YouSaid · the spoken record

Avi Goldfarb

lines on the record: 57
first: 2023-03-21
most recent: 2023-03-21
sittings or episodes: 1
sources: podcast

Every line below is reproduced as it was said and linked to the record it came from. Nothing here is summarised or generated. Directory · Search · Corrections

“Early in my academic career, I had a lot of failure. First, maybe 10 papers I submitted to journals got rejected. It was brutal. Our vice dean at the time guarded charge of faculty. He seemed to believe in the underlying idea of understanding economics technology. We clear at the time I had no idea he was doing this. I only know this with the benefit of hindsight, but he essentially structured my early career in terms of who was responsible for promotion decisions around what I was doing and what my responsibilities were at the university to set me up for success despite what on the surface was failure after failure after failure. He believed in me what I was doing and really more than anybody else career-wise sent me up for I like to think of as success anyway. I really appreciate it.”
2023-03-21 · Invest Like the Best · Avi Goldfarb - The Economic Impact of AI - [Invest Like the Best, EP.321] · IDENTIFIED FROM THE TRANSCRIPT · source
“Essentially own capital, who own the machines, and they become much, much better off, but leading to massive inequality and exploitation of their work of power, that's a real thing to worry about. Maybe the best way to put it is I worry about the concentration of power through AI”
2023-03-21 · Invest Like the Best · Avi Goldfarb - The Economic Impact of AI - [Invest Like the Best, EP.321] · IDENTIFIED FROM THE TRANSCRIPT · source
“I've covered the most excited, which is I think this opportunity to take things that only a handful of humans can do. They're in sort of an outside living because of it and allow everybody else to do it, or not everybody, millions of other students. It's a very exciting world to imagine. Whether it's writing or graphic design or diagnosis or aspects of financial services or other things. What I'm most worried about, the direct consequence of that is there are people who will be hurt. And I worry for them and try to think through how do we mitigate the pain that they're going to experience, whether that's their income or training or else there's sort of a whole set of questions around there that are thing one to worry about. Perhaps bigger thing to worry about is, yes, the technology can upskill many, many people, but the underlying technology might be owned by a small number of companies. If this AI future leads to a reduction in inequality in terms of skills, but leads to a massive increase in handful of people.”
2023-03-21 · Invest Like the Best · Avi Goldfarb - The Economic Impact of AI - [Invest Like the Best, EP.321] · IDENTIFIED FROM THE TRANSCRIPT · source
“Since we saw what ChatGPT can do, the thing that I'm most excited about for AI is this idea that millions of people can now do the things that historically only thousands could do. That's going to be stressful and disruptive for the thousands. And that's an important policy question. But it's going to be amazing for the rest of us. And thinking through the transition from the 19th century through the 20th in farming, yeah, we've a lot less farmers, but food shortages aren't really an issue in North America anymore. That's amazing. We can do that across many industries. That's the real opportunity for AI.”
2023-03-21 · Invest Like the Best · Avi Goldfarb - The Economic Impact of AI - [Invest Like the Best, EP.321] · IDENTIFIED FROM THE TRANSCRIPT · source
“My hope, and I'm using the word hope on purpose, is that all those other professions turn out to be like farming, where we don't have to worry about the stress and cost of dealing with the legal system, whether it's for taxes or criminal or whatever else. That friction mostly goes away, but we still have a few lawyers. That sounds like an amazing world. The transition is stressful and be managed, but a future we all can deal with the state efficiently without having these very expensive intermediaries between us and the law being lawyers. That sounds great. Medicine too, a lot of the stress in the medical system is around the social aspects and the personal aspects of dealing with bad health news. Right now, doctors don't have a lot of time for that. Other medical professionals might. So a world where we have fewer doctors but 10 times as many medical professionals sounds like a wonderful one. That's an upskilling one. You describe those as a dichotomy, and I kind of think one's almost a necessary condition for the other, especially.”
2023-03-21 · Invest Like the Best · Avi Goldfarb - The Economic Impact of AI - [Invest Like the Best, EP.321] · IDENTIFIED FROM THE TRANSCRIPT · source
“You want. Singapore has a digital simulation in the entire city. They're going to build a new building that they have a sense of what that's going to mean in terms of extra density, extra drivers, et cetera. And they can simulate if we build this new building, what's going to happen to traffic? And do we need to change the roads? And they can simulate building the building and changing the road this way versus that way or adding it a lot versus not and see how it all plays out. A third way to collect data is if you know enough about the situation, you can simulate it. Then try hundreds, thousands, or millions of different possibilities. And the underlying technology there is another kind of AI called reinforcement learning. You can think about it as a way to strategically collect data in order to help your predictions.”
2023-03-21 · Invest Like the Best · Avi Goldfarb - The Economic Impact of AI - [Invest Like the Best, EP.321] · IDENTIFIED FROM THE TRANSCRIPT · source
“Through those sensors. And then the other car companies are doing the same thing. If you bought a car in the last little while, the privacy policy on your car is incredibly complicated. Basically, it's because they're sending all the data about what you're doing to help you now, but a lot of it is to help them build the car in the future. Some of the AI is already in there, like a warning for what the other drivers might be doing. But some of the AI are not there yet, but they're collecting that data strategically in order to build what they want. Category two is to proactively collect the data based on actually going out and doing things with customers. There is a third category that's really intriguing, which is what we used to call simulation, but now the word that people use is digital twin, fundamentally the same thing, which is you create a simulated version of the world that your product gets embedded in. And then you try different things and see how the system reacts. The challenge there is making sure that the simulation is good enough to do what.”
