Generative AI Is Not A Real Industry

And that bothers me a great deal. Listen to the episode again if you want to really understand why. But let's start this one with a very very simple question. Is generative AI a real industry? Look, the large language model paradigm is yet to produce a successful mass market product, and no, large language models are not a success, nor are they mass market. I know you're gonna say chat GPT is huge. We've already been through that. I just

talked about that. But surely, surely, right like, it wouldn't just be open Ai, right like, we've been through this. But if generative AI was a real industry, there'd be multiple other players with massive customer bases as a result of how revolutionary it was, right, like at least close, right, maybe like half the size, a quarter of the size, right right, wrong, wrong, so wrong, so very wrong, so fucking wrong. It boils my blood. It makes me scared

for the future, for the market for Silicon Valley. The venture capitalists are so fucking wrong, and so are the hyperscalers. Wrong, wrong, wrong. Let's look at some estimated numbers that I got from data intelligence firm Center Tower, and that's referring to these monthly active users on apps and similar web which is just unique monthly active visitors to websites. And this is for the biggest players in AI in January twenty twenty five. And I must be clear, the following really fucked me

up a little. So open AI's chatgpt had three hundred and thirty nine million active users on chat GPT's app and two hundred and forty six million unique monthly visitors to chatgpt dot com in January twenty twenty five. Pretty good, right, One would assume that everybody else, especially the hyperscalers, they'd be pretty close behind. Right, They've got way more money, They've got a ton of advertising, and one would be

wrong Google Gemini. Google's Gemini had a pathetic eighteen million monthly active users on the Gemini app and a mere forty seven point three million unique monthly users on their website. For COMPARISONCNN dot com has over one hundred and fifty million unique monthly visitors and did not require purchasing billions of dollars of GPUs. Nevertheless, though, Microsoft, who funds open Ai, they wouldn't have blown this right. They wouldn't have got a tiny amount of US right. Wrong, so very wrong.

Microsoft Copilot had an embarrassing eleven million monthly active users on the Copilot app and fifteen point six million unique monthly users visitors. I mean to copilot dot Microsoft dot com. They had a fucking Super Bowl commercial a year ago. Man, what the hell? These are terrible numbers for a company with a market capitalization of three trillion dollars that spent over seventy five billion dollars on capital expenditures in twenty twenty four. But you know what, maybe it's just that

big tech hasn't worked it out. The plucky start of the Silicon Valley must have, right. I mean, we've all heard about perplexity. They seem to be giving away pro accounts all the time. They're pretty big, right, they must be wrong. They had an abominable eight million monthly active users on their app in January and a poultry ten point six million unique monthly visitors to perplexity dot ai. This company's raised six hundred and sixty five million dollars.

They have a multi billion dollar valuation. This is absolutely fucking pathetic. What are we doing here? But you know, maybe I'm just being a sour pus. Maybe I'm just being just being a hater. You know, I sit in my hates thrown and I hate it. I'm like, ooh, I hate the company so much. Right, that's it. It's bias. Obviously, there's one hulking Juggernau I've been leaving out and I

would never ever ever leave them out. Because Anthropic has raised fourteen point seven billion dollars, one would assume with all this money, with all of the press attention, all of the people saying that Warrio Ami Day, sorry, Dario Ami Day, will have Agi in twenty twenty seven around there, right, they'd be huge. They must be huge. They must be huge,

right right? Right then, So flipping wrong. Anthropics Claude had I a shit you not two million monthly active users on the claud app and eight point two million unique monthly visitors the Claude the AI and that's the web based version of their app. These numbers are absolutely abominable. They're trash, they're garbage. Anyone's saying that Anthropic as a real product is talking out of their asshole. I'll get

to API calls later, don't you worry. But it's time to wake up and stop yammering about these companies like they're building the future or have any real product market fit. What a goddamn joke. I am furious. Getting these numbers pissed me off so much. I have had these chonder fucks telling me, oh Ed, you have no idea how big this is? Oh Ed, They're tiny. This is so small. I know. I said it'd be calm. I said it'd

be calm. But when you spend two years having people calling you a hater and a cynic at, a pessimist and a pig and a dog and they spray you at their hoses, you get a little angry about this stuff. And also, why is nobody I'm a pr guy who does a podcast and a newslre why am I the

person to say it? But what's really funny is that the recently emerged deep Seak had twenty seven million monthly active users on the deep seak Act app and seventy nine point nine million unique monthly visitors to deepseak dot com in January. This figure, by the way, doesn't capture deep Seak's China based users, who at least on mobile access the app through a variety of different marketplaces. From what I can tell, the deep Seak Act app I keep speaking like Kathy, I guess, but I'm gonna keep

this going. We don't need to edit that the app has nearly ten million downloads on the Vivo Store, which is just one of the different Android app marketplaces serving mainline China. It's not even one of the biggest. But for the sake of simplicity, assume that all of these numbers refer to those outside of China, where most, if not all, of the Western made chatbots are blocked by the Great Firewall. But let me put this all into perspective.

