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27:30He specifically notes that the only reason that Moore's Law was capable of enabling smaller, faster, cheaper chips was because competitors like AMD forced Intel and other companies to compete, a thing that doesn't really seem to be happening with NVIDIA, which is a near-stranglehold on GPUs required to handle generative AI. And indeed, all of these other companies aren't really making competitive products, they're just kind of making the same thing. Google has their own video and text and image generator. So does Llama, the meta one. So does ChatGPT. It's all the same. There's no competition here.

28:06Kind of like a cartel almost. Good idea for an episode. And while there are companies making these graphics process units aimed at the AI market, especially in China, where US trade restrictions prevent local companies from buying high-powered cards, like the A100 that NVIDIA makes for fears that they'll be diverted to the Chinese military, they're not doing so at the same scale as NVIDIA. And Covello notes that, and I quote, the market is too complacent about the certainty of cost declines. He also notes that costs are so high that even if they were to come down, they'd have to do so dramatically.

28:40And that the comparison to the early days of the internet, where businesses often relied on$64 ,000 service from Sun Microsystems, and there was no live cloud storage like Amazon Web Services or Linode or Azure, those days paled in comparison to the current costs of generative ai and that's even before you include the replacement of the power grid which he says is a necessity to keep the boom going i could probably just read you the entirety of cavallo's interview because it's just so nasty i want to roll around on the floor on it it's amazing and he's so good and he even attacks is one of my least favorite things where he believes that when people say, oh, people didn't really think the iPhone was a big deal, the internet was a big deal, but specifically the iPhone and smartphones, they didn't think it was going to be big and thus generative AI will be big.

29:30And he just says it's complete nonsense. He says that he sat through hundreds of presentations in the early 2000s, many of them including roadmaps that accurately fear how smartphones eventually rolled out, specifically noting things like GPS. So when GPS technology came down, of course that would be in a smartphone. That makes perfect sense. Just to be clear, this guy is a software and hardware analyst. He sits through presentations about what the future might look like all the time. And he said there's no such roadmap for generative AI. And there's no killer app either. He also notes that big tech companies now have no choice but to engage in an artificial intelligence arm race, given the hype, which will continue the trend of massive spending.

30:12And he believes that there are, and I quote, low odds of AI-related revenue expansion, in part because he doesn't believe that generative AI will make workers smarter, just more capable of finding better information faster, which is not great, by the way. And that any advantages that generative AI gives can be arbitraged away, because the tech can be used everywhere, and thus you can't, as a company, really raise prices. In fact, and bridging off from what he said there, what might happen is a race to the bottom. Or maybe when things get too expensive, everyone will get more expensive too. None of this is good, by the way, for them.

30:51But in plain English, just saying it. I'm just going to put it out there. You'll be surprised by what I'm about to say. Generative AI isn't making any money for anybody because it doesn't actually make companies that use it any extra money. Efficiency is useful. but it's not company-defining. Covello also adds that hyperscalers like Google and Microsoft will also garner incremental revenue from AI, not the huge returns that they're perhaps counting on given their vast AI-related expenditures over the last two years and their ridiculous things they've been doing like putting generative AI in search, Jesus Christ, Sundar.

31:27And this is damning for many reasons, chief of which is that the biggest thing that artificial intelligence is meant to do is be smart and make you smarter. being able to access information faster might make you better at your job but that's efficiency rather than allowing you to do something new you're not actually really even being enhanced this is one step above google but maybe it's an internal google search i guess you can generate really crappy looking art i'm just not sure where it is and i don't think jim is either he ends with one important and brutal note that the more time that passes without significant AI applications, the more challenging, and I quote, the AI story will become, with corporate profitability likely floating the bubble as long as it takes for the tech industry to hit a more difficult economic period, kind of like we saw in the middle of 2022.

32:18He also adds his own prediction. Investor enthusiasm may begin to fade if important use cases don't start to become more apparent in the next 12 to 18 months. And I think he's being a little optimistic.

32:34While I won't recount the rest of the report, one theme brought up repeatedly is the idea that America's power grid is literally not ready for generative AI. In an interview with former Microsoft VP of Energy Brian Janus on page 15, the report details numerous nightmarish problems that the growth of generative AI is causing to the power grid, such as hyperscalers like Microsoft, Amazon, and Google increasing their power demands from a few hundred megawatts in the early 2010s to a few gigawatts by 2030, enough to power multiple American cities. Or the centralization of data center operations from multiple big tech companies in northern Virginia, potentially requiring a doubling of grid capacity over the next decade.

