AI & Cloud News - End of October 2026

0:08Aaron Good morning, good evening, wherever you are, and welcome back to the Enterprise AI Show. This is your host, Aaron, and on today's news show, Brian and Brandon follow the money through a wild month in AI. They start with Cisco handing a 27-year-old engineer unlimited AI tokens to rewrite almost all of its legacy code in two years.

0:33Aaron And Brian, a longtime Cisco veteran, explains why he has seen this movie before. And after that, they dig into cloud earnings, Microsoft's buyout offer to about 60,000 employees, and Anthropic's S-1, where they split on whether we are watching an exponential curve or a very expensive bet. And all of that is coming up right after this quick break

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1:38Brian Connect with Nord Security to learn more about NordLayer AI Scout. Visit nordlayer.com/ai-scout/enterpriseai and get started today. And we're back. Brandon, how you doing, man? We are doing, as we've started to, to st- to do every, every two weeks now or so, I think we're doing AI news of the month, AI mid-month news of the month.

2:04Brian How you doing, man? It's been a couple of weeks.

2:06Brandon I'm doing great. A lot of people are excited about Halloween. I think I was excited about happy Anthropic S1 Day as all the people that c- cover cloud computing and the financial analyst and, everyone that's ever wanted to have a comment about Anthropic or AI had a chance to read through the, the S1 and cherry-pick whatever piece of data confirmed their previous opinion.

2:27Brandon So I've really enjoyed it. I think it's great. Maybe I should dress up as the S1 Anthropic filing for my Halloween costume this year. We'll see. We'll see what I actually do

2:36Brian Yeah. I I-- Before we get to it I have a couple of things I want to jump into because we first thing I want to do on the sort of mea culpa, apology I have not yet seen the the Blood Lady movie. The you can see anything. You can… I might go see it this afternoon. My one excuse is I have to find some time to go do it.

2:51Brian It is a three-hour commitment, so you got to find some real time to do it. I can't go with-- I can't take my wife to this because I will have to answer so many questions about why was she crazy? Why did she lie to everybody?" And like I… So I got to go find some time for myself. But I know you've seen it.

3:05Brian Did you go have your lunch with somebody to talk about it? Because I know you had a

3:08Brandon Absolutely. Listen I've… It's, yeah, so the movie's officially name is You Can See Everything. Maybe we'll put a link in the show notes. And then I did, I watched the movie, and then my family actually went, 'cause I went on my own, I was like, "This is great." So they went, but they don't probably like to talk about movies.

3:22Brandon They didn't have as many takes. So I have a specific friend of mine who he has many degrees, but one of them degrees he has is a film degree. And so I texted him, I was like, "We're going to lunch." And he's like, "Okay, we'll go Friday." I was like, "Have you seen this movie?" He said no, he hadn't seen it.

3:35Brandon I said, "Okay, no, we can't go Friday. You have to, like, when you've seen this movie, we're going to lunch." And we did it. So he went through all of his theories, I had my theories. It was great. I feel like I really got it out of my system, which was fantastic, which you have to do, in most cases, after seeing a movie like this

3:49Brian Yeah, I am definitely gonna go see it. I gotta go find a day in the next, few weeks before… Although I would love for it to get onto streaming, but I don't think that's gonna happen anytime soon.

3:57Brandon Although I'm super curious your wife w- she's gonna be the stand-in. I ran into one other person. My son was going and he knew a little bit about the situation, but he was going with a friend who knew nothing about it, right? And I was… I looked at this person a little bit like "You know nothing?" And then I kinda explained a little.

4:12Brandon He's like, "Yeah, maybe I've heard of that." I'm more shocked that there are people that have no idea what Theranos is. They're just like… and I'm, I was sorta like m- it's one of those situation where I was like, "Maybe this person's an alien, but maybe…" And then this, I was like maybe this person's looking at me like I'm an alien, that I know so much." So does your wife kinda put in this category?

4:30Brandon She has her interest, and there's periods, there's just things that she's blocked off of? You don't even, she doesn't even entertain interest in those?

4:38Brian I think, so I think, we're gonna, we're gonna get into some… The good news is she doesn't listen to this podcast, so I can

4:43Brandon so yeah good. Good example, divide. She just doesn't, she has no idea what's going on in the

4:46Brian She doesn't care. No, but I think in her case so this the real scams of Theranos happened a number of years ago, right back… So our kids are now into college. I think this was happening though when she was doing like full-time mom stuff. The kids were in high school. She was pretty consumed with what they were doing.

5:02Brian I don't know if she would really know the details of it partially 'cause she was probably like, "Ah, that's nerdy stuff that you do," and blah, blah, blah, which I don't really do anything having to do with healthcare stuff, although it, this was Silicon Valley, so maybe. But no, the, the bigger thing with her is, and this is a running joke that we have, like she loves to just, she's like everybody.

5:19Brian We'll be sitting there watching TV, and she's scrolling her phone, and she loves to just whatever the latest, murder thing is or serial killer thing is, she'll be like, why do you think that person did that?" "Why do you…?" And I'm always like, "Honey, because they're crazy." J- it's just like there, there, there's no, we're not discussing this.

5:34Brian It's they're crazy that kind of thing. So like this would be three hours of her being like, "All right, I'm bored with this. I don't understand why she keeps lying to everybody," and but no, I'm, I'm-- we're definitely gonna go watch that

5:43Brandon All right, listen, I'll just give it a plug. You can tell her. I don't think she'll be bored, but I think she'll have many questions, and frankly, I knew a lot about this and I'm like, I left with I just think you can't leave this without having a lot of questions. There's just no way.

