# The Man Who Calls BS On AI: They’re LYING About AI, 2027 Is When It All Breaks! | Ed Zitron

Markdown copy of https://realalpha.app/v/Lf5oqGOCRCM/ on Real Alpha, the best minutes from long interviews with the people building AI. Cite and link the page, not this copy.

Ed Zitron argues that generative AI is overhyped and subsidized, and that its data-center spending may not be justified by demand.

- Show: The Diary Of A CEO
- Hosts: [Steven Bartlett](https://realalpha.app/people/steven-bartlett/)
- Guest: [Ed Zitron](https://realalpha.app/people/ed-zitron/) is a British tech critic, host of Better Offline, and founder and CEO of EZPR.
- Published: Aug 27, 2026
- Length: 2 h 28 m

## The best minutes

- [11:47](https://realalpha.app/v/Lf5oqGOCRCM/?t=707) [AI subscriptions can hide the true cost of usage](https://realalpha.app/s/ai-subscriptions-can-hide-the-true-cost-of-usage/) (5 min)
- [1:45:33](https://realalpha.app/v/Lf5oqGOCRCM/?t=6333) [AI infrastructure spending is fueled by circular financing](https://realalpha.app/s/ai-infrastructure-spending-is-fueled-by-circular-financing/) (8 min)
- [2:08:15](https://realalpha.app/v/Lf5oqGOCRCM/?t=7695) [Ed predicts OpenAI could run out of cash in 2027](https://realalpha.app/s/ed-predicts-openai-could-run-out-of-cash-in-2027/) (7 min)

## Also worth watching

- [1:00:38](https://realalpha.app/v/Lf5oqGOCRCM/?t=3638) [AI has not produced broad white-collar job losses](https://realalpha.app/s/ai-has-not-produced-broad-white-collar-job-losses/) (7 min)
- [2:00:21](https://realalpha.app/v/Lf5oqGOCRCM/?t=7221) [The blackmail examples were prompted tests, not autonomous acts](https://realalpha.app/s/the-blackmail-examples-were-prompted-tests-not-autonomous/) (4 min)
- [1:33:36](https://realalpha.app/v/Lf5oqGOCRCM/?t=5616) [AI capability gains are hitting practical limits](https://realalpha.app/s/ai-capability-gains-are-hitting-practical-limits/) (7 min)
- [52:37](https://realalpha.app/v/Lf5oqGOCRCM/?t=3157) [Ed links Google's search decline to pressure for more queries](https://realalpha.app/s/ed-links-googles-search-decline-to-pressure-for-more-queries/) (6 min)

Skip the 15-minute dot-com and data-center-demand debate, the agentic-AI/internet comparison, and the closing relationship advice.

## Summary

Zitron is a British AI critic who hosts Better Offline, described in the YouTube description as reaching over a million monthly downloads, and writes the newsletter Where's Your Ed At. He founded and leads the research firm EZPR and is writing The Hater's Guide to Silicon Valley, due in Q2 2027.

Zitron argues that companies overstate generative AI's capabilities and financial prospects, while subscriptions hide its high operating costs. He says major data-center investments depend on circular funding and speculative expectations rather than proven demand. Bartlett challenges him with examples of adoption, productivity and past technological breakthroughs; Zitron responds that those examples do not establish reliable, profitable use at scale. He predicts that OpenAI could face funding problems in 2027, with consequences for tech companies and investors, and urges people to question company claims.

### Minute by minute

- [2:03](https://realalpha.app/v/Lf5oqGOCRCM/?t=123) **Zitron calls generative AI a con.** Zitron says companies present generative AI as magical and capable of replacing jobs, while he sees expensive, unreliable cloud software. He argues that the industry overstates both what the tools can do and what their financial results show, and says public companies often fail to disclose AI revenue clearly.
- [11:08](https://realalpha.app/v/Lf5oqGOCRCM/?t=668) **AI use can hide its real cost.** Zitron explains that providers charge for input and output tokens, but monthly subscriptions conceal how much usage costs. He cites an analysis finding that a $200 ChatGPT plan could consume $14,000 worth of tokens and a $200 Anthropic plan $8,000. He says companies lose money when customers use more than their subscriptions cover.
- [16:16](https://realalpha.app/v/Lf5oqGOCRCM/?t=976) **AI spending outruns proven returns.** Zitron says providers and cloud companies have not shown that inference is becoming cheaper or profitable. He cites Microsoft’s fiscal 2026 revenue of about $34.33 billion from AI, including $24.1 billion from OpenAI, against $115 billion in capital expenditures. He also questions the assumption that AI will improve at a predictable rate, pointing to worsening software quality.
- [24:30](https://realalpha.app/v/Lf5oqGOCRCM/?t=1470) **AI errors remain hard to control.** Zitron describes a Bloomberg Terminal query that returned a Microsoft share price he knew was wrong, and warns that mistakes matter more in finance, medicine or code. He says reported hallucination improvements rely on simple tasks and benchmarks whose meanings may be unclear. Bartlett argues that AI should be compared with human alternatives; Zitron stresses that people bring context, learning and judgment.
- [38:42](https://realalpha.app/v/Lf5oqGOCRCM/?t=2322) **AI demand may rely on subsidies.** Bartlett describes a business owner who finds AI transformative for writing and images. Zitron asks whether customers would value it at the actual per-token price, and says subsidized subscriptions distort demand. Comparing AI with the dot-com era, he distinguishes internet infrastructure that later found buyers from AI services whose current usage, he argues, is largely subsidized.
- [47:29](https://realalpha.app/v/Lf5oqGOCRCM/?t=2849) **Data-center plans exceed current demand.** Zitron says the large new data centers are being built for generative AI, not for other uses of AI or ordinary computing. He cites a Sightline Climate estimate of 190 gigawatts of data centers under planning and says the resulting annual demand would require $1.6 trillion to $3 trillion, compared with less than $130 billion in current demand. He also links declining search and software quality to business choices and AI-assisted coding.
- [1:00:38](https://realalpha.app/v/Lf5oqGOCRCM/?t=3638) **Zitron disputes broad job-loss claims.** Zitron says there is no economic evidence that AI is replacing most jobs or raising revenue per employee. He says some art directors, transcribers and translators face displacement, often because employers seek cheaper work. On autonomous driving, he says deployment should be cautious because edge cases remain difficult.
- [1:10:09](https://realalpha.app/v/Lf5oqGOCRCM/?t=4209) **AI warnings can serve company interests.** Bartlett asks whether Zitron’s critique may reassure the public in ways that help AI companies. Zitron says companies use claims about both danger and future abundance to create urgency and encourage adoption. He sees cybersecurity risks in giving models access to tools and compute, but says some reported demonstrations involved prompting or setup failures and argues for limits on compute.
- [1:19:13](https://realalpha.app/v/Lf5oqGOCRCM/?t=4753) **Robotics and agents have limits.** Zitron distinguishes generative AI from robotics, saying robots still require hardware, data and the ability to work in varied environments. He describes agentic AI as language models connected through a harness, not proof of independent intelligence. Bartlett discusses using agents for administrative work; Zitron says the scale of that use does not justify the industry’s spending and promises.
- [1:30:21](https://realalpha.app/v/Lf5oqGOCRCM/?t=5421) **Zitron sees limits to AI progress.** Zitron says he uses AI mainly for Bloomberg Terminal queries and technical troubleshooting, but has not found it consistently useful for financial models. He argues that model improvements are reaching diminishing returns and that better scores on tests do not show reliable performance on real tasks. He also questions how GPU data-center spending would make ordinary devices smarter.
- [1:44:59](https://realalpha.app/v/Lf5oqGOCRCM/?t=6299) **AI spending props up growth expectations.** Zitron says major technology companies and investors treat GPU purchases as evidence of future growth, even though the companies do not clearly report AI revenue. Bartlett agrees that spending is excessive but sees practical value in the technology. Zitron says the underlying uses do not justify the scale of investment.
- [1:57:30](https://realalpha.app/v/Lf5oqGOCRCM/?t=7050) **Zitron sets a high bar for changing his mind.** Zitron says he would need a dramatic cost reduction—by about a thousand times—and a genuinely autonomous product to reconsider his view. He disputes reports that AI systems independently blackmailed people, saying the cited examples involved users prompting models or researchers deliberately training them to produce such behavior.
- [2:08:10](https://realalpha.app/v/Lf5oqGOCRCM/?t=7690) **Zitron predicts funding stress in 2027.** Zitron says OpenAI may struggle to raise money or go public and predicts it could run out of cash in 2027. He warns that companies tied to its spending, including SoftBank and Oracle, could be affected, along with technology stocks, venture capital and retirement accounts. He says the resulting downturn could become a tech depression.
- [2:18:31](https://realalpha.app/v/Lf5oqGOCRCM/?t=8311) **Zitron urges caution and connection.** Zitron advises people to be cautious about tech stocks and skeptical of company promises, rather than treating his view as personal financial advice. Bartlett asks why he criticizes AI executives; Zitron says he objects to what he sees as misleading claims and unequal tolerance for failure. In closing, Zitron recommends supporting people around you and telling them when you value their work.

## Transcript

The Diary Of A CEO, hosted by Steven Bartlett, with Ed Zitron.

From the transcript The Diary Of A CEO publishes with the episode.

[0:00](https://realalpha.app/v/Lf5oqGOCRCM/?t=0) I think generative AI is at its heart con, and seeing these ultra-rich, ultra-powerful people lie through their f***ing teeth, turns my stomach. The word con is a strong word. Well, what do you call something where from the very beginning they've sold it in the terms of magic, but it's just a half-arsery machine? They are misleading the entire world, You are the first person that I've spoken to that has that opinion. Well, the fact that this is happening is insane, and the fact it's not a scandal is insane. And I've been in the tech industry for 16 years now, and I love technology, and I'm enthusiastic about it.

[0:30](https://realalpha.app/v/Lf5oqGOCRCM/?t=30) But I don't like being misled. And this is the largest non-consensual push of technology in history. So we're going to play a game, Ed. I have the things that you consider to be myths about the AI industry. Let's play it. The AI industry is creating enormous economic growth. No, it's not. All of these companies run at a horrifying loss. OpenAI lost $20.9 billion last year. None of these people can just say, yeah, we're on the path to making this profitable because they can't. Next one. AI will replace all human jobs. That just isn't happening, and there's no economic data to support it. Next, the United States need to spend trillions to beat China in the AI race.

[1:05](https://realalpha.app/v/Lf5oqGOCRCM/?t=65) What's the race to do, for us to constantly piss our pants worrying about China? But people keep saying, what if these models fall into the wrong hands? They're already in the wrong hands. Mark Zuckerberg, Sam Altman, Dario Amodei. Mark Zuckerberg says, we'll continue to invest aggressively in infrastructure to meet the demand. God matters a monstrosity. Makes me think of Shrek with Law Farquaad. Some of you may die, but that's a risk I'm willing to accept. If only these people gave a fuck about poverty or actual problems in the world versus are we buying enough GPUs. If this continues, what does the future look like?

[1:36](https://realalpha.app/v/Lf5oqGOCRCM/?t=96) Fuck. Guys, I've got a favour to ask before this episode begins. The algorithm, if you follow a show, will deliver you the best episodes from that show very prominently in your feed. So when we have our best episodes on this show, the most shared episodes, the most rated episodes, I would love you to know. And the simple way for you to know that is to hit that follow button. But also it's the simple, easy, free thing that you can do to help us make the show better. And I would be hugely grateful if you could take a minute on the app you're listening to this on right now and hit that follow button.

[2:16](https://realalpha.app/v/Lf5oqGOCRCM/?t=136) Ed Zitron. There are a number of things that you believe that a lot of other people don't believe. Right. You have, I think, a couple of controversial opinions and opinions that are in contrast to the other guests that I've sat here with. What exactly are those opinions, Ed? Ed Zitron. I think generative AI is at its heart con. I don't think it is sold as honest software. I think that they overstate both what it can do, what it will do, and the underlying financials to the point that they are misleading the entire world and they're actively exploiting the weaknesses in journalism, in our economies, and indeed within the responsible parties with sell-side analysts, governments, and all over the shop.

[3:00](https://realalpha.app/v/Lf5oqGOCRCM/?t=180) The word con is a strong word. Yeah, I mean, what do you call something where from the very beginning they've sold it in the terms of magic as this thing that will replace all jobs, that will cure cancer, as all of these things. And when you look at it, it's boring cloud software that's extremely expensive and unprofitable and also unreliable at its core. People will be asking, where are you drawing from in terms of your references, your personal experiences, where will you educate, what you study, what you write about, what you do, Ed? So that's the funny thing is people say, he's not got a finance experience.

[3:30](https://realalpha.app/v/Lf5oqGOCRCM/?t=210) He's not going to take. I've been in the tech industry 15, 16 years now in PR, but still had practical experience. And I love technology and I'm enthusiastic about it. And this thing just comes along. Everyone is telling me it's the best thing since sliced bread. It can't even do the basics. It can't even do search. Well, whenever you ask an AI person, well, what's your setup? They describe this Pee Wee's Playhouse thing of like, well, you've got a harness here and you've got to use the right prompt. Well, you don't want to use that prompt. You want to use this prompt here with this model, but don't use this model for the beginning, but at the end, you're going to want to use this model.

[4:01](https://realalpha.app/v/Lf5oqGOCRCM/?t=241) But... And this is meant to be artificial intelligence. It's meant to be smart. It's meant to be autonomous. It's meant to be something that you set and forget. We have the sort of six leading AI companies on the table here. Anthropic, Amazon, NVIDIA, Microsoft, OpenAI, Google. You're saying that their fundamental business model is... Well, their revenues are not really coming from AI. Up until fairly recently, none of their revenues were coming from AI, like dribbles a bit. Right now, 70% of all AI revenues across those three companies are from OpenAI and Anthropic, two unprofitable, unsustainable companies that literally cannot afford to exist without these very same companies giving them money.

[4:40](https://realalpha.app/v/Lf5oqGOCRCM/?t=280) Amazon sent $50 billion to OpenAI this year. They sent $5 billion to Anthropic. Google sent $10 billion to Anthropic. And in the next three and a half years, OpenAI and Anthropic, based on actual sell-side analyst evaluations, their estimates, that inform whether stock is going to go up or down after earnings, they are expecting $400 or more billion of revenue. 30 or something percent of cloud growth just from these two unprofitable companies that will need to be given the money from somewhere. And on top of that, these companies have such low respect for the average investor, for the analysts, for everyone really, that they don't even disclose their AI revenues.

[5:20](https://realalpha.app/v/Lf5oqGOCRCM/?t=320) The few times they deign us worthy... They use something called a run rate, an annualized run rate, which means, well, nothing. They never define it. It can mean month times 12. It can mean month times 13. It can mean last four weeks times 13. It's different every time, and they never define it. And then they sometimes just don't mention it. So you've got this big thing that is meant to be the biggest, most influential change to software ever. And whenever you ask them about it, when you say, how much are you making from this? They go, oh, I couldn't possibly say. I'm too shy. These are public companies, or at least the ones that aren't anthropic and OpenAI.

[5:53](https://realalpha.app/v/Lf5oqGOCRCM/?t=353) When they have good news, they'll tell you. And when they don't tell you something, well, that actually speaks volumes. Have you used these tools? Yes. AI tools, Gemini, Anthropic, ChatGPT, etc. And you found no value in them? There's some value, but it's not. They have spent over a trillion dollars in capex. What does capex mean? Capital expenditures. So when you are a business and you have operating expenses like electricity, for example, those come right off immediately. Capital expenditures are long-term investments that are theoretically one-off. So a data center or indeed the GPUs you put inside an AI data center.

[6:27](https://realalpha.app/v/Lf5oqGOCRCM/?t=387) Okay, so you've got a data center, and then you have these GPUs, which are like computer chips. So AI GPUs are much bigger, much more power intensive. They take a bunch of high bandwidth memory. And because of how many of them you need, you need thousands of them, tens of thousands, hundreds of thousands in some case, you need a bunch of power. So an example, OpenAI and Oracle are building a data center in Texas, in Abilene, Texas. 1.2 gigawatts called Stargate Abilene. Within that, with each one of the eight buildings, there'll be 50,000 NVIDIA GB200 GPUs. So, City of Bristol takes about 780-800 megawatts of power a year, right?

[7:12](https://realalpha.app/v/Lf5oqGOCRCM/?t=432) Yeah. Well, Stargate Abilene is condensing more power than that, 1.2 gigawatts, into a space around 1,172 times smaller. City of Bristol is about 1.2 billion square feet. Stargate Abilene is about 998,000. So you're condensing all of this power, all of this money, all of this labor into this one spot. And all of these data centers cost billions of dollars. All of these companies other than Microsoft are now to take out debt. And the thing is, they've spent over a trillion dollars so far, and they want to spend another trillion dollars next year. And for what? To make tens of billions of dollars, most of which comes from two unprofitable companies, Anthropic and OpenAI.

[8:02](https://realalpha.app/v/Lf5oqGOCRCM/?t=482) One of the rebuttals to that would be that the adoption, the customer adoption of people using OpenAI and Anthropic has been absolutely insane. These are the fastest growing products in all of history, especially as it relates to sort of technology. If we just focus in on technology, there are, you know, hundreds and hundreds of millions of people, billions of people are using these tools every single day for things that they have subjectively decided are problems they need solving. So, you know, money is a lagging indicator of value. So one would argue that they're just investing ahead of the monetization options.

[8:36](https://realalpha.app/v/Lf5oqGOCRCM/?t=516) The first, let's start with this adoption. Is it honest adoption when you are forced to use generative AI when you load Google? When you load Google Docs, Gemini screams in your ear. When you load Word, co-pilots bugging you. When you use Amazon, whatever Rufus AI is, has opinions on what socks you're buying. This is the largest non-consensual push of technology in history. ChatGPT, for example. Every single media outlet has been screaming about this for three years. They've been saying this will take your job. You must use this. If you don't use this, you're going to be falling behind. So people are using it because they've been told to use it constantly, and they're using it like search predominantly.

[9:16](https://realalpha.app/v/Lf5oqGOCRCM/?t=556) And that's partly because Google fell behind search, and also because... It's better at ingesting queries sometimes. Sometimes if you use a generative search, it's like a trawling vessel. It's not very good at specifics. But if you're like, does this thing exist? Has this person ever said anything like this? It'll still probably get it wrong, but it'll scour the ocean for you. Nevertheless, that's not worth a trillion dollars. None of it is. The amount of money being sunk into this... is just incomparable to anything. Railways, it blows everything out of the water because there is no post-bubble story even for this.

[9:49](https://realalpha.app/v/Lf5oqGOCRCM/?t=589) AI GPUs are not useful for other things either. It's a directionless egregore of capitalism, this headless beast that lumbers around, desperate to seek out growth everywhere, in the hopes that if it harasses people and scares people and... demonizes labor enough, people will be forced to use it. The reason I pause is because I just, I think about my own company. Obviously, everybody thinks about their own personal situation. So you have people listening now that don't use any AI tools, and you'll have people that are using it for everything, from coding, new software tools, to everything they write, to, you know, images, whatever.

[10:26](https://realalpha.app/v/Lf5oqGOCRCM/?t=626) And when you look at the stats around enterprise adoption, it says 88% of organizations regularly use AI at least once for one particular business function. And I'd say in our company, 95% of people use one of these AI tools like Anthropic or ChatGPT or Gemini every day. Right. And that exists on some kind of spectrum of like the super users that are using it probably, you know, every hour of every day for almost everything to, you know, someone maybe hiring the executive team that's using it less because their job doesn't require of it as much. And when you look out into the world, you know, how the world is changing from a content perspective, if we're looking at generative AI, it is obvious that these tools are being widely adopted.

