mathattack

It’s going to be a more common occurrence. If you’re buying a company in distress, you don’t really care about the common shareholders. You pay the employees you want to keep via guarantees.

This is especially true when you can use AI to code an almost good enough competitor for cheap.

Is photography an example? The painters (to misappropriate an analogy from Paul Graham [0]) had to content with photos that were as accurate at a fraction of the time. Painting lost much of its so called practical use, and even hobbyists were impacted by a much more efficient tool. And then photography became an art. And digital disrupted analog, and phones disrupted the rest of digital. Professional and hobbyist painters pivoted too, moving from capturing realism to abstract and symbolic styles. And hobbyist art continues in analog and digital photography.

Net - hobbyist programming will change, but not necessarily go away. It will morph into “what doesn’t this linear algebra machine see or know?”

[0] https://paulgraham.com/hp.html

No word on why. I don’t think that it’s their portfolio companies aren’t recruiting. (They’re in a lot of hyper growth companies)

It could be that they’re not effective being outside the companies they support. (I’ve had weak results from VCs saying “talk to this person”)

It could also be the nature of recruiting has changed. I would think that the “your AI talks to my AI” would increase the value of referrals, but I’ve been wrong before.

Yes. For Iceland it was different than the Mortgage crisis elsewhere. (It was currency gambling)

Iceland had a debt crisis from 2008-2011. Part of the issue is the currency is small relative to global markets, so investments/speculation/shocks from elsewhere have an outsize impact.

https://en.wikipedia.org/wiki/2008%E2%80%932011_Icelandic_fi...

Yes. Especially true when the results are unpopular, and contrary to the internal message.

“Accenture tells us we have 50% more middle managers than our peers” or “Bain tells us our customers don’t like us despite the internal CSAT scoring”

Also a single person for the board to hold accountable. In essence the individual that represents the company to outside groups.

It doesn’t have to be this way. Other working cultures have adopted committees as the top. Is is the dominant form in US shareholder capitalism.

The original post is surely satire.

They were ahead of the industry in Marketing but not in reality.

Having AI and an army of consultants is the market standard today. This is because it works.

IBM slapped Watson on everything, and claimed a ton of revenue. In reality they had a bunch of customers who hated them for decades of broken promises.

This shouldn’t surprise anyone who has dealt with IBM over the past 10-20 years.

1 - IBM audits your company’s software usage.

2 - They find a couple servers that someone forgot to turn off a decade ago that nobody uses.

3 - Since it was found in an audit “you’ll lose the 90% discount” and they present the CFO with a $20 million bill.

4 - “It pains us to have to enforce this MSA that your predecessors signed 20 years ago. In the spirit of partnership we can make this go away with a $2 million Watson purchase.”

5 - You get the Watson subscription which you don’t dare turn on.

6 - IBM touts the growth of AI to Wall Street [0] and fires a bunch of old people [1].

Of course this wasn’t going to end well.

[0] https://www.constellationr.com/insights/news/ibm-q4-better-e...

[1] https://www.publicjustice.net/federal-court-boston-ibm-age-d...

In addition to what others say, the potential for profiting later increases the initial price.

Think of it this way… let’s say two identical companies are going to IPO. Company one you can sell the shares for a profit later if you like. Company two you can only sell for the price you bought.

Which will have the higher IPO price?

This shouldn’t surprise anyone who has dealt with IBM over the past 10-20 years.

1 - IBM audits your company’s software usage.

2 - They find a couple servers that someone forgot to turn off a decade ago that nobody uses.

3 - Since it was found in an audit “you’ll lose the 90% discount” and they present the CFO with a $20 million bill.

4 - “It pains us to have to enforce this MSA that your predecessors signed 20 years ago. In the spirit of partnership we can make this go away with a $2 million Watson purchase.”

5 - You get the Watson subscription which you don’t dare turn on.

6 - IBM touts the growth of AI to Wall Street [0] and fires a bunch of old people [1].

Of course this wasn’t going to end well.

[0] https://www.constellationr.com/insights/news/ibm-q4-better-e...

[1] https://www.publicjustice.net/federal-court-boston-ibm-age-d...

The price tickets sell for will be higher if scalping exists. Demand increases for 2 reasons:

1 - I’m more likely to buy a ticket or pay a higher price if there’s a chance of turning a profit if I can’t go.

2 - Speculators are more likely to buy unused inventory if they can turn a profit. This increases total tickets sold. (Scalpers get paid for taking risk)

I’m not defending this. I’ve given up on concerts for my favorite larger bands due to sticker shock.

And he closes [2] with “May the force be with you”

Very interesting that he seems to be in the camp of “It’s ok if the machines prove it as long as we can understand and formally verify it after.”

I’m not sure I follow.

You’ve hit on a big reason - short term gains. The partners at Accenture, Infosys and the rest circle the execs at old industry companies. The companies start performing worse, though nothing some accounting gimmicks can’t cover. Then they have a very bad quarter, enough that it will ruin their fiscal year. Fingers start pointing, and talk turns to “belt tightening” and “turning fixed costs to variable.” All of a sudden the proposals from Big Consulting that provide savings bankable this fiscal year sound very good.

It doesn’t take long for the cracks to show:

- Not enough program/project management.

- An intuition that service dropped but no good metrics.

- Retrain the outsourcers after the first team quit.

- Inability to size new projects.

- Shadow IT departments form in the business units.

- The outsourcers don’t care about things like vendor consolidation or holding other vendors feet to the fire.

All of this might still be worth it if it’s done strategically to improve a chronically underperforming IT department. It’s rarely effective when rushed to cover up poor performance of the core business.

Interesting as companies like Ford like to show they’re on the leading edge of AI, but do they really have the capabilities and 10x engineers?

Sort of. They can use the debt to grow, in which case they’re betting that they will get more profit than the principal plus interest payments. (Beating a 4% return on the loan, not the whole company)

They could also use it to change the capital structure buying back shares. This simultaneously increases risk and share price, unless the reissue more shares.

In both cases, if they can’t pay the interest payments, the company gets handed over to the creditors. Not an issue for Google, but a lot of startups struggle with venture debt.

It’s not just yield. Its debt gets paid first. And if you miss the interest payments the debt holders get the company.

If you’re profitable and can pay it back, it’s better than equity.

If there’s any financial risk then it may not be worth the potential loss of control.

Yes. Though even more than the US, their engineering talent from top schools heads into consulting and finance.

I couldn’t believe this the first time I heard it. This isn’t new, it goes back to the 90s. Perhaps longer.

He’s writing satire about AI, no?