Everything is gambling now

Welcome to the Birdcast, the flagship podcast of the difference between tool use and computer use. I'm your friend David Pierce and I am almost done setting up my new studio. I mean studio is strong, I met my desk, I have some lights, I put up all this cool, like it's, they're acoustic tiles, but they also just have nice texture and look sort of like I'm doing this on purpose. I have this awesome light from MoMA, I have my knockoff TikTok shop headphones, I have everything I need, except for a couple of things, I need to fix the sound, I'm going to get another one of these shelves because I just don't have enough space to store all of the boxes for gadgets that I have, but we're getting there. I'm starting to feel slightly settled in this house, I got a space heater right there because it's like 40 degrees down here, we're getting there, we're making progress. But today we are not here to talk about what's going on in my home office, although I could do that and I will at great length. Today we're going to do two things, first I'm going to talk to Joe Weisenthal from Bloomberg about Polymarket and Colchie and this general rise in what's called prediction markets. How they got here, how they're so controversial and yet so popular and where they go from here. Then Haydenfield is going to come on and talk about model context protocol, which is a new and pretty important idea about how AI is going to work and I think if we're going to get agents in a real way, the way that all of these companies are promising, MCP is a big part of how we get there. We're also going to do a hotline question about some AI stuff, we got a lot to do, it's going to be very fun. But first I'm going to take a break so that I can turn on this space heater for a minute and start to feel my toes again. This is the first guess, we'll be right back. 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Less stress, less time, more results, now with Indeed sponsored jobs. And listeners of this show will get a $75 sponsored job credit to help get your job the premium status it deserves at indeed.com slash Fox Business. Just go to Indeed.com slash Fox Business right now and support our show by saying you heard about Indeed on this podcast. Indeed.com slash Fox Business terms and conditions apply hiring do it the right way with Indeed. All right, we're back. So over the last few years, a lot of betting has become normalized on the internet. And you know, you can go all the way back to the meme stocks that really started to take off during the pandemic and the way that people talk about crypto. But I've been really fascinated with this idea of prediction markets. These are apps and platforms like polymarket and call she. And what they do is they let you bet on essentially everything. I'm currently looking at this website. And right now you can bet on things like will we be rescheduled in 2025? What will Trump say during a bill signing on December 12th? Who will be the first to leave the Trump cabinet? You can bet on the Jake Paul Anthony Joshua fight, which is a relatively normal thing that people bet on. That's a big fight coming in Netflix. You can bet on what SpaceX is going to IPO at on its first day. You can bet on sports. You can bet on elections. You can bet on all kinds of things. This is the idea of prediction markets. They're they're they're gambling, but they're not trying to be gambling. They're trying to be something different. And this is what I want to understand. How is this not just turning everything into gambling? And if it is that, how do we regulate it this? How do we talk about this? How do we integrate this into our society? These platforms are huge. And they become sort of central to the conversation as more and more important events happen. There were a lot of people talking about polymarket after the election in 2024 saying that polymarket was pricking it because there are a lot of people making real bets with their money and that that is a meaningful way to understand what people think is going to happen. I just don't understand how any of this works and how it has become as big as it has. So I invited Joe Wyzenthal, who's a reporter and a podcast host at Bloomberg. His podcast Adlots is terrific. By the way, highly recommend listening to it if you're into any of this kind of stuff. I invited him on the show to come and explain prediction markets to me. Why they exist. Why they matter where they came from, where they're going. And whether it is, in fact, just gambling. We had a great time. Here's the conversation. Joe Wyzenthal, welcome to the first cast. Thank you for having me. I'm thrilled to be here. I have been like listening to your voice for a very long time. And one thing I always enjoy is I have meetings with people sometimes. And this is the only, I just work in this space all the time. Some people are like, we are and I feel like I'm making a verge cast. I feel like I'm now inside of Adlots, which is very exciting for me. This is, I love talking to other podcasts. We're inside of each other's podcasts. It's so easy to talk to other podcasters. You know, we know how it works, etc. And I checked it and take 10 years like it often does. Yeah, totally. Just a smooth sailing and many respects. Exactly. So I brought you here to talk about prediction markets. Which I think, if I'm being completely honest, or the thing about sort of the tech adjacent culture that make the least sense to me of almost anything I can think of. And so I'm hoping you can explain it to me. But let me just start with sort of the building blockiest question here that I want you to make sense of for me, which is, what is a prediction market? And how is it any different in any meaningful way from a gambling platform? I understand what gambling is. Sure. Prediction markets are different and the same in ways that I want to try and parcel out here. Yeah. There's a lot here to this question. You know, I think first of all, I would say the first difference is sort of just a sort of mechanical structural aspect of it. So a prediction market builds off of the types of markets that have existed in legacy financial markets for literally ever since markets have existed, which is essentially some bet. So you know, if you go back to that economics textbook where you learn about how like, you know, corn futures work, right? You have, they always talk about the story of like, well, here's the farmer who needs to hedge against weather and bad prices. And so they lock in a price and then here's the speculator that wants to make money and take the other side of the bet. This is the sort of mechanically speaking. This is what it's built on. It's built on sort of these outcome based specific outcome based bets will depressive corn be over X over a bush or below it or whatever. But you could apply that to see basically anything. And so the most common example that people hear about in recent years is the presidential election, right? And so or any other political election here is a contract. We're going to bet on whether Donald Trump wins the presidency or maybe 2028. We're going to bet on whether JD Vance wins the presidency. You think he's going to win. You make a bet. If he wins, you get paid a dollar on the dollar if you lose as you get zero. Right now, maybe the contract trades at 30 cents. So you put down 30 cents. If he wins, if he wins, you get paid a dollar. If he loses, you get paid nothing. I don't think it's going to win in theory in this bet. I don't really have forecast. I put down 70 cents. And if he wins, I get a dollar. And if he loses, I lose my 70 cents. That is sort of the essence of it. And this idea that like outcome based betting or hedging or trading does not have to just be confined to the realms of commodities or traditional financial assets is the idea behind prediction markets basically. I do think it's interesting even just to hear you describe it that all of that is very much like that is the language of commodities markets and stock markets. Like it seems like it's sort of careful to not use words like gambling and betting that in fact these are financial predictions. Like these are contracts. These are not bets. So I think that's just very deliberate to me. I think to start, we should be realistic about the fact that even within the realm of traditional finance, what constitutes like sort of investing and speculation or gambling with is like it's in the eye of the beholder, right? It's not like we have really good definition and secure. I'll say something very sympathetic to the prediction markets, which is it's very easy to say. This is just gambling. What are you talking about prediction markets? You've just reinvented gambling. And I think there's a lot of truth to that. On the other hand, it's not like when we look at traditional markets, we have some very clear definition or bright line that distinguishes investing from speculating. And people talk about this all the time in the stock market or they particularly talk about it in the options market because an options market is not really that different. You're going to buy a contract that pays off of the S&P 500 rises 10% over the next two months, which is actually like one of the safest money things you can do in many ways. Yeah, I mean, look, buying, buying contracts on outcomes of, you know, there's buying the S&P 500 and holding it for a long time. And everyone would agree, okay, you're like more investor. What if you buy the S&P 500 and you only are holding it for a month? I don't know. What if you're only going to hold it for a day? Well, that really starts to sound like gambling and speculating. What if you're going to buy a contract that pays off if the S&P 500 closes up over half a percent within the next day? Is that investing? That's like really, it does not sound like investing to me. That sounds like speculating. But this, but it only drives home the point that the idea that we can draw some bright line between what is an investment, what is a legitimate hedge, and what is a pure punt? What is a pure gamble is a very difficult. And so you look at the prediction markets and especially the ones on sports. So I think this is a really important thing that we will