The entire combined monthly active users of Microsoft Copilot, Claude Gemini, Deep Seek, and it perplexitis apps amount to sixty six million monthly active users, or nineteen point four to seven percent of the entire monthly active users of chat GPT's

mobile app. Web traffic slightly improves things, I say sarcastically, with one hundred and sixty one million unique monthly visitors that visited the websites for Copilot, Claude, Gemini, Deep Seek, and Perplexity making up sixty five point sixty nine percent of all the traffic that went to chatgpt dot com. However, I'd argue that including deep Seek vastly overinflates these numbers. They're an outlier, and they're also relatively new, and they've enjoyed a big moment in the media, so we can

leave them out for a second. Without deep Sea, Copilot, Claude, Gemini, and Perplexity made up a total of thirty nine million monthly active users across their apps, and a grand total of eighty one point seven million unique monthly visitors Without chat gpt, it appears that the entire general IVAI app market is a little more than half the size of Pokemon Goo its peak, which had around one hundred and forty seven million monthly active users. Though this number is

kind of hard to chase down. I've heard two hundred million. Nevertheless, even if it was one hundred million, it would still be more. And while one can say I missed a few apps xais, Grock and Mason's rufirst character Ai, there isn't really a chance in hell they cover the shortfall.

These numbers aren't simply pissed poor. They're a sign that the market for general ivai is incredibly small, and based on the fact that every single one of these apps only loses money, they're actively harmful to their respective investors or owners. I do not think this is a real industry, and I believe that if we pulled the plug on the venture capital aspect tomorrow, it would die. It would

die within a month, maybe two. But let's talk about API course, and this is when companies plug their apps into open AIS models, anthropics models, Google's models, any company's models to power some sort of supposedly amazing Generalivai feature. And the counter I hear a lot is that these API calls are a kind of hidden adoption, that there's this massive swell of engaged, happy customers using Genera ivai.

They're just not using it on any of the major apps, and the connection to these models that that's the real success story here, because people are adopting general ivai, they're just doing it through other apps. This isn't the case. Open Ai, as I've established, is the largest player in general ivai, making more revenue roughly four billion dollars in twenty twenty four, though they lost five billion dollars after revenue again open ai lost. They spent nine billion dollars

in twenty twenty four to lose five billion dollars. Anyway, they still made more than everyone else in every other private AI company. The closest I can get to an estimate on how many actual developers integrate their applications through open Ai is a statement from open ai from October twenty twenty four's dev Day, where they said they had over three million developers building apps using open AI's models.

And as I've discussed in the past, open AI's revenue is heavily weighted towards its subscription business, with licensing access to its models like GPT four to O making up less than thirty percent around a billion dollars of their revenue, and subscriptions to their premium products like chech, GPD plus teams, business, pro government and so on make up the majority, around three billion dollars in twenty twenty four. My argument's fairly simple.

Open ai is the most well known player in GENERITIAI, and thus we can extrapolate from it to draw conclusions about the wider industry. In the event that there was a huge, meaningful industry integrating generative AI into distinct products with mass market consumer adoption, open AI's API business would be doing far, far more revenue. But let's get a

little more specific about what an API call is. When a business plugs open AI's models or any other GENERATIVEAI companies models into their apps and the customer triggers one, such as just asking the app to summarize an email, open ai charges the business both for the prompt, which is the input, and the result, which is the output. As a result, where weekly active users might be indicative of attention to open AI's products, API calls are farm

more more indicative consumer and enterprise adoption and usage. In fact, to be clear, I acknowledge that there are a lot, a non specific amount, but a fair amount of app

developers and companies adopting GENERATIVEAI. However, judging on the revenue both from open AI's developer focused business and the lack of any real revenue for any business integrating GENERATIVAI, I hypothesize that customers, which include developers integrating open AI's models into both consumer facing apps and enterprise focused apps, are

not actually using these features that much. I should add the open ai makes about two hundred million dollars a year selling their models through Microsoft, meaning that their API business may be as small as eight hundred million dollars. Again, this is not profit, its revenue. Before we go forward, there is also an alternative open ai is charging way, way, way less for their models than they should, which is an argument I made in the subprime AI crisis last year.

