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MTS · 3 min · Oct 22, 2026
More efficient AI could unlock demand across the economy
Aidan Smith
Co-founder, Flapping Airplanes
Theo JaffeeHost · Co-founder & host, MTS
One of the first members of a16z's new media team; earlier hosted the Emergent Ventures-backed Theo Jaffee Podcast.
Sophia DewHost · Host, MTS
About this segment
Smith argues that cheaper, more capable models could bring AI into much more of the economy, creating more demand for compute. He says safety needs observability and careful scaling as capabilities grow.
From “AI Models Will Tap the Whole Economy in 2 Years | Aidan Smith”, Oct 22, 2026. Watch the full episode
Thanks. We'll look at and fix what's off.
“we want to unlock this 90% of the economy, which is untouched right now.”
Takeaways
- Most economic value remains outside the tasks AI handles today.
- A 1,000-fold increase in tokens could meet much broader demand.
- He says labs should build observability and scale carefully.
In this episode
Full episode- 6:01Whole-brain emulation has two difficult bottlenecks2:36
11:05More efficient AI could unlock demand across the economy2:34
- 20:22Small labs attract talent by offering meaningful ownership2:36Up next
- 3 more moments in the full episode
Transcript
Transcribed by machine (Whisper) from the episode’s audio, so a word may be off here and there.
- 11:09
We'll see. I don't know. I'm just trying to push as much as I can. So how worried are you about your work leading to a major compute overhang? If you do figure out how to make current models 100,000 times or a million times more data efficient, couldn't that lead to a sort of very rapid discontinuous increase in capabilities? I know a lot of people are worried about the need to pace the frontier and allow alignment to catch up with capabilities and such.
- 11:36
Yeah, so there's two questions there. The first is the compute overhang. The second is the alignment thing. I'll adjust both. As for the compute operating, like I said, we want to unlock this 90% of the economy, which is untouched right now. That's so much more demand for compute just waiting to be tapped. I mean, if you think that we're seeing a lot of demand for compute now, imagine what it's going to look like in two years.
- 11:51
Even if we're able to run 1,000x more tokens, imagine the demand for compute when you're actually able to tap the whole economy. That's huge. As far as the safety case goes, we are really thinking about it. I think it's worth taking seriously. It's worth setting up careful systems for observability and making sure that you're doing careful scaling science. I think that I have the privilege of being a lot of really, really smart folks who are thinking about this a great deal and who I get to talk to nearly every day about the state of safety and really make sure that we scale responsibly. But I really think that our goal is to make models that help people and that actually go touch that 90% of the economy that are actively useful. And I think in order to be useful, there's two desert data, there's
- 12:29
actually go out in the world and do things and keep their world to do things in. So for now, we're much more in the former case and we're taking lots of precautions on the ladder. I mean, I guess when it comes to the former, in theory, this now opens up a bunch of new possibilities to add AI into areas that like right now the capabilities aren't totally there or it's just not getting diffused into society in different ways.
- 12:51
And so like what more do you see happening? Like the longevity of this? Well, the world's going to be a crazy, crazy place. I mean, I'm very EGI-filled, so to speak, in that I believe that capabilities are going to continue to improve and improve discontinuously. Maybe our data efficiency will contribute to that and that models that can learn from more limited samples can update themselves better and help make the next run going better.
- 13:10
I think we're well on track for this, even outside of Flappy. But, yeah, I think that it's hard to predict what the Jevons effects will look like, what the places where demand for tokens will leak into, and frankly, what the regulatory environment will adapt around that to make it tractable. It's not at all obvious what the future will hold here, but I'm really excited that Flappy gets to be a part of it, and I think that we'll really work hard to make sure it's a positive vision for that future.
- 13:35
Yeah. What kind of timelines