- Well, welcome everybody. Again, thank you for hucking it
out on this Wednesday night. We're really excited to have you all. The energy in the
room is great. We're all here to talk about what is happening to us and seems to
be spinning wildly out of our control and what it is and how it's gonna affect us
and what we can possibly do about it.
Future-facing. I have two really, really
illustrious guests with me tonight, Cory and Ed. I did my research beforehand and
watched all of their other interviews with other people. I'm not going to do as good
of a job, so I'm really counting on them to shine. But for those of you who maybe
just showed up by accident, I would love for first Corey and then Ed to do a brief
introduction of themselves before we launch into this really incredible topic.
So Corey, why don't you go ahead.
- Hi, I'm Corey Doctorow. I have worked with the
Electronic Frontier Foundation, a digital rights group, for a quarter of a century
now. I've been an activist and a journalist and a writer. I'm a recovering
library worker and bookseller and a Clarion West instructor every now and
again, and I'm very pleased to be back here in Seattle to talk with you folks.
- All right, Seattle, let's open up this pit. I'm Ed Zitron. I'm the host of a
podcast called Better Offline about technology and the decay of society. I
also write a newsletter called Where's Your Ed At that I mostly started because I
was depressed. It's got 80,000 subscribers now somehow. But yeah, I write about tech,
decay of society, and had to learn a bunch of economics to do it, which was extremely
exhausting, but I enjoy it. Thank you for being here.
- Okay, so we're just gonna have
like a little bitty five minutes on the basics before we launch into the
complexities of the situation we're in. I'm gonna start with an anecdote, which is
one day I woke up and Google sucked. I don't know what happened, but one day I
was looking for a thing and I'm like, this is so much worse than I am used to. And
that tripped me into a world of, it sucks on purpose, here's why. And I would love
for Ed and Corey to tell me why Google sucks.
- Do you want to start by talking
about Prabhagar Raghavan?
- PrabhagarRaghavan. Love saying that mother(expletive)er's name.
So I don't know if any of you have read The Man Who Killed Google Search,
which was a piece that I wrote by accident. I found a bunch of notes from
the Department of Justice. Anyway, long story short, around the early part of
2020, there was a thing called a code yellow at Google, which just meant there
was I'm going to use some financial things, but there was query weakness in
Google, which means that not enough people were just asking Google things. Now, you
may think, well, Google ideally gets you an answer, right? No, no, no, you pleb.
How dare you? What do you mean? You get an answer? (expletive) you. You need to look at ads.
Sundar Pichai and all of his McKinsey friends need to do their seance or
whatever. Nevertheless, there was an internal argument at Google. There was a
guy called Ben Gomes who ran Search, who literally said, I'm worried that all
Google cares about is growth. Turns out he was right. Around June that year, a guy
called Prabhakar Raghavan took over. He was formerly the head of ads, and he
pushed Ben Gomes to change things, to make Google Search worse, to keep people on
Google Search. So the decay of Google search really started then. It was
actually a few years beforehand. They were slowly making it so it was harder to tell
sponsored links and ads from regular search results to the point it's pretty
much impossible now. And most of the results are pretty bad as well. But long
story short, Google deliberately made things worse. And then the guy who was
called Prabhakar Raghavan, remember that name? Asswipe. He mandated basically that,
I can't prove it, but it matches up, that he just reduced the quality of results.
They allowed websites that had been previously pushed down to come back,
spammy results, so that you ended up farting around on Google more, seeing more
impressions, and bing bong, number go up. Prabhakar, sadly, he sadly moved on. He's
alive. He is now the chief technologist at Google. I would say like 30% of my work
was the problem. The funny thing is that Prabhakar was riding high, taking a
massive, massive growth of Google. He was doing so well. And then he got made to
take over Gemini, Google's AI. And then there was a thing in, I think it was early
2024, where this, maybe it was 2025, where Google Gemini was generating Chinese
George Washingtons. And the conservatives were going, there's a black Nazi, there's
a Chinese George Washington. My tiny little brain is vibrating at a thousand
miles a minute. And for some reason, Prabhupada Raghavan had to take
responsibility. And this is not a charming man. This isn't a man who's like a
political navigator, he's just rude. He's very good at being rude. In the end,
sadly, Propaganda's work has been done. Google sucks now, and as Corey will tell
you in his excellent book and across his wonderful literature, this is a platform
problem across basically the entirety of the internet.
- There we go. I do have an
honorary PhD in computer science. So, Ed
has got this way of talking about the ideology that says let's make Google worse
in order to increase profits. And you have to understand, you know, when Google hit
this code yellow, they had a 90% market share in search. So, of course, query
growth had slowed, right? How do you increase query growth when you have a 90%
market share? You can raise a billion humans to maturity. and make them Google
customers. That's a product called Google Classroom, but it doesn't work quickly.
And so they needed something else to goose growth, and they came up with this idea,
let's make Google worse in order to make more money. And you see in these documents
that had surfaced this ferocious debate between technologists who want to do the
right thing in the form of Ben Gomes, and business people who want to do the wrong
thing in the form of Pragevar Raghavan. What's interesting about this is that,
although for many years you can imagine fights like this played out at Google,
where the side that wanted to make things better won out against the side that
wanted to make things worse, in this case you see this guy losing. And he's losing
because his argument consists of, if I made Google worse, I would feel bad about
my work and my life. And Prakabar Raghavan's argument is, if we make Google
worse, we'll make a lot more money.
- And there's one other thing as well, Jerry
Dishler, who's now the head of ads. One of his things was, look, I'm not saying that
revenue needs to control ads. However, we all have a shared reality. Basically what
he said, it's (expletive)ing insane. When you read these things, it's chilling and makes
you think of things you can't say in public.