talk more about, which is that, and I get it, but the founders of the major prediction markets, we can put a price on everything. We can hedge everything. You want to hedge the weather? Great. You want to hedge the outcome of the primary in New York City is 12th congressional district. Great. You can put a hedge on that, et cetera. Maybe it's useful to have prices on all these things. I don't know. We can get into that question. The fact of the matter is today, these markets, mostly you would, we're talking about this, we're talking about Kelsey and Polymarket, they get attention for major elections, which they tend to get a lot of interest in, and they get attention for sports. And so all of these things, uh, want to make a market on whether the Minnesota Vikings are going to win. That really looks like sports betting. The structure is a little different. You're not betting against the house. You're betting against other betters. Um, there are some other interesting aspects so you could like set, get out of your position. You bet the Vikings when they were at 20% now they've run up a few touchdowns. Now it's at 80%. You know what? I don't need to grab that extra 20% I'm going to sell out of my position before the end of the game. There are people who really like that, et cetera. So there are many aspects of this that are sort of different to how we think about the sports betting industry as it is at a casino or a scandal, but economic. So I would say economically though, it's roughly the same thing because you're just making a bet on sports, but structurally they would make the argument that a gambling entity is one in which the house sets the odds. And they would say in our system, the market sets the odds and you're trading against each other. But you know, we are never going to resolve the difference between what is speculating what is betting and what is hedging. It's sort of a human judgment question. It reminds me of the people who talk about, you know, the difference between going to a casino and playing poker versus going to a casino playing slots. Yes, right. It is fundamentally are those fundamentally different or in the important ways the same. I think is like you said very much in the eye of the boulder. Yes, poker is a game that you could approve your odds with skill and be it's a game where most of the money that's lost and subgoing to other players. And so therefore you would make the argument, this is a fundamentally different type of product than the typical gambling product. And so one could argue that in prediction markets, most of the money that's lost is other players. And if you're very savvy, if you're very knowledgeable, you understand politics, maybe your other current events at a deeper level than others, then maybe you could improve your performance with skill. Okay, so if I buy that premise, and I think in many ways, I actually do, right, that there are, there is some eye of the boulder in this in here, but there is something fundamentally different about the structure of this thing. Why have polymarketing calls you been so controversial politically in a regular way sense? Is it just because there's something completely new or is the argument about whether they're betting more messy than I'm maybe thinking of? Sure, I think there's a few reasons they're controversial. So when it comes to traditional sports gambling, that's regulated on a state by state basis. So every state has different rules, some states allow physical casinos, some states, it's still illegal to use the popular gambling apps, et cetera. So states want to have the ability to control what types of gambling occurs within the borders. That's like the story of anything that ever happens on the internet, right? So many of us online and somebody goes, well, who is in charge of regulating this? And no one knows for a while and eventually we figure it out. But because these companies have managed to sort of frame themselves differently, they are regulated on a national level. And so I would say it's, this is not an ideal situation, which is, okay, one person has a gambling app, and like, you're not allowed to use this if you're in a state. And so that is, it is an app that is clearly what we all call sports betting. Now here you have another thing that sports trading and because it's used as the sort of the trading idiom, the trading metaphor, so to speak, is regulated by the CFTC nationally. And therefore they found themselves in this ability and they're, they've won in court at times to preempt state laws, which I, I really think it's not a very good situation. For one thing, I think, you know, obviously undercurrent law states have the prerogative to regulate betting within their states. And now here are these entities that have come along and allow basically offered people the economic equivalent of betting and the state can't do anything because, no, this is, this is a trading app. This is a, this is a futures trading app, and it's regulated by the CFTC and your state law doesn't apply there. So that's one source of controversy. Then there's other sources of controversy, which is like, okay, well, like what is the societal function of having markets on everything and they would say, well, look, it's good. It's pride. We understand prices. On the other hand, this could create perverse things. So for example, there is a controversy recently about that. Like, who was going to be the most searched person of the year on Google and there was a market for this. This is the type of thing nobody would have ever been it on before. Someone made a bunch of correct bets. I'm like, oh, is this a Google insider who knew in advance who Google is going to say were the most searched people of the year. Now this creates an issue where if you're a company and there are these betting markets on everything, suddenly you have to like really tighten up your circle of trust. It's like, wait, can I tell you this, how many people need to know this in advance? You think this, these were sort of low stinks questions before. And now suddenly, you have to be like worried that like this random thing, it's like, oh, we're going to put out a press release, namely the most searched person of 2025 could be the type of thing that an insider could use to profit. She's not great. Well, in a way that that goes back to the regular story thing, right, where we have very clear laws that say if you do insider trading, you will go to jail. I'm assuming insider polymarketing is not a thing we have like fully properly. No, it's not. And it raised it's this is also an important thing to think about the industry in the future. So let's go back to the example of markets on most searched person. Now look, these markets are never going to be that big because they're not like, there's not a lot of people who need to hedge their most search person exposure, instead of like, there's not a lot of like natural participants might be fun to bet on. So this is really important for the for the players to which is like, let's say I want to bet on this market. I just like, I haven't feel like this person is going to win. I am not going to participate in these markets. If I think there are like these very well informed sharks on the other side. I think I've smart. So I sort of know something I sort of trying to later and I figured it out. But I am not going to like start betting if I have reason to think that other participants have true insider knowledge in a weird way. That's the closest thing to playing the house that exists on these markets. Yeah. The conclusion that sort of follows from this is these for these markets to thrive. They might want some sort of insider trading regulation. So one argument that people make is insider trading is good because you want to have people who are informed that helps sets the price, etc. These things become oracles of truth or the we want to elicit people who are knowledgeable and then you get a price that's better. But no one is going to provide liquidity for these markets. No one's going to gamble and speculate if you have good reason to think that the other person on the other side of the trade is not speculating because they just know the answer in advance. And so then you get liquidity totally drawing up and then the market is totally useless and so forth. So there is this sort of tension that's going to emerge where the idea is you want the market to be an oracle of truth to have an odds that reflects something about reality. But if people are too informed and there is no regulation and there's no laws against insider trading and there's no penalty for exploiting your insider information, then non insiders are never going to participate in these markets and they're going to you know, fizzle out before they even get off the ground. Okay, I really I can't decide if it is very funny or deeply dystopian, but now I can't stop imagining like a bunch of Google VPs sitting in a meeting getting this presentation about you know, here's what we're going to show here's all the stuff that happened this year and everyone of them is just sort of quietly on their lap. Yeah, they're like looking at their phones. I was like a cab and making my bet. I know, but it is, but this is the thing which is that if you had reason to think that this was happening. No, me and you would never enter into that market or make a bet. Knowing that Google some executive or pure person or something and Google saw that in advance and was able to bet on it. So you know, people, you know, people in all industries like, oh, we like regulation. We want to be regulated regulated us. There's actually very good reason to think that for this industry to thrive and go forward more regulation about things like insider trading might be helpful for establishing the legitimacy of the market. I think we would never have this sort of rich liquid, deep capital markets. We have the United States today. If there were legislation or rules about how you can exploit your insider knowledge totally. So to what extent is there a crypto story in all of this because I think both the kind of arc of what you're talking about and some of this, you know, and an emitting and the fact that it is hard to regulate and the