AI’s Netflix Moment: What Early Cloud Teaches Us About the Next Phase

0:07Good morning, good evening, you have Yarn. Welcome back to the Enterprise AI Show. This is your host, Aaron. And today we have Brian and Brandon ask what happens to Enterprise AI if the market cools off and the era of token maxing gives way to hard questions about ROI. Brandon argues that the real divide is between people who have used AI to finish something that once felt impossible and everyone else. He makes the bold claim that nobody really writes code anymore. And Brian compares this moment to the early days of cloud when Netflix showed us what was possible and most companies couldn't imagine getting there.

0:51And all of that is coming up right after this quick break.

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1:50And we're back. And Brandon, good to see you again, man. How was your weekend? It was fantastic. Happy to be back. Good, good. We are recording this on November 9th. This will go out as the November 11th show. Most of you are probably going, oh, I know what they're going to talk about. They're going to talk about that thing. We are going to talk about that thing, but we're going to hold it for the show for Sunday. We'll be, we don't know whatever date that is, the 13th or 14th. That'll be the cloud news of the week or the AI news of the month, partially way too. We will talk about that thing. And Brandon and I were just talking about it offline.

2:18That might be a two hour thing that we talk about the thing, but we're not gonna talk about the thing today. The thing we're gonna talk about today is there is some perspective in the market right now that we might see some sort of, whether you want to go extreme and call it bubble burst, whether we have some sort of correction in the AI market, whether we have some deflationary thing. There's a lot of stuff, whether it's people looking at the Anthropic S1 or some of the data center stuff that came out of the election, which we'll cover next to the next show or whatever, that maybe there's some slowing down that might happen with AI.

2:47And you and I have had this conversation for a long time because you really just went all in on AI And you went as far as to be like, I'm going to get certified on stuff. I'm curious about doing forward engineering, you're building projects and stuff. And this is, I think we're at the stage where people are going to start having to, I don't want to say rethink AI, but they're going to have to figure out the difference between the last few years, which has had a lot of move fast and break things, the token maxing conversations, the AI first conversation, all this. and what typical enterprises then have to go through as far as ROI.

3:21I'm curious, you're looking at this, you're all in on AI, man. How are you looking at people? How are you thinking about the stuff that you're doing, where you're utilizing it all the time, versus people that you see aren't necessarily utilizing it all the time or aren't getting the full benefit of it? Yeah, I think the big disconnect I see is there's people that really, let's call it the normal people, who've maybe only ever used chat GPT and just the chatbot, right? And then there's people, a lot of us in the middle who have maybe dabbled in, maybe they made a small script, maybe they did one or two things.

3:54And then there's, let's say the frontier model approach where it's like, no, the goal of AI is to basically do everything, right? Where if you look at a presentation by an anthropic engineer, they're usually talking about we're building systems to build stuff for us. So they're more, if you will, it's like we're creating the system to then create something that will build whatever it is that they ultimately want. And I think this is where the huge disconnect is in the world of just AI and people talking about it and why people maybe don't want data centers. Because unless you've done something with AI that you've touched the quote unquote superpower.

4:30hour. And all I mean by that is if you have had something that you have wanted to do, and it can be anything, right? It can be like helping with your taxes, building a Mac app, reading a bunch of documents, summarizing and creating a report. If there's something that you wanted to get done that used to take you a very long time or a task that was so hard that you never really got around to it. It was like, I just, I wish I had that thing, but it's just too long. I don't have time to do it. Unless you've actually taken a task like that and actually completed it with AI, usually incredibly rapidly, you don't have that sense of, wow, this is a set of superpowers that once everyone gets it, it's going to, if you will, turbocharge all of us.

5:11All of the things that we want to do in our life could generally be done faster, better with AI or some AI assistance. And I think that is really where the massive disconnect is, I think, between those that have actually experienced that and those that maybe are on the other side, just haven't really embraced that level. So, and I think token maxing is a good example of this. I think if you are a CFO and your, your day-to-day is I'm in meetings, I'm doing budgets, but you're not really doing anything with AI. You just see these huge bills coming back. Right. And it's not immediately obvious to you, like what, what's going on?

5:46Like, why are we paying for this? It's not, but I bet you to the people that are doing that most of the time, I bet you those tokens were doing something that was like very impressive to that person. And I think that's like where we're stuck, right? It's like people who've, I don't know, it sounds almost religious here, coming off too much like I'm crazy. But it's unless you've done it, unless you've really felt it, it just kind of seems like yet another technology, right? It's like, yeah, whatever. It's just something else. But it really, to me, it's much more than that. Yeah, yeah. I think what you highlighted, it's going to be the next, what was the thing that Gartner had?

