AI Is Worse Than The Dot Com Bubble: Part Four

<v Speaker 1>Media. Hello and welcome to bear off Line. I'm your
<v Speaker 1>host ed Zetron. Today is the final part of Bubble
<v Speaker 1>Week and our four part dot com Bubble special. I
<v Speaker 1>am worryingly invested in this show. I've put so many
<v Speaker 1>hours into it. This is the most I've done in
<v Speaker 1>the January. I'm having the time of my fucking life.
<v Speaker 1>But this four part has been rough, and it's not
<v Speaker 1>been rough for the recording. It's rough because every time
<v Speaker 1>I go over these details, they fill me full of anxiety.
<v Speaker 1>I don't enjoy being right here. Sure I get the satisfaction,
<v Speaker 1>Sure I get the clicks and all that, but like
<v Speaker 1>it sucks, It sucks. I'm really fucking worried. I'm not
<v Speaker 1>doing this to be contrarian. I'm seeing these things and
<v Speaker 1>I'm worried more people aren't seeing them, and I'm worried
<v Speaker 1>that the after effects will be so much worse than
<v Speaker 1>the dot com bubble. So this Foe part was somewhat
<v Speaker 1>drawn from a premium piece I did a few weeks
<v Speaker 1>ago called Inventively. This is worse than the dot com bubble.
<v Speaker 1>I really suggest you subscribe to my premium newsletter or
<v Speaker 1>be in there. But if you don't. I've had a
<v Speaker 1>little mustard on it and truncated it for this because
<v Speaker 1>you needed to be different in voice. Nevertheless, you should subscribe.
<v Speaker 1>But when I was writing that, I actually went into
<v Speaker 1>it trying to prove myself wrong. I spent hours and
<v Speaker 1>hours reading old articles through broken paywalls and archive dot
<v Speaker 1>org links, in the hopes that I'd find some sort
<v Speaker 1>of positive spin, a way that the AI bubble wasn't
<v Speaker 1>as bad, some sliver or nugget of joy, some shread
<v Speaker 1>of hope. And everything I've read has made me more worried,
<v Speaker 1>not less. The real problem is that there are similarities,
<v Speaker 1>but only with the worst parts of both bubbles. We've
<v Speaker 1>got stupid amounts of money being sunk into stuff. We've
<v Speaker 1>got stupid companies that want to ypo. We've got hopeless
<v Speaker 1>startups duced up by edulous venture capitalists and marketed by
<v Speaker 1>even more credulous journalists. Except this time we have the
<v Speaker 1>worst margins this side of a vineyard planted in Las Vegas, Nevada,
<v Speaker 1>and despicable boosters that will go to war with you
<v Speaker 1>to try and improve You're wrong. Using ghost stories, fairy tales,
<v Speaker 1>and Bixie dust, I realize I'm being a little cavalier
<v Speaker 1>and colloquial about this, and that's because I feel emotionally drained,
<v Speaker 1>is the way i'd put in. Things are so much
<v Speaker 1>worse than I thought. I really thought i'd find something good.
<v Speaker 1>I'd dig into the past and find that there were direct,
<v Speaker 1>obvious similarities that would say, Okay, these GPUs will be useful.
<v Speaker 1>There will be something we've built here. I can't find it.
<v Speaker 1>I'm actually now convinced that things are going to be
<v Speaker 1>much worse. The dot com bubble was relatively distributed and
<v Speaker 1>created useful infrastructure. The ideas of some of the most
<v Speaker 1>prominent dot com startups were valid, but based on stupid
<v Speaker 1>hypergrowth business models that didn't make sense and were only
<v Speaker 1>sustained through mass hysteria and ignorance. By comparison, AI startups
<v Speaker 1>fundamentally illogical or selling unreliable software that's best known for
<v Speaker 1>its consistent mistakes and active harms, backed by the corrosive
<v Speaker 1>and ever worsening infrastructural costs of GPUs, and they're the
<v Speaker 1>customers of the largest company on the stock market that
<v Speaker 1>can only keep its valuation on which the markets depend
<v Speaker 1>by selling more of it. An expensive to buy and
<v Speaker 1>more expensive to install item that only appears to lose
<v Speaker 1>its customers money. There is no squaring in Vidia's circle.
<v Speaker 1>It is inevitable even if AI somehow worked out that
<v Speaker 1>companies will have to stop buying as many GPUs, and
<v Speaker 1>in Vidia cannot afford for them to slow down at all.
<v Speaker 1>They must speed up, and they must do so forever.
<v Speaker 1>There's also no other business model for GPUs that scales none.
<v Speaker 1>There is no use case. This is not useful infrastructure.