fact that it's hard to trace. There's crypto adjacent stuff underneath a lot of this. Is there is there crypto really sort of tied up and where these things have come from and how they've grown. Yeah, I would absolutely and I would say it's probably on two levels, which is I just think that like, you know what I wish sometimes I wish that I have like a thousand friends who are really into the online poker boom in 2005. And then I could just track the stuff they're into because I really think like if you had this cohort and you just follow them over the next 20 years. You would have been like really early to Bitcoin. You would have had a really early to you know daily fantasy sports and you know they sort of understood that prediction markets are exciting and hot and would be a big deal. It's the Tim Robinson. I got to figure out how to make money off this meme. It's a yeah. And it's basically like there is a handful of people who are as they mean goes. It's like there's a million dollars trapped in your phone. And if you click the right sequence of buttons, you can save that you can pull that million dollars out your phone. Like there's people whose minds are always in this space. The crypto people were very into that. And so like a lot of them were like the early movers of the people who got excited about prediction markets. The other element I think which is really important is if you go back to 2020 is recently a 2024 the regulatory environment pre-Trump was not as favorable at all. Kelshi barely had any markets and barely had any volume. But Polymarket was already a thing because you just stable coins. And it was one of those things like this is not open to anyone in the US. But it was like wink wink anyone with a VPN could have obviously figured out how to get stable coins on there. But it is one of these things were like I don't know if we could have a minute we could talk forever about the optimal way to regulate these things or what markets should be allowed and what shouldn't be allowed. But as long as smart contracts and stable coins exist. I think it's going to be very hard. It would be very hard to you know there's a certain kind of anarchy they create this sandbox that exists outside of the American regulatory party. And so that's the regulatory perimeter that anyone can really access specifically thanks to crypto and stable coins. And so then you get this situation where it's like okay here you have this thing that is not only not allowed in the United States but it's blooming everywhere and everyone can really access it. And so part of the reason perhaps that regulators have ultimately acquiesced I mean is this sort of reality that it was very it was going to be very hard to stop things to crypto and I would just say one more thing which is that. You know people like to say crypto doesn't have any use cases we could dispute those in these conversations around in circles it does have a use case it lets you circumvent the law and being able to trade on a prediction market platform use stable coins that run on blockchains is a use of crypto. Yeah fair enough so I do want to come back to this idea about these prediction markets as sort of sources of data and prediction because I don't know if you saw the 60 minutes thing about this a couple of weeks ago that was like Anderson Cooper like really loves prediction markets it turns out thought that was really fascinating. But they spent a lot of time talking about like to some extent this is a place where people you know spend and make money. Yeah but like our our sort of value to the world is that we are a reflection of the wisdom of the crowds and actually if you want to know how something is going to go you're better off looking at prediction markets than anything else. Yeah. Do you buy this theory like is there is there something to these platforms ability to actually accurately predict things. You know so I don't so I don't love the term prediction markets and I don't think the test should be in defense and this is me making a defense of the prediction markets I don't think the test should be are they accurate about predicting things I think the test really should be does that price on a given contract accurately reflect conventional wisdom. Now if you and in a sense of prediction market is a replacement for your typical cable TV news pundit and the sure pundit is talking about you know some issue and like well what do you think about the prospects that in the next 10 years trying to launch is a blockade of Taiwan or something like that. And then they'll say well we think there's a 60 we think there's a 40% chance that in the next 10 years it's like this is totally useless everyone always making these 60 40% chances it informs us nothing there's no track record we have no way of going back but it's you know you sound smart I think there's a 60% chance. I think the prediction market is like we can improve on that to some extent because we no longer have to rely necessarily on pundits to come up with that number we can rely on the wisdom of crowds actually think there's something to that and maybe not only the wisdom of crowds but the wisdom of crowds willing to put their money with their mouth is which I do actually find sort of which I actually find to be very compelling and I think there's a pretty legitimate reason to think now we oh you know what it's 75% chance now the people with money. On the line are very concerned about X or Y happening whatever it is and there's a meaningful difference between 55 and 75% and when you see it moving something is going on I think you know it's very interesting from the media perspective to some extent I would say that I think of prediction markets as media companies you can go to polymarket.com and you can see what's moving and if something has moved significantly in the last day or whatever that is a reason to do that. I think that some development has happened in the news so I would say that is very useful a couple other things I want to say to you know like a point that I've stressed for a long time when it comes to prediction markets is if you think about the US government bond market in the United States or really anywhere that is literally a prediction market let's say what is a six month T bill a six month T bill is what the market expects that the overnight interest rate by the Fed is going to be on average over the next six months. Who's sent the overnight interest rate by the Fed the 12 voting members of the FOMC so what this is one of the most liquid popular instruments of the world and it is literally not metaphorically it is literally a bet on what 12 people are going to decide over their meetings over the next six months it is not like a prediction market it is a prediction market in the most classical sense yeah and so to some extent prediction markets not only they are valid indicated invalidated they've been vindicated invalidated for a decade because this is an instrument people betting on what 12 people in a room are going to do is actually at the core of the financial system did you see this thing that happened recently where Spotify put out its year end data and who was the most streamed artist and there is this one person I think it was on polymarket who was like well Taylor Swift is one the last two years Taylor Swift is obviously going to do it the market is way underpriced they spent they put like I think 15 years ago $15,000 on it and they were like this is the best bet ever I'm going to win I'm a genius and then like 15 minutes later they're like oh it's bad money the number one or it's the artist of the year and it just followed up with like well never mind get one more you know there's some issues so let's get even going back to the most searched person of the year incidentally from what I understand Google's most search person of the year is not strictly speaking the person whose name was searched the most trend is not falling it's about trends but this gets to something important which is contract specification and so what actually you have to like in many cases there's a lot of disputes and I think the company's probably have to mature on this and get better and be more clear about what we are actually betting on and so forth and so there could be many of these situations where people think they're betting on one thing because it's like who's the most search person here is probably literally Donald Trump and so it's based on some trends but I think a lot of people get into these markets and don't read the exact contract specs and they get really frustrated because I they didn't realize it and so probably as these companies mature they're going to have to get better about being more transparent so that people know what they're actually betting on yeah agreed so give it all of that yeah your your reporter your market guy yeah you you tweet obsessively about jobs data every 15 minutes which I used to think it was like a bit and now I think it's just actually central to your personality in a way that's right no bits here no bits how how do you think about probably market like and then call she like do you look at them as useful sources of data in your work yeah it's I regularly check the prices of things I want to know like who is the favorite in some primary that's going to come and so absolutely I you know we have here at Bloomberg we have put the we have in we have polymarket and calcium data on the Bloomberg terminal which I think is like a pretty you know we don't just put on data Willie nilly and so I think there's like people use this stuff people find it to be helpful you could do other things too you know it's fun like occasionally you could find a chart of you know I'm going to track Donald Trump's odds of winning the 2024 election along with the S&P or along with the series of energy stocks within the S&P or various sectors that are perceived to perhaps do well under Trump and you can see sometimes they move together some there are a lot of reasons for even people who don't bet but who are just in sort of news media or want to be informed consumers of the news to check these markets from time to time okay that's interesting all right two more things I want to talk to you about sure thing