- So you have to wonder, what is it
that created this environment? Ed calls the mindset that says, well, if you can,
you should worsen things to make money, the rot economy. And I think it's a very
apt phrase. And the question that I try to interrogate in Shittification is what gave
rise to it, right? What created the inshittasine? And my conclusion is it
wasn't because you shopped wrong, right? It's not because, oh, you didn't pay for
the product, so you became the product. You know, farmers who buy
half-million-dollar tractors are exploited by John Deere, which won't let their
repairs go live until they pay a $200 call-out fee. for a John Deere person to
come out and type an unlock code into the keyboard. Now that is not a free
ad-supported tractor, right? That's a tractor they paid, you know, six large for
and it won't work until they pay ransom money. So it's not because you shopped
wrong. It's also not because these guys are the wrong guys to be running the
company. They are terrible people. But the reality is that these Zuckermuskian
mediocrities that run these companies are not smart enough to be causes. They must
be effects, right? They're responding to an inshittogenic environment created by
policy. And that policy, in the case of Google, is the policy that oversaw for
decades Google's serial acquisition of both vertical and horizontal competitors,
so that a company that had only made one really successful consumer-facing product,
which they made a millennium ago, their search engine, and that had almost, with
that exception, failed to launch anything internally, except for things they bought
from other people, Anti-competitive acquisitions to the point where they
bought all the shelf space right nowhere else a search engine could take root
They're bribing Apple to the tune of more than 20 billion dollars a year Not to
enter the search market and have a direct competitor that would erode their margins
so they become too big to care and this is really my thesis right that it's it's as
much as Ed is right to be angry at Pepper Gow Raghavan. There are people alive today
and not so recently dead who presided over shifts in our policy environment where
they were warned at the time that the decisions that they were contemplating
would have the absolutely foreseeable effect of rewarding firms that did bad
things to us, who took those decisions anyway. And today are like hanging around,
polishing their fake Nobel Prizes in economics and collecting six-figure
consulting fees working for blue chips and not being held responsible at all, much
less worrying that when they go out abroad amongst us that someone might be sizing
them up for a pitchfork. And so that's the thing that I want to recover in this book.
- I'm going to jump in here. - Oh, my bad.
- That's OK. So this is Seattle. And
collectively, as Seattleites, we tend to have certain feelings about capitalism. Would you say, either of you, that this
phenomenon, this rot economy, is just an
inescapable fact of capitalism, or is there real policy change? Is there some
other way we could do this, that we could eschew this rot economy and actually still
have functioning capitalism in some way, and the things that we want, and improved lives?
- So, a lot of people talk about going back in time and killing baby
Hitler. Sure, fine. I also think baby Reagan should be on the table. Same goes
for that (expletive)head Milton Friedman.
Finally, an audience with class. Because, whatever, however you feel about
capitalism, the whole growth-focused capitalism started with Milton Friedman
and the free market nonsense. I'm not gonna spend as many angry hours as I need
to to get that out of my system. The flaws of capitalism are obvious, but the real
ones, you remove the regulation, once you allowed Reagan and his various judges to
pull away regulation and just effectively stop doing antitrust. When Lena Karn, who
was good, was remarkable because she tried. That was the real, like Lena Karn
is excellent, I've had her on the show, I'm gonna have her back, she's fantastic,
but it's like, she was particularly remarkable because she was like, actually
knew what she was talking about. I know, I was surprised. And also was like, what
would stop these companies from doing things? What would be the incentives? The
incentives were created over the course of decades. Yes, capitalism is at its root
doing what capitalism will do, but by allowing it to be unrestrained and
allowing the markets to become growth drunk, because that's all the markets,
that is the center of the rot economy, that everything is growth. Every single
thing is driven by growth. Nothing to the point that the AI economy isn't even,
there's like $60 billion of real revenue. It's not about even whether the product
creates money anymore. It's just number go up forever. It sounds simple, but it is at
the root of everything.
- Yeah, I mean, I think Ed makes a really good point here.
And look, I'm not someone who believes that markets are the best or only arbiter
of how we allocate resources. I think that there are other ways that we can do
things. But even if you are the kind of Elon Musk adult libertarian who can't open
your copy of Atlas Shrugged anymore because the pages are all stuck together.
And you think that the only thing that our government should ever do is enforce
contracts? You still want them to enforce contracts, right? And for the referee to
referee the game adequately, they have to be more powerful than the players on the
field. So I tell my libertarian friends, look, the smallest government you can have
is determined by the largest corporation you're willing to tolerate. And the
decision, which was taken in the late 1970s, first under Carter and then
accelerating under Reagan and through the rest of it, and really co-terminal with
the tech industry. So remember, Ronald Reagan went on the campaign trail the year
the Apple II Plus went on sale. The tech industry grew up, and as it got bigger,
antitrust got smaller. It's really the first post-antitrust industry, which is
why it looks the way it does. And when we decided that we would no longer enforce
anti-monopoly law, we really did set in motion these very foreseeable outcomes.
And you know, the people responsible for it, they insist that their pro-monopoly
posture, which boiled down to this, that monopolies are efficient. That when you
observe a monopoly in the wild, what you must be seeing is a company that is very
pleasing to people. Because if a company isn't pleasing to people, then other
people will enter the market and take away your monopoly. And so any monopoly that
you find, tautologically, by circular reasoning, must be a good company. And so
if Apple is controlling all of the app market, if Google is controlling 90% of
the search market, what you're observing is a firm that is so pleasing that
everyone is voluntarily using them. And if they weren't, then they would be
out-competed. And so they said, well, let's tolerate monopolies as efficient.
