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If anyone wants to know why every tech company in the world right now is clamoring for AI like drowned rats scrabbling to board a ship, I decided to make a post to explain what’s happening.

(Disclaimer to start: I’m a software engineer who’s been employed full time since 2018. I am not a historian nor an overconfident Youtube essayist, so this post is my working knowledge of what I see around me and the logical bridges between pieces.)

Okay anyway. The explanation starts further back than what’s going on now. I’m gonna start with the year 2000. The Dot Com Bubble just spectacularly burst. The model of “we get the users first, we learn how to profit off them later” went out in a no-money-having bang (remember this, it will be relevant later). A lot of money was lost. A lot of people ended up out of a job. A lot of startup companies went under. Investors left with a sour taste in their mouth and, in general, investment in the internet stayed pretty cooled for that decade. This was, in my opinion, very good for the internet as it was an era not suffocating under the grip of mega-corporation oligarchs and was, instead, filled with Club Penguin and I Can Haz Cheezburger websites.

Then around the 2010-2012 years, a few things happened. Interest rates got low, and then lower. Facebook got huge. The iPhone took off. And suddenly there was a huge new potential market of internet users and phone-havers, and the cheap money was available to start backing new tech startup companies trying to hop on this opportunity. Companies like Uber, Netflix, and Amazon either started in this time, or hit their ramp-up in these years by shifting focus to the internet and apps.

Now, every start-up tech company dreaming of being the next big thing has one thing in common: they need to start off by getting themselves massively in debt. Because before you can turn a profit you need to first spend money on employees and spend money on equipment and spend money on data centers and spend money on advertising and spend money on scale and and and

But also, everyone wants to be on the ship for The Next Big Thing that takes off to the moon.

So there is a mutual interest between new tech companies, and venture capitalists who are willing to invest $$$ into said new tech companies. Because if the venture capitalists can identify a prize pig and get in early, that money could come back to them 100-fold or 1,000-fold. In fact it hardly matters if they invest in 10 or 20 total bust projects along the way to find that unicorn.

But also, becoming profitable takes time. And that might mean being in debt for a long long time before that rocket ship takes off to make everyone onboard a gazzilionaire.

But luckily, for tech startup bros and venture capitalists, being in debt in the 2010’s was cheap, and it only got cheaper between 2010 and 2020. If people could secure loans for ~3% or 4% annual interest, well then a $100,000 loan only really costs $3,000 of interest a year to keep afloat. And if inflation is higher than that or at least similar, you’re still beating the system.

So from 2010 through early 2022, times were good for tech companies. Startups could take off with massive growth, showing massive potential for something, and venture capitalists would throw infinite money at them in the hopes of pegging just one winner who will take off. And supporting the struggling investments or the long-haulers remained pretty cheap to keep funding.

You hear constantly about “Such and such app has 10-bazillion users gained over the last 10 years and has never once been profitable”, yet the thing keeps chugging along because the investors backing it aren’t stressed about the immediate future, and are still banking on that “eventually” when it learns how to really monetize its users and turn that profit.

The pandemic in 2020 took a magnifying-glass-in-the-sun effect to this, as EVERYTHING was forcibly turned online which pumped a ton of money and workers into tech investment. Simultaneously, money got really REALLY cheap, bottoming out with historic lows for interest rates.

Then the tide changed with the massive inflation that struck late 2021. Because this all-gas no-brakes state of things was also contributing to off-the-rails inflation (along with your standard-fare greedflation and price gouging, given the extremely convenient excuses of pandemic hardships and supply chain issues). The federal reserve whipped out interest rate hikes to try to curb this huge inflation, which is like a fire extinguisher dousing and suffocating your really-cool, actively-on-fire party where everyone else is burning but you’re in the pool. And then they did this more, and then more. And the financial climate followed suit. And suddenly money was not cheap anymore, and new loans became expensive, because loans that used to compound at 2% a year are now compounding at 7 or 8% which, in the language of compounding, is a HUGE difference. A $100,000 loan at a 2% interest rate, if not repaid a single cent in 10 years, accrues to $121,899. A $100,000 loan at an 8% interest rate, if not repaid a single cent in 10 years, more than doubles to $215,892.

Now it is scary and risky to throw money at “could eventually be profitable” tech companies. Now investors are watching companies burn through their current funding and, when the companies come back asking for more, investors are tightening their coin purses instead. The bill is coming due. The free money is drying up and companies are under compounding pressure to produce a profit for their waiting investors who are now done waiting.

