If You Thought Inflation was Over, Think Again
Evidently AI is into everything these days including screwing with the economy
I’m more than surprised that I actually have subscribers after one puny post. Thanks to every one of you. As I’m just starting out on what I hope with be a long and fun voyage, I need all the feedback I can take. The second edition features lots of AI but my intention is not to always focus on it despite it’s ubiquity. This week I will hopefully release my first feature post on Cybersecurity as well as to convert to my own domain: Lemonade.report.
By the way I use Apple News as a source for all the articles I read. There is no marketing affiliate relationship, I just like it.
The Headliner: Bank of Canada dips into AI waters
So the conservative boss, Tiff Macklem, of one of the most conservative central banks in the world is predicting that AI “could add to price pressures in the short term by boosting demand, even though its full effects would not be visible any time soon.” So should we worried about more inflation given the impeccable nature of the source.
Of course we know that huge capital expenditures have been expended, particularly on the hardware powering AI (as a shareholder of NVDA I have been a beneficiary). Several Wall Street and Consulting Firm studies have focused on the uncertainty in the timing and the size of the profits….er, they meant productivity improvements.
Still this seems a very unusual viewpoint for Macklem to take. His comments were many and varied. It was if he was discussing the spectre of AI with some work colleagues over libations after work and the session accidentally got recorded and released to the public. He talked about central bankers needing to better understand the effects of AI on the economy, that the Bank of Canada are using AI internally for predictions, and that AI could cause more volatility in inflation in the future than we have en in past 25 years. In the end I decided not to get too worried. Likely he saw all the attention generated by any topic about AI and wanted to ensure a BoC press release that was not on interest rates was picked up.
Secondi
One more reason that Nvidia will keep going up
In the vernacular, more use cases are being found for the immensely popular GPU chips. It may be a very small trend right now, but we all know what can happen with celebrity and fashion. Telsa’s start is a testament to the power of rich people overpaying for a luxury. Well now the same is happening for Nvidia.
Tessa Barton - a clear uber-stan of all things AI and Nvidia - has starting making luxury purses based on the company’s chips. Although she has only made and sold 10 so far, she is gearing up for success with forthcoming features improvements, a Shopify site, and then venerable H100 chips to be the next step up as a base for the purses. They sell for a cool $1024 (get it) and she has a backlog of demand from “high profile celebrities”. The purses take 2 hours to make and the price of the major input, chips, is pretty high. But I’m pretty sure that like the chips themselves, the demand for these purses will be very inelastic meaning price hikes are in sight. This should be another worry to the bearish NVDA short sellers.
The Rage
A Dirty Underbelly of AI
There are so many disturbing aspects in this disjointed article in the Wall Street Journal I hardly know where to begin. A verbose amount of Silicon Valley entrepreneur corn1, the ridiculous inflated valuation of any business that is in AI, and the veneration of the rich tech executive celebrity lifestyle. Jet setting contrasts nicely with many of the worst aspects of the Gig economy spelled out in the article, especially in lesser developed countries.
But my main focus is on the rapid mobilization of all types of resource – in this case droves of human beings – to keep shovelling inputs to feed the insatiable AI beast. It is never-ending because as a society we must be completely focused on the next big thing, especially when this could be the biggest of all things.
Most people fooling around at work or at home delighting in their inchoate use of AI will not know about this sweatshop environment required to support their wonder at this novel technology. Cutely calling this work data labelling, it involves getting people to
“type out the stories, label the images, and craft the sentences that furnish chatbots with the text they need to better understand human speech patterns”.
So basically using humans to feed a technology creation which will likely displace many human endeavours. Hmm?
This company, Scale AI, employs some nefarious recruiting and people management techniques, including disguising what is actually happening from its contractors who are dropped as quickly as they are hired when the tech wins blow cold. It feels like a business the CIA would run, complete with operation names out of a Netflix spy series. Remember kiddies every new trend that posits social good has a creepy basement hiding somewhere .
Small Bytes
Are we please reaching peak AI Hype?
You know that we are well into the AI hype cycle when Entrepreneur magazine dedicated key parts of their entire summer issue to AI. Here are some of the most important things I learned.
That a large number of consultants are quickly jumping right in with both feet and putting together their shiny new service offerings. This is from the “I’m 5 minutes in front of you but I’m now an expert so please buy me” business model.
That there are 20 AI tools proven by real entrepreneurs that you should be using in your business. This happens everytime a new class of software emerges where listicles are popping up everywhere on the 55 content management tools you must master or my favorite, 101 new productivity tools for you. As a 3 time serial entrepreneur mostly in IT, my belief is that if you spend very much time on these “legitimately useful” AI tools your business will suffer.
“Finally, Personal assistants are here!”, says one article’s title. An assistant that does absolutely everything, like for your complex travel plans. Well reading further you learn that they actually aren’t here (another Hmm) and are likely some years off. You are still on your own doing the donkey work getting refunds from airlines. But wait….. then we learn there are agents now but “they’re expensive and relatively unreliable. ” This is the kind of article I wonder why it was written. But it did make me think: can the 3rd generation SalesForce Agent be my travel agent? Let’s see.
Follow-up
Extreme Hyberbole about AI is Normal Now (Salesforce Redux)
I reported last week on Salesforce’s 3rd generation Agentic AI. At Dreamforce the visionary rhetoric was off the charts.
“We’re moving way faster than Moore’s Law, are arguably reasonably Moore’s Law squared” said Nvidia CEO Jensen Huang.
For neophytes to this party, Moore’s Law is named after one of the original Silicon Valley builders, Gordon Moore, who observed the the number of transistors included on one chip was doubling about every 2 years. For the layperson that is where all the speed comes from so that we can now seamlessly download mindless TikToks on small handhelds nearly anywhere. But squared? Now I took my fair share of math at university but what does that even mean?
Another modest remark from Jensen (who also claimed in the chat to be humble): “We’re going to supercharge the ever-loving daylights of our company.” How’s that for setting reasonable expectations for customers and investors alike. He and Marc Benioff ,the Uber CEO of Salesforce, agreed that adoption needs to be demystified for the average person. Which is why they use common everyday expressions like flywheel zone, agentic, guardrailing, multimodel data, and label at scale. I’ll believe more in AI agents when one can actually express this gobblydegoop in a straightforward manner that actually means something. I’d call this agent
GEORGE ORWELL.
Many people call it Entrepreneur Porn but I think it is more accurate to call it out as old fashioned snake oil cornpone. One of the directions I will be taking in my writing is about the Entrepreneurship in a newsletter called Trupreneur. Part of it will be about dispelling the myths that Silicon Valley has created about new business creation.