[11:09](https://realalpha.app/v/Lf5oqGOCRCM/?t=669) Part of the symptom is the AI slop you see all over the internet. So this idea that it's not being used, I struggle with. It's being used. Here's the thing with the slop. Before we had AI slop, we had SEO slop because Google incentivized doing the lowest common denominator that would rank well in search. It's a whole story about how they pulled back spam guards, thanks to Prabhagar Raghavan, which we can get into, where they made the internet worse by allowing worse content to rank higher. It's why we had, when you used to Google our best washing machine, there's 11 different horrible blogs that read like somebody got a concussion.

[11:47](https://realalpha.app/v/Lf5oqGOCRCM/?t=707) They are built to rank rather than be read by humans or built to be made good. So AI helps weaponize that scale. Yeah, you can make a bunch of generic slop. We've had slop for years. We've just found a slop machine. But then also there's the problem of cost. So when you use AI services, you burn tokens. And it's per million tokens. What's a token? So it's around three quarters of a word. So it's characters. So the AI companies have a currency in which they charge you, like a taxi in New York has a meter. Yeah. And they call it tokens. Yeah. And every word, let's just say for ease it's a word. Yeah, about a word.

[12:25](https://realalpha.app/v/Lf5oqGOCRCM/?t=745) Yeah. And it's per million tokens. So you'll be charged per million input tokens, the stuff you feed into it. like a document or a code base. And the output tokens are both the stuff it spits out at the end, but also when it thinks. So, okay, you've asked me to give you the best restaurants in this area of New York. I should find the best restaurants in New York. All of that's output tokens as well. However, when you're paying for a monthly service, you don't see any of that. Put all that crap to the side. They just have rate limits. So you can use them a certain amount, and then when you run out, but they kind of obfuscate what that was.

[12:56](https://realalpha.app/v/Lf5oqGOCRCM/?t=776) Now... Someone recently found, Semi Analysis actually found this, a big analyst group.

[13:01](https://realalpha.app/v/Lf5oqGOCRCM/?t=781) **Ed Zitron:** They found that on a $200 a month chat GPT subscription, you can burn $14,000 worth of tokens.

[13:08](https://realalpha.app/v/Lf5oqGOCRCM/?t=788) And on Anthropix, you can burn $8,000 for... 200 bucks that is how most and even on the 20 buck a month service you can burn 400 dollars now most people don't realize that most people have no idea what ai costs most people just think oh it's 20 bucks a month no all of these companies run a horrifying loss open ai lost 20.9 billion dollars last year because people can burn as many tokens as they want And when they tried to move everybody on the enterprise side, so companies bigger than 150, onto actually paying the cost of AI in around March of 2026, to quote Sam Altman, they said, people have a big problem with it, I think.

[13:47](https://realalpha.app/v/Lf5oqGOCRCM/?t=827) It's a huge issue, which is not really what the... heir apparent to tech's history is meant to be saying but the point is enterprises immediately started freaking out uber burned through their entire annual token budget in three months so suddenly after everyone's saying ai is the most productive thing ever it's amazing it's changing everything the moment people actually had to pay for it they go oh i don't know actually um maybe it's it's obviously we all love it it's all great right But it's costing too much, so we now need to reduce the cost. Because people are just dumping stuff into it, being like, what do I do here?

[14:21](https://realalpha.app/v/Lf5oqGOCRCM/?t=861) And getting whatever the median is out. Because that's what these things do. They provide the median answer. So essentially, someone like me who's a power user of these tools... I could be costing Anthropic or OpenAI $1,000, but they're only charging me $100, let's say. So they are having to subsidize $900 of my usage because of the electricity costs and the costs at their data centers. And so your assertion here is that that is unsustainable. Yes. And just to be clear, they're probably not one for one dollar. It might be 34. We don't we don't know. I think it's unprofitable. These companies don't disclose them.

[14:56](https://realalpha.app/v/Lf5oqGOCRCM/?t=896) Even in their auditive financials, they play funny games with how they categorize things. But nevertheless, yes. And on top of that, the way that you stand up inference, which is the thing that creates the output within these data centers, is... You're not just saying, okay, turn the inference machine on, let's go. You are standing up the GPUs necessary to take in the demand, and if you buy too much, you've wasted the money. You have to pay for the hourly GPU use regardless. If you buy too few, your customers can't use it. They get pissed off at you, they can, so they go with someone else. But nevertheless, yeah, they would get demand selling $20 or $40 for a dollar.

[15:32](https://realalpha.app/v/Lf5oqGOCRCM/?t=932) And that's what these services do. And really, the simplest way to explain it is, If they were actually profitable, if they believed that these services were worthwhile and that they were worthy of the cost, they'd charge it. Regular people wouldn't be able to get a monthly subscription. They'd just be paying what it's worth. Unless, of course, there was an economic problem. And it's very simple. You pay when you use an LLM, regardless of whether you get what you want. When these things hallucinate, say you're doing something, you're coding something, and they go through a code base and they fuck up a bunch of stuff, they break a bunch of stuff, you're paying for that.

[16:05](https://realalpha.app/v/Lf5oqGOCRCM/?t=965) You're paying for it whether it works or not. Unless, of course, you're using one of these subscriptions. I think the really interesting point is, are they spending ahead of the value showing up, which is, I imagine, what they would argue, or are they spending all of this money and subsidizing all of their users in a way that's unsustainable and that will never be justified? Because you think back through the history of technology, you often get people losing money to grab market share. And they're also focusing on bringing the costs down and making it more profitable for them as well. But they can't afford to underinvest.

[16:25](https://realalpha.app/v/Lf5oqGOCRCM/?t=985) If they were bringing the cost down, they would have brought the cost down, which they have not. It seems to be getting more expensive. In fact, everyone, inference providers, don't seem to be profitable. Even the companies renting out GPUs don't seem to be profitable. I imagine that it wasn't like they started out and they were like, shit, this is unprofitable. At the beginning, we know it. Screw it. We'll keep doing it. I don't think it's... some big conspiracy, they probably thought at some point, yeah, this will go profitable, the chips will catch up, customers will pay for the overwhelming value, because you don't know in 2023 where it's going to be in 2026.

[16:57](https://realalpha.app/v/Lf5oqGOCRCM/?t=1017) You assume it's going to go up. That's the nature of venture capital. They should have stopped in 2024 when OpenAI lost over $5 billion. They should have been like, yep, this is not going to work. But they kept going because it helped number go up so much. It helped stock values pump. It helped everyone pump. It helped NVIDIA pump, Microsoft, everyone. And not from the revenues. Because here's the funny thing about Google, Microsoft, and Amazon. People, for years, have been saying their AI bets have paid off. Wow, their AI bets have paid off. As these companies refuse to say how much they're making from AI.

[17:29](https://realalpha.app/v/Lf5oqGOCRCM/?t=1049) But because their existing businesses continue to grow, and did so, by the way, through price increases, changes to how Google and Meta... did advertising. Amazon bumped up prices and changed how they did. Actually, Amazon started a remarkable ad business during this whole time as well. And they're selling through Amazon platform. Anyway, nothing to do with AI, but because number go up, because revenue go up, everyone went, it's AI because these companies wouldn't spend a trillion dollars for no reason, right? Except in fiscal year 2026, which just ended for Microsoft. Annoying, I know. They made, total according to Bloomberg, about $34.33 billion.

[18:06](https://realalpha.app/v/Lf5oqGOCRCM/?t=1086) $24.1 billion of that was from OpenAI. So that leaves them with about $10 billion in a year when they spent $115 billion on capital expenditures and intend to spend $175 billion next year. The math does not make sense. I imagine their plan was, okay, this is just going to get exponentially more valuable, and at some point, the costs will be outpaced by the return. Problem is that large language models need a bunch of money to train them. They need constant data flows through it. They need customized data. It's just this big, expensive monster. And when you try and talk to people about it, and you try and say, hey, look, this is really bad.

[18:43](https://realalpha.app/v/Lf5oqGOCRCM/?t=1123) NVIDIA has... sold, so it was $215.9 billion in the last fiscal year worth of GPUs mostly. And you try and go, yeah, that's the support, like $22 billion of revenue total in the entire world outside of these two companies that literally require money being fed into them, sometimes by NVIDIA to keep alive. Yeah. When you tell people that, they go, well, companies just lose money, right? Because we have this, quote Ed Elson from Prof G Markets, we have this cult-like worship of the wealthy, where we think that someone wouldn't spend all this money for no reason, right? Because reconciling with that, with this idea that The ultra wealthy, the ultra powerful didn't get there through big brains.

[19:26](https://realalpha.app/v/Lf5oqGOCRCM/?t=1166) They didn't get there through anything other than luck and opportunism and getting an MBA perhaps with the right people, that they just got there because they're regular people and they just happened to be in the right place at the right time. Reconciling with that and realizing that the world is not controlled by people like a meritocracy is kind of grim. So it's easy to be like, no, they're not making a mistake. I must be missing something. And that's what they want. So, you know, I think back through the history of technological breakthroughs, and I think about, I mean, you can look at different industries.

[20:15](https://realalpha.app/v/Lf5oqGOCRCM/?t=1215) And one of my favorite books on this subject is The Innovator's Dilemma. I read it. And one of the things it talks about is how the innovation that ends up taking out or transforming an industry... often starts worse, doesn't make economic sense. None of your customers are asking for it. And this is typically why we end up ignoring it. So like, you've got horse and carriages in the 1800s. Amazing form of transport, according to the 1800s. You know, people of the 1800s. And then you have this thing called cars come along. Now, the problem with cars is they broke down all the time. It's kind of like AI hallucinates now.

[20:47](https://realalpha.app/v/Lf5oqGOCRCM/?t=1247) They were more expensive, and the economics of it didn't make sense. You might as well walk, then buy a car. There was a law at the time that meant you had to walk in front of it with a red flag. and someone had to employ someone to walk in front of it waving a red flag. Obviously, it's worse. It's a worse solution. However, these things that are disruptive innovations, they have a higher ceiling of growth, and so they eventually overtake the horse. And when I think about that analogy in the context of all of this, I go, okay, it's imperfect at the moment. The economic models aren't perfectly ironed out.

[21:19](https://realalpha.app/v/Lf5oqGOCRCM/?t=1279) They're still figuring out how to make it cheaper, the infrastructure, etc. But if you think about the rate of improvement versus other, you know... let's say coding, how much could I train a human coder to improve and to increase their output versus an AI agent? One would go, if you just imagine any rate of improvement in these AI tools, at some point, if you just imagine a 5% rate of improvement per month, at some point it's, you know, and then you imagine a 5% reduction in cost, which is what we did with the internet, what we did with cars. Yeah, but that's- Moore's law. Moore's law is a theory, and Moore's law is not with GPUs.

[21:53](https://realalpha.app/v/Lf5oqGOCRCM/?t=1313) So let me actually explain. So, NVIDIA. NVIDIA invented, I think it was in the 2000s, they put out something called CUDA, which is the underlying software library and the way to run software on GPUs. It took them a solid decade or more to make it something where they could do data analytics, one of the early things, mapper and such. And then when AI came along, they'd had lots of experience with it. But nevertheless, this company has got more money, more attention. more geniuses behind them, more people focused on making their things more efficient than anyone could ever ask for. And NVIDIA, for anyone that doesn't know, makes the chips.

[22:28](https://realalpha.app/v/Lf5oqGOCRCM/?t=1348) So, and that CUDA thing I mentioned, they were the ones with CUDA, and CUDA allowed generative AI to grow. Okay, so they're chips. Chips, yes. And chips are needed. Those are the things that go into the data centers. And their specific chips are the ones where you can run AI software on it. So the training runs and also the inference. Now, here's the thing. The car example. Back then, you didn't have pretty much every mathematician and scientist going into the car industry. You didn't have the combined world's governments never shutting up about this. And by the way, giving them credit early. Since 2023, they've been saying this is inevitable.

[23:01](https://realalpha.app/v/Lf5oqGOCRCM/?t=1381) Even what you said, 5% improvement. I don't even know how you'd measure that because a junior software engineer, can still experience things and learn things from context, from how people deal with problems. And the way that people deal with problems is not as simple as looking at the code or reading some emails. It's context cues from speaking to a person. It's being in different environments. And there are uses for LLMs in coding. I don't dispute that. But even saying 5%, what does that mean? Is it better at Rust? Is it better at C++? I'd say productivity. So just like, yeah, shipped. If we did it in the context of coding, it would be like shipped code.

[23:37](https://realalpha.app/v/Lf5oqGOCRCM/?t=1417) That's the thing. That would be like, he's the best writer in the world because his newsletter is really long. That's an insane way of evaluating it. With coding, it would be, I mean, it's even difficult to evaluate because it's, is the software out there better is actually a great way of evaluating it. And I would say uniformly not. I would say the standard of software across Google, Microsoft, Amazon, Meta, especially God, Meta's a monstrosity, is worse. GitHub, someone posted on Twitter earlier today, we should get a notification when GitHub is up rather than when it's down because that would be more reliable.

[24:09](https://realalpha.app/v/Lf5oqGOCRCM/?t=1449) Microsoft is one of the largest companies in the world and they can barely wipe their own ass when it comes to GitHub. The quality of software is going down, weirdly enough, as more people use LLMs and more businesses demand, and I really do mean demand, that people use these services. So on this point of, if we go back to this horse and carriage and car analogy, say that we're at whatever point today, if you imagine any rate of improvement in the technology, which we have seen since Chatjipati came out. I remember when Chatjipati came out and I was in Asia, and I was there showing it to my fiancé, and I was like, look, he can do this.

[24:40](https://realalpha.app/v/Lf5oqGOCRCM/?t=1480) And it was hallucinating once in a while and getting things wrong. I actually don't have that experience anymore. I have moments where I believe its reasoning is weak, but I don't have outright hallucinations anymore. See, I disagree. Give me an example of what you define as a hallucination. Okay, great one. So I have a Bloomberg terminal. The very useful thing they have on there is Ask B. So when you do a Bloomberg inquiry to look up what we think NVIDIA's revenue is going to be next quarter, it runs something called BQL, which is its own programming language. Now, instead of having to learn that, you can just type into Ask B and it will generate it and run it for you.

[25:16](https://realalpha.app/v/Lf5oqGOCRCM/?t=1516) And so you get pulled up and you know where the date is coming from. It deals with hallucinations real well. The other day, I was like, you know what? We'll get a little spicy. I'm going to look up the growth rate of stocks of Microsoft, Google, Meta, and Amazon over the course of five years, I think it was. And I was about to copy-paste it over to something, looked at it in Excel. It was right in the newsletter. I went, Microsoft stock's never been $575 a stock. You know what? When it's a cute little thing like, oh, it's a stock price and I can't afford it. It was no harm, no foul. That's fine.

[25:48](https://realalpha.app/v/Lf5oqGOCRCM/?t=1548) But when you're talking about a transcribing tool for a doctor or a financial model that a hedge fund is dependent on. At that point, it becomes a little more dangerous. And the thing is, a hallucination with a software package, for example, refactoring a code base, and it leaves the door open security-wise. Or it just breaks something. And you, I don't know, maybe you've been vibe coding for six months. You haven't really been coding with your own hands for a while. Maybe you've forgotten a few things. You have this slot to look for. You go, fuck, you know what? I'm not doing it. And so the problems become multiplicative.

[26:23](https://realalpha.app/v/Lf5oqGOCRCM/?t=1583) And I don't really know how you train them out of that, and they've certainly not succeeded. So on one hand, they have got better. But one of the main ways they evaluate them getting better are benchmarks that are adjusted specifically for large language models. Because you can't just have them do... tasks they've got better at that they found some tasks they can have them do on but even them like meter metr they have this thing where it's like check out this chart look how much better it's getting at running tasks wow it can go for an hour and then you look it's like yeah and successfully completing them 50 of the time they have a hallucination leaderboard.

[26:56](https://realalpha.app/v/Lf5oqGOCRCM/?t=1616) And it really focuses on basic tasks. And it shows that the four-year trend, according to historical data from the Victoria Hallucination Leaderboard, shows that hallucination rates on simple summarization tasks have plummeted from around 21%, 21.8% four years ago, down to 0.7% roughly on today's top frontier models like Gemini and ChatGPT. Again, the point of nuance here is that these are on simple tasks, right? which is kind of what I've experienced. I've experienced that on day-to-day things that hallucinates less. Again, rate of improvement thinking. So if I just imagine the trajectory to continue, there is going to become a time where hallucinations become rarer than they are today, increasingly.

[27:38](https://realalpha.app/v/Lf5oqGOCRCM/?t=1658) And also what I would say is when I think about other technologies, there's two more points. Other technologies at their inception, when they first came to the world, like the internet, also had technical difficulties. I remember growing up with dial-up modems, and I couldn't go on the phone at the same time as going on the internet. I'd have to stop RuneScape upstairs to go on the phone. And you thought, this is crap, this technology is crap. I don't know, mate. I loved it. Yeah. Yeah, I know. It felt like magic. And then, in hindsight, you go, wow, I now have Starlink and 5G internet from my phone.

[28:07](https://realalpha.app/v/Lf5oqGOCRCM/?t=1687) It's unbelievable. You couldn't leave the house with internet before. And that's what I mean by the rate of improvement thinking. I'd say the last point is we often compare... AI to perfection. Right. Whereas that's not actually the alternative. In the working world, like if I wanted to do, let's say, a simple writing task, I should compare AI to my alternative way of doing that simple writing task, which is both measured in my time, right? And my ability to hallucinate as a person who doesn't know everything. Or if I'm hiring someone, an intern who might also be prone to hallucination or have gaps in their knowledge.

[28:45](https://realalpha.app/v/Lf5oqGOCRCM/?t=1725) So it's not actually like we're comparing, we should compare AI to perfection. It's AI to the other alternatives. And if someone hallucinates 0.7% of the time, but knows way more and is faster, maybe on a net basis, that's a good trade. Maybe I should use AI. So let's start with an example. Someone I love dearly. Matt Hughes, my editor. Yeah. He lives inside of Liverpool. Wonderful guy. Yeah. I don't pay Matt Hughes because he knows everything. I pay him because he has incredible context and a ton of knowledge. And he's willing to expand it and work with me. And moral sport. And he's a great editor.

[29:18](https://realalpha.app/v/Lf5oqGOCRCM/?t=1758) But he's also someone who gets into the guts of it and has the experiences of it. He's a... decorated tech journalist and on top of that a wonderful loving being with empathy and joy in his heart for the stuff he loves and absolute fucking venom for the people he hates that's i can't get that from a large language model but on top of that i don't i push back on just the assumption there When you say knows everything, what good is something that knows everything when it sometimes doesn't know anything? When it's sometimes. And the thing is, are you really paying an intern for something basic? Are you really going to them and saying, yeah, can you look up what the date is?

[29:53](https://realalpha.app/v/Lf5oqGOCRCM/?t=1793) No, you're doing that on Google. Whatever the task is, you are trying to also train an intern. The point of an intern is to train them and turn them in, take them out of Pinocchio status. Yeah. But it's also, an intern learns. An intern gets context. An intern learns your habits. An AI gets context and learns. No, it doesn't. An AI doesn't learn? I mean, it doesn't. The way it learns is you create a giant clawed.md file that it sometimes doesn't read, sometimes does read. You create a harness. It's like it's Pee-wee's breakfast machine from Pee-wee's playhouse. You have to do all these contrivances to mitigate the hallucinations.

[30:26](https://realalpha.app/v/Lf5oqGOCRCM/?t=1826) And even then at the end... How much effort have you put in? But, okay, this is an extreme simplified example. If I went on my claw down and said, what's my dog's name? It would know my dog's name. Jesus Christ. This company raised $95 billion this year. I'm using an extreme simplified example to show that it can remember things from the past. Obviously, it knows much more complex things as well. But I just use that as an example. So we accept the fact that it does have memory of the past. It has files it can access that have stuff on it, but that's not the same as memory. And it's also just, okay, so it remembers your dog's name.