5:56Brian No, and

5:56Brandon part is fun

5:57Brian And I've been, I have been there, there must be, I don't know, six or seven podcasts in my feed that now have de- they're not dedicated to this movie, but like they're having dedicated episodes, and I'm trying to avoid them all. Like I'm trying to avoid all the spoilers. I know there's a lot going on with it, but so yeah.

6:12Brian So the, the good news is I got a lot to listen to. I know we're usually legally obligated to talk about college football, and we could talk about the AI bot that your local school University of Te- University of Texas is deploying. But I wanna swerve a little bit 'cause I, there was an article, there was something that came across our desk, came actually, came across the Software Defined Talk Slack just moments ago.

6:31Brian This is breaking news. This is hot off the press. And I bring this one up only because, everybody has sort of their favorite company that they like to follow, maybe because they work there, maybe because like it's just their favorite company. I know a lot of people, big into AWS or VMware or whatever.

6:44Brian My mine happens to be Cisco because I worked there for a long time, was there during the internet boom. Great article that came out today, and I think we wanna talk about this 'cause I have, I don't have any background on this one, but I have a little background on some previous Cisco with this. So basically the headline is "Cisco gives 27-year-old engineer unlimited AI tokens to rewrite 98% of the company's legacy code in 24 months.

7:06Brian President plucks former startup founder, telling him, 'Go nuts.'" All right. So let me provide a little bit of context on this. And I'm going to butcher this person's name. I'm gonna give it a try. I'm notorious for butchering cur- person's name. The employee, Padmanabhan Krishnamurthy, which I think is pretty close joined Cisco after it acquired his company, EasyDubs, which does feel like, a name you would see on one of the betting sites, EasyDubs.

7:31Brian They were a translation startup company. I'm assuming he was the CTO or the founder or whatever. And as, as, oftentimes happens when big company acquires little company, it's like, "Cool, we acquired them," and then they get, chucked into some existing business unit, and they're "I'm not the man anymore.

7:46Brian I'm stuck doing whatever work they have." So he must have walk up to- walks up to a guy named Jeetu Patel. Jeetu Patel is the president and chief product officer at Cisco. He was actually there when I was there. He was, he had come in through some acquisition. Anyways, they must have met at some sort of event, and this, this guy, this 27-year-old, basically walked up to him and said, "Hey, man I'm stuck doing st-" basically "I'm bored."

8:09Brian He's Peter from "The Office." He's like, "Man, I don't really need to come into the office. I'm just, vesting and waiting and stuff." And he said "All, all this stuff that you guys make is old. It's boring. I could rewrite the whole thing in…" Like this feels like a, a real-life episode of Reddit. He basically went to the president and said, "I could rewrite your entire code base just using AI by myself." Actually, he said, "Me and one other guy could rewrite the entire code base." And the president as, as you might do at a whatever, just goes, "Yeah, man, go for it."

8:36Brian Except this one decided, no, not only that, not only am I going to tell this guy he can do it, he can have unlimited tokens, which again means basically a blank check, but they felt this was something they wanted to put out into the press, right? This is not just a, doesn't a random thing. This is from a real news outlet that covers Cisco all the time.

8:53Brian Thoughts on this? Thoughts on, on a, a major public company essentially saying, "Yep, we have this all, old in- installed base. I'm willing to write a, give a blank check to one or two people," who knows how many "and I'm going to publicly tell the world that our entire code base could be rewritten in 24 months."

9:16Brandon I saw this whole article that you just summarized really very well, and I thought to myself my question is Cisco hiring. I'm ready to come on board, right? Because I was thinking to myself, it's like I love the idea here, right? I'm I think… Now, the implementation, the part I don't like about this at least with the reading of it, was like they play up the big the fact that he's 27, that he's Gen Z, and as if that is like some magic button.

9:38Brandon And it even says this is gonna create some friction, but it's healthy friction." I'm like, listen, I'm gonna speak for some percentage of the Cisco employees. They're like, "We've been using it too, and we think that there are lots…" Maybe not everything. They probably think to themselves more around the systems that I know really well at Cisco, I think we could probably rewrite them.

9:56Brandon There's probably 10% of the Cisco employees that are there that are like, "Yeah. Exactly. We should be doing this kind of stuff." So I think, I guess I would just calibrate this a little bit around I don't know why you would just give it to one person or two people and because, it's fine. Maybe he can still do it.

10:11Brandon I like the audacity. But I would just say you probably greatly improve your chances if you add more believers to the team, right? And those people have a little bit more… they're excited about doing it, but they have some more knowledge about the systems that are being rebuilt, and it would just go a little bit smoother.

10:27Brandon Because even no one person can use… and maybe they will do that. I don't know how they're doing this. My idea in my head when I saw it would be like they've got 20 monitors, and they've got 50 agent teams running, individually. They're each running 100 agent swarms running, so they have got 50,000 agents running or something along those lines, and I'm like, I don't nec- like, why not try?

10:49Brandon Part of me is like, "Okay, give it a shot." But I'm also like, if I was doing the project and I just said "Let's get more people that are excited about doing this. Let's fan it out a little bit." And I'm not trying to create a lot of bureaucracy, right? But let's maybe… C- And also too, like, how'd they get 98%?

