The Diary of a CEOThe Man Who Calls BS On AI: They’re LYING About AI, 2027 Is When It All Breaks! | Ed Zitron
EVERY SPOKEN WORD
150 min read · 30,000 words- 0:00 – 2:36
Intro
- EZEd Zitron
I think generative AI is at its heart con. And seeing these ultra-rich, ultra-powerful people lie through their [censored] teeth turns my stomach.
- SBSteven Bartlett
The word con is a strong word.
- EZEd Zitron
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.
- SBSteven Bartlett
You are the first person that I've spoken to that has that opinion.
- EZEd Zitron
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, but I don't like being misled. And this is the largest non-consensual push of technology in history.
- SBSteven Bartlett
So we're gonna play a game, Ed. I have the things that you consider to be myths about the AI industry.
- EZEd Zitron
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.
- SBSteven Bartlett
Next one.
- EZEd Zitron
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. 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.
- SBSteven Bartlett
Mark Zuckerberg says, "We'll continue to invest aggressively in infrastructure to meet the demand."
- EZEd Zitron
God, Meta's a monstrosity. Makes me think of Shrek with Lord 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.
- SBSteven Bartlett
If this continues, what does the future look like? Fuck. This is super interesting to me. My team give me this report to show me how many of you that watch this show subscribe, and some of you have told us, according to this, that you are unsubscribed from the channel randomly. So favor to ask all of you, please could you check right now if you've hit the subscribe button if you are a regular viewer of the show and you like what we do here. We're approaching quite a significant landmark on this show in terms of a subscriber number. So if there was one simple free thing that you could do to help us, my team, everyone here, to keep this show free, to keep it improving year over year and week over week, it is just to hit that subscribe button and to double-check if you've hit it. Only thing I'll ever ask of you. Do we have a deal? If you do it, I'll tell you what I'll do. I'll make sure every single week, every single month, we fight harder and harder and harder and harder to bring you the guests and conversations that you want to hear. I've stayed true to that promise since the very beginning of The Diary of a CEO, and I will not let you down. Please help us. Really appreciate it. Let's get on with the show. [upbeat music]
- 2:36 – 6:15
AI Is A Con
- SBSteven Bartlett
Ed Zitron, there are a number of things that you believe that a lot of other people don't believe.
- EZEd Zitron
Right.
- SBSteven Bartlett
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?
- EZEd 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.
- SBSteven Bartlett
The word con is a strong word.
- EZEd Zitron
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, resolve 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.
- SBSteven Bartlett
Uh, uh, 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?
- EZEd Zitron
So that's the funny thing is people say, "He's not got a finance experience. He's not got a tech..." I've been in the tech industry for 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 that 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 gonna want to use this model." 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.
- SBSteven Bartlett
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 a con.
- EZEd Zitron
Well, their revenues are not really coming from AI. Up until fairly recently, none of their revenues were coming from AI, like dribbles of it. 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. 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 dollars 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. 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, "What, 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. When they have good news, they'll tell you, and when they don't tell you something, well, that actually speaks volumes.
- 6:15 – 8:02
How Much Power Data Centres Really Need
- SBSteven Bartlett
Have you, you used these tools-
- EZEd Zitron
Yes
- SBSteven Bartlett
... the AI tools, Gemini, Anthropic, ChatGPT, et cetera, and you found no value in them?
- EZEd Zitron
There's some value, but it's not... There's-- They've spent over a trillion dollars in CapEx. Um-
- SBSteven Bartlett
What does CapEx mean, for everyone?
- EZEd Zitron
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.
- SBSteven Bartlett
Okay, so you've got a data center-
- EZEd Zitron
Mm-hmm
- SBSteven Bartlett
... and then you have these GPUs, which are like computer chips.
- EZEd Zitron
So AI GPUs are much bigger, much more power intensive. They take a bunch of high bandwidth memory, and they, 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 700, 8, 800 megawatts of power a year, right? 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 have now had 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 – 12:00
Is Widespread AI Adoption Manipulation Or Do People Actually Like Using It?
- SBSteven Bartlett
One of the rebuttals to that would be that the adoption, the customer ad- adoption of people using OpenAI and Anthropic has been absolutely insane. These are the fastest growing products in all of history, uh, especially as it relates to sort of technology. If we just focus in on technology, they 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.
- EZEd Zitron
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, Copilot's bugging you. When you use Amazon, whatever Rufus AI is, wants to-- 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 gonna 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. And that's partly 'cause 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 w- 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, it blows everything out of the water because there is no post-bubble story even for this. AI GPU is not useful for other things either. There's re- 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.
- SBSteven Bartlett
The, the reason I, I pause is because I just, I think about my own company. Obviously, everybody thinks about their own personal situation.
- EZEd Zitron
Yeah.
- SBSteven Bartlett
So you have people listening now that don't use any AI tools, then you'll have people that are using it for everything from coding new software tools to everything they write to, you know, images, whatever. And when you look at the, 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 AI, one of these AI tools like Anthropic or ChatGPT or Gemini every day.
- EZEd Zitron
Right.
- SBSteven Bartlett
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 s- you know, someone maybe higher in the executive team that's using it less because their job doesn't require of it as much.
- EZEd Zitron
Right.
- SBSteven Bartlett
And when you look out into the world at, you know, at 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. Part of the symptom is the AI slop you see all over the internet.
- EZEd Zitron
Right.
- SBSteven Bartlett
So I, I don't, uh... This, this, this idea that it's not being used, I struggle with.
- EZEd Zitron
It's being used. Here's the thing with the slop. Before we had AI slop, we had SEO slop, 'cause Google incentivized doing the lowest common denominator that would rank well in search.
- SBSteven Bartlett
Mm-hmm.
- EZEd Zitron
There's a whole story about how they pulled back spam guards thanks to Prabhakar Raghavan, which we can get into, where they made the internet worse by allowing worse content to rank higher.
- SBSteven Bartlett
Mm-hmm.
- EZEd Zitron
It's why we ha- when you used to Google, oh, best washing machine, there's 11 different horrible blogs that read like somebody got a concussion. They are built to rank rather than be read by humans or built to be g- made good. So AI helps weaponize that at scale. Yeah, you can make a bunch of generic slop. We've had slop for years. We've just found a
- 12:00 – 16:09
The Actual Cost Of AI And How Tokens Actually Work
- EZEd Zitron
slop machine. But then also there's the problem of cost.
- SBSteven Bartlett
Yeah.
- EZEd Zitron
So when you use AI services, you burn tokens, and it's per million tokens. So they're-
- SBSteven Bartlett
What's a token?
- EZEd Zitron
So it's around three-quarters of a word. So-
- SBSteven Bartlett
Okay, so-
- EZEd Zitron
So it's characters
- SBSteven Bartlett
... so the AI companies have a currency in which they charge you, like a taxi in New York has a meter.
- EZEd Zitron
Yeah.
- SBSteven Bartlett
And they call it tokens.
- EZEd Zitron
Yeah.
- SBSteven Bartlett
And every word, let's just say for ease it's a word.
- EZEd Zitron
Yeah.
- SBSteven Bartlett
You're paying per word.
- EZEd Zitron
About a word, yeah.
- SBSteven Bartlett
Okay.
- EZEd Zitron
And it's per million tokens, so you'll be charged per million input tokens, the stuff you feed into it-
- SBSteven Bartlett
Mm-hmm
- EZEd Zitron
... like a document or a bun- 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.
- SBSteven Bartlett
Mm-hmm.
- EZEd Zitron
However, when you're paying for a monthly service, you don't see any of that. All 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. Now, someone recently found, SemiAnalysis actually found this, a big analyst group, they found that on a $200 a month ChatGPT subscription, you can burn $14,000 worth of tokens. And on Anthropic's 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. 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 at a horrifying loss. OpenAI lost $20.9 billion 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, uh, "People have a big problem with it, I think. It's a huge issue." Which is not really what the heir apparent of 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's the most productive thing ever, it's amazing, it's changing everything," the moment people actually had to pay for it, they go, "Oof, I dunno, actually. Um, maybe it's may- 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?" And getting whatever the median is out, because that's what these things do. They provide the median answer.
- SBSteven Bartlett
So essentially, someone like me who's a power user of these tools-
- EZEd Zitron
Mm-hmm
- SBSteven Bartlett
... 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.
- EZEd Zitron
Yes. And just to be clear, they're probably not one for one dollar. It might be 30, 40. We don't, we don't know. I think it's unprofitable. These companies don't disclose them. Even in their audited 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, 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 ha- 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 cancel, they go with someone else. But nevertheless, yeah, they would get demand selling $20 or $40 for a dollar, and that's what these services do. And really the simplest way to explain it is they were actually profitable if they were actually just, 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 pr- fuck up a bunch of stuff and they break a bunch of stuff, you're paying for that. You're paying for it whether it works or not. Unless, of course, you're using one of these subscriptions.
- 16:09 – 20:07
Is The Spending Of AI Companies Justifiable?
- SBSteven Bartlett
I think the, 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? Like, does it... You know, 'cause you l- think back through the history of technology, you often get people losing money to grab market share.
- EZEd Zitron
Right.
- SBSteven Bartlett
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 under-invest.
- EZEd Zitron
If they were bringing the cost down, they would've 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 anyway. We'll screw..." I don't think it's some big conspiracy. They probably thought at some point, "Yeah, this'll go profitable. The chips will catch up. Customers will pay for the overwhelming value." Because you don't know in 2023 where it's gonna be in 2026. You assume it's gonna go up. That's the nature of venture capital. They should've stopped in, like, 2024 when OpenAI lost over $5 billion. They should've been like, "Yep, this is not gonna 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. But because their existing businesses continued to grow, and did so, by the way, through price increases, changes to how Google and Meta, uh, did advertising, Amazon bumped up prices and changed how they did s- Actually, Amazon started a remarkable ad business during this whole time as well, and the selling through Amazon platform. Anyway, nothing to do with AI. But because number go up, because revenue go up, everyone- It's AI. Because these companies wouldn't spend a trillion dollars for, for no reason, w- right? Except in fiscal year 2026, which just ended for Microsoft, annoying, I know, they made total, according to Bloomberg, about $34.33 billion. $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 gonna get exponentially more valuable, and at some point ev- 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, 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." Nvidia has sold, think it was $215.9 billion in their last fiscal year worth of GPUs mostly. And you try and go, "Yeah, that's to 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." When you tell people that, they go, "Well, companies just lose money, right? Companies..." Because we have this, quote Ed Elson from PropG 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, 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
- 20:07 – 24:23
Will The Rate Of Improvement Of AI Go Up, Like Previous Innovations?
