When Eric Wollberg and Wesley Berry met in March, Wollberg was chasing the idea of using lucid dreams to explore consciousness and Berry was working with the musician Grimes on translating neural signals into art. Both were fascinated by how brain-imaging tools could help paint a picture of someone’s thought patterns.
The two, ages 29 and 27, respectively, co-founded Prophetic that same month. It’s a tech startup building what the company calls the “world’s first wearable device for stabilizing lucid dreams.” It’s a headband-like device that issues focused ultrasound signals.
Lucid dreams occur when a person sleeping becomes aware they’re dreaming and may be able to control parts of the dream.
The startup has raised a previously unreported $1.1 million funding round with participation from a16z’s Scout Fund, and led by BoxGroup, the VC fund known for being first to invest in fintech company Plaid. To prototype the noninvasive device, dubbed the “Halo,” Prophetic has partnered with Card79 — the same company that designed and built hardware for Elon Musk’s brain-computer interface company, Neuralink.
Prophetic’s hardware bet comes at a time when a handful of artificial intelligence companies are investing in devices or wearables. Humane AI, a company founded in 2017 by former Apple employees, debuted its wearable — the AI Pin — on the runway last week at Paris Fashion Week. And famed iPhone designer Jony Ive and OpenAI’s Sam Altman are also reportedly discussing an AI hardware project.
Wollberg and Berry, Prophetic’s CEO and chief technology officer, respectively, plan to showcase a semi-working prototype either later this month or in early November. But the full test of the prototype, they say, will have to wait until the third or fourth quarter of 2024, after the conclusion of a yearlong study on brain imaging conducted in partnership with the Donders Institute for Brain, Cognition and Behaviour, part of Radboud University in the Netherlands.
The co-founders have the type of lofty dreams typical of a modern-era tech startup, with Wollberg comparing the company to OpenAI. Its mission is to work “collectively towards understanding the nature of consciousness” and its LinkedIn page reads, “Prometheus stole fire from the gods, we will steal dreams from the prophets.”
But a year out from a fully working prototype, with plans to ship devices starting in spring 2025, Prophetic is still a ways away from delivering on its promises.
Lucid dreaming through a headset
Lucid dreaming has fascinated the public and the neuroscience community alike for decades, spawning references across pop culture, from films like “The Matrix” and “Inception,” to a Reddit community (r/LucidDreaming) with more than 500,000 members. Neuroscientific studies on the subject date back to the 1970s, according to research published in the National Library of Medicine, but interest has increased with the expansion of the cognitive neuroscience field.
Wollberg had his first lucid dream at age 12, and though he doesn’t remember exactly what he did, he called it “just about the most profound experience I’ve ever had.” In college, he started lucid dreaming twice a week and realized he wanted to create a way to use the practice to explore consciousness on a deeper level.
Meanwhile, co-founder Berry had a background in neurotech prototyping — specifically, feeding electroencephalogram, or EEG, data into a transformer neural network, an AI model pioneered by Google, to explore what people may be seeing in their minds. That’s the kind of work he had been doing with Grimes.
“Eric came to me and he told me what he was working on, and I didn’t think the technology was there at that time — we can’t induce dreams, let alone lucid ones, so how could this be possible?” Berry told CNBC. “The defining moment for me was when I realized that you’re not inducing the dream state itself — someone is already dreaming normally, which happens for most people multiple times a week. You’re simply activating the prefrontal cortex, and it turns lucid.”
Wollberg and Berry are counting on the results of the Donders Institute’s yearlong study to provide enough training data for their AI to work on the Halo device. The golden-ticket type of brain data they’re looking for via the study is gamma frequencies — the fastest measurable “band” of brain wave frequencies, which occur in states of deep focus and are a hallmark of an active prefrontal cortex, which is believed to be a defining characteristic of lucid dreams.
While today’s leading transformer models that underpin tools like OpenAI’s ChatGPT deal in inputs and outputs of text, Berry is aiming to do something differently with Prophetic. His plan is to use a convolutional neural net to decode brain-imaging data into “tokens,” then feed those into the transformer model in a way it can understand them.
“You can create this closed loop where the model is learning and figuring out what sort of sequences of brain states need to occur, what sort of sequences of neuro-stimulation need to occur, in order to maximize the activation of the prefrontal cortex,” Berry said.