number one is if all of this seems to be growing at the pace that it is and seems to be sort of culturally hitting in these really interesting ways if I'm fandall or draft kings or Robin Hood or bank of America like why why wouldn't absolutely everyone anywhere who does anything with your money get into prediction markets like is this just the future of finance there's two things there so one is it certainly feels that way I mean what the bigger trend is not just prediction markets but the complete obliteration of any lines between sort of legacy financial institutions speculative trading and you know gambling so like one of the create one of the more surprising news developments the Chicago mercantile exchange has a partnership I believe with fandall where they like allow fandall users to make bet makes bets and small denominations on the price of gold and the price of oil and stuff like that that was a very surprising so we really have just completely lost all definitional difference between all of this stuff kind of feels like it and then you know the other thing is that the brokerages so I BK are interactive brokers one of the I would say it's the most popular brokerage for the sort of prosumer trading audience so it's like someone who wants a little bit more than like a Schwab or Robin Hood or something like that they have you can trade prediction markets right there if you go to Robin Hood if you go to the App Store right now and you download Robin Hood the main one of the main things that you'll see there is that you could trade football games through Robin Hood so I think it is absolutely the case that all of the lines between trading speculating gambling are just being out yeah they're just being completely torn apart where do we even go from here if we're at this moment where we're like you know we go all the way back to the pandemic and it's like every this is when crypto went nuts and everybody started betting on everything and then it's like we're at the death of the American dream and the male loneliness up and I get it's like you can kind of thread everything into what if I could just bet on everything that happened in the world and and it feels like for better or for worse and I think in many ways it feels scary it feels it feels 10 US whatever it's going to be it feels 10 US but it is hard for me to imagine that if if that collapse you're describing continues that we're not headed towards some just like insane rewiring of what it means to like be a person in the world I feel the same way and I was the it's like oh this is also crazy like we're in some sort of like turning point in the world so I'm going to like collapse or something and then I like no you know what I'm 45 years old this is just like middle age man anxiety like every 45 year old man through history has had the same fear but then I like talked to everyone else and like oh shoot it's not just me everyone sort of feels this way I want people to say what are you talking about like you're just like you're just a boomer at this point no wonder you're like anxious and don't like all this change but everyone I talk to more or less feels the same way unfortunately I don't really like that I want people to tell me I'm wrong but it does I don't know where this is all going I don't know how we could possibly know but this feeling that you have or this intuition I would say it's like shared by like by almost everyone I can think of Yeah, I did read a study yesterday that said that young people think sports betting is bad um yeah that made me happy yeah I mean maybe we can have some of this but like let's find a little bit of equilibrium here somewhere I think as a society we have lost the concept of the difference between um differences of degree and or the differences of degree can manifest as differences of kind I think we look at things very black and white these days so you say like I want to regulate uh like the idea of just going back to you know what you can still bet on sports but the only condition is you have to drive an hour to a casino and place the bet in person like that is strikes me as like a very healthy balance I don't want to like ban sports betting such that the only people in the business are mafioso who will like break your leg if you don't pay back I don't think it's great that like all of sports coverage seems to revolve around um gambling or increasing there you can't watch sports without ads for gambling or the idea that like you know what let's just like find a moderate position where we allow it that just seems so antithetical to our contemporary values people just can't accept middle ground anymore but it does seem like there is a bit of a backlash for me I think a lot of people know people who are addicted to their phones addicted to betting on sports they've lost a lot of money betting on sports the question is whether we as a society or really as a political system have the capacity to sort of do productive regulation anymore draw lines I don't know what the answer is to this this is what I mean I think you can like tell the whole story of the world through prediction markets and it's it's just makes it so sort of head wrangling to me it's crazy uh you're a guy who knows things do you ever find yourself staring at polymarket being like should I bet on the job numbers no I think I will uh I'll save my money for losing it poker sounds good all right Joe thank you for doing this this is super fun I appreciate it thanks for having me it was a blast all right thanks again to Joe for coming go listen to his podcast odd lots subscribe to his newsletter if you're a bloomberg subscriber it's good stuff we're gonna take a break and then we're gonna come back and we're gonna talk AI protocols because that's what we do here we'll be right back support for this show comes from linkedin ads when you're running your own business every decision could feel like maker break and you can't afford to waste a penny so if your B2B marketing is still falling short it may be because you're preaching to the wrong choir whether you 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Grammily gives you one place to think right and finish your work where you already write while giving you access to agents that help you sound natural and engaging no matter what kind of writing you're doing Grammily helps you get ideas done faster and move from draft to done with less friction you can use Grammily's AI chat to brainstorm ideas outline a solid draft then refine it with context aware suggestions that fit what you're working on see why 90% of professionals say Grammily has saved them time writing and editing their work in a world of generic AI you don't have to sound like everyone else with Grammily you you never will download Grammily for free at Grammily.com that's Grammily.com Support for the show comes from L'Oreal Group using the latest advancements in science and tech to create personalized beauty solutions for all the global beauty leader recently introduced two breakthrough technologies that bring the power of light to hair care and skin care light straight and multi-stiler and the new LED face mask both of which were recognized as CES 2026 Innovation Award honorees learn more about both technologies on l'Oreal.com L'Oreal Group create the beauty that moves the world Support for the show comes from L'Oreal Group using the latest advancements in science and tech to create personalized beauty solutions for all the global beauty leader recently introduced two breakthrough technologies that bring the power of light to hair care and skin care light straight and multi-stiler and the new LED face mask both of which were recognized as CES 2026 Innovation Award honorees learn more about both technologies on l'Oreal.com L'Oreal Group create the beauty that moves the world HADEN FEELED HADEN FEELED Alright we're back Hayden Field is here. Hi Hayden. Hey happy to be here. Hayden wearing like a big red it's just if you're listening to this I just want you to imagine like devil wears Prada Hayden Field sitting in the studio right now. It's a testament to how cold this office is right now so I am looking glam but feeling extremely cold. I turned off the space heater in my basement before we started and I'm going to freeze to death over the course of this segment. It's going to be great. You need that coat like this clearly. So you're here because you just wrote a big piece about this thing called model context protocol which if anyone has ever listened to or watched the first cast you know we love a protocol and there's a real bet being made in the AI industry that this is not only just like a piece of the infrastructure of AI but is like crucial to how we get to the future everyone is predicting and kind of needs to make happen. The things for this seem super high to me. Is that fair to say before we get into it like this seems like a big thing that a lot of people need to go well. Definitely. Yeah it's it's something that I've been hearing about increasingly over the past year every month more and more and then this is kind of the biggest milestone so far in its journey because donating it to a neutral body and having a neutral body to govern it actually is going to help it improve so much because all these companies are going to make tweaks to it and prove it make it better at security other stuff because they aren't afraid that they're secretly going to be eventually like contributing to their competitors bottom line. So now that it's all on the open no one can own it. It's going to help a lot with it getting better and there for AI agents getting better which is something we really need. Right yeah it's like if agents are going to happen MCP kind of has to work but let's just start at the very beginning here. If you are just a regular person in the world you should not know anything about MCP. It's like I exactly you just shouldn't and you probably never should but it is I think it is a thing that your life is about to intersect with so let's just start from scratch here. What is the model context protocol and where did it come from? Great question because I was doing some my own research on this when I was writing this piece I had heard about it I kind of knew