An AI bubble threatens Silicon Valley, and all of us

> Surveys confirm that for many workers, AI tools like ChatGPT reduce their productivity

I'm pretty suspicious of that survey (the one that always gets cited as proof that Copilot makes developers less productive, which then inevitably gets used to argue that all generative AI makes developers left productive): https://resources.uplevelteam.com/gen-ai-for-coding

If I was running a company like https://uplevelteam.com/ that sells developer productivity metrics software, one of the smartest marketing moves I could make would be to put out a report that makes a bold, contrarian claim about a hot topic like AI coding productivity. Guaranteed to get a ton of press coverage from that.

Is the survey itself any good? I filled in the "request a copy" form and it's a two page infographic! Precious few confirmable details on how they actually ran it: https://static.simonwillison.net/static/2025/uplevel-genai-p...

Here's what they say about their methodology:

> Metrics were evaluated prior to implementation of Copilot from January 9 through April 9, 2023 versus after implementation from January 8 through April 7, 2024. This time period was selected to remove the effects of seasonality.

> Data on Copilot access was provided to Uplevel Data Labs across several enterprise engineering customers for a total of 351 developers in the TEST group (with Copilot access) and 434 in the CONTROL group (without Copilot access). The developers in the CONTROL group were similar to those in the TEST group in terms of role, working days, and PR volume in each period.

Additional example -

Had to review submissions to a conference. You had to pry open a thick rind of words, to get seeds of meaning spread all over the place, and then reconstruct the points being made. Wordy, complex and tiring to analyze.

Dumping it into ChatGPT to get answers was an act of frustration, and the output made you more frustrated. It gave you more words, but didn’t help with actual meaning, unless you just gave in and assumed it was accurate.

It’s making the job of verification harder, and the job of content creation easier. This is not to society’s larger benefit, since the more challenging job is verification.

I shudder to think what is happening with teachers and college at this point.

This has been my complaint about AI from the beginning, and it hasn't gotten better. In the time spend I figuring out how to explain to the AI what I need it to do, I can just sit down and figure it out. AI, for me, has never been a useful assistant for writing code.

Where AI has really improved my productivity is in acting like a colleague I can talk to. "I'm going to start working on X: how would you approach it? what should I know that isn't obvious from the beginning?" or "I am thinking about using Y approach for X problem but I don't see a lot of literature about it. Is there a reason it's not more common?".

These "chats" only take 10-30 minutes and have already led me to learn a bunch of new things, and helps keep me moving on projects where in the past I'd have spent 2-3x as long working through ideas, searching for literature, and figuring things out.

The combination of "every textbook and journal article in existence" with "more or less understands every topic in its training data" is incredibly powerful, especially for people who either didn't do a lot of formal school training or haven't had time to keep up with new developments.

Beginners can benefit from this kind of interaction too, they'll just be talking about simpler topics (which the bot would do even better with) instead of esoterica.

I'm sure I've read somewhere - and it annoys me immensely that I can't recall the source - that SWEs perceive they are more productive with AI, but the measurements say they aren't.

Gary is harsh or extreme, even, but the point largely stands: https://garymarcus.substack.com/p/what-if-generative-ai-turn...

Personally I think there will be things that gen-AI is useful for, such as rapid education for beginners and learning or performance feedback mechanisms. Those use cases are promising, and still in development. Hopefully they'll be cost-effective as well.

Deskilling labour in order to endroute around conflict in the workplace is as old as capitalism. It's not just about automating to reduce expenses, but also about reducing both bargaining power and the "specialness" of the worker.

Uppity Google employees raising a stink and not doing their job because of CEOs sexually harassing employees? Or passing around petitions about making weapons or unethical AI? Sharing their compensation package #s to improve bargaining position or deal with perceived injustices around salary differentials?

They only get away with that because they have bargaining power that management would dearly like them not to have.

The aggressive pivot to "AI" LLM tools is the desperate move of a managerial class sick of our uppity shit.

> worry about the viability of OpenAI in particular [...] they also have the threat of OpenSource models

It's a real shame OpenAI didn't succeed with their core and most fundamental mission of being open and improving humanity as a whole, where new FOSS models would have been seen as a success, not as a competitor or threat. We're all worse off because of it.

> OpenAI is raising its prices to absurd levels

When customers don't know how to differentiate on quality, they use price as a signal.

Worried? Their mission is to make sure that AI benefits all of humanity. Surely they must be thrilled that there is a ton of competition undercutting their prices and eating their market share. I bet Sam Altman is popping champagne as we speak.

> We are building safe and beneficial AGI, but will also consider our mission fulfilled if our work aids others to achieve this outcome.

> Our mission is to ensure that artificial general intelligence—AI systems that are generally smarter than humans—benefits all of humanity.

Source: https://openai.com/about/

In some ways it resembles the drug industry. Heavy investment in what looks like a promising line of development only to have it flop like 4.5 with marginal improvements.

It also seems OpenAI is struggling to scale. I'm a premium subscriber and the site is totally unusable for multiple hours every week. Now that Claude has web search I may switch away from OpenAI permanently.

> OpenAI is raising its prices to absurd levels

When did they raise prices? I don't recall them ever raising prices.

> That said, I expect protectionist policies will be enabled by the US government to protect them and also X.AI/Grok from foreign competition, in particular Chinese

People love to say this but its hard to imagine which American or European businesses would be actively using models that are being run and hosted within mainland China. The risks are too great. Protectionist policies can be entirely ignored.

> I guess they are trying to be the Apple of the AI world...

They're looking more like Alta Vista.