[30:59](https://realalpha.app/v/Lf5oqGOCRCM/?t=1859) It might remember your habits. It might be able to read things you've said before. Does it know your moods? Does it know what's going on in the world around it? Does it have good days and bad days? Is it there for you? Because it's just a fucking text machine. And the thing is, the intent example. An intern is something that can grow. It's something that you invest in. That's not something you do through feeding files and text to it. The way that we store memories ourselves, the way in which we accrue experiences is a milestone of emotion and feelings and facts. Completely different. So I think there's two things here.

[31:33](https://realalpha.app/v/Lf5oqGOCRCM/?t=1893) There's the process in which something happens, and then there's the output. So the process, you were describing the process of how a human does memory. The way that an AI does memory is different, but the thing that people care about is their value in the output. I.e., you know, if I dump all of my files into Claude, I don't really care how it processes it, as long as when I ask it... what's my revenue? It has the number. And one could say the same thing about training someone. You could say you teach them, you put lots of effort into them, you give them lots of context, you educate them and give them experiences, and then you might come and say to them, by the way, what's my revenue?

[32:08](https://realalpha.app/v/Lf5oqGOCRCM/?t=1928) Now, the processes are entirely different, but the outcome is what I care about. Do they know the revenue number when I ask them? Yeah. And so I think that's the part that we sometimes get lost in. We get, you know, because I've heard this debate about, like, can AI be creative? Right. I think, like, the way to answer that question is, like, it's about the output. When I ask it to do a creative thing, does it give me the answer? Not, is the process the same as a human process? Because actually, no, who cares what the product? People care about, they pay for the outcome, the product. I actually disagree about the process because...

[32:39](https://realalpha.app/v/Lf5oqGOCRCM/?t=1959) Matt Hughes, for example. Your editor. Yeah. Yeah. Watching him go down a rabbit hole and being there with him, and actually vice versa, him doing the same thing. We wrote these... Well, I mean, we were working on the research. I ended up sitting there for the day-long session of writing 11,000 words, and he had given me a bunch of notes. It was actually just... Even describing that process, I feel so happy, because it was like us being like, I can't believe how fuck these... Jesus Christ, they can't... Just like the... misanthropy of just the horrible, cynical people of asset managers like Blackstone, just learning about them and being like, it can't be this, and having a back and forth with him.

[33:14](https://realalpha.app/v/Lf5oqGOCRCM/?t=1994) That is fundamentally different because we were both learning together. And the learning process was as much about creating the output as the output itself. When you learn something, you're not creating the average, which really is what these things do, of the documents it could find. You're not getting particularly novel If I needed a generic slop output, sure, but I've used some of the higher-end LLM harness machines that the hedge funds use, and they all give the same shite. It's all the same generic reports, the same, oh, we noticed this analysis, things that you can find on any kind of AI slop out there.

[33:49](https://realalpha.app/v/Lf5oqGOCRCM/?t=2029) What you described to me there, what I heard anyway, is there's two points of value you're getting from your time with that. I mean, there's many more, but you said you're learning and then you're getting this book edited. Blog. Blog. You're getting a blog edited, which is the output, and you're getting learning. And you're also really getting connection and all these other things. But when people sort of think about the value of AI, of course they could use it to learn. But in the example I gave of like repeat my revenue number back to me or do this number, I just care about the output. I could use it to learn.

[34:16](https://realalpha.app/v/Lf5oqGOCRCM/?t=2056) I could say as far with me. What if the revenue number was wrong once? You should have defined, deterministic ways of knowing those numbers. You should not rely on them. Even with the terminal running BQL, which I trust, I will double-triple-triple-check everything just to be sure. Partly because also the process of learning for me, I don't want just a report I... go like that i want something that i fully understand and also understand the context around it i don't think that llms do that and i just don't see them getting better in a way that does that because it's It's just not what they do.

[34:50](https://realalpha.app/v/Lf5oqGOCRCM/?t=2090) And also there's the other problem of the more detailed the report, the more likely there are things to be wrong with it. If you are with Matt Hughes, for example, I can trust he's got it right. I can trust he understood. And I can trust that I can have a back and forth with him that will inform me if I've missed something. I can read the stuff that he's read and actually trust him because there's a big trust part as well. What is the basis of your trust in Matt? Could it be his historical performance? I mean, yes. Okay. And also the fact we've learned half of this stuff together. But tenure doesn't necessarily...

[35:23](https://realalpha.app/v/Lf5oqGOCRCM/?t=2123) There's probably people, you know, for 15 years who you also don't trust. Yes. So I think I was trying to figure out, like, what is the thing that's causing humans to trust another thing? And I guess it would be continual delivery of a commitment made of sorts. And so with Claude, for example, on simple tasks, as we've seen from this hallucination leaderboard, it continually delivers for people. And that's why we've seen the fastest- I mean, is that what that board says? Well, it's saying, like, is it getting it wrong? Is it hallucinating? On simple tasks. Simple tasks, yeah. How are those defined?

[35:52](https://realalpha.app/v/Lf5oqGOCRCM/?t=2152) I don't know. That's the thing, though. Because this is actually a very illustrative thing of the AI industry. They are the whataboutist masters. They have like, well, look, we've got this benchmark that says we're good at this. And look, the number's higher. Yeah. What's the number mean? What's that mean? And I'm not using this as a critique against you. It's when you can't give a direct answer, you give a side answer. When you as the LLM industry want to prove your worth, you can't just be like, just use the product. When the first iPhone came out, I got Penn State at the time. Oh, I felt like the apes at the beginning of 2001.

[36:25](https://realalpha.app/v/Lf5oqGOCRCM/?t=2185) I was like, oh, fuck. Visual voicemail. It was immediate. And I showed it to tech friends. I showed it to the most normal people in the world. And everyone was like, holy shit. They were on Razors. They were on Nokia 3210s. It was obvious the value. Amazon Web Services, same deal. It wasn't obvious, though. Yes, it was. I mean, I bought it. To you, it was. It was. And I also showed it to a bunch of people because I'm aware that I have bias when I just love gadgets. But I remember the famous Steve Barmer, who was the CEO of Microsoft, interview, where he was told about the iPhone. and he'd busts out laughing five hundred dollars fully subsidized with the plan i said that is the most expensive phone in the world and it doesn't appeal to business customers because it doesn't have a keyboard which makes it not a very good email machine you can get uh...

[37:14](https://realalpha.app/v/Lf5oqGOCRCM/?t=2234) a Motorola Q phone now for $99. It's a very capable machine. It'll do music. It'll do internet. It'll do email. It'll do instant messaging. So I kind of look at that and I say, well, I like our strategy. I like it a lot. He burst out laughing, mocking it. Because it was so disruptive. It was way more expensive. And it was way different. No keyboard. Well, phones used to be insanely expensive and the carriers would cover them, but you had to sign a long contract. You were still spending 500 bucks. But the thing I'm getting at is you didn't have to explain to someone what, perhaps you'd have to get past the cost part, but you could just be like, look how good this is.

[37:51](https://realalpha.app/v/Lf5oqGOCRCM/?t=2271) And then once the app was the iPhone 3G with the App Store, people were like, oh shit, this could actually change things. Mobile web, even though it was a monstrosity, it was so bad at first. Even then you could get your emails and you could just look at them. But it's BlackBerrys were also expensive and were still actually kind of cool. But the way they worked was not like consumer software. They didn't have the classic GUI. iPhones felt like that. It felt like a cell phone designed even, like a computer. It was obvious. It was obvious in the beginning. Everyone, I was, I was, day and a go in the center of Pennsylvania at the time and everyone I showed it to was like, wow, this is incredible.

[38:23](https://realalpha.app/v/Lf5oqGOCRCM/?t=2303) That, to me, is the obvious thing. With AI, to this day, when you're like, okay, why is it so amazing? People still dither. People are still like, yeah, you can't run a business fully with it without this... weird system of pulleys and levers and such. But how come then, when you look at the stats around ChatGBT's growth, 100 million active users in just the first 60 days after launching? For comparison, TikTok took nine months, Instagram took 2.5 years, and the internet itself, the World Wide Web, took roughly seven years to reach that scale. Over 60% of the US adults are integrated into AI tools in their daily and regular routines within three years of the launch, reaching 40% of the population population.

[39:04](https://realalpha.app/v/Lf5oqGOCRCM/?t=2344) And that same milestone took the internet five years and personal computers nearly 12. Okay. So I think this is the part that's giving me dissonance. It's like when I showed my fiancé ChatGVT, it didn't really work. But as a sole entrepreneur who English isn't her first language, who has to write lots of text and lots of copy and generate lots of images and was paying a graphic designer to help her make certain images that she couldn't make herself because she doesn't have the skills, she would describe it as being... transformative for her business what i'm hearing from you is that it's not transformative and there's no value in it for people but she if she was sat here now she could transformative it would she pay the per million token rate would she pay the actual rate because that's the thing if this was sold at its honest cost yeah i would actually if and people were reacting like that and they were paying two three four dollars every time they did something and they were genuinely happy that might be an argument what is the what would be the honest cost if they weren't The actual per million token cost, the actual API cost.

[40:02](https://realalpha.app/v/Lf5oqGOCRCM/?t=2402) They should charge. Do you know how much that is relative to what they charge? Oh, God. It depends on the model. But there's actually kind of a point I want to make about the thing you said with the internet earlier. So when I first got on the internet, a 33.4 kilobits a second modem. Even back then, I was like, fuck, if this was faster... And that was like immediate, just like if this was faster, because it was slow. You'd go on like Happy Puppy or something, download, take all bloody day waiting for shareware to download. Immediately, you were like, if I could do this faster, it would be better.

[40:31](https://realalpha.app/v/Lf5oqGOCRCM/?t=2431) And even back then, I'm like, man, you could probably do video camera stuff with this. Stuff that eventually happened. And actually, there's this guy called Jim Covello from Goldman Sachs in a report he did in 2024 that was Gen.AI, too much spend for not enough return. Paraphrasing there. And he made the point that in the run up to the iPhone, right? There was thousands of presentations that when GSM radios get smaller, when Bluetooth radios get smaller, when Wi-Fi radios get smaller, it is inevitable that we will get something like this. And then he said that there is no such path for AI. There was no roadmap to AI becoming...

[41:04](https://realalpha.app/v/Lf5oqGOCRCM/?t=2464) This thing that they promised. And I must be clear, if these companies had gone out there and are like, yeah, this is interesting cloud software. It's generative. It's really expensive. We're not sure if we can fully not trust it, not in the oh, I'm scared way. I mean, just like we're not sure that this is going to be a disruptive... world-changing thing. It has potential, but we're going to go slow. It's really expensive. This is an R&D effort. We're not going to expose consumers to it and actually be like, I don't know, language models and no generative AI stuff. Just being, not even calling it because it isn't AI.

[41:36](https://realalpha.app/v/Lf5oqGOCRCM/?t=2496) It's not autonomous. It's not smart. It's not smart. I actually might respect it, but this is not. They've gone out there since 2023 and said, 2022, this is the best thing since sliced bread. This is changing everything. This is going to do all your work. This is going to take your job. You're going to talk to Bing and it's going to take you to leave your wife. All of these crazy things. And what's funny is when the writer, Kevin Roose, I think it was, he was speaking to Kevin Scott, the CTO of Microsoft, about it. And Kevin Scott goes, you know, I'm just glad we're having this conversation. Instead of being like, settle down, Beavis.

[42:07](https://realalpha.app/v/Lf5oqGOCRCM/?t=2527) It's a website. The website told you something. It's just LLMs. They talked it up. And that's because everyone is talking about what they wish this was rather than talking about what it can actually do. This makes it scary to people, deliberately so. It makes it environmentally destructive. Look at the gas turbines poisoning blank neighborhoods. I think it's in Louisiana. It's one of Musk's data centers. Look at the incredible energy draws. It is raising power bills. And also, it is creating inflation across all consumer electronics because of the massive ramp. Do you know what's interesting? I almost feel like so much of what you're saying is true.

[42:42](https://realalpha.app/v/Lf5oqGOCRCM/?t=2562) And also, it can be true that this technology is going to profoundly change the world. And I think back to the early days of... The internet is maybe the closest analogy we have of... You know, in the dot-com bubble. You know, you wrote this great essay. Yes, yes. Which I found really funny. Especially the name. The Rot Economy. And you talked about the rot-com bubble. Yes. Talking about how AI is of less value than people think. Mm-hmm. And in the sort of dot-com bubble, what you saw is huge hype, people overselling the capabilities of their websites and what they were building. But in the wake of the dot-com bubble, yes, 90% of stuff went to zero.

[43:09](https://realalpha.app/v/Lf5oqGOCRCM/?t=2589) But you had generational companies born that changed the world. Right. Right. And so I do, I kind of, and that's what bubbles do, right? Huge hype, overinvestment. Investors get crazy delusional. They think everything's going to change. At the same time, you do have skeptics. In these moments, the dot-com bubble had... I mean, the internet itself had the biggest sceptics. In 1998, Nobel Prize-winning economist Paul Krugman said, By 2005 or so, it will become clear that the internet's impact on the economy has been no greater than the fax machine. In 1995, astrophysicist Clifford Stuhl, famously, I wrote about this in my book, wrote famously in Newsweek...

[43:52](https://realalpha.app/v/Lf5oqGOCRCM/?t=2632) Do our computer pundits lack all common sense? The truth is no online database will replace your daily newspaper. No CD-ROM can take the place of a competent teacher. Commerce and businesses will shift from offices and malls to networks and modems? Baloney. So how come my local mall does a roaring business and the cyber mall gets zero business? And then I'll give you one more from Krugerman, who was the award-winning economist. He said, the growth of the internet will slow drastically. As it becomes apparent, most people have nothing to say to each other. That may actually be the worst one of those predictions.

[44:31](https://realalpha.app/v/Lf5oqGOCRCM/?t=2671) Hang around any bar in middle America. Honestly, the best conversation. But it's just all the same thing. I actually, so Clifford Stoll actually, his piece was interesting because there were some boner points in it, but he made points about how like an overwhelming amount of bad information out there is bad for society. He's completely right. Saying how online education would not be a great replacement for regular education. I think we've seen that. But... There is an economic difference that's vastly, it's just completely different. So, dot-com bubble was actually two bubbles. There was the website bubble, which was just trash on trash on trash.

[45:04](https://realalpha.app/v/Lf5oqGOCRCM/?t=2704) It was just like, I think, what was it? Excite at Home bought an eager eating card company for like a billion dollars. It was insane crap happening. That was so small. The big thing that people are thinking about is the dark fiber. Dark fiber, yeah. Dark fiber was all of the wires that put in the ground thinking we're going to have all this demand for internet. And it turned out that demand for internet, I think the analyst estimate was it was doubling every 90 days when it was doing that every six to 12 months, maybe longer. And just thus there was a massive overbuild of fiber optic cable and indeed the transmission stations and such to simplifying to bring that to people's houses.

[45:45](https://realalpha.app/v/Lf5oqGOCRCM/?t=2745) And there was the assumption that, well, that would all get lit up and people would want it immediately. Didn't really happen. Now, the post.com bubble thing people say is, well, but after that, there was demand from the internet. That's the thing, though. That's very different to demand for generative AI. Right now, the demand we have for generative AI is predominantly subsidized. Just let's start there. Predominantly subsidized, and most people experience it and yet are not paying the real cost. I agree. On top of that, we already have all of the possible marketing in the world. We have the largest, most disingenuous marketing campaign in the history of man.

[46:23](https://realalpha.app/v/Lf5oqGOCRCM/?t=2783) pushing this up the hill. We have the apex predator of cloud software, Microsoft. They can only get single digit billions from selling AI software. And Christ almighty, outside of OpenAI and Anthropic, we barely get $22 billion. And the thing is, $22 billion is a large amount to you and me. It's not a large amount of money when you spent a trillion plus dollars, when you have Anthropic and OpenAI with $1.1 trillion worth of cloud commitments. And on top of that, How does this turn into a post.com bubble thing? A data center built today is going to be as expensive to run in 2050 as it is today, unless there's some breakthrough in electricity.

[47:03](https://realalpha.app/v/Lf5oqGOCRCM/?t=2823) But again, that's not happening with AI. AI is not doing that unless there's some breakthrough in GPU technology. But we already have Broadcom, NVIDIA, Etched. We have every major chip company, ARM, trying to do something about this. And no one seems to magically be able to make this profitable or indeed even less costly. Right. Even NVIDIA with Vera Rubin, their more expensive new GPU system, even then they're like, yeah, 10x more efficient. It's more dollars per megawatt. They're all coy about it. They don't just say, yeah, we worked with OpenAI and Anthropic and we found it reduced their cost by 50%.

[47:39](https://realalpha.app/v/Lf5oqGOCRCM/?t=2859) Easiest thing in the world if it was true. And that's because it's not happening. And this isn't a case where... So you're saying there's not going to be the demand for... Let's say there's different types of AI, generative AI. Yeah, and actually that's a good point to make. The reason they use the term artificial intelligence is so everyone would lump everything into it. They would lump protein folding, nothing to do with LLMs. Robotics, not LLMs. Autonomous weapons, even horrible as they are, not LLMs because you couldn't trust them. But they've mushed everything into AI so that when you say, well, AI can't, they'll go, um, um, sir, you forgot to give us homework.

[48:15](https://realalpha.app/v/Lf5oqGOCRCM/?t=2895) And also AI, it's working on curing cancer when it's just like, no, that's not LLMs. Stop giving them credits. The similarity, though, is they all need GPUs, all these AIs. No, and that's the funny thing. All those data centers that we're building, all of them are for just generative AI. They're not for all of the other stuff. They're not for the cool shit. AI has been around for a long time. Google, a lot of the good stuff that comes out of Google from the search side is AI, but pre-generative. How would you run the type of... AI that sits in a robot, let's say one of the Optimus robots, if you didn't have a GPU.

[48:50](https://realalpha.app/v/Lf5oqGOCRCM/?t=2930) So Matic, Matic has this cleaning robot, for example. That thing has not got a little GPU in it. What it has, and may indeed have used some GPUs, but now a year as many as they need for generative AI to run the data, feed-training data into it so it's able to clean a house. But when the little bugger's going around cleaning my floor, turdsly I call it, goes around mopping my floor, it's not like burning money the whole time. But when it comes to these massive amount of data centers, Sightline Climate said in February, there's 190 gigawatts of data centers under planning, don't know about under construction.

[49:23](https://realalpha.app/v/Lf5oqGOCRCM/?t=2963) That works out if about 12 million megawatts, well, like $1.6 trillion to $3 trillion a year in annual demand you'd need for that. We don't even have $130 billion worth of annual demand. And people say, well, it will grow. How? When most of the demand is coming from Amazon feeding money to OpenAI or Anthropic, Microsoft feeding money to OpenAI and Anthropic, Google feeding money to OpenAI and Anthropic. Well, Google hasn't fed it to OpenAI yet, but they're a pretty big customer, billions of dollars. The con side is that, We are building these effigies to capitalism, these giant GPU data centers.

[49:56](https://realalpha.app/v/Lf5oqGOCRCM/?t=2996) And people are being told, well, it's for AI. You know, the thing that's done all this other stuff that's unrelated. Or the worst thing I've seen, it's like, oh, you like online banking, where you do like data centers. There's a big difference between a data center for regular non-GPU compute for standing up a server, a content delivery system like Akamai or something that brings the website to you, or how Meta runs Facebook. That is not the same. It takes way less power, mostly CPU-driven, compared to these giant GPU data centers that are for one thing. One thing, aren't they? But I was doing the research and looking at some of these notes here.