I knew what it was but it was something that I would have had trouble explaining to someone else so it's a good thing I wrote this essentially the simplest way to think about it and this is going to be oversimplified but imagine you went to a resort and there are a bunch of activities you could do and you were handed a brochure of all those activities and how to book them. So before you got that brochure you wouldn't know what activities were there and you also wouldn't know how to book them. So that's kind of the situation with MCP for AI systems. It's allowing a model to know what tools are available to it or what databases what context just other things that it can use to make a user's experience better and then how to use them. So it's not just how to use all this stuff but also what's even available to begin with. So that's why it helps make AI agents so much better in theory because instead of just browsing the web and trying to figure things out you know in terms of like a web made for humans to browse it's able to talk to other systems on the back end and get answers like you know connecting to Slack connecting to I mean honestly every single thing that OpenAI announced in October with its chat GPT apps was powered by MCP. Interesting. Yeah I saw a diagram a few days ago that has stuck in my brain ever since and it's basically like if you think of the way that software has always worked which is just through a series of what are known as APIs you have if if I want to connect my thing to your thing I connect my API to your APIs and then we are connected this is like standard software building stuff this is existed for forever but if I want to integrate my thing with a hundred or a thousand or ten thousand other things I have to do each one of them individually and it is like a gigantic pain in the ass and for like the example I give to people all the time is like if you've ever used an app that integrates with like Gmail but not outlook it's because Gmail's API is really easy and outlooks is really hard and so it's like it's just that simple right like some things are easy to plug into some things are not what you had to do it one by one every time MCP the idea is sits in the middle and says okay all of the apps are going to provide a thing to me that says here's how to talk to AI tools and then the AI tools just go to MCP and say what's available out there and then like you said the the MCP server says here are all the things that are available to you and all the stuff that you can do and it just says rad and you get it all at once instead of having to like build it every single time every time you want to do anything exactly that's exactly how it works and yeah like we we put it like you know AI agents need new kinds of APIs and MCP is the standard those APIs will take exactly yeah I love that so where did this come from who who built this this guy named David Soria para at Anthropic built it and his co-creator was a former Anthropic employee named Justin Spar summers so they kind of built this as a pet project they just felt like within Anthropic people should be using Claude Moore for their work like their everyday life and they felt like people weren't so they were like let's make this actually more useful for the end user and let's just figure this out on our own so they both convinced their managers to let them spend like you know 80% of their time working on this project and luckily the managers were like yeah go for it you know if it doesn't work out we'll see but you know try it out why not that's a funny way of like Anthropic slightly telling on itself right that they're like we're a bunch of people on our product team who are like that's weird we make an AI bot and no one wants to use it for work is that and I think they came to the correct conclusion right which is like well because I can't I have to do all of my work somewhere else and so having it live inside of this chat bot is less useful to me than like what I actually need is a thing that can make a sell spreadsheets for me that's a very different project to try and solve and it seems like that is the thing they went out to try and do it's like how do we get the things that are happening in cloud into the software we actually use to do our jobs exactly so they decided to work on this and they spent a couple months on I think they started in an August of 2024 and then by October they kind of introduced it at this internal hackathon and everyone that was participating in the hackathon pretty much Anthropic built on top of MCP for it so that was like the first time they were like oh wait maybe we really have something here and then from there it just ballooned they end up releasing it like right before things giving because they said that they figured people would need a break from their families and they're like let's just you know do it now and then people have time to work on it to play around with it and yeah then by you know early the next year Sam Altman and other and we're tweeting about it so there you go I mean that that's that timeline is crazy right that's so fast totally I couldn't believe it and neither could they actually they kept saying how surreal it felt and how you know it was something that um yeah David sorry apparel was like screen-shotting tweets from tech CEOs you know and just like saving them because he couldn't believe this like he created made it that far I think it's because honestly I think the success is partly because engineers made this for engineers you know it's like the people that were on the ground doing this stuff are the people who made it and maybe that's why it worked interesting yeah it's it's just wild to see how quickly it has gone from like a thing somebody built to a product that a company uses to like a broader standard and I want to get to the news that we have this week which I think is is a telling sort of next piece of the story you alluded to it a minute ago but why is it it's weird to me that all of a sudden andthropic builds this thing that is working very well and makes a lot of sense and rather than do what always happens in business which is Google and open AI and a million other companies look at it and say oh cool good idea we should do that too they all just pitched in behind MCP do you have any idea what what how did that happen that's such an unusual turn of events here that like Sam Altman would be like oh good idea Dario we will just throw in with you I think it's because they knew that it was the best possible standard the one that had the chance of going the furthest and so and they still you know we're a little bit cagey about it I mean they had a group of core maintainers at each company that would talk and meet in person and have a discord chat and talk about ways to improve the protocol but still you wouldn't see like Google you know going all in on fixing MCP's security potential problems right now because they didn't you know if Anthropic ever decided to you know to change its mind right now it's open source but if Anthropic ever said oh actually now we want to keep this for ourselves none of these companies wanted to improve it too much because they would be helping Anthropic out and so I think they would improve it and they you know talked about it and they thought it was the best possible standard for making all of their AI agents work better so it was kind of like they were all getting something out of it but that's why I think the news that is happening this week is so big because now that it's going to be governed by a neutral body and overseen by the Linux foundation it's going to be a real standard that people can you know contribute to tweak make real improvements to without the fear of you know one company eventually benefiting by itself yeah well so then that brings me to the sort of flip side question which is why would Anthropic release this to the world you you look at this like this is great we've built a thing everybody suddenly wants to use this is this is a way we can get MCP and clawed to be more powerful why would they give it to everybody I know you talked to Mike Krieger at Anthropical I think is probably the person who made this decision do you have any idea why he made that decision yeah he said that um he just felt like it was really important it was and it was the way to make this an industry standard that it would not really happen without doing that um and you know it was always open source but a couple months in when um you know the two co-creators were seeing the pickup they started thinking oh should we donate this should we you know give it to a foundation that has done stuff like this in the past so that it can actually like go the extra mile and become a standard and Krieger was apparently super supportive of that and one of the most vocal um you know proponents of that and the other reason is because Anthropic has shortcomings you know there are certain things that they're not going to have the resources or the knowledge to go full fledged into when it comes to bettering MCP so Krieger himself said authentication and security are two of those things like you know they don't hit those problems first um and they don't have as much knowledge as say like you know Google or another tech giant and fixing those things and those potential security concerns so that's why I mean you know it's a kind of benefiting everyone if you just donate it I mean it's funny I might my immediate instinct is to be like well there has to be something more cynical to it than that but then I was like well they did just open source the thing and give it to the Linux foundation so I suppose it can't there can't be but so much cynicism they did then go and you know do the thing and the fact that I mean it's like it's kind of like a rising tide lifts all boats in this one situation because you know I mean Franthropic if they ever do need it to be way better at security and authentication it will be and that of course it'll help their competitors but it'll also help them so I think you know basically it's like this would have been stymied if they kept it um you know never would have advanced quite as far as it could so now that I think they just knew that this was the only next step