11:02Brandon I don't… what what, how suddenly are they this? Like, why not 100? Why not 95? But my point is just like when inside Cisco or any large company, there's lots of different systems, right? And I think having more expertise, even if you're just the, quote-unquote, "orchestr- orchestrator of the agent," just to make sure, it's no one person's gonna know all that.

11:20Brandon And so I don't know. I don't… We, I would… open invitation to this person. Come on the show. Open invitation, though. Come on the show. Tell us what you're doing, and maybe correct me. Tell me how you are interacting with the other groups, or if you're not, because maybe they are doing that.

11:34Brian Yeah. So two things. One, o-open invitation to either this individual, Mr. 27-year-old, or Mr. Patel. Mr. Jeetu Patel, if you wanna come on as well, or both of you. Happy to do, we can sit down and do that. The reason I brought this one up, the reason this one got me because again this whole year there was a period of time when every Silicon Valley person was like, "Dude, I am token maxing.

11:52Brian I am…" We-- look we've been through some of this stuff. We've all read the, the, the Reddit thread where some guy says, "Hey, I could rewrite Twitter in a weekend." This is not… there's really no bravado in this whole thing. This guy's got nothing to lose. But what was interesting to me, and the reason I brought it up, is like, hey, everybody's got their favorite company.

12:08Brian So when I interviewed with Cisco back in 1996, so early part of '96, so that's been 30 years now, one of the things the guy who was the general manager of the group I was interviewing with said, "Hey," and he just brought this up randomly. I don't know why he brought it up. But he said, And again, this was when Cisco primarily had two products.

12:26Brian They had routers running a, an operating system called iOS, which, kids, there was something called iOS before, before the phones. And then they had a new version called iOS X something, right? And he was telling me, he said "We have a dedicated group of people. We have some of our best and brightest who are completely rewriting that code from scratch, from the kernel all the way through it, because," and again, this was 1996.

12:51Brian The internet wasn't that big. We are, we've outgrown that architecture," right? So they've been trying to do this rewriting thing, and again, this was back when they had one product. To put it in context, I was at Cisco for 14 years. I know we acquired at least 125 companies, so that's at least 125 different OS's that came into the company.

13:10Brian And then what happened around '97 or '98, they acquired this company, little, tiny… So Cisco was in the in the networking space. They made a product called Routers. They bought an adjacent product space called Switches, which people understand now. They're just Ethernet things. And they acquired a company and that company did tr- that group did tremendously well to the point where they became the biggest group within Cisco.

13:32Brian They became the biggest revenue group within Cisco, and the, the founding group of that team actually picked up a nickname based on the founders' initials. It was called MPLS. It was Mario, Prem, Luca and Sony. And they, they were they became the most powerful group within the company. And you go, "Okay, that's cool.

13:47Brian That's a great, story of, hey, an a- an acquisition for $100 million turned into a $50 billion business. Good job. Way to go." What those guys did At some point, they got bored with being the biggest business, and they said, "We're going to go off and work on our new ideas, and we're gonna go find some VC funding."

14:05Brian And the Cisco CEO said, "Whoa whoa. Don't leave. You guys are awesome. Don't leave. I'm gonna give you basically special privileges." The equivalent of, you might say, unlimited AI tokens. He basically said, "I will give you a blank check. Please go off and create your thing. I will be the VC of last resort."

14:22Brian And so they went and did this. And they, at that-- Then they built a, a decent business because that next idea wasn't as good as the first idea. But then, of course, they got bored. They didn't like the idea of doing dev and test. They didn't like doing regressions. They didn't like maintaining stuff with P1 calls from customers in the middle of the night.

14:37Brian And so they went into this cycle of "We are just going to, every couple of years, leave the company, threaten the company that we're gonna leave, and go get outside VC funding." And in essence, that MPLS group just became the, "We get to only work on cool stuff. We are going to fix the company." And for whatever reason, Cisco's CEO was like, "I can't quit you.

14:57Brian I am so addicted to you, I can't

14:59Brandon giving you

14:59Brian And I'm like, "Hey Mr. Patel, Mr. G2 Patel, now president and chief product officer, you may wanna do a little bit of Cisco history that this has been done before." And your quote where you say, "Oh, I just, what's ex-- I actually try I actually try to create tension in the teams because you want to have enough friction on the ideas.

15:17Brian You don't wanna have friction with people and personalities." You know what happens when some people get to only work on the cool stuff, and you're probably giving them a bunch of money without any real obligations, without any accountability, and everybody else has to work on the stuff that makes money and has deadlines and stuff, Mr.

15:31Brian Patel? You have friction with people and personalities. I wish all these folks the best of luck, but it

15:36Brandon I like it, and I think what you're

15:37Brian it's fun to watch history repeat

15:39Brandon I like it. I do like it. I love that whole take there. But, and I think what you're highlighting, and just to say it a more simple way, is like probably a lot of the software can be re- written, but any large organization is very difficult, and it's a group of people, and it may not actually… Actually rewriting the software may not be the hardest part of that, right?

16:00Brandon And that's what most… M- this is the thing most of us learn over and over again. It's it turns out the, the people are the hard part. And so maybe the challenge, maybe the biggest challenge if we went back to that person that wanted to do this if you really wanted to do this, you should leave the company and just start a new company, and just be like, "I'm gonna build it up from the ground up as an AI-first networking provider," because then you don't have all the people and the process and all of that hangover.

