cmiles8

Maybe focus on the riots in the streets and sort that out vs wasting energy on nonsense like this. Just saying.

In many places if people charge their car and run the AC on a hot day the grid struggles. So the grid investment won’t go unused if AI implodes.

Also, it’s mostly not R&D either. It’s infrastructure buildout for a thing that doesn’t have a demonstrated business case that actually pays for all the infrastructure.

There remains a scary small amount of truly new money coming into this circular flow between VCs, chip makers, startups, datacenters and such. At some point there needs to be a $hit ton of new cash coming in from the outside to actually pay for all this and that’s not materializing.

Theres “big bets” and then there’s heavily leveraged bet the farm with leveraged debt. The first one hurts when it pops. The second one wipes people out.

This is going to be a “let it burn” scenario that will be absorbed by VCs and private credit markets.

Remember too though that even if a bailout does occur investors typically get wiped out. The companies live on but the investors and employee equity typically get reset to zero.

Folks are leaning it’s like these LED light bulbs that say they’ll last 15 years but after 2 years they start flaking out at a high rate.

Separately, the broader point is still directionally correct. We’re still using fiber from the .com network infra implosion today and will for a long time. The deprecation cycle is incredibly long. The increasing reports of GPUs sitting on shelves because there aren’t data center to power them is very concerning considering all the high interest debt being used to buy what is ultimately a rapidly depreciating asset. Financially, that’s a disaster waiting to happen.

This is the PE playbook backfiring. Buy the company, load it up with debt, pillage every dollar that can be found, then try to pass it off to some unsuspecting schmuck by convincing them the company still has value. That works unless interest rates skyrocket mid flight and you have to renew the debt, then you’re royally f$&!ked.

If these PE firms are truly the business geniuses they claim to just run the companies they bought well and weather the storm. However I think we’re about to find out real quick who is actually good at business and who was just shuffling cheap leveraged money around trying to look important and smart.

All indications are the models are increasingly worth less and less and rapidly approaching zero. Even worse, everyone is rapidly shifting to “router” architecture where they switch models constantly. LLMs are perhaps the least sticky product in the history of tech.

The only money to be made is selling compute to run models on. The only real out I see for Anthropic is if somehow compute becomes so constrained that they can flip to sell all their committed compute at a markup to run commodity models. Absent something like that it would appear they don’t have a viable business plan. As many have been pointing out, they casually left Q3 off their charts. Put that back in and suddenly the charts look very worrisome.

GAAP isn’t perfect, but it exists for a reason.

Similarly nobody is saying AI can’t be a successful business, but here too the big labs have dug themselves into a giant hole such that a bankruptcy reset may ultimately be the only way out of it. Time will tell.

However the price of CDS on bonds is already a strong market indication of where the market thinks all of this is heading. And none of that looks good if you’re betting on the AI exuberance continuing.

If everything goes just perfect they might eek by. If it doesn’t this goes from high flying startup to insolvency and bankruptcy real fast.

In the short term they have to slash prices to avoid losing market share. In the longer term they need to figure this out as the present path simply isn’t sustainable.

2027 is going to be very interesting. Buckle up.

So I would agree that this is bringing more of this to light, but the idea that unknown exploitable bugs can get weaponized being a new thing is naive.

If anything putting all this out in the open makes things more secure, not less, in the long run as it’s harder for hackers to know and exploit them before they’re known as they don’t survive undetected for long. So a bit painful in the short term but we get more secure infra in the long term.

Still not a reason to give Sam regulatory capture as an out to saving OpenAI.

Please regulate us, now! If we don’t get regulatory capture ASAP I’m toast. I mean look man I just had to go beg for tens of billions more cash so I can keep the lights on and my IPO is looking more and more screwed every day. Please, I’m begging you. What more do I need to say to convince you?

Absolute car crash interview that eventually led the board firing him.

It opens with the statement “As it nears 100, is the world’s most illustrious consultancy past its prime?” and cited poor performance associated with its advisors. So your “citation” isn’t really helping the point you’re trying to make.

The former Starbucks CEO is a classic example. His infamous interview with Cramer on CNBC is the textbook of what it looks like when some McKinsey consultant gets actually put in charge. It was a total shitshow.

Likely succeeded at pontificating to CEOs via PPT, but actually being CEO? Not so much.

This incident separately raises deep questions about the competency of the company to do much of anything in the security or compliance space.

It’s ultimately an issue of consistency. If I book with a name brand hotel I have some comfort knowing they have corporate standards that tend to be enforced consistently across properties. If a Hilton, Marriott etc hotel has issues it tends to get dealt with quickly because those brands know consistency is their brand. In extreme cases they will kick hotels out of their brand. That randomly named hotel that used to be a brand name was likely kicked out of the portfolio for compliance issues.

With an AirBnb it’s a total crapshoot. Sometimes it’s totally fine, other times you’d end up in the dirty lair of a psychopath.