dkrich

Pulling on this thread, if the model companies become commoditized and make no money then who is buying the hardware? Seems like it would be the next shoe to drop

Probably more that they are compute constrained. In his latest post Ben Thompson talks about how Microsoft had to use their own infrastructure and supplant outside users in the process so this is probably to free up compute.

This is so spot on and I’ve been harping on this for about two years based on my own professional experiences. The surprising thing, though, is that upper management is ostensibly cool with incompetent people using AI to produce things that are clearly not accurate and have no idea whether it is or not. I believe this is because upper management themselves believe AI is much more accurate in its current form than it is. It’s not clear what if anything will change this but I believe many organizations are rotting from within because they no longer have stringent requirements.

This raises a good point. The analogy in the article implies that eventually there will again be a need to know how to write code at a large scale and nobody will know how to do it. I don’t think the analogy holds if you think of AI as a sort of orchestration and abstraction layer which at the end of the day, all software development tools are.

But I do think there’s another thing going on quietly in corporate America currently that will have major ramifications for companies that have prioritized using AI and that is a loss of technical excellence in general.

I can’t put my finger on it but sometime around 2023 or so there was a noticeable falloff in technical competence at companies I work with because the higher ups went all in on a generative AI future. No longer were they investing in training new hires and having rigorous certification standards. Instead people were encouraged to use AI tools to answer questions and would regularly pass off the output to more knowledgeable workers for refinement. These people clearly had no idea whether what they were sending out was accurate or not but it looked and felt like real work.

I think there will be a consolidation across the tech industry and AI will not be a differentiator and only those who are actually competent will succeed but right now AI is allowing a lot of incompetence to go undetected throughout a lot of organizations.

This article is the first that I’ve seen that hits on a theme I’ve been pondering for a long time. And that is that everyone super bullish on AI assumes that there are enormous real world gains to be had by existing companies automating software tasks- building software, using software- essentially moving bits around. I’ve been very skeptical of this.

We’ve had the ability to automate work between systems with bots and even regular jobs that automate certain repetitive tasks with APIs for years. Yet there’s been a relatively small uptake of bots and there is still a very large market for vendors an SIs who can improve existing processes.

I think it’s pretty clear why this disconnect exists between “regular people” and the people Patel describes as having software brain. And that is that the nature of LLMs is that they are limited to the digital world. At the core they really only do one thing and that is take some text, overlay it with digital representations of the world and try and find the one that most closely matches.

The inborn assumption is that they will get better and better and climb the corporate ladder, starting in the call center but climbing the corporate ladder to replace everyone’s jobs like Michael J Fox in the Secret of my Succcess. But I’m skeptical. Automation always starts in call central customer service use cases because that is one of the few use cases where humans are involved, they are supposed to follow a script, and take actions entirely inside software applications. But it always seems to stall out. Because once you move from jobs where a script can be provided to ones where ambiguity is a constant factor and judgments and decisions have to made that don’t have exact precedents you need humans. LLMs are backwards looking. Humans can consider things that have happened previously as guidance but critically, can also imagine a future state where things operate differently all why considering multiple competing factors, all of which are unique to that situation. They don’t always do it well but LLMs are incapable of doing it in any case.

People hate AI because it doesn’t really do that much for a regular person, is massively hyped by people who look shadier and less credible by the day and has some vague threat of destroying civilization or at least making you homeless.

But- I have zero doubt that if these same companies did actually excel at providing real world value, nobody would care about the negative implications. For example if they produced robots that could automate aspects of your life like cleaning your house, getting your groceries and doing it very inexpensively, I have no doubt the popularity would be off the charts and a bona fide bubble would ensue.

This is plainly true. First off, Waymo is one of the few companies successfully using AI to operate real world objects at enormous complexity and risk. Talk to anyone who just used Waymo for the first time and they will be almost euphoric. It’s amazing technology with overwhelming utility. There are also several examples of companies with less than stellar images who consumers were told they should boycott but most users couldn’t have cared less. Uber in its earlier days and Facebook coming out of the Cambridge Analytica scandal come to mind.