2023-03-21 · Invest Like the Best · Avi Goldfarb - The Economic Impact of AI - [Invest Like the Best, EP.321] · IDENTIFIED FROM THE TRANSCRIPT · source
“You can create it. And you can often create it by watching products into the market that don't represent the system level change, but that represent either a point solution or an application solution on the way. In the auto industry, we think a lot about autonomous vehicles. The company that launches the first autonomous vehicle and they can start collecting data at scale from that is going to have this beneficial feedback loop. They're going to collect more and more and more data. It's going to be hard for anybody to complete. But in order to actually launch that autonomous vehicle, you need to have enough data in the first place that you overcome the regulator and you're creating a safe and not dangerous car. And so far, that's been a meaningful barrier has now. So what's the strategy? The strategy is you embed sensors into all the cars you have on the road, even if you're not as an automotive company, an autonomous vehicle. You don't have autonomous driving yet. And we've seen Tesla do this. They have cars with all sorts of sensors that are driven by humans and they're trying to create data at scale.”
2023-03-21 · Invest Like the Best · Avi Goldfarb - The Economic Impact of AI - [Invest Like the Best, EP.321] · IDENTIFIED FROM THE TRANSCRIPT · source
“So I love the way you put it, scale and quality because it's not just scale, you actually need both. And both of those need to serve a particular purpose. So if you don't know what you're trying to accomplish, lots of companies say, we're going to try to organize all of our data. They spend millions and millions and millions of dollars creating an easy-to-use data interface, but they have no idea what the data is going for. They don't know what they're predicting. And ultimately, much of that money ends up being wasted. When you're thinking through scale and quality of data, your starting point really should be, let's say we're going to do system level change in our company. Let's say we have identified a way to deliver a much better product through a new system-based and better prediction. What does that ultimate prediction look like? What are we trying to predict? And then you go back and think through what data do we have already that's going to help that and what data do we need. That second stage, what data do we need? Well, now how do you go about collecting data? Strategy number one is you can buy it. Sometimes it might be out there. But more commonly,”
2023-03-21 · Invest Like the Best · Avi Goldfarb - The Economic Impact of AI - [Invest Like the Best, EP.321] · IDENTIFIED FROM THE TRANSCRIPT · source
“We're focused on AI disruption is among those can you use prediction if you had better information could you then go directly to serving customers well and skip all that architecture that you have all those SOPs that deal with the fact that you don't serve your customers as well as you could.”
2023-03-21 · Invest Like the Best · Avi Goldfarb - The Economic Impact of AI - [Invest Like the Best, EP.321] · IDENTIFIED FROM THE TRANSCRIPT · source
“The ultimate in service in air travel is to ensure smooth air transportation. That's actually the mission of Seoul Engineer Airport, often to go to the best airport in the world. But most of what they do is about a failure to deliver on that. Most of what they do is to compensate customers for the fact that they have to spend hours and hours in the airport. But no one wants to spend time at the airport. That's an industry where you can think, well, here's all the things they do that aren't about serving customers well in lots and lots of industries you can identify serving customers well sometimes means personalization Sometimes it means efficient processes sometimes it means no waiting depending on the context it can mean all sorts of different things getting you healthy quickly or preventing you from getting sick in the first place but think through what does serving customers well mean and then go through the companies in that industry and identify how much of what they're doing is about serving customers well and how much of what they're doing is about failing to serve customers compensating customers for the fact they fail to serve them well and then the last step”
2023-03-21 · Invest Like the Best · Avi Goldfarb - The Economic Impact of AI - [Invest Like the Best, EP.321] · IDENTIFIED FROM THE TRANSCRIPT · source
“Start with what does it mean to serve customers in a particular industry well? And then you think through how do we actually serve customers in that industry and go to, okay, let's take a company, let's go through their processes and try to separate the things they do into two categories. Category number one is actually delivering on your mission to serve customers. And category number two is the things you do to compensate your customers for your failures. And the more things that fall into that second bucket, the more you worry about disruption, and the more entrepreneurs should see a real opportunity. As an example of this plays out, think about airports. And often airports in the world, Solencion or Singapore, they're spectacular. They're beautiful. They're multi-billion dollar structures, great shopping and restaurants and all this other stuff. But how did the super rich fly? What are the airports of the super rich look like? They're sheds. Private terminals don't have great shopping and great restaurants and all those things.”
2023-03-21 · Invest Like the Best · Avi Goldfarb - The Economic Impact of AI - [Invest Like the Best, EP.321] · IDENTIFIED FROM THE TRANSCRIPT · source
“Example is because it hasn't happened yet. Some creative entrepreneur is going to take that and figure out how to create a new advertising industry, a new consumer products industry, a new entertainment industry, et cetera.”