- EZEd Zitron
what they want.
- SBSteven Bartlett
So, uh, you know, I think back through the history of technological breakthroughs, and I think about... I mean, you can look at different industries, and one of my favorite books on this subject is The Innovator's Dilemma.
- EZEd Zitron
I'll read it.
- SBSteven Bartlett
A- and one of the things it talks about is how the, 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.
- EZEd Zitron
Mm-hmm.
- SBSteven Bartlett
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. Um, they were more expensive and the, the economics of it didn't make sense. You might as well walk than 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 wave, and someone had... You had to employ someone to walk in front of it waving a red flag. Obviously it's worse. It's like 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 I, when I think about that analogy in the context of all of this, I go, "Okay, it's imperfect at the t- at the moment. The economic models aren't q- perfectly ironed out. They're still figuring out how to make it cheaper, the infrastructure, et cetera." But as, if you think about the rate of improvement versus other, uh, you know, let's say coding, m- 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, what we did with the internet, what we did with cars.
- EZEd Zitron
Yeah, but that-
- SBSteven Bartlett
Moore's law
- EZEd Zitron
... Moore's law is a theory and Moore's law is not with GPUs.
- SBSteven Bartlett
[laughs]
- EZEd Zitron
So let me, 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.
- SBSteven Bartlett
Mm-hmm.
- EZEd Zitron
Took them a solid decade or more to make it something whether you 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-
- SBSteven Bartlett
And Nvidia, for anyone that doesn't know, makes the chips that-
- EZEd Zitron
They... So, and that CUDA thing I mentioned, they were the ones with CUDA, and CUDA allowed generative AI to grow.
- SBSteven Bartlett
Okay, so they- they're chips.
- EZEd Zitron
Chips, yes.
- SBSteven Bartlett
And chips are needed. Those are the things that go into the data centers.
- EZEd Zitron
And their specific chips are the ones where you can run AI software on it.
- SBSteven Bartlett
Okay.
- EZEd Zitron
So the training runs and also the inference. Now, here's the thing, the h- 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. Even in 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 may... There are uses for LLMs in coding. I don't dispute that. But even saying 5% be- uh, what does that mean? Is it better at Rust? Is it better at C++? Is it-
- SBSteven Bartlett
I'd say productivity.
- EZEd Zitron
So what-
- SBSteven Bartlett
So just like, yeah, shipped. If we did it in the context of coding, it would be like shipped code.
- EZEd Zitron
That's the thing. That would be like, "He's the best writer in the world 'cause his newsletter's really long." That's an insane way of valuing 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, GitHub, uh, 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." Microsoft are 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.
- 24:23 – 26:54
How Bad Are AI Mistakes?
- SBSteven Bartlett
So on this point of if we go back to this horse and carriage and car analogy-
- EZEd Zitron
Mm-hmm
- SBSteven Bartlett
... say that we're at whatever point today, if you imagine any rate of improvement in the technology, which we have seen since ChatGPT came out.
- EZEd Zitron
Sure.
- SBSteven Bartlett
I remember when ChatGPT came out and I was in Asia, and I was there showing it to my fiancée, and I was like, "Look, it can do this." 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.
- EZEd Zitron
See, that I, I disagree. So the-
- SBSteven Bartlett
Give me an example of a ha- what you define as a hallucination.
- EZEd Zitron
Okay. Great one. So I have a Bloomberg terminal.
- SBSteven Bartlett
Yeah.
- EZEd Zitron
The very useful thing they have on there is Ask B. So when you do a Bloomberg inquiry to, like, look up what we think NVIDIA's revenue is gonna 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. And so you get it pulled up and you know where the data's coming from. It deals with hallucinations real well. The other day I was like, you know what? Get a little spicy. I'm gonna look up the growth rate of stocks of Microsoft, Google, Meta, and Amazon betw- over the course of five years, I think it was.
- SBSteven Bartlett
Yeah.
- EZEd Zitron
And I was about to... I was copy pasted it over to something, looked at it in Excel, and was about to... 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 kinda caught it, it was no harm, no foul, that's fine. But when you're talking about, I don't know, like 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, you're 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 had this slop to look for and you go, "Fucking hell, I'm not doing it." And so the problems become multiplicative, 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, 'cause you can't just have them do tasks. They've got better at that. They've found some tasks they can have them do on. But even then, like Meter, M-E-T-R, 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 and it's like, yeah, and successfully completing them 50% of the time.
- 26:54 – 31:31
Comparing Human Error To AI Hallucinations
- SBSteven Bartlett
They, they have a l- hallucination leaderboard-
- EZEd Zitron
Mm
- SBSteven Bartlett
... 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-
- EZEd Zitron
Wow
- SBSteven Bartlett
... on today's top frontier models like Gemini and ChatGPT. Again, the, the point of nuance here is that these are on simple tasks, which is kind of what I've experienced. I've experienced it on day-to-day things that it hallucinates less. Again, rate of improvement thinking. So if I just imagine the trajectory to continue, there is gonna become a time where hallucinations become rarer than they are today, increasingly. 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-
- EZEd Zitron
Mm-hmm
- SBSteven Bartlett
... and I couldn't go on the phone at the same time-
- EZEd Zitron
Yeah, yeah, yeah
- SBSteven Bartlett
... as going on the internet. I'd have to stop RuneScape upstairs to go on the phone. And you thought that this is crap, this is crap. Technology's crap. All the-
- EZEd Zitron
I d- I dunno, mate, I loved it. [laughs]
- SBSteven Bartlett
Yeah, I know. You... It felt like magic. And then in hindsight you go, "Wow, I now have Starlink and 5G internet from my phone. It's unbelievable." You couldn't leave the house with internet before.
- EZEd Zitron
Right.
- SBSteven Bartlett
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-
- EZEd Zitron
Right
- SBSteven Bartlett
... whereas that's not actually the alternative. In the working world, like if I wanted to do, let's say, a simple writing task, um, I should compare AI to my alternat- alternative way of doing that simple writing task, which is both measured in my time, right, and my ability to hallucinate-
- EZEd Zitron
Uh-huh
- SBSteven Bartlett
... as a person who doesn't know everything. A- or if I'm hiring someone, an intern who might also be prone to hallucination or have gaps in their knowledge. 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 o- on a net basis that's a good trade. Maybe I should use AI.
- EZEd Zitron
So let's start with an example. Someone I love dearly, Matt Hughes, my editor.
- SBSteven Bartlett
Yeah.
- EZEd Zitron
Lives, lives this side of Liverpool. Wonderful guy. 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 support. And he's a great editor, but he's also someone who gets into the guts of it and has the experiences of it. He's a decorated tech journalist-
- SBSteven Bartlett
Yeah
- EZEd Zitron
... and on top of that, a wonderful, loving being with empathy-
- SBSteven Bartlett
Yeah
- EZEd Zitron
... and joy in his heart for the stuff he loves, and absolute fucking venom for the people he hates. That's the... 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.
- SBSteven Bartlett
Mm.
- EZEd Zitron
When you say knows everything, what good is something that knows everything when it sometimes doesn't know anything? When it sometimes... And on... 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?" 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. But it's also an intern learns. An intern gets context. An intern learns your habits, learns your-
- SBSteven Bartlett
An AI gets context and learns.
- EZEd Zitron
No, it doesn't. It d-
- SBSteven Bartlett
An AI doesn't learn?
- EZEd Zitron
I mean, it doesn't. The way it learns is you create a giant Claude.md file that it sometimes doesn't read, sometimes does read. You create a harness. You put... It's like, it's Pee-Wee's breakfast machine from Pee-Wee's- ... playoffs. You have to do all these contrivances to mitigate the hallucinations, and even then at the end, how much effort have you put in?
- 31:31 – 34:18
If The Output Is The Same, Does It Matter If Humans Or AI Created It?
- SBSteven Bartlett
So w- I think there's two things here. There's the process in which something happens-
- EZEd Zitron
Mm-hmm
- SBSteven Bartlett
... and then there's the output.
- EZEd Zitron
Uh-huh.
- SBSteven Bartlett
So the process, you were describing the process of how a human does memory.
- EZEd Zitron
Right.
- SBSteven Bartlett
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.
- EZEd Zitron
Mm-hmm.
- SBSteven Bartlett
You put lots of effort into them. You give them lots of context. You, you educate them and give them experiences, and then you might come and say to them, "By the way, what's my revenue?" Now, the processes are entirely different, but the outcome is what I care about. Do they know the revenue number when I ask them? And so I think that's the part that we sometimes get lost in. We get... You know, 'cause I have, I've heard this debate about, like, can AI be creative?
- EZEd Zitron
Right.
- SBSteven Bartlett
I think, like, the way to fi- 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, 'cause actually no, no, who cares what the pr- people care about, they pay for the outcome, the product.
- EZEd Zitron
I actually disagree about the process because Matt Hughes, for example-
- SBSteven Bartlett
Your editor.
- EZEd Zitron
Yeah.
- SBSteven Bartlett
Yeah.
- EZEd Zitron
Watching him go down a rabbit hole and being there with him, and actually vice versa, him doing the same thing.
- SBSteven Bartlett
Yeah.
- EZEd Zitron
We wrote these... Well, I mean, we were working on the research. I ended up sitting there for, like, the day-long session of writing 11,000 words, and he, 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 fucked these c- Jesus Christ, they can't do..." Like, 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.
- SBSteven Bartlett
Mm-hmm.
- EZEd Zitron
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 outputs. If I needed a generic slop output, sure. But I've, 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 sa- the same generic reports, the same, "Oh, we noticed this" analysis. Things that you can find on any kind of AI slop out there.
- SBSteven Bartlett
What you described to me there, what I heard anyway, is there's two points of value you're getting from your time with Matt. I mean, I mean, there's many more, but-
- EZEd Zitron
Yeah
- SBSteven Bartlett
... you said you're, you're learning, and then you're getting this book edited.
- EZEd Zitron
Blog.
- SBSteven Bartlett
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.
- EZEd Zitron
Yeah, exactly.
- SBSteven Bartlett
But when I come t- 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, I just care about the output. I could use it to learn. I could say far with me-
- EZEd Zitron
But what if, what if the revenue number was wrong once?
- 34:18 – 38:37
Can We Trust AI Like We Trust Humans?
- EZEd Zitron
You should have defined deterministic ways of knowing those numbers.
- SBSteven Bartlett
Mm-hmm.
- EZEd Zitron
You should not rely on them. Even with the terminal running BQL, which I trust, I will double, triple ch- 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. 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.