33:16Utilities, they've not experienced a period of load growth, as in a significant increase in power draw, in nearly 20 years, which is a problem because power infrastructure is slow to build and involves numerous onerous permitting and bureaucratic measures to make sure it's done properly or at all. And the total capacity of power projects waiting to connect to the grid grew 30 % in the last year and wait times of 40 to 70 months. Expanding the grid is no easy or quick task. And Mark Zuckerberg said that these power constraints are the biggest thing in the way of AI, which is sort of true and remarkable for McGuire who's so often full of shit.

33:54In essence, on top of generative AI not having any killer apps, not meaningfully or helpfully increasing productivity or GDP, not generating any revenue, not creating any new jobs or massively changing existing industries, it also requires America to rebuild its power grid, which is a good thing. Which Brian Jane has regrettably heard that the US has kind of forgotten how to do. US doesn't really do big infrastructure anymore. It's not a great scene. I don't know, perhaps Sam Altman's energy breakthrough could be these fucking AI companies being made to pay for new power infrastructure. And I don't mean them owning it.

34:30I mean, tax them. Tax their asses. They're burning the world, make them pay for it. The reason I so agonizingly picked apart this report is that if Goldman Sachs is saying this, things are very, very bad. And it also directly attacks the specific hype tactics of AI freaks The sense that generative AI will create new jobs It really hasn't in the last 18 months The sense that costs will come down They haven't, and there doesn't seem to be a path for them to do so in a way that matters And that there's this incredible demand for these products they claim exists And there really isn't, and I don't see a path to it Even Goldman Sachs, when describing the efficiency benefits of AI added that it was able to create an AI that updated historical data in its company models more quickly than doing so manually.

35:18With one problem, it costs six times as much to do. I love the AI future. I love artificial intelligence. I think it's so good that it's saving so many. I feel crazy. I feel crazy. I feel... Sorry. Moving on. Now, there is a remaining defense, and it's also one of the most annoying. People sometimes argue that perhaps OpenAI has something we don't know about, some sort of big, sexy secret technology that will break the bones of every hater, that will bring me to my knees and beg the machine god for mercy. And I have a counterpoint. No, they don't. They don't have shit. Seriously, Mira Mirati, CTO of OpenAI, said in early June that the models that OpenAI has in its labs are not much more advanced than those that are publicly available.

36:11And that's my answer to all of this. There is no magic trick. There is no secret thing that Sam Altman has that he's going to reveal to us in the next few months that makes me eat crow, or some magical tool that Microsoft or Google pops out that makes all of this worth it. There isn't. I'm telling you, there isn't. We would have seen a sign. There's not even a tinkle. There's not a rumor. There's not a leak. There's nothing. Generative AI, as I said a few months ago, is peaking if it hasn't already peaked. it can't do more than it's currently doing at least not much more other than maybe doing it faster with some new inputs it isn't getting more efficient Sequoia hype man David Kahn gleefully mentioned in a recent blog that Nvidia's B100 chips the kinds used for training and running these models will have 2.5x better performance for only 25 % more cost, which doesn't mean a goddamn thing because generative AI isn't going to gain sentience or intelligence or consciousness because it's able to run faster, I don't even think it's going to be able to do more things.

37:12Generative AI is not going to become AGI, nor will it become the kind of artificial intelligence you've seen in science fiction. Ultra-smart assistants like Jarvis from Iron Man would require a kind of consciousness that no technology currently or may ever be able to produce, which is the ability to both process and understand information flawlessly and make decisions based on experience, which, if I haven't been clear enough are all entirely distinct things and generative AI and AI in general doesn't have experiences. They don't have shades of grey, they only have shades of brown. It's a poop joke.

37:48Generative AI at best processes information when it trains on data but at no point does it learn or understand because everything it's doing is based on ingesting training data and developing answers based on a mathematical sense of probability rather than any appreciation or comprehension of the material itself. LLMs are entirely different pieces of technology to that of an artificial intelligence, in the sense that the AI bubble is hyping, and it's disgraceful that the AI industry has taken so much money and attention with such a flagrant offensive lie. The jobs market isn't going to change because of generative AI, because generative AI can't actually do many jobs, and it's mediocre at the things that it's capable of doing, which is why it's so shocking there are even people who'd replace real people with it.

