The Man Who Calls BS On AI: AI Is The World’s Greatest SCAM, And They All Know It! | Ed Zitron

0:00I think Generative AI is at its heart con and seeing these ultra rich ultra powerful people life you the f**k and it turns my stomach the word corn is a strong word well what do you call something where from the very beginning they've sold it in the terms of magic but it's just a half arse re machine they are misleading the entire world you are the first person that I spoken to that has that opinion well the fact that this is happening is insane and the fact it's not a scandal is insane and I've been in the tech industry for 16 years now and I love technology and I'm enthusiastic about it but I don't like being misled and this is the largest non-consensual push of technology in history so we're gonna play a game at I have the things that you consider to be myths about the AI industry let's play it the AI industry is creating enormous economic growth no it's not all of these companies run at horrifying loss open AI lost 20.9 billion dollars last year none of these people could just say yeah run the path making this profitable because they AI will replace all human jobs that just isn't happening there's no economic data to support it

1:01next the United States need to spend trillions to beat China in the AI race what's the race to do trust who constantly piss our pants worry about China but people keep saying what if these models fall into the wrong hands they're already in the wrong hands Mark Zuckerberg Sam Altman Dario Amade Mark Zuckerberg says will continue to invest aggressively in infrastructure to meet the demand god met as a monstrosity nice me think a shrek with law fog quad some of you may die but that's a risk I'm willing to accept if only these people gave a fuck about poverty or actual problems in the world versus are we buying enough GPUs if this continues what does the future look like guys I've got a favor to ask before this episode begins the algorithm if you follow a show will deliver you the best episodes from that show very prominently in your feed so when we have our best episodes on this show the most shared episodes the most rated episodes I would love you to know and the simple way for you to know that is to hit that follow button but also it's the simple easy free thing that you can do to help us make this show better I would be hugely grateful

2:05if you could take a minute on the app you're listening to this on right now and hit that follow button thank you so so so much there are a number of things that you believe that a lot of other people don't believe right you have I think a couple of controversial opinions and opinions that are in contrast to the other guests that I've sat here with what exactly are those opinions Ed I think generative AI is at its heart con I don't think it is sold as honest software I think that they overstay both what it can do what it will do and the underlying financials to the point that they are misleading the entire world and they're actively exploiting the weaknesses in journalism in our economies and indeed within the responsible parties with socialsite analysts governments and all over the shop the word con is a strong word yeah I mean what do you call something where from the very beginning they've sold it in the terms of magic as this thing that will replace all jobs that will cure cancer resolve

3:08these things and when you look at it it's boring cloud software that's extremely expensive and unprofitable and also unreliable at its core people will be asking where are you drawing from in terms of your references your personal experiences where will you educate what you study what you write about what you do Ed so that's the funny thing is people say he's not got a finance experience he's not going to take I've been in the tech industry 15 16 years now MPR but still had practical experience and I love technology and I'm enthusiastic about it and this thing just comes along everyone is telling me is the best things it's light spread it can't even do the basics it can't even do search well whenever you ask an AI person well what's your setup they describe this P.W.E's playhouse thing of like we got harness here you got to use the right prompt where you don't want to use that prompt you want to use this prompt here with this model but don't use this model for the beginning but the end you're going to want to use this model and this is meant to be artificial intelligence it's meant to be smart it's meant to be autonomous it's meant to be something that you set and forget we have this sort of six leading AI companies on the table here

4:09and through our Amazon Nivodya Microsoft Open AI Google you're saying that their fundamental business model is a con well their revenues are not really coming from AI up until fairly recently none of their revenues were coming from AI like dribbles a bit right now 70% of all AI revenues across those three companies are from open AI and anthropic to unprofitable unsustainable companies that literally cannot afford to exist without these very same companies giving the money Amazon sent 50 billion dollars to open AI this year they sent five billion dollars to anthropic Google sent 10 billion dollars to anthropic and in the next three and a half years open AI and anthropic based on actual cell-zone analysts evaluations their estimates the inform whether stock is going to go up or down after earnings they are expecting 400 or more billion dollars of revenue 30 or something percent of cloud growth just from these two unprofitable companies that will need to be given the money from somewhere and on top of that these companies have such low

5:11respect for the average investor for the analysts for everyone really that they don't even disclose the AI revenues the few times they dayn us worthy they use something called a run rate an annualized run rate which means well nothing they never define it it can mean month times 12 it can mean month times 13 it can mean last four weeks times 13 it's different every time and they never define it and then they sometimes just don't mention it so you've got this big thing that is meant to be the biggest most influential change to software ever and whenever you ask them about it when you say what how much you're making from this they go all I couldn't possibly say I'm too shy these are public companies or at least the ones that aren't anthropic in open AI when they have good news they'll tell you and when they don't tell you something well that actually speaks volumes have you used these tools yes AI tools Gemini andthropic chat GPT etc and you found no value in them there's some value but it's not there's they've spent over a trillion dollars in cat Pecs what is cat Pecs mean capital expenditures so when you were a business and you have operating expenses

6:12like electricity for example those come right off immediately capital expenditures are long term investments that are theoretically one off so a data center or indeed the GPUs you put inside an AI data center okay so you've got a data center and then you have these GPUs which are like computer chips so AI GPUs are much bigger much more power intensive they take a bunch of high bandwidth memory and they because of how many of them you need thousands of them tens of thousands hundreds of thousands in some case you need a bunch of power so an example open AI and Oracle are building a data center in Texas in Abelene Texas 1.2 gigawatts called Stargate Abelene within that with each one of the eight buildings there'll be 50,000 Nvidia GB 200 GPUs so CITiv Bristol takes about 700 AE 800 megawatts of power a year right well Stargate Abelene is condensing more power than that 1.2 space around 1,172 times smaller CITiv Bristol is about 1.2 billion square feet Stargate Abelene is about

7:16998,000 so you're condensing all of this power all of this money all of this labor into this one spot and all of these data centers cost billions of dollars all of these companies other than Microsoft have now to take out debt and the thing is they've spent over a trillion dollars so far and they want to spend another trillion dollars next year and for what to make tens of billions of dollars most of which comes from two unprofitable companies and Thropic and Open AI one of the rebuttals to that would be that the adoption the customer adoption of people using Open AI and Anthropic has been absolutely insane these are the fast-suscrying products in all of history especially as a relates to sort of technology if we just focus on technology they are you know hundreds and hundreds of millions of people billions of people are using these tools every single day for things that they have subjectively decided are problems they need solving so you know money is a lagging indicator of value so one would argue that they're just investing ahead of the monetization options the first let's start with this adoption easy it honest adoption when you

8:20are forced to use generative AI when you load Google when you load Google docs Gemini screams in your ear when you load word co-pilot's bugging you when you use Amazon whatever Rufus AI is wants to has opinions on what sucks you're buying this is the largest non-consensual push of technology in history chat GPT for example every single media outlet has been screaming about this for three years they've been saying this will take your job you must use this if you don't use this you're going to be falling behind so people are using it because they've been told to use it constantly and they're using it like search predominantly and that's partly because Google fell behind search and also because it's better ingesting queries sometimes sometimes if you use a generative search it's like a trawling vessel it's not very good at specifics but if you're like does this what thing exists as this person never said anything like this it'll still probably get it wrong but it'll scour the ocean for you nevertheless that's not worth a trillion dollars none of it is the amount of money being sunk into this is just incomparable to anything railways it it

9:22blows everything out of the water because there is no post bubble story even for this AIGP is not useful for other things either there's it's a directionless egregor of capitalism this headless beast that lumbars around desperate to seek out growth everywhere in the hopes that if it harasses people and scares people and demonizes labor enough people will be forced to use it the the reason i i pause is because i just i think about my own company obviously everybody thinks about their own personal situation so you have people listening now that don't use any AI tools and they'll have people that are using it for everything from coding new software tools to everything they write to you know images whatever and when you look at the stats around enterprise adoption it says 88% of organizations regularly use AI at least once for a one particular business and i'd say in our company 95% of people use a one of these AI tools like a throtticole chat gbt or jemanite every day right and that exists on some kind of spectrum of like

10:25the super users that are using it probably you know every hour of every day for almost everything to you know someone maybe higher in the executive team that's using it less because their job doesn't require of it as much right and when you look out into the world you know at how the world is changing from a content perspective if we're looking at generative AI it is obvious that these tools have been widely adopted part of the symptom is the AI slot you see all over the internet right so i did this this this idea that it's not being used i struggle with it's being used here's the thing with the slot before we had a i slot we had sco slot because google incentivize doing the lowest common denominator that would rank well and search the whole story about how they pulled back spam guards thanks to rabagar raga van which get into where they made the internet worse by allowing worse content to rank higher it's why we had when you used to google our best washing machine there's 11 different horrible blogs that read like somebody got a concussion they are built to rank rather than

11:29be read by humans or built to be good made good so AI helps weaponize that scale yeah you can make a bunch of generic slot we've had slot for years we've just found a slot machine but then also there's the problem of cost so when you use AI services you burn tokens and it's per million tokens that's a token so it's around three quarters of a word so it's characters so the AI companies have a currency in which they charge you like a taxi in New York has a meter yeah and they call it tokens and every word let's just say for it's a word yeah about a word yeah and it's per million tokens so you'll be charged per million input tokens the stuff you feed into it like a document or a code base and the output tokens are both the stuff it spits out at the end but also when it thinks so okay you've asked me to give you the best restaurants in this area of New York I should find the best restaurants in New York all of that's output tokens as well however when you're paying for a monthly service you don't see any of that but all that crap to the side they just have rate

12:30limits you can use them a certain amount and then when you run out but they kind of obfuscate what that was now someone recently found semi-analysis actually found this a big analyst group they found that on a $200 a month chat GPT subscription you can burn $14,000 with a tokens and on an anthropics you can burn $8,000 for $200 that is how most and then even on the 20-buck a month service you can burn $400 now most people don't realize that most people have no idea what AI costs most people just think oh it's 20 bucks a month no all of these companies run a horrifying loss open AI lost 20.9 billion dollars last year because people can burn as many tokens as they want and when they tried to move everybody on the enterprise side so companies bigger than 150 onto actually paying the cost of AI in around March of 2026 it's a quote-same moment they said are people have a big problem with that I think it's a huge issue which is not really what the heir apparent to takes history is meant to be saying but the point is enterprises immediately

13:34started freaking out Uber burned through their entire annual token budget in three months so suddenly after everyone saying AI is the most productive thing ever it's amazing it's changing everything the moment people actually had to pay for it they go oh I don't know actually um maybe it's maybe it's obviously we all love it it's all great right but it's costing too much so we now need to reduce the cost because people are just dumping stuff into it being like what do I do here and getting whatever the median is out because that's what these things do they provide the median answer so essentially someone like me who's a power user of these tools I could be costing and through a pick or open AI a thousand dollars but they're only charging me a hundred dollars let's say so they are having to subsidize nine hundred dollars of my usage because of the electricity costs and the costs at their data centers and so your assertion here is that that is unsustainable yes and just to be clear they're probably not one for one dollar it might be 34 we don't we don't know I think it's unprofitable these companies don't disclose them even in their

14:35auditive financials they play funny games with how they categorize things but nevertheless yes and on top of that the way that you stand up inference which is the thing that creates the output within these data centers you're not just saying okay turn the inference machine on let's go you are standing up the GPU is necessary to take in the demand and if you buy too much you've wasted the money you have to pay for the hourly GPU use regardless if you buy too few your customers can't use it they get pissed off at you the cancer they go with someone else but nevertheless yeah they would get demand selling twenty dollars or forty dollars for a dollar and that's what these services do and really the simplest way to explain it is they were actually profitable if they were actually just they believe that these services were worthwhile and that they were worthy of the cost they charge it regular people wouldn't be able to get a monthly subscription they just be paying what it's worth unless of course there was an economic problem and it's very simple you pay when you use an LLM regardless of whether you get what you want when these things hallucinate say you're doing

15:38something you're coding something and they go to the recovery base and they prefer a couple bunch of stuff they break a bunch of stuff you're paying for that you're paying for it whether it works or not unless of course using what these subscriptions I think that the really interesting point is are they spending ahead of the value showing up which is I imagine what they would argue or are they spending all of this money and subsidizing all of their users in a way that's unsustainable and that will never be justified like doesn't you know because you think back through the history of technology you often get people losing money to grab market share right and they're also focusing on bringing the costs down and making it more profitable for them as well but they can't afford to under invest if they were bringing the cost down they would have brought the cost down which they have not it seems to be getting more expensive in fact everyone inference providers don't seem to be profitable even the company is renting out GPUs don't seem to be profitable I imagine that

16:38it wasn't like they started out and they were like shit this is unprofitable at the beginning we know screw it we'll keep doing it anymore screw I don't think it's some big conspiracy they probably thought at some point yeah this will go profitable the chips will catch up customers will pay for the overwhelming value because you don't know in 2023 where it's going to be in 2026 you assume it's going to go up that's the nature of venture capital they should have stopped in like 2024 when open AI lost over five billion dollars they should have been like yep this is not going to work but they kept going because it helped number go up so much it helped stock values pump it helped everyone pump it helped in video pump Microsoft everyone and not from the revenues because here's the funny thing about Google Microsoft and Amazon people for years have been saying their AI bets have paid off wow their AI bets have paid off as these companies refuse to say how much they're making from AI but because their existing businesses continue to grow and did so by the way through price increases changes to how Google and meta did advertising Amazon bumped up prices and changed how they did

17:40that actually Amazon started a remarkable ad business during this whole time as well and the selling through Amazon platform anyway nothing to do with AI but because number go up because revenue go up everyone it's AI because these companies wouldn't spend a trillion dollars for for no reason right except in fiscal year 2026 which just ended for Microsoft and no I know they made total according to Bloomberg about 34.33 billion dollars 24.1 billion dollars of that was from open AI so that leaves them with about 10 billion dollars in a year when they spent 115 billion on capital expenditures and intent to spend 175 billion next year the math does not make sense I imagine their plan was okay this is just going to get exponentially more valuable and at some point the costs will be outpaced by the return problem is that large language models need a bunch of money to train them they need constant data flow strip they need customized data it's just this big expensive monster and when you try and talk to people about it and you try and say hey look