Let's not engage in this perverse labor of punishing companies for pleasing the
people who've elected us to represent them. Let us celebrate these new
efficiencies. And you do that for 40 years and suddenly every sector becomes a
cartel. We have this in glass bottles, vitamin C, eyeglasses, intermodal
shipping, rail, the internet. As Tom Eastman says, it's five giant websites
filled with screenshots of text from the other four. We have it in semiconductors.
We have it in professional wrestling. We have it in plastic bags filled with
sterile saline. And one company controls not just the hospital beds, but also the
coffins. Think about that for a minute. So this rampant monopolization did ultimately
give rise to this world where firms didn't have to worry about being disciplined by
markets, but it also meant they didn't have to worry about being disciplined by
governments. Because when you boil a sector down to just a handful of firms, It's very easy for them to decide what line of bull(expletive) they're going to feed to
their regulators. And because they are so a slosh in money, because they don't
compete head to head. For Google, $20 billion a year to Apple not to enter the
search market is a bargain, because the erosion of both of their margins, if they
were competing head to head in these markets that they've actually divided up
amongst themselves, like the Pope dividing up the New World, would cost them both far
more than $20 billion. They'd have to hire each other's employees. and pay them more,
they'd have to offer us cheaper things, they'd have to be better to advertisers,
they'd have to be better to publishers, and that would erode their margins. And so
you end up with this moment where they have all of this money, they find it very
easy to come to a single position, and their regulators do as they're told. And
so we end up with both regulatory capture and market capture arising out of this
same set of policy choices. And so two of the most important forces that we count on to punish companies that do bad things, to ensure that when Pragebar Raghavan and Les
Gomes are fighting, that Les Gomes can say more than, this would make me feel bad
about my life's work. He can say, and we're going to have our lunches eaten by
someone smarter than us, or we're going to get smacked around by a regulator that at
that moment he's going to lose that argument. And so this is how you end up
with the devil of your worst nature on your left shoulder whispering in your ear
and winning the argument over the angel of your better nature on your right shoulder
telling you to do the right thing.
- So on that note, our regulators are not really
regulating right now in general. And for
us, the average person, this is all really over our heads power-wise. We as
individuals don't really have power to do anything about getting Google to behave.
But what do we do in our personal lives when we're affected by this? I work in
video games, I'm working on cyberpunk too. And I feel the effects of the rot economy
and shitification on my job every day. It's very, very, very stressful. I was
talking to a woman earlier, her name's Carolyn, hi Carolyn, about AI's effect on
higher ed. So for us, for the people in this room, Do you have any ideas or
guidance for how do we live our lives now? What do we do?
- So we live in a high
information, low processing environment. The reason that regulators don't do much
is not only because they're incentivized not to, but also they don't know (expletive) about (expletive).
In fact, when you go around reading a ton of media, when you read a
bunch of regulatory stuff, when you read what the government says about things,
they don't know what they're talking about. I don't even mean slightly, I mean
that the markets have been running away with this idea that generative AI is the
future. The media has been reporting that generative AI is replacing jobs. Neither
of these are true. They're not true. There are some jobs being eroded by LLMs, but
it's jobs like translators that were already being eroded by machine
translation. I forget the exact terms. And art directors. So real jobs, but contract
labor. And also bosses that wouldn't pay real people anyway. The world itself is
run on ignorance. Not just social ignorance, but just straight up factual
ignorance about what AI can do. And the reason I pick AI is because this is where
you can actually be disruptive. You hear a (expletive)ing data center popping up, go to the
town hall meeting. Make your mayor upset. I'm deadly serious. I saw one brave soul
at a Wisconsin data center meeting. He quoted my work, love him. Going to these
places and actually, not making a scene, just going in and saying, hey, there's
only $60 billion worth of revenue in this industry. There's no growth outside of
chat GPT. Like these companies, OpenAI burned $9.2 billion in the first half of
this year. That's (expletive)ing crazy. That's a completely crazy thing. There's no path to
profitability for these things on top of there not being that much demand. I'm not
just quoting things in my newsletter at you. This is the (expletive) that you should be
saying to your elected officials and show up at town hall meetings. They hate it.
They do not want to see you, but they have to. So you show up and you tell them these
very simple things. And they'll say, what I read in the newspaper. Shut the (expletive) up,
Mayor. I don't want to hear from you, Mayor Stanley. I don't know. Or Bowser, I
guess. But nevertheless, showing up and actually just saying the very basic things
and sticking to your points will do a lot. I know it sounds small, but really, that's
where you get things done. Because these data centers are probably not getting
built anyway. But if you can undermine them, then they're really not getting built.
- You know, when the early reviews started to come out for Insidification,
there was a kind of common theme that emerged from some of these reviews. It
was, I found this book very exciting and interesting. It gave me a way to attach a
handle to something that had been kind of big and diffuse and frustrating to me that
I couldn't make sense of. And now that I've got this handle on it, I feel like I
can do something with it. And I read all of these you know, suggestions for how we
can make policy at the end and what that would do in order to forestall or roll
back in shitification and make a better world. But there wasn't anything I could
do personally in my life as a consumer. And, you know, they're right. They're
right. I don't think your personal consumption choices really play a role in
changing our systemic problems. Now, by all means, like, If there's like a
business you want to support, go to Third Place Books instead of Amazon in order to
get your books because it'll make their lives better and you'll have a bookstore
in your community. But don't kid yourself that it's going to fix the structural
problem of Amazon. The structural problem of Amazon is that regulators allow them to
buy all of their competitors. such that they were able to corner markets and then
they were able to lock people in. Am I too quiet? Is that the issue? All right. And
then they were able to lock people into their platform through getting them to pay
in advance by a year for their shipping with Prime, such that merchants found that
they couldn't sell anywhere else. And then they were able to lard onto those
merchants 45 to 51% junk fees on every dollar they brought in. And then they were
able to hit them with this most favored nation deal that says that if you raise
your prices on Amazon to recover some of those 45 to 51 percent junk fees you have
to raise your prices everywhere else at Target and Walmart mom-and-pop stores in
your own warehouse store so that Amazon started to impose a worldwide tax on all
consumption, right? And that's not a thing you solve by changing your own consumption
habits. You know, by all means, if you feel that Twitter is bad for your mental
health, and it probably is, and you want to go to Blue Sky, you want to go to
Mastodon, sure, but just don't fetishize that as the thing that's going to make a
systemic difference, right? The thing that makes a systemic difference is intervening
not as an individual, but as a polity. So, as I've mentioned before, I work at the
Electronic Frontier Foundation. We have a national network of grassroots groups,
including several here in Seattle, called the Electronic Frontier Alliance. If you
go to efa.eff.org, you can find some of these local chapters, and they work on
things like limiting police use of facial recognition, It's getting involved as a
buying surveillance technology,
privacy for abortion seekers, limitation on the use of digital infrastructure
to track down people that ICE is chasing,
right to repair laws, Washington has got a really good one.