<v Speaker 1>Once the AI bubble bursts, these data centers cannot be
<v Speaker 1>used for other things, at least not things that are
<v Speaker 1>going to make more than a couple of single digit
<v Speaker 1>millions in total. They will have to be emptied out
<v Speaker 1>and replaced with useful gear. They will be those that
<v Speaker 1>are finished, and I think going to be a bunch
<v Speaker 1>of undone construction. They're going to be powered shells, which
<v Speaker 1>are just empty buildings with power attached. And really, I
<v Speaker 1>don't think that's gonna be. That's gonna be across the board.
<v Speaker 1>I think we're gonna have a lot of failed construction.
<v Speaker 1>And throughout all of this bullshit, the rest of them,
<v Speaker 1>Magnificent seven has seen their stock values saw off the
<v Speaker 1>back of pure hype because they weren't making a dime
<v Speaker 1>of profit from selling artificial intelligence services, and they've done
<v Speaker 1>so by it acquiring hundreds of billions of dollars of
<v Speaker 1>physical assets. The whole point of these fucking companies was
<v Speaker 1>that they were asset light and cash heavy. Now they're
<v Speaker 1>full of fucking GPUs to depreciate. This is a fucking calamity.
<v Speaker 1>I am fucking terrified because everything I've read about the
<v Speaker 1>past makes me certain that this will be worse. The
<v Speaker 1>hands will be longer, and nobody seems to want to
<v Speaker 1>accept the true logical endpoint of my arguments, So I'm
<v Speaker 1>gonna kind of lay them out depending on how right
<v Speaker 1>I am. I'm worrying about the following things. And Nvidia
<v Speaker 1>will lose anywhere between forty percent and night besore and
<v Speaker 1>of its revenue in a relatively short amount of time,
<v Speaker 1>a couple of quarters maybe, which will annihilate the value
<v Speaker 1>of the S and P five hundred because the stock
<v Speaker 1>will go down because the market will go Ah, Microsoft,
<v Speaker 1>Google and Amazon will face massive multi billion dollar impairments
<v Speaker 1>within the next few years. For God to say, meta,
<v Speaker 1>but they are included too. Now, this one is funny
<v Speaker 1>but will still be bad. Oracle will potentially face bankruptcy
<v Speaker 1>or at least a severe horrendous series of layoffs and
<v Speaker 1>restructuring efforts to try and write the shift after agreeing
<v Speaker 1>to two hundred and forty eight billion dollars in lease
<v Speaker 1>obligations and fifty six billion dollars in debt primarily to
<v Speaker 1>build data centers to get the revenue from its three
<v Speaker 1>hundred billion dollar five year long deal with open Ai,
<v Speaker 1>a company that's going to run out of money in
<v Speaker 1>the next year. Venture Capital is going to take such
<v Speaker 1>a severe haircut from the AI bubble that it will
<v Speaker 1>effectively kill any chances of raising a round off the
<v Speaker 1>Series B for many, many years. I'm really worried about
<v Speaker 1>the reported one hundred and seventy eight point five billion
<v Speaker 1>dollars in US date center deals going underwater. I don't
<v Speaker 1>think they're going to be paid, and it's going to
<v Speaker 1>lead to massive losses with private equity and banks, which
<v Speaker 1>will lead to a chill in effectively all debt markets
<v Speaker 1>and massive job losses across the many many construction projects
<v Speaker 1>that have started as a result of the AI bubble,
<v Speaker 1>and if open Ai and Anthropic can actually manage to
<v Speaker 1>go public. I think every investor is going to lose
<v Speaker 1>out as they collapse under the weight of their bullshit assumptions.
<v Speaker 1>Every partner, every company relying on them, every infrastructure partner,
<v Speaker 1>every AI starter built on their tech will be burned.
<v Speaker 1>I also believe that we as a society will face
<v Speaker 1>a violent paradigm shift as the result of the AI
<v Speaker 1>bubble bursting, because it revealed how many people just don't
<v Speaker 1>understand stuff. The amount of bosses, influencers, movie stars, politicians,
<v Speaker 1>and other individuals of note that have fallen behind generative
<v Speaker 1>AI and claimed again and again that it can do
<v Speaker 1>things that it can't have effatuated myths that will lead
<v Speaker 1>to massive ciple harms both day and in the future,
<v Speaker 1>have revealed themselves to be fucking frauds. It's been obvious
<v Speaker 1>since twenty twenty three that generative AI flat out does
<v Speaker 1>not do what many people say it does or will do,
<v Speaker 1>and obvious since twenty twenty four that the economics didn't work.