18:41this is really bad Nvidia has sold there's 215.9 billion dollars in the last fiscal year with a GPU is mostly and you try and go yeah that's the support like 22 billion dollars of revenue total in the entire world outside of these two companies that literally require money being fed into them sometimes buy Nvidia to keep alive we tell people that they go well companies just lose money right companies because we have this quote edelsen from prof.g markets we have this cult like worship of the wealthy where we think that someone wouldn't spend all this money for no reason right because reconciling with that with this idea that the ultra wealthy the ultra powerful didn't get there through big brains they get there through anything other than luck and opportune and sermon getting an MBA perhaps of the right people that they just got there because they're regular people and they just have to be in the right place at the right time reconciling with that and realizing that the world is not controlled by people like a meritocracy is kind of grim so it's

19:42easy to be like no they're not making a mistake I must be missing something and that's what they want so you know I think back through the history of technological breakthroughs and I think about I mean you can look at different industries and one of my favorite books on this subject is the innovators dilemma I read it and one of the things it talks about is how the the innovation that ends up taking out or transforming an industry often starts worse doesn't make economic sense none of your customers are asking for it and this is typically why we end up ignoring it so like you've got horse encourages in the 1800s amazing form of transport according to the 1800s you know people of the 1800s and then you have this thing called cars come along now the problem with cars is they broke down all the time it's kind of like AI hallucinates now and they were more expensive and the the economics of it didn't make sense you might as well walk them by a car there was a lure at the time that meant you had to walk in front of it with a red flag and wave and someone had to employ someone to walk in front of it waving a red flag obviously it's worse it's like a worse solution however these things that are disruptive innovations they have a higher ceiling of growth and so

20:46they eventually overtake the horse and I want to think about that analogy in the context of all of this I go okay it's imperfect at the moment the economic models aren't perfectly ironed out they're still figuring out how to make it cheaper the infrastructure etc but as if you think about the rate of improvement versus other you know let's say coding how much can I train a human coder to improve and to increase their output versus an AI agent one would go if you just imagine any rate of improvement in these AI tools at some point if you just imagine a 5% rate of improvement per month at some point it's you know and then you imagine a 5% reduction in cost which is what we did with the internet what we did with cars yeah but that was law more's law is the theory and more's law is not with GPUs so let me let me actually explain so in video in video inventor I think it was in the 2000s they put out something called CUDA which is the underlying software library and the way to run software on GPUs took them solid decade or more to make it something whether you

21:47could do data analytics one of the early things mapper and such and then when AI came along they'd had lots of experience with it but nevertheless this company has got more money more attention more geniuses behind them more people focused on making their things more efficient than anyone could ever ask for and a video for anyone that doesn't know makes the chips they so and that CUDA thing I mentioned they were the ones with CUDA and CUDA allowed generate AI to grow okay so that chips chips chips I needed those are the things that go into the data center and their specific chips are the ones where you can run AI software on a training runs and also the inference now here's the thing the the car example back then you didn't have pretty much every mathematician and scientist going into the car industry you didn't have the combined world's governments never shutting up about this and by the way giving them credit early since 2023 they've been saying this is inevitable even in what you said 5% improvement I don't even know who you'd measure that because a junior software engineer can still experience things and learn things from context

22:49from how people deal with problems and the way that people deal with problems is not as simple as looking at the code or reading some emails it's context use from speaking to a person it's being indifferent environments and they're me there are uses well I'm just encoding I don't dispute that but even saying 5% what does that mean is it better at rush does it better at C plus I say productivity so just like yeah shipped if we did it in the context of coding it would be like shipped code that's the thing that would be like he's the best writer in the world because his newsletter's really long that's an insane way of valuing it with coding it would be I mean it's even difficult to evaluate because it's is the software out there better is actually a great way of evaluating it and I would say uniformly not I would say the standard of software across Google Microsoft Amazon meta especially Godmeth is a monstrosity is worse get hub get hub someone posted on Twitter earlier today we should get an notification when get hub is up rather than when it's down because that would be more reliable except for the largest companies in the world they can

23:50barely wipe their own ass when it comes to get hub the quality of software is going down weirdly enough as more people use LLM's and more businesses demand and I really do mean demand that people use these services so on this point of if we go back to this horse encourage and car analogy say that we're at whatever point today if you imagine any rate of improvement in this technology which we have seen since tragedy came out sure I remember when tragedy came out I was in Asia and I was there showing it to my fiance I was like look you can do this and it was hallucinating once in a while and getting things wrong I actually don't have that experience anymore I have moments where I believe it's reasoning is weak but I don't have outright hallucinations anymore see that I I disagree so I mean example of what you define as a hallucination okay great once so I've a Bloomberg terminal yeah the very useful thing they have on those ask B so when you do a Bloomberg inquiry to like look up what we think in videos revenues going to be next quarter it runs something called BQL which is its own programming language now instead of having to learn that you can just

24:52type into ask B and it will generate it run it for you and so you get pulled up and you know where the date is coming from it it was a hallucinations real well the other day I was like you know what get a little spicy I'm gonna look up the growth ray of stocks of Microsoft Google met her in Amazon over the course of five years I think it was yeah and I was about to copy pasted it over something looked at in Excel was about to it was right in the news that I went Microsoft stocks never been $575 a stock you know what when it's a cute little thing like oh it's a stock price and I can't accolade it was no harm no foul that's fine but when you're talking about I don't like a transcribing tool for a doctor a financial model that hedge fund is dependent on at that point it becomes a little more dangerous and the thing is a hallucination with a software package for example refactoring a code base and it leaves the door open security wise or it just breaks something and you I don't know maybe you've been vibe coding for six months you haven't really been coding with

25:53your own hands for a while maybe you've forgotten a few things you had this slot to look for you fucking what I'm not doing it and so the problem has become multiplicative and I don't really know how you train them out of that and they've certainly not succeeded so on one hand they have got better but one of the main ways they evaluate them getting better a benchmarks that are adjusted specifically for large language models because you can't just have them do tasks they've got better at that they found some tasks they can happen to one be for them like meter METR they have this thing which like check out this chart look how much better it's getting at running tasks wow it can go for an hour and then you look it's like yeah and successfully completing them 50% of the time they have a hallucination leaderboard and it really focuses on basic tasks and it shows that the four year trend according to historical data from the Victoria hallucination leaderboard shows that hallucination rates on simple summarization tasks have plummeted from around 21% 21.8% four years ago down to 0.7% roughly on today's top frontier models like Gemini and ChatGBT

26:58again the point of nuance here is that these are on simple tasks which is kind of what I've experienced I've experienced that on day-to-day things that hallucinates less again rate of improvement thinking so if I just imagine the trajectory to continue there is going to become a time where hallucinations become rarer than they are today increasingly and also what I would say is when I think about other technologies there's two more quits other technologies that they're inception when they first came to the world like the internet also had technical difficulties I remember growing up with dial up modems and I couldn't go on the phone at the same time as going on the internet I'd have to stop ringscape upstairs to go on the phone and you thought that this is crap this is crap technology crap all the I don't know mate I loved it yeah I know you felt like magic and then in hindsight you go wow I know I have styling and 5G internet from my phone it's unbelievable you couldn't leave the house with internet before and that's what I mean by the rate of improvement thinking I'd say the last point is we often compare AI to perfection right whereas that's not actually the alternative in the working world like if I wanted

28:02to do let's say a simple writing task I should compare AI to my alternative alternative way of doing that simple writing task which is both measured in my time right and my ability to hallucinate as a person who doesn't know everything at all if I'm hiring someone an intern who might also be prone to hallucination or have gaps in their knowledge so it's not actually like we're comparing we should compare AI to perfection it's AI to the other alternatives and if someone hallucinates 0.7% of the time but knows way more and is faster maybe on a net basis that's a good trade maybe I should use AI so let's start with an example someone I love dearly Matt Hughes made it so yeah there's a side of Liverpool wonderful guy I don't pay Matt Hughes because he knows everything I pay him because he has incredible context and a ton of knowledge and he's willing to expand it and work with me and moral sport and he's a great editor but he's also someone who gets into the guts of it and has the experiences of it he's a decorated tech journalist and on top of that a

29:04wonderful loving being with empathy and joy in his heart for the stuff he loves an absolute fucking venom for the people he hates that's I can't get that from a large language model but on top of that I don't I push back on just the assumption that when you say knows everything what good is something that knows everything when it sometimes doesn't know anything when it's sometimes and on the thing is are you really paying an intern for something basic are you really going to them and saying yeah can you look up what the date is now you doing that on Google whatever the task is you are trying to also train an intern the point of an intern is to train them and turn them and take them out of your status but it's also an intern learns and intern gets context and intern learns your habits and then he gets context and learns no it doesn't it doesn't learn I mean it doesn't the way it learns is you create a giant Claude that MD file that it sometimes doesn't read sometimes does read you create a harness you put it's like it's P.W.s breakfast machine from P.W.s playoffs you have to do all these controversies to mitigate the hallucinations even then at the end

30:06how much effort have you put in but okay this is an extreme simplified example if I went on my Claude Nanz at what's my dog my dog's name uh it would know my dog's name Jesus Christ so this company raised 95 billion dollars I'm using an extreme simplified example to show that it can remember things from the past obviously it knows much more complex things as well but I just use that as an example so we accept the fact that it can't it does have memory of the past it has files it can access that have stuff on it yeah but that's you know the same as memory and it's also just okay so remember your dog's name it might remember your habits it might be able to read things you've said before yeah does it know your moods does it know what's going on in the world around it does it have good days and bad days is it there for you because it's just a fucking text machine and the thing is the intern example an intern is something that can grow it's something that you invest in that's not something you do through feeding files and text to it the way that we store memories ourselves the way in which we accrue experiences is a a mile strum of

31:07emotion and feelings and facts really different so I think there's two things here there's the process in which something happens and then there's the output okay so the process you were describing the process of how a human does memory right the way that an AI does memory is different but the thing that people care about is their value in the output i.e. you know if I dump all of my files into Claude I don't really care how it processes it as long as when I ask it what's my revenue it has the number and one could say the same thing about training someone you could say you teach them you put lots of effort into them you give them lots of context you educate them and give them experiences and then you might come and say to them by the way what's my revenue now the processes are entirely different but the outcome is what I care about do they know the revenue number when I ask them and so I think that's the part that we sometimes get lost and we get you know because I have I've heard this debate about like can AI be creative right I think like the way to fit answer that question is like it's about the output when I ask it to do a creative thing does it give me the answer not is the process the same as a human process because actually no no who cares what the

32:11people care about they pay for the outcome the product I actually disagree about the process because Matt Houston for example you're editor yeah yeah watching him go down a rabbit hole and being there with him and actually vice versa him doing the same thing we wrote these what I mean we were working on the research I ended up sitting there for like the day long session of writing 11,000 words and he he had given me a bunch of notes it was actually just even describing that process I feel so happy because it was like I was being like I can't believe how fuck these cut Jesus Christ they can't they just like the missing therapy of just the horrible cynical people of asset managers like blacks don't just learning about them and being like can't be this and having a back and forth with him that is fundamentally different because we were both learning together and the learning process was as much about creating the output as the output itself when you learn something you're not creating the average which really is what these things do of the documents it could find you're not getting particularly novel outputs if I needed a generic slop output sure but I've I've used

33:15some of the higher end LLM harness machines that the hedge funds use and they all get the same shine it's all the same the same generic reports the same oh we know as this analysis things that you can find on any kind of AI slop out there what you described to me there what I heard anyway is there's two points of value you're getting from your time with that I mean there's many more but you said you're you're learning and then you're getting this book edited blog blog you're getting a blog edited which is the output and you're getting learning and you're also really getting connection and all these other things but when I come to when people sort of think about the value of AI of course they could use it to learn but in the example I gave like repeat my revenue number back to me or do this number I am I just care about the output I could use it to learn I could say as far with what if the revenue number was wrong once you should have defined deterministic ways of knowing those numbers you should not rely on them even with the terminal running BQL which I trust I will double triple triple check everything just to be sure partly because also the process of learning for me I don't want just to report I go like that I want

34:16something that I fully understand and also understand the context around it I don't think the LLM do that and I just don't see them getting better in a way that does that because it's it's just not what they do and also there's the other problem of the more detailed the report the more likely there are things to be wrong with it if you are with Matt use for example I can trust he's got it right I can trust he understood and I can trust that I can have a back and forth with him that will inform me if I've missed something I can read the stuff that he's read and actually trust him because there's a big trust part as well what is the basis of your trust in Matt could it be his historical performance I mean yes okay and also the fact we've learned half of this stuff together but but tenure tenure doesn't necessarily there's probably people you know for 15 years you also don't trust yes so I think I was trying to figure out like what is the what is the thing that's causing humans to trust another thing and I guess it would be continual delivery of a commitment made of sorts and so with Claude for example on simple tasks as we've seen from this hallucination

35:18leader board it continually delivers for people and that's why we've seen the fast I mean is that what that board says well it's really it's saying like is it getting it wrong is it hallucinated simple task simple tasks how are those defined I don't know that that's the thing though because this is actually a very illustrative thing of the AI industry they are the what about his masters they have like well look we've got this we've got this benchmark that says we're good at this and look the numbers higher what's the number me what's that mean and I'm not using this as a critic against you it's when you can't give a direct answer you give a side answer when you as the LLM industry want to prove your worth you can't just be like just use the product when the first iPhone came out we got this pen state at the time oh I felt like they are eights at the beginning of 2001 oh f**k visual force Mario it was immediate and I showed it to tech friends I showed it to the most normal people in the world and everyone was like holy s**t this is they're on razors they're on Nokia 3210s it was obvious the value Amazon web services same deal it wasn't obvious though yes

36:20it was I mean I bought it to you to you it was it was and I also showed it to a bunch of people because I'm aware that I have bias when I just love gadgets but I remember the famous Steve Balmer who was a CEO of Microsoft interview where he is told about the iPhone and he bursts out laughing 500 dollars fully subsidized with a plan I said that is the most expensive phone in the world and it doesn't appeal to business customers because it doesn't have a keyboard which makes it not a very good email machine you can get a Motorola Q phone now for 99 dollars it's a very capable machine it'll do music it'll do internet it'll do email it'll do instant messaging so I kind of look at that and I say well I like our strategy I like it a lot he busts out laughing not care because it was so disruptive it was way more expensive and it was way different no key word well phones used to be insanely expensive and the carriers would cover them but you had to sign along contract he was spending 500 bucks but the thing I'm getting at is