All of those things start at these grass roots levels
and it's getting involved as a
polity that makes a difference. I know it's easy to despair if you think you
can't solve things individually through your own consumption choices. We've been
told this for 40 years, that you have to vote with your wallet. The reason rich
people want you to vote with your wallet is they have thicker wallets than you. You
are always going to lose that election. Don't vote with your wallet. Be a citizen.
Someone in the reception before this ask me about what advice I would give to tech
workers. Statistically, a bunch of you are probably tech workers. The tech workers
did have this chance to consolidate their power, and they missed it. For a long
time, one of the forces that constrained was workers themselves. Because tech
workers are this uniquely constituted workforce historically. The tech sector
has always had very low union density, but an enormous amount of worker power. And
that's because tech workers were both very scarce and very, very valuable. The
National Bureau of Economic Research estimates that the average tech worker in
Silicon Valley and Seattle was adding a million dollars a year to their employer's
bottom line. That's why they gave you free kombucha and massages and why they'd hire
a surgeon to freeze your eggs so you could work through your fertile years. It wasn't
because they loved you. It was because they were afraid of you getting a job
across the street. Now, we know how tech bosses treat the workers. They're not
afraid of losing. That's the Amazon driver who's got the AI camera that takes points
off if they look away from the road to check something to one side or the other
and it decides that their eyeballs were in the wrong orientation. It's the warehouse
workers that are injured at three times the rate of other warehouse workers in the
sector. It's everyone who pees in a bottle. It's people who assemble iPhones
in China and have suicide nets around the factory. That's how they treat the workers
they're not afraid of. So there was this opportunity at one point for tech workers
to use that power and consolidate it through a union. And they missed it,
right? Because tech workers thought that they were temporarily embarrassed
founders. They didn't think that they were workers. And they thought that because
their bosses would meet them in monthly town hall meetings where they could ask
impertinent questions about corporate strategy, that their bosses thought that
they were peers. But your boss didn't think you were a peer, your boss thought
you were a problem to solve. And after half a million layoffs in the tech sector,
they're not afraid of you anymore. There's other workers who will take your job. You
can no longer say, I refuse to insidify that thing I missed my mother's funeral to
ship, and you can't hire someone else to replace me, because they'll just fire you
and hire someone else to replace you. And so now is the time to unionize. And it can, yes.
- Also, if you have anything
pertaining to the revenues or spend of Anthropic or OpenAI, you could email me
that information. And I could add (expletive), (expletive) and (expletive) between the numbers. They
love it in the podcast.
- And so, you know, it might feel like a bad time to be
unionizing because we no longer have the National Labor Relations Board as it was
constituted under Biden. In fact, it's been so illegally denuded of commissioners
that it can no longer form a quorum and investigate unfair labor practices. So it
can feel like this is a bad time. But here's the category error Trump is making.
Trump thinks that the reason we have unions is because we have the National
Labor Relations Act. It's backwards, right? Long before unions were legal, we
had unions, right? And the union piece represented by the National Labor
Relations Act was brought about because bosses were scared of what their workers
were doing to them at that point, because militancy had gotten so intense that they
sued for peace. And that peace came in two parts. Part of the National Labor
Relations Act describes what your boss can't do to you, but a lot of the National
Labor Relations Act is about what you can't do to your boss. And one guess which
half of the National Labor Relations Act has been most vigorously enforced. So
Trump thinks that we fired the referee and so that means all the players have to
leave the field. He's wrong. When you fire the referee, it means there's no more
rules, right? And there's a reason that fascists attack unions first. It's because
the opposite of fascism is solidarity.
- Yes, excellent answers all around. And just to summarize, what I heard was don't
vote with your wallet, unionize. So take that out the door. And efa.eff.org. Plug
it. Okay, my next question for you is one that a lot of people have been thinking
about, which is the bubble. The bubble is coming. We've all heard about the bubble.
Is the bubble real? This is Ed's department. What is going to happen? If we
are tiny investors that have our 401K and index funds, what the (expletive) do we do?
- Buy long poles to dig through rubble with canned goods.
- Let's try again. Ed?