16:28Brandon 'Cause to your point this is why most of these projects in broadly, let's call it digital transformation, fail. Your point's very valid

16:35Brian The beauty of this is if you were, let's say you were a smaller company. Let's say you were a, a reasonably good-sized company, but you still had a lot of market to expand into, right? Let's say you were VMware when VMware hadn't gotten into networking and storage and all the other things. It was just, it was a thing.

16:51Brian When they say we're gonna redo 98% of the product, essentially, if you went to Cisco and said "How much more market do you think you could get into with what you have? The current products you have, how much expand…" They'd probably be like, "Ah, single digits, maybe double digits if we kinda really push this."

17:06Brian So what you've done is you've told everybody else and your customers that, "Hey, I'm going to impose probably a huge upgrade on you. I'm gonna make you completely probably change how you do operations around this stuff." It's not, their stuff is probably written with- in a lot of C and C++ 'cause it's gotta be down at the hardware level.

17:24Brian W- okay, I'm sure he's gonna write this in Rust because everybody just says they're gonna rewrite it in Rust. But you're… At the end of the day, you're like, "W- and what is this going to do for us? What is this going to do for our customers?" They're still going to get routing updates and a- access lists and, it's as if, it's as if they're like, "Oh no, it's okay f-" for anybody who's ever gone through a major rewrite, and you wanna do this for 98% of your products, how about doing this for one of your products that you still think you have massive expandability for?

17:52Brian But I guess that doesn't make as good of a headline, and it doesn't seem like

17:54Brandon It's not a fun

17:55Brian thinking big enough and blah, blah, blah, blah. But yeah. No, this one made me chuckle. I do think, though, like somebody said on the Slack, I wanna see those status updates. I wanna see those status presentations. And yeah, I hope they come on the

18:06Brandon that would be like the

18:06Brian would love to have them come on the show

18:08Brandon First question is when they come on the show would be like, "Okay, so you're doing this like like what do you do every… what's the one-on-one like? Or are you presenting…" 'Cause this is what I bet happens. I bet you like, are there red, green, yellow PowerPoint slides that have to be presented on some increment about the status of this project?

18:22Brandon 'Cause right away you'd be like, "It's not gonna work." Like you're already missing… You know what I mean? Just the nature of like you trying to run this project is actually preventing this project from succeeding, so that'd be fun. I… Listen, I love it. I like the attempt, and I do think what you highlight, and I think, we'll probably get into this I've…

18:38Brandon The more natural way is people leaving their companies and being like, "I'm just gonna do it from the ground up." And then to your point, customers can opt into the new solutions if they feel like they're more compelling, and that's really the way you disrupt it versus like this, to be more cynical, this does just read like good PR for a big company.

18:57Brandon It's we hired a young person, Gen Z, AI, and in like maybe a year nothing happens, but none of us will remember that. I guess maybe you'll remember this. The rest of us won't.

19:06Brian yeah, no, I, and I'm gonna try not to remember it. I, I do… I guarantee there is a slide somewhere that Mr. Patel put in front of a bunch of people, because he, he had to go to some- somebody in, in, in finance or accounting and said "Hey go in the blank check checkbook. Get one of those out, send it over to our friend here." And they went, "What?" And he said, "We are going to reinvent ourselves before somebody else does." There, there's a slide somewhere that says "SaaSpocalypse.

19:29Brian We're gonna, we're gonna reinvent ourse-"

19:31Brandon there's like a copy of that book somewhere. Like, all that's in there. I like

19:34Brian all those quotes are in there. No I do think if, although if we do end up getting these folks on the podcast, which w- again open invitation, Cisco PR, if you'd like to have them on. I do think what we do, I think we open the show and it's like either you or me, either one of us, it can be me 'cause I've got some Cisco background, and I'm gonna get real close to the camera, and I'm just gonna get them real close to the camera.

19:53Brian We're gonna be real quiet, and I'm just gonna go, "How's it going?" I'm just gonna pause, and I'm gonna be like… And they're gonna tell me, and I'm gonna go, "Really? Was it as easy as you thought it was gonna be?" And they're gonna just, and we're gonna do the whole Blood Lady movie thing for

20:09Brandon I like

20:09Brian a minute and a half until everybody gets uncomfortable, and then we can talk about how he's rewriting everything

20:14Brandon ever. I love it. Let's do it. Come on the show. Come on the show, Cisco people

20:18Brian There we go. Th-that I hope that was okay. I know for those of you that wanted football minute that was a little longer than we expected. But yeah, we saw that pop up on the news, and I thought we had to discuss it. It was a big two weeks, man. We had a ton of earning announcements. Why don't we go through the cloud earning announcements?

20:31Brian 'Cause I think there was at least two interesting things in the cloud earning announcements. AWS announced their numbers. They were… AWS, AWS is now up to about $45 billion per quarter, almost $46 billion per quarter, so that puts it about $170 billion. Again, like I always come back to being like, can you ever imagine, back in, 20 15 years ago, 12 years ago they would be that big?

20:53Brian So they're doing well. Amazon continues to to, keep crank- I think they're actually going to be the biggest spender of a free cash flow next year. But the big news Am Azure finally broke out their numbers, right? We were always like, "Okay, their numbers aren't fully Azure. They include a bunch of other stuff." They are now breaking out the Azure number.

21:12Brian I don't know why this quarter they're starting to break it out, but they're breaking it out. They are now a $29 billion per quarter business. We thought they were getting pretty close to AWS. The number's not as big, but the surprising number is Google Cloud is now a little more than almost $25 billion per quarter.