38:35While it's a useful efficiency tool in specific contexts, said efficiency is based off of a technology that's extremely expensive, and I believe at some point AI companies like Anthropic and OpenAI are going to have to increase prices or begin to collapse under the weight of a technology that has no path to profitability. If there was some secret way that this would all get fixed, wouldn't Microsoft or Meta or Google or maybe Amazon, who's CEO of their cloud platform compared to Generative AI to the dot-com bubble in February, wouldn't they have taken advantage of this big sexy secret? Why am I hearing that OpenAI is already trying to raise another multi-billion dollar round after raising an indeterminate amount at an$80 billion valuation in February?

39:16Isn't OpenAI's annualized revenue$3.4 billion? Why do they need more money? how much are they burning because i'm guessing that if it's more than 3.4 billion dollars it's got to be a lot more if they're still trying to raise capital and if they're still going out they're lying about what chat gbt could do in the future but i'll give you an educated guess because whatever they open ai and other generative ai hucksters have today is obviously painfully not the future generative ai is not the future but a regurgitation of the past a useful yet not groundbreaking way to quickly generate new data from old that costs far too much to make the compute and the energy demands worth it.

40:00Google grew its emissions by 48 % in the last five years, chasing a technology that made its search engine even worse than it already was. And they've got nothing to show for it, other than a bunch of very funny headlines. It's genuinely remarkable how many people have been won over by this insane con, this unscrupulous manipulation of the capital markets, the media and brainless executives disconnected from production, they're all buying it. And it's all thanks to a tech industry that's disconnected itself from building useful things. I've been asked a few times when I think the bubble will burst, by the way, and I maintain that part of the collapse will be investor dissent, punishing one of the major providers, Microsoft or Google, for a massive investment in an industry that produces little actual revenue.

40:47However, I think what will really get the bubble popping will be a succession of bad events, like, say, Figma pausing its new AI feature after it immediately plagiarized Apple's weather app, likely because it was trained on it as part of its training data, crested by one large, nasty one, such as a major AI company like chatbot company Character AI, which raised$150 million in funding a few years ago, and the information great publication claims might sell to one of the bigger tech companies i think someone like character ai could collapse under the weight of an unsustainable business model and unprofitable technology and just also do you really need a check this is what this company does you can speak to like satoru gojo from jujutsu kaisen which is an anime and a manga by the way if you're reading the manga it's taking too long um and it's weird it's one of these weird companies you can talk to historical figures and you're kind of like okay i assume you have a vague enterprise product.

41:39I don't know. It's all just nonsense. It's just when I see these companies and what they raise, I'm just like, what are you even doing all day? But it could be a slightly more useful sounding one like Cognition AI, which raised$175 million, a$2 billion valuation in April to make an AI software engineer with one problem. Well, I mean, it's just a small one. it was that they had to fake a demo of it working. They had to fake the demo. And I've included a link in the notes to a YouTube of a really great software engineer just sitting there saying, I'm actually a fan of AI, but this is crap. And he just goes through it line by line.

42:19Basically, there's going to be a moment that spooks the venture capital firms, and it's going to spook them into pushing one of their startups to sell, which will lead to a sudden and unexpected yet very obvious collapse of a major player as valuations drop and people get desperate. For OpenAI and Anthropic, there really is no path to profitability. Only one that includes burning further billions of dollars in the hope that they discover something, anything that might be truly innovative or indicative of the future, rather than further iterations of generative AI, which is at best an extremely expensive new way to process data.

42:53I just see no situation where OpenAI and Anthropic continue to iterate on large language models in perpetuity. Because at some point, Microsoft, Amazon, and Google will decide that cloud compute welfare isn't a business model. And by the way, all of those companies I listed, Microsoft, Amazon, and Google, have either invested in OpenAI or Anthropic. In the case of Amazon and Google, they've only invested in Anthropic. And a lot of that is in cloud credits, meaning that it's just welfare. It's hilarious. Very right-wing people in the tech industry think that this kind of welfare would bother them.