But accepting this argument means that at some point open ai will have to become profitable, which they've shown no signs of doing so, or they're going to have to charge the action costs of running their unprofitable models. Do you not see the problem there? If they have to raise all the prices for this thing that people aren't really using, why would they keep it? But you're wondering, probably how bad is this for anthropic It's pretty disastrous.

The Information reported recently that Anthropic was projected, and I should be clear this means made up, that they will make at least twelve billion dollars in revenue in twenty twenty seven, despite the fact they only made around nine hundred million dollars in twenty twenty four and lost five

point six billion dollars. Somehow, Anthropic is currently raising two billion dollars at a sixty billion dollar valuation for a business that loses billions of dollars a year, with an app within in store base of two million people and a web present smaller than that of a niche hobbyist news outlet. The Information also adds and CNBC reports as well that sixty to seventy five percent of that revenue came from API course, though this number is from September

twenty twenty four. So what they're making most of their money from people integrating it, and they're making what a few hundred million dollar dollars and it costs them billions of dollars to serve this small customer base. This company

is not worth sixty billion dollars. Anthropic has raised fourteen point seven billion dollars to create an also ran large language model company that some people like more than open Ai, with a competing consumer facing large language model called Claude that has an install base of maybe two percent of the five free to play games made by Clash of

Clans develop a super cell. Anthropic, much like open Ai, has categorically failed to productize its large language model, but the only product it appears to have pushed being computer use, which is like operator by open Ai, and it's similarly useless, and it can sometimes successfully do in minutes what would only take you a few seconds with your hands. Anthropic,

like OpenAI, also has no mote. While they have, they've got kind of chain of thought reasoning in their models that has been, as I mentioned, commoditized by deep Seek. Its models, again like OpenAI, are totally unprofitable. They're unsustainable and heavily dependent on training data that has either run

out or is running out. Anthropic CEO Dario ami Day is also a sleazy con man who, like Sam Mortmon, continually promises that his company's AI systems will become powerful and autonomous in a way that they've never shown they have any possibility of becoming. He loves talking about AGI. He's just like Sam Mortmon, He's just as big a conman. Fuck Dario ama Day. Any investor in Anthropic needs to

seriously consider what it is they're investing in. Anthropic has, other than iterating on its large language model, claud shown little fundamental differentiation from the rest of the industry. Anthropics business, again, like OpenAI, is entirely propped up by venture capital and hyperscalar dollars Google and Amazon in this case, and without them it would absolutely die almost immediately because they have

only ever lost money. Anthropics products are both unpopular and commoditized, and they lost five point six billion dollars last year. Stop dancing around this fact, stop it. Stop doing this. We need to stop. If you remember of the media writing about this, listening to this, I need you to fucking stop. We by not reporting this every article, it's journalistic malpractice. These companies will die. How can you not see this? Let's talk about perplexity, and my general view

on perplexity is who gives a shit? Who cares perplexity? A company valued at nine billion dollars towards the end of twenty twenty four has eight million people a month using its app, but the Financial Times reporting that they have a grand total of fifteen million monthly active users

for an unprofitable search engine. Perplexity, like every Generativai company, only ever loses money, and its product, Generaivai powered search is so commoditized that it's actually remarkable that they still exist. I mean, they're bigger than Anthropic. That's crazy. Other than the slick design, there's little to be excited about here, and eight million monthly active users is pathetic. It's embarrassing, deeply embarrassing for a company with the majority of its

users on mobile aravins. Rivinus is a desperate man with questionable intent that made a half hearted attempt to merge with TikTok in January. Really funny bother, It's like, hey, I have a really shitty company that loses a bunch of money. Can I merge with your beloved app for some reason? Like you need to do this. Also, their product rips off journalists. By the way, they had a whole thing for so they were just ripping fucking content.

Did it with Business Insider two. It's disgusting, But any investor in Perplexity needs to ask themselves, what is it I'm investing in an unprofitable search engine, an unprofitable large language model company, A company that has such poor adoption of its product that was prepared to become the shell corporation for TikTok. Hmmm, Personally, I'd be concerned about the

bullshit numbers they keep making up. The information reported to Perplexity said they'd make one hundred and twenty seven million dollars in twenty twenty five and six hundred and fifty six million dollars in twenty twenty six. How much money did it make in twenty twenty four just over fifty six million dollars. Is it profitable?

just disgusted reading these numbers. Jokeified me one hundred times. I didn't even need to put on the joker makeup. It just appeared on my skin naturally. I'm currently high kicking around this sound cube I record everything in. But really all of this is far more apocalyptic for the hyperscalers.