37:24you don't have to explain to someone what you perhaps you have to get past the cost part but you could just be like look how good this is and then once the app was the iPhone 3G with the app store people are like oh shit this could actually change things mobile web even though it was a monstrosity it was so bad at first even then you could get your emails and you could just look at them but his blackberrys were also expensive and was still actually kind of cool but the way they worked was not like consumer software they didn't have the classic GUI iPhone felt like that it felt like a cell phone designed even like a computer it was obvious it was obvious from the beginning everyone I was they didn't go in the center of Pennsylvania at the time and everyone I showed it too it was like wow this is incredible that to me is the obvious thing with AI to this day when you're like okay why is it so amazing people still did people start like yeah you can't run a business fully with it without this weird system of pulleys and levers and such but how come when you look at the stats around chat you be tease growth 100 million active users in just the

38:25first 60 days after launching for comparison TikTok took nine months Instagram took 2.5 years and the internet itself the world wide web took roughly seven years to reach that scale over 60% of the US adults are integrated into AI tools in their daily and regular routines within three years of the launch reaching at 40% of the population and that same milestone took the internet five years and personal computers nearly 12 okay so like this is I think this is the part that's giving me dissonance is like what I showed my fiance chat you be tea okay it was didn't really work but as a soul entrepreneur who English isn't her first language who has to write lots of texts lots of copy and generate lots of images and was paying a graphic designer to help her make certain images that she you know couldn't make herself because she doesn't have the skills she would describe it as being transformative for her business what I'm hearing from you is that it's not transformative and there's no value in it for people she if she was asking how should get transformative it would she pay the per million token rate would she pay the actual rate because that's the thing if this

39:27was sold at its honest cost yeah I would actually if and people reacting like that and they were paying two three four dollars every time they did something and they were genuinely happy I might be an argument what is the what would be the honest cost if they weren't so the actual per million token cost the actual API cost they should judge you know how much that is relative to god it depends on it depends on the model but there's actually kind of a point I want to make about the thing you said with the internet earlier so when I first got the internet at 33.4 kilobits second modem even back then I was like fuck if this was faster and that was like immediate like if this was faster because it was slow you go and not be puppy or something download take all bloody day waiting for share where to download immediately like if I could do this faster we better and even back now I'm like man you could probably do video camera stuff with this stuff that eventually happened and actually there's this guy called Jim Kavello from Goldman Sachs in a report he did in 2024 that was Gen AI too much spend for not enough return power phrasing there and he made the point them in the run up to the iPhone there was thousands of presentations that when GSM radios get smaller

40:30when Bluetooth radios get smaller when Wi-Fi radios get smaller it is inevitable that we will get something like this and then he said that there is no such path but AI there was no road map to AI becoming distinct that they promised and I must be clear if these companies had gone out there and I like yeah this is interesting cloud software is generative it's really expensive we're not sure if we can fully not trust it not in the one scared way I mean just like we're not sure that this is going to be a disruptive world changing thing it has potential but we're going to go slow it's really expensive this is an R&D effort we're not going to expose consumers to it and actually beat like called them like I don't know language models and no no generative AI stuff just being not even calling because it isn't AI it's not autonomous it's not smart I actually might respect here but this is not they've gone out there since 2023 and said 2022 this is the best thing since sliced bread this is changing everything this is going to do all your work this is going to take your job you're doing a talk to Bing and it's going to take to leave your wife all of these crazy

41:33and what's funny is when the writer Kevin Rooz think it was he was speaking to Kevin Scott the CTO of Microsoft about it and Kevin Scott goes you know I'm just glad we're having this conversation instead of being like settle down bevis it's a website the website told you something it's just elements they talked it up and that's because everyone is talking about what they wish this was rather than talking about what it can actually do this makes it scary to people deliberately so it makes it environmentally destructive look at the gas turbines poisoning black neighborhoods I think it's in Louisiana it's one of musk state centers look at the incredible energy draws it is raising power bills and also it is creating inflation across all consumer electronics because of the massive ramp you know what's interesting I almost feel like so much of what you're saying is true and also it can be true that this technology is going to profoundly change the world and I think like you know I think back to the early days of the internet is maybe the closest analogy we have of you know in the dot com bubble you know you write this great essay yes yes

42:37I wish I found really funny um especially the name the rot economy and you talked about the rot com bubble yes talking about how AI is less valid than people think and in that in the sort of dot com bubble what you saw is huge hype people overselling the capabilities of their websites and what they were building but in the wake of the dot com bubble yes 90% of stuff went to zero but you had generational companies born that changed the world right and so I do I kind of reflect and that's what bubbles do right huge hype it was complete over investment investors get crazy delusional they think it's everything's going to change at the same time you do have skeptics in these moments the the dot com bubble had I mean the internet itself had the biggest skeptics in 1998 Nobel Prize winning economist Paul Krugman said by 2005 also it will become clear that the internet's impact on the economy has been no greater than the facts machine in 1995 astrophysicist

43:38Clifford Stull famously I wrote about this in my book wrote famously in newsweek do our computer pundits lack all common sense the truth is no online database will replace your daily newspaper no CD rom can take the place of a competent teacher commerce and businesses will shift from offices and malls to networks and modems baloney so how come my local mall does a roaring business and the cyber mall gets zero business and then I'll give you one more from Krugman who was the award winning economist he said the growth of the internet will slow drastically as it becomes apparent most people have nothing to say to each other that's that that that may actually be the worst fun and thirsty like to hang around any bar in middle America honestly the best conversation but it's just all the same I actually so Clifford Stull actually his piece was interesting because that there was some bone of points in it but he made points about how like an overwhelming amount of bad information out there is bad for societies completely right saying how online education would not be a great replacement for regular education I think we've seen that but

44:41there is an economic difference that's vastly it's just completely different so dot com bubble was actually two bubbles there was the website bubble which was just trash on trash on trash it was just like I think what was it excited home for a eGiri in card company for a billion dollars it was insane crap happening that was so small the big thing that people are thinking about is the dark fiber dark fiber is dark fiber was all of the wires that put in the ground thinking we're going to have all this demand for internet and it turned out that demand for internet I think the analyst estimate was it was doubling every 90 days when it was doing that every six to 12 months maybe maybe longer and just thus there was a massive overbuilder fiber optic cable and indeed the transmission stations and such to simplifying to bring that to people's houses and there was the assumption that well that would all get lit up and people would want it immediately didn't really happen now the post dot com bubble thing people say is well but after that there was demand for me that's the thing though that's very different to demand for generative AI right now the demand we

45:46have for generative a eyes predominantly subsidized just let's start there yeah predominantly subsidized and most people experiencing it are not paying the real cost I agree on top of that we already have all of the possible marketing in the world we have the largest most disingenuous marketing campaign in the history of man pushing this up the hill we have the apex predator of cloud software Microsoft they can only get single digit billions from selling AI software and crystal my outside of open AI and anthropic we better get 22 billion dollars and the thing is 22 billion dollars is a large amount to you and me it's not a large amount of money when you spend a trillion plus dollars when you have anthropic and open AI with 1.1 trillion dollars worth of cloud commitments and on top of that how does this turn into a post dot com bubble thing a data sent a built today is going to be as expensive to run in 2050 as it is today elic unless there's some breakthrough in electricity but again that's not happening with AI AI is not doing that unless there's some

46:47breakthrough in GPU technology but we already have broadcom and video etched we have every major chip company arm trying to do something about this and no one seems to magically be able to make this profitable or indeed a even less costly even in video with Vera Rubin they're more expensive new GPU system even than they're like yeah 10x more efficient it's a more dollars per megawatt they're all coy about it they don't just say yeah we worked with open AI and anthropic and we found it reduced their cost by 50% easiest thing in the world if it was true and that's because it's not happening and this isn't a case where so you think there's not going to be the demand for let's say let's you know there's different types of AI generative AI we can actually that's a good point yeah the reason they use the term artificial intelligence is so everyone would lump everything into it they would lump protein folding nothing to do with LLM's robotics not LLM's autonomous weapons even horrible as they are not LLM's because you couldn't trust them but they've mushed everything into AI so that when you say well AI can't they go um um sir you forgot

47:52to get this homework and also AI it's working on curing cancer when it's just like no that's not LLM's stop giving them credit so similarity there is they all need GPUs all these BIS and that's the funny thing all those data centers that we're building all of them are for just generative AI they're not for all of the other stuff they're not for the cool shit AI has been around for a long time Google a lot of the good stuff that comes out of Google from the search site is AI but pre-generative how would you run the the type of AI that sits in a robot let's say one of the Optimus robots if you didn't have a GPU somaticmatic is this cleaning robot for example that thing is not got a little GPU in it what it has and may indeed have used some GPUs but no years many as they need for generative AI to run the data feed draining data into it so it's able to clean a house but when the little bugger's going around cleaning the floor thirds leo called for guys around what mop in the floor it's not like burning money the whole time but when it comes to these massive amount of data

48:52sense site lung climate set in February there's 190 gigawatts of data centers under in planning don't know about under construction that works out for about 12 million megawatt as well like 1.6 trillion to three trillion dollars a year in annual demand you'd need for that we don't even have 130 billion dollars worth of annual demand and people say well it will grow how when most of the demand is coming from Amazon feeding money to open AI or anthropic Microsoft feeding my to open AI and anthropic Google feeding money to open AI and well Google hasn't fed it to open AI yet but they're a pretty big customer billions of dollars the con side is that we are building these effigies capitalism these giant GPU data centers and people are being told well it's for AI you know the thing that's done all this other stuff that's unrelated or the worst thing I've seen it's like oh you don't like you'd like online banking we do like data centers there's a big difference between a data center for regular non GPU compute for standing up a server a content delivery system like a acima or something that brings the website to you or how meta runs Facebook

49:55that is not the same it takes way less power mostly CPU driven compared to these giant GPU data centers that offer one thing one thing on but I was doing the research looking so these notes here it does say that for tougher types of AI systems designed to solve concrete physics biology and spatial problems they require some of the most intense data center infrastructure on the planet yeah AI systems like deep mines alpha fold the protein protein folding company used for genomic sequencing and climate forecasting etc run on high performance computing clusters these require immense precision and continuous heavy computing data centers yeah training the brains for self driving cars requires billions of miles of simulated physics environments the AI isn't generating text it's learning to navigate 3d spaces and gravity and relies on data centers right and the thing is those data centers they might have GPUs in them we had GPUs used for this HPC the high performance computing before generative AI and yeah that's how AI is

50:55being trained before that's how test the did I believe they've had their own data centers when it comes to training the autopilot system for better off for worse that's how we've done it before again that is not why we're building these data centers these data centers are being built to sell to AI generative AI companies to either train systems or run inference these things are being built in this brainless way where it's just well actually maybe this is a good way of illustrating because everyone saw google microsoft amazon and meta give in video over call it 800 something billion dollars because they've once saw that they went well they wouldn't do that for no reason they went we've got to build more of these things there must be all this demand even though the demand 70 percent or more of all that demand comes from these two companies who are funded by these three companies and that's the funny thing the reason that they don't want to break out their AI revenues is because it will become alarmingly obvious that this was the case it turns out that

51:57the only real big customers because it's not like they're building a few data centers they're building trillion plus revenue potential they believe they'll get speculative are they speculative they're building it because they saw the biggest companies in the world buy bunch GPUs and they said I want in on that they must have diverse customers right they wouldn't just have two unprofitable fail sons that they're propping up with christ they've raised 217 billion dollars just in 2026 so we know that some of the biggest companies in the world are using AI generative AI to write a lot of their code that is a great productivity gain for those companies right I mean have you used google or facebook or instagram or github recently because they are catastrophically worse amazon web services went down multiple times because of their a i coding tool how is how is Google worse well I'll tell the story of a real-asshole got called propaganda previously one of the heads of ads at google in 2019 Google called something called a cogello which is when they said

52:59we've got a problem and it was material weakness in query numbers which means the amount of times people were searching on google search guy called ben gums internal google then the head of google search says wait a minute to increase this number of using google more we're going to have to I mean you're what you're suggesting would mean we give worse answers because if someone got the answer quickly that would reduce the amount of queries right and people at google did shashitha codes another engineer was saying yeah can we please tell sundar this because this doesn't seem good we can't just increase the amount of queries that would just mean that people would have to search more which make the product worse but it would make them more money yes because you show the more ads so if you are spending more time on google because google's work but is this linked to a i code oh I'll get there so this is the problem is is that this guy called propaganda raga van is the head of ads at the time is pushing push and saying no we need to make more queries have gonna make it happen nick fox it was there as well believes that she's taken over google search gonna make them go up this is our new reality sometime in early 2020 propaganda takes over google

54:05search from then and this is this is what I believe can't prove it if you go and look around the various SEO sites such a journal in the various forums google stripped back a lot of the suppression of spammy sites so that people would be on google more and then over the course of time google wanted to create more queries and google search became much worse is why people always do like plus reddit or from reddit what have you it's because the actual underlying search results of google had got worse and then generative ai came along and propaganda wouldn't you know it gets put a run part of Gemini and google also was having trouble getting people back on google and what they think they do well shit everyone's talking about this ai thing we'll just put it right at the top so people have to stay at google and actually they'll use it more because instead of searching websites and doing that annoying thing where they click away from google they'll just only use google instead of generating answers by which I mean giving you search results you click through now google is the answer is it right god no it might tell you to eat rocks might eat poisonous mushrooms

55:07maybe it'll give you a little few links you could click through but the ideal situation was the ai was the ultimate form of google's evil which were but I'm saying here I'm saying here but that's not a fact that coders could code on google that's made google worse that's human decisions have made it worse yes and then there's the instability of google's platform which is actually I should have probably labored that a problem across the whole tech industry actually saying that you're saying google is going down more yes google is less stable google docs is a bug fest right now and has been for a while google sheets same deal and the thing is you're right I'm being a little unfair this is everyone it's the same with Microsoft it's the same with amazon it's the same across how do we quantify that outside of anecdotes like is there a way to eat you're right I mean get up down time is the best example amazon web services went down to three times this year because of AI tools and honestly you're right is kind of hard to quantify outside of anecdotes but I challenge anyone listening to this go on use a website these days and tell me how well it works tell me how buggy is tell me how money problems even with my iPhone that supposed best UX in town even the iPhone