Anthropic didn’t build shit, it’s got the same closed output rules as ClosedAI and xAI and Perplexity and the Gemini API. Send them your precious questions and code and what do you get back? Output you with a prohibition era policy telling you not to use it to compete with their thing that does everything. That’s such a dumb deal, I immediately think people are dumb when I hear them mention using closed output AI services. Government protections for explicitly anticompetitive services? What a joke!

> It's really hard to accurately assess the possibilities granted by LLMs, because they just feel like they have so much potential.

I agree, but this feeling isn't anything new! This was the verbatim argument people used when insisting that blockchain was going to be a transformative technology. Bitcoin increased in value so dramatically and so quickly that it just felt like there had to be something valuable in the underlying technology, and corporations collectively through billions at it because they wanted to be the ones to exploit it first.

It's very easy to look back and say "well of course it's different this time," but the exuberance for blockchain at the time really was very close to current AI hype levels. It's quite possible that AI becomes a useful tool in some relatively niche scenarios like software development while never delivering on the promise of replacing large swathes of skilled labor.

That might be true, but GenAI for banner optimization is getting huge investments in BigTech. The company that's not doing it will likely bite the dust seriously. You may say it's a sad state of affair, but this will pull hard on the tech you're talking about (albeit, with much less romantic outcomes).

Also, from Sequoia: https://www.sequoiacap.com/article/ais-600b-question/

Sort of surprised this hasn't been taken down, actually.

A big problem is to what extent do future business models disrupt the public perception that AI is "objective" or unbiased, a perception that is often itself the product of these companies' own marketing. When the very results of a prompt to an agent/LLM, such as ChatGPT, are suspected of profit/corporate interests over accuracy, why would anyone use it over the dozen other players in the field? This is precisely the thing that has soured google search results.

What does Zitron define as "AI" companies though? (Actually curious).

A lot of "AI" investments in public markets were basically a bundle of fabless players (Nvidia), data center adjacent players (Broadcom), and some applications, whereas private/VC investment was bifurcated between foundational model players (OpenAI, Anthropic), application or AIOps oriented players (ScaleAI, Harness, etc), and rebranded hardware vendors (Cerebras, CoreWeave, Groq, Lambda).

If by AI he means foundational model companies, then I absolutely agree that there is a need to be bearish about their valuations, because they can constantly be outcompeted by domain specific or specialized models.

Furthermore, a lot of the recent "AI" IPO hype are functionally fabless hardware companies like CoreWeave or Cerebras who were previously riding high because of the previous boom in semiconductor and chip investments.

I've been fairly open about this opinion at my day job.

Ed Zitron is trying to be a wittier Kara Swisher, which means there is near zero signal in the anti-tech noise. Which is a shame because he has the talent to be something else.

"better search / information retrieval" - this is only temporary until people figure out either the SEO equivalent to get into models or AI agents start charging for product placement etc as they will absolutely need to add to their revenue model.

Its the equivalent of all new tech that comes out of the valley -- amazing for early adopters etc then as it starts having to move past the user growth phase and into the monetizing phase the product loses its lustre and create space for new competitors/tech following the same paradigm. Rinse and repeat.

It's looking a lot like it'll mostly be a tiny bits of value scattered around all over, amounting to quite a bit all together, but little in the way of acute disruption of... anything. Aside from ruining some things, as you note.

The supposed Jobs quip about Dropbox being a "feature, not a company" comes to mind.

The software industry as a whole generates trillions of dollars every year. The current state of AI makes coders significantly more efficient and it’s only getting better.

It’s easily worth trillions with just normal speculation.

Just an anecdote, my father when he was younger used to be a great driver. He would drive all around Europe on our vacations, in capital cities (e.g. Paris) with nothing but a tourist map (mother holding the map) and his eyes and ears.

Places I wouldn't really like to drive myself today because of the difficulty (Italy etc.).

For many years he's been using GPS to assist him, first TomTom then iPhone and now his new car has CarPlay.

He's a much worse driver today, constantly distracted, constantly looking at the screen instead of his surroundings and actually learning, using his brain.

I myself like to ride MTB in the woods, I know all the trails and small features in the back of my head. I'm aware of my surroundings and it just sticks without any effort over the years.

I have friends I ride with who use a trail map on their phone or bike computer, many years later they still don't know the trails because they're always looking at their devices.

Sometimes we stop to "have a look" where the fork in the trail goes, drives me mad when it interrupts the flow of the ride.

This is what AI feels to me in many ways.

It's a double-edged sword.

Do you have more details on which aspects of Epictetus' philosophy are related to hating to outsource mental work? I'm not familiar enough with stoicism. Thanks

(I could ask chatgpt, I ask you instead =p)

PS: Claude 3.5 Haiku take on it: "For Epictetus, the process of thinking is more important than the result. By outsourcing mental work, people surrender their most valuable tool for self-improvement - their own mind."

Knowledge work. Part of it is the ability to reason and part of it is just knowing many things and certain fundamental principles.

The dot com bubble from around 1995 to 2000 was huge. I started working in 1997 and we thought it would just keep going but then the bubble popped. Thousands of people lost jobs. Stock market dropped way down. But that doesn't mean that the Internet was useless.

I see AI like that. In my view there is absolutely an AI bubble and it does have real world uses but it is way over hyped right now. I say that as someone working on AI chips.

I generally agree. I think we're in a hype cycle and there will be a correction. I'm hopeful that people will be more realistic about it being a tool and not a panacea. For OpenAI, though, they have to talk up AGI and Universal Basic Compute because of the capital they've raised and their unrealistic valuation.

Curious to see how open weight international models eat into OpenAI's first-mover moat. Until hardware is cheaper and more commodity—which requires crossing the CUDA moat—open weight will be a fun toy, but not a serious production commodity.