Speaker 1: Media. Hello and welcome to bear off Line. I'm your
Speaker 1: host ed Zetron. Today is the final part of Bubble
Speaker 1: Week and our four part dot com Bubble special. I
Speaker 1: am worryingly invested in this show. I've put so many
Speaker 1: hours into it. This is the most I've done in
Speaker 1: the January. I'm having the time of my fucking life.
Speaker 1: But this four part has been rough, and it's not
Speaker 1: been rough for the recording. It's rough because every time
Speaker 1: I go over these details, they fill me full of anxiety.
Speaker 1: I don't enjoy being right here. Sure I get the satisfaction,
Speaker 1: Sure I get the clicks and all that, but like
Speaker 1: it sucks, It sucks. I'm really fucking worried. I'm not
Speaker 1: doing this to be contrarian. I'm seeing these things and
Speaker 1: I'm worried more people aren't seeing them, and I'm worried
Speaker 1: that the after effects will be so much worse than
Speaker 1: the dot com bubble. So this Foe part was somewhat
Speaker 1: drawn from a premium piece I did a few weeks
Speaker 1: ago called Inventively. This is worse than the dot com bubble.
Speaker 1: I really suggest you subscribe to my premium newsletter or
Speaker 1: be in there. But if you don't. I've had a
Speaker 1: little mustard on it and truncated it for this because
Speaker 1: you needed to be different in voice. Nevertheless, you should subscribe.
Speaker 1: But when I was writing that, I actually went into
Speaker 1: it trying to prove myself wrong. I spent hours and
Speaker 1: hours reading old articles through broken paywalls and archive dot
Speaker 1: org links, in the hopes that I'd find some sort
Speaker 1: of positive spin, a way that the AI bubble wasn't
Speaker 1: as bad, some sliver or nugget of joy, some shread
Speaker 1: of hope. And everything I've read has made me more worried,
Speaker 1: not less. The real problem is that there are similarities,
Speaker 1: but only with the worst parts of both bubbles. We've
Speaker 1: got stupid amounts of money being sunk into stuff. We've
Speaker 1: got stupid companies that want to ypo. We've got hopeless
Speaker 1: startups duced up by edulous venture capitalists and marketed by
Speaker 1: even more credulous journalists. Except this time we have the
Speaker 1: worst margins this side of a vineyard planted in Las Vegas, Nevada,
Speaker 1: and despicable boosters that will go to war with you
Speaker 1: to try and improve You're wrong. Using ghost stories, fairy tales,
Speaker 1: and Bixie dust, I realize I'm being a little cavalier
Speaker 1: and colloquial about this, and that's because I feel emotionally drained,
Speaker 1: is the way i'd put in. Things are so much
Speaker 1: worse than I thought. I really thought i'd find something good.
Speaker 1: I'd dig into the past and find that there were direct,
Speaker 1: obvious similarities that would say, Okay, these GPUs will be useful.
Speaker 1: There will be something we've built here. I can't find it.
Speaker 1: I'm actually now convinced that things are going to be
Speaker 1: much worse. The dot com bubble was relatively distributed and
Speaker 1: created useful infrastructure. The ideas of some of the most
Speaker 1: prominent dot com startups were valid, but based on stupid
Speaker 1: hypergrowth business models that didn't make sense and were only
Speaker 1: sustained through mass hysteria and ignorance. By comparison, AI startups
Speaker 1: fundamentally illogical or selling unreliable software that's best known for
Speaker 1: its consistent mistakes and active harms, backed by the corrosive
Speaker 1: and ever worsening infrastructural costs of GPUs, and they're the
Speaker 1: customers of the largest company on the stock market that
Speaker 1: can only keep its valuation on which the markets depend
Speaker 1: by selling more of it. An expensive to buy and
Speaker 1: more expensive to install item that only appears to lose
Speaker 1: its customers money. There is no squaring in Vidia's circle.
Speaker 1: It is inevitable even if AI somehow worked out that
Speaker 1: companies will have to stop buying as many GPUs, and
Speaker 1: in Vidia cannot afford for them to slow down at all.
Speaker 1: They must speed up, and they must do so forever.
Speaker 1: There's also no other business model for GPUs that scales none.
Speaker 1: There is no use case. This is not useful infrastructure.
