He's (unsurprisingly) making an analogy to the dotcom bubble, which seems to me correct. There was a bubble, many non-viable companies got funded and died, and nevertheless the internet did eventually change everything.
There's still depreciation, but it's not the same. Also look at other forms of hardware, like RAM, and the bonus electrical capacity being built.
I have not seen the prices of GPUs, CPU or RAM going down, on the contrary, each day it gets more expensive.
As tempting as it is, it leads to false outcomes because you are not thinking about how this particular situation is going to impact society and the economy.
Its much harder to reason this way, but isnt that the point? personally I dont want to hear or read analogies based on the past - I want to see and read stuff that comes from original thinking.
This guy gets it - https://www.youtube.com/watch?v=kxLCTA5wQow
Instead of plainly jumping on the bubble bandwagon he actually goes through a thorough analysis.
The current AI bubble is leading to trained models that won't be feasible to retrain for a decade or longer after the bubble bursts.
The trenches for the cables even longer than that.
In 2002 I was woking making webs and setting up linux servers and I did not have internet at home.
https://www.statista.com/statistics/189349/us-households-hom...
Low Global Penetration: Only 361 million people had internet access worldwide in 2000, a small fraction of the global population. Specific Country Examples United States: The US had a significant portion of the world's internet users, making up 31.1% of all global users in 2000. Its penetration rate was 43.1%.
It had the Microsoft network or whatever it was called.
I guess another example of the same thing is power generation capacity, although this comes online so much more slowly I'm not sure the dynamics would work in the same way.
It's hugely expensive, which is why the big cloud infrastructure companies have spent so much on optimizing every detail they can.
To give a different example, right now, some of the most prized sites for renewable energy are former coal plant sites, because they already have big fat transmission lines ready to go. Yesterday's industrial parks are now today's gentrifying urban districts, and so on.
Evnn moreso for carrier lines of course. Nimbyism is a strong block on right-of-way needs (except the undersea ones obviously).
Markets for electronics have momentum, and estimating that momentum is how chip producers plan for investment in manufacturing capacity, and how chip consumers plan for deprecation.
Of course this does make some moderate assumptions that it was a solid build in the first place, not a flimsy laptop, not artificially made obsolete/slow, etc. Even then, "install an SSD" and "install more RAM" is most of everything.
Of course, if you are a developer you should avoid doing these things so you won't get encouraged to write crappy programs.
- better weather forecasts
- modeling intermittent generation on the grid to get more solar online
- drug discovery
- economic modeling
- low cost streaming games
- simulation of all types
Not to mean that we're still nowhere near close to solving the broadband coverage problem, especially in less developed countries like the US and most of the third world. If anything, it seems like we're moving towards satellite internet and cellular for areas outside of the urban centers, and those are terrible for latency-sensitive applications like game streaming.
This is not particularly true.
Even top of the line AAA games make sure they can be played on the current generation consoles which have been around for the last N years. Right now N=5.
Sure you’ll get much better graphics with a high end PC, but those looking for cloud gaming would likely be satisfied with PS5 level graphics which can be pretty good.
Just as I'm getting to the point where I can see retirement coming from off in the distance. Ugh.
The Dotcom boom was probably good for everyone in some way, but it was much, much better for the extremely wealthy people that have gained control of everything.
Even for the average person in America, the ability to do so many activities online that would have taken hours otherwise (eg. shopping, research, DMV/government activities, etc). The fact that we see negative consequences of this like social network polarization or brainrot doesn't negate the positives that have been brought about.
In fact, the technology was introduced out here assuming corporate / elite users. The market reality became such that telcos were forced kicking and screaming to open up networks to everybody. The Telecom Regulatory Authority of India (back then) mandated rural <> urban parity of sorts. This eventually forced telcos to share infrastructure costs (share towers etc.) The total call and data volumes are eye-watering, but low-yield (low ARPU). I could go on and on but it's just batshit crazy.
Now UPI has layered on top of that---once again, benefiting from Reserve Bank of India's mandate for zero-fee transactions, and participating via a formal data interchange protocol and format.
