TheChek News Flow

The Microsoft co-founder breaks down his climate investments

It is the blessing that can help determine a climate startup’s fate: backing from Bill Gates, one of the biggest investors in efforts to transform the world’s energy use.

Since 2015, Breakthrough Energy, the climate-investment firm founded by Gates, has lavished $2.2 billion on more than 160 startups and other initiatives, seeking both returns for investors and emissions reductions. He has also made investments separately outside the firm.

Some of those startups are pursuing relatively straightforward solutions, such as sealants that make heating systems more efficient. Others are working on ideas that might sound far-fetched, such as burying plant waste to remove carbon dioxide from the atmosphere.

In an interview, the Microsoft co-founder looked at the road ahead for the young companies he has invested in.

The startups poised to emerge as early winners

The surest bets, Gates said, are the companies that find ways to make existing systems more efficient. “They are, in a sense, just making a better product,” Gates said.

Among the examples he cited was TS Conductor, which makes a power cable that weighs less and carries more electricity than conventional wires. That lets utilities add power to congested grids without building new transmission lines.

As demand for TS Conductor’s technology grows rapidly, a company representative said it is deciding where to put a new U.S. manufacturing site with 10 times the capacity of its first one in Southern California.

Another startup Gates cited is Aeroseal, which identifies leaks in heating and cooling systems, then releases sealant-containing mist to plug them. The technology has been used in hundreds of thousands of homes and more than 10,000 commercial buildings, according to the company.

Gates also predicted success for KoBold Metals, a mineral-exploration company that uses artificial intelligence to identify deposits of metals used in batteries, power lines and other gear needed for the energy transition. KoBold said this year it discovered a vast copper deposit in Zambia after conducting drilling tests at the site since 2022.

Many startups still need to reduce costs

A big reason many green technologies aren’t catching on more quickly is that they cost more than the polluting option.

“The Breakthrough Energy theory is to get to a point where there is no green premium,” Gates said.

That isn’t the case yet for green hydrogen, which could help decarbonize steelmaking and other industries that rely heavily on fossil fuels. Green hydrogen is made by splitting water using renewable electricity, but still costs far more than hydrogen produced from natural gas.

Electric Hydrogen, a Gates-backed startup that says it has developed a better electrolyzer, which splits water, is among those trying to bring costs down. The company raised $380 million from BP, United Airlines and others last year and opened a factory in Massachusetts this spring.

One area where Gates said the cost gap is narrowing is heat batteries, which convert electricity into heat for industrial processes. Rondo Energy, backed by Breakthrough, is working with Diageo, the liquor company, at sites in Kentucky and Illinois and this week announced deals in Europe.

Some investments are far from paying off

It will likely be many years before some technologies can be commercialized, but Gates said his investing approach is “unusually patient.”

Since 2008, for example, he has poured more than $1 billion into TerraPower, a company he founded to develop nuclear reactors that are smaller and cheaper than conventional nuclear power plants. TerraPower recently broke ground on its first project in Wyoming, which the company hopes will come online in 2030.

“As long as that looks promising to me, I’ll make sure that it’s financed,” he said.

Those next-generation reactors aren’t the biggest long shot in Gates’s portfolio. Breakthrough has also backed startups working on nuclear fusion, which could theoretically provide abundant carbon-free power. But even optimists agree that the first fusion power plant is years away.

Gates called it “maybe the hardest thing we work on.”

Startups working to remove carbon dioxide from the air are also still in their relatively early stages. The methods include giant fanlike machines that suck carbon from the air, and the spreading of carbon-absorbing rocks on soil. Gates said he pays $600 per metric ton of carbon dioxide to offset his emissions; Breakthrough has backed a startup that says it can remove carbon for less than $100 a ton by burying plant waste.

Gates said costs will need to fall further for carbon removal to play a major role in curbing climate change.

A bet that didn’t work out

Delays, setbacks and failures aren’t surprising when trying to develop new technologies. One disappointment for Gates came in May with the chapter 11 bankruptcy of Ambri, a developer of liquid-metal batteries.

Ambri is one of many startups trying to develop cheaper or longer-lasting alternatives to lithium-ion batteries, which power electric vehicles and store wind and solar power for when it is needed on the grid.

