-Alan Rickman
Finance is the allocation of capital in society. Talent follows a higher duty, country, or religion, but by and large– talent follows capital.
Talent may rationalize how it isn’t about the capital. There’s a greater purpose. But it’s clear from a macro standpoint capital that talent and capital are aligned. This can be amazing for society as talent goes into the sectors that need it most. Who is better to determine what is needed than the collective actions of a society? Supply and demand determine the value. Great in theory, but we all know market failures.
Take the negative externalities of a coal plant. Sure, it produces electricity for cheap, but it pollutes the local area and emits large amounts of CO₂. There are parts of human nature that need to be better incentivized. This still holds in the tech world.
Ads
For over two decades, many of the smartest, highest-paid people in the world have been perfecting how to get us to watch and click on ads. Pixels on a screen lead to purchases of material goods. Purchases for things we don’t need and won’t make us lastingly happy or fulfilled. That has been the purpose behind their long hours of work.
They serve us ads by providing other services that feel good or provide value. The biggest was search, where we can immediately find relevant answers. It could be watching videos, learning new things, connecting with and messaging friends, or following the news.
However, they also serve us junk food. Feeding gossip and conspiracy theories to push us further into our political biases, recommending content that makes us angry and disconnected from real life. Videos that are distractingly entertaining where we learn nothing. It’s easy to go down rabbit holes watching a video of bouncing tires hitting cars, cat videos, or food porn.
The incentive for companies selling ads is to serve us digital crack. TikTok is the personification of this. We’re compelled to click and scroll to our detriment.
Ads were later complemented with something even more superficial.
Crypto
The crypto craze had many promises. It’s a new trustless database technology. Exciting! Except the only crypto companies that had a sustainable business model were the marketplaces where crypto was bought and sold.
Getting around cumbersome regulations could make sense, but this loophole closed.
The best use case of cryptocurrency has been the stablecoins pegged to the US dollar. This allows those in countries with rampant inflation to diversify away from their home country’s currency. However, that’s not where money was made or where most effort was put in.
To this day, after hundreds of billions of dollars invested, there isn’t one company that uses a cryptocurrency at scale with a practical use case. There’s no utility in utility tokens. Microtransactions can make sense, but maybe they’ll still be done in USD as there isn’t a widely adopted use case for them yet.
The biggest crypto proponents are those who lack trust in their personal lives. It’s often a projection of their insecurities never to trust anyone else fully.
Brilliant people wasted years of their lives working on crypto. A ton of money flowed into the space. Fortunes were made. The fortunes made came from retail investors who didn’t know any better. It was often the rich stealing from the poor. That was the result of the crypto craze. It will continue.
Maybe one-day use cases may be found, but Bitcoin was invented in 2009. Imagine if a company launched in 2009 and had hundreds of billions invested in them, and in 2024, they still don’t have product market fit.
Maybe it takes time, but even the biggest crypto fanatic has to admit it’s been a while.
AI
At least with AI, exciting use cases will make workflows more efficient.
Advancements in LLMs will primarily benefit existing incumbents. In the same way, startup consumer tech companies weren’t a great bet in 2010, but investing in the incumbents would have been. The rise of mobile and cloud empowered incumbents.
LLMs and SLMs are better for increasing the margin of existing use cases. They can leverage existing proprietary datasets to streamline and automate workflows.
Capital is flowing into AI, and so is talent. This seems the most positive of the past couple of decades of tech trends. The startups it will benefit will be those in the enterprise space who can quickly add functionality that results in massive efficiency gains.
We need innovation in AI to keep our economy afloat.