if they wanted to ever get significantly better and actually become an industry standard for real interesting and I would assume that this change giving it to the Linux foundation bringing these other companies in it is now officially or unofficially it is an industry standard right like this is have you talked to anyone who is like well we're still waiting to see on mcp like this thing seems to have essentially unanimous momentum at this point yeah definitely unanimous momentum I mean I've talked to some people that are like you know we'll wait and see because you know the real market industry standard is just when everyone adopts it which has already kind of happened in a lot of ways so I mean some people are like it basically is some people are being a little cagey about it just to see where it improves in certain areas but it's certainly on its way and I I would say it already is um the other thing about it is and I think this goes back to your point of you know what do the other companies get out of it um Anthropic wasn't the only company to donate something to the Linux foundation so um you know open AI donated agents.md block donated goose it's open source AI agent so you know I mean they're all gonna put it this like just a send I just I can't I can't just let that happen I just had to look up what it was called again because it constantly goes out of my brain because it's so strange but yeah the agentic AI foundation is what all these companies established it was like um cloud flare Bloomberg block AWS Microsoft Google and Open AI and Anthropic so all of them came together to create this um neutral body that's under the Linux foundation so technically they all can have a hand in everything but that none of them own it and so I think that kind of consortium helped with all of them feeling comfortable enough to donate also that's fair so what what happens when something gets given to the Linux foundation like what is actually going on here what what is now under the control of this group so now all of these tools um and this protocol are under their control and you know it's just open for people to make it better so you know Google could for example put like 10 or 20 engineers on this just to improve its security um you know another company could be like we got to fix authentication potential issues here let's put a ton of engineers on this and everyone's going to benefit from it the other interesting thing to me was that I talked to the CEO of the Linux foundation and he told he's been in the field for you know over 20 years like he oversaw you know the expansion of like Kubernetes and containers like he was the person that kind of like shepherded that so for him to say that he'd never seen anything like this in terms of interest in MCP was crazy to me and that's what he said he said he could barely keep up with the number of inbound calls from organizations that wanted to be a part of this and he said that oftentimes when a new protocol or you know a new thing that he's trying to push gets introduced he has to scratch and claw his way and try to convince people to you know make it a standard and in this case he didn't have to convince anyone it was just like already widely seen as being obviously then the standard and so I think that's part of why this is such a big deal too that is really interesting and it it seems to me that that again it's just like momentum we get some momentum right and it feels like even got like nine months ago it was like okay MCP is the thing right somebody might try to build a competitor we might end up with two weird standards and it's like it just reminds me of all the sort of Fediverse stuff where it's like okay well somebody built activity pub and everybody got really excited about activity pub and then Jack Dorsey was like I don't like I'm gonna build no stir and then they did AT protocol for Blue Sky and I actually think that has been like hugely detrimental to all of those services and it would have been better for everybody if they had just picked one and I think the AI industry seems to have correctly understood that picking one is very important and that what we need is for all of this to work like I cannot emphasize the extent to which none of this works and MCP is a way to get it there and it feels like they made this call correctly in that sense I think that they all have taken kind of an honest look on the fact that their agents are not doing what they want to do and this is a way to hopefully bridge that gap and they're like at this point you know what let's just all help each other instead of because there's no other way I mean they need this stuff to work and they need to drive a profit as we've seen from opening eyes 1.4 trillion dollar situation I mean they all need to make money and they need to do it quickly so this is kind of their best bet the next piece of the explainer I want to talk about here and I just I want you to just sort of cast out a little bit like let's assume this works what happens next everybody is like all right sick MCP is the thing agents don't just magically get better right like what what happens now that this is a thing everybody is sort of in theory willing to like bet on and believe in what are people going to go spend the next 12 months doing I think that this basically gradually is going to make agents better in a lot of ways just because now that everyone can take a deep breath and say okay I'm not going to be contributing to anthropics IP secretly in the future you know I can just make it better and make this work everyone's going to spend the next 12 months you know working on MCP and integrating into stuff and hopefully making agents actually better like here's an example agents traditionally have been like pretty bad at buying you stuff or like if you're like oh you know let me find a pair of you know white sneakers from this brand in my size for pickup in my city as I think V wrote about recently it has trouble doing that and it has trouble finding that and putting your cart and all the things it's gotten better but it still struggles a lot so I think in this way that type of stuff like actual consumer facing end user tasks are going to be more useful with agents and we won't have to know anything about MCP or even know the name of it hopefully the stuff just gets easier and better and more successful over the next 12 months and we don't even need to hear anything about the the back end of it it just happens so for example like you know let's say you ask chat to the petito do what I just said for you find those shoes you know maybe with a macy's integration or whatever it can talk on the back end to macy's instead of just like browsing the internet like a human wood which is not that efficient for an AI agent so yeah that stuff I think is just going to gradually get better but then again you know agents have always moved slower than companies said they will so we'll see what the actual timeline is up like well to your point about the macy's thing it's it's not lost on me that not that long ago all of these companies launched features that would just go use the computer for you right like this was computer use was the thing that that actually chat gbt would open a chrome window inside of chat gbt and click around the web browser to do stuff on your behalf and then it would it would you know dump stuff into your cart and again this didn't work but it was kind of the idea there for a minute they're like okay what we can do is solve this problem in literally like a brute force way um this is just the end of that right this feels like everybody's I think must have correctly surmised that was never going to be possible and it was always going to be problematic we need a better way so I floated that and whenever I floated that to an expert I was talking to for this piece they were like no it's not the end of it because like well what do you mean I mean clearly it is but their caveat was that they still really need that for a bunch of areas of the internet that aren't going to have mcp there's going to be some areas of the internet that humans they're built for humans and they're going to stay built for humans and that's just the way it is and so that was an important like milestone and it's going to keep needing to get better but mcp is going to short cut a bunch of the stuff that you would have had to use tools like computer use for and make it way faster and easier so I think you're you're we're like you're right in that it's going to diminish a lot like we don't need to use computer use for everything now or in the future but it's apparently still going to stay around for a bunch of areas where you know might just be a euphemism for saying we still need to do it in case companies don't want to give us access to their data like yeah I think that's true yeah I mean this is the thing we talk about all the time right like Nila calls this the door dash problem like if I'm a platform provider why am I going to just happily offer AI models a perfectly mapped set of my data so that no one ever comes to my website again you might not right like there are a lot of reasons it's useful and valuable to do so like flight tracking is one that I'm sure came up a bunch in your conversation yes because this is like the canonical one right you can go and you can try to scrape airlines websites to get their flight info but that is inefficient and bad and wrong and also all of these companies have set up this like incredibly accessible database so that you know the kayaks and booking comms of the world can access this stuff and if they just point that at MCP all of a sudden LLM's will actually be able to go in and get good data in order to buy you flights sure as far as that goes sure and I think the airlines maybe more likely than most to just be happy selling you flights even if you don't go to their website but they're going to be a lot of them that don't want you using LLM's to do their thing and so maybe that's the computer you single is like yeah it's gonna still have to click around the door dash website because not everybody is going to want to let the LLM's access door dash totally and I think about the flight thing a lot especially because you know when