An Ambri spokesman said the company is on course to exit bankruptcy next month and will push to license its technology after it didn’t secure enough investment for its manufacturing plans. Gates is part of a creditor group that is on course to acquire the company out of bankruptcy.

Gates, who invested through his Gates Frontier firm, said Ambri didn’t bring down costs as hoped. He predicted that most startups in that area will struggle to gain traction.

“Given the large number of battery companies, the majority of those technologies will be outcompeted,” he said.

Construction

We know what is working in the US stock market: anything within the AI halo. But what isn’t working?

The basic answer to this question is that lots of stuff isn’t. Since the end of March this year, 294 of the stocks in the S&P 500 have delivered a negative total return; 310 of them have suffered price declines. And the declines are all over the place. The 15 companies that have inflicted the largest dollar losses on the index are a remarkably diverse group, spanning just about every sector:

The stock market had a great run, and has become expensive against a backdrop of gently slowing growth. It is not surprising that there has been some retrenching. Looking at all the companies in the index, however, one theme did jump out at me, perhaps because I have been thinking about housing. Almost every stock in the index that has anything to do with construction has had a bad three months. Builders FirstSource, a wholesale supplier to the building trade, is the worst performing stock in the index. Pool Corp, as mentioned yesterday, recently said it will be a very slow summer for pool building. Timber, furnishings, flooring, paint, industrial supplies, toolmakers, DIY retailers, and heavy machinery are all adding to the gloom:

Many of these companies did very well during the pandemic and then corrected some. Now they have corrected again. Several reported soft revenues or weakening margins in the first quarter, though none of the others gave an outlook quite as bad as Pool’s. As a whole, the stock prices tell a worse story than the recent results. But this makes sense: construction is rate sensitive and we have been in a high-rates environment for well over a year. If you are looking for a crack in the US economic facade, construction is a good candidate.

Other macro signals back up the story. Lumber futures prices have fallen 20 per cent since March. Production of construction supplies has been sliding since early 2022. Construction spending is still growing nicely, but it has been slowing since December. Construction employment growth has been steady, but looking at the other data, including from the homebuilding sector, you might wonder how long this will last:

Does this amount to a significant worry? Construction accounts for about 5 per cent of the workforce and 4 per cent of GDP. It is volatile and therefore matters more than that on the margin. It is often discussed as a leading economic indicator, but in this weird cycle it is hard to tell what is leading what. But construction is undoubtedly worth watching.

- The majority of secondary endpoints did not show an effect either.

- The treatment was very well tolerated and safe, consistent with previous clinical trials in other indications.

- decided to further reduce its operating costs and workforce to conserve cash while considering all the strategic alternatives for the Company.

- As a result, the Swiss parent company GeNeuro SA has made redundant 7 of its 9 employment agreements, including all of the Executive Management.

- The Company will continue to seek paths to advance or monetize its pipeline assets against multiple sclerosis and amyotrophic lateral sclerosis, as well as its HERV platform, in order to generate value for all stakeholders.

The GNC-501 clinical trial is a Phase 2 study in patients suffering from post-COVID-19 neuropsychiatric syndromes, testing temelimab against placebo. The study enrolled over 200 patients in Switzerland, Spain and Italy who had tested positive for HERV-W ENV. The top-line results from this study show that treated patients had no clinically meaningful improvement compared to placebo on the primary endpoint measuring the improvement of fatigue with the PROMIS SF7a test. The majority of secondary endpoints did not show an effect either. The treatment was very well tolerated and safe, consistent with previous clinical trials in other indications.

- Preliminary analyses suggest that shorter disease duration at time of inclusion, as well as the evolution of the underlying HERV-W ENV status, may have an impact on the efficacy outcome measures. The Company will continue to analyze complete results once they become available, including additional biomarkers.

Moscow allegedly plotted to kill an investigative journalist in Austria. Now his home is protected by officers with submachine guns.

VIENNA—Inside a stately art nouveau building in central Vienna, special-forces officers armed with submachine guns guard the home of Christo Grozev, an investigative journalist whose Academy Award-winning documentary exposed the Kremlin’s attempt to kill opposition leader Alexei Navalny.

