Microsoft Knows How to Avoid an AI Bubble: Listen Up, Grunts, Discipline Now!
November 18, 2025
Another short essay from a real and still-alive dinobaby. If you see an image, we used AI. The dinobaby is not an artist like Grandma Moses.
I relish statements from the leadership of BAIT (big AI tech) outfits. A case in point is Microsoft. The Fortune story “AI Won’t Become a Bubble As Long As Everyone Stays thoughtful and Disciplined, Microsoft’s Brad Smith Says.” First, let’s consider the meaning of the word “everyone.” I navigated to Yandex.com and used its Alice smart software to get the definition of “everyone”:
The word “everyone” is often used in social and organizational contexts, and to denote universal truths or principles.
That’s a useful definition. Universal truths and principles. If anyone should know, it is Yandex.
Thanks, Venice.ai. Good enough, but the Russian flag is white, blue, and red. Your inclusion of Ukraine yellow was one reason why AI is good enough, not a slam dunk.
But isn’t there a logical issue with the subjective flag “if” and then a universal assertion about everyone? I find the statement illogical. It mostly sounds like English, but it presents a wild and crazy idea at a time when agreement about anything is quite difficult to achieve. Since I am a dinobaby, my reaction to the Fortune headline is obviously out of touch with the “real” world as it exists are Fortune and possibly Microsoft.
Let’s labor forward with the write up, shall we?
I noted this statement in the cited article attributed to Microsoft’s president Brad Smith:
“I obviously can’t speak about every other agreement in the AI sector. We’re focused on being disciplined but being ambitious. And I think it’s the right combination,” he said. “Everybody’s going to have to be thoughtful and disciplined. Everybody’s going to have to be ambitious but grounded. I think that a lot of these companies are [doing that].”
It was not Fortune’s wonderful headline writers who stumbled into a logical swamp. The culprit or crafter of the statement was “1000 Russian programmers did it” Smith. It is never Microsoft’s fault in my view.
But isn’t this the AI go really fast, don’t worry about the future, and break things?
Mr. Smith, according the article said,
“We see ongoing growth in demand. That’s what we’ve seen over the past year. That’s what we expect today, and frankly our biggest challenge right now is to continue to add capacity to keep pace with it.”
I wonder if Microsoft’s hiring social media influencers is related to generating demand and awareness, not getting people to embrace Copilot. Despite its jumping off the starting line first, Microsoft is now lagging behind its “partner” OpenAI and a two or three other BAIT entities.
The Fortune story includes supporting information from a person who seems totally, 100 percent objective. Here’s the quote:
At Web Summit, he met Anton Osika, the CEO of Lovable, a vibe-coding startup that lets anyone create apps and software simply by talking to an AI model. “What they’re doing to change the prototyping of software is breathtaking. As much as anything, what these kinds of AI initiatives are doing is opening up technology opportunities for many more people to do more things than they can do before…. This will be one of the defining factors of the quarter century ahead…”
I like the idea of Microsoft becoming a “defining factor” for the next 25 years. I would raise the question, “What about the Google? Is it chopped liver?
Several observations:
- Mr. Smith’s informed view does not line up with hiring social media influencers to handle the “growth and demand.” My hunch is that Microsoft fears that it is losing the consumer perception of Microsoft as the really Big Dog. Right now, that seems to be Super sized OpenAI and the mastiff-like Gemini.
- The craziness of “everybody” illustrates a somewhat peculiar view of consensus today. Does everybody include those fun-loving folks fighting in the Russian special operation or the dust ups in Sudan to name two places where “everybody” could be labeled just plain crazy?
- Mr. Smith appears to conflate putting Copilot in Notepad and rolling out Clippy in Yeezies with substantive applications not prone to hallucinations, mistakes, and outputs that could get some users of Excel into some quite interesting meetings with investors and clients.
Net net: Yep, everybody. Not going to happen. But the idea is a-thoughtful, which is interesting to me.