[50:29](https://realalpha.app/v/Lf5oqGOCRCM/?t=3029) It does say that for tougher types of AI systems designed to solve concrete physics, biology, and spatial problems, they require some of the most intense data center infrastructure on the planet. AI systems like DeepMind's AlphaFold, the protein folding company, used for genomic sequencing and climate forecasting, etc., run on high-performance computing clusters. These require immense precision and continuous heavy computing data centers. Training the brains for self-driving cars requires billions of miles of simulated physics environments. The AI isn't generating text. It's learning to navigate 3D spaces and gravity and relies on data centers.

[51:07](https://realalpha.app/v/Lf5oqGOCRCM/?t=3067) Right. And the thing is, those data centers, they might have GPUs in them. We had GPUs used for this HPC, the high-performance computing, before generative AI. And yeah, that's how AI has been trained before. That's how Tesla did. I believe they've had their own data centers when it comes to training the autopilot system, for better or for worse. That's how we've done it before. Again, that is not why we're building these data centers. These data centers are being built to sell to generative AI companies to either train systems or run inference. These things are being built in this brainless way, where it's just, well, actually, maybe this is a good way of illustrating the con.

[51:45](https://realalpha.app/v/Lf5oqGOCRCM/?t=3105) Because everyone saw Google, Microsoft, Amazon, and Meta give NVIDIA over, call it 800-something billion dollars, because everyone saw that, they went, well, they wouldn't do that for no reason. They went, we've got to build more of these things, because there must be all this demand, even though the demand... 70% or more of all that demand comes from these two companies who are funded by these three companies. And that's the funny thing. The reason that they don't want to break out their AI revenues is because it will become alarmingly obvious that this was the case. It turns out that the only real big customers, because it's not like they're building a few data centers.

[52:25](https://realalpha.app/v/Lf5oqGOCRCM/?t=3145) They're building trillion plus revenue potential. They believe they'll get. Speculative. Entirely speculative. Speculative. They're building it because they saw the biggest companies in the world buy a bunch of GPS and they said, I want in on that. They must have diverse customers, right? They wouldn't just have two unprofitable fail sons that they're propping up with. Christ, they've raised $217 billion just in 2026. So we know that some of the biggest companies in the world are using AI, generative AI, to write a lot of their code. That is a great productivity gain for those companies, right?

[52:59](https://realalpha.app/v/Lf5oqGOCRCM/?t=3179) I mean, have you used Google or Facebook or Instagram or GitHub recently? Because they are... catastrophically worse. Amazon Web Services went down multiple times because of their AI coding tool. How is Google worse? Well, I'll tell the story of a real arsehole, a guy called Prabhagar Raghavan. Previously, one of the heads of ads at Google. In 2019, Google called something called a code yellow, which is when they said, we've got a problem. And it was material weakness in query numbers, which means the amount of times that people were searching on Google search. Guy called Ben Gomes, internal at Google, then the head of Google search, says, okay, wait a minute, to increase this number of using Google more, we're going to have to, I mean, what you're suggesting would mean we give worse answers, because if someone got the answer quickly, that would reduce the amount of queries, right?

[53:32](https://realalpha.app/v/Lf5oqGOCRCM/?t=3212) And people at Google, Shashi Thakur was another engineer who was saying, yeah, can we please tell Sundar this? Because this doesn't seem good. We can't just increase the amount of queries. That would just mean that people would have to search more, which would make the product worse. But it would make them more money, are you saying? Yes. Because you'd show them more ads. So if you were spending more time on Google because Google's work... But is this linked to AI doing code? Oh, I'll get there. So this is... The problem is that this guy called Prabhupar Raghavan, who was the head of ads at the time, was pushing, pushing and saying, no, we need to make more queries happen.

[54:04](https://realalpha.app/v/Lf5oqGOCRCM/?t=3244) Got to make it happen. Nick Fox, who was there as well, I believe he's actually taking over Google search, said, got to make them go up. This is our new reality. Yeah. Sometime in early 2020, Prabhagar Raghavan takes over Google search.

[54:14](https://realalpha.app/v/Lf5oqGOCRCM/?t=3254) **Ed Zitron:** From then, and this is what I believe, can't prove it, if you go and look around the various SEO sites such as a journal and the various forums, Google stripped back a lot of the suppression of spammy sites so that people would be on Google more.

[54:29](https://realalpha.app/v/Lf5oqGOCRCM/?t=3269) And then over the course of time, Google wanted to create more queries, and Google search became much worse. It's why people always do, like, plus Reddit, or from Reddit, or what have you. It's because the actual underlying search results of Google had got worse. And then generative AI came along. And Prabhbagar, wouldn't you know, it gets... put to run part of Gemini. And Google also was having trouble getting people back on Google. And what did they think they'd do? Well, shit, everyone's talking about this AI thing. We'll just put it right at the top. So people have to stay at Google. And actually they'll use it more because instead of searching websites and doing that annoying thing where they click away from Google, they'll just only use Google instead of generating answers, by which I mean, giving you search results you click through.

[55:10](https://realalpha.app/v/Lf5oqGOCRCM/?t=3310) Now Google is the answer. Is it right? God, no. It might tell you to eat rocks. might eat poisonous mushrooms maybe i'll give you a little few links you could click through but the ideal situation was that ai was the ultimate form of google's evil which was but i'm saying here i'm saying here but that's not the fact that coders could code on google that's made google worse that's human decisions have made it worse yes and then there's the instability of google's platform which is actually i should have probably led with that a problem across the whole tech industry Okay, so you're saying Google is going down more.

[55:41](https://realalpha.app/v/Lf5oqGOCRCM/?t=3341) Yes, Google is less stable. Google Docs is a bug fest right now and has been for a while. Google Sheets, same deal. And the thing is, you're right. I'm being a little unfair. This is everyone. It's the same with Microsoft. It's the same with Amazon. It's the same across the world. How do we quantify that outside of anecdotes? Like, is there a way to... You're right. I mean, GitHub downtime is the best example. Amazon Web Services went down, I think, two or three times this year because of AI tools. Wow. And honestly, you're right. It's kind of hard to quantify outside of anecdotes. But I challenge anyone listening to this, go and use the website these days and tell me how well it works.

[56:15](https://realalpha.app/v/Lf5oqGOCRCM/?t=3375) Tell me how buggy it is. Tell me how many problems, even with my iPhone, the supposed best UX in town, even the iPhone is a flipping mess these days. Okay, so the research says... The short answer is yes. Tech downtime and software outages have demonstrably increased over the last few years, and industry data points directly to the explosion of AI-assisted coding as a primary culprit. The problem is hitting the tech industry from two entirely different directions. The code itself is getting buggier, and the sheer volume of AI activity is literally crashing the underlying infrastructure. Interesting.

[56:50](https://realalpha.app/v/Lf5oqGOCRCM/?t=3410) Yeah, that's because GitHub, people are just writing a bunch of code, pushing it, That's interesting. Yeah, it's a real mess as well because open sources have this problem as well because it's well-meaning people. They're like, oh, I learned a bit of code with an LLM. I'm going to go out and do some stuff. I'm going to make this project better. And these people barely understand what they're shipping. Or maybe they understand a bit of code and they say, oh, Dunning-Kruger, this motherfucker. I'm just like, I can understand some of this. And now the code's all written and just push it right now.

[57:20](https://realalpha.app/v/Lf5oqGOCRCM/?t=3440) So GitHub is flooded with AI code. This sounds like it's making humans complacent. It is. Because we're going, okay, look, I'll let it write the code for the last 100 lines. And it was broadly right. So the next 100 lines, I won't check them as much. Yeah, yeah, yeah. And that's human nature, is to get sort of to take shortcuts, to spend less energy on an activity if you can. Right, but the AI's still making the mistake and we're still making all the promises of AI. That's the thing. This thing is meant to be this autonomous... You say it can't be perfect. I don't know. Based on what Sam Altman has been saying for the last few years, Clammy Sammy's been promising the world, saying this will replace software engineers.

[57:59](https://realalpha.app/v/Lf5oqGOCRCM/?t=3479) Dario Amodei, Wario himself, has been saying, oh yeah, 50% of white-collar labor is going to go away in the next few years. These people are promising the world. Again, if they were... saying it would be smaller and they were like yeah it does have issues and we must be none of this oh what if it wakes up and it's super powerful just like yeah it's probabilistic it's going to make mistakes and if you don't know what you're doing you don't really know what you're looking at you're going to miss those mistakes and it's going to get multiplicatively worse as you go when you don't know what you're doing so yeah human nature is part of it but so is the marketing so are the promises One of the smartest things a business can do is build like a bigger company without actually hiring like one.

[58:53](https://realalpha.app/v/Lf5oqGOCRCM/?t=3533) But the problem we all face is that most companies don't have every skill in-house. So when I look at the businesses seeing real success today, the consistent pattern with all of them is how quickly they move. They bring in specialists with skills in emerging areas to keep themselves ahead. Even in our company, We spent the last year pulling in talent across areas like AI-native strategy, no-code builds, and product workflows. And we find this talent through our long-time partner, Fiverr Pro. Their premium service only shows you vetted talent, so you've always got the safeguard that anyone you pull in to help you with a complex project has the skills that you're after and will deliver to the same high standards as your internal team.

[59:31](https://realalpha.app/v/Lf5oqGOCRCM/?t=3571) And most importantly, they'll keep up with the pace. It's a simple strategy, but it lets us stay agile without compromising on quality. So if you need these kind of skills in your business, head to pro.fiverr.com to find pioneering talent to fill your business's gaps. That's pro.fiverr.com. You know the little traditional SIM card that goes inside of our phones? They haven't changed at all since they were invented in the 90s. You have this physical piece of plastic that means you're locked into one carrier, one network, and the second you cross a border, that carrier can start charging you whatever they want.

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[1:00:36](https://realalpha.app/v/Lf5oqGOCRCM/?t=3636) And if you want 15% off your first purchase, use my code DOAC when you get to checkout. That's DOAC for 15% off. My car that drives itself, that is AI technology. Yes. I sat here with Dara from Uber, and he was saying that, I think in a couple of years' time, we won't need drivers for Uber because the cars will drive themselves. Like, they'll be fully autonomous. And I think, if I'm not mistaken... Driving is one of the biggest professions on planet Earth. So when you hear people, when you hear the CEO saying that there will be job disruption, you say that they are not telling the truth. Yes. Or they're guessing in a way that's very good for them.

[1:01:25](https://realalpha.app/v/Lf5oqGOCRCM/?t=3685) Think about it from the perspective of Microsoft. Satya Nadella. He's not going to be like, yeah, we're done after. This is going to work, mate. Of course he's going to talk his book and he's going to say, yeah, this is going to replace all workers. It's going to be amazing. It's going to be so powerful. And then he'll change his tune and say, actually, it's not going to replace workers. It'll make them more powerful because the things aren't catching up. They're from Uber, for example. Of course he's going to say, if this happens, then that would be good for Uber because Uber would just become...

[1:01:51](https://realalpha.app/v/Lf5oqGOCRCM/?t=3711) An autonomous taxi service. There's a reason that Waymo's taken... I find Waymo fascinating. I think that shit's really cool. I think there are socioeconomic problems that will come from it. I think there are actual real problems that will emerge. And also... What kind of problems? Well, I mean, socioeconomically, there are, like you said, one of the largest employment centers in the world. I mean, just the economics of cabs would fall apart. But again, we are nowhere, nowhere, nowhere near that. We're not even close. Waymo has had to do the smallest rollouts and the most controlled things because the problem with pretty much every AI system, but especially driving, is not the getting 95% of the way.

[1:02:24](https://realalpha.app/v/Lf5oqGOCRCM/?t=3744) It's those edge cases. It's raining, which is a big problem for them in San Francisco. It's a kid runs across the road, but they're wearing a high-vis thing. Yeah. Does it even notice it's a child? Again, this is a really interesting but very, very applicable example of the right comparison to be made shouldn't be autonomous vehicles versus perfection. It should be autonomous vehicles versus human drivers. I mean, I don't know if I agree because the human driver might make mistakes, sure, but... Again, not an expert in autonomous cars. Just want to be clear. But if we're pushing autonomous cars out there willy-nilly, and we're not doing so in extremely controlled environments, those edge cases will multiply and be dangerous.

[1:03:02](https://realalpha.app/v/Lf5oqGOCRCM/?t=3782) Yeah, they might be better at human drivers in some ways, but they might also... I was in Vegas the other day, and I was in a hotel, and I watched a bunch of Zoox cars just get fucking stuck. The autumnalous cars. Yeah, yeah, yeah. These weird boxy things. And they just blocked the exit. They just all kind of lined up and just fell asleep. I saw the same thing actually happen outside of a hotel when it got out of a Waymo in San Francisco. It just stopped at the... And then a bunch of cars and another Waymo got stuck behind it. And these are kind of... I've seen some human bad drivers as well. I agree.

[1:03:29](https://realalpha.app/v/Lf5oqGOCRCM/?t=3809) But it's just we have control over deploying these... Bad or good drivers. We have an ability to roll them out slowly, which is exactly what we should do. I'm not saying autonomous cars are bad. I'm saying we need to be so, so, so careful and treat them as guilty until proven innocent because we can prove... And also, they have people overlooking them. They actually have people monitoring the routes. It is something they cannot rush out. And it doesn't seem like they're rushing it, which is good. And they're not promising the world. I do agree. Listen, I'm a big fan of taxi drivers generally, in part because I spend a lot of time in taxis.

[1:04:03](https://realalpha.app/v/Lf5oqGOCRCM/?t=3843) And I think I'm not just getting in there because I want to get from A to B. I'm getting in there for lots of other reasons. However, when I look at the stats... around what is more dangerous, driving myself or having an autonomous vehicle drive me. There's a 68% lower overall crash involvement rate when you're in an autonomous vehicle. Autonomous vehicles experience roughly 2.1 police-reported crashes per million miles compared to humans that are at roughly 4.68 per million miles. So a 55% reduction when you get in an autonomous vehicle. Right. An autonomous vehicle show an 80% to 81% reduction in crashes resulting in injuries versus human drivers.

[1:04:42](https://realalpha.app/v/Lf5oqGOCRCM/?t=3882) So you're 85% less likely to be involved in a single vehicle crash, like hitting a wall or a tree, if you're an autonomous vehicle versus being driven by humans. I agree, but... So it's safer. Also, that data is, what's the sample size of human drivers? I mean, we've got many, many, many, many, many, many more years of drivers and many, many, many more years of accidents. And also, man, does that not have anything to do with generative AI. If we were just talking about that... be having a different conversation. I guess the question here was really around job disruption. Like, you know, we look across industries and we go, driving's a massive profession.

[1:05:17](https://realalpha.app/v/Lf5oqGOCRCM/?t=3917) Is there going to be job disruption because cars can now drive themselves? If we think about white-collar, you know, jobs, you know, lawyers and accountants, people sit here and they tell me that lawyers and accountants, the profession, right, I should say some of the skills within the ai's to do here's the thing lawyers for example great example always hearing fucking legal partners talking about ai never the associates the associates are the ones that go out and find the precedent they're the ones that go and do the grunt work they're the ones who pull emotions half the time the partner is the one that might be the litigant it may be the client facing but the ones that are actually doing the day-to-day work i'm not hearing from them i'm not hearing associates being like this is fucking awesome i'm hearing a bunch of well-paid people that Yeah, I'm the greatest lawyer ever.

[1:06:06](https://realalpha.app/v/Lf5oqGOCRCM/?t=3966) They're not the ones that I want to hear from, the actual workers. White-collar labor disruption is not happening. OpenAI had a study that came out, I think, like a week ago, that said there was no connection between spending on AI tokens and revenue per employee. Like, this is open. What does that mean? Could you explain that to me? As in, the more tokens you spend has no correlation at all. with the amount of money you make. It's the second report they've put out. The other one was like, hallucinations are mathematically guaranteed. Kind of almost, it's the one thing I respect about that company.

[1:06:36](https://realalpha.app/v/Lf5oqGOCRCM/?t=3996) Occasionally, they just put out a study. It's like, yeah, shit, it kind of sucks. But the people that are having their lives disrupted,

[1:06:43](https://realalpha.app/v/Lf5oqGOCRCM/?t=4003) **Ed Zitron:** work-wise, are art directors. It's people, art directors, transcribers, translators, who have bosses that don't care about the output.

[1:06:52](https://realalpha.app/v/Lf5oqGOCRCM/?t=4012) It's what they consider cheap work. And the problem is, is those people would have automated your work away anyway. They would have sold it. They would have taken the cheapest offer. They would have sold it to the global self. They would have taken the shittiest option they could. That is something that AI is doing. And again, those people are not paying the actual cost of AI. They're using a subscription. The actual white-collar labor force might have some things that are slightly changing, but there is no evidence of productivity gains. In fact, if there were, they would be screaming it from the rooftops.

[1:07:22](https://realalpha.app/v/Lf5oqGOCRCM/?t=4042) There was an Oxford Economics study last year where it's like, oh, young people are finding less jobs because of AI. We actually read the study, which multiple journalists did not. It was a single line that said, yeah, we saw some correlation. Didn't give a number. Didn't actually say what the correlation was. We are so conditioned to believe that the rich and powerful know what they're doing that we internalize these narratives about like, well, previous booms lost a lot of money. Well, technology takes time to do stuff. And they are intentionally playing on those mythologies. They are playing on these knowing that journalists, analysts, investors...

[1:08:00](https://realalpha.app/v/Lf5oqGOCRCM/?t=4080) We'll believe them. And this is partly because our realities are defined by stock prices. Because the stock prices of these companies went up, we're like, oh, look, it must be working, right? Both of those things you said were true, though, right? Like that previous technologies didn't make money at the start. And the other one you said was, they'll get better. But that's the thing. Okay, because another thing got better, this will get better? No, but there's got to be something that they're saying that is fundamentally not true. Because those are two true statements that, okay, technology often starts...

[1:08:28](https://realalpha.app/v/Lf5oqGOCRCM/?t=4108) Okay, I know. I get what you mean. Yeah. What they are fundamentally misleading people about is how possible it is. How many actual signs they have, because they don't have the signs. If they had the signs, as in the signs of this getting cheaper, as in the signs of this being able to autonomously do work without the Rube Goldberg machine, and even then, in a reliable way that was making the customer more money, being productive in a way you can say with your whole chest without a series of asterisks. And that's how it is across the board. The people... that are most excited about this, psychopaths on Twitter in many cases, are people that I believe... Psychopaths on Twitter.

[1:09:02](https://realalpha.app/v/Lf5oqGOCRCM/?t=4142) They really are some... I'm sorry, there are some people on Twitter... Because the other thing about this is, this is really unique to the AI industry. I've never seen it any other industry outside of maybe, like, sports teams. The attachment that some people online have to these companies, if you dare... dare to criticize anthropic it's almost this religious attachment good example was this week bloomberg reported that open ai was on track to hit 40 billion dollars in annualized revenue month times 12 four weeks times 13 we don't know they don't define it i saw multiple people and i going actually it's 60 billion it's actually 60 billion i heard from someone it is like a cult and it's a cult of software driven around growth and this idea that by backing the right horse you you will have some grand thing.

[1:09:50](https://realalpha.app/v/Lf5oqGOCRCM/?t=4190) And OpenAI in particular, in particular Mr. Altman, they have been fomenting this. They're Tibo as well, the TIBO, one of the guys at OpenAI. They foment this thing online. They build this kind of parasocial relationship with both the large language model themselves and the companies. And one's allegiance to the companies is so important. It's truly vile. If only these people gave a fuck about, I don't know, Medicare for All or poverty or things like actual problems in the world versus are we buying enough GPUs? Do you know what's interesting is some of what your narrative... one would argue, actually helps them.

