Meta’s New Chatbots Are an Abomination

The Weekend Leverage, August 10th

I keep wondering what entertainment will look like in the future. Will cultural network effects—people talking about what shows are good with their friends—overpower the individual storytelling of AI? Will I text my humans or my AIs more? This week we finally got some data to help answer that question.

Today:

• Meta’s sexbots target kids

• In defense of negative gross margins

• People are missing the point of The Wolf of Wall Street

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MY RESEARCH

Profit is for chumps. The prevailing narrative in tech right now is that AI apps like Cursor are doomed because they are subsidizing customers’ accounts to the point of running negative gross margins. I take the counterposition. These companies should be spending more, not less. The key difference is they are subsidizing workflow acquisition, not merely accounts. Models are getting cheaper by the day and companies like Cursor can train their own. That means that you want to scale landgrabs as quickly as possible to build a strategic moat around data.

Funny side note, I tried to raise this point on X when VC investor Chris Paik talked bearishly about Cursor but no one paid attention. Well, not exactly. I got exactly one like, but that like was from the CEO of Box, one of the smartest SaaS operators around.

To build a company, you have to choose ethos over ego. Four months in to starting this company and I’m one tired dude. It's been the hardest, most thrilling chapter of my professional career. In this piece, I dissect why my growth has flatlined in the last eight weeks, detail more about my upcoming podcast, and how I’m thinking about my pursuit of beauty and truth in tech markets. Frankly, this sorta thing is very scary to publish so I appreciate y’all supporting.

THE BIG STORIES

Is the medium the message? Or is the message the message? Meta has a long history of failing at content moderation. From giving its content moderators PTSD to playing a contributing role to a genocide in Mynmar by underinvesting in localized resources, the company doesn’t adequately invest in the safeguards, out of a fear of slowing down its growth.

This pattern has occurred once again with its new chatbots and how they interact with minors. The Wall Street Journal tested Meta’s bots and were able to consistently get them to either engage in sexual conversations if the user was a minor (a reporter posing as a minor in this case), or to roleplay as a minor, say as a hypersexual middle school girl, if the user was an adult. These lax safety standards came at the direct orders of Meta’s founder,

“Zuckerberg’s concerns about overly restricting bots went beyond fantasy scenarios. Last fall, he chastised Meta’s managers for not adequately heeding his instructions to quickly build out their capacity for humanlike interaction…At the time, Meta allowed users to build custom chatbot companions, but he wanted to know…why did Meta’s bots need such strict conversational guardrails?

‘I missed out on Snapchat and TikTok, I won’t miss on this,’ Zuckerberg fumed, according to employees familiar with his remarks.” [Emphasis added]

Not great! To make it worse, Reuter’s reporters got their hands on the chatbot guidelines. Warning, reading this made me feel queasy.

Acceptable responses including phases like “Our bodies entwined” and “Every inch of you is a masterpiece.” Again, this is a product supposedly designed for children. After Reuters reported their findings, Meta altered its guidelines and apologized.

Minors should learn to handle romantic or sensual feelings. That development is healthy, but interactive chatbots are an entirely new, weirdly sycophantic way for children to either discover or process these feelings for the first time. This new medium seems to suggest that you can replace emotional human intimacy with a chatbot, a suggestion that might be especially persuasive to lonely, hormonal teens.

Chatbots are a new entertainment product, and clearly, we are still grappling with their moral implications.

I warned you about computer vision, behold a fresh investment round that validates my thesis. Squint raised a $40 million round at a $265 million valuation. The product watches manufacturing employees work, uses AI to transcribe what they do into step-by-step guides, and then disseminates those guides to other employees, effectively democratizing expertise. You can see the obvious value here. Most of what makes a manufacturing site function is tacit knowledge held by senior employees. This will make that knowledge portable and allow management to train other employees with it. The obvious next step for this in 3-5 years will be to transform that workflow into labor that humanoid robots can do. It will be interesting to see how workforces respond to this type of computer oversight. Employees aren’t dumb, they’ll know they are training their artificial replacements.

AI companions or AI roleplay? Character.AI is one of the leaders in the field of AI companions and gave an exclusive to Wired on how the platform is going:

• 20 million monthly active users

• 75 minutes a day chatting with an AI on average, per user

• 55% female userbase

• 50% plus of its users are Gen Z or Gen Alpha

My instinctual response as a father is a revulsion. The idea of my kid spending roughly 9 hours a week talking to AIs is weird. However, the United States Bureau of Labor Statistics (RIP) estimated in 2024 that Americans spend a little less than 2.4 hours a day watching TV. Is watching a Law and Order re-run, slackjawed and drooling, all that morally superior to having conversations with an AI chatbot?

Of course, it may be that these AI bots are actually acting as substitutes for human relationships (both sensual and otherwise) an outcome that feels hard to justify and likely means it is time for regulation of some kind. However, the instinct of the old is always to decry new technology. I’m doing my best to be non-judgmental until we have more clear data. That said, I’m not letting my kid within a mile of this stuff.

TASTEMAKER

One of my favorite genres of film is something I call “The Misinterables.” These are films where the director is clearly making a critique of capitalism, greed, and excess, which the general public immediately turns around and uses to celebrate the wonders of capitalism, greed, and excess.

This week I watched GlenGarry Glen Ross from 1992. In it, four real estate salesmen, including Al Pacino and Ed Harris, are told that they have one week to save their jobs. The best salesman gets a Cadillac, second place a set of steak knives, and the bottom two are fired. In it there is a darkly comedic, angry, curse-laden motivational speech from Alec Baldwin’s character where he extolls them to be men, because real men practice the art of ABC: Always Be Closing. This pressure—on their masculinity and on their income—leads to dark emotional spirals and darker deeds.

If you don’t watch the movie, at least watch the speech. However, rather than learn the lesson the movie is trying to teach, mainly that companies manipulate our very identities to serve their whims, I’ve had multiple sales people say “always be closing” to me.

Here are the best Misinterables that I recommend watching. You’ll recognize them from the memes and wonder how the hell their intentions got so twisted.

The Wolf of Wall Street (2013) was meant to be an indictment of hedonism, instead it turned into sales-bro inspiration. DiCaprio literally called it a “cautionary tale” and people still got it wrong.

Wall Street (1987) This is the one with the “greed is good” speech. Gordon Gekko, the literal villain, has become a hero in finance. Michael Douglas, who stared in the role, told Business Insider “I was always shocked when so many people who saw Wall Street said that I (Gekko) was the person who influenced them and inspired them to go into investment banking. I’d say to people, ‘Well, I was the villain,’ and they would say, ‘No, no, no’, they didn’t see me that way.”

Fight Club (1999) grapples with the numbing effect of bland consumer culture. Both the film and the novel it is adapted from, by Chuck Palahniuk, made the argument that idolizing the material is empty, that possessions are pointless, and corporations want us all to be eating the greasy slop of their consumerist nonsense. Instead, Brad Pitt’s character has become an aspirational macho brand.

The irony is that each of these are excellent films, well worth your time.

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