This and also constantly saying stupid things like “yes that is a great observation and that’s how the pros do it for this very reason!” for a specific question that doesn’t apply to anything anyone else is doing

My experience is that people who weren't very good at writing software are the ones now "most excited" to "create" with a LLM.

My greatest frustration with AI tools is along a similar line. I’ve found that people I work with who are mediocre use it constantly to sub in for real work. A new project comes in? Great, let me feed it to Copilot and send the output to the team to review. Look, I contributed!

When it comes time to meet with customers let’s show them an AI generated application rather than take the time to understand what their existing processes are.

There’s a person on my team who is more senior than I am and should be able to operate at a higher level than I can who routinely starts things in an AI tool but then asks me to take over when things get too technical.

In general I feel it’s all allowed organizations to promote mediocrity. Just so many distortions right now but I do think those days are numbered and there will be a reversion to the mean and teams will require technical excellence again.

I’ve been astonished at how bad the battery is in my base iPad I bought last year.

Granted I’m switching to it from an iPhone 17 pro max but still the thing goes from 100% to 80% overnight without being used and a 40 minute Zwift ride routinely drains 15-20%. Makes me much more reluctant to buy another as it has to be tethered to a charger.

Also have to consider that it’s now private which removes the pressure of having to show any semblance of a profit or, critically, share usage or advertising statistics which could (and probably are) down dramatically since the acquisition. Being private allows the fictitious storyline to persist that “we’re doing great and everyone is using our products.”

There are many, many, many companies much older than Palantir operating in the beltway that do this. Having TS/SCI cleared resources who can work in SCIFs isn’t in itself a differentiator. Besides, that type of security level would make it very difficult to make use of their products in the first place.

One of the most telling experiences while following this company was a town hall type of discussion between Karp and I believe former BP CEO. In it, the CEO gushes about how vital Palantir has been in transforming operations and ironing out inefficiencies. But as he continues to talk it becomes apparent he has absolutely no idea what was done or how it helped.

Then the motives became very clear to me- Palantir wants to sell more software by creating an image of a secretive panacea while the c level wants to create an image that they are forward thinking and using cutting edge tools to transform operations. It’s a two way fortuitous grift but I have no doubt the investors pouring money into it have also gotten ensnared in this grift and it’s grown from questionable sales tactics to a full blown bubble.

Yes because in that case you’re acquiring the stock directly from the company as part of a planned transaction. In one case you’d be dealing with individual uninformed shareholders which would cause a lack of confidence in markets (the entire reason insider trading rules were created), in the other you aren’t.

The introduction to a river runs through it is an interesting read. I never realized how much creative influence Redford had over the production of the movie until I read it a few months ago.

That pe is nonsense imo. It’s based on a one time $6 billion tax credit that they included last quarter because they assume they will be profitable enough in the future to use it so are adding it into the balance sheet now.

I believe their comps are getting tougher and tougher every quarter as they aggressively drive to turn the profit spigot and squeeze more and more profit out of an inherently unprofitable business model. This is a single dimension stock that is 100% reliant on growing its user base.

They’ve been able to do that because users are aging into the platform faster than they’re aging out but eventually the well will run dry.

Can you explain why a GitHub repo for IP rotating and tied to a prominent DOGE member was downloaded and then deleted?

Or they’re just fearful of retaliation/termination for making waves with this administration

I think he’s saying that if their intent was to not get caught which you’d assume, they could have made a private repo instead of a public fork tied to a doge account

The point is more about the profit for a company operating at massive scale- over 100 million users- and after pulling every lever to max out profit they possibly can- is only $770 million.

There was something of a red flag in that last report as well in that for the first time as far as I can tell, profit grew exactly in line with trips and gross bookings. What that implies is that the unit economics are maxed out. The business is as profitable as it can be and their only hope is to add more riders.

I think uber is different though. It hasn’t been founder led for several years and the current ceo was hired to cut out all r&d spend and maximize profits and revenue.

They report things like foreign currency transactions and stock based compensation as free cash flow.

The hope with uber is that they become an aggregator of AVs which belies an assumption that autonomous vehicles will essentially be a commodity. Or perhaps that AVs take much longer to become practical at scale than people think.