The Wall Street Journal reports that Microsoft intends to spend ninety three point seven billion dollars in capital expenditures in twenty twenty five, or roughly eighty five hundred and eighteen dollars per monthly active user of the co Pilot app in January twenty twenty five. Google is planning to spend seventy five billion dollars on capital expenditures in twenty twenty five, or roughly foury one hundred and sixty seven per monthly active user of the Gemini app in January twenty twenty five.

Sundhapashai wants Gemini to be used by five hundred million people before the end of twenty twenty five, and number five so unrealistic that someone at Google should be fired, and that someone is sunned up as shy. The fact of the matter is that if Google and Microsoft can't make generative AI apps work, if they can't get meaningful consumer penetration. This entire industry is screwed. There really are no optimistic ways to look at these numbers, and yes

I'm repeating myself. Microsoft Copilot had eleven million monthly active users on the Copilot app and fifteen point six million unique monthly visitors the coopilot dot Microsoft dot com. Google Gemini had eighty million monthly active users on the Gemini app and forty seven point three million unique monthly users

visitors even to their website. These are utterly pathetic considering Microsoft and Google scale, especially given the latters complete dominance over Google Search and web search in general, and the ability to funnel customers to Gemini for millions, perhaps billions, Google is the first page that they see when they

open a web browser. Google should be owning this by now. Look, forty seven point three million unique monthly visitors is a lot of people, But considering that Google spent five fifty two zero point five four billion dollars in capital expenditures in twenty twenty four, it's hard to see whether return is or even whether a tone could be. Google, like

most companies, does not break out revenue from AI. Just to be clear, if they were doing well, they would, though they do love to say stuff like a strong quarter was driven by our leadership in AI and momentum across the business, which means nothing. By the way that shit is made for journalisticy and go oh, that means they're making money in AI. When a company's making money

in something, they'll tell you directly. And as a result of its unwillingness to share hard numbers, all we have to look at are numbers like those that received from similar webons Centre Tower, and it's fair to suggest that Gemini and its associated products have been a complete flop.

We're still Google spent one hundred and twenty seven point five four billion dollars in capital expenditures in twenty twenty three and twenty twenty four, combined with an estimated seventy five billion like I said for twenty twenty five, what the fuck is going on? Yes, Google is likely making revenue from people running generally AIM and Google Cloud, and yes they're likely making money from forcing AI onto Google Workspace customers by raising the prices and saying you get

this for quote free. But Google, like every single other general IVAI company, is losing money on every single general IVAI prompt, and based on these monthly active user numbers, nobody really cares about Gemini at all. Actually, I take that back. Some people care about Gemini. Not that many, but some. And it's far more fair to say that nobody cares about Microsoft Copilot, despite Microsoft shoving it in

every corner of our lives. Eleven million monthly active users for its unprofitable, heavily commoditized large language model app is a joke, as are the fifteen point six million monthly active users for its web presents, probably because it does exactly the same shit that every other LMM does, and if one knows it's powered by chet GPT, it's just it's remarkable. Microsoft's copil app isn't just unpopular, it's irrelevant.

For comparison, Microsoft Teams has, according to a post for Microsoft from the end of twenty twenty three, over three hundred and twenty million months active users. That's more than ten times the amount of monthly active users of the Copilot app in January twenty twenty five, and the Copilot website combined, and unlike Copilot teams, makes Microsoft money now. I obviously don't have the numbers on people that accidentally click the Copilot button in Microsoft Office or bing dot com.

But I do know that Microsoft isn't making much money on AI at all. Microsoft reported in its last earnings that it was making thirteen billion dollars of annual revenue, a projected number based on current contracts versus booked money. And this was on their artificial intelligence products. Now I've made this point again and again and again, and I'm going to keep making it. But revenue is not the same thing as profit, and Microsoft does not have an

artificial intelligence part of its earnings breakdowns. These numbers are cherry picked from across the entire suite of Microsoft products, such as selling Copilot add ons to their Microsoft three sixty five enter price suite. And by the way, The Information reported in September twenty twenty four that Microsoft had only sold Copilot to around one percent of their customers

buying three sixty five. They also make it selling access to open AIS models on this roughly a billion dollars in revenue, and people running their own models, and the zore cloud, Microsoft's cloud compute platform for context. By the way, Microsoft made sixty nine point sixty three billion dollars in revenue in its last quarter, thirteen billion dollars of annual revenue not profit, is about three point twenty five billion dollars in quarterly revenue off of upwards of two hundred