56:13is a flippin mess these days okay so the research says the short answer is yes tech downtime and software outages have demonstrably increased over the last few years and industry data points directly to the explosion of AI assisted coding as a primary culprit the problem is hitting the tech industry from two entirely different directions the code itself is getting buggy and the sheer volume of AI activity is literally crashing the underlying infrastructure interesting yeah that's because GitHub people are just writing a bunch of code pushing it and thus there's just more code on there that's interesting yeah it's it's a real mess as well because open sources have this problem as well because it's well-meaning people they're like I learned a bit of code with an LLM I'm going to go out and do some stuff I'm going to make this project better and these people barely understand what they're shipping or maybe they understand a bit of code and they say I've done in Kruger this motherfucker I'm gonna I'm just like I can understand some of this now the codes are written and it just push it right now so GitHub is flooded with AI code this sounds like it's making humans

57:15complacent it is because we're going okay look I let it write the the code for the last 100 lines and it was broadly right so the next 100 lines I won't check them as much yeah yeah and that's human nature is to get sort of to take shortcuts to spend less energy on an activity if you can right but the AI is still making the mistake and we're still making all the promises of AI that's the thing this thing is meant to be this autonomous perfect you say it can't be perfect I don't know based on what Sam Orton has been saying for the last few years Clammy Sammy's been promising the world saying this will replace software engineers Dario Amade Wario himself has been saying oh yeah 50% of white collar labor is going to go away in the next few years these people are promising them out again if they were saying it would be smaller and they were like yeah it does have issues and we must be none of this oh what if it wakes up and it's super powerful just like yeah it's probabilistic it's going to make mistakes and if you don't know what you're doing you don't really know what you're looking at you're going to miss those mistakes and it's going to get

58:17multiplicatively worse as you go when you don't know what you're doing so yeah human nature is part of it but so is the marketing so the promises one of the smartest things a business can do is build like a bigger company without actually hiring like one but the problem we all face is that most companies don't have every skill in house so when I look at the businesses seeing real success today the consistent pattern with all of them is how quickly they move they bring in specialists with skills and emerging areas to keep themselves ahead even in our company we spent the last year pulling in talent across areas like AI native strategy no code builds and product workflows and we find this talent for a long time partner five vote pro their premium service only shows you vetted talent so you've always got the safeguard that anyone you pull in to help you with a complex project has the skills that you're after and will deliver to the same high standards as your internal team and most importantly they'll keep up with the pace it's a simple strategy but it lets us stay agile without compromising on quality so if you need these kind of skills in your

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1:00:21code D-O-A-C when you get to check out that's D-O-A-C for 15% off keep that yourself my my car that drives itself that is AI technology yes I sat here with Dara from Uber and he was saying that I think I probably is time we won't need drivers for Uber because the cars will drive themselves like they'll be fully autonomous and I think if I'm not mistaken driving is one of the biggest professions on planet earth so when you hear people when you hear the CEO saying that there will be job disruption you say that they are not telling the truth yes all they're guessing in a way that's very good for them think about it from perspective of Microsoft satchin Adele he's not going to be like yeah we've done after it's going to work mate of course he's going to talk his book and he's going to say yeah this is going to replace all workers it's going to be amazing you he's going to be so powerful and then he'll change his tune and say actually it's not going to replace works make more powerful because the things aren't catching up Dara from Uber for example

1:01:25of course he's going to say if this happens then that would be go for Uber because Uber would just become an autonomous taxi service there's a reason that Waymo has taken I I find Waymo faster I think that shit's really cool I think there are socio economic problems that will come from it I think there are real problems that will emerge and also what kind of problem I mean socio economically there are like you said one of the largest employment centers in the world I mean just the economics of cabs before part but again we are nowhere nowhere near that we're not even close Waymo has had to do the smallest rollouts and the most controlled things because the problem with pretty much every AI system but especially driving is not the getting 95% of the way it's those edge cases it's raining which is a big problem for them in San Francisco it's a kid runs across the road but they're wearing a high-vis thing does it even notice it's a child again this is a really interesting but very very applicable example of the right comparison to be made shouldn't be autonomous vehicles versus perfection it should be autonomous vehicles versus human drivers I mean I don't know if I agree because the human driver might make mistakes sure but again not an

1:02:30expert in autonomous cars just want to be clear but if we push an autonomous cars out there willy-nilly and we're not doing so in extremely controlled environments those edge cases will multiply and be dangerous yeah they might be better at human drivers in some ways but they might also I was in Vegas the other day and I was in a hotel and I watched a bunch of zoops cars just get fucking stuck there autonomous cars yeah they these weird boxy things they just blocked the exit they just all kind of lined up and just fell asleep I saw the same thing actually happened outside of a hotel when it got out of a waymo in San Francisco just stopped at this and then a bunch of cars and another waymo got stuck behind it I was kind of these are kind of I've seen some human bad drivers as well I I agree but it's just we have control over deploying these bad or good drivers we have an ability to roll them out slowly which is exactly what we should do I'm not saying autonomous cars are bad I'm saying we need to be so so so careful and treat them as guilty to prove an innocent because we can prove and also they have people overlooking them they actually

1:03:31have people monitoring the routes it is something they cannot rush out and it doesn't seem like they're rushing it which is good and they're not promising the world I do get listen I I'm a big fan of big kind of taxi drivers generally in park because I spend a lot of time in taxis and I think I'm not just getting in there because I want to get to for me to be I'm getting in there for lots of other reasons yeah however when I look at the stats around what is more dangerous driving myself or having an autonomous vehicle drive me there's a 68% lower overall crash involvement rate when you're in an autonomous vehicle autonomous vehicles experience roughly 2.1 police reported crashes per million miles compared to humans that are at roughly 4.68 per million miles right a 55% reduction when you get in on autonomous vehicle an autonomous vehicle show an 80 to 81% reduction in crashes resulting in injuries versus human drivers so you're 85% less likely to be involved in a single vehicle crash by hitting a wall or a tree right if you're an autonomous vehicle versus being driven by I agree but so it's safer in also that data is

1:04:37what's the sample size of human drivers I mean we've got many many many many many many many more years of drivers and many many more years of accidents and also man does that not have anything to do with generative AI yeah if we were just talking about that we have a different conversation I guess the question here was really around job disruption like you know we look across industries and we go driving some massive profession is there going to be job disruption because cars can now drive themselves if we think about white collar you know jobs you know lawyers and accountants eight people sit here and they tell me that lawyers and accountants were the profession right I should say some of the skills within the profession will be relegated to AI is to do here's the thing lawyers for example right example always hearing fucking legal partners talking about AI never the associates the associates are the ones that go out and find the person they're the ones that go and do the grunt work they're the ones who would pull emotions off the time the partners the one that might be the litigant maybe the client facing but the ones that are actually doing the day-to-day work I'm not hearing from them I'm not hearing a associates being like this is fucking awesome I'm hearing a bunch of well-paid people that have

1:05:42sat on chat GPT and gone yeah I'm the greatest lawyer ever they're not the ones that I want to hear from the actual workers white collar labor disruption is not happening open AI had a study that came out think like a week ago that said there was no connection between spending on AI tokens and revenue per employee like this is open and that's the thing does that mean could you explain that to me as in the more tokens you spend has not no correlation at all with the amount of money you make it's the second report they've put out the other one was like hallucinations and mathematically guaranteed kind of almost it's the one thing I respect about the company that occasionally use put out a study it's like yeah shit's got a sucks but the people that are having their lives disrupted workwise are our directors it's people our directors transcribers translators who have bosses that don't care about the output it's what they consider cheap work and the problem is is those people would have automated work away anyway they would have sold it they would have taken the cheapest off for they would have sold it to the global self they would have taken the shitiest option they could that is something that AI is doing and again those people

1:06:45are not paying the actual cost of AI they're using a subscription the actual white collar labor force might have some things that are slightly changing but there is no evidence of like productivity gains in fact if there were they would be screaming it from the rooftops there was an oxover economic study last year where it's like oh young people are finding less jobs because of AI we actually read the study which multiple journalists did not it was a single line that said yeah we saw some correlation didn't give a number didn't actually say what the correlation was we are so conditioned to believe that the rich and powerful know what they're doing that we internalise these narratives about like well previous booms lost a lot of money well technology takes time to do stuff and they are intentionally playing on those mythologies they are playing on these knowing that journalists analysts investors will believe them and this is partly because our will our realities are defined by stock prices because the stock prices of these companies went up we're like

1:07:47oh look it must be working right both of those things you said were true though right like that previous technologies didn't make money at the start and the other one you said was um they'll get better but that's the thing okay because another thing got better this will get better no but there's there's got to be something that they're saying that is fundamentally not true because those are two true statements that okay technology often starts I know I get what you mean yeah what they are fundamentally misleading people about is how possible it is okay how many actual signs they have because they don't have the signs if they had signs as in the signs of this getting cheaper as in the signs of this being able to autonomously do work without the root gulpberg machine and even then in a reliable way that was making the customer more money being productive in a way you can say with your whole chest without a series of asterisks and that's how it is across the board the people the are most excited about this psychopaths on twitter in many cases are people that I believe they're really awesome I'm sorry there are some people on twitter because the other thing about this is this is really unique to the AI industry I've never seen it any other industry outside of maybe like

1:08:52sports teams the attachment that some people online have to these companies if you dare dare to criticize anthropic it's almost this religious attachment good example was this week Bloomberg reported the open AI was on track to hit 40 billion dollars in annualized revenue months times 12 four weeks times 13 we don't know they don't define it I saw multiple people lying going actually it's 60 billion it's actually 60 billion I heard from someone it is like a cult and it's a cult of software driven around growth and this idea that by backing the right horse you will have some grand thing and open AI in particular in particular Mr. Altman they have been fermenting this that tibo as well that t i b o that one of the guys are open AI they ferment this thing online they build this kind of parasocial relationship with both the large language model themselves and the companies and ones allegiance to the companies is so important it's truly vile if only these people gave a fuck about I don't know Medicare for all

1:09:56or poverty or thing like actual problems in the world versus are we buying enough GPUs do you know what's interesting is some of what your narrative one would argue actually helps them how because you know the AI do almost that have come here and told you know some of the original founding fathers of AI like Jeffrey Hinton have told me that what they're building is highly highly dangerous and that it will be fundamentally disruptive to society and it's interesting because some of the CEOs who you've mentioned their historical narrative was also by the way this is really fucking dangerous yeah and there is a significant chance it could we could fuck up the planet uh-huh and what we've seen is this slow pivot away from it which is now they're getting sued and they're being attacked yeah they've been the slow pivot away from it and the pivot almost sounds a little bit like your narrative it now sounds like actually now it's not going to change anything and you're all going to be fine and it's now it's just now it's nice not dangerous at all but that's the funny thing and that's why I'm saying like your you're not they I actually think there might be a couple PR people at this big AI company thinking thank god for ad

1:11:00or I don't know about that some of it because you're like you're saying actually don't worry everything's going to be fine it's not going to take your job it's not going to disrupt the economy it's just a fad there's no technology and I think they don't think that here's the thing I think Altman and Amadeus some of the most deeply corrupt and cynical people in the world I don't of course they were going to say from the it was early 2023 Altman said we're a little bit scared about what we're creating oh shut up I'm just I hear that and I feel so frustrated because I've met so many of these rich fucking liars these people and you know what he wants to say that so you'll invest in his company and buy the software so you'll be scared to the if you don't use AI today you'll be left behind in the future which is their continual narrative that if you don't get on the train today then you'll be left behind by the way every single scam and con starts with rushing you every single trick in history begins with saying you must do this now and best piece of advice ever got was if anyone tries to rush you and it's not literally a mortal thing like you are bleeding or on fire or houses on fire slow down and yet all these companies saying

1:12:03so scary and now they're talking about slowdowns but you ever know it's the amade in Altman they say well maybe we should slow down progress and then they don't right now Altman saying oh we slow down progress was so delayed now they're out compute now they're doing it but I can guarantee you by the way the PR people do not like me I know for I know I don't think open a eyes PR people super fond of me but I bet there's elements of what you're saying because you're calming people you are theoretically calming down the general public and you know what I hope I am because the fear based tactics is horrible these companies don't want that these companies want people scared I'm 100% sure I don't I just fundamentally disagree I think it could I so the timelines to an ice sit here what I do is I log their quotes over time oh and I read them out from 2015 yeah to 2026 and the change you see is them going from there could be extinction that's the narrative the early narrative Elon said it himself he says it's a single most dangerous thing in the Elon's author and then you track it over time and it evolves to this age of abundance we're all gonna have unlimited stuff and then the the the new slogan it tried to be tears intelligence

1:13:09for everyone it's suddenly an author and whenever Dario comes out and says by the way it's really rock and dangerous they attack Dario yeah that's me hate him that my Dario is they're like Dario shut the fuck up honestly I've been saying Dario shut the fuck up for years but it's the thing is I get your point where it's like I don't think they've changed to calm the public down so much as they're desperate to not get regulated which is laughable we don't regulate tech we don't regulate shit America doesn't regulate shit we are in the we are still trapped in the hands of Milton Friedman Margaret Thatcher and fucking Ronald Reagan we're still stuck in the neoliberalistic hellscape which is growth at all costs free market capitalism so no no one's regulating the regulation of these companies should have been I don't know breaking up but these past this is I break out these fuckers for sure we shouldn't have companies this big it makes things worse but these technologies are dangerous I mean they're dangerous but not in the ways they've been warning about less than if we think about cyber hacking right and just be clear those cyber hacking things that