21:28Brian So Google Cloud and Azure Cloud are very close in terms of being number seven or number two. I feel like in any given quarter GCP could actually leapfrog them, which I think was one of Aaron's predictions maybe seven or eight years ago, that they would eventually leapfrog to number two.

21:43Brandon it'll come true?

21:44Brian He's in the ballpark. But the clouds are doing well. Continue to do well as, as Coté would always s- you know, to say, "Oh they made a lot of money. Good for them." But any surprises in the in the three cloud a-announcement numbers that came out this, this quarter?

21:55Brandon Not so much surprises, but I will say this, that, it was one of those things like AWS and that revenue is doing well, but, the headline was A- Amazon misses earnings. So it's sorta like you're doing well, but again, graded on this specific curve, we're still worried about what you're… We're… let me say it this way.

22:12Brandon We're still very worried about all the money you've told us you're gonna spend

22:15Brian Yeah, I think, yeah, I think it was two things. I think they, people are like, "Oh wow, you're still spending $220 billion a year on, on this stuff. That's crazy." I think they also missed by like a billion and a half dollars on their ad stuff, which is interesting because they missed on their ad numbers.

22:32Brian And the thing with Amazon… What's that?

22:34Brandon I was just gonna say Google missed on their

22:36Brian Google, yeah, Google missed on their ad numbers as well, and it, it's-- The, the thing that's interesting is, Amazon has such a captive market for their ads. Basically, like you have to be on the shopping thing. But what's, yeah, what's interesting is Meta, which we don't typically cover, blew their numbers away, right?

22:53Brian So it does between Amazon missing, and again, this is one data point, Google missing, and again, one data point, it does make you wonder, is most of the ad stuff being driven by like mobile, which, neither Google, people are-- If they're shopping, maybe they're doing it on their phone, but y-you're m- less likely a-as a, as an Amazon shopper to be looking through the ads as you would on the web.

23:15Brian Same with Google Cloud, or Google, if you're doing stuff on the web, you're more likely to see the ads. Facebook has basically, or Meta has basically become, entirely web-based, especially around like Instagram and all kinds of stuff like that. It does make you wonder if the mobile sort of, the, the very mobile-centric generation is now the one that's basically driving where the ads are going, which, makes sense.

23:36Brian We've all got, their service have all gotten older and stuff. But I think, yeah, those are gonna be interesting to watch, maybe not so much from a cloud and AI perspective, but from a just a, how much, where are you getting revenue to then go fund the other

23:47Brandon and I think that's why I think it's interesting to talk about Amazon and Google together. It's like the, the part, the parts that we know, AWS and GCP, doing extremely well, but requiring massive invest- investment. Then those businesses are, quote-unquote, "funded" in the large part through advertising, slightly different models, but those businesses are showing…

24:06Brandon I don't, again, they're both great businesses. It's not like I always like we should put this in quotes, but any type of… this is what investors worry about. That's the narrative they worry about. It's like wait a minute. If you spend all this money and your advertising business isn't as good, then where's the money gonna come from?

24:19Brandon So and then in the case of Google, it is a little bit even more interesting because there is some talk that the AI search, which you use even if you don't know it, when you type in a Google search, that is not performing as well on an ad side as it is. Which is interesting. So here they are building the business that, if you will, kinda takes away their thing.

24:38Brandon So I think that's the part that's interesting is just like investors like… Let me just say it this way. I would say this we're going into this next year, billions are being invested. There's just no way around it. And I think it's it's just a bunch of people you got together, and it's like but what if it doesn't work out?"

24:52Brandon And it's yeah, that's definitely a possibility, but it doesn't matter. They're going to be invested. So I just think you just have the stock market and all these companies just worry. Just and some people believe in it, and some people don't, and some people like, "Don't take on so much debt," and other people are like, "We're gonna do it."

25:07Brandon But it's happening. Whether you want it or not, it's happening

25:09Brian And they're-- and all of those companies, the, the whole Mag 7 are all basically locked in a game of, winner take all. Like the, there are no longer any belief that "Hey, we're gonna be cool with two or three of us dividing up the pie or two of us dividing up the pie." They're all basically we are all going all in." I think Microsoft was really the only one who wasn't negative free cash flow.

25:30Brian And yeah it's interesting to watch how many of how many of the, the financial analysts now all they do is talk about AI, 'cause they're basically the ones that are saying like, "Look, the only bet in the market right now is AI," right? Call it however you want, but, the only bet is AI and stuff. Yeah it's interesting stuff.

25:44Brian Do you want to, I think that covers most of our cloud news. I think the other sort of cloud news is less sort of cloud news, and it's more having to do with the flip side of this. We, we saw the negative side of it, which is, we're starting to see Microsoft, I think, offered like 27% of their workforce, which is a lot of

25:59Brandon 60,000 people have been offered early

26:01Brian offered them early retirement and so forth. Yeah, has a lot of people freaked out that like the entire IT market… It's if that number of people take the buyout, at some point they may go looking for other jobs. They might not be ready for retirement. Like I, I don't know if this is like the, the end of the over hiring that happened because of COVID, or if this is a combination of like the end of the over-hiring of COVID plus, most of this stuff I think is gonna have to do with "Hey, we can't even afford people anymore 'cause we're spending so much money on buying GPUs and building data centers."