- Go back in time, but if you can't, know that gravity exists. Right now, the market is
going absolutely bat (expletive) insane. I'm not a stock analyst. I cannot give you financial
advice, but right now, number going up. So maybe you could... I don't own stocks. I'm
a psychopath. I live in cash. I invest in words. The problem we have right now is
that NVIDIA is the largest stock on the stock market. There has never been a more
problematic fact than that. 88% or more of their revenue is selling these (expletive)ing
GPUs. You wanna know what happens when you plug those GPUs in? They start losing you
money. Nobody, not a single company, other than NVIDIA, is making any kind of profit
on AI. In fact, they're burning billions. The reason I tell you this is you can't
really navigate away from the bubble right now other than just selling, I imagine. So
know what you're going into. Everything you're reading Oracle say right now about
their relationship with OpenAI is bull(expletive). And to get specific is Oracle
has a five year long $300 billion contract with OpenAI. Sounds amazing, right? They
just need four and a half gigawatts of data center capacity. Any guesses how much
they have? 200 megawatts. Now, don't worry... That's less than 400 gigawatts,
right? That's a lot less. That's a lot less. And I must be clear, I actually mean
power. IT load, they've got about $1.30. So, not to worry though, because OpenAI
also doesn't have the money. Nevertheless, the stock is run. AMD now has a deal where
they're going to sell chips to OpenAI. Who the (expletive) knows who's paying? NVIDIA, same
deal. Whenever you see OpenAI involved, just don't. Just don't do it. There is no
avoiding a bubble popping now. There just isn't. So the smartest thing you can do is
stick to the fundamentals. We're going to get into the more hysterical phase now.
We're going to see some crazy (expletive). I had someone suggest the other day that OpenAI
may do a SPAC IPO. I think it's insane, which is why it's possible. Do not let
your money touch OpenAI under any circumstance. That company is cancer. I'd
say the same thing about Anthropic. But just be aware that right now the stock
market and all of the associated media is gonna tell you, oh there's a bubble, I've
read many places, oh there's, bubbles can be good. They can never be good, that's,
we don't call them bubbles, I see it in multiple headlines, we're like, yeah but
this is a good bubble. Yeah, you know, I've got the good kind of cancer. I got
the good kind of diarrhea. Anyway, the point is, knowledge is power here, and
you're going to look at the media, and the media's going to say, AI, number go up,
everything great. Broadcom's going to ship $10 billion of chip, 10 gigawatts of chips
to open AI by the end of 2029. Cost $50 billion in two and a half years to make a
gigawatt of data center capacity. Everyone is going to feel like they're saying that
this is inevitable. Know that it's not. I realize I can't give you much better
advice than that, but just know that gravity exists. This cannot succeed. On
top of the fact that everyone's unprofitable, it's not actually that
popular either. Chad GPT is very popular because a lot of people love being driven
insane or trying to (expletive) it, I think. And terrible subscribers. For me, that's what
my friends... Sorry, Caleb. But it's
frustrating as well, because I'm sure all of you have felt the poison of generative
AI within your workplace, and these people will tell you that you must learn... AI is
coming, you must learn to use AI. The reason it's not able to do your jobs is
it's (expletive). Like, I realize that all of this sounds maybe very elementary to you,
sounds like most of you get it. You're gonna keep reading that it's not the case,
that it's replacing coders. It isn't. That is a (expletive)ing lie. Everyone's saying it.
Sundar Pichai, Sachin Adela, Andy (expletive)ing Jassy. These chunder(expletive)s love to say this
stuff. It's not true. So really, the advice I can give you is, this is going to
pop. It's going to happen. And act accordingly.
- So let me advance a theory of
the less bad and more bad bubble, if not a good bubble. That would be nice. So some
- That would be nice.
- So some bubbles have productive residues and some don't, right? So Enron left nothing
behind, right? Now WorldCom, which was a grotesque fraud, some of you will
remember, right? They raised billions of dollars claiming that they had orders for
fiber. They dug up the streets all over the world. They put fiber in the ground.
They didn't have the orders for the fiber. They stole billions of dollars from
everyday investors, people who just wanted to go through their old age without
starving to death or not having a roof over their head. The CEO died in prison
and it was good riddance, but there was still all that fiber in the ground, right?
So I've got two gigabit symmetrical fiber at home in Burbank because AT&T bought
some old dark fiber from WorldCom because fiber lasts forever, right? It's just
glass. So, once it's there, it is a productive residue, right? So, what kind
of bubbles are we living through? Well, crypto is not going to leave behind
anything. Crypto is going to leave behind (expletive)ty Austrian economics and worse JPEGs,
right? AI is actually going to leave behind some stuff. So if you want to think
about like a post-AI bubble world, and I just got edits from my editor. I wrote a
book over the summer called The Reverse Centaur's Guide to Life After AI. And if
you want to think about a post-AI world, Imagine what you would do if GPUs were 10
cents on the dollar, if there were a lot of skilled applied statisticians looking
for work, and if you had a bunch of open source models that had barely been
optimized and had a lot of room at the bottom.
- I've got to push back on this.
These AI GPUs are mostly owned by private equity firms and big tech. The
majority of the GPUs are not owned by people who will let them enter the market.
And there are really not a ton of, like, if the idea is that GPUs, someone will
work something out. Sure, but you don't think all the King's horses and all the
King's men would have come up with something else? Because that's the thing.
The thing that I worry about, the thing that terrifies me about this bubble is,
this is not useful infrastructure at all. Everyone loves to say, oh, it's just like
the dot-com bubble. It's nothing like that. It's not even like the, at least the
fiber was somewhat useful. These GPUs, the amount of power alone, and one of the
reasons that OpenAI and Anthropic have been able to have their monopolies is
because they have the capital, and no one's going to have the capital to run
these things. I mean, they'll be selling A100s, they'll be paying you 50 cents an
hour. It's just what terrifies me is the, and I'm not saying you're doing this, that
there are people already trying to rationalize this and say, well, and you
were the one that actually told me the stories of the .com boom where there were
useful server space because it was before AWS. Right. I don't see that usefulness here.