Prophetic’s goal with the prototype is to use focused ultrasounds to stimulate the user’s prefrontal cortexes while dreaming. Research suggests that focused ultrasound stimulation can improve working memory, and Berry compares that, in a way, to the idea of not knowing how you got somewhere while dreaming. It’s part of why he believes there’s a “really, really, really good shot that this works.”
“My conviction strongly comes from how it feels like a quantum leap … when you’re using this focused ultrasound,” Berry said. “It’s quite a bit better than everything else that’s been done.”
Microsoft owns lots of Nvidia graphics processing units, but it isn’t using them to develop state-of-the-art artificial intelligence models.
There are good reasons for that position, Mustafa Suleyman, the company’s CEO of AI, told CNBC’s Steve Kovach in an interview on Friday. Waiting to build models that are “three or six months behind” offers several advantages, including lower costs and the ability to concentrate on specific use cases, Suleyman said.
It’s “cheaper to give a specific answer once you’ve waited for the first three or six months for the frontier to go first. We call that off-frontier,” he said. “That’s actually our strategy, is to really play a very tight second, given the capital-intensiveness of these models.”
Suleyman made a name for himself as a co-founder of DeepMind, the AI lab that Google bought in 2014, reportedly for $400 million to $650 million. Suleyman arrived at Microsoft last year alongside other employees of the startup Inflection, where he had been CEO.
More than ever, Microsoft counts on relationships with other companies to grow.
It gets AI models from San Francisco startup OpenAI and supplemental computing power from newly public CoreWeave in New Jersey. Microsoft has repeatedly enriched Bing, Windows and other products with OpenAI’s latest systems for writing human-like language and generating images.
Microsoft’s Copilot will gain “memory” to retain key facts about people who repeatedly use the assistant, Suleyman said Friday at an event in Microsoft’s Redmond, Washington, headquarters to commemorate the company’s 50th birthday. That feature came first to OpenAI’s ChatGPT, which has 500 million weekly users.
Through ChatGPT, people can access top-flight large language models such as the o1 reasoning model that takes time before spitting out an answer. OpenAI introduced that capability in September — only weeks later did Microsoft bring a similar capability called Think Deeper to Copilot.
Microsoft occasionally releases open-source small-language models that can run on PCs. They don’t require powerful server GPUs, making them different from OpenAI’s o1.
OpenAI and Microsoft have held a tight relationship shortly after the startup launched its ChatGPT chatbot in late 2022, effectively kicking off the generative AI race. In total, Microsoft has invested $13.75 billion in the startup, but more recently, fissures in the relationship between the two companies have begun to show.
Microsoft added OpenAI to its list of competitors in July 2024, and OpenAI in January announced that it was working with rival cloud provider Oracle on the $500 billion Stargate project. That came after years of OpenAI exclusively relying on Microsoft’s Azure cloud. Despite OpenAI partnering with Oracle, Microsoft in a blog post announced that the startup had “recently made a new, large Azure commitment.”
“Look, it’s absolutely mission-critical that long-term, we are able to do AI self-sufficiently at Microsoft,” Suleyman said. “At the same time, I think about these things over five and 10 year periods. You know, until 2030 at least, we are deeply partnered with OpenAI, who have [had an] enormously successful relationship for us.
Microsoft is focused on building its own AI internally, but the company is not pushing itself to build the most cutting-edge models, Suleyman said.
“We have an incredibly strong AI team, huge amounts of compute, and it’s very important to us that, you know, maybe we don’t develop the absolute frontier, the best model in the world first,” he said. “That’s very, very expensive to do and unnecessary to cause that duplication.”
President Trump’s new tariffs on goods that the U.S. imports from over 100 countries will have an effect on consumers, former Microsoft CEO Steve Ballmer told CNBC on Friday. Investors will feel the pain, too.
Microsoft’s stock dropped almost 6% in the past two days, as the Nasdaq wrapped up its worst week in five years.
“As a Microsoft shareholder, this kind of thing is not good,” Ballmer said, in an interview with Andrew Ross Sorkin that was tied to Microsoft’s 50th anniversary celebration. “It creates opportunity to be a serious, long-term player.”