26:32Brian But I think that's-- I think what's gonna be interesting is like how much of that is contained just to the, the certain number of tech companies, but the trickle of it is other leadership groups, whether you're in banking or finance or, you're banking or pharmaceuticals or airlines goes, "Oh, we should just do that too," 'cause that's what's grabbing headlines, and look what happened to their stock price.

26:50Brian And that's not a trend that we love talking

26:52Brandon I think it's a little unique though in the sense like Microsoft obviously all these companies making these huge investments. My recommendation, I don't know, it's probably not what people wanna hear, is like I think take the buyout and then take take enough money in your buyout to then go get your subscription to Claude or, one of the best ones, and learn how to become the, the greatest person at AI.

27:10Brandon Because I think that's what's funny about this whole thing is it's like all these people, all those companies you just mentioned, like banks and everything, they need help figuring out how to use this. And it's if Microsoft doesn't wanna do that, if they just wanna, we just wanna build infrastructure, like everybody that leaves Microsoft is gonna be capable of going out and helping people with AI that d- that wanna do something.

27:28Brandon So I think it's to me it's grab your buyout check, go go on vacation first if you can, take some time off, and then go just become… And it's kinda like the Cisco thing. It's go become the, the people that are like, "You know what? I'm just gonna start rebuilding the things that all these big companies feel like they either can't rebuild or won't rebuild," and I think a lot of people will be successful.

27:46Brandon So maybe and I say that, again, if you have choice in it, it's obviously a lot better than just being told to leave. Think

27:52Brian Yeah, it'll be, yeah, it'll be interesting to see if we have a resurgence of essentially what is peop- old people remember this, like the concepts like Kelly Services. Oh, we're, we need a bunch of people to, it, outsourcing. Whether it's outsourcing or like local temps or whatever, 'cause not everybody wants to just go out and… they may wanna go out and build all those like FDE skills or AI skills, but they definitely don't wanna go off selling themselves and having to do all the backend stuff of what a consultant is.

28:13Brian And so it'll be interesting to see what little pockets of people get together and somebody is essentially selling their time and services. Again, not a

28:20Brandon and be like, you know what? Grab the … Just look around and be like, "Hey, who's the salesperson that's leaving, and who's the…" And it's like, let's just, let's get 10, 15, get people together. Let's and f- and funny, the funny enough, it's like probably you can sell some services back to Microsoft, which is

28:32Brian Oh God,

28:32Brandon the funniest, most ironic way these things happen. So I, I, if I… If you're in a position of strength and you can do it, man, go do it. This is like opportunity is now

28:41Brian Yeah and you highlight the most important thing, which is like the, the company that fired you is probably the most likely to be like, "Oh you already know how we work. Sure we'll hire you back," but like on some sort of hourly or,

28:50Brandon sometime a consultant, do something. Yeah, try it out. I say go for it

28:53Brian All right maybe we should get to the main event. Again, there are dozens and dozens of things in the AI and cloud news of the month stuff that you can, folks can go dig through. Do you want to give your two cents on the on the $2 trillion potential S1 IPO from the f- folks at Anthropic?

29:08Brandon I just think that's one, like I said at the open, right? It just comes down to this. I think there's lots of fun charts in there, and there's a chart for everyone. You just go- going back through it, it's y- we are seeing revenue growth that no company has ever experienced before, right? And when you look at the charts, the exponential numbers people talk about a hockey stick.

29:23Brandon It's I don't even know what's g- what goes up faster, right? A rocket ship. So you clearly have that, and simultaneously you have if you will the commitments to spend on cloud, almost going up equally as fast. So it's just you just have to decide w- which piece of evidence you would like to cherry-pick and make your case.

29:42Brandon But I do think, if nothing else, this is the great perfect scorecard for us going forward, because we're now we're gonna be able to see every quarter, and as many people have made this point already, it's like at the very beginning, an exponential line and a linear line look the same, right? It's when you s- when you draw them at the beginning, it's the same, if you will, a slope.

30:01Brandon But only over time does it reveal itself is what's going on. And I don't think anyone really knows what's gonna happen. I, regardless of who you are, I don't think we know what's gonna happen. But we are definitely, as an economy, about to make this huge bet, and Anthropic will really be our guiding light until OpenAI comes out to, to see whether or not this revenue growth actually continues.

30:25Brandon And when I say that, that's just a proxy for demand, right? And I do-- You know, I know we've talked about it on this show, and it's been talked about a zillion times by everyone else. It's like all the circular financing, all that stuff. It's to me, like I just-- It does not matter. It doesn't matter at all.

30:40Brandon It just, all that matters is that the revenue growth and demand increase this exponential pattern of growing. And if it does, things are gonna work out. It's gonna be great. And if it doesn't, it's all gonna be bad. It doesn't matter if it was circular financing or regular financing or what. It's gonna be really bad.

31:01Brandon So it's that's like the simplest way to look at it. And then, of course, there are millions of finance blogs where they go into, like, all these weird, you know, s- finance geek terms about, revenue growth and SaaS and retention and, net margin and, so yeah, it's but it's all that matters, man. All that really comes down to it is just demand.

31:18Brandon So that's where I come down. What do you think? You've thought about a lot of this as well.

