The AI wildfire is coming. it's going to be painful and healthy
ceodinner.substack.com
The AI wildfire is coming. it's going to be painful and healthy
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Re: The AI wildfire is coming. it's going to be painful and healthy
#2> Every promising engineer, designer, or operator is being courted by three, five, ten different AI startups, often chasing the same vertical, whether it’s coding copilots, novel datasets, customer service, legal tech, or marketing automation.
This is flat out wrong.
Re: The AI wildfire is coming. it's going to be painful and healthy
#3VC is inherently high risk capital. It's by design most companies will fail or at most break even via acquisitions/acquihires, while a small few make investors massive amounts of money.
The only real difference this time around is all of the datacenters being built. There's real hard asset costs making it much riskier and capital intensive.
Re: The AI wildfire is coming. it's going to be painful and healthy
#4> Businesses aren’t asking “do we want AI capabilities?” They’re asking “how much can we get, and how soon?”
This is only because businesses are full of folks with short-sighted FOMO desperately trying to cram AI features into any product they can. AI is the new digital clock.
Re: The AI wildfire is coming. it's going to be painful and healthy
#5> Every promising engineer, designer, or operator is being courted by three, five, ten different AI startups, often chasing the same vertical, whether it’s coding copilots, novel datasets, customer service, legal tech, or marketing automation. This is flat out wrong.
I've been approached by a few companies to train their models to basically replace me. Why would I want to do this?
Re: The AI wildfire is coming. it's going to be painful and healthy
#6The text reminded me of one of Veritasium's latest videos [1] about power law, self-organized criticality, percolation, etc... and it also has a wildfire simulation
Re: The AI wildfire is coming. it's going to be painful and healthy
#7Framing this as something cyclic as the rest of the world is static may be a mistake if things have deep changes outside (related or not with what is being done here), or the nature of the field radically changes.
Then the cycle is broken, and there might be no survivors, or the regrowth may be so far into the future that it will make no difference for most of the survivors.
Re: The AI wildfire is coming. it's going to be painful and healthy
#8> Every promising engineer, designer, or operator is being courted by three, five, ten different AI startups, often chasing the same vertical, whether it’s coding copilots, novel datasets, customer service, legal tech, or marketing automation. This is flat out wrong.
I still don't understand what should this "wildfire" burn. My perspective is very limited, but where are the pets.com of AI today? Where are all the small companies with improbable business cases that are getting absurd valuations/ investments because they're in AI? The space seems mostly dominated by huge players that, while burning tons of cash, are still making real progress on something that will have more economic impact than society can actually bear. Who should be wiped out by the wildfire? Anthropic?
Re: The AI wildfire is coming. it's going to be painful and healthy
#9> Businesses aren’t asking “do we want AI capabilities?” They’re asking “how much can we get, and how soon?” This is only because businesses are full of folks with short-sighted FOMO desperately trying to cram AI features into any product they can. AI is the new digital clock.
The problem with current AI is that it's super easy to get half-decent results by hooking up a simple agent to a lot of office software- and when it works it looks like pure magic; but getting reliably good results is way harder. So half assed agents abound (I know, I've added three or four to our apps in the last few months) but they can get frustrating for the users really quickly.
Re: The AI wildfire is coming. it's going to be painful and healthy
#10> training compute looks more like an operating expense with a short payback window than a durable capital asset
Today they are a durable asset functionally, longer than they are economically. So there is no reason in a market with less demand, that their economic payback windows cannot be extended further into their functional lifetimes.
There will be energy cost incentives to replace GPUs. But turnover can respond sensibly to demand as it revives, while older GPUs continue working.
Also, the data centers themselves, and especially any associated increase in power generation, will carry forward as long term functional value.
I doubt any downturn in compute demand lasts long. The underlying trend, aside from AI, was for steady increases in demand. Regardless of bad AI business models, or investment overhangs, a greater focus by more entities on AI product-market fits, along with cheaper compute, will quickly soak up cycles in new and better ways.
The wildflowers will grow fast.