43:25I wonder what the difference is. Anyway, without a real tangible breakthrough, one that would require them to leave the world of large language models entirely, it's unclear how generative AI companies can even survive. Generative AI is locked in the Red Queen's race, burning money to make money in an attempt to prove that they one day will make more money despite there being no clear path to making more money than they spend. It's all a little wild, a little bit upsetting and a little bit crazy making and i feel a little bit crazy every time i put together one of these episodes because it's all so patently ridiculous generative ai is unprofitable unsustainable and fundamentally limited in what it can do thanks to the fact that it's probabilistically generating an answer it's not learning anything it doesn't know anything it isn't intelligent it's only artificial it's been 18 months since this bubble started inflating And since then, very little has actually happened involving technology doing new stuff, just iterative explorations of the very clear limits of what an AI model that generates answers based on training data can produce, with the answer being something that at times is sort of good.

44:36It's obvious. It's well documented. Generative AI costs far too much. It isn't getting cheaper. It uses too much power and doesn't do enough to justify its existence. There are no killer apps and no killer apps on the horizon. And there are no answers to these problems. I don't know why more people aren't saying this as loudly as I am. And I don't know why everyone's not freaking out. I understand that big tech desperately needs this to be the next hyper-growth market, as they haven't got any others. But pursuing this quasi-useful environmental disaster-causing cloud efficiency boondoggle will send shockwaves through the industry when it all collapses.

45:13And what's frustrating to me about this is it's becoming obvious, and you're seeing people lightly kind of come out of their shells and say, I'm not sure this is going to be good. I'm not sure. Are we hitting PKI? There's a great piece in the New York Times by someone recently saying that we hit PKI and it used a bunch of my links. Thank you, Julia. Anyway, putting aside my bitterness, the problem here is all of the money and power going into this, but also the big lie being perpetrated by people. In my next episode, I'm going to go into some more of that. I'm going to talk about the fact that a lot of these companies are not really doing anything.

45:49That they're kind of doing marketing exercises as a means of manipulating the media and the markets. It's all just a disgraceful waste. The people getting hurt by generative AI are people that are working contract jobs because it's harder than ever to get a full-time job. They're being replaced by shitty software that costs too much money, that will invariably go away when this all collapses. And I feel that the media has some responsibility here. The markets too, but definitely the media. I understand that it's difficult to look at the tech industry and think, are they all kind of leading us on?

46:25But they've done it so many times, and this is the worst one I've seen. This is ridiculous. Billions of dollars wasted. So much time, so much energy. And yes, we can cover this. Yes, we can talk about this. We don't owe them both sides. Why do we owe them that? They wouldn't give us one. Have you ever seen a tech entrepreneur go, oh, that was a nice fair interview? Or do they usually piss and moan the moment anyone says anything negative? No, the right way to look at this now is with suspicion and frankly, most innovations. But in particular, this one, because despite an alarming amount of people in the media saying things like, oh yeah, well, generate value will of course lead to super intelligence, it's never going to do that.

47:10And we all, I don't know if you consider me a reporter or a journalist. This is a conversation to have with me via my email, I guess. But whatever I am, I should not be the only one that's really going at this hard. And I know I'm not. There are other people, some people, Brian Merchant, fantastic writer, another great guy, Paris Marks, another great guy, doing great work. And Alan Huitt with Bloomberg was on a few episodes great coverage of sam altman but nevertheless it is time to start saying when we cover generative ai specifically open ai and anthropic hey where are we with super intelligence and i don't mean what level we're at i mean what is the technology that you have that is going to lead to that and when they refuse to give an answer what should be covered is that they don't have one make them dance.

47:59Why do we have to do the work to make AI important? Why doesn't generative AI impress us? Right now, it's taking money out of people's hands. It's killing freelancers. It's really horrible. And the thing to cover is that you can cover fun apps. I don't have a problem with that. But when it comes to Google, Microsoft, Amazon, OpenAI, Anthropic, all these companies, we need to treat them as kind of interlopers at this point because they need to fucking show us what they're working on and they need i don't care about the safety side they don't care about it either we don't need to worry about the safety issue right now because the only safety issue is the problem we are facing today which is that millions of people's works being stolen and millions of other people are having their jobs taken in the most mediocre way by shitty bosses who don't do any work when sam altman gets on stage and claims that ai will solve all the physics the appropriate answer is what the fuck are you talking about you sound like an idiot when brad lightcap coo of open ai says oh i don't know if it was trained on youtube you should say why don't you know and then when he bubbles away because oh i just i'm not sure say it's really weird that a company worth 80 billion dollars as a coo who does not know what's happening same goes for mira marati when she can't answer whether zora was trained on youtube these people must be treated, if not as criminals, as suspicious types, as con artists, as people that have absorbed so much attention, so much money, so much time, so much adulation.