31:21Brian Yeah, no I it's, I've, I've had it thrown at me, and again, these days, like nobody, nobody really just does the like, straight down the middle these are, this is what the numbers look like, and this is, this is what it w-," like you you hear very few just like finance professors or economists just go down through it and be like, like I, I would l- it's always somebody who's like, "Hey, this is a bubble." They've got Ed Zitron on, and Ed's of course pitching his book of like the world's gonna end, and these guys are all t- they're all frauds and blah, blah, blah.

31:47Brian And then of course you'll have the All-In podcast or you'll have some Silicon Valley driven thing that's like, "Hey, you guys just don't even understand how big AI's gonna be, and it's gonna, it's gonna be 50 times as big as it is, and…" But yeah, like it, it is one of these things where and again, th- this is by no means financial advice, and by the way, for 99.99% of you that don't have a dad who's like works in private equity or something, like you're not gonna get access to these shares anytime soon until maybe you're like S&P 500 has to mandatory buy them, 'cause they're not really going out with that many shares.

32:17Brian This is just like SpaceX, where it's like it's a small, it's a small allocation. All that stuff's already been pre-allocated to, friends and family of, all the bankers and all that sort of stuff. But yeah, it's, it is one of these things where, again, we've talked about this a million times, like you, you-- everyone talks about, hey, this is, this company is the fastest, money printing machine in the world.

32:36Brian They've grown faster than everything and the flip side of that is also they're not profitable. They're not anywhere close to being profitable. And for all the companies that people didn't really understand, like Microsoft or Google or whoever, that were the 500X growers but they were all profitable at IPO time.

32:53Brian They were all wildly profitable at IPO time. This one isn't profitable now. It probably isn't going to be profitable for the foreseeable future. And, a- again, it's going to be like… I think the thing I hear from everybody, and again, this is where you go back to separating the AI demand from is this a good investment or how well will they do in the marketplace?

33:13Brian It's like they are rushing this thing out the door because interest rates are going up. Their growth rates have slowed down between the Q2 and Q3. They just came out, and they're like, "Oh yeah, they're not as fast as they were last quarter." They have, more demands, more compute commitments that they have that they can't get out of.

33:28Brian I thought that was an interesting some- one somebody was walking through the other day, which is yes, they've got like $300 or $400 billion of compute that they can't get out of, that they can't back out of it, they can't force, majeure their way out of these things. And they're like, so you'd have to have growth of like 10X of where they are today.

33:44Brian So that hockey stick is going to it's gonna start turn- curving back the other way. So it's gonna be interesting. And then of course, the, the best part about the whole thing was this is probably the first major IPO in history that has absolutely no, no regulation, but has an entire section that's "Oh yeah, and we could destroy the world or-" kill you all or be massively damaging to all sorts of things.

34:03Brian And people are just like, "Oh, yeah. Yeah okay, yeah, that's

34:06Brandon yeah.

34:06Brian I'm perfectly fine

34:07Brandon and it's just a bullet point

34:08Brian Yeah, it's just a

34:09Brandon of many, it's like one of many. All right, so I like where you're coming from, but I think the one of the things I've been thinking a lot about, and I heard this somewhere else, so I'm stealing it, but it's it's just how bad human beings are at exponential growth. And I'll just give… I just wanna give like a couple-- I'm gonna take a, couple positive things just to offset it a little bit.

34:22Brandon It's we mentioned Amazon at the beginning of the show, and if you go back and read just a bunch of the Amazon books I've read a bunch of them. But anyway, one of the things they talk about in there is that Andy Jassy's putting together the quote unquote, "The first memo," right? The first, six-pager or whatever.

34:37Brandon And in his wildest dreams he's like, "Maybe one day this could be worth a billion dollar business," right? And like here you have a zealot creating a proposal that's supposed to get people ex- very excited about investing in this thing, right? And the best he could conceive of in his mind was a billion dollars.

34:58Brandon And you gave the number earlier. You said today it's on the verge of $180 billion business. And if you watched this week, he's come out and said, eventually this can be, he believes it could be a $1 trillion business. And it's I don't think Andy Jassy's stupid. I just think he's a human being, and he doesn't think…

35:15Brandon And it's when you see success like the mind doesn't really let you think of it that way. Another one I-I'll think about, nothing to do with cloud computing, but I ran across this stat the other day, or this story, was that the Wright brothers, think Orville Wright, up in your area, right? I think Kitty Hawk.

35:29Brandon They did the first flight, great place, by the way. Go to Kitty Hawk. One, the hill's not that big. That's the most important thing. But anyway, in his lifetime, he was there for the fir- obviously, he was there doing the first flight. But he said he lived just long enough to see the human the, the fastest if you will plane break the sound barrier, right?

35:47Brandon So if you had told him that day "Not only is h- this flight gonna work, we're gonna break the sound barrier in your lifetime," I think people would've thought that's absolutely ridiculous. And so that's just two examples of exponential growth and improvement in areas, right? Computers would be the other one.

36:03Brandon The first computer, the ENIAC, whatever, could do nothing. Now, your iPhone is whatever. However, how much better is the iPhone today than the first computer? And it's like we don't think it's exponentially better,

36:14Brian Oh tom, Thomas, is it Thomas Watson? I think it's Thomas Watson, the founder of IBM was like, we can't see a market for more than five computers in the world." So yeah,

36:22Brandon so my… And again, I'm just trying to for the pod. So if you believe that and this is where I think the Anthropic people clear- I think this is what they clearly believe, and the AI people that are truly pills you're gonna see AI get exponentially better. So like next year it's gonna not be two times better.