1:14:12happened were not a result of they were like break out of the sandbox and then they set the sandbox up wrong they set up the server they were wrong but I mean you know advanced AI models could very easily because they can go out onto the open internet as agents they could very easily go and look at code bases of different websites find vulnerabilities and exploit those vulnerabilities yeah that scale and arguably at a higher intelligence and faster and wider than humans human hacker could theoretically so that's dangerous well here's the funny thing we don't know how much compute was spent to do the hugging face attack the open AI one we also do know that they improperly set up the server to keep it they thought they'd turn the internet off and they didn't that's human era and that's human error in a sense that yeah they threw about an indeterminantly large amount this is dangerous but people keep saying we can't let the the Chinese get a hold of these models we couldn't possibly because what if these models fall into the wrong hands they're already in the wrong hands Mark Zuckerberg Sam Altman Dario Amade the wrong hands are the hands of those who are

1:15:17running these companies we should not be training these models to do these things I don't know why the fuck we're doing it other than they've run out of other things they can train on there's a ton and the fact that they can do it it's kind of interesting but you do it would you agree that it's an intelligence and I'll call it that you know you might disagree with that technology but an intelligence that can go out onto the internet and click around and take actions is inherently there's risks associated with that well the second part I agree with the risks we've had people running automated scripts and hacking scripts for a while we've had hackers doing that for years this is brute forcing it with a bunch of compute and yet it is dangerous these companies are doing something dangerous that is not what Jeffrey Hinton at Al have been warning about they've been saying who are these things to destroy society they can manipulate people when you actually look at the underlying things not so much Jeffrey Hinton as well talking his books still got his Google stock I think and weirdly enough he left Google because he was worried about the AI there but then immediately made a comment being like yeah actually though Google's very

1:16:19responsible strange thing now but let's get back to the the cybersecurity side I agree this is dangerous these people should not have access to so much compute they clearly don't know what to do with it there's a really easy way of dealing with this it's not letting them use so much compute it's regulating that part out of existence what if the Chinese do it the Chinese are able to distill the models and also I don't know regulate it and stop I I feel like with this particular thing as well we got to this point and let the genie out of the bottle to use an annoying Sam Orton term we let this happen because we let these companies be unregulated and use as much compute we want we have these fucking enablers allowing to burn as much compute so they want and also we for all of these dire warnings about AI dangers now I want to seem still fucking done anything okay we're going to play a game at let's play it on these cards here yeah I have the things that you consider to be myths about the AI industry the challenge is I want you to give me one

1:17:19sentence on each myth so just your first reaction you're going to pick it up you're going to read it and then you're going to give me one sentence on your opinion of that belief okay let's go so let's do this what does it say in what is your one says the AI industry is creating enormous economic growth no it's not it's nowhere in the data okay that's just it may do a second sentence go ahead pretty much all of the economics is either in video feeding money to its companies like Corwave or these three companies feeding money to these ones to spend it with them okay and what evidence do you have that there's it's not causing economic growth just to be clear other than the spend on semi-conductors so the speculative investment in GPUs and data center infrastructure that's happening but as far as like spend on AI goes barely cracking a hundred billion dollars and most of that is just these two running their services and paying these three companies or or call Corwave and others but a hundred

1:18:21billion dollars is a lot of money for a relatively new technology not when you've spent three hundred billion dollars in equity funding and if we're going with just these three I think six hundred billion dollars in capital expenditures yeah I get that that means it's not profitable but the hundred billion is an expression of consumer demand when the compute is mostly driven by subscriptions that subsidize now it's not when you're giving someone twenty dollars or forty dollars for a dollar they are going to use it more if this was all on a per million token basis we've been having a different conversation okay so fine cool next one the United States need to spend trillions to beat China in the AI race let's see what AI race but that's actually that's actually my point it's what AI race is there is it to make big scary LLAMs they did that already without the Nvidia GPUs by the way they've got black while GPUs kakashi and jistario two amazing analysts I love they've been on this fears it's like China's already had Nvidia GPUs that they're not meant to have for years but also to do what they really got the LLAMs what's the race to do to

1:19:26make us spend more money than them for us to constantly piss our pants worrying about China because they won if that's the case myth number three AI will replace all human jobs that just isn't happening there's no economic data to support it will it replace some jobs I mean it's replaced some contract labor that would otherwise be replaced with cheap labor out in the global south it's a digital globalization in that sense but all jobs most jobs a lot of jobs no what about robotics robotics is not what we're talking about yeah robotics is a very different thing and even then robotics will be powered by AI I mean yes but there are tons of different kinds of AI we're talking explicitly about generative AI and that's what I this one my myth bust the species site that was definitely about generative AI okay but what about robotics like the thing is the Optimus robot that Elon's working on it Tesla the one where even in the demo of the hand he did like they had to have a guy controlling it wasn't doing that autonomous thing here's the thing if they can beat all these challenges yeah robotics would be really cool I don't know how long

1:20:28that's that's one I'd actually be willing to believe in a couple decades have you seen them Chinese robots I know you've seen what you need what's it called the one that can dance and that but they can't really do human things well it's just it is pretty mind blowing is robots are fucking cool I like I'm not going to pretend I think robots are cool I wish they were building robots and actually doing cool shit I wish the tech industry still made fun stuff and interesting stuff so we get these fucking large language models but with AI plus robotics isn't you know I was in San Francisco and I went to this massive incubator there and when I'd gone there three years earlier it was all software startups right and when I went back three years later it was all these robot startups and I remember saying to the founder of the incubator I was like why is everything robots now there's this one robot where it was just the arm and it had a frying pan on it yeah and it's whole thing as it cooks for you yeah so it was it was showing me it cooking whatever and he goes well you know the arm he goes the hardware part the physical parts that's always been fairly cheap yeah he goes the expensive part was the intelligence yeah and now that's come down

1:21:32to pennies so what you're seeing is this explosion in a robotics industry because robotics is a function of intelligence plus hardware we've always had a ton of data though as well yeah and the data is very expensive yeah the thing is cybercabs rolled out real slow it's going to take a long time it could be a threat if they do a robot that could replace a human job sure it could but that human jobs are multifaceted human jobs change with environments and also a lot of human jobs that you might think of like I don't know dish washing robot for example yeah some guy at a restaurant isn't paying 10 20 gram for a robot to replace the job that they're already not paying enough for point is yeah it could if you can replace the jobs that is not what we're talking about with this yeah I just I just I lost these questions not because I'm trying to be like they're actually I'm trying to form my own opinion on these things and I I do think you know as it's written that it says AI will replace all human jobs obviously not obviously that's what yeah but I'm trying to figure out if the truth is somewhere in the middle that there's a certain type of job which

1:22:35actually humans probably shouldn't have ever been doing really if you think back through history there was someone's job just to sit in an elevator and press the buttons right as an example of a job that human's probably shouldn't been doing and as technology gets more advanced it takes on a lot of that sort of automated monotonous stuff right the thing is with this particular thing that I know that this is from a specific blogger wrote I was explicitly talking about generally they either I was explicitly talking about people when they say this they're referring to that so you're not talking about a gentica i which is a gentica i is a lens a gentica i is just a fancy way of saying an LLM talking to another LLM with a harness on top that is still a lens a gentica i is one of the the bigger lies they tell it's like when you hear agent you meant to think autonomous say I can do what you want it's still a lens it's still a lens talking to other LLM's yeah taking screenshots and putting them in LLM's that's not good yeah okay but you know I could make the case that I'm just thinking about my personal usage I definitely use agents to do things that I would have previously asked people to do it's not to say that I didn't I still don't

1:23:37hire because why aren't it crazy yeah and I still in that particular function I'm thinking about like the chief of staff role so my chief of staff would have triaged all of my inboxes previously and put them somewhere and told me about them or maybe once upon a time show me a piece of paper back in the day I guess now my chief of staff is no longer doing that job you still have a chief of staff but if this is what I'm saying they're doing other things right but the thing is again what you were describing is fairly basic automation I don't know what the tasks are to be basically things about a trillion dollars on triaging email well that's the the promise it if they'd spent ten billion dollars and this was much smaller and you're like oh cool software yay a lot of the things the people are impressed with the like script stuff as well it's just LLM's doing Python you should be impressed by Python code Python's incredible you scrape websites get out of the load shit awesome but the point of making is none of this would be anywhere near as much of a problem if they didn't ask for all of the attention all of the money and promise the world it's their promises that are the problem and the journalists who went along with it and the analysts and Twitter people who went along with this saying that this would change everything and replace everything

1:24:41and leaving the realm of reality is there any technological innovation through history that was really really game changing whether that didn't happen I mean the internet I mean people overpromise that I mean they overpromised on the businesses but I've read through a great many pieces about the early internet a lot of people were excited but hesitant they were worried that there was not enough demand but they were still like oh yeah this could have potential ramifications if it happened people were not super negative about the internet a lot of the skeptics were saying were worried about an overload of bad information look at where we are a lot of people worried about the social consequences of everyone talking online which they were correct about with the economic things they were specifically talking about like the globe which I think made hundreds of thousands of dollars and had like a think a billion dollar market cap but they were talking yeah they were massive hype in the dot com era I read a lot of those stories the hype was nowhere near you didn't have articles everywhere that were saying if you don't get online you'll be left behind you

1:25:43didn't have professional consequences Nick Sir Eschementan should his blog earlier he described this thing global a eyes of history and global decision making where he said that you have businesses you work at where if you don't say that you're more productive with AI whether or not it's true as irrelevant you have professional consequences you can get fired there are people having to a i wash their jobs by saying a i did it otherwise their bosses don't do shit will get mad at them this did not happen with the internet it was not present and part of the thing is social media was not like it is today the kind of I was decentralization of media in general as course as well and also the fact of day trading there's so many different things that are different it's crazy I do think a i is different from the internet in part if you just measured it on the speed of adoption especially if we could just think about generous of AI and it's the adoption of the internet required physical connections to your house the adoption of generative AI involves having a web browser it took a vast amount of effort to bring internet to people even with dial-up

1:26:47connections it still required the decision and that's why it was so slow and there was less you know there was less hype than air I do agree that there's way more hype and we again going back to this point that we're clustering AI in this big category of lots of different things it was generative AI this generative AI there's like real world AI in general if AI is explicitly what I'm talking about here when bosses are saying you need to use AI they're not saying I need you to go and buy a unibime robot they're saying use llm so that I and that's the thing they have this theory they're the era of the business city it's like we are ruled by people that don't do work because nobody who actually does a bunch of work who really is productive is harassing someone who works for them for not being productive enough they're not they don't have the time they're doing work someone who is sitting there with the ingratiation machine that's telling them every beautiful idea out of their messy little skull is amazing yeah they're going damn this thing says I'm a genius why are you not using the genius machine to do more work and yeah if you're a boss that goes to launch leaves launch and sometimes there is your emails llm's a magic I you know one of the most compelling

1:27:48arguments I have for the over hype of AI in a world where everybody has access to these tools whatever the tools can do would largely be commoditized what the tools can't do which one could say is the human taste judgment you could say it's people's skills whatever you want to say is now going to be the valuable thing because the scarce and the hard becomes the most valuable through history and the commoditized becomes the least valuable so the very nature that were commoditizing the generation of content or whatever you want to call it code means that's actually not where the value will accrue add for the user and actually if you think about what it takes to now make something that is objectively great if an AI can do it then it's not the great thing is not a value right so I think a lot I've been thinking a lot actually about how how do you um avoid the temptation of sloppification of the things you make the value you put into the world it's very simple example that people will be able to relate to if you use chat to be too

1:28:52or anthropic you know Claude to make your LinkedIn posts let's say uh-huh they will be shit to LinkedIn posts because everybody else is using them and actually a great LinkedIn post now is someone who doesn't use them and makes something that's like irreplaceably human right and deeper and more personal end of one lived experience yeah all these things that AI can't do and I think that's a compelling argument that actually the commodity tools produce commodity outcomes so everyone has access to these things and what's changed like really like what the sloppification is like we've got a bunch of slopp but these people are half-arsing their jobs before it's just a half-arsery machine and it's just it's it's the thing it's what I'm talking about with the slot blogs it's like it's it yeah people that gave you dog shit before have now got the dog shit machine to pump out dog shit it's so there's a guy called car brown internet bucks awesome guy great software engineer he he said at most that this earlier so it makes the easy things easy the hard things harder when you know you're doing a really distinct small script for something and it can plop that out it's awesome I used Claude the other day for something useful my kid loves Minecraft

1:29:56I was trying to fix a fucking broken mod because he loves these with a storm it's awesome and it still took me half an hour and kept getting things wrong what do you use AI for generous of that I really don't I don't use it with Bloomberg terminal I use Ask B which is just when it's like requesting the consensus analyst estimates for in video otherwise you don't use it no so how do you know it's bad I've used it I've put it through its places I've used it to try and do financial models and found one error and immediately be like ah I've never been particularly impressed the one thing I will defend it on is it's really good for like tech support like I have this thing called synergy in my new new place I go to I have this monitor where I have a Macbook and a PC laptop and this thing synergy for using the same mouse and keyboard drop in a giant fucking trouble shooting log into this thing going what's wrong and it going this is wrong yeah super useful is that trillion dollars not is that a two trillion dollar company no pretty good Google though right better than good I mean yeah remember do you Google search still I try I have to fucking push the crap out of the way and oh my god I can't remember the last time I did a Google search Christ

1:31:00the farmer's stuff using Bing sometimes I know I hate saying it so but I have to scroll past the AI crap because I want the good stuff I want that I want the actual links the stuff so that I can read the thing and go but you can ask the AI to give you the links yeah and it doesn't do a particularly good job like my so say that the other day my iPad wasn't turning on and it was doing this funny little thing on screen you think that it's better to type that into Google or no I must be clear that may be the only LLM use case I defend the troubleshooting things awesome for it I will it's the one weakness I have it's like genuinely being able to drop a log into it that's awesome again that is not what they're selling it as they're not selling it as a useful little tool they're selling it as the earth software as the thing that will change everything that will replace all jobs that will do this and that it's not like they sold it as a quirky bit of software no you are right they are you know telling us that is going to replace everything but funnily enough the critics are saying that as well which one I mean I mean I like the Jeffrey Hinton's of the world you know even people that have left the safety team and tragedy to you who