billion dollars of capital expenditure since twenty twenty three. The fact that neither Gemini nor Copilot has any meaningful consumer penetration isn't just a joke. It should be sending alarm bells through Wall Street. While Microsoft and Google may make money outside of consumer software, both companies have desperately tried to cram Copilot and Gemini down consumer's throats, and they have categorically unquestionably failed or while burning billions of dollars

to do so. But ed ed, what about get hubcopilot? All right, let's talk about git hub coopilot, shall we. According to a report from The Wall Street Journal from October twenty twenty three, Microsoft was losing an average of more than twenty dollars a month per user on the paid of gitthub copilot, what with some users costing them

more than eighty dollars a month. Jesus christ. Microsoft said a year later that gethub copilot had one point eight million paid subscribers, which is pretty good, except like all generativio products, it loses money. Like I just bloody said, I must repeat that Microsoft will have spent over two hundred billion dollars in capital expenditures by the end of twenty twenty five. In return, Microsoft got one point eight million paying customers for a product that, like everything else

I'm talking about, is heavily commoditized. Basically, every LM can generate code that some are better than others, by which I mean they all introduced security issues into your code. But nevertheless, and somehow, Microsoft loses money even when the users use it paid. Am I getting through to you yet? Is this working? If you are working for a hedge fund and investment bank or anyone like that, please get in touch. I will protect your identity. Is anyone around

you freaking out because they should be? They should be. Man, I'm freaking out a little, and I just keep all my money in a big box under my bed. I don't

have that I do anyway, not going to do that. Jug. So, one of the arguments people make is that AI is everywhere, But it's important to remember that the prevalence of AI you seeing it in different apps, is not proof of its adoption, but the intent of companies to shove it into everything, And the same goes for businesses integrating AI that are really just mandating people dick around with Copilot or chat GPT and I'm really not kidding, no really.

KPMG bought forty seven thousand Microsoft Copilot subscriptions last year, a significant discount to be familiar with any AI questions their customers may have. Management consultancy PwC bought one hundred thousand enterprise subscriptions, becoming open AI's largest customer in the process, as well as their first reseller, and have created their own internal generative AI called Chach PwC. The PWSC stuff as absolutely hate. It's really cool that when you actually

talk to the users, they just fucking hate it. And while you may see AI everywhere, integrations of generative AI are indicative more of the decision making of the management behind the platforms and the demands of the market more than any consumer demand. Enterprise software is more often than not sold in bolt to managers or c suite executive tasks, less with company operations and messy things like doing staff for making sure the company runs, more with seeming on

the forefront of technology. In practical terms, this means that there is a lot of demand to put AI in stuff, and some demand to buy stuff with AI on it by enterprise buying software, but little evidence that this actually leads the significant user adoption or usage. I'd argue this is because large language models do not really lend themselves

to features that would provide meaningful business returns. And I think everyone can agree on that, Like there are things like summarizing emails, which I'll get to get to that in a second. Look. In fact, let's do it now. Let's briefly talk about where large language models work, where they are actually good. And some of you are not going to love this, but I know there's one of you is that yes, yes, now I will get ahead.

I've got him now, I have him in my sights, to be clear, And this is really dealing with the am actually responses. I'm not saying and really have never meant to say that large language models have no use cases or no customers. People really do use them. They use them for coding, for searching defined libraries of documents, for generating draft materials, for brainstorming, for summarizing and searching documents,

These are useful, but they're not magical. They're cool, but that's about it, and their coolness or usefulness is a tiny little ant compared to the costs and stealing from millions of people and damaging our power grid in our planet. Okay, okay, so you're probably wondering. I brought it up earlier. Agents. You've heard about agents. Mark Benioff wankin Off about agents. Sam Allman talking about agents. They loved, They loved talking about agents, right, they love saying agents of the future.