[1:10:29](https://realalpha.app/v/Lf5oqGOCRCM/?t=4229) How? Because, you know, the AI doomers that have come here and told, you know, some of the original founding fathers of AI, like Geoffrey Hinton, have told me that what they're building is highly, highly dangerous and that it will be fundamentally disruptive to society. And... It's interesting because some of the CEOs who you've mentioned, their historical narrative was also, by the way, this is really fucking dangerous. Yeah. And there is a significant chance we could fuck up the planet. And what we've seen is this slow pivot away from it. Which is so strange. Because now they're getting booed and they're being attacked.

[1:10:58](https://realalpha.app/v/Lf5oqGOCRCM/?t=4258) Yeah. They've been this slow pivot away from it. And the pivot almost sounds a little bit like your narrative. It now sounds like, actually, no, it's not going to change anything. And you're all going to be fine. And it's now, it's just not, it's not dangerous at all. But that's the funny thing. And that's why I'm saying like, I actually think there might be a couple of PR people at these big AI companies thinking, thank God for Ed. Oh, I don't know about that, mate. Some of it. Because you're saying, actually, don't worry. Everything's going to be fine. It's not going to take your job. It's not going to disrupt the economy.

[1:11:28](https://realalpha.app/v/Lf5oqGOCRCM/?t=4288) It's just a fad. There's no technology. And I think they don't think that. Here's the thing. I think Altman and Amadeus are some of the most deeply corrupt and cynical people in the world. Of course they were going to say, it was early 2023, Altman said, we're a little bit scared about what we're creating. Right. oh shut up i'm just i hear that and i feel so frustrated because i've met so many of these rich fucking liars these people and you know why he wants to say that so you'll invest in his company and buy the software so you'll be scared that if you don't use ai today you'll be left behind in the future which is their continual narrative that if you don't get on the train today you'll be left behind.

[1:12:04](https://realalpha.app/v/Lf5oqGOCRCM/?t=4324) By the way, every single scam and con starts with rushing you. Every single trick in history begins with saying, you must do this now. And best piece of advice I ever got was, if anyone tries to rush you, and it's not literally a mortal thing like you are bleeding or on fire or the house is on fire, slow down. And yet all of these companies say, so scary. And now they're talking about slowdowns, but you're... ever noticed that Amaday and Altman, they say, oh, maybe we should slow down progress. And then they don't. Right now, Altman's saying, oh, we've slowed down progress because we're so delayed.

[1:12:34](https://realalpha.app/v/Lf5oqGOCRCM/?t=4354) Now they're out of compute. Now they're doing it. I can guarantee you, by the way, their PR people do not like me. I don't think OpenAI's PR people are super fond of me. But I bet there's elements of what you're saying, because you're calming people. You are theoretically calming down the general public. And you know what? I hope I am, because... The fear-based tactics is horrible. These companies don't want that. These companies want people scared. I'm 100% sure. I just fundamentally disagree. I think it... So the timelines, and I sit here, and what I do is I log their quotes over time. Oh. And I read them out from 2015 to 2026.

[1:13:06](https://realalpha.app/v/Lf5oqGOCRCM/?t=4386) And the change you see... is them going from, there could be extinction. That's the narrative, the early narrative. Elon said it himself. He says it's the single most dangerous thing in the- Elon says a lot of things. And then you track it over time and it evolves to this age of abundance. We're all going to have unlimited stuff. And then the new slogan at Track TVT is intelligence for everyone. It's suddenly, and all the, and whenever Dario comes out and says, by the way, it's really rockin' dangerous. Yeah, they hate him. They're like, Dario, shut the fuck up. Honestly, I've been saying Dario, shut the fuck up for years.

[1:13:44](https://realalpha.app/v/Lf5oqGOCRCM/?t=4424) But the thing is, I get your point where it's like, I don't think they've changed to calm the public down so much as they're desperate to not get regulated, which is laughable. We don't regulate tech. We don't regulate shit. America doesn't regulate shit. We are still trapped in the hands of Milton Friedman, Margaret Thatcher, and fucking Ronald Reagan. We're still stuck in the neoliberalistic hellscape, which is growth at all costs, free market capitalism. So no, no one's regulating. The regulation of these companies should have been, I don't know, breaking up. Put these bastards aside. Break up these fuckers, for sure.

[1:14:20](https://realalpha.app/v/Lf5oqGOCRCM/?t=4460) We shouldn't have companies this big. It makes things worse. But these technologies are dangerous. I mean, they're dangerous, but not in the ways they've been warning about. If we think about cyber hacking. Right. And just be clear, those cyber hacking things that happened were not a result of... They were like, break out of the sandbox. And then they set the sandbox up. wrong. They set up the server they were on wrong. But I mean, you know, advanced AI models could very easily, because they can go out onto the open internet as agents, they could very easily go and look at code bases of different websites, find vulnerabilities and exploit those vulnerabilities at scale and arguably at a higher intelligence and faster and wider than a human hacker could, theoretically.

[1:14:43](https://realalpha.app/v/Lf5oqGOCRCM/?t=4483) So that's dangerous. Well, here's the funny thing. We don't know how much compute was spent to do the hugging face attack, the OpenAI one. We also do know that they improperly set up the server to keep it in. They thought they'd turn the internet off, and they didn't. That's human error, and that's human error in a sense that, yeah, they threw about an indeterminately large amount of compute. This is dangerous, but people keep saying, we can't let the Chinese get a hold of these models. We couldn't possibly, because what if these models fall into the wrong hands? They're already in the wrong hands.

[1:15:13](https://realalpha.app/v/Lf5oqGOCRCM/?t=4513) Mark Zuckerberg, Sam Altman, Dario Amodei. The wrong hands are the hands of those who are running these companies. We should not be training these models to do these things. I don't know why the fuck we're doing it. Other than they've run out of other things they can train on. There's a ton. And the fact that they can do it, it's kind of interesting. But would you agree that it's... An intelligence, and I'll call it that, you might disagree with that terminology, but an intelligence that can go out onto the internet and click around and take actions is inherently, there's risks associated with that.

[1:15:47](https://realalpha.app/v/Lf5oqGOCRCM/?t=4547) Well, the second part I agree with, the risks. We've had people running automated scripts and hacking scripts for a while. We've had hackers doing that for years and years and years. This is brute forcing it with a bunch of compute and yet... It is dangerous. These companies are doing something dangerous. That is not what Geoffrey Hinton et al. have been warning about. They've been saying, oh, these things could destroy society. They could manipulate people. When you actually look at the underlying things, not so much. Geoffrey Hinton as well, talking his book, still got his Google stock, I think.

[1:16:15](https://realalpha.app/v/Lf5oqGOCRCM/?t=4575) Weirdly enough, he left Google because he was worried about the AI there, but then immediately made a comment being like, yeah, actually, though, Google's very responsible. Strange thing, that. But let's get back to the cybersecurity side. I agree. This is dangerous. These people should not have access to so much compute. They clearly don't know what to do with it. There's a really easy way of dealing with this. It's not letting them use so much compute. It's regulating that part out of existence. What if the Chinese do it? The Chinese are able to distill the models. And also, I don't know, regulate it and stop.

[1:16:46](https://realalpha.app/v/Lf5oqGOCRCM/?t=4606) I feel like with this particular thing as well, we got to this point and let the genie out of the bottle, to use an annoying Sam Altman term. We let this happen because we let these companies be unregulated and use as much computers as we want. We had these fucking enablers allow them to burn as much computers as they want. And also, for all of these dire warnings about AI dangers, no one seems to have fucking done anything. Okay, we're going to play a game, Ed. Let's play it. On these cards here, I have the things that you consider to be myths about the AI industry. The challenge is I want you to give me one sentence on each myth.

[1:17:24](https://realalpha.app/v/Lf5oqGOCRCM/?t=4644) Oh, Christ. So just your first reaction. You're going to pick it up, you're going to read it, and then you're going to give me one sentence on your opinion of that belief. Okay, let's go. Let's do this. What does it say? And what's your one sentence? It says the AI industry is creating enormous economic growth. No, it's not. It's nowhere in the data. Okay. It's just, may I do a second sentence? Go ahead. Pretty much all of the economics is either NVIDIA feeding money to companies like CoreWeave or these three companies feeding money to these ones to spend it with them. Okay. And what evidence do you have that it's not causing economic growth?

[1:18:24](https://realalpha.app/v/Lf5oqGOCRCM/?t=4704) Just to be clear, other than the spend on semiconductors, so the speculative investment in GPUs and data center infrastructure, that's happening. But as far as like spend on AI goes, barely cracking $100 billion, and most of that is just these two running their services and paying these three companies, Oracle, Core, even others. But $100 billion is a lot of money for a relatively new technology. Not when you've spent $300 billion in equity funding and if we're going with just these three, I think $600 billion in capital expenditures. Yeah, I get that. That means it's not profitable. But the $100 billion is an expression of consumer demand.

[1:18:59](https://realalpha.app/v/Lf5oqGOCRCM/?t=4739) When the compute is mostly driven by subscriptions that are subsidized, no, it's not. When you're giving someone $20 or $40 for a dollar, they are going to use it more. If this was all on a per million token basis, we'd be having a different conversation. Okay, fair. Fine. Cool. Next one. The United States need to spend trillions to beat China in the AI race. Let's see. What AI race? that's actually my point. It's what AI race is there? Is it to make big, scary LLMs? They did that already. Without the NVIDIA GPUs, by the way, they've got Blackwell GPUs. Kakashi and Justario, two amazing analysts I love.

[1:19:31](https://realalpha.app/v/Lf5oqGOCRCM/?t=4771) They've been on this for years. It's like, China's already had NVIDIA GPUs that they're not meant to have for years. But also, to do what? They already got the LLMs. What's the race to do? To make us spend more money than them? For us to constantly piss our pants worrying about China? Because they won, if that's the case. Myth number three. AI will replace all human jobs. That just isn't happening. There's no economic data to support it. Will it replace some jobs? I mean, it's replaced some contract labor that would otherwise be replaced with cheap labor out in the global south. It's a digital globalization in that sense.

[1:20:06](https://realalpha.app/v/Lf5oqGOCRCM/?t=4806) But all jobs, most jobs, a lot of jobs, no. What about robotics? Robotics is not what we're talking about. Robotics is a very different thing. And even then... Robotics will be powered by AI. I mean, yes, but there are tons of different kinds of AI. We're talking explicitly about generative AI. And that's what I... This is from my Mythbusters piece. That was definitely about generative AI. Okay, but what about robotics? The thing is... The Optimus robot that... Elon's working on it, Tesla. The one where even in the demo of The Hand, he did like they had to have a guy controlling it. It wasn't doing an autonomous thing.

[1:20:43](https://realalpha.app/v/Lf5oqGOCRCM/?t=4843) Here's the thing. If they can... beat all these challenges, yeah, robotics would be really cool. I don't know how long that's... That's one I'd actually be willing to believe in a couple decades. Have you seen them Chinese robots? I know you've seen them Chinese. Well, the Unie, what's it called? The one that can dance and that, but they can't really do human things? Well, it's just, it is pretty mind-blowing. Robotics are fucking cool. Like, I'm not going to pretend I don't think robots are cool. I wish they were building robots and actually doing cool shit. I wish the tech industry still made fun stuff and interesting stuff.

[1:21:15](https://realalpha.app/v/Lf5oqGOCRCM/?t=4875) Instead, we get these fucking large language models. But AI plus robotics is, you know, I was in San Francisco and I went to this massive incubator there. And when I'd gone there three years earlier, it was all software startups. Right. And when I went back three years later, it was all these robot startups. And I remember saying to the founder of the incubator, I was like, why is everything robots now? There was this one robot where it was just the arm and it had a frying pan on it. Yeah. And its whole thing is it cooks for you. Yeah. So it was showing me it cooking, whatever. And he goes, well, you know the arm?

[1:21:44](https://realalpha.app/v/Lf5oqGOCRCM/?t=4904) He goes, the hardware part, the physical parts, that's always been fairly cheap. Yeah. He goes, the expensive part was the intelligence. Yeah. And now that's come down to pennies. So what you're seeing is this explosion in the robotics industry, because robotics is a function of intelligence plus hardware. We've always had the hardware. And a ton of data, though, as well. Yeah. And the data is very expensive. Yeah. The thing is, cybercabs rolled out real slow. It's going to take a long time. It could be a threat. If they do a robot that could replace a human job, sure it could. But human jobs are multifaceted.

[1:22:15](https://realalpha.app/v/Lf5oqGOCRCM/?t=4935) Human jobs change with environments. And also, a lot of human jobs that you might think of like, I don't know, dishwashing robot, for example. Yeah. Some guy at a restaurant isn't paying 10, 20 grand for a robot to replace the job that they're already not paying enough for. The point is, yeah, it could if you can replace the jobs. That is not what we're talking about with this. Yeah, I ask these questions not because I'm trying to be like devil. Actually, I'm trying to form my own opinion on these things. And I do think, you know, as it's written there, it says AI will replace all human jobs. Obviously not.

[1:22:49](https://realalpha.app/v/Lf5oqGOCRCM/?t=4969) Obviously, that's bullshit. But I'm trying to figure out if the truth is somewhere in the middle, that there's a certain type of job, which actually humans probably shouldn't have ever been doing, really, that's... if you think back through history there was someone's job just to sit in an elevator and press the buttons right that's an example of a job that humans probably shouldn't have been doing and as technology gets more advanced it takes on a lot of that sort of automated monotonous stuff right the thing is with this particular thing that i know that this is from it's a specific blog i wrote i was explicitly talking about generative ai though i was explicitly talking about people when they say this they are referring to that so you're not talking about agentic ai which agentic ai is llms agentic ai is just a fancy way of saying an llm talking to another llm with a harness on top that is still a lamp's agentic ai is one of the the bigger lies they tell it's like when you hear agent you're meant to think autonomous ai can do what you want it's still llms it's still llms talking to other llms taking screenshots and putting them in llms oh god yeah okay but but you know i could i could make the case that

[1:23:48](https://realalpha.app/v/Lf5oqGOCRCM/?t=5028) I'm just thinking about my personal usage. I definitely use agents to do things that I would have previously asked people to do. It's not to say that I still don't hire because we're hiring like crazy. Yeah. And I still, in that particular function, I'm thinking about like the chief of staff role. So my chief of staff would have triaged all of my inboxes previously and put them somewhere and told me about them. Or maybe once upon a time, show me a piece of paper back in the day, I guess. Now my chief of staff is no longer doing that job. You still have a chief of staff, though. This is what I'm saying.

[1:24:15](https://realalpha.app/v/Lf5oqGOCRCM/?t=5055) They're doing other things. Right. But the thing is, again, what you were describing is... Fairly basic automation. I don't know what the tasks are. Yeah, it's fairly basic email. Didn't spend a trillion dollars on triaging email. Like, that's the promise. If they'd spent $10 billion and this was much smaller and you're like, I go, cool, software, yay. A lot of the things that people are impressed with, like script stuff as well, it's just LLM's doing Python. You should be impressed by Python code. Python's incredible. You can scrape websites. You can download shit. It's awesome. But the point I'm making is...

[1:24:45](https://realalpha.app/v/Lf5oqGOCRCM/?t=5085) None of this would be anywhere near as much of a problem if they didn't ask for all of the attention, all of the money and promise the world. It's their promises that are the problem. And the journalists who went along with it and the analysts and the Twitter people who went along with this saying that this would change everything and replace everything and leaving the realm of reality. Is there any technological innovation through history that was really, really game changing where that didn't happen? I mean, the internet... I mean, people overpromised that. I mean, they overpromised on the businesses, but I've read through a great many pieces about the early internet.

[1:25:21](https://realalpha.app/v/Lf5oqGOCRCM/?t=5121) A lot of people were excited but hesitant. They were worried that there was not enough demand, but they were still like, oh yeah, this could have potential ramifications if it happened. People were not... super negative about the internet. A lot of the skeptics were saying we're worried about an overload of bad information. Look at where we are. A lot of people were worried about the social consequences of everyone talking online, which they were correct about. With the economic things, they were specifically talking about like the globe, which I think made hundreds of thousands of dollars and had like a...

[1:25:51](https://realalpha.app/v/Lf5oqGOCRCM/?t=5151) I think a billion-dollar market capper. Yeah, there was massive hype in the dot-com era. I read a lot of those stories. The hype was nowhere near. You didn't have articles everywhere that were saying, if you don't get online, you'll be left behind. You didn't have professional consequences. Nick Suresh mentioned his blog earlier. He described this thing, AI's of history and global decision-making, where he said that you have... businesses you work at where if you don't say that you're more productive with AI whether or not it's true is irrelevant you have professional consequences you can get fired there are people having to AI wash their jobs by saying AI did it otherwise they're bosses who don't do shit will get mad at them this did not happen with the internet it was not present and part of the thing is social media was not like it is today the kind of uh was it decentralization of media in general has caused this as well and also the fact of day trading there's so many different things that are different it's crazy i do think ai is different from the internet in part if you just measured it on the speed of adoption Especially if we just think about generative AI.

[1:26:55](https://realalpha.app/v/Lf5oqGOCRCM/?t=5215) I know AI is lots of things. But the adoption of the internet required physical connections to your house. The adoption of generative AI involves having a web browser. It took a vast amount of effort to bring internet to people. Even with dial-up connections, it still required the distribution. And that's why it was so slow and there was less hype than AI. I do agree that there's way more hype. And we are, again, going back to this point that we're clustering AI in this big category of lots of different things. There's generative AI. There's generative AI. There's like real world AI. The generative AI is explicitly what I'm talking about here.

[1:27:26](https://realalpha.app/v/Lf5oqGOCRCM/?t=5246) When bosses are saying you need to use AI, they're not saying I need you to go and buy a Unibeam robot. They're saying use LLMs so that I – and that's the thing. They have this theory, the era of the business idiot, where it's like we are ruled by people that don't do work. Because nobody who actually does a bunch of work, who really is productive, is harassing someone who works for them for not being productive enough. They don't have the time. They're doing work. Someone who is sitting there with the ingratiation machine that's telling them every beautiful idea out of their messy little skull is amazing.

[1:27:56](https://realalpha.app/v/Lf5oqGOCRCM/?t=5276) Yeah, they're going, damn, this thing says I'm a genius. Why are you not using the genius machine to do more work? And yeah, if you're a boss that goes to lunch, leaves lunch, and sometimes reads your emails, LLMs are magic. Do you know one of the most compelling arguments I have for the overhype of AI? In a world where everybody has access to these tools, whatever the tools can do would largely be commoditized. And what the tools can't do, which one could say is the human taste judgment, you could say it's people skills, whatever you want to say, is... is now going to be the valuable thing because the scarce and the hard becomes the most valuable through history and the commoditized becomes the least valuable.

[1:28:35](https://realalpha.app/v/Lf5oqGOCRCM/?t=5315) So the very nature that we're commoditizing the generation of content or whatever you want to call it code means that's actually not where the value will accrue for the user. And actually, if you think about what it takes to now make something that is objectively great, if an AI can do it, then the great thing is not of value. So I think a lot, I've been thinking a lot actually about how do you avoid the temptation of slopification of the things you make, the value you put into the world. It's a very simple example that people will be able to relate to. If you use ChatGPT or Anthropic, you know, Claude, to make your LinkedIn posts, let's say, they will be shit LinkedIn posts.

[1:29:16](https://realalpha.app/v/Lf5oqGOCRCM/?t=5356) Because everybody else is using them. And actually, a great LinkedIn post now is someone who doesn't use them and makes something that's irreplaceably human. Right. And deeper and more personal, N of one, lived experience. Yeah. All these things that AI can't do. And I think that's a compelling argument that actually... The commodity tools produce commodity outcomes. So everyone has access to these things. And what's changed? Like, really, like what? The slopification of stuff. We've got a bunch of slob. But these people were half-arsing their jobs before. It's just a half-arsery machine. And it's just, it's the thing.