Stephen E Arnold, November 18, 2025
AI Content: Most People Will Just Accept It and Some May Love It or Hum Along
November 18, 2025
Another short essay from a real and still-alive dinobaby. If you see an image, we used AI. The dinobaby is not an artist like Grandma Moses.
The trust outfit Thomson Reuters summarized as real news a survey. The write up sports the title “Are You Listening to Bots? Survey Shows AI Music Is Virtually Undetectable?” Truth be told, I wanted the magic power to change the headline to “Are You Reading News? Survey Shows AI Content Is Virtually Undetectable.” I have no magic powers, but I think the headline I just made up is going to appear in the near future.
Elvis in heaven looks down on a college dance party and realizes that he has been replaced by a robot. Thanks, Venice.ai. Wow, your outputs are deteriorating in my opinion.
What does the trust outfit report about a survey? I learned:
A staggering 97% of listeners cannot distinguish between artificial intelligence-generated and human-composed songs, a Deezer–Ipsos survey showed on Wednesday, underscoring growing concerns that AI could upend how music is created, consumed and monetized. The findings of the survey, for which Ipsos polled 9,000 participants across eight countries, including the U.S., Britain and France, highlight rising ethical concerns in the music industry as AI tools capable of generating songs raise copyright concerns and threaten the livelihoods of artists.
I won’t trot out my questions about sample selection, demographics, and methodology. Let’s just roll with what the “trust” outfit presents as “real” news.
I noted this series of factoids:
- “73% of respondents supported disclosure when AI-generated tracks are recommended”
- “45% sought filtering options”
- “40% said they would skip AI-generated songs entirely.”
- Around “71% expressed surprise at their inability to distinguish between human-made and synthetic tracks.”
Isn’t that last dot point the major finding. More than two thirds cannot differentiate synthesized, digitized music from humanoid performers.
The study means that those who have access to smart software and whatever music generation prompt expertise is required can bang out chart toppers. Whip up some synthetic video and go on tour. Years ago I watched a recreation of Elvis Presley. Judging from the audience reaction, no one had any problem doing the willing suspension of disbelief. No opium required at that event. It was the illusion of the King, not the fried banana version of him that energized the crowd.
My hunch is that AI generated performances will become a very big thing. I am assuming that the power required to make the models work is available. One of my team told me that “Walk My Walk” by Breaking Rust hit the Billboard charts.
The future is clear. First, customer support staff get to find their future elsewhere. Now the kind hearted music industry leadership will press the delete button on annoying humanoid performers.
My big take away from the “real” news story is that most people won’t care or know. Put down that violin and get a digital audio workstation. Did you know Mozart got in trouble when he was young for writing math and music on the walls in his home. Now he can stay in his room and play with his Mac Mini computer.
Stephen E Arnold, November 18, 2025
AI and Self-Perception of Intelligence
November 18, 2025
Here is one way the AI industry is different from the rest of society: In that field, it is those who know the most who are overconfident. Inc. reports, “New Research Warns That AI Is Causing a ‘Reverse Dunning-Kruger Effect’.” A recent study asked 500 subjects to solve some tough logic problems. Half of them used an AI like ChatGPT to complete the tasks. Then they were asked to assess their own performances. That is where the AI experts fell short. Writer Jessica Stillman explains:
“Classic Dunning-Kruger predicts that those with the least skill and familiarity with AI would most overestimate their performance on the AI-assisted task. But that’s not what the researchers reported when they recently published their results in the journal Computers in Human Behavior. In fact, it was the participants who were the most knowledgeable and experienced with AI who overestimated their skills the most. ‘We would expect people who are AI literate to not only be a bit better at interacting with AI systems, but also at judging their performance with those systems—but this was not the case,’ commented study co-author Robin Welsch. ‘We found that when it comes to AI, the DKE vanishes. In fact, what’s really surprising is that higher AI literacy brings more overconfidence.’”