Speaking from India, having lived here all my life, and occasionally travelled abroad (USAmerica, S.E. Asia).
We, as a society and democracy, are also feeling the harsh, harsh hand of "Code is Law", and increasingly centralised control of communication utilities (which the telecoms are). The left hand of darkness comes with a lot of darkness, sadly.
Which brings me to the moniker of "third world".
This place is insane, my friend --- first, second, third, and fourth worlds all smashing into each others' faces all the time. In so many ways, we are more first world here than many western countries. I first visited USAmerica in 2015, and I could almost smell an empire in decline. Walking across twitter headquarters in downtown SF of all the places, avoiding needles and syringes strewn on the sidewalk, and avoiding the completely smashed guy just barely standing there, right there in the middle of it all.
That was insane.
However, it wasn't just that, and the feeling has only solidified in three further visits. It isn't rational, very much a nose thing, coming from an ordinary software programmer (definitely not an economist, sociologist, think tank).
Now we need X*0.75 people to do meet Y demand.
However, those savings are partially piped to consumers, and partially piped to owners.
There is only so much marginal propensity to spend that rich people have, so that additional wealth is not resulting in an increase in demand, at least commensurate enough to absorb the 25% who are unemployed or underemployed.
Ideally that money would be getting ploughed back into making new firms, or creating new work, but the work being created requires people with PHDs, and a few specific skills, which means that entire fields of people are not in the work force.
However all that money has to go somewhere, and so asset classes are rising in value, because there is no where else for it to go.
Or, the returns on capital exceed the rate of economic growth (r > g), if you like Piketty's Capital in the Twenty First Century.
One of the central points is about how productivity and growth gains increasingly accrue to capital rather than labor, leading to capital accumulation and asset inflation.
https://en.m.wikipedia.org/wiki/Special:BookSources/97806742...
This is how GDP/person has increased 30x the last 250 years.
What always happens is that the no longer needed X*0.25 people find new useful things to do and we end up 33% richer.
It's actually, "they end up" and the 33% gains you're talking about aren't realized en masse until all the coal miners have black lung. It's really quite the, "dealy" as Homer Simpson would say. See, "Charles Dickens" or, "William Blake" for more. #grease
For sure, we can shop faster, and (attempt) research and admin faster. But…
Shopping: used to be fun. You’d go with friends or family, discuss the goods together, gossip, bump into people you knew, stop for a sandwich, maybe mix shopping and a cinema or dinner trip. All the while, you’d be aware of other peoples’ personal space, see their family dynamics. Queuing for event tickets brought you shoulder to shoulder with the crowd before the event began… Today, we do all this at home; strangers (and communities) are separated from us by glass, cables and satalites, rather than by air and shouting distance. I argue that this time saving is reducing our ability to socialise.
Research: this is definitely accelerated, and probably mostly for the better. But… some kinds of research were mingled with the “shopping” socialisation described above.
Admin: the happy path is now faster and functioning bureaucracy is smoother in the digital realm. But, it’s the edge cases which are now more painful. Elderly people struggle with digital tech and prefer face to face. Everyone is more open to more subtle and challenging threats (identity theft, fraud); we all have to learn complex and layered mitigation strategies. Also: digital systems are very fragile: they leak private data, they’re open to wider attack surfaces, they need more training and are harder to intuit without that training; they’re ripe for capture by monopolists (Google, Palantir).
The time and cost savings of all these are not felt by the users, or even the admins of these systems. The savings are felt only by the owners of the systems.
Technologgy has saved billions of person-hours individual costs, in travel, in physical work. Yet, wemre working longer, using fewer ranges of motions, are less fit, less able to tolerste others’ differences and the wealth gap is widening.
Be careful about making narratives that don’t line up with industry data.
There’s a lot of brick and mortar retail going on. It just doesn’t look like the overbuilt mall infrastructure of the 1970s-1980s.
"Quality of life" is a hugely privileged topic to be zooming in on. For the vast majority of people both inside and outside the US, Time and Money are by far the most important factors in their lives.
