Open AI is No Gold Rush

Martin Shkreli on the Open AI Gold Rush: Real Innovation Will Come After The AI Bubble

To call Open AI a goldrush implies that at least some ordinary people are making money from it. Except no one is making any money from Open AI. Unless, I suppose, you include making viral YouTube videos and tweets about Open AI, and collecting Google ad revenue from clicks/impressions, not from the AI itself. Being a private company, you cannot invest in Open AI. Nor are there any AI ‘meme stocks’, unlike GME/AMC in early 2021. Your options are quite limited.

2-3 years ago people were buying fancy cars and expecting to retire off crypto riches. Or GME/AMC riches. Or NFT riches. Now we’ve been reduced to posting twitter threads and viral articles praising the capabilities of GPT or warning of AI risk. The tweets and posts go viral, but as for money, not so much.

This is just more evidence, over and over, that things which are overhyped either it’s too late to make money or no one is making money. It sounds cliched to say, but to make money you cannot look/do what or where everyone is looking or doing. The past 1.5 years, to put it bluntly ,sucked for people trying to make money:

1. Surging interest rates, tech layoffs, falling home prices, inflation, etc.

2. Bursting of crypto bubble in Nov. 2021 (Although it’s trying to recover, it has a long way to go, and many crypto assets will never recover.)

3. Bursting of the ‘meme stock’ bubble in 2021 (GME, AMC, etc).

4. Option volatility has been subdued since early 2021 as evidenced by the flatlining of the VIX index. Many quant strategies generally benefit from low interest rates (for leverage) and volatility expansion, and the two are often tied together (low interest rates makes leverage cheaper, and hence more options volume and volatility). The failure of volatility to explode like it did in 2020 during Covid or early 2018, combined with the 2022 bear market and sky-high interest rates, means many quant strategies, such as Taleb’s famous ‘barbell strategy’, no longer work.

5. The ‘VC crash’, notably the collapse of SVB bank and others, which will likely mean downgraded valuations for start-ups.

Right now we’re in Substack’s world. Same for Twitter. The top Substack authors and pundits, and on Twitter too, making more money than ever even despite GPT, which despite producing good prose has not disrupted the pundit hegemony. Everything else is falling apart/sucks. Unlike buying crypto or meme stocks, few people are intellectually cut out for success at the wordcel game or have the gift of gab, hence so few people participating, unlike crypto riches for the masses.

Even in the 90s it was possible to invest in early tech companies like AOL, Dell, Microsoft, Oracle, or Cisco, while they were small and cheap, but not anymore. Either stuff waits too long to go public, or gains never hold anymore, unlike in the 90s when stocks would go up for years at a time. Stocks get pumped due to Reddit/Twitter hype and come crashing down days later….nothing holds.

Again, I have never seen sectors and careers destroyed or sidelined as badly as in 2021-2022. Worse than even 2008-2009 in terms of people I follow.

For 2023, Meta is now among the best performing assets, its stock having increased 80%. Hardly anyone was talking about it, unlike the examples above, and by late 2022 Meta was left for dead, eclipsed by AI hype and weighed down by Metaverse losses. But properties controlled by Meta collectively have 2 billion users and generate $100 billion in annual revenue (about 1/3 of that profit), and this is regardless of the ‘Metaverse’ being a dud. It does not matter if Bitcoin goes to zero or how much hype there is about the latest iteration of GPT–people are addicted to their social media, and advertisers are shelling out near-record sums to reach these billions of users. That is not going to change, or at least there is no reason to expect it to.