6:20It was like the haves and have-nots. It was the people that move fast and the people that move slow kind of gardener concept. It's been 10 years. I forget what they called it. Like the early adopters. Yeah, yeah, yeah. They had a name for it. It'll come to me at some point as we're talking about this. But I think we've gone through some stages here. So we went through, it first came out, there was a lot of, okay, there's people who went out and figured out, hey, how does ChatGPT work and that sort of stuff. And then we went through the immediate sort of corporate, okay, we really kind of want this because it seems cool, but we're not sure what anybody can do.

6:51And so you had these companies making like AI policies and a lot of their AI policies ultimately just became like give a bunch of money to Microsoft and let Copilot. You can all have access to Copilot. And then it became Copilot's not that great or Gemini's not that great, but I could get those as corporate things. And then people were like, yeah, but I want to use Cloud Code or I want to use Codex or I want whatever. Like we've gone through two or three phases of what would have been what we called shadow IT or shadow cloud or whatever. But those were more like access issues, right? And then we had the second tier of stuff that was the equivalent of the Facebook move fast and break things.

7:26I don't know if it was beginning this year or the end of last year, token maxing became a thing. And it was just like, look, you don't understand it. Just give people as much as they can possibly have. Don't ever put any things on it. But again, there wasn't really a goal for token maxing. It was just, look, if you just give them unlimited, then unlimited things will come out of it. Right. And we, you know, we saw companies where there was distinctly a top down thing where it was like, we need to go tell the market that we have an AI policy and we think that's going to make our stock price grow up.

7:56And we saw, we saw little bumps with that and so forth. But I think the thing that we're going to quickly get into, especially if the market has any sort of downturn or correction or right sizing or whatever it might be, is I think we're going to almost get back to where we were when cloud was first starting to take off. And folks like Adrian Cockroft were giving their talks about, hey, this is what we do at Netflix. And we're able to deploy 10 times a day. And we're able to do chaos stuff. And people were just like, there was a group of people that were like, that is the way forward. The technology now exists.

8:28That's the way forward. That's the way we're going to build software applications better. And then there was a much bigger group of people who were like, I can't fathom that because my world doesn't look anything like that. And to get to that, you are going to have to change so many things. And that requires policy changes. And it requires that old guy who doesn't want to give up his job or doesn't want to give up his control over some simple process to do these things. I think we're going to go through that with AI in which there's going to be, I think there's going to be three things that happen.

8:57And there's going to be the companies who all of a sudden are like, no, we're pulling back. We're not doing that stuff. It's too expensive. I don't trust those companies, whatever it might be. The classic, you know, slow and concerned companies. You're going to have a lot in the middle that are trying to figure out some balance of things. And then you're going to have some that just go, oh, my God, the market is like, I feel like there's going to be a certain number of people. And again, this is the 10X engineers, the whatever, that are going to almost have the mindset that Andy Jassy used to have where he would say things like, I can't believe the competition is still not even responding to us in the cloud.

9:30And they're giving us all this room to just go run. Like he used to say, we're seven years ahead of our competition and I can't believe they're not responding to stuff. I think it's going to be really interesting to see how companies surface the folks that have experience, like even just the level of experience that you have, which is like a year of kind of living in this sort of thing and being like, how do we double down on that? because like you've got like tangible things where you're like, I was able to do this. I use Claude to plan my stuff. I don't just use it as an afterthought. I don't like half-ass it and whatever.

10:02And I think that's going to be really an interesting sort of second act to this thing, especially from an enterprise perspective. And I think we're going to see, instead of people just being like, yes, we gave Microsoft a whole bunch of money and I don't really know what we did with it, but like we're AI ready or whatever, to where we're going to start to see those stories and those use cases that we've been asking for the last couple of years. And I think people are going to be like, man, why did it take four years? And you go like, you're like, that's as long as it took cloud to start figuring.

10:32I'm like, Netflix wasn't there on day one in 2006 and 2007. They were showing up at reInvent in like 2010 and being like, yeah, we did some stuff. So I feel like it's starting to play itself out. We just got ourselves so compressed that things could go a million miles an hour with AI, especially in the enterprise, that it's working itself out. But I I think we're going to go through a really bumpy period here for the next year and a half, just because the market dynamics are going to get weird. And it's going to be really interesting to see how much more bottom-up leads stuff versus leadership sees this as an opportunity and goes and finds certain people and all that kind of stuff.

11:07Yeah, I think it's one of these things that probably take longer than that. And I think if we think about it, it's just human beings, like how we adopt new ideas and how complicated it is. And really, if we're being more honest about it, it's like being skeptical of a bunch of technologists saying, hey, here's a new technology. It's great. You should adopt it. There's plenty of evidence that this has not gone well, right? Social media. I won't go into all the things. So I think you just have a world that is very prime to be like, there's been a lot of promises before. And there have been a lot of unintended side effects and some broken promises.