the scandal broke that a lot of airlines were doing you know per person pricing or like pricing solo travelers higher than group travelers you know I mean I'm sure that that's gonna be a thing they may want to just hold on to the power to do that stuff and you know that that's how it is and there you know I even saw a story the other day about like you know some grocery app testing algorithmic pricing so I mean I even saw something about Instacart potentially you know introducing like AI pricing tools so yeah I mean a lot of companies want control over who's searching and when and what their history is like so they can charge you different prices so we'll see how that works out here I hate that so I would love for MCP to overhaul that and just like you know we all have equitable insights into why it's something costs I know right on the one hand MCP is sort of a great user experience in the sense that you can just sort of describe what you want to have done and it gets done like I was talking to a mirror the CEO of this cap called to do it's the other day and he has is all in on AI and MCP and the thing that he really likes about MCP is he's like well we get a lot of these people who have really specific feature requests for us they're like I I have my to-do list but I want all sorts of things to happen whenever I if I complete a to-do list I need it to also go to Gira and market complete or I need it to send an email to my boss saying that I've done this thing whatever everybody has these sort of specific automated or semi-automated workflows that they want and to do is can't build them all but the idea that through MCP to do is can just say here are all of your tasks here is their state of completion and their due dates and their projects and their priorities have at it right and then clawed or chat GPT or Gira or whoever can tap into that and suddenly you can build these automations essentially just by asking for them is very very cool and and there's just like little pieces of that that is like if we can put that stuff in front of users and just say I want to whenever I book a flight to LA I want it to also book me a hotel automatically like that's a thing you can do that MCP makes possible in a way that has not been possible before it probably still won't work so I don't recommend trying it but it is like theoretically MCP is what helps us get there do you know what I mean exactly yeah but there's just it really really really relies on everybody being on board and there are still enough reasons to not be on board that I'm just skeptical right I know I totally agree and that's why I think we'll have to see what happens over the next year with companies addressing some of their concerns in MCP like authentication security stuff like that there's a bunch of areas that I think could be improved and that'll get more companies on board but we'll have to see how that actually shakes out plus you know I've been burned enough by AI agents not working that you know I'm too cynical we'll have to see how it actually plays out like you know do some tests now do some testing a year do some tests in six months but yeah it'll be interesting to see how much this actually overalls the landscape for consumers because I mean you know enterprise users agents are working a little bit better because it's a predictable controllable environment but when it comes to like you know booking flights booking travel figuring out a restaurant that everyone can go to and putting on their calendar stuff like that is still kind of a pipe dream in some ways because it just doesn't work well enough for everyday people to be using agents for this type of thing what are the things about the protocol that that people use to talk to are still working on or thinking about or paying attention to I mean this is this is 14-month-old software that we're just going to stick at the middle of the AI industry are people concerned about pieces of it pretty much just security is the main concern I've heard um you know there things that and theropic just isn't equipped to um you know beef up on MCP and so that's part of also why they're donating it they're like you know what you guys go ham and just fix all this stuff they can turn about great so yeah that's the main thing I've seen are we are we talking about security in the sort of normal AI agent kind of security where it's like we find allowing an LLM to go talk to a bunch of tools and talk to a bunch of services and access a bunch of my data there's just a lot of potential points for like everybody talks about prompt injection and there's a lot of places where my data becomes available to a lot of different services and there's just like this whole system needs to be kind of hardened against releasing my data and my work in the wrong places is that is that the security stuff you're talking yeah that's a big part of it the other part is like authentication and just making sure someone is who they say they are um so that's another thing anthropic wasn't really fully equipped to to handle so they're you know saying okay you guys do this so yeah those are the things like when it comes to payments stuff like that um sensitive data so yeah I mean we'll see how that stuff shakes out I think there's gonna be a lot of work done and certain companies are just gonna put teams on this and just say hey like you guys for the next couple of months just work on MCP and try to fix this aspect that we're a little concerned about do you think every like big and small company is going to spend the next year doing that like pointing somebody at MCP and saying okay let's stand up a server and see what's possible here is this is this going to start to happen that fast I don't think it's gonna be every company I think it'll just be the main players that have a vested interest I think I mean this is just kind of anecdotal but I think smaller companies are just gonna wait for the bigger companies to do it you know they don't need to put the resources on this and they know that bigger companies have you know a lot of the same concerns they do so they're like yeah just you guys work on the infrastructure part of it we'll use it when it's when it's ready so yeah I mean I could see all the companies that are involved in this a a a i f foundation um you know putting their teams on it uh you know AWS Google open AI um a lot of the same companies that have representatives involved in this kind of like discord group chat and core maintainers group where uh they were already kind of talking about waste and prove it but now they're going to actually make all those changes yeah it does feel like we're we're six to 12 months away from all of those companies just making it like plug and play MCP tools where it's like AWS is just like click here and you have an MCP server it's like great and that's that's when it'll start to really take off when it's like I don't even have to figure out how to do this relatively easy thing from scratch it just comes free with whatever piece of software I'm using that's if you want MCP to win that's what it's going to have to look like but we'll see 100 percent yeah I really do hope I both am very excited to talk about MCP and I also hope this is the last time we ever talk about MCP do you know what I mean that's same that's the correct answer it's like we don't talk about TCP IP on this show for a reason it's just like yeah it works it does the job and I don't ever have to think about it ever again and it feels like that's what MCP needs to become all right hidden we used to go on for five more minutes we have a hotline question oh yeah 100 percent all right we're going to take a break we'll be right back security program on spreadsheets new regulations piling up an audit dread it's time for vanta vanta automate security and compliance brings evidence into one place and cuts audit prep by 82 percent less manual work clear of visibility faster deals zero chaos call it compliance or call it calm clients get it join the 15,000 companies using vanta to prove trust get started at vanta.com slash calm security program on spreadsheets new regulations piling up an audit dread it's time for vanta vanta automate security and compliance brings evidence into one place and cuts audit prep by 82 percent less manual work clear of visibility faster deals zero chaos call it compliance or call it calm clients get it join the 15,000 companies using vanta to prove trust go to vant.com slash calm security program on spreadsheets new regulations piling up an audit dread it's time for vanta vanta automate security and compliance brings evidence into one place and cuts audit prep by 82 percent less manual work clear of visibility faster deals zero chaos call it compliance or call it calm clients get it join the 15,000 companies using vanta to prove trust go to vant.com slash calm this is advertiser content brought to you by stonyfield organic our cows them going out to pasture they love it they're so excited to go out every day they weight-rated the drawing effect we milk them and we just open up the laneway and let them just go right out to pasture i'm ronda miller goodrich and i'm a dairy farmer in cabitvermont our farm is mollybrook farm we're an organic dairy farm and we are a supplier to stonyfield mollybrook farm has been in my husband's family since 1835 we started our organic transition in 2015 we had 53 acres of corn ground and of course we had to use herbicides and pesticides and the soil was dead really for all intense purposes we stopped growing corn and stopped using herbicides and pesticides and we seeded that down to perennial grasses after that we began to see biodiversity and that soil again to be organic certified our cows need to be in pasture at least 120 days i think the organic practices really benefit our animals you know having good feed good water a nice light area that's what's important to us and that's what's important to stonyfield visit stonyfield dot com to find stonyfield organic yogurt near you hey how's it going i'm erick one of the verch cas producers and before we move on with the rest of the show i just wanted to mention that this week's hotline is presented by AWS how leading businesses use AI for next level