- SBSteven Bartlett
What is the basis of your trust in Matt? Could it be his historical performance?
- EZEd Zitron
I mean, yes.
- SBSteven Bartlett
Okay.
- EZEd Zitron
And also the fact we've learned half of this stuff together.
- SBSteven Bartlett
But, but tenure, tenure doesn't necessarily... There's probably people you know for 15 years-
- EZEd Zitron
Agree
- SBSteven Bartlett
... who you also don't trust.
- EZEd Zitron
Yes.
- SBSteven Bartlett
So I think I was trying to figure out, like, what is the, 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-
- EZEd Zitron
I mean, is that what that board says?
- SBSteven Bartlett
Well, it's li- it's saying, like, is it getting it wrong? Is it hallucinating?
- EZEd Zitron
On simple tasks.
- SBSteven Bartlett
Simple tasks, yeah.
- EZEd Zitron
How are those defined?
- SBSteven Bartlett
I d- I don't know.
- EZEd Zitron
That's the thing, though, because this is actually a very, very illustrative thing of the AI industry. They are the what abouters masters. They have, like, "Well, look, we've got this, we've got this benchmark that says we're good at this, and look, the number's higher." What's the number mean? Eh.
- SBSteven Bartlett
Mm.
- EZEd Zitron
Eh. What does that mean? And I'm not using this as a critic against you.
- SBSteven Bartlett
Mm.
- EZEd Zitron
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 think I was at Penn State at the time. Oh, I felt like the, uh, apes at the beginning of 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, this is..." They were on Razrs, they were on Nokia 3210s. It was obvious, the value. Amazon Web Services, same deal
- SBSteven Bartlett
It wasn't obvious, though.
- EZEd Zitron
Yes, it was. I mean, I bought it at-
- SBSteven Bartlett
To you, to you it was
- EZEd Zitron
... 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
- SBSteven Bartlett
But, but I remember the famous Steve Ballmer, who was the CEO of Microsoft, interview where he is told about the iPhone, and he bursts out laughing
- EZEd Zitron
" [laughs] $500, fully subsidized with a 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, 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, I kinda look at that and I say, "Well, I like our strategy. I like it a lot."
- SBSteven Bartlett
He bursts out laughing mocking it-
- 38:37 – 42:35
Would People Use AI If They Paid The Honest Cost?
- EZEd Zitron
and such." And-
- SBSteven Bartlett
But how come then when you look at the stats around ChatGPT's growth-
- EZEd Zitron
Mm-hmm
- SBSteven Bartlett
... 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.
- EZEd Zitron
Mm.
- SBSteven Bartlett
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. And, and that same milestone took the internet five years, and personal computers nearly 12.
- EZEd Zitron
Okay.
- SBSteven Bartlett
So, like, this is the... I think this is the part that's giving me dissonance, is like when I showed my fiancée ChatGPT-
- EZEd Zitron
Mm
- SBSteven Bartlett
... okay, it was didn't really work. But as a sole entrepreneur who English isn't her first language-
- EZEd Zitron
Mm-hmm
- SBSteven Bartlett
... 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, um, certain images that she, you know, couldn't make herself because she doesn't have the skills, she would describe it as being transformative for her business.
- EZEd Zitron
Mm-hmm.
- SBSteven Bartlett
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'd go, "Transformative."
- EZEd Zitron
It... Would she pay the per million token rate? Would she pay the actual rate? 'Cause that's the thing. If this was sold at its honest cost-
- SBSteven Bartlett
Yeah
- EZEd Zitron
... I would actually... If, and people were reacting like that and they were paying two, three, $4 every time they did something and they were genuinely happy, that might be an argument.
- SBSteven Bartlett
What is the... What would be the honest cost if they weren't subsidizing it?
- EZEd Zitron
The actual per million token cost. The actual API cost. They should cha- If they-
- SBSteven Bartlett
Do you know how much that is relative to-
- EZEd Zitron
Oh, God-
- SBSteven Bartlett
... what they charge?
- EZEd Zitron
... it depends, it depends on the model. But there's actually kind of a point I wanna make about w- 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," 'cause 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'd be better." 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, 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 is no roadmap to AI becoming this thing that they promised. And I must be clear, if these companies had gone out there and they're 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 'ooh, 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 gonna go slow. It's really expensive. This is an R&D effort. We're not gonna expose consumers to it," and actually be- like, call them, like, I don't know, language models and no, no generative AI stuff. Just being re- Not even call it... 'Cause it isn't AI. It's not autonomous, it's not smart. I actually might respect it, but this is not. They've gone out there since 2023 and said, or 2022, "This is the best thing since sliced bread. This is changing everything. This is gonna do all your work. This is gonna t-take your job. You're gonna talk to Bing and it's gonna tell you to leave your wife." All of these crazy things. And what's funny is when the writer, uh, Kevin Roose, I think it was, um, 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. 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 black 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
- 42:35 – 47:42
How Does The AI Bubble Compare To The Dot-Com Bubble?
- EZEd Zitron
the massive RAM requirement
- SBSteven Bartlett
Do you know what's interesting? I almost feel like so much of what you're saying is true, and also it can be true that this technology is gonna profoundly change the world. And I think, like, uh, you know, I think back to the early days of... Uh, the internet is maybe the closest analogy we have of, you know, in the dot-com bubble. You know, you wrote this great essay a couple of years ago-
- EZEd Zitron
Oh, yes, yes
- SBSteven Bartlett
... which I found really funny, um, especially the name, The Rot Economy.
- EZEd Zitron
The Rot Economy, yes.
- SBSteven Bartlett
And you talked about the dot-com bubble-
- EZEd Zitron
Yes
- SBSteven Bartlett
... talking about how AI is, uh, of l- less value than people think.
- EZEd Zitron
Mm.
- SBSteven Bartlett
And in that, 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.
- EZEd Zitron
Mm-hmm.
- SBSteven Bartlett
But you had generational companies born that changed the world.
- EZEd Zitron
Right.
- SBSteven Bartlett
And so I s- I do... I kind of ref- and that's what bubbles do, right?
- EZEd Zitron
But that, it was completely different.
- SBSteven Bartlett
Huge hype, over-investment. Investors get crazy delusional. They think it's, everything's gonna change. At the same time, you do have skeptics in these moments. The, the dot-com bubble had... I mean, the internet itself had the biggest skeptics. 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 Stoll famously, I wrote about this in my book, wrote famously in Newsweek, "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 Krugman, who was the, um, 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."
- EZEd Zitron
[laughs] That's, that, that, that may actually be the worst one of those predict- [laughs] Like, the, the... Hang around any bar in middle America, honestly, the best conversation.
- SBSteven Bartlett
But it's just all-
- EZEd Zitron
No, but, but-
- SBSteven Bartlett
It's just all the same thing
- EZEd Zitron
... I actually... So Clifford Stoll actually, his piece was interesting 'cause that, 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. It was just like, I think, what was it? Excite @ Home bought a e-greetings 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.
- SBSteven Bartlett
Dark fiber? What's-
- EZEd Zitron
The, uh, dark fiber was all of the wires that were put in the ground thinking we're gonna 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, maybe longer. And just thus there was a massive overbuild of fiber optic cable and indeed the transmission stations and such, just simplifying, to bring that to people's houses, 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-dot-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.
- SBSteven Bartlett
Yeah.
- EZEd Zitron
Predominantly subsidized, and most people experiencing it are not paying the real cost.
- SBSteven Bartlett
I agree.
- EZEd Zitron
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 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 better 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've 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-dot-com bubble thing? A data center built today is gonna be as expensive to run in 2050 as it is today, elec- unless there's some breakthrough in electricity. But again, that's not happening with AI. AI's 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 e- even less costly. Even Nvidia with Vera Rubin, their more expensive new GPU system, even then they're like, "Yeah, 10X more efficient. It's, uh, 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%." Easiest thing in the world if it was true, and that's because it's not happening. And this isn't a case
- 47:42 – 52:46
Does AI Demand Match The Cost And Risk Of Data Centres?
- EZEd Zitron
where-
- SBSteven Bartlett
So are you saying there's not gonna be the demand for, let's say, let's... You know, there's different types of AI.
- EZEd Zitron
Mm.
- SBSteven Bartlett
Generative AI, we can-
- EZEd Zitron
Yeah, and actually-
- SBSteven Bartlett
Yeah
- EZEd Zitron
... that's a good point to make.
- SBSteven Bartlett
Yeah.
- EZEd Zitron
The reason they use the term artificial intelligence is so everyone would lump everything into it.
- SBSteven Bartlett
Mm-hmm.
- EZEd Zitron
They would lump, uh, 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, and also AI c- it's working on curing cancer," when it's just like, no, that's not LLMs. Stop giving them credit. So-
- SBSteven Bartlett
The similarity, though, is they all need GPUs or SPUs.
- EZEd Zitron
No, that's-
- SBSteven Bartlett
Right?
- EZEd Zitron
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
- SBSteven Bartlett
How would you run, uh, the, the type of AI that sits in a robot, let's say one of the Optimus robots, if you didn't have a GPU?
- EZEd Zitron
So Matic, Matic is 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 nowhere near 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, Tedsley I call him, if it goes around wa- 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 planned planning. Don't know about under construction. That works out for about 12 million megawatt. That's, what, 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'll 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, 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 is like, "Oh, you don't like... You like online banking. Well, 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, uh, 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 offer one thing, one thing only.
- SBSteven Bartlett
But I was doing the r- the research and looking at some of these notes here.
- EZEd Zitron
Yeah.
- SBSteven Bartlett
It, it does say that for tougher types of AI systems designed to solve concrete physics, biology, and spatial-
- EZEd Zitron
Mm-hmm
- SBSteven Bartlett
... problems, they require some of the most intense data center infrastructure on the planet.
- EZEd Zitron
Yeah.
- SBSteven Bartlett
AI systems like DeepMind's AlphaFold-
- EZEd Zitron
Mm-hmm
- SBSteven Bartlett
... the pro- protein folding company, used for genit- uh, genomic sequencing and climate forecasting, et cetera-
- EZEd Zitron
Yep
- SBSteven Bartlett
... run on high performance computing clusters. These require immense precision and continuous heavy compute in data centers.
- EZEd Zitron
Yeah.
- SBSteven Bartlett
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.
- 52:46 – 58:46
Is AI Making Websites Like Google Worse?
- SBSteven Bartlett
So we know that some of the biggest companies in the world are using AI, generative AI, to write a lot of their code.
