There’s no question we’re in a “GenAI” bubble, the only question is how big of a smoking crater in the ground is going to be created when this thing pops.
The tech isn’t going away, and is cool/useful, but from a business standpoint this whole thing looks like a dumpster fire burning next to a gasoline truck. Right now VC FOMO is the only thing stopping all that from blowing up. When that slows down buckle up.
The arms race to throw money at anything has "AI" in their business name is the same thing I saw back in 2000. No business plan, just some idea to somehow monetize the internet and VC's were doing the exact same thing. Throwing tons of good money after bad.
Although you can make an argument this is different, in a lot of ways, its just feels the same thing. The same energy, the same half baked ideas trying to get a few million to get something off the ground.
I think vibe coding will get good enough that things like vercel's "0 to POC" thing are going to stick around.
I think AI-powered IDE features will stick around. One notable head-and-shoulders-above-non-AI-competitor feature I've seen is "very very fuzzy search". I can ask AI "I think there's something in the code that inserts MyMessage into `my.kafka.topic`. But the gosh darn codebase is so convoluted that I literally can't find it. I suspect "my", "kafka", and "topic" all get constructed somewhere to produce that topic name because it doesn't show up in the code as a literal. I also think there's so much indirection between the producer setup and where the "event" actually first gets emitted that MyMessage might not look very much like the actual origination point. Where's the initial origin point?"
Previously, that was "ctrl-shift-F my.kafka.topic" and then ask a staff engineer and hope to God they know off-hand, and if they don't, go read the entire codebase/framework for 16 hours straight until you figure it out.
Now, LLMs have a decent shot at figuring it out.
I also think things like "is this chest Xray cancer?" are going to be hugely impactful.
But anyone expecting anything like Gen AI (being able to replace a real software engineer, or quality customer support rep, etc) is going to be disappointed.
I also think AI will generally eviscerate the bottoms of industries (expect generic gacha girl-collection games to get a lot of AI art) but also leave people valuing the tops of industries a lot more (lovingly crafted indie games, etc). So now this compute-expensive AI is targeting the already low-margin bottoms of industries. Probably not what VCs want. They want to replace software engineers, not make a slop gacha game cost 1/10th of its already low cost.
I'm not shocked. It reminds me a bit of the way some people talk about their personal investing. They'll talk about wins (often exaggerated) and leave out the travails and failures. Next think you know, your friend is telling you about their new day trading plan. :)
Unfortunately, the same thing is playing out here. Nobody likes being the guy that points out the gains are incremental when everyone is bragging about their 100x gains.
And everyone in the management side starts getting, understandably, afraid that their company will miss out on these magical gains.
It is all a recipe for wild overspending on the wrong things.
Well, at least AI is going to be better than the blockchain hype. No one knew what “blockchain” was, how it worked, or what could be used for.
I had a very hard time explaining once you put something in the chain, you can’t easily pull it back out. If you wanted to verify documents, all you have to do is put a hash in a database table. Which we already had.
It has exactly one purpose: prevent any single entity from controlling the contents. That includes governments, business executives, lawyers, judges, and hackers. The only good thing is every single piece of data can be pulled out into a different data structure once you realize your mistake.
Note, I’m greatly oversimplifying all the details and I’m not referring to cryptocurrency.
Article doesn't understand that cutting "between five and 20 percent of support and admin processing" is really valuable, instead it seems to want to dismiss that as a dull failure.
Business process outsourcing companies are valued at $300bn according to the BPO Wikipedia page. So 5%-20% of that is 15-60bn. So even if we're valuing all the other GenAI impact at zero the impact on admin and support alone could plausibly justify this investment.
What arrogant and cynical way of looking at business operations. You don't know how anything interesting turns out in the future. You make educated guesses and those cost money. When you run a business, everything costs money. But that is not "lighting money on fire", that is how all learning happens.
If anyone thinks they have figured it all out, stop blabbering around. Short the market.
$40B seems very low. I wouldn't be surprised to find the annual corporate churn on innovation / transformation / IT/IM new initiatives whatever you call it, is way higher than that. There's some subset of corporate spend that's just chasing new stuff and keeping up on what the hot topics are.
I think there is a bubble, if it's really just $40B maybe I'm wrong.
There is no real source for this data other than "executives" that only think in numbers and of course those are the types that collude with their CFOs to come up with great ways to get giant tax write-offs. I would imagine they are not "burning billions" they are coming up with new ways to describe how they ALREADY burned billions.