<v Speaker 1>Yet still, every single goddamn day, we are surrounded by
<v Speaker 1>people screaming in our faces the AI is the future,
<v Speaker 1>that AI will replace us, that AI is the panacea
<v Speaker 1>to every fucking problem, even though it only seems to
<v Speaker 1>create new ones. I also believe that AI psychosis is
<v Speaker 1>a prevalent thing on a scale that few people want
<v Speaker 1>to discuss. There's something about the process of using a
<v Speaker 1>large language model that convinces people that AI is powerful
<v Speaker 1>because they managed to bunk it on the head enough
<v Speaker 1>times to make something useful come out seemingly intelligent. People
<v Speaker 1>will spend hours and hours making clawed code burb out
<v Speaker 1>quasi useful, quasi functional software, claiming that the productivity gains
<v Speaker 1>are obvious, even when if you sat down and worked
<v Speaker 1>out how long it took them and how much the
<v Speaker 1>API rates for the software would be. If they weren't
<v Speaker 1>being subsidized, they could probably have just learned to code
<v Speaker 1>in the first place, or paid someone else to do it.
<v Speaker 1>And no, please stop this thing of oh it's cheaper
<v Speaker 1>than hiring a developer. Did you go out and ask
<v Speaker 1>a developer? Did you actually get a quote? Do you
<v Speaker 1>actually know what you're talking about? Do you know a
<v Speaker 1>fucking thing about you're talking about? You see, I think
<v Speaker 1>large language models that are a global gas lighting experiment,
<v Speaker 1>where the test is to see whether inefficient and questionably
<v Speaker 1>functional software can convince you that it works because you
<v Speaker 1>managed to manipulate its handles with the right prompts, explaining
<v Speaker 1>away failures as you go, and getting increasingly agitated with
<v Speaker 1>those who don't agree with you that you're living in
<v Speaker 1>the future. This series forced me to live in the
<v Speaker 1>past for hours and hours and hours, and all it
<v Speaker 1>taught me is that people are desperate to compare this
<v Speaker 1>era to another as a means of explaining away the
<v Speaker 1>bad habits and specious ideas of a tech industry run
<v Speaker 1>by fucking influences and management consoles. By comparison, the dot
<v Speaker 1>com bubble is relatively sensible, built on good ideas execut
<v Speaker 1>by greedy people rushing to do things based on ideas
<v Speaker 1>they didn't understand, and analyzes that were utter bullshit. The
<v Speaker 1>AI bubble is happening in a remarkable era of digital
<v Speaker 1>information and connectivity that allows us to process and analyze
<v Speaker 1>details at scale and with speed, And everybody who inflated
<v Speaker 1>this era should, and, by my fucking sword, will be
<v Speaker 1>made to experience inextricable, permanent shame for the horrors that
<v Speaker 1>follow as a result. And believe me, even if I'm
<v Speaker 1>half right, things will likely be so much worse than
<v Speaker 1>when the dot com bubble burst. I don't see a
<v Speaker 1>scenario where anything survives the collapse of core we've let
<v Speaker 1>alone the collapse of open AI. I don't see a
<v Speaker 1>scenario where any more than a few AI starts survive,
<v Speaker 1>if any and if that happens, there won't be any
<v Speaker 1>customers for those GPUs, not that anywhere near enough existed
<v Speaker 1>to fill even a tiny percentile of the demand that
<v Speaker 1>currently exists, or for the capacity we've already built. On
<v Speaker 1>some level. I hope I'm wrong. I just don't know
<v Speaker 1>how anymore. I really don't thank you so much for listening.
<v Speaker 1>It's been in intense January with this, with CES, with
<v Speaker 1>the inchittaphone ential crisis. I'm probably going to take the
<v Speaker 1>week off next week and run a call zone media
<v Speaker 1>rewind to give my aching brain and lungs a break.
<v Speaker 1>Thank you so much for listening. Who knows, though, some
<v Speaker 1>bullshit will probably happen because it's earning season when this runs,
<v Speaker 1>some crazy shit will happen, or maybe it'll be normal.
<v Speaker 1>I could just rest, and if that happens, I'll probably
<v Speaker 1>end up pinking and squawking into the micros. I always though, regardless,
<v Speaker 1>you'll hear my voice one way or another. Thank you
<v Speaker 1>so much everyone, This has been bubble week. Thank you
<v Speaker 1>for listening to Better Offline.
<v Speaker 2>The editor and composer of the Better Offline theme song
<v Speaker 2>is Matasowski. You can check out more of his music
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<v Speaker 2>T O S O W s ki dot com. You
<v Speaker 2>can email me at easy at Better Offline dot com
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<v Speaker 1>much for listening. Better Offline is a production of cool
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