2023-03-21 · Invest Like the Best · Avi Goldfarb - The Economic Impact of AI - [Invest Like the Best, EP.321] · IDENTIFIED FROM THE TRANSCRIPT · source
“You ask for an image and it'll give you 10, and maybe only one of them is what you're looking for, but you know what you're looking for. Know what the right answer is. And if you know what the right answer is, these models are incredibly helpful. The hype and excitement is running away from the technology and the anxiety is running away from the technology because this so far is a technology that's great if you know what you're looking for. That means when you're trying to identify the business opportunities from generative AI or AI more generally, you need to think through. You need to recognize this isn't going to be able to allow me to take humans out of the loop and processes that happen, but instead maybe you have someone who spends all day writing an article. And now that's going to take them five minutes. They're going to know what the right query is. They're going to look at it and read it and say, oh yeah, that's great. I need to edit these six words done. And then they can write a lot more content. They can embed imaging in that content through other tools. And somehow, I don't know.”
2023-03-21 · Invest Like the Best · Avi Goldfarb - The Economic Impact of AI - [Invest Like the Best, EP.321] · IDENTIFIED FROM THE TRANSCRIPT · source
“We absolutely can't predict it. It's prediction technology, so it relies on data. It's something totally new. We don't have data. So we have no idea what's going to happen. Partly because it's prediction technology and we think about, especially in generative models, what makes them so useful is they make the process much more efficient as long as you know what good output looks like. So if you think about, I don't know if you've played with ChatGPT, presumably you have, or DALY too, you know what you're looking for. And that's when it's most useful. If you have no idea, the anxiety you see around ChatGPT ads giving all these wrong answers. There's a lot of gotchas. I'm an expert in this and I asked to write a fiber grab essay on that five paragraph essay was wrong. Of course it was, but it's a great starting point for you to now turn it into a great five paragraph essay. Use DALI for graphic design. There's lots of people, including me, who are terrible at drawing, but I often want to embed a graphic design in things I do. I can now create images at scale in a way I couldn't before.”
2023-03-21 · Invest Like the Best · Avi Goldfarb - The Economic Impact of AI - [Invest Like the Best, EP.321] · IDENTIFIED FROM THE TRANSCRIPT · source
“Exactly. It wasn't that they didn't see it coming given the way the organization was set up. There wasn't much they could do about it. The failure of Blockbuster in the long run, maybe there could have been some way to hive off a separate company or do something like that, but it wasn't a failure revision of recognizing what was happening. It was a failure of not knowing how to take the organization they had and turn it into the organization. That's when we see disruptive opportunities, which is there's an incumbent and they do things the way they do things. And what prediction enables is a totally new way of operating. And well, a totally new way of operating requires new humans and a different set of humans who are doing different things, a different set of assets, and that could just be too heavy a lift for a cut.”
2023-03-21 · Invest Like the Best · Avi Goldfarb - The Economic Impact of AI - [Invest Like the Best, EP.321] · IDENTIFIED FROM THE TRANSCRIPT · source
“That is not a thing anymore. The story we often hear is that Blockbuster didn't see digital distribution coming. But if you actually look at the Blockbuster documents, they saw it coming. They just couldn't manage their organization to move in the right direction. They were largely franchised. And the franchise owners, they didn't want digital distribution. There wasn't really a way to incentivize them the way the company operated to enable digital distribution.”
2023-03-21 · Invest Like the Best · Avi Goldfarb - The Economic Impact of AI - [Invest Like the Best, EP.321] · IDENTIFIED FROM THE TRANSCRIPT · source
“Of disk drive was cheaper, maybe didn't have as much storage in the first waves as the older ones, but be applied to a wider variety of applications. The established disk companies were selling into the same big enterprises, and the big enterprises didn't care about the digital storage that was going to be for small-scale applications, so they ignored it. And a new company came along. And as they got better and better and better, they ended up disrupting and being able to do the stuff for the big ones as well. Called demand side disruption. Rebecca Henderson developed, you might think of a supply-side disruption, which is companies are a way of doing things. This is around SLP, stated operating procedures. And it's very hard to break them. If a new company comes along, new business idea comes along, new business model, if that's going to change who does what in your organization, you just might ignore it. And so it may never happen. The example we talk about in power and prediction is in the context of Blockbuster video. I was a kid. It was a big event on Saturday. We'd go, we go to Blockbuster video, and we pick our video. After the activity was going to block.”
2023-03-21 · Invest Like the Best · Avi Goldfarb - The Economic Impact of AI - [Invest Like the Best, EP.321] · IDENTIFIED FROM THE TRANSCRIPT · source
“It's impossible. Add in a good prediction technology. We can now think through personalized education in terms of what they're learning in the classroom. That's the best way to get this particular kid to do better and to reach their potential while also potentially keeping the class, the social-emotional needs altogether with your cohort. I describe that in the second grade, but I also think that same thing applies to my MBAs. Doctoral students largely get personalized because two doctoral students per professor, but the rest of the university, they don't get that personalized education, but they could in the presence of good prediction tools. We could deliver an entirely new kind of education. So that's piece one. Now let's talk about disruption. There's two different concepts of disruption in the academic literature and they get mixed together. There's the Claytonson kind of disruption, which is that you start up, end up creating a worse product, effectively, but that serves a particular niche in a way that's not of interest to the core customer. So the Clayton Skina disruption was, you talked about disk drives, and each new generation.”