Two years ago, Austrian intelligence and U.S. law enforcement warned Grozev that Russian President Vladimir Putin’s spies were plotting to kill him. After living with his family for two decades in Austria, the Bulgaria-born Grozev fled to the U.S. in 2023. Now, when he returns to visit his family, who remained behind in Vienna, he receives a degree of state protection that rivals that of Austria’s chancellor, officials say.

The failed murder plot is one of a series of incidents that show how Vienna has emerged as Russia’s new espionage hub in Europe after capitals there expelled 600 spies posing as diplomats in the wake of the invasion of Ukraine.

Dozens of these spies have since resurfaced in Austria, intelligence officials there say. In the past two years, the number of Russian state employees in Austria swelled to over 500 from 300 to 400, over a half of whom are diplomats and administrators, according to intelligence officials. Up to a half of them operate as spies, Austrian intelligence officials estimate.

Last year, neighboring Germany closed the Russian consulate in Munich, which German officials said was hosting a number of spies. The Russian staff simply relocated to Salzburg, an Austrian city across the border to the east, Austrian intelligence officials say.

Vienna is now a base for Russian clandestine operations, including financing and logistical support for murder, sabotage and recruitment across Europe, as well as industrial espionage and influence operations, according to over a dozen Austrian, European and U.S. intelligence and government officials.

The Russian Embassy in Washington didn’t immediately respond to a request for comment.

Russian diplomats and support staff operate in Vienna from over 40 properties owned by Moscow and people or companies linked to the Russian state. Surveillance equipment has sprouted up on the roofs of such properties, some used to tap satellite telecommunications.

An Austrian Interior Ministry spokesman said that Austria is one of the safest countries due to its well-functioning security agencies. The spokesman said that the country’s intelligence agency is aware that Austria has become a target for Russian espionage and influence operations and that the agency counters threats from state actors within its legal limits.

During the Cold War, the city was a notorious international spying hub, as immortalized in the Hollywood classic, “The Third Man.” Espionage is legal in Austria, which is a member of the European Union, as long as it isn’t directed against Austria itself. A neutral country outside military alliances, Austria hosts international organizations, including United Nations agencies and the Organization of the Petroleum Exporting Countries, some of which have long had spies in their delegations, according to multiple Austrian and foreign officials.

Russian influence runs deep in Austria, dating back to when Moscow was an occupying power of the country after World War II.

For instance, in 2018, photos of Putin dancing with Austria’s Foreign Minister Karin Kneissl at her wedding caused an uproar. The Foreign Ministry is in charge of approving diplomats’ accreditations—as well as expelling them. In 2023, Kneissl moved to Russia, where she runs a think tank. The Russian air force helped move her household, including her ponies.

Vienna-based Russian operatives are suspected of helping with the recruiting and financing of Russian operations such as tracking Western arms shipments to Kyiv in Poland and killing a Russian military helicopter pilot who defected to Ukraine and was living in Spain, Western security officials say. The killers, who shot the man five times and then ran him over with an SUV, were criminals paid with cash provided by Russian state employees from Vienna, these officials say.

“We are now becoming a liability for our neighbors because Russia is using us as an operational base,” a senior Austrian intelligence official said.

Russia sends large volumes of cash into neighboring countries such as Lithuania by road, an Austrian intelligence official said. From there, Austria-based diplomats ferry it across Europe, often in diplomatic pouches that can’t be checked by police.

Now, other EU nations are considering a Czech proposal for a ban on Russian diplomats traveling outside the country where they are posted.

“If these diplomats want to work in Vienna, then that is perfectly fine…but I see no reason why they should have free access to the Czech Republic,” the Czech Foreign Minister Jan Lipavský said, claiming that Russian diplomats engage in nefarious activities. Russian or Russian-paid saboteurs were found by Czech police and prosecutors to be behind a number of attacks on ammunitions factories and civilian targets.

The Austrian government must end its “extremely dangerous inaction” on Russia spying, which is “weakening efforts to curb Russian influence in Europe,” said Stephanie Krisper, an Austrian opposition legislator who sits on the committee scrutinizing intelligence operations.

