None of what I write in this newsletter is about sowing doubt or “hating,” but a sober evaluation of where we are today and where we may end up on the current path. I believe that the artificial intelligence boom — which would be better described as a generative AI boom — is (as I’ve said before) unsustainable, and will ultimately collapse. I also fear that said collapse could be ruinous to big tech, deeply damaging to the startup ecosystem, and will further sour public support for the tech industry.
Can’t blame Zitron for being pretty downbeat in this - given the AI bubble’s size and side-effects, its easy to see how its bursting can have some cataclysmic effects.
(Shameless self-promo: I ended up writing a bit about the potential aftermath as well)
I mean it’s gotten to the point where I can’t even keep track of all the different AI being pushed by companies. My prediction is some company is going to make a super efficient and helpful AI and everyone will start using that as a base point. Like how every company wanted a website before they all just migrated the majority of their information to social media like Facebook and Twitter. And let’s be honest, most of the big companies making AI are not going to be the ones to do it. And even though they are improving, they are more interested in making money than better AI. We haven’t seen a major breakthrough in months and the majority of progress is minimal. Every time they come out with a new model it’s usually just the same with more bells and whistles.
I’m terrified for the future, and not even on hater shit. The public numbers are bad, and barring some extremely surprising reports locked behind a wall of NDAs, the private numbers don’t seem much better - even Saltman, perpetual cheerleader he is, doesn’t have much to offer except desperation to keep the party going, barely even a week after their big model drop.
Image description
Sam Altman responds to a user asking for the promised voice features with extreme pettiness. “how about a few weeks of gratitude for magic intelligence in the sky, and then you can have more toys soon?”
So if all the big tech players know that this is garbage, the continual doubling down on this either points to: 1. scrambling for the pie while it’s there because they need it to stay afloat, or 2. everything else they have to offer is even worse somehow? And in either case, the aura of being a tech company instead of a company is lost, and I don’t know what happens in the fallout. The probably best case scenario is that only tech workers like myself have to eat the blowback, but I suspect things won’t play out so cleanly.
And in either case, the aura of being a tech company instead of a company is lost
I don’t understand this and am kinda afraid of what hides behind this
So I should be clear, I dont think theres anything special about Tech companies that should let them be treated differently. But for whatever reason, it is a fact that places like We or Tesla or Theranos or fucking Groupon gets stupid valuations just because they’re “tech” adjacent.
If the market ever catches on that theres no secret ingredient (and as Zitron’s shown, there are pretty visible public numbers pointing at this), we’re looking at a correction at the trillion dollar scale. Or maybe we never ask Google to put up or shut up, and just keep the fairy powder in our eyes forever.
It’s about hype and economics.
Tech companies can theoretically scale well and are valued on the expectation of growth while normal companies are manly valued based on what they currently do. An app can basically be copied for free to millions of users once it has been coded and servers don’t cost that much. A traditional company, say a car company, that wants to increase profits has to build a new factory or something. The problems arise when a companies perception goes from startup/tech company to normal company.
Example: wework was a startup that rented office space long term and lets it customers rent short term from them. Once people realized, that it was a real estate company and not a tech company it’s value plummeted, it couldn’t raise more capital and went bankrupt.
Edit: spelling
I worry this is going to leave a crater in the software industry that will take a decade to fill.
I don’t toil in the mines of the big FAANG, but this tracks with what I’ve been seeing in my mine. I also predict it will end with lay-offs and companies collapsing.
Zitron thinks a lot about the biggest companies and how it will ultimately hurt them, which is reasonable. But, I think it ironically downplays the scale of the bubble, and in turn, the impacts of it bursting.
The expeditions into OpenAI’s financials have been very educational. If I were an investigative reporter, my next move would be to look at the networks created by venture capitalists and what is happening inside the companies who share the same patrons as Open AI. I don’t say that as someone who interacts with finances, just as someone who carefully watches organizational politics.
I also fear that said collapse could be ruinous to big tech, deeply damaging to the startup ecosystem, and will further sour public support for the tech industry.
Yes… ha ha ha… YES!
