Longreads + Open Thread

NFTs; AI; Trading Careers; Movies; LLMs; Supply Chains; LBJ; Expected Returns


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From the comments on last week's post looking at how AI's economics might be closer to those of the steel industry than the software industry, here's another good analogy from Calvin McCarter:

Re: AI and steel, another parallel I think about is electric vehicles, Tesla, and the auto industry. It's quite possible that, because EVs are so simple, the overall profits of the auto manufacturing sector will decline. OEMs were complex system integrators for an insane number of parts suppliers, but in the future many components will no longer need to be made, and integration of the smaller number of remaining components will be capital-intensive yet commoditized. Similarly, a lot of software development is basically making various bespoke software-glue components, and AI could automate this away. And making the AI that does this will be capital-intensive yet commoditized. To the extent that Tesla's still-high valuation is justified, it's because it makes its own batteries, cuts out the car dealership middlemen, and maintains a charging network. Similarly, the money in AI could be derived upstream (making AI chips and running datacenters), developing a brand & loyal relationships with customers (designing sticky interfaces that people love and trust), and offering ongoing services to those customers (various products built around AI).

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