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PLUS: NVIDIA’s Proxy War 🪖

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Hi Everyone. This is Take Off. We're like a hidden Easter egg in your favorite video game - surprising, delightful, and adding an extra layer of fun to your tech news consumption.

Here's what we're serving up today:

  • Ads to my Right ; Ads to my Left 📺

  • NVIDIA’s Proxy War 🪖

  • Asteroids ☄️

  • Trending Tools ⚒️ 

Ads to my Right ; Ads to my Left 📺

Trivia Time: What do the following companies have in common?

  1. Meta

  2. PayPal

  3. Uber

  4. JP Morgan Chase

  5. United Airlines

At first glance, these companies might seem to be players in different industries. But there’s one juicy secret they all share: ADS.

Consumer Data = Gold

Today, the most precious commodity isn’t gold or oil - it’s attention. And who better to mine this than companies armed with terabytes of user data. 

To be clear, advertising isn’t new. But as the consumer internet really took off in the early 2000s, with Google, Facebook, Twitter and all your favorites, advertising became THE de-facto method of monetization. 

Pay for the Product and Be The Product

You might have heard the famous saying: 

If you’re not paying for the product, you ARE the product.

Google, Facebook and Reddit don’t charge anything to use the product because they sell your data to advertisers. 

Now, you’ll have to pay for the products and be the product as well. Talk about good times.

Retailers like Walmart, Target, Kroger and Best Buy have been monetizing customer data by expanding into retail media i.e. retailers selling ad spots. 

Retail media can be more effective than social-media ads because folks are targeted at a time when they’re more likely to spend. That’s how Amazon has built a $40B+ advertising side hustle.

Retailers aren’t the only companies whose main biz isn’t advertising to lean into data-focused ad networks.

  1. Uber has built a $1B+ ARR advertising business in the last few years.

  2. PayPal recently announced it would venture into digital ads using its consumer transaction data. 

  3. United Airlines will show targeted ads on their in-flight screens. 

The Takeaway:

“You either die a hero as a company or live long enough to see yourself become the villain an advertising company”

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NVIDIA’s Proxy War 🪖

We’ve previously discussed where the REAL MONEY lies in GenAI right now and in the future. As of today, the money minters in AI are the companies offering cloud infrastructure as well as the GPU Gangsta: NVIDIA.

NVIDIA has positioned itself as a central player in this domain, dominating the GPU chip market and significantly influencing the dynamics of the cloud infrastructure. 

NVIDIA: The GPU Overlord

NVIDIA mentioned in their recent quarterly earnings that over 45% (~$13B) of their Data Center aka GPU revenue was coming from the hyperscalers. 

Yep, the big guns like Amazon, Google, and Microsoft are shelling out big bucks for NVIDIA’s GPUs to keep up with the AI boom.

However, this heavy reliance on NVIDIA has prompted these tech behemoths to explore alternatives by designing their custom silicon to reduce their dependence on NVIDIA. 

Waging a Proxy War

Now, NVIDIA isn’t just sitting back and munching on popcorn. 

It has recognized this threat and is actively trying to avoid losing their position as the sole dominator in the GPU Chip race. But how?

There’s been a whole slew of startups offering GPU cloud services. And NVIDIA has been arming these 

GPU cloud rebels CoreWeave and Lambda Labs by weaponizing them with priority access to advanced chips, conducting a proxy war through them against cloud giants Amazon, Google and Microsoft, which are all developing their custom silicon. 

CoreWeave stands out as a prime example of this strategic partnership. CoreWeave was NVIDIA’s 7th biggest customer in 2023 at 4.5% of the total revenue, putting them among Amazon, Meta, Microsoft, Alphabet and Tesla as one of the biggest global GPU buyers.

CoreWeave’s meteoric rise is evident from its revenue growth, leaping from $30M in 2022 to over $500M in 2023 with a projected revenue of $2.3B in 2024.

David vs Goliath

  • $14 Billion

  • $14 Billion

  • $12 Billion

This is the CapEx spend for AWS, Microsoft Azure and Google Cloud respectively in just Q1 of 2024. That’s the kind of pocket change these companies have. 

So, how will these private GPU cloud rebels go up against these Goliaths? 

The answer is NVIDIA. These private GPU Clouds have received significant allocations of GPU hardware specifically because NVIDIA wants to seed an alternative cloud ecosystem that will attract customers and keep them dependent on the NVIDIA GPU Stack.

This is the main reason all the public cloud providers have shortages of GPU resources - because NVIDIA doesn’t want them to get too big, too fast, when it comes to capturing the next wave of AI use cases.

☄️ Asteroids ☄️

Poolside.ai is raising $400M at a $2B valuation, led by Bain Capital Ventures and DST. With a strong founding team and a focus on speeding up software development, they're diving into the generative AI pool. 🏊‍♂️💰

Anthropic's Claude 3.5 Sonnet is here, flexing its upgraded AI muscles. Faster, better at humor (finally!), and great with images. Plus, it powers new tools like Artifacts for editing AI-generated content. 📸🤖

Microsoft’s Recall feature, meant to screenshot everything on new Qualcomm laptops, was pulled last minute due to security concerns. It’s now an opt-in feature with upcoming security fixes, still prominent in marketing. 💻🔒

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