Veracity of the article’s numbers is obviously an issue but the thing that’s interesting is that this number isn’t about investment in AI infrastructure or models. It’s money spent on consuming and using the models. Which puts the infra spend in an even starker light. If people don’t feel like they are getting value out of this spend at the peak of hype that’s not a great sign.
Yes and no. Its clear from the article that there is industrial integration. But only workers who are very highly skilled at utilizing the technology--and there are very few of those--are seeing benefits, and only managers who have experience effectively utilizing it are adopting it well. Time will tell, but yes, most projects aren't going anywhere, because they make the fundamental error of thinking that its equivalent to a human in terms of intelligence.
There is a lot of organizational inertia to overcome, but it is happening. The first big wave of savings we are seeing in my org (which deals in physical goods, not software) is replacing very expensive enterprise software with in-house developed replacements.
Well run large companies often waste a lot, in order to (1) hedge risks of being left behind, (2) ensure they have options in the future in possible growth or new efficiency areas, and (3) to start on long learning curves for skills and capabilities that appear likely to be a baseline necessity in the long run.
Bonfires of money.
Predictably. Because all three of those concerns require highly speculative action to properly address.
That doesn't make those reasons invalid. Failures are expected, especially in early days. And are not a sign they are making spurious bets, or starry eyed about industry upheavals. The minimal return is still experience gained and a ramped up institutional focus.
How many of us here speed up our overall development by coding early on new projects before we have complete clarity? Writing code we will often throw away?
You're giving company executives way too much credit in general. I'm sure there are unicorns out there where conscientious stewards of the company's long-term health are making measured, rational choices that may pay off in a decade, but it's a tiny minority of companies. Most are run by narcissistic short-term corporate raiders whose first priority is looting the company for their own profit and second priority is cosplaying as a once-in-a-generation genius "thought leader" in a never-ending battle to beat away the nagging (and correct) thought that they're nepo-babies who have no clue what they're doing. These morons are burning money because they are stupid and/or because it benefits them and their buddies in the short-term. They burned money on blockchain bullshit, they burned money on Web 2.0 bullshit, they are burning money on AI, and they will be burning money on the next fad too. The fact that AI might actually turn out to be something real is complete serendipity; it has nothing to do with their insight or foresight. The only reason they ever look smart is because they're great at taking credit for every win, everyone else immediately forgets all their losses, and op-ed writers and internet simps all compete to write the most sycophantic adulations of their brilliance. They could start finger-painting their office windows with their own feces and the Wall Street Journal would pump out op-eds saying "Here's why smearing poop on your windows is actually a Really Brilliant Business Move made by Really Good-Looking Business Winners!" Just go back and re-read your comment but think "blockchain" instead of "AI" and you'll see clearly how silly and sycophantic it really is.
Strange advice to companies that can’t figure out how to deploy AI is to not use BPO when obviously they can’t figure it out themselves. Also, I am looking at a BPO RFP right now for a huge organization and they mostly care about is how the vendor going to leverage AI to reduce their price over the term of the contract.
Looking back at recent technology advancements it seems pretty clear that first movers end up getting buried by the second wave. This may be a sign that AI is dramatically increasing the scale of the errors we make.
Aren't executives just responding rationally to the current environment? Right or wrong, the broadly speaking, the current thinking is that GenAI will be super impactful. Which means there is a lot of risk to be seen as underinvesting in GenAI, even when the ROI isn't there. Until the hype dies down and there is a broad, practical understanding of the value of GenAI, I don't see how it could work anyother way.
The wonderful thing about money is: its roots are only in belief, not in fact. If you get a sufficient amount of money users to believe pink colored dog poop has more value than a diamond, than it has.
The entire shtick is made up. People just tend to forget this too quick.
Moreover, money is not destroyed by spending, but rather circulates. Right now it's flowing around faster -- a manic phase for a portion of the economy.
In other eras, everyone got excited and went to tent revivals.
Granted there could be an opportunity cost -- the real effort and electricity could be used elsewhere -- but only if it were possible to create a similar amount of excitement about something useful, like putting solar panels everywhere. But that takes different people and different skills, so maybe this costs nothing?
(Money can be created and destroyed -- it doesn't just circulate -- but that destruction happens when loans are repaid within a fractional reserve system. Which is kind of a scam, but money itself is, so, whatever.)
Once you internalize that this is all sort of a scam, does that change your behavior? Maybe you start making NFTs or minting shitcoins.
