Tuesday, January 09, 2024

NEW INC. MAGAZINE COLUMN BY HOWARD TULLMAN

 

The Real World is Bailing on Artificial Intelligence

 

EXPERT OPINION BY HOWARD TULLMAN, GENERAL MANAGING PARTNER, G2T3V AND CHICAGO HIGH TECH INVESTORS@HOWARDTULLMAN1

 

Major non-tech public companies in the U.S. have pretty much squeezed all of the good news and PR juice possible out of the A.I. lemon. The end of the hoopla around large language models -- which we once called “vaporware” -- is drawing near.

Not surprisingly the Potemkin projects these businesses hastily erected as shiny facades to hide the sad reality that they actually had no clue about what was coming down the pipe and are already showing their age and their cracks. The recent Sports Illustrated debacle where fake articles created by A.I. were published under false names is a good example of pretenders getting ahead of the curve. None of these folks really had any business trying to get into this messy and complicated business. They also had no real desire to make the long-term and expensive investments required to seriously find out what was going on. Only the Magnificent Seven tech giants can actually afford to unreservedly pursue pipe dreams on this scale. The rest of these guys were mostly kidding themselves and trying to play catchup in terms of the market buzz.

The relatively prudent and financially responsible companies among them - notwithstanding their latest A.I. excesses - have for years been shortchanging R&D to bolster their bottom-line profits.  This is what you’d expect, especially when a new area of invention and innovation is outside of their alleged areas of expertise. The very best strategy they can muster is rarely substantive. It’s almost always about noise, free-riding, and jumping on the bandwagon whether they know where it's headed or not and doing it on the cheap to boot.

The current storm, which is rapidly abating, is just the latest case of believing that, if the story is big enough and the shouting is loud enough, the facts don’t matter. At the moment, they’re done fishing and starting to focus on cutting bait and bagging the whole show.

Expect that in the first quarter of this year we’ll see an unending parade of delays, deflections and dodges all designed to try to let the air out of this particular balloon before it completely pops. I always thought that some of the craziness around the diversity, equity and inclusion nonsense and the pronoun police would hit the skids before the big guys started to bail out of their A.I. misadventures. But it looks like we’ll be stuck with the politically correct know-it-alls for a while longer although certain DEI-cheerleading college presidents won’t be leading the charge. I guess the new rule these days - courtesy of the Orange Monster - is that you can lie as much as you want, as long as you can get away with it, and as long as you don’t come to believe your own lies.

This is not to say that every company won’t eventually benefit from the incorporation of these ideas and new technologies into the software, operating systems, and other productivity tools which they purchase and license from the tech giants. It’s just that all their creatively cosmetic attempts to do any of this magic themselves are already clearly doomed. Better than 90% of the businesses in the U.S. may never have any material uses or direct application for artificial intelligence in their shops. 

But that didn’t keep all the biggest non-tech players from dreaming up, staffing up, launching at great expense, and then hyping the daylights out of their own A.I. initiatives long before there was any demonstration of practical applications, productivity gains, or even validation of the accuracy of the underlying statements, which have regularly been shown to include what the industry politely calls “hallucinations.” In formulations and fantasies that Lewis Carroll would be proud of, the promoters like to suggest that what the systems say is very clear - what the verbiage means is up to you - and you’re invited to take and use it at your peril.

The biggest problem with these fantasies is that they never deliver the goods. Even the most industrious group of highly paid monkeys sitting in front of a bank of computers won’t write critical code that is worth anything if they have no idea of what they’re trying to do. Of course, the people charged with explaining to their finance teams and eventually to their investors (not to mention the about-to-be-unemployed team members) where these orphaned A.I. experiments and abandoned initiatives now stand have their hands full. Because there’s no amount of creative math sufficient to conceal the true costs of fake work.

You had hundreds of people charging full speed ahead in these companies under the delusion that effort alone (rather than vision or intelligence) was sufficient to create value. Now the marketing and PR efforts will turn to crafting convenient justifications and explanations - just as baseless and fantastical as the original story lines - to escape the thorny and inescapable truth that the money is gone, and they have nothing to show for it. Even ChatGPT has no answers for this mess. You can either have results, or excuses, but not both.

As all these companies begin to slow down and back away from their stalled and stale “projects”, I assume that they’ll be seizing upon a couple of obvious and easy explanations - as long as it doesn’t highlight their own ignorance. You can be sure that no one will ask why they didn’t think about these exposures before they rushed ahead.

We’ll hear about elaborate concerns over privacy and data. Angst about security and safety, especially in terms of other countries and bad actors. New issues regarding copyright laws and, of course, all the scams and frauds based on voice and video simulations. Measurement, validation and tracking problems will be highlighted as they all begin to worry anew about accountability. Keep in mind that these are the same folks spending billions in ad dollars for programmatic ad solutions where they have absolutely no idea of how the ads are being placed or their impact and effectiveness.  

The bottom line is pretty simple and two lessons to keep in mind as the new year begins. You can’t go wrong by sticking to your knitting and focusing on doing a better job on the things you know how to do. And don’t try to do complicated things cheaply that you shouldn’t do at all.

JAN 9, 2024

The opinions expressed here by Inc.com columnists are their own, not those of Inc.com.