Ballmer was sandwiched in between Microsoft co-founder Bill Gates and current CEO Satya Nadella for the interview.
“I took just enough economics in college — that tariffs are actually going to bring some turmoil,” said Ballmer, who was succeeded by Nadella in 2014. Gates, Microsoft’s first CEO, convinced Ballmer to join the company in 1980.
Gates, Ballmer and Nadella attended proceedings at Microsoft’s Redmond, Washington, campus on Friday to celebrate its first half-century.
Between the tariffs and weak quarterly revenue guidance announced in January, Microsoft’s stock is on track for its fifth straight month of declines, which would be the worst stretch since 2009. But the company remains a leader in the PC operating system and productivity software markets, and its partnership with startup OpenAI has led to gains in cloud computing.
“I think that disruption is very hard on people, and so the decision to do something for which disruption was inevitable, that needs a lot of popular support, and nobody could game theorize exactly who is going to do what in response,” Ballmer said, regarding the tariffs. “So, I think citizens really like stability a lot. And I hope people — individuals who will feel this, because people are feeling it, not just the stock market, people are going to feel it.”
Ballmer, who owns the Los Angeles Clippers, is among Microsoft’s biggest fans. He said he’s the company’s largest investor. In 2014, shortly after he bought the basketball team for $2 billion, he held over 333 million shares of the stock, according to a regulatory filing.
“I’m not going to probably have 50 more years on the planet,” he said. “But whatever minutes I have, I’m gonna be a large Microsoft shareholder.” He said there’s a bright future for computing, storage and intelligence. Microsoft launched the first Azure services while Ballmer was CEO.
Earlier this week Bloomberg reported that Microsoft, which pledged to spend $80 billion on AI-enabled data center infrastructure in the current fiscal year, has stopped discussions or pushed back the opening of facilities in the U.S. and abroad.
JPMorgan Chase’s chief economist, Bruce Kasman, said in a Thursday note that the chance of a global recession will be 60% if Trump’s tariffs kick in as described. His previous estimate was 40%.
“Fifty years from now, or 25 years from now, what is the one thing you can be guaranteed of, is the world needs more compute,” Nadella said. “So I want to keep those two thoughts and then take one step at a time, and then whatever are the geopolitical or economic shifts, we’ll adjust to it.”
Gates, who along with co-founder Paul Allen, sought to build a software company rather than sell both software and hardware, said he wasn’t sure what the economic effects of the tariffs will be. Today, most of Microsoft’s revenue comes from software. It also sells Surface PCs and Xbox consoles.
“So far, it’s just on goods, but you know, will it eventually be on services? Who knows?” said Gates, who reportedly donated around $50 million to a nonprofit that supported Democratic nominee Kamala Harris’ losing campaign.
AppLovin CEO Adam Foroughi provided more clarity on the ad-tech company’s late-stage effort to acquire TikTok, calling his offer a “much stronger bid than others” on CNBC’s The Exchange Friday afternoon.
Foroughi said the company is proposing a merger between AppLovin and the entire global business of TikTok, characterizing the deal as a “partnership” where the Chinese could participate in the upside while AppLovin would run the app.
“If you pair our algorithm with the TikTok audience, the expansion on that platform for dollars spent will be through the roof,” Foroughi said.
The news comes as President Trump announced he would extend the deadline a second time for TikTok’s Chinese-owned parent company ByteDance to sell the U.S. subsidiary of TikTok to an American buyer or face an effective ban on U.S. app stores. The new deadline is now in June, which, as Foroughi described, “buys more time to put the pieces together” on AppLovin’s bid.
“The president’s a great dealmaker — we’re proposing, essentially an enhancement to the deal that they’ve been working on, but a bigger version of all the deals contemplated,” he added.
AppLovin faces a crowded field of other interested U.S. backers, including Amazon, Oracle, billionaire Frank McCourt and his Project Liberty consortium, and numerous private equity firms. Some proposals reportedly structure the deal to give a U.S. buyer 50% ownership of the company, rather than a complete acquisition. The Chinese government will still need to approve the deal, and AppLovin’s interest in purchasing TikTok in “all markets outside of China” is “preliminary,” according to an April 3 SEC filing.
Correction: A prior version of this story incorrectly characterized China’s ongoing role in TikTok should AppLovin acquire the app.