2023-03-21 · Invest Like the Best · Avi Goldfarb - The Economic Impact of AI - [Invest Like the Best, EP.321] · IDENTIFIED FROM THE TRANSCRIPT · source
“Of a good prediction machine. The pharma company can. This isn't pharma company exploitation. This is, hey, because we have a better prediction technology, we can diagnose people at scale more efficiently for this previously seemingly rare disease, any production capacity on that kind of a drug becomes much, much more profitable. There's a lot of this kind of opportunity, which is once you have better prediction, you can do things that you couldn't do before. And if you have the assets that are a complement to prediction that could take advantage of it, there's huge money making opportunity. You can see that in pharma. can see that in some kind of personalized goods and services. Maybe this is because I sit in education, but I think there's huge opportunities in education because those rules everywhere in education. We have people go cowork by cohort. Everybody in second grade kind of learns the same stuff. Everybody in the third grade learned stuff. Historically, we haven't had a really good way to deal with that because everyone in the second grade in terms of social-emotional benefits by being with other second graders. And so having the same teacher teach in the class of 30 teach 30 different lessons.”
2023-03-21 · Invest Like the Best · Avi Goldfarb - The Economic Impact of AI - [Invest Like the Best, EP.321] · IDENTIFIED FROM THE TRANSCRIPT · source
“Exactly. If you make chips, or if you provide cloud services, good for you. There's going to be a handful of opportunities there for sure. Second point is, maybe more interestingly, there's a whole bunch of business opportunities that are constrained by bad print. My favorite example is thinking about pharmaceuticals. So pharmaceutical companies have patents, which means they have a monopoly on certain drugs over a period of time and they can make a lot of money off. But it's often a challenge to identify people who need their drugs, particularly for those that are relatively rare treatment or relatively rare. There's a push in that industry toward blockbuster that, hey, if you hit 65, you're going to need this drug pretty much no matter what, we don't have to worry about the prediction. It's not quite rule-based, but really mass market, that's where a lot of the opportunity lies. Now, imagine we have an AI that does better diagnosis. And in particular, a diagnosis, a disease that it's not that rare, but it's hard to identify. And so you have a prediction machine that identifies it. You have a drug that helps cure it, or at least manage that disease in the present.”
2023-03-21 · Invest Like the Best · Avi Goldfarb - The Economic Impact of AI - [Invest Like the Best, EP.321] · IDENTIFIED FROM THE TRANSCRIPT · source
“In any gold rush, for lack of a better metaphor, people benefit by providing the equipment. There's going to be huge opportunities for companies that are providing the compute power underlying AI. Right now, that looks like it's the traditional big tech companies and they're providing the underlying compute power. And as the demands for compute power grow, there's going to be opportunities.”
2023-03-21 · Invest Like the Best · Avi Goldfarb - The Economic Impact of AI - [Invest Like the Best, EP.321] · IDENTIFIED FROM THE TRANSCRIPT · source
“Decision is hard and it requires a different kind of skill because most of us don't think brumballistic. I know a lot of your audience are investors. So another way to think about this is that skill you have in investing and thinking probabilistically will permeate all aspects of life because when you're trying to decide what to do rather than just relying on doing the same thing every time, you'll now have information on the relative likelihood of different things happening.”
2023-03-21 · Invest Like the Best · Avi Goldfarb - The Economic Impact of AI - [Invest Like the Best, EP.321] · IDENTIFIED FROM THE TRANSCRIPT · source
“Uncomfortable, and it's not something like doing. There's lots of decisions where it's useful to us. It's convenient that the prediction and judgment are bundled in our head. And hiring decisions are the same thing. Why don't you hire this person and not that person? But maybe it's because you predicted that they had a better chance of succeeding in the company versus the other person. Or maybe it's because your tastes are toward people who look like that or act like that or speak like that. It's convenient for us that our predictions about success are bundled with our human biases so that we don't really have to face our biases explicitly. But once you have a prediction saying, okay, this person's 90% likely to succeed and that person's 85% likely to succeed, which one are you going to hire? Now we have to face our biases in a way that we do. That could be good. A lot of my optimism around AI is partly around how bad humans are and all sorts of things, including bias. But in this particular example, it's just that decoupling of the prediction from judgment. So the prediction for the rest of the”
2023-03-21 · Invest Like the Best · Avi Goldfarb - The Economic Impact of AI - [Invest Like the Best, EP.321] · IDENTIFIED FROM THE TRANSCRIPT · source
“Great science fiction. In the movie, there's this flashback scene about why he hates robots. Here's why he hates robots. The protagonist Will Smith and this little girl, they're in a car accident and their cars are sinking into a river. And it's clear they're both about to drown. Now a robot comes along and saves him and not the goal. And that's why he hates robots. Nice aside, he then figured out, hey, it's a robot, I can figure out why it made the decision. The human you can never know, he audits the robot, and he figures out the robot predicted that he had a 45% chance of survival and the girl only had an 11% chance. That's why the robot saved the adult man and not the girl. And then he says, well, 11% was more than enough, and a human being would have known that. But that's not the same about the predictions. That's the same about the decision. The judge is the relative value of an adult man's life versus a little girl. The protagonist of the movie, Will Smith, says that that girl's life is worth more than four times his life, effectively. Versus 44 or 45, then you get them more than four. I don't know that we humans all agree on that, but I think we agree that that's hard.”