[1:29:50](https://realalpha.app/v/Lf5oqGOCRCM/?t=5390) It's what I'm talking about with the slop blogs. It's like, it's it. Yeah, people that gave you dog shit before have now got the dog shit machine to pump out dog shit. It's, so there's a guy called Carl Brown, Internet Bucks. Awesome guy. Great software engineer. He said, I might have said this earlier, so it makes the easier things easier, the hard things harder. When you know you're doing a really distinct, small script for something and it can plop that out, it's awesome. I used Claude the other day for something useful. My kid loves Minecraft. I was trying to fix a fucking broken mod because he loves his Witherstorm.

[1:30:26](https://realalpha.app/v/Lf5oqGOCRCM/?t=5426) It's awesome. And it still took me half an hour and kept getting things wrong. What do you use AI for? Generative AI. I really don't. You don't use it? With Bloomberg Terminal, I use Ask B, which is just when it's like requesting the consensus analyst estimates for NVIDIA. But otherwise you don't use it? No. So how do you know it's bad? I've used it. I've put it through its paces. I've used it to try and do financial models and found one error and immediately be like, ah. I've never been particularly impressed. The one thing I will defend it on is it's really good for tech support. I had this thing called Synergy in my New York place I go to.

[1:30:58](https://realalpha.app/v/Lf5oqGOCRCM/?t=5458) I had this monitor where I have a MacBook and a PC laptop. And this thing, Synergy, for using the same mouse and keyboard, drop in a giant fucking... troubleshooting log into this thing going what's wrong and it going this is wrong yeah super useful is that trillion dollars no is that a two trillion dollar company no better than google though right better than google no i mean uh yeah remember do you use google search still i try i have to fucking push the crap out of the way and oh my god my I can't remember the last time I did a Google search. Christ, I find myself using Bing sometimes. I know.

[1:31:30](https://realalpha.app/v/Lf5oqGOCRCM/?t=5490) I hate saying it too. But I have to scroll past the AI crap because I want the good stuff. I want the actual links to stuff so that I can read the thing and go. But you can ask the AI to give you the links. Yeah, and it doesn't do a particularly good job. Like my... So say that the other day, my iPad wasn't turning on and it was doing this funny little thing on the screen. You think that it's better to type that into Google? Oh, no, I must be clear. That may be the only LLM use case I defend. The troubleshooting thing is awesome for it. It's the one weakness I have. It's like genuinely being able to drop a log into it.

[1:32:03](https://realalpha.app/v/Lf5oqGOCRCM/?t=5523) That's awesome. Again, that is not what they're selling it as. They're not selling it as a useful little tool. They're selling it as the... software as the thing that will change everything that will replace all jobs that will do this and that it's not like they sold it as a quirky bit of software no you are right they are you know telling us that it is going to replace everything but funnily enough the critics are saying that as well which one i mean i mean they are like the jeffrey hintons of the world you know even people that have left the safety team in chat gbt who've who've sat here with these are critics that are that are warning of the impacts it's going to have on the world It's weird how all these critics also have a vested interest in AI doing well, though.

[1:32:42](https://realalpha.app/v/Lf5oqGOCRCM/?t=5562) Daniel Former, OpenAI guy, AI 2027, written with the Star Codex guy that was nothing more than badly written science fiction that he's already had to walk back. But you know he could have made more money by staying at Chachapi too. could he i mean looks like if he had options early it sticking around did he lose the options how much did he lose you're not saying that they're they're being critical they're not critical of the companies themselves they're not critical of the stealing they're not critical of the environmental damage they're not critical of the fact that you cannot rely on the answers they're critical of this big scary boogeyman out in the future where it's like, oh, I'm scared of when this becomes so powerful and everyone should talk to me about how scary and powerful it is.

[1:33:23](https://realalpha.app/v/Lf5oqGOCRCM/?t=5603) They're not saying, hey, here are the harms today. Here are the things we're actually looking at today. Here are the social problems of having this automated way of spewing out slop, of filling our feeds with crap, of having information that will pop up that is presented, even with the little disclaimer thing of saying, yeah, sometimes this gets shit wrong in the tiniest... words possible. They don't talk about the fact that these things are trained on stealing millions of people's work. But on that last point where you say that it's going to get progressively more intelligent and when it does, it will be a danger.

[1:33:45](https://realalpha.app/v/Lf5oqGOCRCM/?t=5625) Yeah. Would you agree with the statement that artificial intelligence has gotten more intelligent If you measure it based on any sort of measure of intelligence one might use. It's got better on the tests that are rigged for the models. It's got better at tests where you can train for the test. Okay, so it's got better at... It's got better at tests that they're intentionally trained for. So if you logged the rate of improvement on a graph, it would look something like... this. Right. You agree? In terms of what it's capable of doing. Oh, there we go. Yeah. Because it's not got new features. You'll notice that outside of OpenAI and Anthropic, when you remove the coding startups, there's basically no successful AI startup company.

[1:34:28](https://realalpha.app/v/Lf5oqGOCRCM/?t=5668) So we agree that it's got better, it's got more capable At doing things. Yeah, fine. Over time, AI's got more capable. If we imagine that trajectory will continue, it will get more capable, then at some point it does cross, you know, this is what they say to me, it crosses human intelligence. And at such time... Will it not start to do some of the jobs that people are doing today? Outside of software engineering. Remove software. Because I will concede software engineering. It's got better at that. Outside of software engineering. Yeah. Where? So the chief of staff things, the admin. Okay. So it's got better at admin.

[1:34:56](https://realalpha.app/v/Lf5oqGOCRCM/?t=5696) Video generation, photo generation. Okay. Text generation, theoretically. Coding. Coding. Right. And then I'd say agentic workflows. What is an agentic workflow? So automated workflows where you're doing the same. I mean, a good example is looking at the backend data of the diary of a CEO. Summarizing. Looking at all of the data, ingesting all of it. Going out onto the internet and searching who Ed is. Looking at every interview you've ever done ever. This is summarizing and generating. Making a little model on the things people want to know from Ed. Producing a report, sending that to my inbox.

[1:35:28](https://realalpha.app/v/Lf5oqGOCRCM/?t=5728) Me getting a 20, 30, 40, 50 page report on Ed before he arrives. This is all basically the same thing it's been doing for years, though. It's not really new capabilities. Research, it's search. It's still the same thing. They've had web search for years. They've had report generation for years. But we couldn't generate... high quality videos that are like indistinguishable from cameras see dance and these ones that look like movies i mean they are incredible so i'm saying the point i'm trying to make is that if we imagine that over the last 10 years there has been a rate of improvement in terms of capabilities and output and quality we've seen hallucinations drop we've seen the models get more quote-unquote intelligent get better you know if you didn't give it an iq test it's getting higher scores than it was 10 years ago we agree that there's been an upward motion of improvement.

[1:36:28](https://realalpha.app/v/Lf5oqGOCRCM/?t=5788) This is pretty much how machine learning goes when you feed it more data. Exactly. And you put more compute behind it. So if this continues, what does the future look like? So the rebuttal I was expecting to hear is that it won't continue. And I actually don't think it... I think that there are hard limits that we're going to hit. So you do believe that there's a hard limit somewhere? We've kind of already hit the diminishing returns level because... For example, video generation, which is, by the way, far less an American concern anymore. OpenAI has shut down Sora. I think you can still use the API.

[1:37:00](https://realalpha.app/v/Lf5oqGOCRCM/?t=5820) But nevertheless, look around you with the amount of stuff and the crew you need to get a shot. People think the movies are just shot by shot by shot, and they just magically happen. When you've got a wonderful girlfriend of... first ADs, assistant directors, you've got gaffers, you've got lighters. And also, simulating light is insanely difficult. There are so many magical things that happen in creating visual images that, yeah, you could create a one-minute-long thing that might fool someone. How do you practically turn that into a movie? Because that movie, I forget what the name is, there was a movie that claimed it...

[1:37:30](https://realalpha.app/v/Lf5oqGOCRCM/?t=5850) aired at can it didn't no one it aired in the city of can during the can film festival it was not at the film festival when it comes to the practical creation of actual things at the end of it versus magic tricks the actual practical outcomes are not there the reason i keep coming back to the capabilities thing for the example is yeah they can do better at tests do better you number go up when it comes to can this actually do distinct tasks you can rely on it You can rely on it for summaries. You can rely on it for generations. The things it was doing, it's getting linearly-ish better at. But again, there's a ceiling to that.

[1:38:03](https://realalpha.app/v/Lf5oqGOCRCM/?t=5883) Like, okay, so it gets really good at research. What does that actually mean? You've already kind of got the automation there. What is the next step of that? Because training it to be more autonomous, for example, that's not something that comes from training data. That is actually a new, Gary Marcus, a neurosymbolic. You actually need to build a structure around the AI to make it work. And even then, it's... It doesn't fix the... So you're saying that there will become a point where the rate of improvement will plateau... We're already there. ...and stop. We've already hit that diminishing... Gary Marcus said this in 2022 as well.

[1:38:32](https://realalpha.app/v/Lf5oqGOCRCM/?t=5912) You know there's lots of people listening now that, like, they've had their workflows completely transformed by these tools. Have they? There'll be... Yeah, there are. Yeah, the thing is, first of all, every single one of them, did you pay for the tokens? That's the thing. Did you pay for the tokens? And also... How many tokens did you burn? But putting all that aside, what workflows? Because of it, yeah, I did a bunch of web scraping or web searches. I'm just not impressed. Did you make an entire fucking movie? No, you didn't. Is it speeding up your coding? Yeah, I believe that. I've heard that from multiple people.

[1:38:56](https://realalpha.app/v/Lf5oqGOCRCM/?t=5936) But again... How much can you trust this? I think what I was getting at is, you know, in the moment of any technological innovation, people, they extrapolate linearly or they view it as a static state, i.e. they think today is going to look like tomorrow or they think it's going to get better in this sort of straight line. But what we end up seeing a lot of the time is this exponential improvement. All of the innovations we're talking about with you, with compute and all that, with fast processes, those are hardware breakthroughs. The hardware breakthrough companies don't seem to be fixing the LLM problems.

[1:39:29](https://realalpha.app/v/Lf5oqGOCRCM/?t=5969) Despite all the king's horses, all the king's men, we're what? Nine, ten generations of TPUs from Google now. Broadcoms building stuff with OpenAI, their jalapeno chip. And yet none of these people can just say, yeah, we're on the path to making this profitable. Because they can't. If we fix the environmental problems and the profitability situation, maybe I'd be more generous with this stuff. But they don't seem to be able to. And you talk about these improvements in capabilities, there's a certain point at which I'm saying, okay, can it do even a tenth of the stuff they're promising? Samuel, when the other fucking week was saying, it was going to be in like six months, we'll be like a genie that you can ask wishes for.

[1:40:07](https://realalpha.app/v/Lf5oqGOCRCM/?t=6007) It's like, motherfuckers never watched Aladdin. What's he talking about? Like... Also, the genie was charming.

[1:40:12](https://realalpha.app/v/Lf5oqGOCRCM/?t=6012) **Ed Zitron:** Anyway, long story short, the promises do not line up with the capabilities or the capability improvements.

[1:40:18](https://realalpha.app/v/Lf5oqGOCRCM/?t=6018) An exponential improvement in software and software performance is always a result of direct hardware improvement. We have all the gifted mathematicians, all the gifted software engineers, all the gifted hardware engineers. And where are we? Trillion plus dollars in with... The future great financial crisis and the world's greatest marketing psyop. I just think in the future, I do think that all of the devices and the computers we use and the physical items in our world will be more intelligent. I mean, sure, but is that LLMs? That'll be powered by the underlying AI infrastructure. It'll be the more data centers.

[1:40:49](https://realalpha.app/v/Lf5oqGOCRCM/?t=6049) It'll be energy coming down. How does a... GPU full data center translate to a Nikon camera that can, I don't know even what you'd think, because what is the thing we're talking about here? Because the idea that devices will get smarter, sure, I can see that it's a very broad statement. I can see it happening. It's really kind of happening. What does that have to do with the data centers? Because these data centers, again, are not being built to make your consumer electronics smarter. They're not being built for anything other than speculating on the ability to capture demand for generative AI services.

[1:41:23](https://realalpha.app/v/Lf5oqGOCRCM/?t=6083) But it's not just generative AI. We went through that. It is. No, but those data centers, they are being built for generative AI. They are not being built for anything else. Would you consider generative AI to be the fact that on Meta's earnings call, like a couple of weeks ago, Mark Zuckerberg said the big breakthrough we've had, which has resulted in 15 basis points of increased retention, I believe he was referring to Instagram, is that we now take anything you post on social media and we run it through an AI to get full context of what it is. And because we can see a guy sat in front of me called Ed with...

[1:41:55](https://realalpha.app/v/Lf5oqGOCRCM/?t=6115) blue shirt and coffee we now can train the ai to serve whoever wants blue shirt adding with coffee to the right user which means people are retained longer because isn't 15 basis points like 0.15 yeah it's not cool but it makes a difference at scale it makes a big difference at scale yeah but a hundred and something billion dollars in and the best you've got is 0.15 if he could be fired i mean how much of a difference because there's a reason he's saying basis points versus dollars Because think about it like this. If Mark Zuckerberg was... I take your point about scale. I'm saying the point I was making was that that is another application of these data centers because it needs a data center that is driving revenues, but also that's outside of us thinking about just generating a sentence.

[1:42:42](https://realalpha.app/v/Lf5oqGOCRCM/?t=6162) And that's the gem, the generative model. Muse. Oh, Muse Spark is their LLM. Gem is their generative... It's Muse. Well, Muse... then that's them doing the weird thing where it's like on Instagram and it's like, Dave the cat, why is Dave the cat suffering? Like it's the weird pop-up things. Meta is fuck. God damn that company sucks. Like every time I think about how they've ruined that product. But that's the thing though. Again, why can't he just say with his whole chest, we've made a couple billion? Why can't he say that? Because he isn't. Because there's not actually a way of going, I spent all this money.

[1:43:13](https://realalpha.app/v/Lf5oqGOCRCM/?t=6193) I spent $14 billion goddamn dollars on scale by Alexander Wong, and I made this much. They can't... It gets back to a very simple point of, hey, if it was going well, you'd tell me how well it was going, rather than, I don't know, doing this weird rain dance thing where you're like, well, if we move all the pieces around in three years, theoretically, this will happen. Yeah. I've done almost 700 interviews with some of the most interesting people in the world. And one of the things you learn, which is unexpected, is that vulnerability is the doorway to connection. And after sitting here for two, three hours with a guest, I feel a deep sense of connection to them.

[1:44:01](https://realalpha.app/v/Lf5oqGOCRCM/?t=6241) And as they leave, what I get them to do is to write a question in the diary of a CEO. We've taken all of the questions from the diary of a CEO. We have put the question... here on this card with the name of the person that wrote it. So you can sit at home as I do with my fiancee and my colleagues at work and other people in my life. Whenever we get a minute, we play the Diary of a CEO conversation cards and it is incredible what happens. These are great if you're in a romantic relationship and you wanna connect your partner These are also great if you're in a team and you want to bond your team together.

[1:44:44](https://realalpha.app/v/Lf5oqGOCRCM/?t=6284) And I have to say they're also great for families that want to learn more about each other and that need a good excuse to spend some time in a digital world, in the analog environment, connecting human to human. It is remarkable what the right question at the right time can do. Go to thediary.com and you can get these conversation cards I do think you're accurate and right when you talk about the fact that there's a lot of like, is the word for gazy? Yeah. Where like there's a lot of people that have spent a lot of money and they kind of shouldn't have spent it and they fucked up. And now they're thinking, shit, like we've spent all this invested money.

[1:45:23](https://realalpha.app/v/Lf5oqGOCRCM/?t=6323) Kind of like the metaverse was a bit of a joke. Oh my God. That was a bit of a joke. That's so weird. A lot of money spent. We kind of thought this dream was coming of this one. I shouldn't say dream because it's not a dream that I've had. A dream that they had. Yeah, this sort of virtual world, and actually it never transpired. And there's no sign that it will in the near term. AI and the dot-com boom, in this regard, are the same. NFTs were the same. Right. So one could argue that a lot of the crypto industry was the same. It's Wang that is inflated by the media. The difference is, the reason the metaverse and NFTs didn't...

[1:45:54](https://realalpha.app/v/Lf5oqGOCRCM/?t=6354) escape this was there weren't stocks to speculate on. There weren't big companies that you could invest in. They had record earnings in 2021. There's a bunch of money floating in the system thanks to post-COVID, the PRDC, that basically government, federal money flowed in to the banks. There's a bunch of easy money, zero interest for a year. Money was easy to find. Then after that, there was the hangover. Growth started to slow down dramatically. This is actually my rock-com bubble theory, which is they don't have any hyper-growth ideas anymore. So suddenly they started buying GPUs. And when they bought GPUs, people went...

[1:46:26](https://realalpha.app/v/Lf5oqGOCRCM/?t=6386) They're doing AI. Oh, we better buy the stock. And the stock's won an incredible run. Meta's like several hundred percent. In the last few years, their stock has grown by hundreds of percent, despite zero proof. And because the media was just saying, yeah, Meta's revenue is growing because of AI, right? Microsoft's revenue is growing because of AI, right? The fugazi you're talking about was the fact that everyone just gave them credit in advance. And now we're kind of getting to the point where it's like, hey... You didn't spend that trillion dollars for no reason, did you, Satya? Amy Hood, just going to take him out back, send him to the glue factory or something?

[1:47:00](https://realalpha.app/v/Lf5oqGOCRCM/?t=6420) I do think there's overspending. I want to concede that. Dramatic. Yeah, no, I do think there is. And I think the reason why there's overspending, Ed, is I think there is something here. And in terms of like, I think there is practical uses for this technology. And I think when people realize that through history, they go crazy because they want to be the person that owns the opportunity. I'm going to be honest. I just, I fundamentally don't agree. You don't agree with which part. I don't agree that the speculation is a result of actual demand. I don't believe it's suspect. I don't think private credit is sinking hundreds of billions of dollars into AI because of actual demand.

[1:47:35](https://realalpha.app/v/Lf5oqGOCRCM/?t=6455) **Ed Zitron:** They are doing it because they saw the biggest companies in the world building data centers, making a ton of money from two companies they feed money, and went, I want some of that money.

[1:47:43](https://realalpha.app/v/Lf5oqGOCRCM/?t=6463) I'm saying that I do think there is value in the underlying technology. Sure. And so I think... I'm not saying how much value. Right. Okay. I get you meaning that. That's fair. I'm not saying it's proportionate to the investment. All I'm saying is that, do you know what it's like? It's like, if I take your example, the Rot Economy essay that you wrote. Yeah. Say that you're on a desert island and then someone says they found a banana tree. Right. And there's 10,000 people on the island. Okay. They are going to stam fucking peed towards where they think the banana tree is. They are going to fucking claw each other to pieces.

[1:48:17](https://realalpha.app/v/Lf5oqGOCRCM/?t=6497) And if your essay here is right, that there was desperation because they hadn't found an innovation in a while, maybe that explains it. Maybe there is a bit of value here. Right. And they're stam fucking peeding and killing each other and making irrational decisions like hungry people would. I actually think then we actually agree. That is actually my point, which is these three companies in matter, their main business lines are running out of growth. There's only so much they can grow. And indeed, in the next three and a half years, analysts think that these two bastards, these two, OpenAI and Anthropic, are going to spend over $400 billion on these people alone.

[1:48:48](https://realalpha.app/v/Lf5oqGOCRCM/?t=6528) Microsoft... Google and Amazon. And the crazy thing is, is that's a large part of their future growth. And if this money isn't spent, their growth slows down. Okay. So your point about a bananas, I actually agree. That is the rock-on bubble. It's they don't have a new thing and they're desperate. And indeed, they got rewarded for buying the GPUs. They got, when they bought these goddamn GPUs from NVIDIA, All the markets went rock hard overnight. They loved it. There were stories about how they were sending armored cars with the GPUs to Microsoft to make sure Microsoft got the GPUs. And so everyone saw all that money flowing in, even though they never disclosed AI revenues.