- So, I take your point. I think that there's going to be a lot of firms in
receivership, right? I don't think that private equity bosses' preferences are
going to enter into it. I think that there's going to be a lot of firms in
receivership, and I do think that when you contemplate intersection of optimization
of existing open-source models, you know, think about what happened when DeepSeek
entered the market, right? You've got Chinese firms that are prohibited from
using the more advanced GPUs, so rather than doing this sort of display of how
serious they are about AI by spending as much money as they can, they went and they
said, okay, well, what can we juice out of, you know, previous generations of
GPUs? And then they got some pretty impressive results.
- Yeah, but what result?
Like, I'm... So they made it cheaper, sure, but what actually happened as a
result of DeepSeek? Other than everyone, all of Silicon Valley went, didn't happen.
Sure. They can't do it cheaper. They're Chinese.
- So my point is not about the
market realities, the material reality. So I'm talking about what happens after the
market pops, right? So, you know, I have seen people do interesting and useful
things with AI. I think you've probably seen people do some useful and
interesting. I'll give you an example. I was writing an essay. And I couldn't
remember where I'd heard a quote I'd heard in a podcast. I couldn't remember which
quote it was. So I downloaded Whisper, which is an open source model from OpenAI,
to my laptop, which doesn't have a GPU, right? A little commodity laptop. Through
30 hours of podcasts that I'd recently listened to, I got a full transcription in
an hour. My fan didn't even turn on. That's awesome. Yeah, so I know tons of
people who use this, and the title of the book, Reverse Centaur, refers to this idea
from automation theory, where a centaur is someone who gets to use machines to assist
them, a human head on a machine body, right? And so, you know, you're riding a
bicycle, you're using a compiler.
- I thought it was a horse with human legs.
- Yes, and a reverse centaur is, that's right, a machine head on a human body,
right? It's someone who's been conscripted to be a peripheral for a machine, right?
And when I, you know, I should say, you talked about good cancer, I have the least
bad kind of cancer. I've got a very treatable form of cancer, but I'm paying a
lot of attention to stories about cancer and, you know, open source models or AI
models that can sometimes see solid mass tumors that radiologists miss. And if what
we said was, we at the Kaiser Oncology Department are going to invest in a
service that is going to sometimes ask our radiologists to take a second look to see
if they missed something, such that instead of doing 100 x-rays a day, they're
going to do 98. Then I would say, as someone with cancer, that sounds
interesting to me. I don't think anyone is pitching any oncology ward in the world on
that. I think the pitch is, fire 90% of your oncologists, fire 90% of your
radiologists, have the remainder babysit AI, Have them be the accountability sinks
and moral crumple zones for a machine that is processing this stuff at a speed that
no human could possibly account for. Have them put their name at the bottom of it
and have them absorb the blame for your cost-cutting measures. And so, you know,
when I hear people talk about AI, right, I hear programmers talk about AI doing
things that are useful. Like one that I've heard many programmers say is, I had one
data file. in a weird format that for one, as a one-off, I needed to get into a
different format, and I had ways that I could check it and tell what was going on.
And so I asked, I one-shotted it with an AI, I did some checksums, and it was
great, and it saved me an hour. That's a centaur, right?
- Sure, but here's the
thing. How many of those anecdotes actually exist at any given time, and how
many of them are, the DGX books that NVIDIA's launched, like I could see a
future where large language models are run locally, sure. Also, I question how much
of the cancer-related stuff would actually be generative, but that's a separate
discussion. Because one of the things these people do is they conflate AI, which
has been around for a while, with generative. And my concern is that, I
don't know, a lot of the anecdotal one-shot stuff, Carl Brown, Internet of
Bugs, if any of you have ever seen it, fantastic YouTube channel, you should look
him up, he's (expletive)ing brilliant. He said it makes the easy things easier and the
harder things harder. If we could have that as client-side, awesome, but I don't
really think any of this GPU infrastructure, even in receivership, you
can already get discount A100s, H100s, H200s, can't wait for the discount
Blackwells, pieces of (expletive).
- OK. I'm going to
put my fingers between the tigers here.
- I really want to squeeze out one more
example here. It's a really good one because it's about a non-profit people
should be supporting as well. There's a non-profit called the Human Rights Data
Analysis Group, HRDAG.org. It's run by some really brilliant mathematicians,
statisticians. They started off doing statistical extrapolations of war crimes
for human rights tribunals, mostly in The Hague. and talking about the aspects of
war crimes that were not visible but could be statistically inferred from adjacent
data. They did a project with Innocence Project New Orleans, where they used LLMs
to identify the linguistic correlates of arrest reports that produced exonerations,
and they used that to analyze a lot more arrest reports than they could otherwise,
and they put that at the top of a funnel where lawyers and paralegals were able to
accelerate their exoneration work. That's a new thing on this earth, right? It's
very cool. And I'm like, okay, well, if these guys can accelerate that work with
cheap hardware that today is out of reach, if they can figure out how to use open
source models but make them more efficient because you've got all these skilled
applied statisticians who are no longer caught up in the bubble, then I think we
could see some useful things after the bubble. That's my argument for this is
fiber in the ground and not (expletive)ty monkey JPEGs.
- Thank you both. We got there. So
what I think I heard was we feel like the GPU infrastructure is just kind of (expletive)ed.
That's not going to be useful afterwards. But also, the actual technology itself
could possibly be useful in a number of use cases that could be socially just.
- If workers get to decide how they use their tools, they generally will be able to make
some good decisions about it. And new tools for workers who are skilled and get
to decide how they use them, that's great. You know, look, I met a video editor who
changed the eye lines of 200 extras in a crowd scene, right, using a deep fake. And
he was like, yeah, I was sitting over with the director. We thought, wouldn't this
scene be really interesting if they were all looking that way instead of this way?
And they were able to do it. And I'm like, okay, that's a new tool on this earth.
