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Something is nagging me about the AI-human replacement conversation that I would love insight from people who know more about startup money than me. It seems li

Something is nagging me about the AI-human replacement conversation that I would love insight from people who know more about startup money than me. It seems like the AI revolution hit as interest rates went insane, and at the same time the AI that could write code was becoming available, the free VC money dried up, or at least changed. I feel like that's not usually a part of the conversation and I'm wondering if we would be having the same conversation if money for startups was thrown around (and more jobs were being created for SWEs) the way it was when interest rates were zero. I know next to nothing about this and would love to hear informed opinions.

swyx 1y ago
its not part of the conversation because the influence here is tangential at best (1) and your sense of how much vc money is on the table at any given time is not good (2). 1a. most seed/A stage investing is acyclical because it is not really about timing for exits, people just always need dry powder 1b. tech advancement is definitely acyclical - alexnet, transformers, and gpt were all just done by very small teams without a lot of funding. gpt2->3 was funded by microsoft, not vc 2a. (i have advance knowledge of this bc i've previewed the keynote slides for ai.engineer) free vc money slowed in 2022-2023 but has not at all dried up and in fact reaccelerated in a very dramatic way. up 70% this yr 2b. "vc" is a tenous term when all biglabs are >>10b valuation and raising from softbank or sovereign wealth. its no longer vc, its about reallocating capital from publics to privates because the only good ai co's are private
- mjburgess 1y ago
  I'm not seeing how you're replying to this comment. I'm not sure you've understood their point. The point is that there's a correlation between macroeconomic dynamics (ie., the price of credit increasing) and the "rise of AI". In ordinary times, absent AI, the macroeconomic dynamics would fully explain the economic shifts we're seeing. So the question is why do we event need to mention AI in our explanation of recent economic shifts? What phenomena, exactly, require positing AI disruption?
  - munificent 1y ago
    > What phenomena, exactly, require positing AI disruption? AI company CEOs trying to juice their stock evaluations?
  - rglover 1y ago
    Social media. Especially in SV, the embarrassment of failing publicly having been given so much money is far too painful psychologically. Spinning that to say you're a "visionary" for replacing expensive employees with AI (even when it's clear we're not there yet) is risky, but a good enough smoke screen to distract the average bear from poking holes in your financials.
sfRattan 1y ago
> It seems like the AI revolution hit as interest rates went insane... > ...I'm wondering if we would be having the same conversation if money for startups was thrown around (and more jobs were being created for SWEs) the way it was when interest rates were zero. The end of free money probably has to do with why C-level types are salivating at AI tools as a cheaper potential replacement for some employees, but describing the interest rates returning to nonzero percentages as going insane is really kind of a... wild take? The period of interest rates at or near zero was a historical anomaly [1]. And that policy clearly resulted in massive, systemic misallocation of investment at global scale. You're describing it as if that was the "normal?" [1]: https://www.macrotrends.net/2015/fed-funds-rate-historical-chart https://www.macrotrends.net/2015/fed-funds-rate-historical-c...

swyx 1y ago

its not part of the conversation because the influence here is tangential at best (1) and your sense of how much vc money is on the table at any given time is not good (2). 1a. most seed/A stage investing is acyclical because it is not really about timing for exits, people just always need dry powder 1b. tech advancement is definitely acyclical - alexnet, transformers, and gpt were all just done by very small teams without a lot of funding. gpt2->3 was funded by microsoft, not vc 2a. (i have advance knowledge of this bc i've previewed the keynote slides for ai.engineer) free vc money slowed in 2022-2023 but has not at all dried up and in fact reaccelerated in a very dramatic way. up 70% this yr 2b. "vc" is a tenous term when all biglabs are >>10b valuation and raising from softbank or sovereign wealth. its no longer vc, its about reallocating capital from publics to privates because the only good ai co's are private

mjburgess 1y ago
I'm not seeing how you're replying to this comment. I'm not sure you've understood their point. The point is that there's a correlation between macroeconomic dynamics (ie., the price of credit increasing) and the "rise of AI". In ordinary times, absent AI, the macroeconomic dynamics would fully explain the economic shifts we're seeing. So the question is why do we event need to mention AI in our explanation of recent economic shifts? What phenomena, exactly, require positing AI disruption?
- munificent 1y ago
  > What phenomena, exactly, require positing AI disruption? AI company CEOs trying to juice their stock evaluations?
- rglover 1y ago
  Social media. Especially in SV, the embarrassment of failing publicly having been given so much money is far too painful psychologically. Spinning that to say you're a "visionary" for replacing expensive employees with AI (even when it's clear we're not there yet) is risky, but a good enough smoke screen to distract the average bear from poking holes in your financials.

sfRattan 1y ago

> It seems like the AI revolution hit as interest rates went insane... > ...I'm wondering if we would be having the same conversation if money for startups was thrown around (and more jobs were being created for SWEs) the way it was when interest rates were zero. The end of free money probably has to do with why C-level types are salivating at AI tools as a cheaper potential replacement for some employees, but describing the interest rates returning to nonzero percentages as going insane is really kind of a... wild take? The period of interest rates at or near zero was a historical anomaly [1]. And that policy clearly resulted in massive, systemic misallocation of investment at global scale. You're describing it as if that was the "normal?" [1]: https://www.macrotrends.net/2015/fed-funds-rate-historical-chart https://www.macrotrends.net/2015/fed-funds-rate-historical-c...