innovation now back to david all right we're back let's do a question from the verch cas hotline as always you can call it 66 version one one you can email verch cas to the verch dot com or you can do what we're about to do which is you can just post it me on social i will lose the post and i will continue to think about the question you asked me for so long that i bring it back up on the show so to the person who sent this to me please know that i'm very sorry that i cannot find this post to give you credit i'll put it in the show notes if i can find it but hey the question was essentially why is it that every a i company is trying to get me to shop that that somehow everyone has simultaneously decided that the main thing you want to do with an l l m is buy something i have a couple of theories on this but i'm curious what spring's mine for you that's a great question i think partly it's a really good foil for like a complex multi-step task that involves commonsense and logistics so in a way it's just like kind of a good tell for whether an AI agent is actually good-ish or not you know i mean commonsense of which things to highlight or put in your cart you know can it understand the instructions of what you're even looking for so let's take the issue example let's say you wanted like white night keys size 8.5 for pickup in um you know menhine and that's a lot of different steps um an AI agents are designed they say to do really complex multi-step tasks and they need to be able to reason okay well this shoe is white um but it's not night key so okay i'm not going to put that in her cart things like that it's just a kind of a good foil for what an AI agent can actually do plus yeah time we've already learned that chatbot can't really tell time so yeah like you know is it available for pickup today tomorrow um manhattan geographical uh you know limits there so yeah i think it's just a kind of a good foil the other part of it is i'm sure um you know all these companies want to make money so why is tiktok shop a thing why our influencers um you know pedaling their uh special codes for you to buy something it's because e-commerce is a great way to make money i'm sure that if you buy something in chat ubt or in clawed eventually they will have a certain cut or a commission of that you know i mean it's like easy money why not um and the other part of it is they'll learn more about you you know it's data is is valuable and what you buy says a lot about you and is really lucrative to these companies so yeah i think those are the main reasons that come to mind for me i think it's not about the data piece of it that it it does seem to be true that 2026 is going to be the year of ads in AI tools and one a one really great thing to advertise is products people can buy uh and be one really great way to get better data is to watch people go through shopping flows uh that is like that is where all of the money is in advertising and so if you want to do that having one click shopping stuff inside of your AI tool goes a really long way um i think the the only thing i would add to that is that uh it is it is like an sort of obvious and benevolent use case if that makes sense like i think i'm sure you hear this too but i think i hear from AI companies all the time is they're not very good at explaining to people what you can do with their product and this idea that they're just like fun to talk to and sort of act like your best friend gets you a long way but ultimately the tool has to do something for you and a thing that the internet until now frankly has not been very good at for all the reasons you just subscribed is shopping um shopping is a thing everybody does it's a it's like a universally appealing demo people almost everybody likes shopping in some way shape or form and it's a it's a non scary and totally mainstream use case that you can just point people at and be like yeah we can find you better deals than you would otherwise like there was this Alexa announcement last week where uh you can have roofish amazon's shopping AI which again is like clearly named to not seem scary i don't like when they do that but anyway uh it will actually monitor prices on an item for you and we'll buy it automatically when you when it hits that threshold this is like it that doesn't need to be a generative AI use case but it is also like a a perfect and understandable use case for this kind of tool in a way that i think there are not a lot of those for AI yeah especially because you're absolutely right i mean i think i can't think of anyone that wouldn't use that you know what i mean it's absolutely there's so many that that is a thing that amazon has to build on top of amazon like what a funny way to admit that your pricing scheme is insane and doesn't make any sense to anyone again algorithmic pricing yeah truly insane but yeah i think it's funny because these things are built i think a lot of time i'm honestly a lot of AI tools and in general are just built i think sometimes without an end use case in mind like they're just built to build them without really solving a problem or without you know thinking about what it's actually for so this is a great example of something that yeah people would use and want to use booking travel shopping um saving money um do you remember when uh like google chrome had that extension honey um where it would like try automatically every coupon code when you're going through a cart i mean that's a great use of technology so it's like people want to save money they want to you know be and also here's another example honestly instagram ads a lot of people like them right they find them useful they buy stuff from them that's one of the only ad experiences that i've seen people actually enjoy and so i mean yeah i think that's what chatubt eventually is going to offer when i was at dev day for opening i in october sam ultman was talking about ads within chatubt and he said specifically that he wanted them to operate kind of like instagram ads in that you know but he wanted to recommend products that people did want or would find interesting so i think that's what we're going to see happen next year honestly they're they put it on pause for a little while during their code red but i think next year they're allegedly going to release adult mode in the first quarter and i think they're going to release ads soon after that yeah it's really it's going to be a banner year for it being a fun product for humans to use no i agree with all that the only the only other thing i would add is just to to put a even finer point on your this is how they make money piece of it this is how they make money right like it it is so easy to make money from shopping because this is like a huge industry that everybody understands the commissions are well established the pipeline exists and if you can be the one who is like oh now we're the place that people go to find products you you can just take part of that for yourself like i've been following google shopping for years because i think google shopping is fascinating it's like what if you had all of the data in the universe and could see the whole internet and still couldn't do better than amazon fascinating but the the google shopping's whole thing has been okay people are searching anyway if we can just prevent you from going to their website and then clicking to buy something and we can just google pay you straight through that whole process a that's a pretty good user experience because you found the product you wanted faster you pay faster you get the thing faster but also google now owns and gets to extract value from more parts of that process so you can think even like if chat gbt gets access to my credit card number and can just be like oh i found the Nike shoes you're talking about do you want me to just go ahead and buy them and you can say yes a excellent user experience b chat gbt gets to just run around a whole bunch of people who want to take commissions and just take it for themselves 100% and i think great because i'm my first one of my first jobs in New York was a personal assistant and yeah that's the type of thing that i would be doing for people so there you go i mean useful people wanted real good personal assistant would you say i think i was pretty good you know i booked the travel i kept the calendar i did some a myriad of random random chores um you know i think i was pretty good um i was way more organized about the person i was being an assistant for his life than my own because i think you can only manage one person's life at a time i managed her life mine i let fall by the way side a little bit until i was done being a personal assistant i also had a separate phone with a separate ringtone um that i had to keep on in all hours so there you go this is why chat gbt is going to totally collapse as it starts to take over more and more of our lives chat gbt is just gonna get like weird and sad but it's gonna be very helpful for us exactly all right we gotta get out of here Hayden thank you it's always thanks so much all right that's it for the show thank you to Hayden and Joe for being here and thank you as always for watching and listening if you have thoughts questions feedback feelings about prediction markets or guaranteed winners on polymarketing call sheet i can't do anything about it but i want to hear about them anyway email vergecastethaverge.com or call the hotline 866 version 1 1 we absolutely love hearing from you it is the single best thing i have a lot of inboxes in my life and the only one i like is the vergecast hotline and the vergecast email so keep all of your stuff coming we love hearing from you this show is produced by eric gomes brand and key for and travis lord truck vergecastes verge production and part of the vox media podcast network we're gonna be back on friday and then next Tuesday those are our last two shows of the year next Tuesday is the vergecast holiday spectacular which is one of my favorite episodes every year and this one is extremely fun so stay tuned and then we are all going to just fade into the holidays and i'm very much looking forward to it we will see you next time rock and roll. 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