When a company uses the term agent, they're intentionally trying to be deceitful, because the term agent means autonomous AI that does stuff without you touching. It goes off and does things for you with one command, and it knows what to do. Remember, these models don't know anything. The problem this definition is that everybody has used it to refer to what is actually a chatbot that can do some things while connected to a database, which I would

regularly called a chatbot personally. In open AI and anthropics case, agents refer to a model that controls the computer. This is closer to the truth other than the fact that their agents are so unreliable as to be disqualifying, and the tasks they succeed at, like searching trip advisor, are very simple and did not need automating. Next time you hear the agent actually look at what the product does,

and maybe you flick a booger at the person. But Ed, Ed, you just burst into my door and having a nice diet coke and you're in my house. What are you doing here?

does not make decisions. They are probability machines, which in turn makes them own only as reliable as probability can be and as conscious no matter how intricate the system may be or how much infrastructure is built. As a pair of dice, we do not understand how human intelligence works, and as a result, it's completely laughable to imagine we'd be able to simulate it. Large language models do not

create or resemble, or they're not artificial intelligence. They are at most the most powerful parrot in the world, trained to respond to stimulus with what they guess is the correct answer, and they're pretty good at it. They're pretty good. Right, It's pretty cool, except we shouldn't be burning hundreds of billions of dollars to make them slightly better at this.

Let me put it in simpler terms. Imagine if you made a machine that threw a bouncy ball down a hallway and it was really really you got really good at dialing in to throw the ball so that it followed a fairly exact trajectory. Would you think the arm was intelligent? Would you think the ball was intelligent? Would you think that the ability to precisely do something or more reliably do something would make it smart. The point I'm making about large language models is that they're a

cool concept with some interesting things they can do. But they've been used as a cynical marketing vehicle to raise money for open AI by lying about what they're capable of doing, starting with calling them artificial intelligence. All right, really, though, at this point, I need to ask a very fucking simple question. Where is the goddamn money? Where is the goddamn money? Where's the money? Sammy, Sammy, give me the money. Where's the money? Money me money now? Sam Mortman, where

is the money? Dario Ama Day, where's the money? Satya Nadella, where's the money? Summed up Ashai? Where's the money? Mark Benioff, where's the money? Where is the goddamn money? Because revenue is not the same as profit, I will say it again, revenue is not the same as profit. And even then, Google, Amazon, and to an extent, Microsoft, the company's making the most investments in AI, do not want to state what the

revenue is on AI. I hypothesize the reason that they do not want to disclose it is that it's pretty goddamn small. It is extremely worrying that so few companies are willing to directly disclose their revenue from selling services that are allegedly revolutionary. Why Salesforce says they close two hundred AI related deals in their last earnings. How much money did they make? Why does Google get away with saying that they have growing demand for AI and nothing else?

Is it? Because nobody's making that much money. As a sidebar, I can find and I've really really looked like one company that appears to be making profit from genera ivai during a consultancy that helps generaivai companies find people to train their models. That made three hundred million dollars in revenue in twenty twenty four and reach an indeterminate amount

of profitability. We don't know if it was like a million dollars or not, while Microsoft may disclose it made thirteen million dollars in AI revenue that's annualized, so projected based on current contracts rather than actual money in accounts, and does not speak to the specific line items like one would say. If said line items, we're not going

to make. The market say, hey, what the fuck? Put aside whatever fantastical beliefs you may have about the future, and tell me right now what business use case exists that justifies burning hundreds of billions of dollars, damaging our power grid, hurting our planet, and stealing from millions of people to train these models. Even if you can put troublesome things like morals or the basic principles of finance aside, can AI evangelists not see that their dream is failing.

Can they not see that nothing is really happening, That general ivai at best can be kind of cool, yet mostly sucks and comes at this unbearable moral, financial, and environmental cost. Is any of this really worth it? And where exactly does this end? Do you AI evangelist gone to your head, your life contingent on the truth, leaving your lips believe that this goes much further than you see today? Do not know if these AI people see

that this kind of sucks? Do they not see that general ifai runs contrary to the basic tenets of what makes science fiction call It doesn't make humans better. It reduces their work to a stagnant, unremarkable slop in every way it can, and reduces the cognition of those who come to rely on it, And it costs hundreds of billions of dollars and a return to fossil fuels. For some fucking reason, it isn't working. The users aren't there,

the revenue isn't there. The best time to stop this was two years ago, and the next best time to stop is as soon as humanly possible. Generatifai is a group delusion, its own kind of real life hallucination. What you're seeing in the news is not the success of the artificial intelligence industry, but a runaway narrative created by and sustained by Sam Altman, Open Ai, Dario Amadee, and

of course satch In Nedella these fucking people. What you're watching is not a revolution but a repetitious public relations campaign for one company that accidentally time the launch of chat GBT with a period of deep desperation in big tech, one so profound that it will likely drag half a trillion dollars worth of capital expenditures along with it. The bubble will only burst when either the markets or the hyperscalers accept that they've chased their own tales toward oblivion.