- EZEd Zitron
Mm-hmm.
- SBSteven Bartlett
That is a great productivity gain for those companies, right?
- EZEd Zitron
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.
- SBSteven Bartlett
How, how is, how is Google worse?
- EZEd Zitron
Well, I'll tell the story of a real asshole, a guy called Prabhakar Raghavan. Previously one of the heads of ads at Google. In 2019, Google called something called a Code Yellow-
- SBSteven Bartlett
Mm
- EZEd Zitron
... 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. A guy called Ben Gomes, internal at Google, then the head of Google Search, says, "Wait a minute. To increase this number of using Google more-
- SBSteven Bartlett
Mm-hmm
- EZEd Zitron
... we're gonna have to... Well, I mean, you're, 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?" And people at Google, uh, Shashi Thakur was another engineer, 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."
- SBSteven Bartlett
But, but it would make them more money, you're saying?
- EZEd Zitron
Yes.
- SBSteven Bartlett
Because more queries you show-
- EZEd Zitron
And it would, because you'd show them more ads.
- SBSteven Bartlett
Okay.
- EZEd Zitron
So if you're spending more time on Google 'cause Google's work-
- SBSteven Bartlett
But is this linked to AI doing code?
- EZEd Zitron
Oh, I'll, oh, I'll get there. So this is, the problem is, is that this guy called Prabhakar Raghavan, who was the head of ads at the time, was pushing and pushing and saying, "No, we need to make more queries happen. Gotta make it happen." Nick Fox, who was there as well, I believe, has actually taken over Google Search, said, "Gotta make them go up. This is our new reality." Sometime in early 2020, Prabhakar Raghavan takes over Google Search. From then, and this is, this is what I believe Can't prove it. If you go and look around the various SEO sites, Search Engine Journal and the various forums, Google stripped back a lot of the suppression of spammy sites so that people would be on Google more. 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 Prabhagar, 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, now Google is the answer. Is it right? God, no. It might tell you to eat rocks, might eat poisonous mushrooms. Maybe it'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-
- SBSteven Bartlett
But I'm saying here, I'm saying here, but that's not-
- EZEd Zitron
Oh-
- SBSteven Bartlett
The fact that coders could code on Google, that's made Google worse. That's human decisions have made it worse.
- EZEd Zitron
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. So-
- SBSteven Bartlett
Okay, so you're saying that, that-- You're saying Google is going down more.
- EZEd Zitron
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, and it's the same across-
- SBSteven Bartlett
How do we quantify that outside of anecdotes? Like, is there a way to-
- EZEd Zitron
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. And honestly, you're right. It is kind of hard to quantify outside of anecdotes. But I challenge anyone listening to this, go and use a website these days and tell me how well it works. 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.
- SBSteven Bartlett
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."
- EZEd Zitron
Mm-hmm.
- SBSteven Bartlett
Interesting.
- EZEd Zitron
Yeah, that's because GitHub people are just writing a bunch of code, pushing it, and thus there's just more code on there.
- 58:46 – 1:00:51
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- SBSteven Bartlett
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- 1:00:51 – 1:10:22
Is AI Job Disruption A Lie?
- SBSteven Bartlett
My, my car that drives itself, that is AI technology
- EZEd Zitron
Yes
- SBSteven Bartlett
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, um, for Uber because the cars will drive themself. Like-
- EZEd Zitron
Uh-huh
- SBSteven Bartlett
... 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 these CEOs saying that there will be job disruption-
- EZEd Zitron
Mm-hmm
- SBSteven Bartlett
... you say that they are not telling the truth?
- EZEd Zitron
Yes. Or they're guessing in a way that's very good for them. Think about it from perspective of Microsoft, Satya Nadella. He's not gonna be like, "Yeah, we don't know if this is gonna work, mate." Of course, he's gonna talk his book and he's gonna say, "Yeah, this is gonna replace all workers. It's gonna be amazing. He, he... It's gonna be so powerful." And then he'll change his tune and say, "Actually, it's not gonna replace workers, it'll make 'em more powerful," because the things aren't catching up. Dara 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 an autonomous ca- taxi service. There's a reason that Waymo's taken... I, 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-
- SBSteven Bartlett
What kind of problems?
- EZEd Zitron
Well, I mean, socioeconomically they're, 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 these 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, 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. Does it even notice it's a child?
- SBSteven Bartlett
Again, this is a really interesting but very, very applicable example of, uh, the right comparison to be made shouldn't be autonomous vehicles versus perfection, it should be autonomous vehicles versus human drivers.
- EZEd Zitron
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 wanna 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. 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.
- SBSteven Bartlett
They're autonomous cars, yeah?
- EZEd Zitron
Yeah, yeah. They're, they're these weird boxy things and they just blocked the exit.
- SBSteven Bartlett
Mm.
- EZEd Zitron
They just all kind of lined up and just fell asleep. I saw the same thing actually happen outside of a hotel when I got out of a Waymo in San Francisco, just stopped at this... And then a bunch of cars and another Waymo got stuck behind it.
- SBSteven Bartlett
I, I would-
- EZEd Zitron
And these are kind of, these are kind-
- SBSteven Bartlett
I've seen some human bad drivers as well
- EZEd Zitron
I, I agree. But it's just-
- SBSteven Bartlett
[laughs]
- EZEd Zitron
... 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 and pro- till proven innocent-
- SBSteven Bartlett
But-
- EZEd Zitron
... 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.
- SBSteven Bartlett
I, I agree. I do agree. Listen, I, I'm a big fan of, a, a big fan of taxi drivers generally in, in part 'cause I spend a lot of time in taxis. And I think-
- EZEd Zitron
Yeah, yeah, yeah
- SBSteven Bartlett
... I'm not just getting in there because I wanna get to, from A to B, I'm getting in there for lots of other reasons.
- EZEd Zitron
Yeah.
- SBSteven Bartlett
However, when I look at the stats around what is more dangerous-
- EZEd Zitron
Uh-huh
- 1:10:22 – 1:14:22
Could Your Narrative Be Helping AI Companies?
- SBSteven Bartlett
Do you know what's interesting is some of what your narrative, one would argue, actually helps them.
- EZEd Zitron
How?
- SBSteven Bartlett
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 th- what they're building is highly, highly dangerous, and that it will be-
- EZEd Zitron
Mm-hmm
- SBSteven Bartlett
... 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."
- EZEd Zitron
Yeah.
- SBSteven Bartlett
"And there is a significant chance it could fu- we could fuck up the, the planet."
- EZEd Zitron
Uh-huh.
- SBSteven Bartlett
And what we've seen is this slow pivot away from it-
- EZEd Zitron
Which is so strange
- SBSteven Bartlett
... because now they're getting booed and they're, they're being attacked.
- EZEd Zitron
Yeah.
- SBSteven Bartlett
There's 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 gonna change anything, and you're all gonna be fine." And it's now... It's just n- it's... Now it's not dangerous at all. It's-
- EZEd Zitron
But, but that's the funny thing
- SBSteven Bartlett
... and that's why I'm saying, like, your, your na- They... I actually think [laughs] there might be a couple PR people at these big AI companies thinking, "Thank God for Ed."
- EZEd Zitron
Oh, I d- I don't know about that. [laughs]
- SBSteven Bartlett
Well, and some of it, some of it... Because you're like... You're saying, "Actually, don't worry, everything's gonna be fine. It's not gonna take your job. It's not gonna disrupt the economy. It's just a fad. There's no technology." And I think they don't think that.
- EZEd Zitron
Here's the thing. I think Altman and Amadei are some of the most deeply corrupt and cynical people in the world. I don't th- of course they were gonna say... From the... It was early 2023, Altman said, "We're a little bit scared about what we're creating." 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, th- you'll be left behind. 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 a house is on fire, slow down. And yet all of these companies saying, "So scary." And now they're talking about slowdowns. But you ever notice that Amadei and Altman, they say, "Well, 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." No, they're out of compute. Now they're doing it. But I can guarantee you, by the way, their PR people do not like me. I know for a-
- SBSteven Bartlett
Yeah
- EZEd Zitron
... I know... I don't think OpenAI's PR people are super fond of me for the-
- SBSteven Bartlett
But I bet there's elements of what you're saying because you're calming people. You, you are theoretically calming down the general public.
- EZEd Zitron
And you know what? I hope I am-
- SBSteven Bartlett
Yeah
- EZEd Zitron
... because the fear-based tactics is horrible. These companies don't want that. These companies want people scared. I'm 100% sure.
- SBSteven Bartlett
Well, uh, I don't... I just fundamentally disagree. I think it-
- EZEd Zitron
Can I... So the timelines th- And I sit here and what I do is I log their quotes over time.
- SBSteven Bartlett
Oh.
- EZEd Zitron
And I read them out from 2015-
- SBSteven Bartlett
Yeah
- EZEd Zitron
... to 2026, and the change you see
- 1:14:22 – 1:17:30
How Dangerous Is AI Cyberhacking?
- EZEd Zitron
things worse. But-
- SBSteven Bartlett
But these technologies are dangerous
- EZEd Zitron
... I mean, they're dangerous, but not in the ways they've been warning about
- SBSteven Bartlett
Less if we think about cyber hacking
- EZEd Zitron
Right. And just to be clear, those cyber hacking things that happened were not a result of... They were like, "Break out this sandbox," and then they set the sandbox up wrong. They set up the server they were on wrong.
- SBSteven Bartlett
But I mean, you know, advanced AI models could very easily, 'cause they can go out onto the open internet as agents, they could very easily go and look at code bases of different websites-
- EZEd Zitron
Uh-huh
- SBSteven Bartlett
... find vulnerabilities and exploit those vulnerabilities-
- EZEd Zitron
Yeah
- SBSteven Bartlett
... you know, at scale, and arguably-
- EZEd Zitron
Could
- SBSteven Bartlett
... um, at a higher intelligence and faster and wider than humans, a human hacker could theoretically.
- EZEd Zitron
So-
- SBSteven Bartlett
So that's dangerous
- EZEd Zitron
... 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 turned the internet off, and they didn't. That's human error, and that's human error in the sense that, yeah, they threw about an indeterminately large amount of compute. This is dangerous, but people keep saying, "We can't let the, the Chinese get ahold of these models. We couldn't possibly. Because what if these models fall into the wrong hands?" They're already in the wrong hands. 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.
- SBSteven Bartlett
But you do... Would you agree that it's a- an intelligence, and I'll call it that, you know, 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.
