mathattack

Also a single person for the board to hold accountable. In essence the individual that represents the company to outside groups.

It doesn’t have to be this way. Other working cultures have adopted committees as the top. Is is the dominant form in US shareholder capitalism.

The original post is surely satire.

They were ahead of the industry in Marketing but not in reality.

Having AI and an army of consultants is the market standard today. This is because it works.

IBM slapped Watson on everything, and claimed a ton of revenue. In reality they had a bunch of customers who hated them for decades of broken promises.

This shouldn’t surprise anyone who has dealt with IBM over the past 10-20 years.

1 - IBM audits your company’s software usage.

2 - They find a couple servers that someone forgot to turn off a decade ago that nobody uses.

3 - Since it was found in an audit “you’ll lose the 90% discount” and they present the CFO with a $20 million bill.

4 - “It pains us to have to enforce this MSA that your predecessors signed 20 years ago. In the spirit of partnership we can make this go away with a $2 million Watson purchase.”

5 - You get the Watson subscription which you don’t dare turn on.

6 - IBM touts the growth of AI to Wall Street [0] and fires a bunch of old people [1].

Of course this wasn’t going to end well.

[0] https://www.constellationr.com/insights/news/ibm-q4-better-e...

[1] https://www.publicjustice.net/federal-court-boston-ibm-age-d...

In addition to what others say, the potential for profiting later increases the initial price.

Think of it this way… let’s say two identical companies are going to IPO. Company one you can sell the shares for a profit later if you like. Company two you can only sell for the price you bought.

Which will have the higher IPO price?

This shouldn’t surprise anyone who has dealt with IBM over the past 10-20 years.

1 - IBM audits your company’s software usage.

2 - They find a couple servers that someone forgot to turn off a decade ago that nobody uses.

3 - Since it was found in an audit “you’ll lose the 90% discount” and they present the CFO with a $20 million bill.

4 - “It pains us to have to enforce this MSA that your predecessors signed 20 years ago. In the spirit of partnership we can make this go away with a $2 million Watson purchase.”

5 - You get the Watson subscription which you don’t dare turn on.

6 - IBM touts the growth of AI to Wall Street [0] and fires a bunch of old people [1].

Of course this wasn’t going to end well.

[0] https://www.constellationr.com/insights/news/ibm-q4-better-e...

[1] https://www.publicjustice.net/federal-court-boston-ibm-age-d...

The price tickets sell for will be higher if scalping exists. Demand increases for 2 reasons:

1 - I’m more likely to buy a ticket or pay a higher price if there’s a chance of turning a profit if I can’t go.

2 - Speculators are more likely to buy unused inventory if they can turn a profit. This increases total tickets sold. (Scalpers get paid for taking risk)

I’m not defending this. I’ve given up on concerts for my favorite larger bands due to sticker shock.

And he closes [2] with “May the force be with you”

Very interesting that he seems to be in the camp of “It’s ok if the machines prove it as long as we can understand and formally verify it after.”

I’m not sure I follow.

You’ve hit on a big reason - short term gains. The partners at Accenture, Infosys and the rest circle the execs at old industry companies. The companies start performing worse, though nothing some accounting gimmicks can’t cover. Then they have a very bad quarter, enough that it will ruin their fiscal year. Fingers start pointing, and talk turns to “belt tightening” and “turning fixed costs to variable.” All of a sudden the proposals from Big Consulting that provide savings bankable this fiscal year sound very good.

It doesn’t take long for the cracks to show:

- Not enough program/project management.

- An intuition that service dropped but no good metrics.

- Retrain the outsourcers after the first team quit.

- Inability to size new projects.

- Shadow IT departments form in the business units.

- The outsourcers don’t care about things like vendor consolidation or holding other vendors feet to the fire.

All of this might still be worth it if it’s done strategically to improve a chronically underperforming IT department. It’s rarely effective when rushed to cover up poor performance of the core business.

Interesting as companies like Ford like to show they’re on the leading edge of AI, but do they really have the capabilities and 10x engineers?

Sort of. They can use the debt to grow, in which case they’re betting that they will get more profit than the principal plus interest payments. (Beating a 4% return on the loan, not the whole company)

They could also use it to change the capital structure buying back shares. This simultaneously increases risk and share price, unless the reissue more shares.

In both cases, if they can’t pay the interest payments, the company gets handed over to the creditors. Not an issue for Google, but a lot of startups struggle with venture debt.

It’s not just yield. Its debt gets paid first. And if you miss the interest payments the debt holders get the company.

If you’re profitable and can pay it back, it’s better than equity.

If there’s any financial risk then it may not be worth the potential loss of control.

Yes. Though even more than the US, their engineering talent from top schools heads into consulting and finance.

I couldn’t believe this the first time I heard it. This isn’t new, it goes back to the 90s. Perhaps longer.

He’s writing satire about AI, no?

The question is are we more like farm workers who will be unemployed because of the farm or accountants who become much more valuable and high paid because of the spreadsheet?

And I am grateful for not working on a farm, it’s hard work!

Yes. And gut support too. The only consolation is that the software still exists.

It’s not necessarily the sale. Some private equity companies move from “Let’s invest like we’re shooting for the moon” to “Let’s invest like we want to improve margins and flip this on 3-5 years”

It’s not inherently wrong but it is a different model, and sometimes companies suffer as a result.

Interesting. My observation on IBM is their entire business model is:

1 - Audit your customers

2 - Buy back shares

3 - Force early retirements

It was easy to see why Watson failed in that environment. The revenue was “We’ll let you out of the $6mm audit bill if you buy $2mm of Watson”. Companies would agree, install better asset management, and never put Watson into production.

I couldn’t imagine Quantum Comouting surviving there. Spinning it off the best play.

I find it interesting how old brands are being rebooted. Andersen Consulting is back.

If you can resurrect Old Spice, why not try it elsewhere?

I tell them “no idle conversation or verbal tics” in the instructions.

It’s gotten somewhat better over time though clearly not their top priority.

It can synthesize and summarize many topics.

For example, I can give it 8 papers on best practices in online marketing, it will turn it into a 20 minute podcast.

There are errors, but also with real podcasters.

I used it most key to learn about history. There isn’t much damage if it got 1600s or 1700s detail wrong. My high school teachers got much of it wrong too.

This is consistent with a lot of AI apps. I fell in love with Gamma and haven’t used it in forever. Same with NotebookLM.

I worked at a Lotus shop in the 90s. It was great until everyone moved to the web, and then it got too clunky. Fat clients that stored tons of data locally weren’t the thing anymore.

When that company moved off of Notes despite the massive investment, the writing was on the wall even if the product survived for a few decades under IBM.

Any one loan may be risky, but in aggregate the rates compensate for it.

They pay you 0-4% for the money in your checking account and lend it at 1-3% points higher. As long as they have a big enough uncorrelated portfolio, they make easy money.

And if the whole portfolio tanks all at once, the whole industry gets bailed out.

These are the projects that give us confidence.

40% actually seems reasonable for a flip into maintenance mode. That’s what PE firms do when then buy cash cow businesses. Dramatically cut engineering on new functionality, cut back on sales and marketing, remove all redundancy in operations.

Anyone who has counted on a vendor that went private or was bought by a rollup firm has felt this pain.

Better to do it all at once than repeated declines.