If you had a huge pile of money but still lived in a shack in a slum, you’d still have a terrible quality of life.
If you argument were true, and people are saving time (or money) due to these new systems, why is the wealth gap widening?
You are describing platform capture. Be it Google Search, YouTube, TikTok, Meta, X, App Store, Play Store, Amazon, Uber - they have all made themselves intermediaries between public and services, extracting a huge fee. I see it like rent going up in a region until it reaches maximum bearable level, making it almost not worth it to live and work there. They extract value both directions, up and down, like ISPs without net-neutrality.
But AI has a different dynamic, it is not easy to centrally control ranking, filtering and UI with AI agents. You can download a LLM, can't download a Google or Meta. Now it is AI agents that got the "ear" of the user base.
It's not like before it was good - we had a generation of people writing slop to grab attention on web and social networks, from the lowest porn site to CNN. We all got prompted by the Algorithm. Now that Algorithms is replaced by many AI agents that serve users more directly than before.
You can download a model. That doesn't necessarily mean you can download the best model and all the ancillary systems attached to it by whatever service. Just like you can download a web index but you probably cannot download google's index and certainly can't download their system of crawlers for keeping it up to date.
In poor countries, they may not have access to clean running water but it's almost guaranteed they have cell phones. We saw that in a documentary recently. What's good about that? They use cell phones not only to stay in touch but to carry out small business and personal sales. Something that wouldn't have been possible before the Internet age.
That 40% has a very long shelf life.
Unfortunately, the energy component is almost entirely fossil fuels, so the global warming impact is pretty significant.
At this point, geoengineering is the only thing that can earn us a bit of time to figure...idk, something out, and we can only hope the oceans don't acidify too much in the meantime.
Honestly I think the most surprising thing about this latest investment boom has been how little debt there is. VC spending and big tech's deep pockets keep banks from being too tangled in all of this, so the fallout will be much more gentle imo.
I am using x86 chips though.
AI is already making us wildly more productive. I vibe coded 5 deep ML libraries over the last month or so. This would have taken me maybe years before when I was manually coding as an MLE.
We have clearly hit the stage of exponential improvement, and to not invest basically everything we have in it would be crazy. Anyone who doesn’t see that is missing the bigger picture.
Why is it all these kinds of posts never come with any attachments? We are all interested to see it m8.
I had been mostly opposed to vibe coding for a long time, autocomplete was fine but full agentic coding just made a mess.
That’s changed now, this stuff is genuinely working on really hard problems.
You can see that all across this discussion.
And there will also be software infrastructure which could be durable. There will be improvements to software tooling and the ecosystem. We will have enormous pre-trained foundation models. These model weight artifacts could be copied for free, distilled, or fine tuned for a fraction of the cost.
Dot com crash followed by the web getting pretty popular and a bit central to business.
To all those betting big on AI before the crash:
Careful, Icarus.
What does that even mean?
pets.com was a fat loser only telling telling people that were going to fly.
Amazon was Icarus, they did something.
Vs weak commentators going on about the wax melting from their parents root cellar while Icarus was soaring.
Most of Y Combinator are not using AI they just say that and you're worried about the people who do things?
Icarus drowned in the sea.
Even if you want to put the world into only two lumps of cellar dwellers and Icaruses it is still a group of living people on one side and a floating/semi-submerged pile of dead bodies that are literally only remembered for how stupid their deaths were on the other.
The leap of faith necessary in LLMs to achieve the same feat is so large its very difficult to imagine it happening. Particularly due to the well known constraints on what the technology is capable of.
The whole investment thesis of LLMs is that it will be able to a) be intelligent b) produce new knowledge. If those two things that dont happen, what has been delivered is not commensurate to the risk in regards to the money invested.
Past bubbles leaving behind something of value is indeed no guarantee the current bubble will do so. For as many times as people post "but dotcom produced Amazon" to HN, people had posted that exact argument about the Blockchain, the NFT, or the "Metaverse" bubbles.
This is because many people have mistaken LLMs for AI, when they’re just a small subset of the technology - and this has driven myopic focus in a lot of development, and has lead to naive investors placing bets on golden dog turds.