2023-03-21 · Invest Like the Best · Avi Goldfarb - The Economic Impact of AI - [Invest Like the Best, EP.321] · IDENTIFIED FROM THE TRANSCRIPT · source
“We're going to round up or down. And what prediction machines do is they give us an explicit number. Oh, there's a 36% chance this is going to happen. And then the hard part is most of us aren't that good at figuring out what to do if there's a 36% chance that this is going to happen as opposed to a 28. There's a whole learning process in getting used to making decisions in the face of statistics. People who are probably best in the world in this are investors. So an investor audience is very familiar with let's think through the probabilities, run up a decision tree or do our Monte Carlo simulation and figure out how this all plays out. But for many decisions, even investors, when they're not investing, it's hard to think through what's probability. Give an example of this of where it gets really hard. Seen in the UVI robot?”
2023-03-21 · Invest Like the Best · Avi Goldfarb - The Economic Impact of AI - [Invest Like the Best, EP.321] · IDENTIFIED FROM THE TRANSCRIPT · source
“I like that way to think about it. The world was always in decimals. If we're trying to fill in missing information, there's always some probability. But without a prediction machine, you have a lazy way of thinking, which is we tend to think it's either this or that. And so therefore, we're going to.”
2023-03-21 · Invest Like the Best · Avi Goldfarb - The Economic Impact of AI - [Invest Like the Best, EP.321] · IDENTIFIED FROM THE TRANSCRIPT · source
“If we had control, or if whoever is trying to overcome the rules and say, hey, I want to make a decision, if they're also making all the other decisions, then it's easy. We don't have to worry about coordination. The problem is in most companies, in most contexts where you're trying to really move from rules to decisions, you need to coordinate between lots of people within the company and even between others outside the company. All sorts of other people are involved and it becomes a much more complicated process.”
2023-03-21 · Invest Like the Best · Avi Goldfarb - The Economic Impact of AI - [Invest Like the Best, EP.321] · IDENTIFIED FROM THE TRANSCRIPT · source
“Of 2020 and AI to predict whether somebody in COVID, there were these apps that you cough into your phone to have some prediction, they worked all that well. Retrospect seems kind of funny. Now that worked. The best tool we had for predicting whether somebody had COVID was a rabbit test. It's not perfect, but at least to figure out to predict if somebody was infectious, it worked pretty well. Unfortunately, that tool for a long time wasn't useful because we were so focused on rules, in order to use that prediction to make a decision, to move from rules to decision making. All these other things that happen in companies had to change. If you wanted to use rapid testing to test people coming into your business to make sure they didn't have COVID and then open up if you were one of those businesses that were shut down, well, it seems easy. You just have a decision about whether people can come in or not. But there's all these other decisions that coordinate with it and you have to start figuring out. If you're doing it for your employees and they test positive, we're going to give them sick pay. Well, lots of companies didn't have.”
2023-03-21 · Invest Like the Best · Avi Goldfarb - The Economic Impact of AI - [Invest Like the Best, EP.321] · IDENTIFIED FROM THE TRANSCRIPT · source
“COVID, COVID's not a health problem. We don't want COVID, but COVID is an information problem because you're worried about all the other people you might interact with, whether they would have COVID, which would then turn it into a health problem for you. Once you understand that COVID's an information problem, well, now we think, well, here's an opportunity for AI. Here's an opportunity for prediction machines because what does AI do? It fills in misinformation. That's what prediction is. Once you say COVID, for most of us, it's not a health problem information problem. We see an opportunity to overcome the rule of stay home. Because if we had the information about who was infectious, then we don't have to follow the rule of stay home. We can now make a decision based on our predicted likelihood of being infectious and interacting with another infectious. So in the presence of predictions, we could actually have gone about our business. We had a good AI for predicting whether somebody had COVID, then there would have been no risks. Effectively, we would say, hey, you know what? You 1% of the population stay home and the rest of us, we can go about our business. We didn't have a big AI. So there were all sorts of people trying to build that over the course of the”
2023-03-21 · Invest Like the Best · Avi Goldfarb - The Economic Impact of AI - [Invest Like the Best, EP.321] · IDENTIFIED FROM THE TRANSCRIPT · source
“More interesting and more complicated. A lot of the way we do things now, because we don't have good information, so we just follow the instructions. Because if we follow the instructions and everyone else follows the instructions, we know things will coordinate well. And what we mean by decisions are if you have a prediction, then if you know the state of the world, you don't have to do the same thing every time. You can start thinking creatively and doing things differently. After our experience over the last few years, the rule that many of us experienced was stay home. Warranting, we have no idea if you might be infectious. The easiest thing to do is to apply a rule to everybody. Just stay home. Joshua, my co-author on the book, recognized pretty early something that most people in the public health community weren't talking about, which is that for most people, COVID was not a helper. At any given time, more than 99% of the population, this was summer 2020, did not have COVID. And if you don't have COVID,”
2023-03-21 · Invest Like the Best · Avi Goldfarb - The Economic Impact of AI - [Invest Like the Best, EP.321] · IDENTIFIED FROM THE TRANSCRIPT · source
“That happens in fractions of a second for that slot. That was inconceivable in the old advertising world. But because we have this prediction combined with other complementary technologies around digitization, we have an entirely different advertising industry that now has players that we never even heard of before. And measurement agencies and data providers, all these types of players. A lot of them are just Google. But all these players only exist because of the AI. The advertising industry is an industry that's experienced system level change through prediction technology.”