[1:49:21](https://realalpha.app/v/Lf5oqGOCRCM/?t=6561) They saw the expenditures and they went... Well, I want to do what these people are doing. I want to get a little of that money, don't I? I think the area where we have a slight disagreement is that I think the underlying technology has a lot more promise over the long term than you do. So the thing I want to push back on there is... To have progress with AI, just taking it in a vacuum, to have progress for these two companies to keep going and to keep progressing, they need to spend tens of billions of dollars a year on training. The only way that that can happen is if these companies and venture capitalists and private credit firms and NVIDIA keep circulating money to them.

[1:50:00](https://realalpha.app/v/Lf5oqGOCRCM/?t=6600) So the progress... that we've got so far is entirely a result of this circular system. So it means that without- Circular, you talked about VCs there. Venture capitalists who are, by the way- Investors. The majority of the funding that OpenAI got in the last six months came from SoftBank, NVIDIA, and Amazon. Okay, yeah. So just the point is, you're talking about progress continuing. Progress in LLMs can only continue as long as the money keeps flowing. I completely agree. Once the money stops flowing, the progress stops. But isn't that most like early... Spotify didn't make money for 20 years.

[1:50:34](https://realalpha.app/v/Lf5oqGOCRCM/?t=6634) Spotify didn't lose $20.9 billion in one year. They didn't need to raise $217 billion in the space of six months. Yeah, and Uber's another example. $33 billion since inception before it became a messy kind of profitable. Amazon Web Services between 2003 and 2015, when it became profitable, $29.7 billion. They'd spent. Yeah, that's the total capital expenditures. And that's not just Amazon Web Services. That's the entire logistics operation. Normalized for inflation. So they all lost money for a long period of time, is the TLDR. Yes, but the amount of money they lost is... completely just magnitudes different on a level where these three come... Can I argue then that that's because the potential of intelligence permeates everything, whereas Amazon at the time was like selling books.

[1:51:19](https://realalpha.app/v/Lf5oqGOCRCM/?t=6679) No. That was bringing retail online. When Amazon Web Services grew, it was... Oh, Amazon Web Services. Amazon Web Services. Amazon Cloud. With Amazon Web Services, the reason I bring that up, I'm going to repeat something, but it's really important. 2003, it was founded. Mm-hmm. And it was founded mostly because Amazon, as a growing online store, needed hardcore infrastructure. 2006, I think, is when they turned it client-facing. I may be wrong on the dates there. But 2015 was the year it became profitable. The total capital expenditures normalized for inflation were $29.7 billion across that 12-year period.

[1:51:51](https://realalpha.app/v/Lf5oqGOCRCM/?t=6711) And yeah, it lost money. But if we speak cold economics here... Amazon didn't have to go into the... They were unprofitable in a way, but their margins actually started improving because AWS was a very margin-heavy business. It was great. These two, Google, cash flow negative. Amazon, cash flow negative. These businesses, the reason you liked software businesses was they are meant to be... Cash-heavy asset light. These companies, along with Meta, have added more than $700 billion of new property, plants, and equipment, so assets, data centers, GPUs, in the last four years. They have gone from being these cash machines to these cash...

[1:52:33](https://realalpha.app/v/Lf5oqGOCRCM/?t=6753) furnaces you said a second ago this can only continue if investors continue to invest yes and i was saying i think that investors are used to pumping money into things that are burning cash your rebuttal to me sounds like well this is burning more cash than ever and then so i would say well is the opportunity bigger than those other case studies you reference like aws and one would say that the opportunity of intelligence is permeates everything so the TAM the total addressable market is enormous maybe the rebuttal back to me is about open source and all these kinds no no no I actually know what you're going at so what you were describing there is the argument that Satya Nadella or Sam Alton would make the theoretical opportunity of large language models and I could have bought that shit into any 24 from them when they were like, oh, we see the opportunity.

[1:53:23](https://realalpha.app/v/Lf5oqGOCRCM/?t=6803) We've gone way past the point at which you can rationally argue that LLMs need this much money. And when I say the money needs to keep flowing, I am talking these two companies, OpenAI, just OpenAI. Clammy Sammorton has said, Wall Street Journal and Issa Gardizi reported a few weeks ago, they plan to spend $750 billion on compute through 2030. I think they're going to be dead before then, but $750 billion. That is an insane amount of money. It is crazy. And a large chunk of that is training. So when I say progress, I mean literally to make the models better at stuff requires billions of dollars invested just in data.

[1:54:03](https://realalpha.app/v/Lf5oqGOCRCM/?t=6843) and also tens of billions of dollars of taking that data. And so training, training is actually a really interesting thing, because when you think of like, for Jake and Troy, my trainers, when I train with them, when I lift with them, I have a defined thing. And when I do it and I eat right, muscles get bigger. And here's the thing. When you train with an LLM, you're experimenting. And this is not actually a hit on the companies, because they're still trying to work out how to do the thing. Because... Putting aside how I feel like they're trying to innovate. I think there are people at these companies that actually want to do something interesting.

[1:54:33](https://realalpha.app/v/Lf5oqGOCRCM/?t=6873) It's costing too much money. So once the money tap turns off, the money won't be there to buy the data or feed the data into the GPUs. Put aside all the thoughts I have, just the raw capital to get them this far has cost increasingly larger amounts of money. And increasingly larger amounts of training money for training runs that sometimes can fail. GPT-5 was meant to be this panacea for the AI industry. They had at least one training run that cost half a billion dollars and did nothing. And that's the thing. If we are thinking about progress in a vacuum, they need so much more money just to maybe get somewhere.

[1:55:08](https://realalpha.app/v/Lf5oqGOCRCM/?t=6908) There's no guarantee. There's never any guarantee, but there's a reason that Google and Amazon are cash flow negative now. There's a reason why Oracle's probably going to die. as a result of OpenAI, because Oracle's future depends on OpenAI spending $300 billion over five years. It's absolutely fascinating, because I was just reading through a list of quotes from the big CEOs of the AI companies to see what they would rebuttal you. And they're all basically saying the same thing. They're all saying, this is an actual and exact quote from Sundar, who is the CEO of Google. He says, the risk of underinvesting is dramatically greater than the risk of overinvesting.

[1:55:26](https://realalpha.app/v/Lf5oqGOCRCM/?t=6926) And you go down, you go through this, you know, Andy Jassy, CEO of Amazon, we're not investing approximately 200 billion in CapEx in 2026 on a hunch. We're not going to be conservative in how we play this. We're investing to be the meaningful leader, and our future business operating income and free cash flow will be much larger because of this investment. Then Mark Zuckerberg, CEO of Meta, says... We'll continue to invest aggressively in infrastructure to meet the demand. I'd rather risk building capacity before it's needed than being late. Makes me think of Shrek with Law Farquad. Some of you may die, but that's a risk I'm willing to accept.

[1:56:02](https://realalpha.app/v/Lf5oqGOCRCM/?t=6962) It's like, you know, I'm just going to spend all this money. You can't fire me because Mark Zuckerberg can't be fired due to the unique board situation he's got going. So yeah, he's just going to piss the money away and hope he's right. I don't know from the people who know it matter. He's not right. Why might you be wrong? I mean, this is the thing. The AI people who claim this is going to be the biggest, strongest thing in the world, did they ever get that? I mean this... It's a good question. Because it's like, they don't. And the thing is, what would it take for me to be wrong? A bunch of hardware breakthroughs to make this profitable.

[1:56:29](https://realalpha.app/v/Lf5oqGOCRCM/?t=6989) A bunch of... This is a good question, though. New mathematics... Because the thing is... When it comes to being a critic or a skeptic, you are put on the hot seat. Not the people spending a trillion dollars. Not the people promising the world. The arsehole with a blog is the one who's like, no, no, no. Trust me. If they came here, they'd be on the hot seat too. Trust me. Oh, they won't talk to me. Don't know why, Steve. It's because I call him Clammy Sammy. No. I think it's because my guests are quite critical that I don't think Sam Altman wants to come here. Mr. Altman, go on Steve, do it. But this is the thing, like, of course they're going to say that.

[1:57:01](https://realalpha.app/v/Lf5oqGOCRCM/?t=7021) And also, if they thought they were right, I don't think they do anymore. If I was in their shoes and I thought that this was an existential thing, sure. But it gets back to the rock-con bubble, which is, yeah, this is the last thing they've got. But I really want to know that question. It was one of the questions I was really excited to ask you, which is you have a different opinion. We said this at the top. You have a very different opinion from a lot of people. I would categorize the two most popular opinions as AI is going to hurt everybody and it's going to be catastrophic and we need to stop.

[1:57:28](https://realalpha.app/v/Lf5oqGOCRCM/?t=7048) The other opinion is age of abundance is going to be amazing. Let us crack on. Yours is different from both of those, which is, as you said in your words, it's a con and there's no real underlying value in the technology and it's overhyped. Yes. And there's way too much spending. I mean, a few people agree on the spending part. Yeah. But the other part. So with you, it's probably the first person that I've spoken to that's had this opinion. So what would it take for you to change your mind? About what you believe here. There would need to be a hardware breakthrough that reduced the cost by like a thousand.

[1:58:02](https://realalpha.app/v/Lf5oqGOCRCM/?t=7082) It would have to be just a dramatic breakthrough that is not happening, just to be clear, because they've all been trying. So it's the cost for you that would have to change. It's the cost, and it's also the data centers. I think the way they're building the data centers is reckless and damaging to communities. The fact that you have communities like in Vinyl, New Jersey, where the residents are like, I don't want this, but the planning boards vote for it because they're all... I assume having chummy lunches with the people doing it. I think the use of gas turbines is fucking disgraceful. The water situation I'm not super well read on, so I'm not going to wade into it, but the use of gas turbines and behind the beat of power is reckless and damaging to communities.

[1:58:36](https://realalpha.app/v/Lf5oqGOCRCM/?t=7116) The noise that these things make, and also, generative AI is this egregious, pornographic... demonstration of how unfair the world is. Regular people try and get a loan for a business, a random business. They want to have a good idea. They go to a bank, a bank of talent, they'll go fuck themselves. They'll say, you're going to make a store that sells stuff? Screw you. You want to build a data center? The Jensen Huang will back you. Jensen Huang will give you 25% residual value. You want to build a regular business that's even profitable? Fuck you. No, a venture capitalist won't give you the money.

[1:59:09](https://realalpha.app/v/Lf5oqGOCRCM/?t=7149) Something that's just growing steadily but it's profitable? Screw that. No, I need 10, 100x return. Try and get a mortgage. You have to give the bank a full colonic. But you want to get money for Jensen Huang? To buy some GPUs, he'll give you a contract. CoreWeave is a great example. A NeoCloud, which is just a company that builds data centers and puts GPUs in rent and people. NVIDIA, one of their first investors, in 2023 signed a $1.3 billion contract. to rent back their GPUs from CoreWeave so that CoreWeave go to a bank and go, I've got a customer. Yeah, it's the guy I'm buying the GPUs from with the debt I'm getting from you.

[1:59:45](https://realalpha.app/v/Lf5oqGOCRCM/?t=7185) If you want to buy GPUs, it's open season. If you want to live a regular life where you build a regular business or buy a house, highest interest rates ever, screw you up yours. Yeah, you need to show us way more than that. I don't trust you regular folks. But if you're an unprofitable NeoCloud, you get billions from Jensen. It doesn't matter. It's so interesting. It's interesting because you are the first person that I've spoken to that has that opinion. I am pro user. Let's take another myth. AI will be conscious. So, super intelligence, artificial general intelligence. These are theories. Anyone saying this stuff will become this is just guessing and does not have proof.

[2:00:28](https://realalpha.app/v/Lf5oqGOCRCM/?t=7228) Okay. And that's really it. Okay. Okay, let's take another myth. AI systems are already blackmailing and escaping control. So this is a really specific one. Anthropic. There's actually two. OpenAI's GPT 3.5. I realize this is more than a sentence. I apologize. In their system card, and a bunch of media outlets cover this, saying that OpenAI's model blackmailed a TaskRabbit into solving a capture.

[2:01:11](https://realalpha.app/v/Lf5oqGOCRCM/?t=7271) **Ed Zitron:** What actually happened was a user of GPT doing the experiment got it to generate things to say to a TaskRabbit to make a TaskRabbit do stuff.

[2:01:23](https://realalpha.app/v/Lf5oqGOCRCM/?t=7283) A TaskRabbit being... As in a person that you rent, not even to do a capture. It's someone you rent to nail a picture up in your apartment. It's an insane example. This was covered as if these things blackmailed someone. And they specifically said, yeah, we prompted it to do this. And also, the other note was that, yeah, AI systems can't do autonomous stuff like this. Then there was this other one where Anthropic said, oh, yeah... A model was blackmailing someone, saying that if you don't do this, I'll email proof that you slept with someone else other than your wife, I think it was. What actually happened was Anthropic explicitly trained a model to do this and then prompted it to blackmail.

[2:02:00](https://realalpha.app/v/Lf5oqGOCRCM/?t=7320) This keeps happening and the media just slop me up. I don't need no thoughts. Put the story in the bag. And it's frustrating because it scares people. Put aside the fact it's wrong. It's scary. It's scary to people, people living their lives who have to work longer hours to make less money and their money doesn't go far. And they turn on the fucking news and there's some asshole being like, yeah, you should be terrified. It blackmailed someone. But this is so counterintuitive of their interest to some degree. And they've experienced it backfire. Well, they have now. Like, it's literally backfired.

[2:02:33](https://realalpha.app/v/Lf5oqGOCRCM/?t=7353) It's backfired. Eric Schmidt getting booed at the commencement speech by 8,000 people every time he said the word AI. Yeah, that's awesome. But I mean, these CEOs are being attacked at home. Yeah, which fucking sucks. Yeah, which is terrible. I must be clear, like, you dislike the company, don't fucking hurt people. Yeah, don't attack people at home. But the point here is that that narrative is backfiring in a big, big way for them. I don't think they saw it coming. Because you have to remember, you mentioned regulation earlier. These tech companies have been glazed for their entire existence.

[2:03:04](https://realalpha.app/v/Lf5oqGOCRCM/?t=7384) Travis Kalanick's like, oh, what? People don't like me now. And it's because Uber was a horribly run place and he was kind of a monster. Also, tons of articles about how great Uber was at the time. The point I'm making is these companies are not used to pushback. They thought what would happen, I believe, just guessing, they thought they'd do this scary stuff and they would just get floods of money and everyone would just be like, I kneel before you, I'll do whatever you want. They didn't expect, I think, what has happened. I agree, this has backfired on them. Because they were inarticular. They're disconnected from regular people.

[2:03:35](https://realalpha.app/v/Lf5oqGOCRCM/?t=7415) Sam Altman drives a $5 million car around San Francisco. So that man's doing it like nine miles an hour. It's hilarious. But these people are disconnected from everyone else. So they don't experience real problems, so they can't build the solutions for them. And they think, well, if we scare people into doing what we want, that'll work, right? It didn't. This was, all of this blackmail stuff, was an attempt to make it mystic. It was a mysticism attempt. It was to make it seem like this unknowable, impossible to control, just this powerful thing. But we're the only ones. We are the only us. Only these two angels could possibly control the beast we've created.

[2:04:10](https://realalpha.app/v/Lf5oqGOCRCM/?t=7450) This is quite a controversial statement. But I think that for some reason, I trust Dario a little bit more. Because I think he's been the most balanced in his writing about the risk profile. Whereas the others, they seem to kind of move with the wind. I get what you mean. The reason I don't like Dario is Dario was doing the scare tactics thing when he worked at OpenAI. When GPT-2 came out, he said, it's too scary to release. He's also gone on television and given AI psychosis to Axios, being like, 50% of jobs are going to go away because of AI. What I respect is the consistency. He's now being attacked by them.

[2:04:50](https://realalpha.app/v/Lf5oqGOCRCM/?t=7490) Good. But the thing is... Sorry, I mean, clarify the word attack. Dario is being verbally attacked by Silicon Valley. And, you know, if Silicon Valley, if powerful people in Silicon Valley are attacking someone... Four months ago, he wasn't, though. They were all saying he was the smartest boy ever. But the point I want to make there as well is, again, wow, you're so scared of how powerful this is. You're so scared of it. It's so scary. What are you doing about it? Oh, nothing. It's just like, what are you doing? Well, we have an alignment team. So does every AI lab. Well, I guess OpenAI cycles through this really quickly.

[2:05:21](https://realalpha.app/v/Lf5oqGOCRCM/?t=7521) Here's the thing. If I'm Dario Amadeus and I'm like, I'm scared of all things changing... And I thought I had made a thing that would eliminate all jobs. I'd be fucking terrified. I'd be walking around with like a 10-ton weight on my back. The responsibility, the fact he doesn't, the fact he wants to be this weird elder statesman that's too scared to hold Sam Altman's hand at an event just makes me believe that he's just saying it because it's convenient. And he'll wind that back as he kind of already has... whenever it's convenient for him. I think OpenAI and Anthropic are basically the same level of bad company.

[2:05:52](https://realalpha.app/v/Lf5oqGOCRCM/?t=7552) I think Anthropic is more cult-like. I think it's so weird, like Jack Clark over there, one of the co-founders, that fellow used to be at the register, he used to be one of the most critical journalists ever, and now it's like something took over him, because they talk of these things in these highfalutin terms. But then again, maybe the people at Anthropic buy their shit, maybe some of the people at OpenAI buy their shit, I don't know. So going back to the central question we asked at the top here was, What would have to be the case for you to look back and say, do you know what, I was wrong in 2026.

[2:06:18](https://realalpha.app/v/Lf5oqGOCRCM/?t=7578) And you said to me it would be mainly that the cost of production around AI drops dramatically. And it would have to also do insane amounts of stuff it does. It would have to be a truly autonomous... It would have to continue its improvement in terms of capability. It would have to be a different product. It would have to be indistinguishable from magic. And the reason I have these high standards is they set them. Okay, fair enough. It's interesting as well because all these myths and all these conversations, it's about technology, but it's also, it's an information war. It's literally... narrative versus narrative everyone trying to escape the financials everyone trying to actually escape what the models can do and the big thing i always say about ai boosters is if i could regulate them i'd regulate them they can't speak in the future tense anymore just you got to talk about today mate you get two weeks in the future max because if they were constrained to what was Yeah, no, I think...

[2:07:13](https://realalpha.app/v/Lf5oqGOCRCM/?t=7633) I guess most technology companies would at the time. Uber would sound insane. Amazon would sound insane. Uber was basically... They were pissing money, though, weren't they? They were pissing money away, but the unit economics were the same, just subsidized. So you were still getting a service from A to B and paying a much lower cost. It wasn't like... You paid Uber 200, sorry, 20 bucks a month and you could get 500 miles of Uber. And then one day you started paying by the mile. Because that's what's happening with this. Have they, they've changed their business model for customers like me now so that I have to buy credits?

[2:07:44](https://realalpha.app/v/Lf5oqGOCRCM/?t=7664) No. So you, well, kind of with Fable. They asked me the other day to buy credit. So with the Anthropics Fable model, with some accounts you have to pay for usage. And also adoption of Fable has been pretty low because of this, because of the cost. But with enterprises, so companies over 150 people, you have to pay by the token now, or per million token. Oh, so they are moving to a token. Yeah, but when they did that, everyone went from being like, this is the most impressive thing ever to being like, we've got to control these costs. Uber's COO says, Andrew McDonald, I think he said that it's getting hard to justify because it's hard to connect spending money on tokens to actual useful outcomes.