I disagree on AI as a whole, however - as unlike previous technologies this one can self-ratchet and bootstrap. ML designed chips, ML designed models, and around you go until god pops out the exit chute.
Perhaps the most famous implosion of all was AOL who merged (sort of) with TimeWarner gaining the lion's share of control through market cap balancing. AOL fell so destructively that it nearly wiped out all the value of the actual hard assets that TW controlled pre-merger.
It’s different enough that it probably isn’t relevant.
It did, but not for the better. Quality of life and standard of living both declined while income inequality skyrocketed and that period of time is now known as The Great Divergence.
> He's (unsurprisingly) making an analogy to the dotcom bubble, which seems to me correct.
He's got no downside if he's wrong or doesn't deliver, he's promising an analogy to selling you a brand new bridge in exchange for taking half of your money... and you're ecstatic about it.
It will become so valuable so fast we struggle to comprehend it.
First were the models. Then the APIs. Then the cost efficiencies. Right now the tooling and automated workflows. Next will be a frantic effort to "AI-Everything". A lot of things won't make the cut, but absolutely many tasks, whole jobs, and perhaps entire subsets of industries will flip over.
For example you might say no AI can write a completely tested, secure, fully functional mobile app with one prompt (yet). But look at the advancements in Cline, Claude code, MCPs, code execution environments, and other tooling in just the last 6 months.
The whole monkeys typewriters shakespeare thing starts to become viable.
Elsewhere in AI however progress has been enormous, and many projects are only now reaching the point where they are starting to have valuable outputs. Take video gen for instance - it simply did not exist outside of research labs a few years ago, and now it’s getting to the point where it’s actually useful - and that’s just a very visible example, never mind the models being applied to everything from plasma physics to kidney disease.
The claim is "exponential" progress, exponential progress never seems "slow" after it has started to become visible.
I've worked in the research part of this space, there's neat stuff happening, but we are very clearly in the diminishing returns phase of development.
2022-2023 AI changed enough to be me to convert from skeptic, to a believer. I started working as an AI Engineer and wanted to be on the front lines.
2023-2024 Again, major changes, especially as far as coding goes. I started building very promising prototypes for companies, was able to build a laundry list of projects that were just boring to write.
2024-2025 My day to day usage has decreased. The models seem better at fact finding but worse for code. None of those "cool" prototypes from myself or anyone else I knew seemed to be able to become more than just that. Many of the cool companies I started learning about in 2022 started to reduce staff and are running into financial troubles.
The only area where I've been impressed is the relatively niche improvements in open source text/image to video models. It's wild that you can make sure animated films on a home computer now.
But even there I'm seeing no signs of "exponential improvement".
My experience has been that it was. I was using AI last year to build ML models about as well as I have been this year.
I'm not saying AI isn't useful, just that the progress certainly looks to be sigmoid not exponential in growth. By far the biggest year for improvement was 2022-2023. Early 2022 I didn't think any of the code assistants were useful, by 2023 I was able to use them more reliably. 2024 was another big improvement, but I honestly haven't felt the change (at least not for the better).
Some of the tooling may be better, but that has little do to with exponential progress in AI itself.
And before it didn’t seem to understand the fundamentals of Torch well, not well enough to do novel work. Now with Codex in high it absolutely does, and MLE bench reflects that
It's certainly possible that AI will improve this way, but I'd wager it's extremely unlikely. My sense is that what people are calling AI will later be recognized as obviously steroidal statistical models that could do little else than remix and regurgitate in convincing ways. I guess time will tell which of us is correct.
If the model is doing meaningful research that moves along the state of the ecosystem, then we are in the outer loop of self improvement. And yes it will progress because thats the nature of it doing meaningful work.
That's a lot of vague language. I don't really see any way to respond. I suppose I can say this much: the usefulness of a tool is not proof of the correctness of the predictions we make about it.
> And yes it will progress because thats the nature of it doing meaningful work.
This is a non sequitur. It makes no sense.
And I never said there's anything bad about or wrong with statistical models.