Is this why AI leaders are a bit over the top? This would explain a lot. To make matters worse, another report found the vast majority of users do not double check AIs’ results. We learn:
“One recent analysis by trendspotting company Exploding Topics found an incredible 92 percent of people don’t bother to check AI answers. This despite all the popular models still being prone to hallucinations, wild factual inaccuracies, and sycophantic behavior that fails to push back against user misunderstandings or errors.”
So neither AI nor the people who use it can be trusted to produce accurate results. Good to know, as the tech increasingly underpins everything we do.
Cynthia Murrell, November 18, 2025
Can You Guess What Is Making Everyone Stupid?
November 17, 2025
Another short essay from a real and still-alive dinobaby. If you see an image, we used AI. The dinobaby is not an artist like Grandma Moses.
I read an article in “The Stupid Issue” of New York Magazine’s Intelligencer section. Is that a dumb set of metadata for an article about stupid? That’s evidence in my book.
The write up is “A Theory of Dumb: It’s Not Just Screens or COVID or Too-Strong Weed. Maybe the Culprit of Our Cognitive Decline Is Unfettered Access to Each Other.” [sic] Did anyone notice that a question mark was omitted? Of course not. It is a demonstration of dumb, not a theory.
This is a long write up, about 4,000 words. Based on the information in the essay, I am not sure most Americans will know the meaning of the words in the article, nor will they be able to make sense of it. According to Wordcalc.com, the author hits an eighth grade level of readability. I would wager that few eighth graders in rural Kentucky know the meaning of “unproctored” or “renormalized”. I suppose some students could ask their parents, but that may not produce particularly reliable definitions in my opinion.
Thanks, Venice.ai. Good enough, the new standard of excellence today.
Please, read the complete essay. I think it is excellent. I do want to pounce on one passage for my trademarked approach to analysis. The article states:
a lot of today’s thinking on our digitally addled state leans heavily on Marshall McLuhan and Neil Postman, the hepcat media theorists who taught us, in the decades before the internet, that every new medium changes the way we think. They weren’t wrong — and it’s a shame neither of them lived long enough to warn society about video podcasts — but they were operating in a world where the big leap was from books to TV, a gentle transition compared to what came later. As a result, much of the current commentary still fixates on devices and apps, as if the physical delivery mechanism were the whole story. But the deepest transformation might be less technological than social: the volume of human noise we’re now wired into.
This passage sets up the point about too much social connectedness. I mostly agree, but my concern is that references to Messrs. McLuhan and Postman and the social media / mobile symbiosis misses the most significant point.
Those of you who were in my Eagleton Lecture delivered in 1986 at Rutgers University heard me say, “Online information tears down structures.” The idea is not that the telegraph made decisions faster. The telegraph eliminated established methods of sending urgent messages and tilled the ground for “improvements” in communications. The lesson from the telegraph, radio, and other electronic technologies was that these eroded existing structures and enabled follow ons. If we shift to the clunky computers from the Atomic Age, the acceleration is more remarkable than what followed the wireless. My point, therefore, is that as information flows in electronic and digital form, structures like the brain are eroded. One can say, “There are smart people at Google.” I respond, “That’s true. The supply, however, is limited. There are lots of people in the world, but as the cited article points out, there is more stupid than ever.
I liked the comment about “nutritional information.” My concern is that “information bullets” fly about, they compound the damage the digital flows create. With lots of shots, some hit home and take out essential capabilities. Useful Web sites go dark. Important companies become the walking wounded. Firms that once relied entirely upon finding, training, and selling access to smart people want software to replace these individuals. For some tasks, sure, smart software is capable. For other tasks, even Mark Zuckerberg looks lost when he realizes his top AI wizard is jumping the good ship Facebook. Will smart software replace Yann LeCun? Not for a few years and a dozen IPOs.