49:39They should be held accountable. And holding them accountable starts with a real evaluation of generative AI. And as I've shown you today, this bubble is full of shit. now I'm going to end on a happier note though I looked it up yesterday and as of speaking this out it's only been four and a half months of this show I thought it had been six months or a year I have time dilation issues in my brain and I will be seeing a doctor but I genuinely want to thank all of you I want to thank everyone who's been there from last episode or the first episode everyone who's come through through different ways this show's evolving and it will continue to evolve I know I'm angry I know I'm pissy but I think at this time in history there's a reason to be.

50:20I'm not filling myself for the bag. It's naturally there. It's naturally there when I look at an industry, a tech industry that I genuinely love, that genuinely made me the person I am today. And I see what's being done to it. And it makes me so pissed off because technology is everything we do. To discard tech as something that happens just on the computer and then there's real life. It's kind of silly. They're both the same thing now. We are all influenced by offline and online culture. At times, far more by online culture. As this show progresses, I'm going to get more into that. And the upcoming episodes I have are going to be a lot of fun.

50:56The second episode this week is just a real laugh. And it kind of showed me how this show can grow into a more conversational, fun, interesting thing, where I talk to all sorts of folks about all sorts of things in tech and how it affects them. I'm really grateful for you all listening. You'll hear my email after that. And by the way, it's EZ as in letter E, letter Z, or Z for my British listeners. Email me, easy at betteroffline.com. Message me on Twitter or Facebook or Instagram. I'm always happy to hear from people. I want to know how to make this better. But I know one way is to just keep doing it.

51:29And I'm really excited for the future. And I'm very, very thankful to have all of you there. Even the people who are very mad at me for not like in generative AI. But seriously though, one final thing. People will see this stuff and they do contact me fairly regularly and they say, what can I do? And I said this at the end of the shareholder supremacy as well, but I'll say it here as well. You can't do a ton. What you can do is say people's names. Mira Marati, Sam Altman, Prabhagar Raghavan, Sandhapishai. I know it sounds silly, but a lot of these ultra rich people, they don't care about experiences.

52:04They don't really have predators. what they have is their reputations. But also, what they have is their lies. I know it sounds a bit dramatic to say they're liars, but look at what Sam Altman's saying. The only reason Sam Altman has been able to get where he is today is a series of lies and cons. The way to break generative AI, which it should be broken until it can prove itself profitable and not environmentally destructive, is to push back, to constantly talk about how bad it is, to share your bad experiences with it. Share every hallucination. Share them publicly on social media channels. Tag Sam Altman, at Sammer on Twitter.

52:40S-A-M-A. Do it. I know this sounds silly, but guess what? These people have grown so rich and powerful from nobody calling out their shit. And there are people like me, there are journalists who've done it. And I'm not saying nobody does it. Don't get mad at me. What I'm saying is thousands, tens of thousands, hundreds of thousands of people listening why this stuff sucks. why it's bad, we'll get to the tech people. And eventually one of those messages will get to some of these financial people. And when they really turn against this, it will collapse. And if it doesn't, if I'm wrong, well, I'll do an episode about how wrong I am.

53:18Because you know what? This is meant to be informative. It's meant to be entertainment. But also, I don't mind being wrong. It's kind of yet to be so. Someone's going to be mad at that. Anyway, thank you.

54:00podcast links, and of course, my newsletter. I also really recommend you go to chat.wheresyoured.at to visit the Discord, and go to r slash betteroffline to check out our Reddit. Thank you so much for listening. Better Offline is a production of Cool Zone Media. For more from Cool Zone Media, visit our website, coolzonemedia.com, or check us out on the iHeartRadio app, Apple Podcasts, or wherever you get your podcasts.

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