- Was that generative? -Yeah, it's a deepfake,right? They just move the eyeballs.
- Yeah but the deepfake is that generative AI. Because this is a really important point.
- Well, they made new pixels where pixels didn't exist before by making an inference, right?
- Right, but that doesn't mean it's a transform of AI.
The reason I say this is not because you're wrong about that. That example's
great. It's just, these pigs have got rich conflating the useful with the useless.
- Okay. Okay. All right. - Gourmet is also ripe with that.
- Thank you, sirs. I do have
one small anecdote to add myself. Yes, I am of value. I work in the video games
industry. Of course you are. I work in the narrative department, which means I write
a lot of dialogue. And in my pipelines, we have found a use for generative AI that
doesn't steal anybody's work. and makes us work about 15% faster. So what we've done
is we got permission from our SAG actors to train our personal closed generative
model on their voices, plug that into what we call RoboVoice, so our lines that do
speech-to-text instead of the horrible Amazon Polly monstrosity that's like,
hello, my name is robot. And what we're able to do is hear the lines and iterate
on them faster so that we're done by the time we actually get to record with the
SAG actors at their SAG fees and nobody has lost any work. So I think my point is,
generative AI absolutely does have some uses. Is it worth burning down the planet?
I can't answer that for you. It's a Wednesday. But there's baby and there's
bathwater, and I think it behooves us all to continue to have the discussion, to not
100% close the door. And on that note, we are going to switch to answering questions
from the audience, and I have one picked out already. Since we're all adults here,
I thought I would start with a spicy one, which is, Wouldn't slowing AI development
in the United States just allow China to dominate all of us?
- Oh, good. Oh, good. - Take it away Ed.
- So, I love hearing (expletive) that was said about the Soviet Union said
again. Oh no, what if we don't have chat GPT like China? Oh no, what will we ever
do if we don't have a chat, but we can (expletive) like China? It's nonsense. The reason
that China is pulling ahead of America in any way is because they have a massive
renewables initiative and also terrible working conditions. But putting all that
aside, that whole thing is built on an inherently xenophobic idea and also just
nonsense, which is that America does not have the resources to get this. Nowhere
ever has anywhere near this much money been shoved into one thing forever for
years. Not the dot-com boom, not the Post-Telecommunications Act, which Corey
probably knows way better than I do, but the other thing is $400 billion put into
that nonsense. Nobody has ever had more chances and more money to do anything. Using China as a convenient excuse to spunk money every month is a (expletive)ing
stupid idea, but also, to develop what? Look at the last releases from OpenAI.
Atlas, oh wow, a (expletive)ing web browser. Great, I've never used one of those. Oh,
it can read the webpage and then (expletive) up and not buy a thing, wow. I can just take
five edibles if I want to not use Amazon properly. But in all seriousness, there is
no development to be made that is not being made in America. (expletive) tons of
talent. Tons of it Chinese, by the way. Tons of Chinese engineers, as you all
know. Like, it's a very common thing. There is no development that's being
missed. There's no, what are we gonna, oh no, we can't hand anthropic $5 billion a
year to destroy it for no real reason. There's no, it's not a cogent argument
because Look at what China seems to be doing about the same thing as America is
with large language models is way less. That says more about large language models
than anything.
- So there's a long history of saying that we should subsidize and
protect large American firms to defend America against foreign firms. So, for
many, many years, the argument against breaking up AT&T was that they were our
national champion and that they were keeping us safe from foreign aggressors.
In the mid-1950s, AT&T was almost broken up. The DoD intervened to say that if we
lost AT&T, if it wasn't intact, America might lose the Korean War. So AT&T won the
Korean War because they got another 30 years, right? The only people arguably who
won the Korean War were AT&T, including both sides of the Korean War. So when the
80s rolled around, Right? There was this law in the 70s and the 80s rolled around,
and we were once again thinking about breaking up AT&T. There was this long
argument about how there was this belligerent foreign power in the Pacific
Rim that they weren't original. They stole our IP and cloned our technology, and they
would destroy our high-tech industries if we did not have a giant company to defend
us against them. That country was Japan. Right? Now, it turns out that the major
project of AT&T was not defending America from Japan, it was preventing Americans
from getting modems. Because AT&T really did not want you and anyone else in
America to be able to provide a service to one another without them being able to
veto it or charge rent on it. If you think about the rollout of caller ID, $6.99 per
month when it rolled out. This was what it cost you to find out who was calling you
before you picked up the phone. You can't do that once people have modems. There is
no caller ID for email. If your email provider says, until you click the message
in the list pane, you don't get to find out who the from address is, you would
just change email providers. So by controlling the network, by centralizing
the network, they were able to just basically kneel on the throat of the
American tech industry. And so it is always the case that when we defend
monopolists in order to prevent foreign firms from destroying our high-tech
sectors, what we're actually doing is we are defending the firms that are
structuring and controlling the market domestically for our own innovation. So
these very large firms that are doing AI now, AI is only like one of the things
they do. Obviously we have Anthropic and OpenAI, but Microsoft, Google, Apple,
Oracle, these are firms that are effectively market structures. They get to
decide what products exist and what products don't exist, how much they're
gonna cost, and who can see them and who can use them. And when we defend them in
the name of preventing China from pulling ahead in AI, what we're effectively doing
is we're saying that we should maintain this shadow FTC that has more power than
the FTC ever managed to exercise, but that never exercised it in the interest of the
American public, but only in the interest of their shareholders. Thank you.
- All right, we have about five minutes left and I run a tight ship, so this is the last
question. So the question is, I have a high school senior who is technically
minded. Ten years ago, I would have told her to get a CS degree and go into tech.
What should you tell someone to study now?
- Finance. - That's interesting.