There is no justification for any of the capital expenditures related to generative AI. We are approaching the limit of what transformer based architecture can do, if we haven't already reached it. No amount of beating off about test time, compute, and connecting large language models to other large language models is going to create a new use case for this technology, and even if it did, it's unlikely that it ever makes enough money to make it profitable. I will keep

talking about this stuff until I'm proven wrong. I do not know why more people aren't more worried about this. The financials are truly damning. The user numbers are so small as to be insignificant. The costs are so ruinous that they will likely cost tens of thousands of people their jobs, and one of the hyperscalar CEOs their job along with it, although admittedly I'm a lot less upset

about that. And they're going to inflict damage on tech valuations that may well rival the dot com boom or worse. And if the last point feels distant to you, ask yourself, what's in your retirement savings? That's right, Google, Microsoft, and hundreds of other companies that will be hurt by the contagion of an aiding. I should also not be the person saying this, or at least I shouldn't be one of the first. These numbers are horrifying, and I have

no idea why nobody else is worried. There's no industry here, there is no money. There's no proof that this will ever turn into a real industry, and far more proof that it will cost more money than it will ever make. Im perpetuity open AI and anthropic are not real companies. They're freeloaders living on venture backed welfare for an indeterminate

amount of time. Because the entire tech industry has agreed to rally around the world's most unprofitable software, and, like any other free ride that doesn't actually produce anything, when the money goes away, they're fucked. Seriously, why are investors funding open Ai? Do they seriously believe it's necessary to let Sam Altman and open Ai continue to burn five or more billion dollars a year on the off chance he's able to create something that's alive. This motherfucker can't

create something that's profitable. What's the end point here? How many more billions? Where's the fucking money? Sammy? Where is it? Sam Moorman? Where's my god damn money? Where's my money? Sam?

I say all this because generativeai is open Ai. The consumer adoption of this software is completely failed, and it's going nowhere fast Chat GPT is sustained entirely on deranged, specious hype drummed up by a media industry that thinks it's more remarkable to write down the last lie that Sam Moltman told than say that open ai has lost nine billion dollars in the last year to Sorry, they spent nine billion dollars to lose five billion dollars in

last year, and they intend to more than double that number in twenty twenty five for absolutely no reason. Look, look, it's time to stop humoring open ai and time to stop directly stating that it is a bad business without a meaningful product. We also really need to be clear that the generative AI industry does not really exist without open Ai, and thus this company must justify its existence. And let's be abundantly clear, open Ai cannot exist any

further without further venture capital investment. This company has absolutely no path to sustain in itself, no mode, and loses so much money that it will need more than fifty billion dollars to continue in its current form in the next year. I don't know how I'm wrong, and I've sat and thought through and researched a great deal on how I might be. I can't find any compelling arguments.

I don't know what to do, but tell you what I think and why I think that way, and hope that you the listener understand a little bit more about what I think is going on, because this really bothers me. As I've said before, I grew up on the compute. The computer made me who I am. Seeing the tech industry like this sickens me because it's getting money away from people doing cool shit to the least cool people

doing the least coolshit possible, and it's frustrating. But I'll leave you with one thought and one thing that particularly bothers me about GENERATIVAI. Regular people, for the most part of my experience, do not seem to want this. While there are occasionally people I'll mate you use chat GPT to rewrite part of an email, most of the people

I may feel like AI was forced upon them. With that in mind, I believe that Apple is actually radicalizing millions of people against GENERATIVEAI by forcing them to reckon with the terrible summaries, awful suggested texts, and horribly designed user interface choices from Apple Intelligence, one of the worst

product launches I think I've seen in my life. Something about generative AI has caused the hyperscalers to truly lose their minds, and the intrusion of GENERATIVAI into both Microsoft Office and Google Docs has turned just about everybody I

know in the business world against them. The resentment boiling against this software is profound because the tech industry has become desperate and violative, showing such contempt for their customers that even Apple will force an inferior experience upon their customers to please the will of the rot economy and the growth at all cost mindset of the markets. Let's

be frank, nobody really needs anything generative AI does. Large language models hallucinate too much to be truly reliable, a problem that will require entirely new branches of mathematics to solve, and their most common consumer facing functions like summarizing an article, practicing for a job interview, or writing a business plan are not really things people need or massively benefit from. Even if these things weren't ruinously expensive damaging to the environment.

I believe general if AI is turning regular people against the tech industry thanks to how much they're trying to force it upon them and make them use the bad idea, and it isn't working. Nobody wants this ship. They're intrigued by the idea, then immediately bounce off of it in many cases once they see what it can or can't do.