[2:08:21](https://realalpha.app/v/Lf5oqGOCRCM/?t=7701) He said the thing. Like, he said the actual thing I've been saying, and it's... So we're in an AI bubble. Yes. And when this AI bubble collapses, so much of the economy is resting upon it. Yeah. It's going to have downstream consequences. So I've got two questions for you. I guess the first question is, are we in an AI bubble? And what happens when the bubble pops? Yes, and it depends. So the big thing that people say is, oh, we'll get bailed out. Donald Trump, scared of Donald Trump. Here's the problem with this. It isn't just an AI bubble, it's the Rotcom bubble. So the AI bubble collapsing will probably be this company running out of money.

[2:08:43](https://realalpha.app/v/Lf5oqGOCRCM/?t=7723) OpenAI. And the thing is with OpenAI is they were meant to go public this year. And now it's been pushed to next year. A week and a half after I released their auditive financials. I wonder where that was. But they've delayed to next year. Sarah Fryer, the CFO, has now said... Well, they'll do it earlier than 2027 or 2027. Great answer there. For anyone that doesn't understand what going public means, that means joining the stock market. And at such a time when you join the stock market, your investors can finally sell their equity that they got for investing in the company when it was private.

[2:09:14](https://realalpha.app/v/Lf5oqGOCRCM/?t=7754) So oftentimes companies will flirt with the idea of we'll go public someday soon because investors will have a moment in their head where they'll get their money back at a return. So you kind of need to, if you're in these guys' shoes, you kind of need to be flirting with going public or investors won't want to invest. OpenAI up until this point has been a private company. And their last funding round, they were valued at $865 billion. Now, when they tried to go public, New York Times' Mike Isaac reported this. They tried to list, well, they wanted to go at a $1 trillion valuation. Apparently, their advisor said, no, don't do that.

[2:09:52](https://realalpha.app/v/Lf5oqGOCRCM/?t=7792) That is very bad for a number of reasons. One, OpenAI needs perpetual amounts of money. They raised $122 billion this year. Most of it's crossed. There's some left. But...

[2:10:01](https://realalpha.app/v/Lf5oqGOCRCM/?t=7801) **Ed Zitron:** They are going to need to raise at least $100 billion a year just to survive.

[2:10:05](https://realalpha.app/v/Lf5oqGOCRCM/?t=7805) If they can't go public, they will have to raise another funding round. The problem is it's going to be difficult to raise even the same one they raised that. They're probably going to have to take a flat, so the same amount. They can't do that. Exactly. But they need money. They need money so bad. Amazon sent them $35 billion that was meant to be contingent on them going public early. They did that because they need the money. Now, OpenAI is the kind of catastrophe center here because Anthropic is likely going to beat it to go public. And once Anthropic goes public, it'll be borderline impossible for OpenAI to do so because Anthropic, an unprofitable, unsustainable AI lab, but a better business that's growing faster than OpenAI's.

[2:10:43](https://realalpha.app/v/Lf5oqGOCRCM/?t=7843) I believe they have a ceiling. They're eventually going to face perdition too. I think sometime in 2027, things are going to start running out of steam. Because the thing I said earlier, the only way these models get better is if you feed more money, tens of billions of dollars into them. So you think OpenAI runs out of steam in 2027? I think they're already running out of steam, yeah. But I think they run out of cash. You think they run out of cash? Yes. And the sequence of events here will be they go out and try and raise... And they have trouble raising another round. I think maybe NVIDIA props them up a little.

[2:11:11](https://realalpha.app/v/Lf5oqGOCRCM/?t=7871) Maybe Private Credit, Blackstone, BlackRock, and the like. And the reason that Private Credit is getting involved, so asset managers, is because they're investing in the data centers, and they know this company's most of the data center demand. Okay, so they run out of steam in 2027, according to you. Yep. And maybe they try, if they bum rush to go public, they're going to have worse economics than an anthropic. They're going to get savage. WeWork was a great example. Another SoftBank classic. Now, I think OpenAI collapses. There are many different ways it could happen. There are many different ways it could end.

[2:11:39](https://realalpha.app/v/Lf5oqGOCRCM/?t=7899) But the crucial thing is that there are multiple companies that are existentially tied to OpenAI. SoftBank, one of the largest companies in the Japanese stock market, a holding company with lots of investments, they have on paper... about $100 billion worth of OpenAI stock. If they can't go public, they can't do diddly squat with them. And so SoftBank's future, their ability to continue paying the people around them and existing as a business, relies on their ability to continually liquidate funds, to take the things they've invested in and have value from them, either by selling the stock or taking loans out on the stock.

[2:12:14](https://realalpha.app/v/Lf5oqGOCRCM/?t=7934) If OpenAI can't go public, SoftBank can't do that. SoftBank. Probably won't run out of money, but we're going to see one of the largest holding companies in the world become much smaller. We will also see Amazon, Google and Microsoft have to restate guidance. They will have to say, actually, we don't think we're going to grow as fast. And what happens then? Well, I think we enter a tech depression because the rock-com bubble, the core of my theory, is that they're out of hyper-growth ideas, but the market doesn't think so. The reason they're so maniacally spending is because buying AI GPUs allows them to kick the can further.

[2:12:48](https://realalpha.app/v/Lf5oqGOCRCM/?t=7968) It allows them to say, we're still doing something. We're working on AI. Don't think too hard. And also, their current business is still growing. Yeah. their current businesses will eventually slow. There's only so many price increases. There's only so many tweaks to ads. Only so many tweaks to Google search. Only so many ways that Amazon can screw merchants. So in that tech depression, which you think it might be triggered in 2027, is that a cascading downstream economic depression? Because the stock market is heavily dependent on these companies. The stock market sees a pullback. Investors stop investing.

[2:13:21](https://realalpha.app/v/Lf5oqGOCRCM/?t=8001) They get panicked. Yes. I think that because... What sort of downstream consequence, the sort of domino effect? There's so much to imagine that it's difficult to capture everything, but there are a few things that worry me. First of all, a ton of American money, just regular people's money, retail investors, are in these companies. And they bought into the Magnificent Seven thinking that number go up forever. NVIDIA is the largest company on the Fortune 500 and NASDAQ as well. And like 7% to 8% of the S&P 500... That company, when the bottom falls out from NVIDIA, and we haven't really got into it, but NVIDIA is doing the most circular of financing, feeding companies money so that they can raise debt to buy more GPUs.

[2:13:59](https://realalpha.app/v/Lf5oqGOCRCM/?t=8039) I think NVIDIA's revenue could go 50% to 70% now. I think that NVIDIA could, NVIDIA back in 2022 was making single digit billion dollars. And what happens though, I'm thinking about like Jenny and Dave that are watching this right now, and they are just normal people. With normal jobs. People's retirements are going to contract severely, and I don't believe they're going to return to those values. And I think that because so much of the value of the S&P 500 and Russell 1000 index comes from these four companies and the rest of the Magnificent Seven, so Apple, Tesla, Meta as well. And the thing is, I don't know what happens after that because venture capital has also, like more than half of venture capital last year went into AI.

[2:14:38](https://realalpha.app/v/Lf5oqGOCRCM/?t=8078) I think most venture capital investments in AI are going to zero. Because when it comes to building a company on top of an LLM, all of those are unprofitable too. And the thing is, LLM companies have not really been acquired, the exception being Cursable by Elon Musk for the coding side. But you have Cognition, which is just another LLM company raising a $26 billion valuation. That means that company has to go public because who's buying a company at $26 billion other than Elon Musk? And there are rumors that Elon Musk was trying to buy them as well. Is Elon Musk just going to pick off every LLM?

[2:15:10](https://realalpha.app/v/Lf5oqGOCRCM/?t=8110) Like LLM company, like on a fucking TJ Maxx for AI, like Jesus Christ. So is that a recession you're describing? It is a recession, but it's also a depression within people's retirements. Like I'm talking about 20, 30, 40% off the top of these companies' stock value. Economic contractions, recessions consistently lead to job losses and rising unemployment. When an economy contracts, the mechanism driving job losses typically follows a predictable sequence. Falling demand, consumers and businesses spend less money causing revenues across most industries to drop. Margin compression with lower revenue and often fixed overhead costs like rent or debt, corporate profit shrink.

[2:15:43](https://realalpha.app/v/Lf5oqGOCRCM/?t=8143) And lastly, cost cutting measures to survive or protect profit margins, businesses freeze hiring, reduce hours and resort to layoffs. Yes, that would all happen. But the thing is, we're talking about equity values dropping, and we're talking about there not really being a home for that value or that money. So much is riding on these companies, but you can't bail it out. You can theoretically bail out OpenAI. I don't think it happens. You could pump these dogs full of money and keep them alive for a bit, but at some point they're going to have to start. They have, between these two companies, Anthropic and OpenAI, a lot of companies.

[2:16:15](https://realalpha.app/v/Lf5oqGOCRCM/?t=8175) you have $1.1 trillion of commitments. Just OpenAI. Oracle is building 7.1 gigawatts of data centers, so over $400 billion worth just for OpenAI. There is not a customer on earth, and Oracle's revenue has been flat the last 15 years when you adjust for inflation. Without OpenAI, Oracle dies. So you think OpenAI is going to crash and run out of money, and that's going to cause this domino effect across these other big tech companies, which is going to impact the stock market and impact the broader economy? Yes, and also the tens of thousands of people that will be laid off from the tech sector.

[2:16:46](https://realalpha.app/v/Lf5oqGOCRCM/?t=8206) But also, the venture capital thing is significant because venture capital has been having one of the most historic bad runs in history. Since 2018, the average return from venture capital, a total value put in, so the amount of money you get back for your dollar is between 0.8 and 1.21, meaning for every dollar you invest, you get 80 cents to $1.20. Paper gains. Well, no, that's just actual returns. Paper gains they'll give you, but even an internal rate return, which is a whole separate thing, even that's not very happy. But long story short, very simple, venture capital is not making money come out.

[2:17:21](https://realalpha.app/v/Lf5oqGOCRCM/?t=8241) Venture capital is not actually providing returns. They're celebrating paper gains. They're celebrating paper gains. And they're raising off paper gains. Uh-huh. And paper gains, I mean, just being able to say, oh, look, the valuation of Anthropic went up. But that's what Google and Amazon were doing. Google's last quarter, they boosted their net profits, profits on paper, by $99 billion because of the increased value of their SpaceX holding and their Anthropic holding. And again... The fact that this is happening is insane, and the fact it's not a scandal is insane, but we live in this culture, I guess.

[2:17:53](https://realalpha.app/v/Lf5oqGOCRCM/?t=8273) But everyone is really benefiting right now. It's really that great tweet where it's like, when you're reaping, it's like, yeah, fuck yeah, this rocks, sewing, ah, shit, this sucks. Because right now they're all like, yeah, all the speculative gains are awesome, the paper gains are awesome, the theoreticals of Anthropic being worth $2 trillion, wow, the articles we can write, the promises we can make. Then when the rubber meets the road... It's going to be pretty rough on them because the valuation of Amazon, Google, Microsoft and Meta is based on this idea that they will grow eternally, that they will grow forever.

[2:18:24](https://realalpha.app/v/Lf5oqGOCRCM/?t=8304) If that changes, to quote Ed Elson from Prof G Markets again, it's this, they're all doing Botox right now. They're sinking money into it to make themselves feel young again. And the market believes them. When the market doesn't, we're not just talking about a depression. I'm talking about the market valuing them like airlines and saying, yeah, you're real big and you make money off your existing products. But guess what? You don't have new shit. You're just going to be doing this forever. And we're going to value you as such. So for Jenny and Dave, should they do anything differently? Should they be conserving money?

[2:18:54](https://realalpha.app/v/Lf5oqGOCRCM/?t=8334) If there's a recession or depression coming, should they be a little bit more conservative? Should they? Yes. I actually think it's, I don't know. I don't have money in the market. I think it's a casino. Casino pumped up by the media. Should they invest in the S&P 500? Should they invest in OpenAI? Oh, God, no. Honestly, I live in cash right now. You live in cash? Yeah. I don't fucking trust the market, man. Try and get some gains here. I'm not comfortable giving financial advice, but it's like you're gambling. Okay, be conservative. Things might get volatile. Yeah, it really is. It's going to be act as you would with volatility.

[2:19:26](https://realalpha.app/v/Lf5oqGOCRCM/?t=8366) Take the gains when you've got them. Don't sell everything, but be suspicious of tech. Like, that's actually the biggest thing. It's like, be suspicious of what they're promising. If you're acting based on their promises, don't trust the promises. Trust that they are going to say what will make the stock run rather than what's actually happening and that they will find every dodgy way to make you think something is happening rather than it's actually happening. Annualized run rate. Great example. Microsoft said that they had $38, $37 billion of annualized run rate in AI. You hear that, you go, I made $38, $37 billion, right?

[2:20:03](https://realalpha.app/v/Lf5oqGOCRCM/?t=8403) Wow, that's so much. Run rate may be month times 12. They don't even define it, but it's built to manipulate. And they do that because we don't have a functional SEC and we don't have a media environment that actually where skepticism is the priority and where protecting the readers is necessary. What would they say? They would say, Ed, this technology is going to be so great and so transformative that we are investing a ton of money in advance of the value and utility showing up. That's what they would say. Right. And I've heard your rebuttal, but I just wanted to express... No, no, I get that.

[2:20:38](https://realalpha.app/v/Lf5oqGOCRCM/?t=8438) I think that's their sentiment. I'm not defending them or anything. No, I get it. I'm trying to provide enough, like, balance to see if we can dance between these two perspectives. And a lot of people would say that there's going to be a bloodbath. Yeah. Because they can't all win big in the way that they're kind of describing. So someone's going to have to lose. And when one of these players starts to lose big, I think it could, as you say, there could be some kind of domino effect or contraction. Yeah. And I think the thing that people want to believe is the dot-com bubble thing. It's like, it worked out afterwards.

[2:21:10](https://realalpha.app/v/Lf5oqGOCRCM/?t=8470) Because Amazon, Oracle, they didn't die after the dot-com bubble. They were actually fine. Yeah. isn't like that they're bigger companies they're have bigger promises and even i'm not like oracle i actually think could die i r.i.p larry oh it couldn't happen to a nastier man they'll probably like these people do you no i actually why no again i ask this question purely because i want an answer not because i agree or disagree but um why don't you like these these people I don't like being misled and I don't think regular people are being misled either. And I really don't think that the average person can get away with bullshitting as much of these companies do.

[2:21:55](https://realalpha.app/v/Lf5oqGOCRCM/?t=8515) And I don't think the average person gets anywhere near the level of affordance for failure and lying as these companies do. And I think there is a real economic and human cost to allowing these companies to run rampant and promise the world and never really get called up on it. the tepid nature of criticism these days is so frustrating there are some really great critics out there the really great people but it's like seeing these ultra rich ultra wealthy ultra powerful people lie through their fucking teeth or misstate or whatever people want to call it it turns my stomach and i hate seeing people being misled and i feel like i write at such length because i really want people to see why i've come to a conclusion am i right am i wrong i think i am of course i do But I also, I just find it loathsome.

[2:22:42](https://realalpha.app/v/Lf5oqGOCRCM/?t=8562) I find these companies don't make good products anymore. They don't care about their customers. And they treat their customers with contempt. If people want to go read more about your work, you have a great Substack. Ghost, actually. It looks exactly like I'd moved off of Substack in 2024. Oh, okay. And you also have a podcast, you do? Yeah, Better Off Lime. I'm going to link both of them below. So if anyone wants to read more, get more detail and follow Ed, I think it's, I would highly recommend. It is fascinating. And do you know what? One of the things people sometimes struggle with when they listen to podcasts is you get lots of different opinions.

[2:23:16](https://realalpha.app/v/Lf5oqGOCRCM/?t=8596) And weirdly, I think they think of... Some people assume podcasts are going to be like one person saying the same thing as the next person and the next person. Yeah, yeah, yeah. That is just not the nature of information in the world and opinions and progress and discussion. What happens is people have different opinions. And I think my job, but also the listener's job, is to try and pass through it and over time collect more of these reference points from different people and do your own research. Yeah. Whether it's on your health or whether it's on something like this, is to watch and do your own research and to learn.

[2:23:44](https://realalpha.app/v/Lf5oqGOCRCM/?t=8624) And I would say also, never believe one person, never believe one particular perspective religiously. You know, collect a body of evidence and follow the evidence yourself. But I love watching your YouTube because it provides a different opinion. And that challenges me to think beyond my current opinion about what might be possible. So when I've heard you talking about how this is an economic bubble, and I've heard you talk about the CapEx spend with these big sort of frontier AI labs, it really did make me pause for a second. And it really did make me consider that there could be a bit of figazi going on here.

[2:24:23](https://realalpha.app/v/Lf5oqGOCRCM/?t=8663) And then it made me reflect on history and go, you know, through history, there's always a bit of figase in these moments. And, oh, that's an interesting take. And what's going to happen in 2027, 2028 when there's a bit of a market pullback? And so I highly recommend people go watch because you do. You challenge me to think differently. Yeah. And we need some of those contrarian voices to... to have honest discussions. So thank you for doing what you do. Really appreciate it. And I find you to be a very compelling, captivating communicator. And I feel like I've learned a lot today. So I appreciate that.

[2:24:49](https://realalpha.app/v/Lf5oqGOCRCM/?t=8689) We have a closing tradition. Yeah. Where the last guest leaves a question for the next guest, not knowing who they're leaving it for. And the question left for you is, given that high quality relationships are important for health and longevity, what should we be doing to improve our relationships and social connection? So this is actually connected to the AI bubble. So I'm a critic. I'm a skeptic. I have found that showing and appreciating and loving the people around you and uplifting them and raising them up as you succeed is the way we do that. Your success should be everyone around you. It's not economic.

[2:25:15](https://realalpha.app/v/Lf5oqGOCRCM/?t=8715) It's talking about Matt Hughes for a while. Made me really happy. This whole thing has been at times quite grueling and quite negative and quite brutal. But the love I've found and the joy I've found from community and the people around... Because even in the small groups of haters, even like Gary Marcus and so the people I talked to, Edward Ngueso Jr., Molly White, Brian Merchant, there are so many people who have been loving and caring. And I think within especially these very critical moments, when you're very much dialing in on how negative things are, how bad things are, finding the people who...

[2:25:51](https://realalpha.app/v/Lf5oqGOCRCM/?t=8751) Maybe find it repulsive, too. Finding the people... Finding your people. Who can be... The people who will talk to you about it. Even, like, Troy and Jake, my trainers, who are so excited about this. Even talking to them about this shit as normal people. Knowing that there are people there going through their own struggles, but also... to just give you the perspective and also remind you that you are human too and focus i know this is kind of a all over the place point but it's just it's really easy to get hard locked on everything in life and to kind of get away from why you do things and focus too much on the work when the most important thing at times is just to know there are other people feeling the way you do and when i hear from my listeners my readers a lot the most common thing i feel is they feel like they have a voice and they feel like someone is there for you And I don't think it can be understated how much it means when you just reach out to someone you love and tell them you love them.

[2:26:39](https://realalpha.app/v/Lf5oqGOCRCM/?t=8799) Tell them their shit rocks. Say that their shit bangs. Tell everyone when you like an artist or a writer's thing or a podcast like this, tell them you fucking love it. We don't do this enough. And we need to do it more. Well, that's a good closing message. So if you have enjoyed the conversation today with Ed, please do let Ed know that you love it down below. But please do leave your opinions down below and I shall read all of them. Ed, thank you so much. I'll link to your website, but also to your YouTube channel where people can learn more. And I would highly recommend you do because it is truly fascinating.

[2:27:08](https://realalpha.app/v/Lf5oqGOCRCM/?t=8828) And I think we need more voices that are demystifying a lot of the figazi and the narrative in this moment in time. And you're certainly one of them. I really enjoyed the conversation. Thank you so much.