Speaker 1: Once the AI bubble bursts, these data centers cannot be
Speaker 1: used for other things, at least not things that are
Speaker 1: going to make more than a couple of single digit
Speaker 1: millions in total. They will have to be emptied out
Speaker 1: and replaced with useful gear. They will be those that
Speaker 1: are finished, and I think going to be a bunch
Speaker 1: of undone construction. They're going to be powered shells, which
Speaker 1: are just empty buildings with power attached. And really, I
Speaker 1: don't think that's gonna be. That's gonna be across the board.
Speaker 1: I think we're gonna have a lot of failed construction.
Speaker 1: And throughout all of this bullshit, the rest of them,
Speaker 1: Magnificent seven has seen their stock values saw off the
Speaker 1: back of pure hype because they weren't making a dime
Speaker 1: of profit from selling artificial intelligence services, and they've done
Speaker 1: so by it acquiring hundreds of billions of dollars of
Speaker 1: physical assets. The whole point of these fucking companies was
Speaker 1: that they were asset light and cash heavy. Now they're
Speaker 1: full of fucking GPUs to depreciate. This is a fucking calamity.
Speaker 1: I am fucking terrified because everything I've read about the
Speaker 1: past makes me certain that this will be worse. The
Speaker 1: hands will be longer, and nobody seems to want to
Speaker 1: accept the true logical endpoint of my arguments, So I'm
Speaker 1: gonna kind of lay them out depending on how right
Speaker 1: I am. I'm worrying about the following things. And Nvidia
Speaker 1: will lose anywhere between forty percent and night besore and
Speaker 1: of its revenue in a relatively short amount of time,
Speaker 1: a couple of quarters maybe, which will annihilate the value
Speaker 1: of the S and P five hundred because the stock
Speaker 1: will go down because the market will go Ah, Microsoft,
Speaker 1: Google and Amazon will face massive multi billion dollar impairments
Speaker 1: within the next few years. For God to say, meta,
Speaker 1: but they are included too. Now, this one is funny
Speaker 1: but will still be bad. Oracle will potentially face bankruptcy
Speaker 1: or at least a severe horrendous series of layoffs and
Speaker 1: restructuring efforts to try and write the shift after agreeing
Speaker 1: to two hundred and forty eight billion dollars in lease
Speaker 1: obligations and fifty six billion dollars in debt primarily to
Speaker 1: build data centers to get the revenue from its three
Speaker 1: hundred billion dollar five year long deal with open Ai,
Speaker 1: a company that's going to run out of money in
Speaker 1: the next year. Venture Capital is going to take such
Speaker 1: a severe haircut from the AI bubble that it will
Speaker 1: effectively kill any chances of raising a round off the
Speaker 1: Series B for many, many years. I'm really worried about
Speaker 1: the reported one hundred and seventy eight point five billion
Speaker 1: dollars in US date center deals going underwater. I don't
Speaker 1: think they're going to be paid, and it's going to
Speaker 1: lead to massive losses with private equity and banks, which
Speaker 1: will lead to a chill in effectively all debt markets
Speaker 1: and massive job losses across the many many construction projects
Speaker 1: that have started as a result of the AI bubble,
Speaker 1: and if open Ai and Anthropic can actually manage to
Speaker 1: go public. I think every investor is going to lose
Speaker 1: out as they collapse under the weight of their bullshit assumptions.
Speaker 1: Every partner, every company relying on them, every infrastructure partner,
Speaker 1: every AI starter built on their tech will be burned.
Speaker 1: I also believe that we as a society will face
Speaker 1: a violent paradigm shift as the result of the AI
Speaker 1: bubble bursting, because it revealed how many people just don't
Speaker 1: understand stuff. The amount of bosses, influencers, movie stars, politicians,
Speaker 1: and other individuals of note that have fallen behind generative
Speaker 1: AI and claimed again and again that it can do
Speaker 1: things that it can't have effatuated myths that will lead
Speaker 1: to massive ciple harms both day and in the future,
Speaker 1: have revealed themselves to be fucking frauds. It's been obvious
Speaker 1: since twenty twenty three that generative AI flat out does
Speaker 1: not do what many people say it does or will do,
Speaker 1: and obvious since twenty twenty four that the economics didn't work.