This software is being forced on people at scale by corporations desperate to seem futuristic without any real understanding as to why they need to do so, and whatever use cases may exist for large language models are dwarfed by how utterly unprofitable this whole fucking fiasco is. But I want you to do something. If this whole thing has pissed you off, if hearing about these companies has enraged you as it has enraged me. I want you to tell your friends, your family that open Ai spent nine

billion dollars to lose five billion dollars. I want you to talk about the fact that large language models don't really have a market. That chat GPT is a marketing con That Sachinidella of Microsoft has burned probably will burn too, un billion dollars chasing software that does the same thing as everyone else. That Tim Cook of Apple has forced Apple Intelligence barely functional software on millions and millions of

people because Apple has no more ideas. That Mark Zuckerberg of Meta has pushed AI on everything because he has no more ideas left, and it's going to burn so much money in Meta and Sam Altman and Daria Amaday are two fucking liars, two liars who will tell you that their software will turn into artificial general intelligence. They're lying. They're all lying. And Sundharpeshai of Google is the arc liar who went in Google io and talked about a

completely fictional AI agent returning some shoes. The only reason that companies like this lie like this is because the truth is boring. The truth is mediocre. Believe your goddamn eyes when you use chat GPT and you say, what the fuck is this? Why does this matter? You're not crazy, You're not an idiot because you can't see the magic of generative AI. The people pushing this stuff are rather credulous. They're either bought or they're making a shit ton of

money and lying to you. I refuse to let them keep doing so. Better off Lene exists to kind of explain this stuff as plainly as possible. You can reach out to me if I wasn't clear about something. I love feedback. Please be nice to me. I guess is what I ask. But I love doing this. I am scared of how this ends. I think it's going to really hurt the markets. Could be three months, could be

six months, could be eighteen months. I don't know, and I don't really think it's the right thing to do to predict, but I'll tell you this, a better tech industry can come out of this collapse. I don't know how severe the collapse is. I don't think like Google's going to die ornything. It's going to hit tens of thousands of people's jobs, It's going to hit the markets hard. I don't know if a recession is possible. I'm not a financial guy, but I'll tell you this, the tech

industry needs. They need to realize how bad this is. They need consumers to tell them, and honestly, consumers not using it should have told them. But they clearly haven't worked that shit out, have they. But I'll leave you with this. I think when this there's going to be a lot of people that need to apologize. A lot of people in the media, the Casey Newtons of the world, the Caros Wishes of the world, the people claim in

this the early days of the internet again boo. I think the thing we really need to do is make our dispersure known to these tech companies. Find the feedback forms, go online and talk about them. Say their names. Say their names to the friends you have who are mad at this too, which should be a lot of them. Say their names again and again and again. You ask me, how can things change? These people only have their names.

They have more money than any of us can mind, they have all of this power, and as a result, they actually only have their seo their names. How do you think propagar Ragavan feels, by the way, when you google his name and all you see is me, the smiling man. I believe that enough of us just talking shit on these people. And I don't mean being irate. I don't mean making stuff up. We're not them. We

don't have to operate with lies. We can operate with truths, such as Microsoft is propping up AI a venture welfare client. All these people hate the poor so much, but they love welfare when it means maybe making money or maybe burning billions of dollars. So fuck their name's up. Talk shit about them, Talk them to your friends. I don't care if you mentioned better offline. Just tell people what they've done. Tell people that Generative AI loses money on

every single fucking move. It's so sickening, it's so boring, and it's most decidedly not the future. You are not crazy if you don't think this is amazing. You're being

lied to. What you're seeing is a marketing campaign. And I will continue to walk you through this stuff, and if I'm wrong somehow, I will correct myself every goddamn time, because I deeply care about giving you what I know and what I've seen, and the things I've reported in these two episodes scared the shit out of me, both for the markets and the fact that so many rich people are willing to be so goddamn stupid, and it made me really angry because it shows such contempt, contempt

for the media and contempt for the user, and I will not bloody accept it. It's such a pleasure to do this show. I'm very lucky to do so. Thank you for listening to Better Offline. The editor and composer of the Better Offline theme song is Mattersowski. You can check out more of his music and audio projects at Mattasowski dot com M A T T O S O W s KI dot com. You can email me at easy at Better offline dot com, or visit Better Offline dot com to find more podcast links and of course,

my newsletter. I also really recommend you go to chat dot Where's youreed dot at to visit the discord, and go to our slash Better Offline to check out our reddit. Thank you so much for listening.