But one of the biggest red flags to me with this company is how they aggressively buy back stock and publicly announce that they believe it’s undervalued. You’re in the midst of an extremely competitive emerging market and your best idea for your cash is to… buy stock?

I’m bearish on uber because despite all of these shady tactics they are still barely profitable at the current scale and with enormous tailwinds. Last quarter they made $770 million on $12 billion of revenue. It’s just a lousy business model and they are desperate to beat Wall Street’s ever inflated expectations each quarter.

There is no plan. Talk tough, reverse under pressure, rinse repeat. Anyone surprised must not have watched season one which aired in 2019.

It’s interesting because I just watched an interview with him on cnbc and left it with much the same thoughts. Not that I took issue with anything in particular but he really didn’t say anything particularly insightful it was just bland, zero risk platitudes which to me is shocking for the CEO of what is supposed to be one of the most forward thinking companies in history. Like give us some bold predictions, opinions, etc. Not a great sign for Amazon imo

This was my take as well. Nadella is looking increasingly desperate by the day to salvage this investment. First that Jevon paradox tweet after futures opened Sunday night now this clearly leaked story plus a tweet from Altman of them together lol. I actually recall him making a similar tweet last time futures tanked a few months ago though I don’t recall the context.

Pretty clear that this thing is quickly getting away from them. Even if the data was stolen it doesn’t make any difference. You have no moat if scraped data is your moat. The moat was supposedly their ingenious engineers.

I think a 180 is coming soon when Microsoft stops doubling down, takes their medicine and shifts their strategy to cut back on infrastructure spend. I think the risks are still enormous for the tech sector.

I don’t necessarily disagree, I think he has very thorough and detailed analyses of many topics and I’ve learned a ton reading his blog over the years.

Nevertheless he’s human and every human no matter how hard they try is prone to certain biases at various times.

So he’s not invested monetarily in meta stock. But he’s clearly spent time with the higher ups at meta and settled on a particularly bullish narrative as it pertains to their future. That in and of itself makes him vested in meta being the winner because he predicted it and wants to be proven right.

The reason I bring this up is as someone who has read this blog very consistently for a long time now this is the first time I’ve sensed a shift in the tone. And this post seemed to be fired off quickly about an hour before the market opened and it seemed like he was palpably nervous about tHe situation and trying to calm people’s nerves. That in and of itself feels like it’s squarely in the bullish camp and hoping for a particular outcome.

This blog has taken an odd turn. It seems like he is invested in meta stock given the timing of this post and its focus on the stock market reaction to deepseek. That’s fine and I find no fault with it except that it’s hard to read the past few posts and not filter it through someone very bullish on meta no matter how the facts change.

Psst: it’s probably going to end up being a fraction of that but doesn’t make for as good a headline

I think a lot of his decisions can be boiled down to being hellbent on disrupting Apple.

I think the metaverse was his first crack at it until Wall Street gave him the hook for over spending.

Then when AI came around he again became fixated on the meta verse but using AI as the means of generating content for it.

I think these are all moon shot bets and meta still has no track record of success in hardware despite multiple attempts.

It seems that the next great hardware platform is probably a long ways away and will require some breakthrough that hasn’t happened yet and likely to come from a person with maniacal focus on a single application because that seems to have been the pattern in the past.

In other words I think it’s highly unlikely a current incumbent fosters the next hardware platform. I remember a time not so long ago when a lot of smart people were saying that Alexa was going to disrupt everything as we know it.

Also this AI shit on Facebook these days just seems really weird. But maybe there’s a vision of the future that suddenly makes it’s indispensable. Who knows?

If the stock market continues to rise there will be a bubble in defense stocks and a lot of defense IPOs

One of the unusual trends of the past several years is that higher education has become less and less respected and people now look to private industry for the R&D that universities were designed to perform for the public good.

I think 2025 Will mark a bottom for that in one way or another- either private industry (the FANGs) suffers a setback or (more likely in my view) research universities start a comeback as a new set of startups begin to launch out of a department (not necessarily CS or hardware). Perhaps in another field like gene therapy.

These tests are meaningless until You show them doing mundane tasks