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[ 4.6 ms ] story [ 33.5 ms ] threadThe tech isn’t going away, and is cool/useful, but from a business standpoint this whole thing looks like a dumpster fire burning next to a gasoline truck. Right now VC FOMO is the only thing stopping all that from blowing up. When that slows down buckle up.
The arms race to throw money at anything has "AI" in their business name is the same thing I saw back in 2000. No business plan, just some idea to somehow monetize the internet and VC's were doing the exact same thing. Throwing tons of good money after bad.
Although you can make an argument this is different, in a lot of ways, its just feels the same thing. The same energy, the same half baked ideas trying to get a few million to get something off the ground.
I think AI-powered IDE features will stick around. One notable head-and-shoulders-above-non-AI-competitor feature I've seen is "very very fuzzy search". I can ask AI "I think there's something in the code that inserts MyMessage into `my.kafka.topic`. But the gosh darn codebase is so convoluted that I literally can't find it. I suspect "my", "kafka", and "topic" all get constructed somewhere to produce that topic name because it doesn't show up in the code as a literal. I also think there's so much indirection between the producer setup and where the "event" actually first gets emitted that MyMessage might not look very much like the actual origination point. Where's the initial origin point?"
Previously, that was "ctrl-shift-F my.kafka.topic" and then ask a staff engineer and hope to God they know off-hand, and if they don't, go read the entire codebase/framework for 16 hours straight until you figure it out.
Now, LLMs have a decent shot at figuring it out.
I also think things like "is this chest Xray cancer?" are going to be hugely impactful.
But anyone expecting anything like Gen AI (being able to replace a real software engineer, or quality customer support rep, etc) is going to be disappointed.
I also think AI will generally eviscerate the bottoms of industries (expect generic gacha girl-collection games to get a lot of AI art) but also leave people valuing the tops of industries a lot more (lovingly crafted indie games, etc). So now this compute-expensive AI is targeting the already low-margin bottoms of industries. Probably not what VCs want. They want to replace software engineers, not make a slop gacha game cost 1/10th of its already low cost.
Unfortunately, the same thing is playing out here. Nobody likes being the guy that points out the gains are incremental when everyone is bragging about their 100x gains.
And everyone in the management side starts getting, understandably, afraid that their company will miss out on these magical gains.
It is all a recipe for wild overspending on the wrong things.
I had a very hard time explaining once you put something in the chain, you can’t easily pull it back out. If you wanted to verify documents, all you have to do is put a hash in a database table. Which we already had.
It has exactly one purpose: prevent any single entity from controlling the contents. That includes governments, business executives, lawyers, judges, and hackers. The only good thing is every single piece of data can be pulled out into a different data structure once you realize your mistake.
Note, I’m greatly oversimplifying all the details and I’m not referring to cryptocurrency.
Business process outsourcing companies are valued at $300bn according to the BPO Wikipedia page. So 5%-20% of that is 15-60bn. So even if we're valuing all the other GenAI impact at zero the impact on admin and support alone could plausibly justify this investment.
If anyone thinks they have figured it all out, stop blabbering around. Short the market.
I think there is a bubble, if it's really just $40B maybe I'm wrong.
Here is the Archived Version: https://web.archive.org/web/20250818145714/https://nanda.med...
Bonfires of money.
Predictably. Because all three of those concerns require highly speculative action to properly address.
That doesn't make those reasons invalid. Failures are expected, especially in early days. And are not a sign they are making spurious bets, or starry eyed about industry upheavals. The minimal return is still experience gained and a ramped up institutional focus.
How many of us here speed up our overall development by coding early on new projects before we have complete clarity? Writing code we will often throw away?
I've never heard of such a thing
It’s like the New York Jewish joke about the terrible food and the too small portions.
The entire shtick is made up. People just tend to forget this too quick.
In other eras, everyone got excited and went to tent revivals.
Granted there could be an opportunity cost -- the real effort and electricity could be used elsewhere -- but only if it were possible to create a similar amount of excitement about something useful, like putting solar panels everywhere. But that takes different people and different skills, so maybe this costs nothing?
(Money can be created and destroyed -- it doesn't just circulate -- but that destruction happens when loans are repaid within a fractional reserve system. Which is kind of a scam, but money itself is, so, whatever.)
Once you internalize that this is all sort of a scam, does that change your behavior? Maybe you start making NFTs or minting shitcoins.