You get enshittification. You get quality going down and price going up. You get “now that you’re a captive audience here, we’re forcing ads or we’re forcing subscriptions on you.” Don’t get me wrong, the plan was ALWAYS to monetize the users. It’s just that it’s come earlier than expected, with way more feet-to-the-fire than these companies were expecting. ESPECIALLY with Wall Street as the other factor in funding (public) companies, where Wall Street exhibits roughly the same temperament as a baby screaming crying upset that it’s soiled its own diaper (maybe that’s too mean a comparison to babies), and now companies are being put through the wringer for anything LESS than infinite growth that Wall Street demands of them.

Internal to the tech industry, you get MASSIVE wide-spread layoffs. You get an industry that used to be easy to land multiple job offers shriveling up and leaving recent graduates in a desperately awful situation where no company is hiring and the market is flooded with laid-off workers trying to get back on their feet.

Because those coin-purse-clutching investors DO love virtue-signaling efforts from companies that say “See! We’re not being frivolous with your money! We only spend on the essentials.” And this is true even for MASSIVE, PROFITABLE companies, because those companies’ value is based on the Rich Person Feeling Graph (their stock) rather than the literal profit money. A company making a genuine gazillion dollars a year still tears through layoffs and freezes hiring and removes the free batteries from the printer room (totally not speaking from experience, surely) because the investors LOVE when you cut costs and take away employee perks. The “beer on tap, ping pong table in the common area” era of tech is drying up. And we’re still unionless.

Never mind that last part.

And then in early 2023, AI (more specifically, Chat-GPT which is OpenAI’s Large Language Model creation) tears its way into the tech scene with a meteor’s amount of momentum. Here’s Microsoft’s prize pig, which it invested heavily in and is galivanting around the pig-show with, to the desperate jealousy and rapture of every other tech company and investor wishing it had that pig. And for the first time since the interest rate hikes, investors have dollar signs in their eyes, both venture capital and Wall Street alike. They’re willing to restart the hose of money (even with the new risk) because this feels big enough for them to take the risk.

Now all these companies, who were in varying stages of sweating as their bill came due, or wringing their hands as their stock prices tanked, see a single glorious gold-plated rocket up out of here, the likes of which haven’t been seen since the free money days. It’s their ticket to buy time, and buy investors, and say “see THIS is what will wring money forth, finally, we promise, just let us show you.”

To be clear, AI is NOT profitable yet. It’s a money-sink. Perhaps a money-black-hole. But everyone in the space is so wowed by it that there is a wide-spread and powerful conviction that it will become profitable and earn its keep. (Let’s be real, half of that profit “potential” is the promise of automating away jobs of pesky employees who peskily cost money.) It’s a tech-space industrial revolution that will automate away skilled jobs, and getting in on the ground floor is the absolute best thing you can do to get your pie slice’s worth.

It’s the thing that will win investors back. It’s the thing that will get the investment money coming in again (or, get it second-hand if the company can be the PROVIDER of something needed for AI, which other companies with venture-back will pay handsomely for). It’s the thing companies are terrified of missing out on, lest it leave them utterly irrelevant in a future where not having AI-integration is like not having a mobile phone app for your company or not having a website.

So I guess to reiterate on my earlier point:

Drowned rats. Swimming to the one ship in sight.

  • Daedskin@lemm.ee
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    10 hours ago

    The company I contract with has been pushing hard on getting people to use LLMs (Copilot specifically) in their day-to-day; so much so that they put out a survey to everyone who hasn’t used it yet, asking why they haven’t used it. One of the questions was selecting checkboxes of reasons you haven’t used it; for the “Other”, free-form answer field I put:

    I’m not about to sacrifice the integrity of my work just so that some venture capitalists can feel justified in roleplaying as useful members of society.

  • i_stole_ur_taco@lemmy.ca
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    20 hours ago

    If this resonates with anyone, I strongly encourage reading Ed Zitron’s writing. He takes a big shit on Big AI and brings receipts on why it’s not even compatible with capitalism, which is the only thing propping it up.

    • nickwitha_k (he/him)@lemmy.sdf.org
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      19 hours ago

      The only thing that it is really useful for is getting possible solutions for simple problems that don’t pop up in search results anymore because of all of the slop that it was used to generate for scummy advertising dickheads. Even then, it’s not trustworthy and requires verification, wasting time that would not be needed if the official docs came up consistently on the first page of search results.