Russia is rebuilding its spying network by recruiting civilians, organized-crime figures, hackers and private detectives for attacks on and surveillance of critical infrastructure and other operations across the continent.

“Russian intelligence is now like an octopus using every tentacle at its disposal, and the head is currently in central Europe,” a European intelligence officer said.

The U.S. also keeps a large spying contingent in Austria, which is the seat of the Central Intelligence Agency’s regional center overseeing activities in Eastern Europe and the Balkans.

Some U.S. officials believe that Russia grew bolder in recent years and began targeting American personnel. In 2021, 20 U.S. Embassy staff, including CIA officers, based in Vienna became ill with a mysterious condition known as the Havana Syndrome, according to several U.S. and Austrian officials.

The Russians possibly used acoustic or “directed energy” weapons against the U.S. personnel, said Amb. John Bolton, former President Donald Trump’s national security adviser from 2018 to 2019, when some of the reported Havana Syndrome incidents occurred in various countries. The inability of the U.S. to protect personnel from the attacks “means that the Russians or whoever is doing it are way ahead of us,” he said.

In 2023, the U.S. intelligence community said there was no evidence that a foreign adversary had used any such weapon.

Austria’s intelligence service itself has allegedly been penetrated by Russian spies. Earlier this year, Egisto Ott, a senior undercover operations official, was arrested on various charges including accusations of spying for Russia. Ott’s lawyer Jürgen Stephan Mertens didn’t immediately respond for a request for comment. Mertens told Austrian media that the accusations against Ott were unfounded and lacking solid evidence. In an interview with The Wall Street Journal before his arrest, Ott denied he was a Russian spy.

The agency’s former head of operations Martin Weiss, also suspected by Austrian investigators of being a Russian spy, fled to Dubai in 2021. Austria is seeking his extradition for a number of accusations, including some related to the Grozev case, such as using Ott to obtain the journalist’s personal details. Weiss didn’t respond to requests for comment.

Both men worked for Jan Marsalek, the Austria-born former chief operating officer of fintech group Wirecard, which collapsed in a major fraud case in 2020. Marsalek, who fled to Moscow to avoid arrest, has been working for Russian intelligence for over a decade and now holds a senior role with the FSB, Russia’s main intelligence service, according to European officials.

Marsalek coordinated at least one team that participated in the plot against Grozev, according to legal documents. Moreover, Austrian authorities have accused Ott in their arrest warrant, seen by the Journal, of using his intelligence connections to obtain Grozev’s address and passing it on to Marsalek and to Russian agents.

A team coordinated by Marsalek then began following Grozev. They stole electronic equipment including laptops from his homes in Vienna and Bulgaria, according to investigators in several European countries. The goal was to capture and kill him, say investigators.

Several people involved in the plot have since been arrested. One was identified after Grozev’s teenage daughter took a picture in 2022 of a man loitering outside a cafe where she was lunching with her father.

After the plot was discovered, the new head of the Austrian intelligence agency, Omar Haijawi-Pirchner, who has been cleansing the body of suspected Russian sympathizers, personally vouched for the security of the Grozevs.

Russian spies have photographed the Grozevs’ security team in an attempt to establish their identities, according to Austrian intelligence officials.

On Tuesday, Grozev said the Austrian government must do more to curb Russian espionage, saying it had penetrated Austrian institutions and its business community.

“Austria only has the counterespionage infrastructure of a very small country, although given the concentration of spies and its importance as a hub for intelligence services, it should have that of a much larger country,” he said in the presence of armed guards.

In the wake of the investigation, Austria’s justice minister has said he wants to change the law that allows for spying.

In the past two years. Haijawi-Pirchner, a former police officer without prior links to the agency, successfully pushed for the expulsion of 11 Russian spies accredited as diplomats, according to several Austrian officials. He has asked for the expulsion of over a dozen other Russian diplomats, but the government has yet to react, two officials said.

Some Western intelligence agencies that had curbed their cooperation with Vienna during the recent scandals said they had re-established some intelligence sharing with Austria after Haijawi-Pirchner purged the service of Russian influence.