- EZEd Zitron
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 yeah, 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, talk in his book, still got his Google stock, I think. And weirdly enough, he left Google 'cause 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, 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... I, 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 compute as we want. We had these fucking enablers allowing them to burn as much compute as they want. And also, we m- for all of these dire warnings about AI dangers, no one seems to have fucking done anything. No-
- SBSteven Bartlett
Okay, we're gonna play a game, Ed.
- EZEd Zitron
Let's play it.
- 1:17:30 – 1:19:14
Is The AI Industry Creating Economic Growth?
- SBSteven Bartlett
On these cards here-
- EZEd Zitron
Yeah, yeah
- SBSteven Bartlett
... I have the things that you consider to be myths about the-
- EZEd Zitron
Yeah. Go on
- SBSteven Bartlett
... AI industry. The challenge is I want you to give me one sentence-
- EZEd Zitron
Fuck
- SBSteven Bartlett
... on each myth.
- EZEd Zitron
Oh, Christ.
- SBSteven Bartlett
So just your first reaction. You're gonna pick it up, you're gonna read it-
- EZEd Zitron
Okay
- SBSteven Bartlett
... and then you're gonna give me one sentence on your opinion of that, um, belief.
- EZEd Zitron
Okay, let's go.
- SBSteven Bartlett
So-
- EZEd Zitron
Let's do this. [sighs] [card clattering]
- SBSteven Bartlett
What does it say? And what, and what's your one sentence?
- EZEd Zitron
It says, it says the, "The AI industry is creating enormous economic growth." No, it's not. It's nowhere in the data. Okay. [laughs] Like it's just... May I do a second sentence?
- SBSteven Bartlett
Go ahead.
- EZEd Zitron
Pretty much all of the economics is either NVIDIA feeding money to its companies like CoreWeave or these three companies feeding money to these ones to spend it with the, them.
- SBSteven Bartlett
Okay. And what evidence do you have that there's, it's not causing economic growth?
- EZEd Zitron
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, CoreWeave, and others.
- SBSteven Bartlett
But $100 billion is a lot of money for a, a relatively new technology.
- EZEd Zitron
Not when you've spent $300 billion in equity funding, and, uh, if we're going with just these three, I think $600 billion in capital expenditures.
- SBSteven Bartlett
Yeah, I get that. That means it's not profitable. But the 100 billion is an expression of consumer demand.
- EZEd Zitron
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 gonna use it more. If this was all on a per million token basis, we'd be having a different conversation.
- SBSteven Bartlett
Okay, fair. Fine. Cool. Next one.
- 1:19:14 – 1:19:53
How Would The US Beat China In The AI Race?
- EZEd Zitron
"The United States need to spend trillions to beat China in the AI race." Let's see. What AI race? Th- that's, that's actually, that's actually my point. It's what AI race is there? Is it to make big, scary LLMs? They, they did that already without the NVIDIA GPUs. By the way, they've got Blackwell GPUs. Kakashi and Just Dario, two amazing analysts I love, 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, 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, uh, they won if that's the case.
- 1:19:53 – 1:23:23
Is Robotics A Threat To Jobs?
- SBSteven Bartlett
Myth number three.
- EZEd Zitron
AI will replace all human jobs. That just isn't happening, and there's no economic data to support it.
- SBSteven Bartlett
Will it replace some jobs?
- EZEd Zitron
I mean, it's replaced some contract labor that would otherwise be replaced with cheap labor out in the Global South. It, it's a digital globalization in that sense but all jobs, most jobs, a lot of jobs, no.
- SBSteven Bartlett
What about robotics?
- EZEd Zitron
Robotics is not what we're talking about.
- SBSteven Bartlett
Yeah.
- EZEd Zitron
Robotics is a very different thing. And even then-
- SBSteven Bartlett
But robotics will be powered by AI
- EZEd Zitron
... 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. I, that was definitely about generative AI.
- SBSteven Bartlett
Okay, but what about robotics? Like-
- EZEd Zitron
The thing is-
- SBSteven Bartlett
... the Optimus robot that Elon's working on at, uh, Tesla
- EZEd Zitron
... the, the one where even in the demo of the hand, he d- like they had to have a guy controlling it. It wasn't doing it autonomously. 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.
- SBSteven Bartlett
Have you seen them Chi- them Chinese robots? I know you've seen them, Chinese robots
- EZEd Zitron
What, the Li, what's it called? The one that can dance and that, but they can't really do human things?
- SBSteven Bartlett
Well, it's just, it is pretty mind-blowing. Um-
- EZEd Zitron
It's... Robotics are fucking cool. I, like, I'm not gonna 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 instead we get these fucking large language models.
- SBSteven Bartlett
But w- AI plus robotics is an... You know, I, I was in San Francisco, and I went to this massive, um, incubator there, and when I'd gone there three years earlier, it was all software startups.
- EZEd Zitron
Right.
- SBSteven Bartlett
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-
- EZEd Zitron
Mm-hmm
- SBSteven Bartlett
... and it had a frying pan on it.
- EZEd Zitron
Yeah.
- SBSteven Bartlett
And its whole thing is it cooks for you.
- EZEd Zitron
Yeah.
- SBSteven Bartlett
So it was, it was showing me it cooking, whatever, and he goes, "Well, you know the arm?" He goes, "The, the hardware part, the physical parts, that's always been fairly cheap."
- EZEd Zitron
Yeah.
- SBSteven Bartlett
He goes, "The expensive part was the intelligence."
- EZEd Zitron
Yeah.
- 1:23:23 – 1:25:03
What Do You Think About Agentic AI?
- EZEd Zitron
that. They-
- SBSteven Bartlett
So you're not talking about agentic AI, which are agents-
- EZEd Zitron
Agentic AI is LLMs. Agentic AI is just a fancy way of saying an LLM talking to another L- LLM with a harness on top. That is still LLMs. Agentic AI is one of the b- 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 to do LLMs.
- SBSteven Bartlett
Yeah. Taking screenshots and putting them in LLMs and stuff.
- EZEd Zitron
Oh, God. Yeah.
- SBSteven Bartlett
Okay. But, but, you know, I could, I could make the case that... I'm just thinking about my personal usage. I definitely use agents to do things that I would've previously asked people to do. It's not to say that I didn't, I still don't hire 'cause we're hiring like crazy.
- EZEd Zitron
Yeah.
- SBSteven Bartlett
And I still, in that particular function, I'm thinking about, like, the chief of staff role. So my chief of staff would've triaged all of my inboxes previously and put them somewhere and told me about them-
- EZEd Zitron
Right
- SBSteven Bartlett
... or maybe once upon a time, shown me a piece of paper back in the day, I guess. Now my chief of staff is no longer doing that job.
- EZEd Zitron
You still have a chief of staff, though.
- SBSteven Bartlett
This is what I'm saying. They're doing other things.
- EZEd Zitron
Right. But the thing is, again, what you're describing is fairly basic automation. I don't know what the tasks are. Triage of emails-
- SBSteven Bartlett
Yes, fairly basic, but-
- EZEd Zitron
Didn't spend a trillion dollars on triaging email. Like, that's the, the promise if they'd spent $10 billion and this was much smaller and you go, "Cool, software. Yay!" A lot of the things that people are impressed with, like script stuff as well, it's just LLMs 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 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.
- 1:25:03 – 1:28:06
Is The Adoption Of AI The Same As The Rise Of The Internet?
- SBSteven Bartlett
Is there any technological innovation through history that was really, really game-changing where that didn't happen?
- EZEd Zitron
I mean, the internet-
- SBSteven Bartlett
I mean, people overpromised that. Um-
- EZEd Zitron
I mean, they overpromised on the businesses, but I've read through a great many pieces about the early internet. 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, I think a billion-dollar market cap. They were talking-
- SBSteven Bartlett
Yeah
- EZEd Zitron
... also-
- SBSteven Bartlett
There was a massive hype in the dot-com era
- EZEd Zitron
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, global, uh, AI sophistry in 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, their 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 swell, and also the fact of day trading. There's so many different things that are different. It's crazy. It's-
- SBSteven Bartlett
I do, I do think AI is different from the internet, in part if you just measured it on the speed of adoption, es- especially if we could just think about generative AI. I know AI has lots of things, but-
- EZEd Zitron
But, but the, the s- 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-
- SBSteven Bartlett
And, and that's why it was s- so slow and there was less, you know, there was less hype than AI. I do agree that there's way more hype. And we, again, going back to this point that we're clustering AI in this big category of lots of different things.
- EZEd Zitron
It was generative AI. It was-
- SBSteven Bartlett
There's generative AI. There's, like, real world AI we call it-
- EZEd Zitron
But generative AI is explicitly what I'm talking about here.
- SBSteven Bartlett
Yeah.
- EZEd Zitron
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. I have this theory, the era of the business idiot, where it's like we are ruled by people that don't do work. 'Cause nobody who actually does a bunch of work, who really is productive, is harassing someone who works for them for not being productive enough.
- SBSteven Bartlett
Mm.
- EZEd Zitron
They're not... They don't have the time. They're doing work. Someone who is sitting there with the ingratiation machine that's telling them that every beautiful idea out of their messy little skull is amazing, 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
- 1:28:06 – 1:30:23
The Overhype Of AI
- EZEd Zitron
are magic.
- SBSteven Bartlett
I... Do you know one of the most compelling arguments I have for the overhype of AI?
- EZEd Zitron
Mm-hmm.
- SBSteven Bartlett
In a world where everybody has access to these tools-
- EZEd Zitron
Mm-hmm
- SBSteven Bartlett
... whatever the tools can do would largely be commoditized.
- EZEd Zitron
Yeah.
- SBSteven Bartlett
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 wanna say, is now gonna be the valuable thing because the scarce and the hard becomes the most valuable through history, and the commoditized becomes the least valuable. So the very nature that we're commoditizing the generation of content or whatever you wanna call it, code, means that's actually not where the value will accrue a- 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 it's not... The, the g- the great thing is not of value.
- EZEd Zitron
Right.
- SBSteven Bartlett
So, so I think a lot, I've been thinking a lot actually about how, how do you, um, avoid the temptation of slopification of the things you make, the value you put into the world? It's 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-
- EZEd Zitron
Uh-huh
- SBSteven Bartlett
... they will be shit LinkedIn posts because everybody else-
- EZEd Zitron
Yeah, yeah, yeah
- SBSteven Bartlett
... is using them. And actually, a great LinkedIn post now is someone who doesn't use them and makes something that's, like, irreplaceably human-
- EZEd Zitron
Right
- SBSteven Bartlett
... and deeper and more personal, N of one lived experience.
- EZEd Zitron
Yeah.
