN: This year’s World Cup, there was a lot of momentum that FIFA could build on. I think part of the reaction is because of some of the historical corruption, frankly, that has been part of FIFA, and a concern that the culture of FIFA hasn’t learned that lesson. But there’s a higher standard that the World Cup represents and that FIFA could, I don’t want to say should, but could represent to the world about sport bringing people together, and I think that’s what sort of rankled people.

Isn’t there any place in this world where things aren’t going to be corrupted by how do we maximize the amount of money we make out of this? I hope that spirit persists not just in FIFA, but for all of us as businesspeople, to recognize that maximizing every dollar today isn’t necessarily bringing us to a better place overall, especially when a lot of the people who are getting those extra dollars don’t really need them. Listen, I love sports. You know I love sports, and part of the reason I love it is because it connects us so well. So if you’re going to do something that’s going to disconnect people in sports, then maybe let it go.

Copy LinkHow prediction markets are exploiting a regulatory gray area

MORRIS: One thing that is splitting sports fans right now is the treatment of Kalshi, the prediction market, which has been sued by New York state for running an illegal gambling operation. The prediction markets are seemingly, to this point, able to operate much the same as most gambling companies without facing a lot of the same regulations. Do you feel like this is just a matter of time? Do you feel like the state has a good case here?

SAFIAN: Listen, there’s no question that Kalshi and Polymarket are being used for sports betting. That’s undeniable. But because they have successfully gotten themselves regulated already as a futures market by the CFTC, that allows them to sidestep some of these other regulations. It’s a very smart move. I think, in the long run, these new models like Kalshi are going to be real players. They are attracting real audiences, and they’re being used for some fascinating stuff.

I mean, looking at your Knicks hat and thinking of the Knicks playoffs, I don’t know whether you remember this story, but during the Knicks’ finals run, there was a bar in New York City that decided to offer a free bar tab of up to $100 for all of its patrons if the Knicks won the game. At the same time, they placed a countervailing bet on Kalshi so that if the Knicks won, they knew, “Well, I might be losing money here, but I’ll make it back over here.” It was this really creative hedge that they were using Kalshi for that is, in theory, what an exchange like Kalshi could be used for. But I don’t think that’s what most Kalshi users are using it for these days.

Copy LinkWhy Saudi Arabia’s Public Investment Fund acquired EA Sports

MORRIS: I want to ask you about Saudi Arabia’s Public Investment Fund, which just acquired EA for $55 billion. If I were Andrew Wilson, CEO, I don’t know how I would feel about this, in that you have a big influx of money coming in. Obviously, this is what happened at Newcastle United in the Premier League. It’s what happened to LIV Golf. There are these big dreams that, for Newcastle, all of this money could have them be a rival to a club like Man City.

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

SAFIAN: I think EA, Electronic Arts, is, I’m sure, thinking that they are quite different from the Saudi investment in sports properties. They’re a much bigger business, with renewable revenue in a different kind of way, and they’re much more established. EA could have gone to the capital markets and raised capital in other ways. I think, again, this is my guess, that they believe they can remake and modernize EA to make it a more valuable company when they’re private in a way that would be more difficult when they were public. The value of the company would fluctuate much more dramatically, and maybe they would become potentially subject to takeover efforts by financial partners they would feel were less supportive than the Saudi Public Investment Fund. In the case of Newcastle, in the case of LIV Golf, I just think other players, when the Saudis come with their money, those lessons are there for people to say, “Let me make sure I’m asking the right questions. Let me make sure I’m pushing back the right way. And let me not get too dependent, perhaps, on this unending fire hose of money that may actually end.”

Copy LinkWhat Taco Bell can learn about rebuilding trust

MORRIS: I want to ask you about Taco Bell. They’ve been struggling with the cyclospora outbreak the last few weeks, and I’ve been surprised that this story has kept going. People are still talking about it. There are still cases being reported. It’s become a real brand hit for Taco Bell and its parent company, Yum Brands. If you were going into Taco Bell to advise them on recovering from this brand hit, what would you say?

SAFIAN: The first thing they’ve got to do is make sure that their supply chain is actually clean, right? Once you’ve had a problem, and really a scandal of this magnitude, at least in terms of public attention, you can’t afford any other scares. Anytime anyone has any difficulties with Taco Bell food, if that gets publicized, it’s just going to reinforce this. This is something that Chipotle went through. They had their own issues with, I guess, E. coli at some point.

That dogged them for a while, and it took them a while to get themselves back on track. When I was younger, we used to call it Taco Hell. Everybody knew that the food there was… you know, you’d get sick. Of course, everyone would get sick at Taco Bell. Taco Bell, don’t get mad at me. That was just the talk that young college kids had about it. But they really got the brand to be trusted and relied on. They’re just going to have to do all that hard work over again, and it’s not going to happen quickly. It just won’t. You had asked me earlier whether this was good for Del Taco or some of the other fast-food brands.

MORRIS: Yeah.

SAFIAN: I don’t think it is. I think it just makes people question, “What am I getting when I go into a fast-food restaurant?” I don’t know that it’s the only reason Chipotle’s stock has gone down or the only reason McDonald’s is seeing a slowdown in traffic to its stores, but it probably contributes. It’s certainly not a good thing. A whole category has to be that much more careful about the quality of its food and the quality of its service in responding to people who complain about how they feel after they’ve had the food. Those bars go up. That’s good for us as consumers if they actually live up to that, so maybe we don’t have to rely on regulation, which seems to be pulling back in some of these areas. But maybe market scrutiny will keep folks in line.

MORRIS: We’re still in August, but as the summer begins to slowly wind down, I want to ask: What are you looking forward to? Where is the puck headed? What should we be paying attention to?

SAFIAN: Of course, I’m looking forward to October 20 to 22, when the Masters of Scale Summit takes place in San Francisco. For those listening or watching who have not looked into attending the Masters of Scale Summit, you can go to the website, summit.mastersofscale.com. It’s going to be a great gathering, and I am deeply looking forward to that. Am I looking forward to the elections coming later this year? I’m not sure. I think it’s going to be noisy and messy, and all the resolution that people are hoping will clarify America’s direction will not be clarified because, as a country, we have not clarified where we want to go. But I hope some things get a little clearer in that. And listen, Alex, I’m always looking forward to whatever the next episode you and I are going to do together will be. We’ve had a lot of chances to talk to a lot of great folks, and I’m curious to see who we get next and share their ideas and sometimes their wisdom, sometimes their troubles, but always interesting perspectives.

MORRIS: Absolutely. Thank you so much, Bob. And to everybody listening and watching, we’ll see you Friday.