Speaker 1: Yet still, every single goddamn day, we are surrounded by
Speaker 1: people screaming in our faces the AI is the future,
Speaker 1: that AI will replace us, that AI is the panacea
Speaker 1: to every fucking problem, even though it only seems to
Speaker 1: create new ones. I also believe that AI psychosis is
Speaker 1: a prevalent thing on a scale that few people want
Speaker 1: to discuss. There's something about the process of using a
Speaker 1: large language model that convinces people that AI is powerful
Speaker 1: because they managed to bunk it on the head enough
Speaker 1: times to make something useful come out seemingly intelligent. People
Speaker 1: will spend hours and hours making clawed code burb out
Speaker 1: quasi useful, quasi functional software, claiming that the productivity gains
Speaker 1: are obvious, even when if you sat down and worked
Speaker 1: out how long it took them and how much the
Speaker 1: API rates for the software would be. If they weren't
Speaker 1: being subsidized, they could probably have just learned to code
Speaker 1: in the first place, or paid someone else to do it.
Speaker 1: And no, please stop this thing of oh it's cheaper
Speaker 1: than hiring a developer. Did you go out and ask
Speaker 1: a developer? Did you actually get a quote? Do you
Speaker 1: actually know what you're talking about? Do you know a
Speaker 1: fucking thing about you're talking about? You see, I think
Speaker 1: large language models that are a global gas lighting experiment,
Speaker 1: where the test is to see whether inefficient and questionably
Speaker 1: functional software can convince you that it works because you
Speaker 1: managed to manipulate its handles with the right prompts, explaining
Speaker 1: away failures as you go, and getting increasingly agitated with
Speaker 1: those who don't agree with you that you're living in
Speaker 1: the future. This series forced me to live in the
Speaker 1: past for hours and hours and hours, and all it
Speaker 1: taught me is that people are desperate to compare this
Speaker 1: era to another as a means of explaining away the
Speaker 1: bad habits and specious ideas of a tech industry run
Speaker 1: by fucking influences and management consoles. By comparison, the dot
Speaker 1: com bubble is relatively sensible, built on good ideas execut
Speaker 1: by greedy people rushing to do things based on ideas
Speaker 1: they didn't understand, and analyzes that were utter bullshit. The
Speaker 1: AI bubble is happening in a remarkable era of digital
Speaker 1: information and connectivity that allows us to process and analyze
Speaker 1: details at scale and with speed, And everybody who inflated
Speaker 1: this era should, and, by my fucking sword, will be
Speaker 1: made to experience inextricable, permanent shame for the horrors that
Speaker 1: follow as a result. And believe me, even if I'm
Speaker 1: half right, things will likely be so much worse than
Speaker 1: when the dot com bubble burst. I don't see a
Speaker 1: scenario where anything survives the collapse of core we've let
Speaker 1: alone the collapse of open AI. I don't see a
Speaker 1: scenario where any more than a few AI starts survive,
Speaker 1: if any and if that happens, there won't be any
Speaker 1: customers for those GPUs, not that anywhere near enough existed
Speaker 1: to fill even a tiny percentile of the demand that
Speaker 1: currently exists, or for the capacity we've already built. On
Speaker 1: some level. I hope I'm wrong. I just don't know
Speaker 1: how anymore. I really don't thank you so much for listening.
Speaker 1: It's been in intense January with this, with CES, with
Speaker 1: the inchittaphone ential crisis. I'm probably going to take the
Speaker 1: week off next week and run a call zone media
Speaker 1: rewind to give my aching brain and lungs a break.
Speaker 1: Thank you so much for listening. Who knows, though, some
Speaker 1: bullshit will probably happen because it's earning season when this runs,
Speaker 1: some crazy shit will happen, or maybe it'll be normal.
Speaker 1: I could just rest, and if that happens, I'll probably
Speaker 1: end up pinking and squawking into the micros. I always though, regardless,
Speaker 1: you'll hear my voice one way or another. Thank you
Speaker 1: so much everyone, This has been bubble week. Thank you
Speaker 1: for listening to Better Offline.
Speaker 2: The editor and composer of the Better Offline theme song
Speaker 2: is Matasowski. You can check out more of his music
Speaker 2: and audio projects at Mattasowski dot com, m A T
Speaker 2: T O S O W s ki dot com. You
Speaker 2: can email me at easy at Better Offline dot com
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Speaker 1: much for listening. Better Offline is a production of cool
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