2023-03-21 · Invest Like the Best · Avi Goldfarb - The Economic Impact of AI - [Invest Like the Best, EP.321] · IDENTIFIED FROM THE TRANSCRIPT · source
“Advertise for small businesses, it's going to cost you $50 per thousand views if you just want to advertise in the search engine. That's a generic advertising. It's not targeted at all. It's going to cost you $10 per thousand deeds, something like that. The industry just took the old model and applied it to a point solution. Then some people realized, well, online advertising is different. Online advertising is different because there's this one-to-one relationship between the server sending you the ad and the user. And that allows them to know not just whether the user is seeing an ad, but to predict a lot about the user. who they are and their particular context of that particular moment. So what's different about online advertising is this recognition that we can target ads based on the prediction about who the user is. And so over the next 20 years, an entirely new industry arose that still called itself an advertising industry. But with completely different players, completely different technology, a completely different way of doing things, there's an opportunity to show somebody an ad. And now the industry has this real-time auction.”
2023-03-21 · Invest Like the Best · Avi Goldfarb - The Economic Impact of AI - [Invest Like the Best, EP.321] · IDENTIFIED FROM THE TRANSCRIPT · source
“1960s, and you might have seen, say, on Madmen. I don't know about the soap opera part of it, but the way the business worked, where there was a lot of charm and a lot of fancy dinners and big sales was a lot of how Madison Avenue worked back then. And when digital technology came along, when online advertising came along, the way people did it in the 1990s looked exactly like the way it used to happen. If you wanted to advertise in a magazine in the 70s, 80s, or 90s, you go to the magazine owner and say, hey, I want to advertise in your magazine. And they'd say, okay, here's our rate card, here's our prices. Maybe some back and forth in negotiation. But fundamentally, there was the prices and you would advertise. So if you want a full page out of people magazine, it's going to cost you $100,000 certain years. That's what you get. And they tell you their circulation. And the internet came along. You want to advertise online. That was the model they did. They said, hey, the internet's like a magazine industry. So you reach out and say, hey, yeah, do I want to advertise on you? And they say, great, here's our rate card. If you want to advertise in real estate, it's going to cost you $20 per 1,000 views. If you want to.”
2023-03-21 · Invest Like the Best · Avi Goldfarb - The Economic Impact of AI - [Invest Like the Best, EP.321] · IDENTIFIED FROM THE TRANSCRIPT · source
“Driver became more productive if they knew real time traffic reports and had these predictions and could use the GPS, Google Max or something else. Eventfully companies realized if we take digital navigation, so navigational AI, navigational predictions anyway, combine it with digital dispatch and combine it with a prediction tool about where people are going to want to get picked up by taxis to go from point A to point B, you can build an entirely new kind of business. Uber and Lyft and other ride-yelling services created an entirely different system. They use that same technologies that taxi drivers could use to drive more efficiently, figure out how to find customers better. But in the process, they upscaled anybody who could drive could now effectively be a professional taxi. So they created a whole new system for transportation. The other example of prediction leading to an entirely new way of doing business is in digital advertising. Advertising in the 1990s wasn't that different from the advertising industry in the 1990s.”
2023-03-21 · Invest Like the Best · Avi Goldfarb - The Economic Impact of AI - [Invest Like the Best, EP.321] · IDENTIFIED FROM THE TRANSCRIPT · source
“and call the knowledge. If you're a taxi driver, especially a taxi driver in a complicated city like London, it could take a long time to learn your way around the city. So the city of London, they call that ability to navigate the city called the knowledge. And it actually takes about three years of school to know enough about the city to be licensed as a tax driver. Then a prediction tool came along called GPS and some maps that allowed you to get from point A to point B with real-time traffic reports, even if you didn't take three years of school. If you went to the city of London, you have to get used to driving on the other side of the road. But notwithstanding that, you could get from point A to point B not quite as efficiently, but almost as efficiently as professional and a taxi driver who had three years of school. What that meant was the first applications, I should say, were point solutions. So many people who was taking advantage of real-time traffic and GPS, they were professional drivers when they were truck drivers or taxi drivers or others, people who made a living as a”
2023-03-21 · Invest Like the Best · Avi Goldfarb - The Economic Impact of AI - [Invest Like the Best, EP.321] · IDENTIFIED FROM THE TRANSCRIPT · source
“And eventually could totally automate that response. And they did, and they helped Zoom. But then March 2020 came and Zoom's demand for these customer service queries went up by well over a factor of 10. And they could keep up because as they were scaling, most of the customer service queries were pretty straightforward and they could have this application layer, this application AI, which is not quite doing what they were doing before, but it plugs enough into their existing processes that it can work to allow Zoom and others to scale. So ADA was an application which lets use AI to support customer service representatives so that one customer service representative can serve many, many more customers. And application solution doing things a little bit differently, but plugged into an existing value chain. System solutions for AI are harder to find. You can think of two. One of them is in prediction machines, we talk about”
2023-03-21 · Invest Like the Best · Avi Goldfarb - The Economic Impact of AI - [Invest Like the Best, EP.321] · IDENTIFIED FROM THE TRANSCRIPT · source
“stay the same and they took off this small St. John's Newfoundland based business suddenly became a tech darling and was at least for Canada our first AI unicorn. Think about application solutions. Another company we've worked with is a company called Ada Support. Ada's a startup for AI and customer service. They were a small, they started in startup mode, but the real moment came in March 2020. In December 2019, they signed up a new customer called Zoom. In December 2019, no one knew it was. And what they were focused on was automating parts of the customer service workflow. In particular, when people emailed Zoom for password resets or a handful of other requests, what Ada figured out is those requests are pretty standardized and you can predict what kind of response those customers are going to want. You can add an AI into the workflow that automatically at least writes the email for the customer service representative to look over and send.”