36:36Brandon It co- it could be twice as good or four times as good. And then in five years when we start to compound that exponential growth, right? What's it like if this AI is 100 times better than it is today? What does the market look like? And I think that's the part, like we just as human beings, 'cause we're used to linear growth.

36:54Brandon 'Cause most things in our life aren't really like that. A plant grows very slowly, it doesn't come out. And so I just think that's the part where if you want to see the other side of it is yeah, if this is 100 times better, we're probably s- we're solving problems we're not even conceiving exist, right?

37:10Brandon We don't… we literally can't conceive, and that's where you're gonna see this tremendous productivity growth and, and all these things. So that's just one way to think of

37:17Brian yeah, no, that, and those things are all awesome. The best news of it is if, like I, I think about this in terms of, like the, the people that are fans of it and so forth. The good news is if it goes out as a, as let's say a $2 trillion stock, right? And you're thinking about this like, "Hey man, I'm just, I'm in this for the Benjamins.

37:32Brian I wanna make money on it." And you think about like the growth of like a Microsoft or Google, and people go if you'd put a dollar into Google or $1,000 into… you would be worth, $50 million or whatever." The good news is most of the growth of the stock probably already has existed, right? It's, it is the foundation of the financial system.

37:49Brian It's not gonna grow 50x or 100x. That would be, 10 times the entire, GDP of the world. So that's probably not gonna happen. So you got that going for you. It's already put software developers out of business who should be its best friend. It's putting mathematicians out of business who should also be its best friend.

38:03Brian So that's cool. It's going after the people who should be its greatest its greatest cheerleaders and so forth. I don't know. I think it's gonna be interesting. I think it's really hard for people to separate the difference between being like, is this technology, could this technology do really interesting things?

38:18Brian And then being like will that ever happen in a way that is sustainable for economies, for, profitability, for mankind and so forth? Like we've talked about flying cars since "The Jetsons" was on, and we were all excited about that sort of stuff. And we were like, man, if there was flying cars, we wouldn't have traffic.

38:35Brian You could go wherever you wanted to. You wouldn't be limited by these sort of things." And never happened, right? Still hasn't happened regardless of what you think about Elon Musk's, charade he

38:43Brandon that's also say, like in AI there's

38:44Brian but this is where I k- I kinda come back to this whole thing of like you, you can hold two things to be incredibly truthful. One is like you for example, like you let AI run all sorts of stuff in your life and you're super happy with it. Now, it still can't s- you know, schedule things properly, but that's, that's a 10x, that's a 10x opportunity.

39:02Brian But at the same time, like you wouldn't pay f- $10,000, you wouldn't pay $10,000 a month for it, I don't think.

39:09Brandon Not today. I just, I can't afford it. It's as simple as that, right.

39:12Brian be- and also because you haven't come up with a $100,000 a month idea yet. That's the reason you wouldn't pay $10,000 for it, is you don't have a, a 10X thing on top of it yet which you might. You might come up with the next Amazon. And th- that's the part where I think it's, as much as it's really hard for people to separate like straight lines from, lines that go up and to the right sort of things, I think we also have a hard time separating this idea of I love my $20 a month subscription.

39:36Brian I love my $100 a month subscription. But you can also be like, and I have no idea where the f- the, the $4 trillion in funding has come from, nor do I understand how they're actually being profitable on that $4 trillion, which is the foundation of like thing growing into the future to become those 100X things.

39:55Brian I think that's, that, that's what the thing's gonna be. And this is going to be, the, the perfect jumping off point for let's see what happens, right? Let's see what has to happen in order for this thing

40:04Brandon And maybe that's the fun- that's the best reason for the Anthropic IPO is we now have a perfect window. Yeah, we need a window into we're all gonna be able to see what happens. And we can… In a year from now, we're gonna be like, "Local maxima, the, it's not exponential pain," or something great's gonna happen, and we're gonna be like, "Yeah we weren't thinking big enough."

40:21Brian Right? It's, yeah we might see, we might have to see Dario Amodei run for president of the United States and then declare Anthropic a national, standard for the country. That might be the way for him to get to his number. Or there might just, it just might be naturally growing that way. Who knows? We'll see what happens.

40:36Brian So all right, man, we've gone on for a long time. We didn't cover as many topics as I thought we would, but we covered a lot. It was mostly mostly money, this one. And of course, and our friend our friends at Cisco who are gonna reinvent Cisco, which is gonna be cool too. So we-- I mean, I think at the end of the day, if I wrap up this show, w- we're, we have two pillars to this show.

40:50Brian We have one, which is, will somebody actually completely rewrite a Fortune 500 public company in two years, right? Nobody else has held themselves out that they're going to do that. Lots of people have talked about the mainframe. So we've got that as a tent pole, and we've got the Anthropic IPO, which is supposed to go out here pretty soon, probably before the end of the year.

41:08Brian We've got two really good things to be looking forward to and to measure again. So any last thoughts, man? We didn't talk about football. You got a chance to get some football stuff in if you want to.

41:16Brandon No, no football. I think it, much like the Anthropic AI IPO, it's like we're mid-season, so we have to wait and see. We'll have to wait and see who rises to the top and who finally implodes. W- J- and we'll see. Tune in a couple weeks, we'll give you an update on that, too

41:27Brian That's right. That's right. All right, folks. With that, we're gonna wrap it up, and we will talk to you next week Thanks for listening. Check us out at theenterpriseaishow.com for past shows, newsletters, and all things enterprise AI