1:32:05have sat here with these are critics that are that a warning of the impacts it's going to have on the world sweetheart all these critics also have a vested interest in AI doing well though Daniel former open AI guy AI 2027 written with the star codex guy that was nothing more than badly written science fiction that he's already had to walk back you know he could have made more money by staying at Chatchabee to you could he I mean looks like if he had options early it sticking around with did he lose the options how much did you cut you're not saying that they're being critical they're not critical of the companies themselves they're not critical of the stealing they're not critical of the environmental damage they're not critical of the fact that you cannot rely on the answers they're critical of this big scary boogie man out in the future where it's like oh I'm scared of when this becomes so powerful and everyone should talk to me about how scary and powerful is they're not saying hey here are the harms today here are the things we're actually looking at today here are the social problems of having this automated way of spewing out

1:33:05slop of filling our feeds with crap of having information that will pop up that is presented even with the little disclaimer thing of saying yes sometimes this gets you wrong so in the tiniest words possible they don't talk about the fact that these things are trained on stealing millions of people's work but on that last point where you say that it's going to get progressively more intelligent and when it does it'll be a danger yeah would you agree with the statement that artificial intelligence has gotten more intelligent if you measure it based on any sort of measure of intelligence one might use it's got better on the test that are rigged for the models it's got better at test where you can train for the test okay so it's got better at it's got better at test that they're intentionally trained for so if you logged the rate of improvement on a graph it would look something like this right you agree in terms of what it's capable of doing oh there we go yeah because it's not be it's not got new features you'll notice that outside of open AI and anthropic the but when you remove the coding stars there's basically no successful AI

1:34:08star company so we agree that it's got better it's got more capable at doing things yeah okay fine over time AI has got capable if we imagine that trajectory will continue it will get more capable then at some point it does cross you know this is what they say to me it crosses human intelligence and at such time will it not start to do some of the jobs that people are doing today outside of software engineer remove software because I will concede software engineering it's got better at that outside of software engineering yeah where so the chief of staff things that admin okay so it's got better at video generation photo generation okay text generation theoretically coding right and then I'd say agentec workflows so what is an agentec workflow so automated workflows where you do the same I mean a good example is looking at the backend data of the dioroteo summarizing looking at all of the data and just in all of it going out into the internet and searching who ed is looking at every interview you've ever done ever uh-huh this is summarizing and generating

1:35:12making a little model on you know the things people want to know from ed producing a report sending that to my inbox me getting a 20 30 40 50 page report on ed before he arrives this is all basically the same thing it's been doing for years though it's it's not really new capabilities research it's it's it's still the search it's still the same things they've had web search for years they've had report generation for years but we couldn't generate high quality videos that are like indistinguishable from cameras seed dance and these ones that look like movies I mean they are incredible so I'm saying the point I'm trying to make is that if we imagine that over the last 10 years there has been a rate of improvement in terms of capabilities and output and quality we've seen hallucinations drop we've seen the models get more quote-unquote intelligent get better you know if you did give it an IQ test it's getting higher scores than it was 10 years ago we agree that there's been a upward motion of improvement this is pretty much how machine learning goes when you feed it more data exactly and you put more compute behind it so if this continues what does the future look like so the bookline was expecting to hear is that it won't continue

1:36:14and I actually don't think it I think that there are hard limits that we're going to hear so you do believe in that there's a hard limit somewhere we've kind of already hit the diminishing returns level because for example video generation which is by the way far less an american concern anymore open-air eyes shut down sore I think you can still use the API but nevertheless look at look around you with the amount of stuff in the crew you need to get shot people think the movies are just shot by shot by shot and they just magically happen when you've got my wonderful girlfriend of the first A.D.'s and so assistant directors you've got gaffers you've got liars and also simulating light is insanely difficult there are so many magical things that happen in creating visual images that yeah you could create a one minute long thing that might fall someone how do you practically turn that into a movie because that movie I forget what the name is there was a movie that claimed it aired at can it didn't no one to it aired in the city of can during the can fail festival it was not at the film festival when it comes to the practical creation of actual things at the end of it versus magic tricks the actual practical outcomes are not there the reason I

1:37:16keep coming back to the capabilities thing for example is yeah they can do better at tests do better you number go up when it comes to can this actually do distinct tasks you can rely on it you can rely on it for summaries you can rely on it for generations the things it was doing it's getting linearly ish better at but again there's a ceiling to that like okay so it gets really good at research what does that actually mean you've already kind of got the automation there what is the next step of that because training it to be more autonomous for example that's not something that comes from training data that is actually a new Gary Marcus in Euro symbolic you need actually need to build a structure around the AI to make it work and even then it doesn't fix the the saying that there will become a point where the rate of improvement will plateau really now and stop we've already hit that dimension Gary Marcus said this in 2022 as well you know there's lots of people listening now that like they've had their workflows completely transformed by these tools at bay they'll be yeah they're all yeah the thing is first of all every single one did you pay

1:38:16for the tokens that's the thing did you pay for the tokens and also how many tokens did you burn putting on that side what workflows because of it's yeah did a bunch of web scraping web searches just not impressed did you make an entire fucking movie no you didn't is it speeding up your coding yeah I believe that I've heard that from multiple people but again how much can you trust this I think I was getting at is you know when in the moment of any technological innovation people they extrapolate linearly or they view it as a static state i.e they think today is going to look like tomorrow or they think it's going to get better in this sort of straight line but we end up seeing a lot of the time is this exponential improvement all of the innovations we're talking about with you with like with compute and all that with fast processes those are hardware breakthroughs the hardware breakthrough companies don't seem to be fixing the llm problems despite that all the kinks horses all the kinks men we want nine ten generations of tp use from google now broad comms building stuff with open a i they're jalapeno chip and yet none of these people could

1:39:17just say yeah we're on the path to making this profitable because they can't if we fix the environmental problems and profitability situation maybe i'd be more generous with this stuff but they don't seem to be able to and you talk about these improvements and capabilities there's a certain point of which i'm saying okay can it do even a tenth of the stuff they're promising sam won't and the ever fucking week was saying it was going to be in like six months will be like a genie that you can ask wishes for from this like well motherfuckers never watch the lad in what's he talking about like also the genie was charming anyway long story short the promises do not line up with the capabilities or the capability improvements and exponential improvement in software and software performance is always a result of direct hardware improvement we have all the gifted mathematicians all the gifted software engineers all the gifted hardware engineers and where are we trillion plus dollars in with the future great financial crisis in the world's greatest marketing sire i just think in the future i do think that all of the devices and

1:40:21the computers we use and the physical items in our world will be more intelligent i mean sure but and is that lm's at that'll be powered by the underlying a i infrastructure it'll be the the data sets data centers it'll be energy coming down how does a GPU full data center translate to a Nikon camera that can i don't know even what you think i think it like because what is the thing we're talking about here because the idea that devices will get smarter sure i can see that that's a very broad statement i could see it happening it's really kind of happening what does that have to do with the data sense because these data centers again are not being built to make your consumer electronic smarter they're not being built for anything other than speculating on the ability to capture demand for generative a i surfaces but it's not just generative a i we went to that i know but those data centers they are being built for generative a i they are not being built for anything else would you consider generative a i to be the fact that on meta zoning's call like a couple of weeks ago mong Zuckerberg said the big breakthrough we've had which has resulted in

1:41:2215 basis points of increased retention i believe he was referring to instagram is that we now take anything you post on social media and we run it through an a i to get full context of what it is and because we can see guy sat in front of me called ed with blusher and coffee we now can train a i to serve whoever wants blusher adding with coffee to the right user which means people are retained longer because it's a 15 basis points like point one five percent yeah it's not all but it makes a difference at scale it makes a big difference at scale yeah but a hundred and something billion dollars in and the best you've got is point one five percent if he could be fired i mean how much of a difference because there's a reason he's saying basis points versus dollars because think about it like this if marks Zuckerberg was i take your point about scale now i'm saying the point i was making was that that is another application of these data centers because it needs a data center that is driving revenues but also that's not out that's outside of us thinking about

1:42:25just generating a sentence and that's generate the gem their generative model mues it was it oh mues spark is there LLM gem is a generative it's most well mues then then that's them doing the weird thing where it's like on instagram and it's like Dave the cat why is Dave the cat suffering like it's the weird pop-up things meteoris fuck god damn that company sucks like every time i think about how they've ruined that product but that's the thing though again why can't you just say with this whole chest we've made a couple billion why can't he say that because he isn't because there's not actually a way of going i spent all this money i spent 14 billion god damn dollars on scale i Alexander Wong and i made this much they can't it gets back to a very simple point of hey if it was going well you'd tell me how well it was going rather than i don't know doing this weird rain dance then we're like well if we move all the pieces around in three years theoretically this will happen i've done almost 700 interviews with some of the most interesting people in the world and one of the things you learn which is unexpected is that vulnerability is the doorway to

1:43:28connection and after sitting here for two three hours with a guest i feel a deep sense of connection to them and as they leave what i get them to do is to write a question in the diary of a CEO we take all of the questions from the diover CEO we have put the question here on this card with the name of the person that wrote it so you can sit at home as i do with my fiance and my colleagues at work and other people in my life whenever we get a minute we play the diover CEO conversation cards and it is incredible what happens please agree if you're in a romantic relationship and you want to connect your partner more these are also great if you're in a team and you want to bond your team together and i have to say they're also great for families that want to learn more about each other and that need a good excuse to spend some time in a digital world in the analog environment connecting human to human it is remarkable what the right question at the right time can do go to the diary dot com and you can get these conversation cards right now i do think you're accurate

1:44:32and right when you talk about the fact that there's a lot of like is the word for gazing yeah where like there's a lot of people that have spent a lot of money and they kind of shouldn't spend it in the dark and now they're thinking shit like we spent all this investor money kind of like the metaverse was a bit of a fun oh my god that was a bit of a joke that's so weird a lot of money spend we kind of thought this dream was coming into this one i shouldn't say dream because it's not dream i've had but dream that they had yeah they sort of virtual world and actually it never transpired and there's no sign that it will in the near time a i and the dot com boom in this regard of the same nfts were the same you know so crypto one could argue that a lot of the crypto industry was the same it's weighing that is inflated by the media the difference is the reason the metaverse and nfts didn't escape this was they weren't stocks to speculate on they want big companies that you could invest in they had record earnings in 2021 there's a bunch of money flowing in the system thanks to post covid the prdc that basically government federal money flowed in to the banks there's a bunch of easy money zero interest free era money was easy to find then

1:45:33after that there was the hangover growth started to slow down dramatically this is actually my rock com bubble theory which is they don't have any hyper growth ideas anymore so suddenly they started buying GPUs when they bought GPUs people went they're doing AI well we're bad by the stock and the stocks weren't incredible right there's like several hundred percent growth in the last few years their stock is growing by hundreds of percent despite zero proof and because the media was just saying yeah net as revenues growing because of AI right Microsoft's revenue is growing because of AI right the forgaze you're talking about was the fact that everyone just gave them credit in advance and now we're kind of getting to the point where it's like hey you didn't spend that trillion dollars for no reason did you sat you Amy Amy who'd just gonna take him out back send the glue factory or something like I do think there's overspending I want to concede up I do that tick yeah no I do think there is and I think the reason why there's overspending that is I think there is something here and what in terms of like I think there is practical uses

1:46:35for this technology and I think when people realize that through history they go crazy because they want to be the person on the other side I'm gonna be honest I just I fundamentally don't agree you don't agree with which part you don't agree that this that the speculation is a result of actual demand I don't believe it's a suspect I don't think private credit is sinking hundreds of billions of dollars into AI because of actual demand they are doing it because they saw the biggest companies in the world building data centers making a ton of money from two companies they feed money and went I want some of that money I'm saying that I do think there is value in the underlying technology I sure and so I think I'm not saying how much value right okay I get you meaning that's fair I'm not saying it's proportionate to the investment all I'm saying is that do you know what it's like it's like if I take your example the rot economy I say that you wrote yeah say that you're on a desert island and then someone says they found a banana tree right and there's there's 10,000 people on the island okay they are gonna stamp fucking peed towards where they think the banana trees they are gonna fucking claw each other to pieces and if you're essay here is right that

1:47:39there was desperation because they hadn't found an innovation in a while maybe that explains it maybe there is a bit of value here right and they're stamp fucking peeding and killing each other and making irrational decisions like hungry people would I actually think we're then we actually agree that is actually my point which is these three companies a matter their main business lines are running out of growth there's only so much they can grow and indeed in the next three and a half years analysts think that these two bastards these two open AI and anthropic are gonna spend over four hundred billion dollars on these people alone Microsoft Google and Amazon and the crazy thing is is that's a large part of their future growth and if this money isn't spent their growth slows down okay so your point about a bananas actually agree that is the rock on bubble it's they don't have a new thing in their desperate and indeed they got rewarded for buying the GPUs they got when they bought these goddamn GPUs from Nvidia all the markets went rock hard overnight they loved it they were stories about how they were sending armored cars with the GPUs to Microsoft to make sure Microsoft got the GPUs and so everyone saw all that money flowing in even though they

1:48:40never disclosed their i revenues they saw the expenditures and they went well I don't want to do what these people are doing I want to get a little of that money don't I I think the area where we have a slight disagreement is that I think the underlying technology has a lot more promise over the long term than you do so the thing I want to push back on there is to have progress with AI just on taking it in a vacuum to have progress for these two companies to keep going and to keep progressing they need to spend tens of billions of dollars a year and training the only way that that can happen is if these companies and venture capitalists and private credit firms and Nvidia keep circulating money to them so the progress yeah that we've got so far is entirely a result of this circular system and what means that we're circular we talked about VCs there venture capitalists who are by the way the majority of the funding the open AI got in the last six months yeah came from soft bank Nvidia and Amazon okay yeah so just the point is is you're talking about

1:49:41progress continuing progress in LLMs can only continue as long as the money keeps flowing once the money keeps once the money stops flowing the progress stops which isn't that most like only like Spotify didn't make money for 20 years Spotify didn't lose 20.9 billion dollars in one year they didn't need to raise 217 billion dollars in the space of six months yeah and it was another example 33 billion dollars since inception before it became a messy kind of profitable Amazon web services between 2003 and 2015 when it became profitable 29.7 billion dollars they spent the skate yeah that's the total capital expenditures and that's not just Amazon web services that's the entire logistics operation normalize for inflation so they all lost money for a long period of time as the TLDO yes but the amount of money they lost is completely just magnitudes different on a level where these three can I argue then that the pit that's because the potential of intelligence permeates everything whereas Amazon at the time was like selling books no that was bringing retail