A spokeswoman for the Austrian Foreign Ministry said it supports requests to expel all diplomats who violate laws and regulations when firm evidence is presented. The Chancellery didn’t immediately respond to a request for comment.

Few disagree on the goal but turning it into reality requires strategic thinking

When the G7 met in Puglia recently, the seven countries around the table accounted for 61 per cent of the planet’s public debt, 45 per cent of its GDP and 11 per cent of its workforce. The economic future of the world’s major democracies depends on decreasing the first number, increasing the second, and making the third — the G7’s relatively small labour force — more productive. The infrastructure sector may be able to accomplish all three.

The US, UK and their allies are staring down the same growth dilemma. Debt burdens have become so large that traditional fiscal policies can no longer tame them. By 2030, what the US government must pay out (mandatory spending plus net interest on debt) will permanently exceed what it takes in (tax revenue). Even if discretionary spending went to 0, the country would still run a deficit. That projection is based on current law. But even if laws change, it’s hard to see a scenario where spending cuts or tax increases are sufficient to solve the debt crisis. That’s true for most G7 nations.

The only way out is growth — increasing the size of our economies so that what we owe is small relative to what we make. The problem is that growth is getting much harder to find.

An economy’s growth ceiling is set, in part, by the size of its labour force, and four G7 nations have already seen working-age populations start to decline. If immigration trends hold, both the US and the UK will join them. By 2065, Canada will be the only G7 nation not on a demographic downslope.

Infrastructure investment can be a counterforce to a high-debt, low-growth economy. It does the opposite — catalysing growth without necessarily adding public debt. Why? There’s a rapidly growing pool of private dollars to pay for infrastructure (more on that in a moment) and a wide body of literature shows that, in general, every dollar invested in infrastructure produces well over a dollar in additional economic output. From 1950 to 1989, roughly 25 per cent of the American productivity increase was attributable to increased investment in the highway system.

This growth can be felt very quickly. For example, the construction of new data centres for AI is causing US energy demand to grow after 15 years of stagnation. In addition, the technology will also make people more efficient, meaning our smaller future workforce can still become more productive than our larger current one.

But building this infrastructure requires a resource in short supply: pragmatism.

First, we need pragmatism in financing. By 2040, the world will need to spend $75tn repairing old and building new infrastructure. Asking taxpayers to shoulder $75tn of new debt is not something countries can reasonably do.

The capital markets aren’t always a good alternative to public financing, but they are in this case. The current supply of private investment for infrastructure is $1tn, and BlackRock projects this is going to be one of the fastest growing segments of the capital markets.

Second, we need pragmatism in policy — specifically, in permitting. When President Biden signed the Inflation Reduction Act two years ago, the law’s clean energy investments were projected to reduce carbon emissions by 710mn metric tons (MMT) by 2030. But if permitting delays continue, the new projection is 475 MMT.

In both the US and the EU, permitting for the average infrastructure project takes longer than building it. An extra high-voltage power line requires up to 13 years before it’s permitted. China takes no more than 3.5 years to deploy the same project. That should change.

Finally, we need pragmatism in energy. Much of the new infrastructure is for renewables. But without advances in storage, wind and solar cannot provide a reliable flow of electricity. The world can’t function without it. For now, it’s estimated that more than half of data centres’ electricity has to come from dispatchable sources like nuclear or natural gas. Otherwise, these bedrocks of the digital economy will shut down.

During conversations at the G7, very few disagreed with these goals. Who’s against more economic growth? The hard part is what happens after leaders leave the room — turning the desire for growth into a strategy for it.

Fortunately, in this case, our growth strategy can start with a very simple chain of logic. We can grow by building infrastructure. We can build infrastructure by unlocking private investment. We can unlock private investment by being smart about policy. The world’s great democracies have historically also been its great economic powers. With a measure of pragmatism, I believe they can stay that way.

It isn't often Bill "Mr. I Know What's Best For The Entire World" Gates comes up with an idea that we aren't immediately skeptical of, but his recent pledge to promote next generation nuclear power sounds to us to be a common sense solution to multiple problems we'll be facing in coming years.