- I want to tell you a little story. So I taught
myself economics in this past year and a half. I'm a (expletive)ing idiot. I just want to
be really clear. I don't consider myself particularly smart. However you feel is up
to you. Point is, the world right now, the media, tons of analysts, tons of tech
founders don't know (expletive) from (expletive). Those are technical terms. In all seriousness,
finance is not as difficult or complex as it sounds. And indeed, the world runs on
money. But also, these corporate structures are run fairly simply, but they
dress them up in these confusing and annoying terms that actually, when you
break them down, are pretty simple. There are people to blame. They've got houses.
They're very flammable. But in all seriousness, these people, they're
empowered through ignorance. They're not powered through ability, intelligence, or
even making good products. They are powerful because we have, and I'm not
trying to sound paranoid, this is just the truth, media that in many cases does not
understand the things they're writing about or indeed have the capability of
reading an earnings statement. This stuff seems very scary. You may say, I'm not a
numbers person. I couldn't possibly. You are a numbers person. It's not that. It
really isn't. If I can do it. I failed mathematics years and years in a row. It
really is fairly straightforward. They literally format things to make them
boring. They word them to make them seem confusing. You can pick apart corporate
structure. Any one of you can do it. That is where anyone can have an effect. I
think a high schooler could do it. You want to change the world, you pull away
their power. You take away their ability to obfuscate their wealth and the way they
accumulate power by learning how these things work. I've written a lot about it.
I had to, everything you read, it's so long because I'm learning as I go. It's
10,000 words because I'm teaching myself, like, what the (expletive) is this? Anyone can do
this. You want to teach a young person anything? Honestly, teach them who the
(expletive) Milton Friedman was. Teach them how the world got the way it got, but also...
Learn about how companies are structured. It is not that complex. And the reason
that you get knocked off course is because the powerful people go, no, it's not that
simple. It's actually very mystical. Sam Altman is not just a con artist. He's not
just a guy that's really good at convincing rich people to give him money.
He has secret brilliance. No, he doesn't. None of these people do. They're McKinsey
eggplants. Like, these (expletive)ing people. Long story short, learn finance,
seriously, and you don't have to go to school.
- It's good advice. There's this
idea from the finance sector, this acronym MEGO, My Eyes Glaze Over. It's when you
large so much complexity in a prospectus that no one can get through it and they
assume that a pile of (expletive) that big has to have a pony underneath it. I have
different advice, though. So my daughter started college this year, and she wasn't
sure what to do. We had a lot of talks about what to do. She didn't take my
advice, but I'll tell you what I told her, which is that if you don't know what you
want to do at university, don't go to university. Go to college and become an
electrician. Absolutely, there is so much work for electricians and we are going to
be solarizing for the next 40 years There's going to be infinity work for
electricians. It's like being a plumber, but you don't have to touch poo you can be
you can be an electrician who just does emergency call-outs when money's getting
low and you charge 500 bucks an hour and You can be an electrician on a cruise
ship. You can be a theater kid. You can be an electrician on a job site. You can be
an electrician for the government. You can be an electrician on a battleship. You can
go abroad and be an electrician because electricity is the same, right? And it's
interesting work. And you get paid on the job, right? You get paid for your
apprenticeship. And you can be in a union. And if you decide later you want to learn
more and you like it, you can become an ENG. And if you don't, you can put
yourself through college by being an electrician and learn finance.
- And one other thing. Seriously, I've talked to basically every power analyst that's at
this point or read their work. And I will say, there's always space for someone who
knows electricity and finance. 100%. You will make so much. I'm not kidding. There
are people who pay you $1,500 an hour. Yeah. So it's crazy.
- Or HVAC. HVAC electricity. - Oh hell yeah.
- That is a killer combo. -No really, you'll make so much money,
I'm not even kidding. Like the electricity stuff, that's hard. I couldn't
do that. The numbers, easy peasy. - Yeah, if you get your numbers wrong, you don't
electrocute yourself. No one ever fell off a roof doing math.
- It's true. Well, Ed,
Corey, We have time for one more question. Okay, thanks for sneaking that in there.
We were at time, okay. Oh no, now you're making me panic. Okay. Oh no, I gotta log
in. Please sign in. Oh, identification at work. Anyone use a computer? Oh, no. We're
going, we're going. Hang on, hang on.
- I texted Sam Altman the other day and he didn't take back to me. Just a fact I'd
share with the audience. Dario Amadei's PR, Anthropic's PR.
- This is a short answer
lightning round, which is if you had to guess, what is the timeline we are looking
at for the AI bubble to pop? Make your bets, people.
- No later than Q2 2026.
- So I am a firm believer that the market can remain irrational longer than you can
remain solvent. So I'm not going to try and guess, but I think it's coming. And I
also think the number, so to your point, Ed, I would say that the number of
foundation models that will be around after the crash very likely could be zero.
I'm not saying that it must be zero, but I think it very likely could be zero. And
the open ones will be around. Yeah, the open models, you can't kill an open source
model if people like it and contribute. Like a French murderer, they'll kill
Claude. Yeah. Yeah. All right, so we have
- All right, so we have
immediately and later, then you can stay solvent, so don't try to guess. Save your stocks.
- Don't try and short that market. Buy poles, practice digging for canned
goods and rubble. Use that time effectively.
I had both my hips replaced and my cataracts done, just in case civilization was about
to fail. I saved one of my femurs. I had a cane topper made, cast in brass. I had it
scanned at 3D. If you go to archive.org slash doctor-femur, you can get a 1200 DPI
STL file. You can print my diseased femur. I wanted to make soup stock, but my wife said no.
- And on that note, everything's
going to be fine. It's going to be fine. You'll be all right. Have a wonderful
night, everybody. Thank you.