The Inevitable Rise, Fall and Eventual Resurgence of Artificial Intelligence

Artificial Intelligence is all the new shiny toy. I don’t think a day goes by that an article discussing ChatGPT and other AIs are poised to disrupt the world. Most recently, ChatGPT 4 has passed the bar exam. In fact at the time of writing, ChatGPT has passed the following exams:

• The Uniform Bar Exam
• The Graduate Record Examinations
• US medical Licensing exam
• AP Exams
• SAT
• Sommelier Examinations
• Wharton MBA exam

It’s an impressive feat considering that our weak human minds may only find the strength to pass on or two of those exams in our lifetime.  I have no doubt that AI will be a major disruptor, and will potentially upend industries, skillsets and even the relevance of certain college degrees.
However with every new shiny tony big tech focuses on, it delivers a predictable cycle of rapid development, followed by a collapse and then a resurgence.  It’s happened before, and it appears it may happen again.

The Rise

It begins with every shiny toy large tech companies fixate on.  A few players entering the space and innovating something different or game changing.

Dot-com

In the late 90s, it was ecommerce.  Internet-based companies were ramping up at a rapid rate offering a wide range of services to the masses.  Venture capitals poured money into startups that could sell an idea and a dream.  All that free money, led to the rise of web developers, programmers, and system analysts. They would be offered lavish salaries and employment compensation packages.  California and other technology hubs were established across the United States and the world.

Cryptocurrencies

Cryptocurrencies is still a relatively young field. It has been led by coins such as Bitcoin and Ethereum.  Initially, people had trouble wrapping their arms around what crypto currency is and generally shied away from it.  Bitcoins were exceptionally affordable initially.  You could obtain several hundred bitcoins for a pizza.  Then the catalyst.  More and more people became interested in cryptocurrencies.  With bitcoin being a front runner, it was natural for people to start investing into it.  As the price, and fear of missing out (FOMO) began to rise, more joined in.  Other crypto currencies began to be developed, some were designed for a purpose while others were created as a joke.

Industries were created, venture capitalist showered the industry with money.  All that free money, led to the rise of blockchain developers, cryptocurrency analysts, and crypto operations managers.  They would be offered lavish salaries and employee compensation packages.  California and other technology hubs would see offices established that were dedicated to the development or trading of crypto currencies.

Artificial Intelligence

The rise of Artificial Intelligence (AI) over the past decade has been driven by the culmination and advancements in machine learning, data analytics, and computing power. Our reliance on the internet, ecommerce and social media platform led to the creation of treasure chests of data. Many of these applications are free to use as long as you agree to certain telemetry and datapoints being captured.  In fact the internet is a repository of knowledge ranging from the factual to the absurd.  It’s a plethora of data that is readily available for something to ingest it.

AI initially relied on data modeling as a training mechanism.  AI data modeling is the process of creating mathematical models that can learn and make predictions based on data. It involves training a model on a dataset, which allows it to identify patterns and relationships within the data. The model can then be used to make predictions about new, unseen data.

However, AIs such as ChatGPT are considered AI language model and are trained differently.  Rather than be taught a particular task like identifying dogs vs cats, AI language models receive vast amounts of data to learn patterns and relationships between words, phrases, ideas and concepts.  What sets it apart from more basic AIs you find in most chatbots is that you can ask it anything.

We’re on the cusp of the AI ramp up, and as the innovations before it, organizations are being created such as OpenAI to lead the initiative.  California and other states are making concessions to organizations that are trying to ramp up support for the growing AI industry. The incumbents are racing to catch up or couple up with the initial industry leaders, and venture capitalists are pouring money into the industry. All that free money will lead to the rise of AI Prompt Engineers, Deep Learning Engineers, and AI Ethicists.  They will be offered lavish salaries and employee compensation packages.

In the next 18 – 36 months, we will see the rise of industries focused on AI. New VC backed entities that will bill themselves as innovators.  We will see a ramp of of AI related  courses, studies, and training boot camps to steer the masses toward the AI field.

The Fall

Until one day it comes crashing down.  Like with the current crypto winter and the dot-com bust have occurred, the correction will be caused by the following reasons.

Overvaluation

Many technology companies will be significantly overvalued, with high stock prices not necessarily reflecting the underlying financial health of these organizations creating a speculative bubble that eventually burst.

Mismanagement

A certain percentage of these companies will be poorly managed, with questionable business models and unsustainable spending. Making them more vulnerable to financial troubles, market turbulence and economic instability.

Market Saturation

As  companies entered the market, there will be increased competition for funding and market share. This will lead to a situation where there will simply be too many companies chasing too few customers, which resulted in a shakeout and consolidation of the industry.

Signs and Signals

I cannot predict when the collapse will occur, but there will be signs along they way.  Initially, Investors will start discussing the debt that certain organizations have and how it will eventually become a burden. Next, there may be a few companies that will announce layoffs voluntary or involuntary. Finally the collapse is upon us when the following two things occur:

• Celebrity Endorsements of Products and Services
• Superbowl commercials

As ridiculous as it sounds, and no scientific proof that backs this up, the dot-com bubble and the crypto collapse were predicated by celebrity endorsements, and Superbowl commercials.   There’s no reason for me to believe that AI will not follow a similar pattern.  Crypto currency has seen the likes of Madonna, Tom Brady, Gwyneth Paltrow and Mr. “Fortune favors the Bold” Matt Damon endorse crypto and crypto exchanges. There wasn’t a Superbowl commercial break without some mention of crypto.  Beckoning the masses to join in or miss out.

Shortly afterwards, crypto currency tanked across the board.  In most cases, crypto prices plunged 70 – 90% across the board.  Several exchanges and stable coins collapsed during the process or are currently on the verge of collapse.

As with every collapse, there is a human element.  Layoffs will be the first weapon of choice to reduce cost and stave off collapse.  Service Levels may be effected by the inability to cover service costs which could effect the customer experience, and tech heavy stock exchanges will plunge by large percentages as the disastrous news reports trickle in.  Retirement funds will be depressed as they will be negatively effected by the stock market.

The Resurgence

From the ashes, several stable and strong organizations will arise.  These organizations will lead the AI industry stabilization, that will progress our world forward, arguably.  Either by innovation or acquisition,  the likes of Microsoft, Google and Amazon will be around.  There will also be a few new players, well managed entities that will survive the AI Battle Royale.
Crypto is seeing a  similar resurgence, although not officially deemed that.  The price of major crypto players such as Ethereum and Bitcoin have stabilized.  In fact, Bitcoin’s price has increased significantly since the beginning of the year.  However, the winter has claimed many victims and may claim a few more before it’s all said and done.

Conclusion

I could be wrong.  AI may mature and progress, companies will be created and thrive and innovation will be fortuitous.  However, Big Tech and VCs love their shiny toys, and what they fear most of all is missing out.  The sad reality of this situation is that the people that suffer will not be the VCs, the entrepreneurs or Big Tech.  Win or lose they find a way to thrive and continue their profitable goals.  It will be the people that believed the company’s mission, the college grads who think their starting a career that will allow them to pay down their college debt, and the support staff that worked day and night to keep the lights on.  Those who had plans to retire may decide to work a few more years because their retirement funds lost more value then anticipated.  Others may have to return to work.  The human cost of these shiny toy experiments can be extremely high.

I want to be wrong.  This article is in fact 100% opinionated.  However, I would not be surprised if Super Bowl 63/64 wasn’t filled with AI commercials.  Do me a favor if that happens, check your investments.