Gates is pledging billions of dollars to promote nuclear through startup TerraPower LLC, OilPrice.com wrote this week. And it looks like that number could grow.

Gates recently told Bloomberg: "I put in over a billion, and I’ll put in billions more."

OilPrice.com notes that nuclear power is gaining global traction as a key player in decarbonization strategies. In addition to TerraPower, companies like Sam Altman-led Oklo are also focused on modernizing nuclear with small modular reactors.

Advocates emphasize its immense clean energy potential, proven technology, and existing infrastructure. Although not renewable, nuclear energy emits zero carbon and could help meet global emissions targets.

As we have been noting for months, urgency for clean energy has intensified due to the tech sector, especially Artificial Intelligence, consuming massive amounts of energy. This surge in demand has reversed the trend, with developed countries now experiencing faster energy demand growth than developing nations.

The IT industry currently accounts for about 2% of global CO2 emissions, according to Science Alert in 2023. Gartner predicts the AI sector alone will consume 3.5% of global electricity by 2030 without significant changes.

In response, tech giants are seeking carbon-free energy sources, with many turning to nuclear power. Bill Gates and Warren Buffett's TerraPower aims to supply nuclear energy for Microsoft's AI needs and is developing safer, less controversial reactors using liquid sodium coolant, which reduces water usage and may recycle spent nuclear fuel, addressing hazardous waste concerns.

Recall, at the start of April, we penned a lengthy report for premium subs discussing why artificial intelligence data centers, the electrification of the economy, and onshoring trends will result in a major upgrade of the nation's power grid. We followed the note up on Monday with a report titled Everyone Is Piling Into The "Next AI Trade."

In May, Larry Fink jumped on the trade: "I do believe to properly um build out AI. We're talking about trillions of dollars of investing. So data centers today could be as much as 200 megahertz - and they're now talking about data centers being one gigawatt. That powers a city."

It may be the big funding rounds that grab the headlines when it comes to the startup world, but for investors it’s the exit that actually matters.

For the past few years the M&A market for startups has been slow — and the IPO pipeline nonexistent.

However, just as AI is taking over venture, perhaps it is doing that for the M&A and IPO markets.

OpenAI — which reportedly has doubled annualized revenue to $3.4 billion — opened up its wallet the past few days to make two deals happen. The creator of ChatGPT first bought search and analytics startup Rockset last week. The San Mateo, California-based company had raised nearly $118 million in capital, per Crunchbase. Terms of the deal were not disclosed.

Then just this week, the AI giant bought video collaboration startup Multi, previously Remotion, in what was reportedly an acqui-hire. The San Francisco-based company had raised $13 million to date, per Crunchbase.

Overall, M&A has picked up slightly involving startups, per Crunchbase data. The current quarter already has witnessed more activity than Q1, with more than 430 deals. However, those numbers are still relatively low compared to quarters in previous years.

While those two deals will not set fire to the M&A market, it doubled the amount of deals OpenAI had previously done according to Crunchbase. It may show a new willingness for inorganic growth, a desire nearly all Big Tech companies must gain as they get larger. With OpenAI’s ever-expanding revenue numbers and the value of the company ever increasing, it certainly has the wherewithal to easily become a Goliath among suitors.

However, M&A is not the only way to exit, and AI may be looking to help there too. Last week, artificial intelligence chips startup Cerebras Systems reportedly filed confidentially for an initial public offering.

It’s a good time to be an AI chip developer. Nvidia has become one of the most — if not the most — valuable companies in the world and funding is currently gaining traction in the sector. Astera Labs — which provides data and memory connectivity solutions for some of the biggest chipmakers in the world — had a successful IPO even though its shares have tailed off its highs.

Other companies that went public this year had strong AI ties — like biotech Tempus AI — or played up their AI connections strongly — like Reddit.

Public investors are clearly intrigued by the AI tech play and where it may lead.

Investors have waited a couple years for the IPO and M&A markets to open back up, and it would not be surprising for AI to lead that charge — just as it seems to be leading everything else.

If big AI companies like OpenAI and perhaps Nvidia — which is showing interest in taking on the cloud services providers — start to get acquisitive and more startups think the time is right to test the public market, investors may start to see those long-awaited returns rolling in.