11:39And we're not necessarily happy with what's going on. And I think this is a large reason why data center is just a tangible thing that everyone can understand. It's like, it's a building, it sucks power. It's in my neighborhood. I don't want it. Right. This is a very easy way to be like, I don't want that thing. And I understand that. I like when I get it, I get where people would have some natural reservations at the same time. I don't know, at risk of just sounding all Pollyanna, it's like, it really feels different this time. And as we've talked about on this show, it's like AI can be a single player game, right?

12:08It's like, I understand changing a whole organization. Trust me. I understand in spades how at times it feels impossible. But that doesn't mean that right now, everyone listening to this can't be like, I'm going to automate my weekly reports. I'm going to make my spreadsheets better. I'm going to make them faster. I'm going to create my slides faster. I'm going to find ways to automate many of the things that I am doing, right, over and over with one of the popular AI tools, right? And I think it's just the willingness to be like, I'm just going to go in there and start trying this and doing it because that's what's going to, back to your question about like where the market goes or differentiated, just people that are willing to get in there and try it.

12:48And I know it kind of lends itself more to the tinkerer personality type. So there's people that are just like computers, if you will, but I just can't tell, I don't know. I feel like even people that I know that are in technology, some of them are even real slow to want to do some of this stuff, right? They just want to be like, I'm going to, for example, someone would be like, I'm going to have it look at my WordPress and give me some ideas on like how to customize it. And I'm like, no, you're going to just let AI build the entire new website, have it do the whole thing. And then they really push back.

13:18They're just like, my website is really good. And I want a new theme and all this other stuff. I'm like, no, you're like, you're totally missing it. Just have AI go do the whole entire thing. And if you don't like it, you can just, you can move away from it. But it's a real, it takes a real change in mindset around, no, that's how I get stuff done is I just tell AI the goal and we just work through it and get it done versus I put AI in this tiny little box and it does one little thing for me and it's maybe not that impressive. And I kind of walk away like, ah, that's not that impressive, right?

13:49So it's going to be hard, right? I guess that's my thought. And then one of the things you have on here, and I almost think this phrase vibe coding has really gone the wrong way. It's like, I know what people say, I'm going to vibe code something in 30 minutes and it'll do something. But coding is completely changed. There is no coding anymore. No one actually sits down, even in production settings and writes code. It is completely done. And I think sometimes people don't really internalize, no, it's over. It is absolutely over. I'm not saying someone doesn't occasionally open something up, but no one is really as good at coding as the AI stuff.

14:21And it's the idea that even vibe coding is like, no. What people almost kind of throw away, this is vibe coding is the best software developer you've ever worked with. I think you have to really internalize that to be like, wow, there's some real superpowers in here. Yeah, yeah. And I think that's, the vibe coding one is an interesting one because you're right. We're going to quickly realize that Vibe Coding is going to become the equivalent of, yeah, do you know somebody in your organization that's like really good at pivot tables in Excel? Because it's just going to be like, yeah, they just use the tool and they're good at using the tool.

14:49I think the Vibe Coding thing, the other thing about the Vibe Coding that's going to be interesting is I think we have this perspective that like if somebody builds an application and we're going to put it in production, that it would have gone through like all of the things that the typical software development would do, The hard part about that is not the, I built the thing. It's going to be like, did you build it for all the corner cases? Did you figure out all the negative stuff and all the corner cases and the last 10%, as they always say? And then the real interesting part is going to be like, who's going to deal with sort of the security pieces of it?

15:24Because if you just did it and you put out an MVP of it and you're like, oh, it works fine for whatever we did, it still sits there as this, yeah, they might have done the PHP thing. And then the PHP big bug comes along and it's like, oh, shit, we didn't. They didn't know what corporate thing we were supposed to use. that does feel like that but i feel like every enterprise already has that problem of there's 30 40 50 of stuff that you have no idea what's running in your organization and it's but even something like that like i feel like that's another good example it's like hey like you build something right like how do we should talk for a second like at least for how i see stuff actually happens okay so you build something and you start to get it like what you said before the happy path done right you get your application start to do it right then maybe you show it to people like you would anywhere else beta and people start to give you problems and it's like literally I've done this, right?

16:11People email in enhancements, right? I'm personally doing this right now. I'm running, I won't board people with this, but like I'm running a beta program right now. People email me with feedback. I take the email, I cut and paste the email into the agent and it fixes the problem within, I've done this in 20, 30 minutes. I'll cut a new build. I'll go back to them and be like, can you try this and tell me if it works? Right. And most, a lot of times it works. Right. And then on the security side, it's so I, this is how I've tried to do stuff like that. It's like you, Mr. Organization, give me all the security requirements you have.

