18 months ago ChatGPT was introduced to the world, and since then every major IT company ramped up investment in their Generative AI offerings, every CTO of every kind of business started working on plans to benefit from the new technology, and what it means for their business going forward.
Investors in Wall Street started pouring funds into every business that had public plans to benefit from Generative AI, at some point having AI plans felt like a requirement of every business willing to grow. Echoing a dangerous precedent of the late 90s Dot-com bubble.
As fears of an impending recession rose in Wall Street last week, Investors started discussing the notion of an AI bubble and wether that bubble has burst. In this article I will try and throw in my two cents on the matter: wether we are really in a bubble, or on the brink of a revolution similar in magnitude to the industrial revolution, or something in between.
Time is the ultimate currency
The goal of technology is to save the time and efforts of humans, since of the dawn of civilizations, nations started competing on out producing each other, allowing humanity to march forward to our present day.
In his book “An Inquiry into the Nature and Causes of the Wealth of Nations” Adam Smith discusses how the division of work can produce improvements in the productive powers of labor, how allowing workers to focus on single tasks can multiply production, increase the product quality, and reduce complexity.
In the same book Smith discusses the evolution of societies moving from the barter system to representing value with different metals. the underlying value of any work is the time and effort spent on it, as well as the level of availability of a certain skill to meet demand.
Allowing humans to focus on work that matters, and reducing the time consumed by different tasks, directly translates to gains in productivity, and increase in revenues and the value of offerings of any business, that was true in the time of Adam Smith, and it is true today.
And while advances in productivity can some time be translated to job loss, in the long term it allows humans to focus on work of higher value. The famous example of this is the Gutenberg press, which killed the profession of scribes, but gave birth to other -more creative- professions like journalism, not possible before having the ability to mass produce printed text, with massive gains in productivity and time savings.
The invention allowed human to go higher in the creativity scale, before the Gutenberg press people learned mainly to copy, authoring books and literature was reserved for high status wealthy people. that changed after the press.
While investors in Wall Street might look for quarterly gains to assess the importance of generative AI, taking the long term view allows us to project the future and what might we gain.
Productivity gains
During the past 18 months we all witnessed the possibilities of generative AI assistants, they can rephrase text, summarize large paragraphs, produce artifacts like code, images, or even video. help professionals research topics, and answer questions referring to large amounts of data.
Trying to measure an explicit dollar value of all what Gen AI has to offer can be tricky, but measuring the time saved in every task that a Gen AI assistant helps with is easier, answering developer questions might seem equal to searching the web, but the time saved in researching the possible causes of a software bug and arriving to a solution can be huge. That translates to shorter timelines, higher efficiency, and productivity gains. accomplishing more with less people, and deploying the excess manpower to more projects.
If every human has his own AI assistant, how much value can we drive from that? how much value can HR departments drive from the ability to screen larger numbers of candidates efficiently? you might not find the amount of money gained by hiring the perfect candidate for a job in the companies balance sheet, but the value is there, and might be inferred by comparing the performance of companies deploying AI tools vs companies working the old way.
Autonomous Intelligence
Another area where AI is absorbing massive investments is Autonomous Intelligence, that is Artificial Intelligence that can act without Human intervention. A good example of that is FSD: Full Self Driving.
Developing autonomous vehicles is a massive area where if we reach a reliable solution massive gains will be achieved, yes a lot of people will lose their jobs in the transportation sector, but on the other hand the expected gains for the collective human race are huge.
Think of the value of the wasted resources we see around us every day: all these parked cars that work few hours per day to transport a person from home to work and back, the model of car ownership itself will be disrupted, if you can offer a service like Uber with the privacy of your own car, a cheaper service -considering the absence of a driver-; no body will need to own a car, and fewer cars can transport more people with limited parking time.
Less traffic congestions, safer transportation, less accidents due to lack of focus while driving, and allowing people to accomplish work on the road while a machine drives them to their destination. put a dollar value on that!
Abstraction and Creativity
The progress of the human civilization and the economy can be attributed to an ongoing game of abstraction, every revolution in our journey over the centuries can be traced back to an invention that allowed us to move up in the chain of work complexity. Steam engines and then cars allowed humans to travel easily and eliminated the need of carriages and horses, Mechanical machinery allowed humans to mass produce products with less muscle power and higher efficiency letting humans focus on operating the machinery, computers allowed humans to perform more complex computations accurately and faster than by hand, allowing humans to focus on the applications of these complex computations.
AI is no different, If an AI assistant can help me research the endless ocean of information on the web it will speed up my journey (as a solution architect) to design systems faster and more effectively, As a software engineer I can draft code faster using customized AI assistants and then fine tune the results to the project needs.
The same goes to all other professions out there, AI assistants will help people accomplish work faster and with higher quality, and while that do mean that companies will higher fewer people to do the same work, it also means that the excess manpower can work on other initiatives and projects, then we’ll start seeing the real value of the AI boom happening right now.
The Dot-com bubble didn’t mark the end of the web, today every business has some sort of an online presence. No one can tell the future, but if the coming months do show that AI investment is a bubble that will burst, I am sure the coming years will proof that AI is going to allow humans move up the work chain, and help us evolve our economies further.