- SBSteven Bartlett
All these things that AI can't do. And I think that's a compelling argument that actually the commodity tools produce commodity outcomes.
- EZEd Zitron
Also, everyone has access to these things, and what's changed? Like, really, like, what-
- SBSteven Bartlett
The slopification of stuff
- EZEd Zitron
... it's like we've, we've got a bunch of slop, but these people were half-assing their jobs before. It's just a half-assery machine. And it's just, it's, it's the thing. It's what I'm talking about with the slop blogs. It's like, it's, 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 Karl Brown, uh, Internet Bucks. Awesome guy. Great software engineer. He, he said it. 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 'cause he loves his Wither Storm. It's awesome. And it still took me half an hour and kept getting things
- 1:30:23 – 1:33:41
What Do You Use Generative AI For?
- EZEd Zitron
wrong.
- SBSteven Bartlett
What do you use AI for, generative AI?
- EZEd Zitron
I really don't. I w-
- SBSteven Bartlett
You don't use it?
- EZEd Zitron
With Bloomberg Terminal, I use Ask B, which is just when it's, like, requesting the consensus analyst estimates for Nvidia.
- SBSteven Bartlett
But otherwise you don't use it?
- EZEd Zitron
No.
- SBSteven Bartlett
So how do you know it's bad?
- EZEd Zitron
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 been like, "Ah." I've never been particularly impressed. The one thing I will defend it on is it's really good for, like, tech support. Like, I have this thing called Synergy in my New York, New York place I go to. I have this monitor where I have a MacBook and a PC laptop, and this thing Synergy for using-
- SBSteven Bartlett
Uh-huh
- EZEd Zitron
... the same mouse and keyboard. Dropping a giant fucking troubleshooting log into this thing and going, "What's wrong?" And it going, "This is wrong." Yeah, it's super useful. Is that a trillion dollars? No. Is that a $2 trillion company? No. Pretty useful.
- SBSteven Bartlett
Better than Google though, right? Better than Google Search.
- EZEd Zitron
Uh, no. I mean, uh, yeah, g- remember-
- SBSteven Bartlett
Do you use Google Search still?
- EZEd Zitron
I try. I have to fucking push the crap out of the way and scroll.
- SBSteven Bartlett
Oh my God. I can't remember the last time I did a Google search.
- EZEd Zitron
Christ, I find myself using Bing sometimes. I know. I hate saying it too. But I have to scroll past the AI crap 'cause I want the good stuff. I want the I want the actual links to stuff so that I can read the thing and go-
- SBSteven Bartlett
But you can ask Ch- the AI to give you the links
- EZEd Zitron
Yeah, and it doesn't do a particularly good job. Like my-
- SBSteven Bartlett
So say that the other day my iPad wasn't turning on, and it was doing this funny little thing on the screen.
- EZEd Zitron
Yeah.
- SBSteven Bartlett
You think that it's better to type that into Google than to-
- EZEd Zitron
Oh, no. I must be clear.
- SBSteven Bartlett
Yeah.
- EZEd Zitron
That may be the only LLM use case I defend. The troubleshooting thing is awesome for it. I w- it's the w- the one weakness I have, it's like genuinely being able to drop a log into it. 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, ugh, 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.
- SBSteven Bartlett
No, you are right. They are, you know-
- EZEd Zitron
'Cause they-
- SBSteven Bartlett
... telling us that it is gonna replace everything. But funnily enough, the critics are saying that as well.
- EZEd Zitron
Which one? I mean, I mean-
- SBSteven Bartlett
They are. Like the Geoffrey Hintons of the world. You know, even-
- 1:33:41 – 1:34:29
Has AI Gotten More Intelligent?
- EZEd Zitron
of people's work.
- SBSteven Bartlett
But on that last point where you say that it's gonna get progressively more intelligent, and when it does, it'll be a danger.
- EZEd Zitron
Yeah.
- SBSteven Bartlett
Would you agree with the statement that artificial intelligence has gotten more t- intelligent if you measure it based on any sort of measure of intelligence one might use?
- EZEd Zitron
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.
- SBSteven Bartlett
Okay, so it's got better at t- at these-
- EZEd Zitron
It's got better at tests that-
- SBSteven Bartlett
Okay
- EZEd Zitron
... they're intentionally trained for.
- SBSteven Bartlett
So i- if you logged the rate of improvement on a graph, it would look something like this.
- EZEd Zitron
Right.
- SBSteven Bartlett
You agree? In terms of what it's capable of doing.
- EZEd Zitron
Oh, that's-
- SBSteven Bartlett
The tasks-
- EZEd Zitron
There we go.
- SBSteven Bartlett
Yeah.
- EZEd Zitron
'Cause it's not b- it's not got new features. You'll notice that outside of OpenAI and Anthropic, the v- when you remove the coding startups, there's basically no successful AI s- startup company.
- 1:34:29 – 1:36:27
Will AI Start To Do More Jobs As It Gets More Capable?
- SBSteven Bartlett
So we agreed that it's got better, it's got more capable a- at doing things.
- EZEd Zitron
Yeah. Okay, fine.
- SBSteven Bartlett
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?
- EZEd Zitron
Outside of software engineering.
- SBSteven Bartlett
Yeah.
- EZEd Zitron
Remove software. 'Cause I will concede software engineering-
- SBSteven Bartlett
Yeah
- EZEd Zitron
... it's got better at that. Outside of software engineering-
- SBSteven Bartlett
Yeah
- EZEd Zitron
... where?
- SBSteven Bartlett
So ch- the chief of staff things, the admin.
- EZEd Zitron
Okay, so it's got better at admin.
- SBSteven Bartlett
Um, vid- vid- video generation, photo generation-
- EZEd Zitron
Okay
- SBSteven Bartlett
... text generation, uh, theoretically coding.
- EZEd Zitron
Right. But-
- SBSteven Bartlett
And, and then I'd say agentic workflows. So automated-
- EZEd Zitron
What is an agentic workflow?
- SBSteven Bartlett
So automated workflows where you're doing the same s-
- EZEd Zitron
Of what?
- SBSteven Bartlett
I mean, a good example is looking at the backend data of The Diary of a CEO.
- EZEd Zitron
Summarizing.
- SBSteven Bartlett
Looking at all of the data, ingesting all of it, going out into the internet and searching who Ed is.
- EZEd Zitron
Uh-huh.
- SBSteven Bartlett
Looking at every interview you've ever done ever.
- EZEd Zitron
Uh-huh.
- SBSteven Bartlett
Um-
- EZEd Zitron
This is summarizing and generating.
- SBSteven Bartlett
Yeah. Making a little model on, you know, the things people wanna know from Ed.
- EZEd Zitron
Uh-huh.
- 1:36:27 – 1:38:28
What Does The Future Look Like As AI Grows?
- EZEd Zitron
this continues, what does the future look like? So the rebuttal-
- SBSteven Bartlett
To-
- EZEd Zitron
... I was expecting to hear is that it won't continue. And actually-
- SBSteven Bartlett
But I actually don't think it... I think that there are hard limits that we're going to hit.
- EZEd Zitron
Okay. So you do believe in that, that there's a hard limit somewhere?
- SBSteven Bartlett
And 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.
- EZEd Zitron
Okay.
- SBSteven Bartlett
OpenAI has shut down Sora. I think you can still use the API. But nevertheless, look at the, look around you with the amount of stuff and the crew you need to get a shot. People think that movies are just shot by shot by shot, and they just magically happen. When you've got m- wonderful girlfriend of first ADs and so 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 f- aired at Cannes. It didn't. No one... It aired in the city of Cannes during the Cannes 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
- EZEd Zitron
The example is, yeah, they can do better at tests. Do better at ... You, number go up. When it comes to can this actually do distinct tasks that 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. 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 n- actually need to build a structure around the AI to make it work, and even then it doesn't fix the pr- it's-
- SBSteven Bartlett
So you're saying that there will become a point where the rate of improvement will plateau-
- EZEd Zitron
We're already there
- SBSteven Bartlett
... and stop.
- EZEd Zitron
We've already hit that diminishing ... Gary Marcus said this in 2022 as well.
- SBSteven Bartlett
You know there's lots of people listening now that, like,
- 1:38:28 – 1:40:41
You Don't Think People's Workflows Have Been Transformed By AI?
- SBSteven Bartlett
they've had their workflows completely transformed by these tools.
- EZEd Zitron
Have they? They'll be b- ... Yeah, they're all [laughs] ... 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 if it's, "Yeah, it 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, but again, how much can you trust this-
- SBSteven Bartlett
I think what I'm, I was getting at is, you know, when i- in the moment of any technological innovation, people tr- they extrapolate linearly or they view it as a static state, i.e., they think today is gonna look like tomorrow, or they think it's gonna get better in this sort of straight line. But what we end up seeing a lot of the time is this exponential improvement.
- EZEd Zitron
All of the innovations we're talking about with you, with, like, with compute and all that, with fast processors, those are hardware breakthroughs. The hardware breakthrough companies don't seem to be fixing the LLM problems, despite the all the king's horses, all the king's men. We've got 9, 10 generations of TPUs from Google now. Broadcom's 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 10th of the stuff they're promising?" Sam Altman the other fucking week was saying it was gonna be a, in, like, six months will be like a genie that you can ask wishes for, from. It's like, motherfucker's never watched Aladdin. What's he talking about? Like ... Also, the, the genie was charming. Anyway, long story short, the promises do not line up with the capabilities or the capability improvements. 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.
- SBSteven Bartlett
I just think in the future, I do think that all of the
- 1:40:41 – 1:43:41
Will All AI Be Powered By Data Centres?
- SBSteven Bartlett
devices and the computers we use and the physical items in our world will be more intelligent.
- EZEd Zitron
I mean, sure, but-
- SBSteven Bartlett
And it's-
- EZEd Zitron
Is that LLMs?
- SBSteven Bartlett
And that'll be powered by the underlying AI infrastructure. It'll be the-
- EZEd Zitron
How?
- SBSteven Bartlett
... more data cents- data centers.
- EZEd Zitron
How?
- SBSteven Bartlett
It'll be energy coming down.
- EZEd Zitron
How does a GPU-full data center translate to a Nikon camera that can ... I don't know even what you'd think, think it could ... Like, because what is the thing we're talking about here? Because the idea that devices will get smarter, sure. I can see that. It, it's a very broad statement. I could see it happening. It's already kind of happening. What does that have to do with the data centers? 'Cause 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.
- SBSteven Bartlett
But it's not just generative AI. We went through that earlier on.