2023-03-21 · Invest Like the Best · Avi Goldfarb - The Economic Impact of AI - [Invest Like the Best, EP.321] · IDENTIFIED FROM THE TRANSCRIPT · source
“I'm sitting in Canada. My favorite example of the point solutions is company ERIFA. And Aerifin is predicting financial fraud. So they do. It turns out banks need to predict financial fraud and they have all sorts of processes to do that. A combination of human and almost symbolic logic. A bunch of FAN statements. Thereafter Fin actually was in that business already in predicting financial fraud, but not using machine learning, not using AI. They were fine. And then they realized that given the data they had and given what they were trying to predict, they could use machine learning to do the exact same thing. It was just cheaper and better, but no one had to change anything. In fact, many of their customers were already using Verifit. It was a perfect point solution in the sense that there's already a workflow. You're already making predictions. It's already intermediated by machines. So it's not even replacing a human in that particular context, but we can do it better and more efficiently. That's the point solution. They took out the oil machine process, dropped in an AI process workflow.”
2023-03-21 · Invest Like the Best · Avi Goldfarb - The Economic Impact of AI - [Invest Like the Best, EP.321] · IDENTIFIED FROM THE TRANSCRIPT · source
“Build new processes without having to mess with the entire system. And often when you have these technological changes, a lot of the successful entrepreneurs in the early days are building new applications that can usefully fit into the old system, but allow the companies, the organizations, to do things better, faster, cheaper, more efficiently in various ways. In the internet, we can think about applications. We call them applications. In the IT 90s version of the internet, it was new ways to look through information, new ways to connect buyers and sellers, but without inventing a whole new company. Electronic communication led to this technology called EDI Electronic Data Interchange in the late 80s and 90s that really helped supply chains be more efficient, like retailers connect with suppliers more efficiently, but it didn't really involve totally changing the workflow. It was an application that”
2023-03-21 · Invest Like the Best · Avi Goldfarb - The Economic Impact of AI - [Invest Like the Best, EP.321] · IDENTIFIED FROM THE TRANSCRIPT · source
“So, what was different about electricity is that machines could be switched on and off and can be taken in and out of the overall workflow relatively. But if something's powered by a steam engine, turning on and off the steam engine was really, really hard. Everything is powered by the steam engine. It's connected to the steam engine by a belt, by a thing moving fast. What was costly and risky to turn on and or off a machine because you'd be moving one of these fast-moving belts. And so typically you just kept your machines on all the time. With electricity, even if you took out the steam engine, dropped an electric motor and didn't change where things were in the factory. You could start to do different kinds of machines because you could have them flip on and off. And once you can have the machines flip on and off, you can take advantage of electricity within the existing workflow, but to allow different production processes. Application solutions are at a high level. They're somewhere between the point solution and system solution. So they allow you to...”
2023-03-21 · Invest Like the Best · Avi Goldfarb - The Economic Impact of AI - [Invest Like the Best, EP.321] · IDENTIFIED FROM THE TRANSCRIPT · source
“Computing on the way business is operated through the 70s, 80s, and 90s. And now we expect the same thing to happen with artificial intelligence over the next decade or so.”
2023-03-21 · Invest Like the Best · Avi Goldfarb - The Economic Impact of AI - [Invest Like the Best, EP.321] · IDENTIFIED FROM THE TRANSCRIPT · source
“It can allow us to produce much more efficiently, much more effectively, and maybe even different kinds of consumer products, like the mass market automobile that were not possible before under a Steam Powerchack. That's what we think about a system change. It's not just taking out the old process, dropping in the new one, not messing with the workflow. That seems easy, but if taking out the old and putting the new is costly, then it's probably not going to be worth the bother. It's only worth the bother to electrify your factory if you can do something totally different and deliver a new kind of value. If you look at the history of technological change, these big picture impactful technologies called general purpose technologies, also called GPTs, but it's a different GPT, that kind of reinvention process where in order to get the value out of the new technology, you have to do things differently occurs over and over again. So it occurred with electricity. It actually occurred with a steam engine 100 years before electricity. It occurred with the impact of”
2023-03-21 · Invest Like the Best · Avi Goldfarb - The Economic Impact of AI - [Invest Like the Best, EP.321] · IDENTIFIED FROM THE TRANSCRIPT · source
“Starting around 1900, a couple of people recognized that electricity wasn't just cheap power, but electricity was distributed power. It allowed you to decouple the location of the power source for the location of the machines. And once you can decouple the location of the power source from the location of the machines, you can build an entirely new kind of fact where the logic of the workflow in the factory is determined by the production process, like inputs and outputs, rather than by your power needs. And so the quintessential 20th century factory that you might imagine, which is in cheap land and suburban areas, huge factories, inputs come in one end, outputs come out of the other with modular production that exists of a reinvention of how factories worked after the recognition that electricity did is a decoupled, the power source from the machines. So it created a whole new factory system. Once people started to figure out, hey, that's much more efficient. It's a much better workflow.”