  • jjjalljs@ttrpg.network
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    22 hours ago

    The whole venture capitalist system is kind of bullshit. There’s so much vibes-based investing. The end game is often “and then we’ll be a monopoly and price gouge people”. It sucks. It all sucks.

    Labor should unionize. Kill the bosses if need be. And then maybe we can focus on building things that are useful and well liked, instead of another ad targeting platform.

    • 4am@lemm.ee
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      22 hours ago

      You didn’t need the word “venture”, you’re mostly just describing all capitalism

      • jjjalljs@ttrpg.network
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        19 hours ago

        True. It feels worse lately, but maybe that’s just mythology. In my imagination, in the not so distant past, if you wanted to get funding for a business you’d have to show the investors it was a good idea, with like spreadsheets and stuff. Now it seems more like a bunch of bros just decide based on feelings. Zoom, I read, got funded even though the investors thought it was a solved problem and foolish to go against the big players, but they were friends with the CEO and decided to let him have his fun for like several hundred million dollars.

  • brucethemoose@lemmy.world
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    1 day ago

    My perspective is that research machine learning has been chugging along reasonably for years, without any fuss, until Altman went against OpenAI’s mandate and commercialized (and marketed) ChatGPT.

    Now it’s enshittified. And ruining shit. Thanks for that.

    One example I often cite is the utter shock in finance land at Deepseek R1 coming out when the research/tinkerer community saw that coming miles away.

    • 4am@lemm.ee
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      22 hours ago

      They’re so lost in the Altman sauce they actually want to make DeepSeek illegal because it will bankrupt so many American investors if someone makes a useful, free alternative that runs locally for pennies compared to the power-sucking cloud based slop that’s already using more power than all cryptocurrencies combined

      Motherfucking Microsoft was talking about re-opening three mile island to power copilot for Christ’s sake. Couldn’t get America to consider nuclear for 50 years and now suddenly we MUST have it

      The rich are all gambling addicts and we’re at their mercy

      • brucethemoose@lemmy.world
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        21 hours ago

        There’s a misconception that Deepseek is locally runnable, where the “full” model is actually overly large, and the smaller variants are not the same thing

        But yeah, 100% agree with the point. Altman just wants to shut them out.

        • desktop_user@lemmy.blahaj.zone
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          5 hours ago

          both versions are theoretically runnable locally, it just requires extraordinary expensive GPUs with more than 100GB of VRAM, or certain integrated GPUs that can make use of system RAM and slowly chug along.

          • brucethemoose@lemmy.world
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            5 hours ago

            One can use ik_llama.cpp to run the dense layers on a 3090/4090 and offload the MoE layers to a threadripper/EPYC CPU, with full support for its MLA attention scheme, at quite reasonable speeds. In other words, the full deepseek is surprisingly usable locally if you shoot for the right setup.

            And now we have something similar from Qwen, at “only” 235B.

  • Olgratin_Magmatoe@slrpnk.net
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    1 day ago

    This isn’t gonna be the last ship the rats try to escape to. There will be another fancy thing they want down the line. Maybe it’ll be Boston dynamics style dog bots with AI. Maybe it’ll be some quantum computer scam.

    It’s a constant cycle of bullshit motivated by profit, a cycle that doesn’t need to exist.

    • kopasz7@sh.itjust.works
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      16 hours ago

      If you look at nvidia’s presentation, the next “big thing” is robotics and related software. Well, it’s kind of obvious, you can only do so much with just software (AI) even if it works as best as it can, it is bound to the digital world.

      If getting LLM’s (alignment, accuracy etc.) right was challenging, then the same on top of dynamic 3D environments will result in an even bigger shit show.

      • AngryCommieKender@lemmy.world
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        5 hours ago

        They’re gonna create the robots from iRobot, (the film, not the book, or the Roomba company,) just unintentionally, and without Viki controlling them.

    • Ogmios@sh.itjust.worksM
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      1 day ago

      a cycle that doesn’t need to exist

      Have you got any idea how many psychopaths it keeps busy away from reality?

      • oxysis@lemmy.blahaj.zone
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        1 day ago

        There is one need that has to do with it, the need to keep the line going up. Cause once it falls then heads will roll

  • drspod@lemmy.ml
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    1 day ago

    That pretty much sums it up, well said.

    I take issue, though, with the repeated misspelling of “vulture capitalist.”

    • porthos@startrek.website
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      10 hours ago

      Vultures have been shown to be vital in reducing the spread of disease by scavenging, don’t drag them through the mud by comparing them to freeloading criminals wearing suits that cost more than your car.