16:43Give me, tell me everything I'm supposed to do. Sometimes I'll fire up a separate agent from a different provider, right? Sometimes I'll use Claude, sometimes I'll be like, okay, read this whole thing, go through, do an entire audit of all the issues, right? And then I take that and then I feed that back into the coding agent, fix all this. And I'm like, is it perfect? Yeah. But I'm like, this is like professional level development. I would have never gotten a security audit like this on the software I was building. Right. And even in a large organization. So I think it's just this idea of, yeah, you can start with a nugget of a tiny idea and you, can you, how many times you can go back to the, every time you say to me, what about this thing?

17:19I'll be like, can someone just tell me what needs to be done? Cause I'm going to fire up an agent that's going to go do all of that. And then after I spent a couple of weeks doing that, I'll give it to whatever group you want me to write and be like, go ahead, penetrate, do pen testing, do whatever you want, acceptance testing. So it's out there. I just think it's like, you just got to keep pushing forward. And I think that's the point where put aside all the craziness. I have no idea if the stock market's going to go up or down. I wish I knew. I would do, if I did, I would invest right. But I do know these tools are going to continue to make us all a lot more productive.

17:53And the people that grab them, the sky's the limit with what you can do. Oh yeah. No, I think my biggest takeaway from this is I think we're going to, just like we saw the beginning when cloud took off, there were people who jumped all in and they were all in on it, right? They were all in on it. They distanced themselves significantly. They became the thing that people were like, oh man, I wish we could do that, right? They were the ones who like, digital transformation was like, no, we were just digital native. We didn't have to go through all of it. And then, yeah, there were so many variants of like, but, like it's, yeah, but, you know, But yeah, I think you're right.

18:29This is as big an opportunity as ever, and probably even more so than if you started this thing three or four years ago, and you were one of those people who were like, oh, I just vibe-coded this thing over the weekend with my whatever. This is a huge opportunity that if you're already starting down this path, especially if you're concerned about, oh, is my company going to not lay off people? They're going to do that. There's been no better opportunity to distance yourself or showcase yourself or highlight yourself or whatever. And if you can figure out a way to do it, that's like immediately obvious to folks, you're just going to have to, you're going to start seeing leaders go, you, I need you, I'm pulling you out.

19:05I need you to work on this and you, okay. You, cause you, you get what's possible and you can showcase what's possible. But I think it, I think there is just, I think it's so hard for people to not have the, yeah, but if, but okay, I got to throw a person, I got to throw a, an old process in the loop. But I didn't want to say throw a human in the loop. I think it's more like, how do I not automatically throw an old process in the loop? And I think that's going to be, it's going to be hard. It's going to take some work. But I think it's something that, you know, the people that figure out ways to do that.

19:36And again, this goes back to the flip side of everything's AI first. I don't think you have to do the sort of everything's AI first, but I think you do look at the things, like you said, where you go, we are just going to apply AI to this thing. And we're just going to let it do its thing. And we're going to take feedback quickly. And we're going to put it in places that it can succeed. Don't try and apply it to everything where you're like, man, that's nothing but like rocks and salt and gears grinding and like people that are going to get in the way. Like, fine, avoid that stuff. But yeah, I think you're right.

20:07And I think this, just what's going on in the market, what might happen in the market, and I don't know the timing of it. Like you said, you don't know the timing of it, but there's going to be some reactions because people react to whatever. I think this is going to be a bigger time than we've ever seen. Well, I was going to say, right before we wrap up here, I think maybe we'll just build on your statement there and say, hey, what if you replace yeah, but with what if? What if is a great prompt, right, for an agent? It's like, what if I ask the agent to do X, Y, Z and just go put that in, go see what it says, right?

20:35Start there. before you do the thing. What if I asked the agent to do the report? What would it do? Ask it if it could do it, see what it would do. And I think that's the kind of, just that switch, the switch in your mind of you may be surprised what things you'll see. So that would be my advice to everyone. All right, let's wrap it up there. I know we're a little tight on time. This one's a little shorter than normal, but trust me, folks, we've got some stuff to talk about coming up this Sunday. And then we've got Aaron, Brandon, I just talked about a few on the prep show for this thing that we're going to have some long ones.

21:02So the good news for that is the long ones are always useful when we've got holidays coming up because we know people like they go on car rides with their family. They want to get away from the kids. They want, they need a two hour one. It's not just the end of your year wrap up. Oh, we've got a few of those coming for you. A little shorter this week, but Brandon, thanks for everything. Thanks for the insight. Again, I think we're going to, we're going to see some, some shifting here happen in the next few months, few quarters or whatever. So be prepared for stuff. So folks with that, we're going to wrap it up.

21:26We'll talk to you next week. Thanks for listening. Check us out at theenterpriseaishow.com for past shows, newsletters, and all things Enterprise AI.