2023-03-21 · Invest Like the Best · Avi Goldfarb - The Economic Impact of AI - [Invest Like the Best, EP.321] · IDENTIFIED FROM THE TRANSCRIPT · source
“With anything else. This is what we call a point solution where you take out the old way of doing things, drop in a new process, but don't change the workflow at all. And those factories did say a little bit on energy costs. But for the most part, it wasn't worth the bot. For most factories saving 5, 10, 15% wasn't worth trying to figure out how to get rid of steam engine.”
2023-03-21 · Invest Like the Best · Avi Goldfarb - The Economic Impact of AI - [Invest Like the Best, EP.321] · IDENTIFIED FROM THE TRANSCRIPT · source
“To the point where, in order to make sure that you're using energy efficiently, you'd put machines above and below your steep engine. You'd have these tightly clustered multi-story factories typically where the logic of the workflow was determined by the location of the power source. And so you'd have people moving pieces up and down and around because of where the power sources were. And then once you did that, that's really inefficient. So you'd even have workers doing a lot more in each station because they put a lot more pieces together. They were much more specialized workers because once you were located somewhere, you're using a machine, having to then move it up to the next machine and then back down was really costly and efficient. With the Steam engine, that was the logical smart way to build effect. Then electricity came along and a few people said, you know what, this is cheaper power. We can save 5, 10, 15% on the energy cost, perhaps because we don't have as many belts where energy gets lost or we happen to be near a good source of electricity. So they take out the steam engine, drop an electric motor at the same point, but not.”
2023-03-21 · Invest Like the Best · Avi Goldfarb - The Economic Impact of AI - [Invest Like the Best, EP.321] · IDENTIFIED FROM THE TRANSCRIPT · source
“US workplaces, and half of US homes were electrified. It took 40 years from recognizing, hey, this technology has extraordinary potential to most people being affected by electricity at home. Wanted to take 40 years of wandering to get from, hey, this is a big deal to it actually making an impact in most people's lives. Well, in the 1890s, if you ran a factory, here's what your factory would look like. They would have had a steam engine, sometimes a watermill, but particularly a steam engine at the center of the fact. And that steam engine powered everything. It was one big power source. All the machines in the factory were connected by belts to the steam engine. And if you remember your high school physics, the more distance that the energy has to travel, the more energy gets dissipated. So what you want to do is you want to locate your most power hungry machines as close to the scene engine as possible. The logic of the factory was built around the power needs of the machines.”
2023-03-21 · Invest Like the Best · Avi Goldfarb - The Economic Impact of AI - [Invest Like the Best, EP.321] · IDENTIFIED FROM THE TRANSCRIPT · source
“And love that question because it is the core thesis of our new book, our prediction, unpacking that. It's what I've been spending more time than anything else thinking about it the last couple of years. Let's start a little bit on motivation, which is we wrote prediction machines in 2018, thinking the revolution in AI was about to happen. And then three or four years later, we felt like we saw some cool uses of AI, but the world hadn't changed. That led us to think about the history of technology generally and electricity in particular. Edison's patent for electric light bulb was AT. So if you're paying attention in the 1880s, it was clear that this technology was going to be transformative. The patent office was inundated with new patents. The newspapers were filled with people coming up with new ideas on how electricity might be used in all aspects of society. But if you look at the adoption rates of electricity in factories and households, how many people were actually using it? It wasn't until the 1920s that half of”
2023-03-21 · Invest Like the Best · Avi Goldfarb - The Economic Impact of AI - [Invest Like the Best, EP.321] · IDENTIFIED FROM THE TRANSCRIPT · source
“Maybe not, but if the chat GPT is doing fundamentally it's taking your query, write a five paragraph essay on how AI will affect investing. And it will look at other five paragraph essays that exist on the internet. It will look at discussions about AI and investing that exist in its data set. And it will fill in the missing information of what should those five paragraphs look like. We never imagined, frankly, even when we were writing prediction machines that writing essays would be a prediction problem. But here we are five years later in very clear leads. And so that's the essence of it, which is as something gets cheap, we do it more. And when that change in price is exponential or at least several orders of magnitude, the way we think about problems can change. Things that we didn't used to think of as prediction in the context of AI really are changing.”
2023-03-21 · Invest Like the Best · Avi Goldfarb - The Economic Impact of AI - [Invest Like the Best, EP.321] · IDENTIFIED FROM THE TRANSCRIPT · source
“Identify all sorts of extraordinary applications we didn't imagine before. With today's artificial intelligence, you usually think of it as prediction technology. By prediction, I mean in this statistical set, taking information you have and filling in information you don't have. The first applications of machine prediction were good old fashioned prediction problems. You walk into a bank, you want a loan and loan officer at the bank looks you up and down and decides whether they trust you and predicts whether they're going to pay you back. Over the course of the 20th century, that became more and more rigorous. And now increasingly banks are using machine learning tools using AI to predict whether they're going to pay them back. I already talked about medical diagnosis. Medical diagnosis is prediction. You take in data about your symptoms. You feel in the missing information of the cause of those symptoms. That's prediction. And writing, turns out a lot of writing is prediction. How do you write in response to a query? Well, you're filling the missing information about where words should go and what words belong next to other words in response to a particular query. Freeform writing.”
2023-03-21 · Invest Like the Best · Avi Goldfarb - The Economic Impact of AI - [Invest Like the Best, EP.321] · IDENTIFIED FROM THE TRANSCRIPT · source