1:50:42when Amazon web services grew it was for Amazon web services so the Amazon cloud with Amazon web services the reason I bring that up repeat something but it's really important 2003 it was founded and it was founded mostly because Amazon as a growing online store needed hardcore infrastructure 2006 I think it's when they turned it client-facing I may be wrong on the dates there but 2015 was the year it became profitable yeah the total capital expenditures normalize for inflation with 29.7 billion dollars across that 12 year period yeah and yeah it lost money but if we speak cold economics here Amazon didn't have to go into the they were unprofitable in the in a way but their margins actually started improving because AWS was a very margin heavy business it was great yeah these these two Google cash flow negative Amazon cash flow negative these businesses the reason you liked software businesses was they are meant to be cash heavy asset life these companies along with meta have added more than 700 billion dollars of new property plants and equipment so assets

1:51:45data centers GPUs in the last four years they have gone from being these cash machines to these cash furnaces you said a second ago this can only continue if investors continue to invest yes and I was saying I think that investors are used to pumping my into things that are burning cash your rebuttal to me sounds like well this is burning more cash than ever and then so I would say well is the opportunity bigger than those other case that is your reference like AWS and one would say that the opportunity of intelligence permeates everything so the time the total address market is enormous maybe the revolve back to me is about open source and all these countries no no I actually know what you're going at so what you were describing there is the argument that satchinid deliros and all would make but the theoretical opportunity of large language models and I could have bought that shit into any 24 from them when they were like oh we see the opportunity we've gone way past the point at which you can rationally argue that LLM's

1:52:47need this much money and when I say the money needs to keep flowing I am talking these two companies open AI just open AI clami sarmor has said Wall Street General and Isaqad easy reported a few weeks ago they plan to spend $750 billion on compute through 2030 I think they're going to be dead before then but $750 billion that is an insane amount of money is crazy and a large chunk of that is training so when I say progress I mean literally to make the models better at stuff requires billions of dollars invested just in data and also tens of billions of dollars of taking that data and so training training is actually a really interesting thing because when you think of like well for j control of trainers while I train with them I'll live with them I have a defined thing and when I do it and I eat right muscles get bigger they would and is the thing when you train with an LLM you're experimenting each and this is not actually a hit on the companies because they're still trying to work out how to do the thing because putting aside how I feel like they're

1:53:49trying to innovate I think there are people at these companies that you want to do something interesting it's costing too much money so once the money tap turns off the money won't be there to buy the data or the feed the data into the GPUs put aside all the thoughts I have just the raw capital to get them this far has cost increasingly larger amounts of money and increasingly larger amounts of training money for training runs that sometimes can fail GPT five was meant to be this panacea for the AI industry they had at least one training run that cost half a billion dollars and did nothing and that's the thing if we are thinking about progress in a vacuum they need so much more money just to maybe get somewhere there's no guarantee there's never any guarantee but there's a reason Google and Amazon are cash when they get it now there's a reason why Oracle's probably going to die as a result of open AI because Oracle's future depends on open AI spending 300 billion dollars over five years it's absolutely fascinating because I was just reading through a list of quotes from the big CEOs of the AI companies to see what they would rebuttal you yeah and they're all

1:54:50basically saying the same thing they're all saying this is an actual an exact quote from Sundar who's the CEO of Google he says the risk of under investing is dramatically greater than the risk of over investing you go down you go through this you know the Andy Jassy CEO of Amazon we're not investing approximately 200 billion in CapEx in 2026 on a hunch we're not going to be conservative and how we play this we're investing to be the meaningful leader and our future business operating income and free cash flow will be much larger because of this investment then Mark Zuckerberg see of meta says will continue to invest aggressively an infrastructure to meet the demand I'd rather risk building capacity before it's needed than being late let me think a shrek with law far quad some of you may die but that's a risk I'm willing to accept it's like you know I'm just going to spend all this money you can't fire me because Mark Zuckerberg can't be fired due to the unique board situation he's got going so yeah he's just going to piss the money away and hope he's right and I know from the

1:55:51people and I'm not mad he's not right the thing it what why might you be wrong I mean this is the thing the AI people who claim this is going to be the biggest strongest thing in the world did they ever get that I I mean this like good question because it's like they don't and the thing is what would it take for me to be wrong a bunch of hardware breakthroughs that make this profitable a bunch of questions new math because the thing is when it comes to being a critic or a skeptic you were put on the hot seat not the people spending a trillion dollars not the people promising the world the the the asshole with the blog is the one who's like trust me if they came here they'd be on the hot CT oh wow oh they they won't talk to me don't know why stay they don't know it's because I couldn't clammy Sammy I think it's because my guests are quite quite critical that I don't think I'm all yeah come here Mr. Allman I can't Steve should do it but this is think like of course they're going to say that and also if they thought they were right I don't think they do anymore if I was in their shoes and I thought that this was an existential thing sure but it gets back to the rock con bubble which is yeah this is the last thing they've got but I really want to

1:56:51know that question it was one of the questions that's really excited to ask you which is you have a different opinion we said this at the top yeah you have a very different opinion from a lot of people yeah I would categorize the the two most popular opinions as a i's going to hurt every billion it's going to be catastrophic and we need to stop yeah the other opinion is age of abundance it's going to be amazing let us crack on yours is different from both of those which is as you said in your words it's a con and it's in there's no real underlying value in the technology and it's overhiked yes and there's way too much spending I mean a few people agree on the spending part yes but the other part so with you it's one of probably the first person that I've spoken to that's had this opinion so how what would it take for you to change your mind about what you believe here there would need to be a hardware breakthrough that reduce the cost by like a thousand but it would have to be just a dramatic breakthrough that is not happening just be clear because they've all been trying so it's the cost for you that would have to change it's the cost and it's also the data centers I think the way they're building the data centers is reckless and damaging to communities

1:57:54the fact that you have communities like in violent New Jersey where the residents like I don't want this but the planning boards vote for it because they're all I assume having chummy lunches with the people doing it I think the use of gas turbines is fucking disgraceful I at the water situation I'm not super well read on so I'm not going to wait into it but the use of gas turbines and behind the beat of power is reckless and damaging to communities the noise that these things make and also generative AI is this egregious pornographic demonstration of how unfair the world is regular people try and get alone for a business ran business they what I have a good idea they got all bank bank account look I fuck themselves they'll say I'm not gig you you can make a store that sells stuff screw you you want to build a data center you know jensen Huang will back you jensen Huang will give you 25% residual value you want to build a regular business that's even profitable fuck you no venture capitalists won't give you the money something that's just growing steadily but it's profitable screw that no I need ten a hundred decks return try and get a mortgage you have to give the bank a full colonic but you want to get money for jensen Huang

1:58:59to buy some GPUs he'll give you a contract core weaves great example cut a neocloud which is just a company that builds data centers puts GPUs and rent people in video one of their first investors in 2023 signed a 1.3 billion dollar contract to rent back their GPUs from core weaves so that core we've got a bank go I got a customer yeah it's the guy I'm buying the GPUs from with the that I'm getting from you if you want to buy GPUs it's open season if you want to live a regular life we build a regular business on buy a house highest interest rates ever screw you up yours yeah you need to show us way more than I don't trust you regular folks but if you're an unprofitable neocloud you get billions from jensen it doesn't matter it's so interesting you it's interesting because you are the first person that I spoken to that has that opinion I am pro user let's take another myth AI will be conscious so super intelligence artificial general intelligence these are

2:00:00theories anyone saying this stuff will become this he's just guessing and does not have proof okay and like that's really it okay cast another myth AI systems are already blackmailing and escaping control so this is a really specific one and thropic let's actually two open AI's GPT 3.5 I realized this more than the sentence I apologize in their system card and a bunch of media outlets cover this saying that open AI's model blackmailed a task rabbit into solving a capture what actually happened was a user of GPT doing the experiment got it to generate things to say to a task rabbit to make a task rabbit do stuff a task rabbit as in a person that you rent not even to do a capture it's something you rent like nailed that nail picture up in your apartment it's an insane example this was covered as if these things blackmailed someone and and they specifically said yeah we prompted it to

2:01:00do this and also the other note was that yeah AI systems can't do autonomous stuff like this then there was this other one where anthropic said oh yeah a model was blackmailing someone saying that if you don't do this I'll email proof that you slept with someone else of them your wife I think it was what actually happened was anthropic explicitly trained a model to do this and then prompted it to blackmail this keeps happening and the media just slop it slop me up I don't need no thoughts put the story in the bag and it's frustrating because it scares people put aside the fact it's wrong it's scary it's scary to people people living their lives who have to work longer hours to make less money and their money doesn't go for and they can turn on the fucking news and there's some asshole being like yeah it should be terrified it blackmailed someone but this is this is so counterintuitive if they're interest to some degree and they've experienced it backfire well they have now like it's it's literally backfired it's backfired Eric Schmidt getting booed have a commencement speech by eight thousand people every time he said that AI but I mean this is

2:02:03this is I mean they've these tears are being attacked at home yet which fucking sucks yeah which is terrible I must be clear like you just like to come don't fucking hurt people yeah don't attack him at home but but the point here is that that narrative is backfiring in a big big way you agree to them I don't think they saw it coming because you have to remember you mentioned regulation earlier these tech companies have been glazed for their entire existence Travis Kellex like oh what people don't like me now and it's because Uber was a horribly run place and he was kind of a monster also tons of articles about how great Uber was at the time the point making is these companies are not used to push back they thought what would happen I believe just guessing they thought they do this scary stuff and they would just get floods of money and everyone would just be like I kneel before you I'll do whatever you want they didn't expect I think what has I agree this has backfired on them because they were in articulate they're disconnected from regular people sammol and drive a five million dollar car around San Francisco so that that man's doing it like nine miles an hour it's hilarious but these people are disconnected from everyone else so they don't they don't

2:03:07experience real problems so they can't build the solutions for them and they think well if we scare people into doing what we want that'll work right it didn't that this was all this black mouth stuff wasn't the attempt to make it mystic it was a mysticism attempt it was to make it seem like this unknowable impossible to control just this powerful thing but we're the only ones we're the only us only these two angels could possibly control the beast we've created this this is this is quite a controversial statement but I think that for some reason I trust Dario a little bit more because I think he's been the most balanced in his writing about the risk profile I whereas the others they they seem to kind of move with the wind I I do you know I get what you mean with the reason I don't like Dario is Dario was doing the scare tactics thing when he worked the open AI when GPT2 came out so it's too scary to release he's also gone on television and given AI psychosis to Axio's being like 50% of jobs are going to go away because of AI what I respect is

2:04:09the consistency he's now being attacked by them good but the thing is you sir I mean clarify the way to attack Dario is being verbally attacked by Silicon Valley and you know if Silicon Valley if powerful people in Silicon Valley are attacking someone four months ago he wasn't though they were all saying he was the smartest whatever you want to make there as well as again wow you're so scared of how powerful this is you're so scared of it so scary what you doing about it oh nothing like it's just like what are you doing well we have an alignment team so does every AI lab well I guess opening our cycles through this really quickly because the thing if I'm Dario am at dams and like I'm scared of all things changing and I thought I had made a thing that would eliminate all jobs I'd be fucking terrified I'd be walking around with like like a 10 ton way on my back the shot the responsibility the fact he doesn't the fact he wants to be this weird elder statesman that's too scared the whole Sam Altman's hand and the ven just makes me believe that he's just saying it because it's convenient and he'll wind that back as he kind of already has whenever it's

2:05:11convenient for him I think open AI and Anthropic are basically the same level of bad company I think Anthropic is more cult like I think it's so weird like Jack Clark over there one of the co-founders that fella used to be at the register used to be one of the most critical journalist ever now he's it's like I'll get something took over him because they talk of these things in these high fluid terms but then again maybe the people Anthropic buy their shit maybe some of the people open AI buy their shit so so going back to the central question we asked at the top here was what would have to be the case for you to look back and say do you know I was wrong in 2026 and you said to me it would be mainly that the cost of production around AI drops dramatically and it would have to also do insane amounts of stuff it does it would have to be a truly autonomous it would have to continue its improvement in the capability it would have to be a different product it would have to be it would have to be indistinguishable from magic and the reason I have these high standards is they set them okay it's interesting as well because all these myths and all these conversations it's about technology but it's also it's an information war it's literally

2:06:12narrative versus narrative everyone trying to escape the financials everyone trying to actually escape what the models can do and the big thing I always say about AI boost is if I could regulate them I'd regulate them they can't speak in the future tense anymore just you've got to talk about today mate you get two weeks in the future max because if they were constrained to what was happening they it they would sound like insane people yeah no I think yeah most I guess most technology companies would at the time like Uber would sound insane but no I'm not saying the was basically the difference they were pissing money they weren't they they were pissing on anyway but the unit economics were the same just subsidized so you were still getting a service from eight to be and paying much lower cost it wasn't like you paid over 200 sorry 20 bucks a month and you could get 500 miles of Uber and then one day you started paying by the mile because that's what's happening with this have they they've changed their business model for customers like me now so that I have to buy credits no so you well kind of with me the other day to be because with the anthropics fable model yeah with some accounts you have to pay for usage and also adoption

2:07:17and fable has been pretty low because of this because of the cost but with enterprises so companies over 150 people you have to pay by the token or per million token asking they are moving to a table yeah but when they did that everyone went from being like this is the most impressive thing ever to being like we've got to control these costs Uber's COO says Andrew don't know the thing he said that it's getting hard to justify because it's hard to connect spending money on tokens to actual useful outcomes hmm he said the thing like he said the actual thing I'd be saying and it's so you were in an AI bubble yes and when will when this AI bubble collapses so much of the economy is resting upon it yeah it's gonna have downstream consequences so I got two questions for you I guess the first question is are we in an AI bubble and what happens when the bubble pops yes and it's it depends so the big thing that people say is oh get bailed out Donald Trump scared of Donald Trump here's the problem with this it isn't just an AI bubble it's the rock on bubble so