- EZEd Zitron
It is. No, but those data centers, they are being built for generative AI. They are not being built for anything else.
- SBSteven Bartlett
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 guy sat in front of me called Ed with blue shirt and coffee, we now h- can train the AI to serve whoever wants blue shirt, Ed, and c- with coffee to the right user," which means people are retained longer because-
- EZEd Zitron
Isn't 15 basis points, like, .15%?
- SBSteven Bartlett
Yeah, it's fuck all, but it makes-
- EZEd Zitron
[laughs]
- SBSteven Bartlett
... a difference at scale. It makes a big difference at scale.
- EZEd Zitron
Yeah, but 100 and something billion dollars in, and the best you've got is .15%? If-
- SBSteven Bartlett
It's a big difference
- EZEd Zitron
... if he could be fi- ... I mean, how much of a difference? Because-
- SBSteven Bartlett
Yeah
- EZEd Zitron
... 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.
- SBSteven Bartlett
No, uh, I'm saying ... The point I was making was that that is another application of these data centers-
- EZEd Zitron
Right
- SBSteven Bartlett
... 'cause it needs a data center that is driving revenues, but also that's n- not out- that's outside of us thinking about just generating a sentence.
- EZEd Zitron
That's ge- and that's generate- their Gem, their generative model.
- SBSteven Bartlett
Muse.
- EZEd Zitron
Again, it was in ... Oh, Muse Spark is their LLM.
- SBSteven Bartlett
Yeah.
- EZEd Zitron
Gem is their generative-
- 1:43:41 – 1:45:12
Ads
- SBSteven Bartlett
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. 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 fiancée, 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 more. These are also great if you're in a team and you want to bond your team together. And I have to say they're also great for families that wanna 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 right now. There should be a button just down below here, and if it says subscribed, you're already subscribed. If it says subscriber, that means you're not yet. And if you're not subscribed, please could you do us a favor and hit that button? It helps the show more than you know, and according to the algorithm, you're someone that watches our show, but you haven't yet hit that button. Thank you so much. I do think you're accurate and right when you talk about
- 1:45:12 – 1:55:22
Is Overspending On AI Due To Demand Or Something Else?
- SBSteven Bartlett
the fact that there's a lot of like... Is the word fugazi?
- EZEd Zitron
Yeah.
- SBSteven Bartlett
Where, like, there's a lot of people that have spent a lot of money and they kinda shouldn't have spent it-
- EZEd Zitron
Yeah
- SBSteven Bartlett
... and they fucked up, and now they're thinking, "Shit, like we've spent all this investor money." Kind of like the metaverse was a bit of a fucking-
- EZEd Zitron
Oh my God
- SBSteven Bartlett
... That was a bit of a joke.
- EZEd Zitron
That is so weird.
- SBSteven Bartlett
A lot of money spent. We kind of thought this dream was coming of this... Well, not, I shouldn't say dream, 'cause it's not a dream that I've had, but-
- EZEd Zitron
Dream that they had.
- SBSteven Bartlett
Yeah, this sort of virtual world, and actually it never transpired, and does, 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.
- EZEd Zitron
Right.
- SBSteven Bartlett
You know? So crypto, one could argue that a lot of the crypto industry was the same.
- EZEd Zitron
It's wank that is inflated by the media. The difference is the reason the metaverse and the NFTs didn't escape this was there weren't stocks to speculate on. There weren't big companies that you could invest in. They had rec- record earnings in 2021. There was a bunch of money flowing in the system thanks to post-COVID, uh, the PRDC, that basically government federal money flowed in to the banks. There was a bunch of easy money, zero interest free era. Money was easy to find. Then after that, there was the hangover. Growth started to slow down dramatically. This is actually my dotcom bubble theory, which is they don't have any hypergrowth ideas anymore. So suddenly they started buying GPUs, and when they bought GPUs, people went, "They're doing AI. Oh, we better buy the stock." And the stocks went on an incredible run. Meta's like several hundred percent grow- 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's grown 'cause of AI, right? Microsoft's revenue's grown 'cause 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, Amy Hood just gonna take him out back, send him to the glue factory or something like.
- SBSteven Bartlett
I do think there's overspending. I, I wanna concede that point. I do think that-
- EZEd Zitron
Dramatic.
- SBSteven Bartlett
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-
- EZEd Zitron
What? [laughs]
- SBSteven Bartlett
Like in terms of like, I think there is prac- practical uses for this technology.
- EZEd Zitron
It's-
- SBSteven Bartlett
And I think when people realize that through history, they go crazy 'cause they wanna be the person that owns the opportunity-
- EZEd Zitron
I'm, I, I gotta be honest. I just, I fundamentally don't agree.
- SBSteven Bartlett
You don't agree with which part? You don't think-
- EZEd Zitron
I don't agree that this, that the speculation is a result of actual demand. I don't believe it's spec-
- SBSteven Bartlett
Mm.
- EZEd Zitron
I don't think private credit is sinking hundreds of billions of dollars into AI because of actual demand. 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."
- SBSteven Bartlett
I'm saying that I do think there is value in the underlying technology.
- EZEd Zitron
Sure.
- SBSteven Bartlett
I think that, and so I think... I'm not saying how much value.
- EZEd Zitron
Right.
- 1:55:22 – 1:57:31
Tech CEOs Rebuttal
- SBSteven Bartlett
list of quotes from the big CEOs of AI companies to see what they would rebuttal you.
- EZEd Zitron
Yeah.
- SBSteven Bartlett
And they're all basically saying the same thing. They're all saying, th- this is a actual, an exact quote from Sundar, who is the CEO of Google. He says, "The risk of underinvesting is dramatically greater than the risk of overinvesting." And you go down, you go through this, you know-
- EZEd Zitron
But that-
- SBSteven Bartlett
... 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."
- EZEd Zitron
Makes me think of Shrek with Lord Farquaad. "Some of you may die, but that's a risk I'm willing to accept." It's like, "You know, I'm just gonna 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 gonna piss the money away and hope he's right, and I know from the people I know at Meta he's not right. The thing is-
- SBSteven Bartlett
Okay. Why, why might you be wrong?
- EZEd Zitron
I mean, this is the thing. The AI people who claim this is gonna be the biggest, strongest thing in the world, do they ever get that? I j- I mean this, like-
- SBSteven Bartlett
Good, it's a good question
- EZEd Zitron
... 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 that make this profitable. A bunch of-
- SBSteven Bartlett
It's, it's a good question, right
- EZEd Zitron
... new mathema- Because the thing is, when it comes to being a critic or a skeptic-
- SBSteven Bartlett
Mm
- EZEd Zitron
... you are put on the hot seat, not the people spending a trillion dollars, not the people promising the world. The per- the, the asshole with a blog is the one who's like, "No, no, mm, ne-
- SBSteven Bartlett
Right. Trust me, trust me. If they came here, they'd be on the hot seat too. Trust me. [laughs]
- EZEd Zitron
Uh, oh, I w- Oh, they, they won't talk to me. Don't know why, Steve. They d-
- SBSteven Bartlett
No. [laughs]
- EZEd Zitron
Don't know, don't know, it's 'cause I call him Clammy Sammy. Um, but he won't-
- SBSteven Bartlett
Yeah. I think it's 'cause my guests are quite cr- quite critical that I don't think Sam Altman wants to come here. [laughs]
- EZEd Zitron
Yeah. Mr. Altman, I... Go, go on Steve's show. Do it. But this is the thing, like of course they're gonna say that. 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 dotcom bubble, which is, yeah, this is the last thing they've got.
- SBSteven Bartlett
But I really wanna know that question. It was one of the questions I was really excited
- 1:57:31 – 2:00:50
What Would It Take For You To Change Your Mind About AI?
- SBSteven Bartlett
to ask you, which is you have a different opinion. We said this at the top.
- EZEd Zitron
Yeah.
- SBSteven Bartlett
You have a very different opinion from a lot of people.
- EZEd Zitron
Yeah.
- SBSteven Bartlett
I would categorize the, the two most popular opinions as, uh, AI is gonna hurt everybody and it's gonna be catastrophic and we need to stop.
- EZEd Zitron
Yeah.
- SBSteven Bartlett
The other opinion is age of abundance, it's gonna be amazing. Let us crack on.
- EZEd Zitron
Yeah.
- SBSteven Bartlett
Yours is different from both of those, which is, as you said in your words, it's a con and it's n- and there's no real underlying value in the technology, and it's over-hyped.
- EZEd Zitron
Yes.
- SBSteven Bartlett
And there's way too much spending.
- EZEd Zitron
Yes.
- SBSteven Bartlett
I mean, a few people agree on the spending part at least.
- EZEd Zitron
Yeah.
- SBSteven Bartlett
But the other part. So with you, it's one of, probably the first person that I've spoken to that's had this opinion. So how, what would it take for you to change your mind about what you believe here?
- EZEd Zitron
There would need to be a hardware breakthrough that reduced the cost by, like, 1,000. B- It would have to be just a dramatic breakthrough that is not happening, just to be clear, because they've all been trying.
- SBSteven Bartlett
So it's the cost for you that would have to change.
- EZEd Zitron
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 Vineland, 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. I, the water situation I'm not super well-read on, so I'm not gonna wade into it, but the use of gas turbines and behind the meter power is reckless and damaging to communities, 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 teller will go, "Go fuck themselves." They'll say, "I'm not giving you... You, you're gonna make a store that sells stuff? Screw you." You wanna build a data center? You, Jensen Huang will back you. Jensen Huang will give you 25% residual value. You wanna build a regular business that's even profitable? Fuck you. No venture capitalist won't give you the money. 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 d- give the bank a full colonic. But you wanna get money from Jensen Huang to buy some GPUs? He'll give you a contract. CoreWeave is a great example. Co- A Neocloud, which is just a company that builds data centers and puts GPUs and rent them to 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." If you wanna buy GPUs, it's open season. If you wanna 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.
- SBSteven Bartlett
It's so interesting. You- It's interesting because you are the first person that I've spoken to that has that opinion.
- EZEd Zitron
I am pro-user. Let's take another myth. AI will be conscious.
- SBSteven Bartlett
Mm-hmm.
- EZEd Zitron
So superintelligence, artificial general intelligence, these are theories. Anyone saying this stuff will become this is just guessing and does not have proof.
- SBSteven Bartlett
Okay.
- EZEd Zitron
And they, like, that's really it.
- SBSteven Bartlett
Okay.
- EZEd Zitron
Okay, let's take another myth.
- 2:00:50 – 2:08:28
Are AI Systems Already Blackmailing?