Riffing on what he sees for the future of AI, Meta CEO Mark Zuckerberg said in an interview published Thursday that he deeply believes that there will not be “just one AI.” Touting the value of open source to put AI tools into many people’s hands, Zuckerberg took a moment to disparage the efforts of unnamed competitors who he sees as less than open, adding that they seem to think they’re “creating God.”

“I don’t think that AI technology is a thing that should be kind of hoarded and … that one company gets to use it to build whatever central, single product that they’re building,” Zuckerberg said in a new YouTube interview with Kane Sutter (@Kallaway).

“I find it a pretty big turnoff when people in the tech industry … talk about building this ‘one true AI,’” he continued. “It’s almost as if they kind of think they’re creating God or something and … it’s just — that’s not what we’re doing,” he said. “I don’t think that’s how this plays out.”

“I get why, if you’re in some AI lab … you want to feel like what you’re doing is super important, right? … It’s like, ‘We’re building the one true thing for the future.’ But I just think, like, realistically, that’s not how stuff works, right?” Zuckerberg explained. “It’s not like there was one app on people’s phones that people use. There’s not one creator that people want all their content from. There’s not one business that people want to buy everything from.”

In the conversation, Zuckerberg said there needs to be a lot of different AIs that get created to reflect people’s different interests. The company also on Thursday announced early tests of its AI Studio software in the U.S. that will allow creators and others to build AI avatars that will be able to reach people through Instagram’s messaging system. The AIs will be able to answer questions from their followers and chat with people in a fun way but will be labeled as “AI” to not cause confusion.

When referring to companies that build closed AI platforms, the Meta CEO said he didn’t believe this is how to create the best experiences for people.

“You want to unlock and … unleash as many people as possible trying out different things,” he continued. “I mean, that’s what culture is, right? It’s not like one group of people getting to dictate everything for people.”

His comments feel a bit like sour grapes, as they arrive shortly after reports emerged that Meta had tried to negotiate with Apple to integrate its AIs into Apple’s operating systems, instead of only working with OpenAI at launch, but got shot down. According to Bloomberg, Apple decided to not move forward with formal discussions with Meta because it didn’t believe its privacy practices were strong enough.

Without a deal, Meta loses access to potentially billions of iPhone users worldwide. But it appears that Meta’s plan B is to build technology that expands beyond the smartphone.

In the interview, Zuckerberg touched on the progress the company is seeing with the Ray-Ban Meta smart glasses, for example, saying that its path would one day converge with the work being done now on full holographic displays. However, the former will have more appeal in the near term, he said.

“I actually think you can create a great experience with cameras, and a microphone, and speakers and the ability to do multimodal AI, even before you have any kind of display on these glasses,” he noted. Plus, not having a display keeps the costs down. Meta’s smart glasses are around $300, and the Meta Quest Pro is $1,000, for comparison.

Zuckerberg said there will be three different products ahead of convergence: display-less smart glasses, a heads-up type of display and full holographic displays. Eventually, he said that instead of neural interfaces connected to their brain, people might one day wear a wristband that picks up signals from the brain communicating with their hand. This would allow them to communicate with the neural interface by barely moving their hand. Over time, it could allow people to type, too.

Zuckerberg cautioned that these types of inputs and AI experiences may not immediately replace smartphones, though. “I don’t think, in the history of technology, the new platform — it usually doesn’t completely make it that people stop using the old thing. It’s just that you use it less,” he said.

For instance, people now use smartphones to do things they may have done on their computers 10 to 15 years ago.

“I think that’s gonna happen with glasses, too,” he said. “It’s not like we’re going to stop having a phone. It’s just that it’s going to stay in your pocket, and you’ll take it out when you really need to do stuff with it. But more and more, I think people will just start saying, ‘Hey, I can take this photo with my glasses. I can ask this question to AI, or I can send someone a message — it’s just a lot easier with glasses,” Zuckerberg said.

“I wouldn’t be surprised if 10 years from now, we’ll probably still have phones, but it’s probably going to be much more intentional in usage as opposed to just reflexively reaching for it and grabbing it for any technological thing that you want to do,” he said.