2:08:17the AI bubble collapsing will probably be this company running out of money the open AI and the thing is with open AI is they were meant to go public this year and now it's been pushed to next year we can half after a release they're auditive financials what away that was um but they've delayed to next year Sarah Fry the CFO has now said well they'll do it earlier than 2027 or 2027 great answer there for anyone that doesn't understand what going public means that means joining the stock market and at such a time when you join the stock market your investors can finally sell their equity that they got for investing in the company when it was private so oftentimes companies will flirt with the idea of will go public someday soon because investors will have a moment in their head well they'll get their money back at a return so you kind of need to if you're in these guys shoes you kind of need to be flirting with going public or investors won't want to invest open AI up until this point has been a private company and their last funding round they were valued at $865 billion now when they tried to go public New York times my

2:09:20kaisa reported this they tried to list at what they wanted to go at a set a one trillion valuation apparently their advisor said no don't do that that is very bad for a number of reasons one open AI needs perpetual amounts of money they raised $122 billion this year most of it's cross there's some left but they are going to need to raise at least $100 billion a year just to survive if they can't go public they will have to raise another funding round problem is it's going to be difficult to raise even the same one they raised that so they're probably going to have to take a flat so the same amount they can't do exactly but they need money they need money so bad amazon sent them $35 billion that was meant to be contingent on them going public early they did that because they need the money now open AI is the kind of catastrophe center here because anthropic is likely going to be it to go public and once anthropic goes public it'll be borderline impossible for open AI to do so because anthropic non-profitable unsustainable AI lab but a better business that

2:10:20scrolling faster than open AI's I believe they have a ceiling they're eventually going to face perdition too I think sometime in 2027 things are going to start running out of steam because the thing I said earlier the only way these models get better is if you feed more money tens of billions of dollars into them so you think open AI runs out of steam in 2027 I think they're already running out of steam yeah but I think they run out of cash you think they run out of cash yes and the sequence of events here will be they they go out and try and raise and they have trouble raising another round I think maybe Nvidia props them up a little maybe private credit black star and black rock and the like the ones and the reason that private credit is getting involved so asset managers is because they're investing in the data centers and they know this company's most of the data center demand okay so they run out of steam in 2027 according to you yep and maybe they try if they bum rush to go public they're going to have worse economics than anthropic they're going to get savage it we work was a great example another soft bank classic now I think open AI collapses there are many different ways it could happen there are many different ways it could end but the crucial thing is is that there are multiple companies that are

2:11:22existentially tied to open AI soft bank one of the largest companies in the Japanese stock market a holding company with lots of investments they have on paper about 100 billion dollars worth of open AI stock if they can't go public they can't do diddly squat with them and so soft banks future their ability to continue paying the people around them and existing as a business relies on their ability to continually liquidate funds to be it to take the things they've invested in and have value from them either by selling the stock or taking loans out in the stock if open AI can't go public soft bank can't do that soft bank probably won't run out of money but we're going to see one of the largest holding companies in the world become much smaller we will also see amazon google and microsoft have two restate guidance they will have to say actually we don't think we're going to grow as fast and what happens then well I think we enter a tech depression because the rock combo the core of my theory is that they're out of hyper growth ideas but the market doesn't think so the reason they're so

2:12:22maniacally spending is because buying AIGPUs allows them to kick the can further it allows them to say we're still doing something we're working on AI don't think too hard and also the current businesses are still growing the current businesses will eventually slow there's only so many price increases so many so many tweaks to ads only so many tweaks to google search only so only so many ways that amazon can screw merchants so in that tech depression which you think you might be triggered in 2027 is that a cascading downstream economic depression because the stock market is heavily dependent on these companies the stock market sees a pullback investor stop investing they get panicked yes I think that because what's the sort of downstream consequence the sort of domino effect there's so much to imagine that it's difficult to capture everything but there are a few things that worry me first of all ton of american money just regular people's money retail investors are in these companies they bought into magnificent seven thinking that number go up forever in video is the largest company on the fortune 500 and asdaq as well and like 708% of the

2:13:26smp 500 that company when when the bottom falls out from Nvidia and we haven't really got into it but Nvidia is doing the most circular financing feeding companies money so that they can raise their debi more GPUs I think in videos revenue could go 50 to 70% now I think that Nvidia could Nvidia back in 2022 was making single digit billion dollars and what happens though I'm thinking about like Jenny and Dave that are watching this right now and they are just normal people the normal jobs people's retirements are going to contract severely and I don't believe they're going to return to those values and I think that because so much of the value of the smp 500 and Russell 1000 index comes from these four companies and the rest of the magnifs at seven so apple tesla matter as well and the thing is I don't know what happens after that because venture capital has also that more than half of venture capital last year went into AI I think most venture capital investments in AI going to zero because when it comes to building a company on top of an LLM all of those are unprofitable too and the thing is LLM companies have not really been acquired the

2:14:29exception being cursor but by Elon Musk for the coding side but you have cognition which is just another LLM company raising a 26 billion dollar valuation that means that company has to go public because who's buying a company at 26 billion dollars other than the Elon Musk and the rumors that Elon Musk was trying to buy them as well is Elon Musk just going to pick off every LLM company like on a fucking TJ Maxx Ray I like Jesus Christ so is that a recession you're describing it is a recession but it's also a depression within people's retirements like I'm talking about 20 30 40% off the top of these companies stock value economic contractions recessions consistently lead to job losses and rising unemployment when an economy contracts the mechanism driving job losses typically follows a predictable sequence falling demand consumers and businesses spend less money causing revenues across most industries to drop margin compression with lower revenue and often fixed overhead costs like rent or debt corporate profit shrink and lastly cost cutting measures to survive or protect profit margins businesses freeze hiring reduce hours and resort to layoffs yes that's that would all happen but the thing is we're talking about equity values

2:15:32dropping and we're talking about they're not really being a home for that value or that money so much is riding on these companies but you can't bail it out you can directly bail it open I don't think it happens you could pump these dogs full of money and keep them alive for a bit but at some point they're going to have to start they have between these two companies anthropic and open AI you have 1.1 trillion dollars of commitments just open AI Oracle is building 7.1 gigawatts of data centers so over 400 billion dollars worth just for open AI there is not a customer on Earth and Oracle's revenue has been flat last 15 years when you were just for inflation so that open AI Oracle dies so you think open AI is going to crash and run out of money and that's going to cause this dominant effect across these other big tech companies which is going to impact the stock market and impact the broader economy yes and also the tens of thousands of people that will be laid off from the tech sector but also the venture capital thing is significant because venture capital has been having one of the most historic bad runs in history since 2018 the average return

2:16:37from venture capital at total value put in so the amount of money you get back for your dollars between 0.8 1.21 meaning for every dollar you invest to get 80 cents to a dollar 20 paper gains well no that's just actual get like actual returns paper gains they'll give you but even an internal rate rate return which is a whole separate thing even that's not very happy but long story short very simple venture capital is not making money come out venture capital is not actually providing returns they're celebrating paper gains they're celebrating paper gains and they're raising off paper gains and paper gains I mean just being able to say oh look the valuation of anthropic why not so that's that's what Google and Amazon were doing Google's last quarter they boosted their net profits profits on paper by 99 billion dollars because of the increased value of their SpaceX holding in their anthropic holding and again the fact that this is happening is insane and the fact it's not a scandal is insane but we live in this culture I guess but everyone is really benefiting right now it's really that it's that great tweet it's like when you're a reaping it's like yeah fuck yeah this rocks sowing ah shit this sucks because right now

2:17:42they're all like yeah all the speculative gains are awesome the paper gains awesome the theoretical is an anthropic being worth two trillion dollars wow the articles we can write the promises we can make then when the rubber meets the road it's going to be pretty rough on them because my the valuation of Amazon Google Microsoft and Meta is based on this idea that they will grow eternally that they will grow forever if that changes to quote edelson from prof g markets again it's this they're all doing Botox right now they're sinking money into it to make themselves feel young again and the market believes them when the market doesn't we're not just talking about depression I'm talking about the market valuing them like airlines and saying yeah you're real big and you make money off your system products but guess what you don't have new shit you're just going to be doing this forever and we're going to value you as such so if it's Jenny and Dave should they do anything differently should they be conserving money if there's a recession or depression coming should they be a little bit more conservative should they yes I actually I actually think it's I don't know I don't have money in the market I think it's a casino casino pumped up by the media

2:18:44should they invest in the S&P 500 should they invest in open AI I'm sorry oh god no I honestly I live in cash right now I I I cash yeah I don't fucking trust the market man try and get some gains here I'm like I'm not comfortable giving financial sure advice but it's like if you that kids like your gambling okay be conservative things might get volatile yeah it really is it's going to be actors you will with volatility take the gains when you've got them don't sell everything but be suspicious of tech like that's actually the biggest thing it's like be suspicious of what they're promising if you're acting based on their promises don't trust the promises trust that they are going to say what will make the stock run rather than what's actually happening and that they will find every dodgy way to make you think something is happening rather than it's actually happening annualized run rate great example Microsoft said that they had $38 37 billion and for annualized run rate in AI you hear that you go I made $38 37 billion right wow that's so much

2:19:44run rate maybe month times 12 they don't even define it but it's built to manipulate and they do that because we don't have a functional SEC and we don't have a media environment that actually where skepticism is the priority and where protecting the readers is necessary what would they say they would say this technology is going to be so great and so transformative that we are investing a ton of money in advance of the value and utility showing up that's what they would say right and I've heard you're a battle but I just wanted to express that I think that's their sentiment I'm not defending them we're anything I'm trying to provide enough like balance to see if we can dance between these two perspectives and a lot of people would say that there's going to be a bloodbath because they can't all win big in the way that they're kind of describing so someone's going to have to lose and when one of these players starts to lose big I think it could as you say there could be some kind of domino effect or contraction yeah and I think the thing that people

2:20:44want to believe is they the dot com bubble things like it worked out afterwards because Amazon Oracle they didn't die after the dot com bubble they're actually fine isn't like that their bigger companies there have bigger promises and even I'm not like Oracle I actually think could die I RIP Larry well what couldn't happen to a nasty man they'll probably like these people do you no I actually why no I can ask this question purely because I want to answer not because I agree or disagree but why don't you like these these people I don't like being misled and I don't think regular people are being misled either and I really don't think that the average person can get away with bullshitting as much of these companies do and I don't think the average person gets anywhere near the level of affordance for failure and lying as these companies do and I think there is a real economic and human cost to allowing these companies to run rampant and promise the world and never really get called up on it the tepid nature of criticism these days is so frustrating they're all some really great critics out there though the really great people but it's

2:21:47like seeing these ultra rich ultra wealthy ultra powerful people life either fucking teeth or mistay whatever people want to call it turns my stomach and I hate seeing people being misled and I feel like I write it such linked because I really want people to see why I've come to the conclusion and I write them wrong I think I am of course they do but I also I just find it loads some I find these companies don't make good products anymore they don't care about the customers and and they treat their customers with contempt if people want to go read more about your work um you have a great sub stack ghost actually it looks exactly like I moved off of sub stack in 2024 oh okay and you also have a podcast you do yeah better offline um I'm gonna link both of them below so who wants to read more get more detail and follow it I think it's I would highly recommend it's it is fascinating and you know what one of the things people um sometimes struggle with when they listen to podcasts is you get lots of different opinions and weirdly I think they think of some people assume podcasts are gonna be like one person saying the same thing is the next person

2:22:52and the next person yeah that is just not the nature of information in the world and opinions and progress and discussion what what happens is people have different opinions and I think my job but also the listeners job is to try and pass through it and over time collect more of these reference points from different people and and do your own research yeah whether it's on your health or whether it's on something like this is to watch and do your own research and to learn and I would say also never believe one person never believe one particular perspective religiously you know collect a body of evidence and follow follow the evidence yourself but I love watching your youtube um because it provides a different opinion and that challenges me to think beyond my current opinion about what might be possible so what I've heard you talking about how this is an economic bubble and I've heard you talk about the capex spend or with these big sort of frontier AI labs it really did make me pause for a second and it really did make me consider that there could be a bit of for gazing going on here yeah and then it made me reflect on history and go you know

2:23:55through history there's always a bit of for gazing in these moments and oh that's an interesting take and what's gonna happen in 2027 2028 and there's a bit of a market pull back and so I highly recommend people go watch because you do you challenge me to think differently um yeah and we need some of those contrarian voices to uh to have honest discussions so thank you for doing what you do really appreciate it and I thank you to be a very compelling captivating communicator and I've I feel like I've learned a lot today so I appreciate that we have a closing tradition yeah whether last guest leaves a question for the next guest not knowing who they're leaving it for and the question left for you is given that high quality relationships are important for health longevity what should we be doing to improve our relationships and social connection so this is actually connected to the AI bubble so I am a critic and a skeptic what caught I have found the showing and appreciating and loving the people around you and uplifting them and and raising them up as you succeed is the way we do that your success should be everyone around you it's not economic it's talking about mathews for a while made me really happy

2:24:58this whole thing has been at times quite grueling and quite negative and quite brutal but the love I found and the joy I found from community and the people are because even in the in the small groups of haters even like Gary Marcus and so the people I talked to Edward and Greyso Jr. Molly White Brian Merchant there are so many people who have been loving and caring and I think within especially these very critical moments when you're like very much dialing in on how negative things are how bad things are finding the people who maybe find it repulsive to find the people finding your people who can be the people who will talk to you about it even like Troy and Jake my my trainers who suck side about this um even talk to them about the shit as normal people knowing that there are people there going through their struggles but also to just give you the perspective and also remind you that you were human to and focus I know this is kind of all over the place point but it's just it's really easy to get hard locked in everything in life and to kind of get away from why you do

2:25:59things and focus too much in the work when the most important thing at times is just to know there are other people feeling the way you do and when I hear from my listeners my readers a lot the most common thing I feel is they feel like they have a voice and they feel like someone is there for you yeah and I don't think it can be understood how much it means when you just reach out to someone you love and tell them you love them tell them their shit rocks say that their shit bangs tell everyone you when you like an artist or a writer's they were a podcast like this tell me fucking love it we don't do this enough and we need to do it more well that's a good closing message so if you do have you have enjoyed the conversation today with them please do let Ed know that you love it down below but please do leave your opinions down below and I shall read all of them Ed thank you so much I'll link to your website but also to your YouTube channel where people can learn more and I would highly recommend you do because it is truly fascinating and I think we need more voices that I demystifying a lot of the fagazzy and the narrative in this moment in time and you're certainly one of them I really enjoyed the conversation thank you