- EZEd Zitron
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 covered this, saying that OpenAI's model blackmailed a TaskRabbit into solving a CAPTCHA. 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.
- SBSteven Bartlett
A TaskRabbit being?
- EZEd Zitron
As in a person that you rent, not even to do a CAPTCHA. It's someone you rent to, like, nail d- nail a picture up in your apartment. It's an insane example. This was covered as if these things blackmailed someone and, any- 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. This keeps happening and the media just, "Mm, slop, 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. Ooh."
- SBSteven Bartlett
But this is, this is so counterintuitive of their interest to some degree.
- EZEd Zitron
Is it?
- SBSteven Bartlett
And they've experienced it backfire.
- EZEd Zitron
Well, they have now. Like, it's, it's literally backfired.
- SBSteven Bartlett
It's backfired. Er- Eric Schmidt getting booed-
- EZEd Zitron
Yeah. [laughs]
- SBSteven Bartlett
... at a commencement speech by 8,000 people every time he said the word AI.
- EZEd Zitron
Yeah, that's awesome.
- SBSteven Bartlett
But I mean, this is, this is... I mean, the- they're... These CEOs are being attacked at home.
- EZEd Zitron
Yeah, which fucking sucks. We shouldn't-
- SBSteven Bartlett
Yeah, which is terrible
- EZEd Zitron
... No, I, I must be clear, like-
- SBSteven Bartlett
Yeah
- EZEd Zitron
... you dislike the... Don't fucking hurt people.
- SBSteven Bartlett
Yeah, don't, don't attack people at home. But, but the point here is that that narrative is backfiring in a big, big way for them.
- EZEd Zitron
I agree. I don't think they saw it coming.
- SBSteven Bartlett
Yeah.
- EZEd Zitron
Because you have to remember, you mentioned regulation earlier. These tech companies have been glazed for their entire existence. 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... I, I agree, this has backfired on them because they're inarticulate. They're disconnected from regular people. Sam Altman drives a $5 million car around San Francisco, so that, 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, 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. They... 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're the o- only us, only these two angels could possibly control the beast we've created.
- SBSteven Bartlett
Uh, this is, 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.
- EZEd Zitron
I-
- SBSteven Bartlett
Whereas the others, they [laughs] , they seem to kind of move with the wind.
- EZEd Zitron
I, I-
- SBSteven Bartlett
Do you know what I mean?
- EZEd Zitron
... get you. I get what you mean. Well, the reason I don't like Dario is Dario was doing the scare tactics thing when he worked at OpenAI.
- SBSteven Bartlett
Yeah.
- EZEd Zitron
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 gonna go away because of AI."
- SBSteven Bartlett
What I respect is the consistency. He's now being attacked by them.
- 2:08:28 – 2:13:26
Are We In An AI Bubble And What Happens When It Pops?
- SBSteven Bartlett
when will... When this AI bubble collapses, so much of the economy is resting upon it.
- EZEd Zitron
Yeah.
- SBSteven Bartlett
It's gonna have downstream consequences. So I got two questions for you. I guess the first question is, are we in an AI bubble, and what happens when the bubble pops?
- EZEd Zitron
Yes, and it's, 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 rockcom bubble. So the AI bubble collapsing will probably be this company running out of money
- SBSteven Bartlett
And the company-
- EZEd Zitron
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 it released their audited financials. Wonder why that was. Um, but they've delayed to next year. Sarah Friar, the CFO, has now said, well, they'll do it earlier than 2027 or 2027. Great answer there.
- SBSteven Bartlett
For anyone that doesn't understand what going public means, that means joining the stock market.
- EZEd Zitron
Yeah.
- SBSteven Bartlett
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. 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.
- EZEd Zitron
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 at... Well, they wanted to go at a se- a $1 trillion valuation. Apparently, their advisor said, "No, don't do that." 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 they are gonna need to raise at least $100 billion a year just to survive. If they can't go public, they will have to raise another funding round. The problem is, it's gonna be difficult to raise at even the same one they raised at. So they're probably gonna have to take a flat, so the same amount-
- SBSteven Bartlett
They can't do that
- EZEd Zitron
... or down round. 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 gonna 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. I believe they have a ceiling. They're eventually gonna face perdition too. I think sometime in 2027 things are gonna start running out of steam because that thing I said earlier, the only way these models get better is if you feed more money, tens of billions of dollars into them.
- SBSteven Bartlett
So you think OpenAI runs out of steam in 2027?
- EZEd Zitron
I think they're already running out of steam, yeah, but I think they run out of cash.
- SBSteven Bartlett
You think they run out of cash?
- EZEd Zitron
Yes.
- SBSteven Bartlett
And the sequence of events here will be they tr- they go out and try and raise, but-
- EZEd Zitron
And they have trouble raising another round. I think maybe Nvidia props them up a little, maybe private credit, Blackstone, BlackRock, and the like, the ones... 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.
- SBSteven Bartlett
Okay, so they run out of steam in 2027 according to you.
- EZEd Zitron
Yep, and maybe they try... If they bum rush to go public, they're gonna have worse economics than Anthropic. They're gonna get savaged. It- 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. But the crucial thing is, 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 that. 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 be a- 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. If OpenAI can't go public, SoftBank can't do that. SoftBank probably won't run out of money, but we're gonna 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 gonna grow as fast."
- SBSteven Bartlett
And what happens then?
- EZEd Zitron
Well, I think we enter a tech depression because the rockcom bubble, the core of my theory, is that they're out of hypergrowth 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. It allows them to say, "We're still doing something. We're working on AI. Don't think too hard," and also their current businesses are still growing. 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, only so many ways that Amazon can screw merchants.
- SBSteven Bartlett
So in that tech depression, which you're
- 2:13:26 – 2:19:08
The Tech Depression Is Coming
- SBSteven Bartlett
thinking 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, they get panicked.
- EZEd Zitron
Yes. I think that because the-
- SBSteven Bartlett
What, what sort of downstream consequence, the sort of domino effect?
- EZEd Zitron
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 Magnificent Seven thinking the 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 Invi- 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. I think Nvidia's revenue could go 50 to 70% down. I think that Nvidia could... Nvidia back in 2022 was making single-digit billion dollars.
- SBSteven Bartlett
And what happens, though? I'm thinking about, like, Jenny and Dave that are watching this right now, and they are just normal people-
- EZEd Zitron
Peop-
- SBSteven Bartlett
With normal jobs
- EZEd Zitron
... 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. 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 Cursor, bought 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, 'cause 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 gonna pick off every L- like, LLM company? Like going to fucking TJ Maxx for AI? Like, Jesus Christ.
- SBSteven Bartlett
So is that a recession you're describing?
- EZEd Zitron
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.
- SBSteven Bartlett
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 profits shrink. And lastly, cost-cutting measures. To survive or protect profit margins, businesses freeze hiring, reduce hours, and resort to layoffs.
- EZEd Zitron
Yes, that's, 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 gonna have to start... They have, between these two companies, Anthropic and OpenAI, you have $1.1 trillion of commitments.
- SBSteven Bartlett
Mm-hmm.
- EZEd Zitron
Just OpenAI.
- SBSteven Bartlett
Mm-hmm.
- EZEd Zitron
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.
- SBSteven Bartlett
So you-
- EZEd Zitron
Without OpenAI, Oracle dies.
- SBSteven Bartlett
So you think OpenAI is gonna crash and run out of money, and that's gonna cause this domino effect across these other big tech companies, which is gonna impact the stock market and im- impact the broader economy?
- EZEd Zitron
Yes, and also the tens of thousands of people that will be laid off from the tech sector. 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 at total value put in, so the amount of money you get back for your dollar, is between .8 and 1.21, meaning for every dollar you invest, you get 80 cents to $1.20.
- SBSteven Bartlett
Paper gains.
- EZEd Zitron
Well, no, that's just actual ga-
- SBSteven Bartlett
Actual money
- EZEd Zitron
... like, actual returns. Paper gains they'll give you, but even an internal r- rate of 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. Venture capital is not actually providing returns. The whole-
- SBSteven Bartlett
They're celebrating paper gains.
- EZEd Zitron
They're celebrating paper gains.
- SBSteven Bartlett
And they're raising off paper gains.
- EZEd Zitron
Uh-huh. And actually-
- SBSteven Bartlett
And paper gains, I mean just being able to say, "Oh, look, the valuation of Anthropic went up, so let's-"
- EZEd Zitron
But that's, 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. But everyone is really benefiting right now. It's really that, it's that great tweet where it's like when you're, uh, reaping, it's like, "Yeah, fuck yeah, this rocks." Sowing, "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 gonna be pretty rough on them because my- the valuation of Amazon, Google, Microsoft, and Meta is based on this idea that they will grow eternally, that they will grow forever. If that changes, to quote Ed Elson from Property 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 gonna be doing this forever, and we're gonna value you as such."
- 2:19:08 – 2:21:45
What Should The Public Do?
- SBSteven Bartlett
do anything differently? Should they be conserving money if there's a recession or depression coming? Should they be a little bit more conservative? Should they-
- EZEd Zitron
I... Yes. I actually, 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.
- SBSteven Bartlett
Should they invest in the S&P 500? Should they invest in OpenAI and crypto?
- EZEd Zitron
I... Oh, God, no. I... Honestly, I live in cash right now. I, I-
- SBSteven Bartlett
You live in cash?
- EZEd Zitron
Yeah. I don't fucking trust the market, man. Try and get some gains here. I'm like, I'm not comfortable giving financial-
- SBSteven Bartlett
Sure
- EZEd Zitron
... advice, but it's like, if you... Like, it's like you're gambling.
- SBSteven Bartlett
Okay. Be conservative. Things might get volatile.
- EZEd Zitron
Yeah, it really is. It's gonna be act as you would with volatility. Take the gains when you've got them.
- SBSteven Bartlett
Mm-hmm.
- EZEd Zitron
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, "They made $38 to $37 billion, right? 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 w- and where protecting the readers is necessary.
- SBSteven Bartlett
What would they say? They would say, "Ed, this technology's gonna be so great and so transformative-
- EZEd Zitron
Uh-huh
- SBSteven Bartlett
... that we are investing a ton of money, um, in advance of the value and utility showing up."
- EZEd Zitron
Yeah.
- SBSteven Bartlett
That's what they would say.
- EZEd Zitron
Right.
- SBSteven Bartlett
Um, and I've heard your rebuttal, but I just wanted to express, like, that's-
Episode duration: 2:27:49
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Transcript of episode Lf5oqGOCRCM
