Silicon Valley’s techies have built the AI that will replace them

The Chase Center in San Francisco, a 18,000-seat arena for sports and entertainment, was filled with a frisson of intrigue and fear.

Mark Zuckerberg, third richest man in the world, was seated on a stage wearing a loose shirt with a mop curls to talk about his 20-year tenure as CEO of Meta, which owns Facebook, WhatsApp, and Instagram. Legions of Silicon Valley workers, Silicon Valley start-up founders and investors hung on every word. The conversation, a live recording of the popular Acquired Technology podcast last week, turned to his view on the company and the employees.

Zuckerberg praised the downsizing that he carried out in 2022 and in 2023 at Meta. He got rid of 21 000 workers within a short time. He said that “you want to keep things lean” and longed for the days of “you can just have meetings inside your head about which direction you would like to go”.

18 months after that bloody massacre, Zuckerberg said he was “still very focused” on turning the social media giant into “the leanest possible version of a big company”. He said: “It’s problematic when there are more people working on a project than is necessary.”

It was almost like hearing a collective gulp of the technology workers. Not just Meta, but the entire industry has been through a tough time. According to the data collected by Layoffs.fyi since 2022, after their Covid heyday, over 470,000 tech workers were let go. Venture capital funding for startups in other sectors than artificial intelligence plunged to $167 Billion (£126 Billion) in the first half of this year. This is less than half of the amount invested in the same period last year.

Last week, Zuckerberg still talked about tweaking “the dial” to find the sweet spot between cutting out too much food and being just a tad overweight. His words are powerful. His words carry immense weight.

He sent his “love lean” message during the tumultuous rise of artificial Intelligence, which is widely regarded as the biggest tech change since the Internet. San Francisco and Silicon Valley were home to more than half of the 1,800 AI startups that received funding last year. Many of these AI start-ups promise to revolutionise anything from call centres, law and what it means to human.

HeyGen, a San Francisco-based start-up, creates high fidelity video clones for anyone who uploads even one minute of video footage. On the streets, driverless robotic taxis transport tens and thousands of people each week.

In some pockets, the future is already here. This has led to a growing paranoia, which is especially acute on the West Coast, where, as you might expect, the tools that could replace many human jobs are being developed. One could say, if one wanted to be cruel about it, that tech workers have caused their own misery.

This leads us to the perhaps most important question: Do any of these AI-based tools work well enough for them to replace people or augment their capabilities so drastically that firms require fewer employees to produce the same results? This is a hard question to answer. David Cahn is an investor with Sequoia Capital. He has publicly warned about the AI bubble. He said that Big Tech firms were investing hundreds of billions in AI chips and data centers, which would require them to generate at least $600 Billion in AI profits to justify their investment.

Meta’s Menlo Park headquarters, in California, has seen 21,000 jobs disappear in 2022 and 2030, since the glory days of Covid.

He asked: “How many AI products do consumers use today, besides [OpenAI’s] ChatGPT?” Consider how much you can get out of Spotify at $11.99 or Netflix for $15.49 per month. In the long term, AI companies must deliver significant value to consumers in order for them to continue to open their wallets.

Last week, his criticisms resurfaced when it was revealed that OpenAI, a United Arab Emirates investment fund, MGX led consortium, was in negotiations to raise $7 billion at a $150-billion valuation from a consortium. This was a remarkable figure for a company which only five years earlier had created a profit-making arm. It was also revealed that the company had surpassed 11,000,000 monthly subscribers. OpenAI, with its licensing of AI models to a third party, is on course to generate $4 billion in sales annually.

It is burning through billions almost as quickly as it can raise — this $7 billion would bring the total amount raised to more than 20 billion dollars — due to computing costs for running its tools.

Anecdotal evidence suggests that big companies are cutting back on AI tools because they have been found to be too buggy, too prone to give bad information and too unreliable for them to replace legacy systems.

Silicon Valley is a place of near-delusional enthusiasm, and investors are more interested in the areas where the technology is making a difference. Sebastian Siemiatkowski said that the AI automation of roles would reduce the 3,800 strong workforce at Klarna. This was months after he boasted about a single ChatGPT-based chatbot that could do the work of 700 employees.

Bank of America published the results of its survey of 150 equity and market analysts who cover an universe of over 3,000 companies. Analysts were equally divided on whether AI would be a net job creator or eliminater. All agreed, however, that the pace of technological innovation is accelerating and that the payoff will come much sooner than the delayed internet revolution. The bank stated: “Chatbots which were helpful like an 18-year old intern a year ago now display intelligence that is closer to that of a college graduate, proving AI investment produces useful apps.”

Zuckerberg is at the center of this revolution. He appears to be in a new phase. He keeps his hair long. He loves long gold chains. Launchpad, a 287ft yacht he recently received for delivery. Zuckerberg also has no intention of apologizing for the role his company played in societal disruption. He is instead going full-steam ahead, and he will be on the front lines when it comes AI. Meta released its latest version of the Llama AI, which is stronger than the recent versions of ChatGPT. However, it is not the newest version. It is also free to use by others, or companies, to create new bots.

We all could be facing a lean life.