One final comment. Here’s a statement from the Theory of Dumb essay:
Despite what I just finished saying, there is one compressionary artifact from the internet that may perfectly encapsulate everything about our present moment: the “midwit” meme. It’s a three-panel bell curve in which a simpleton on the left makes a facile, confident claim and a serene, galaxy-brained monk on the right makes a distilled version of the same claim — while the anxious try-hard in the middle ties himself in knots pedantically explaining why the simple version is actually wrong. Who wants to be that guy?
I want to point out that I am not sure how many people in the fine Commonwealth in which I reside know what a “compressionary artifact” is. I am not confident that most people could wrangle a definition they could understand from a Google Gemini output. The midwit concept is very real. As farmers lose the ability to fix their tractors, skills are not lost; they are never developed. When curious teens want to take apart an old iPad to see how it works, they learn how to pick glass from their fingers and possibly cause a battery leak. When a high school shop class “works” on an old car to repair it, they learn about engine control units and intermediary software on a mobile phone. An oil leak? What’s that?
I want to close with the reminder that when one immerses a self or a society in digital data flows, the information erodes the structures. Thus, in today’s datasphere, stupid is emergent. Get used to it. PS. Put the question mark in your New York Magazine headline. You are providing evidence that my assertion about online is accurate.
Stephen E Arnold, November 17, 2025
AI and Learning: Does a Retail Worker Have to Know How to Make Change?
November 14, 2025
This essay is the work of a dumb dinobaby. No smart software required.
I love the concept of increasingly shallow understanding. There is a simple beauty in knowing that you can know anything with smart software and a mobile phone. I read “Students Using ChatGPT Beware: Real Learning Takes Legwork, Study Finds.” What a revelation? Wow! Really?
What a quaint approach to smart software. This write up describes a weird type of reasoning. Using a better tool limits one’s understanding. I am not sure about you, but the idea of communicating by have a person run 26 miles to deliver a message and then fall over dead seems slow, somewhat unreliable, and potentially embarrassing. What if the deliver of the message expires in the midst of a kiddie birthday party. Why not embrace the technology of the mobile phone. Use a messaging app and zap the information to the recipient?
Thanks, Venice.ai. Good enough.
Following this logic that learning the old fashioned way will have many dire consequences, why not research topics by:
- Using colloquium held at a suitable religious organization’s facilities. Avoid math that references infinity, zeros, or certain numbers, and the process worked. Now math is a mental exercise. It is more easily mastered by doing concepts, not calculations. If something tricky is required, reach for smart software or that fun-loving Wolfram Mathematica software. Beats an abacus or making marks on cave walls.
- Find a library with either original documents (foul papers), scrolls, or books. Read them and take notes, preferably on a wax tablet or some sheepskin, the Microsoft Word back in the day.
- Use Google. Follow links. Reach conclusions. Assemble “factoids” into knowledge. Ignore the SEO-choked pages. Skip the pages hopelessly out of date when the article suggests that one use XyWrite as a word processor. Sidestep the ravings of a super genius predicting that Hollywood films are the same as maps of the future or advisors offering tips for making a million dollars tax free.
The write up presents the startling assertion:
The researchers concluded that, while large language models (LLMs) are exceptionally good at spitting out fluent answers at the press of a button, people who rely on synthesized AI summaries for research typically don’t come away with materially deeper knowledge. Only by digging into sources and piecing information together themselves do people tend to build the kind of lasting understanding that sticks…
Who knew?
The article includes this startling and definitely anti-AI statement:
A recent BBC-led investigation found that four of the most popular chatbots misrepresented news content in almost half their responses, highlighting how the same tools that promise to make learning easier often blur the boundary between speedy synthesis and confident-sounding fabrication.
I reacted to the idea that embracing a new technology damages a student’s understanding of a complex subject. If that were the case, why have humans compiled a relatively consistent track record in making information easier to find, absorb, and use. Dip-in, get what you need, and don’t read the entire book is a trendy view supported by some forward-thinking smart people.
This is intellectual grazing. I think it is related to snacking 24×7 and skipping what once were foolishly called “regular meals.” In my visits to Silicon Valley, there are similar approaches to difficult learning challenges; for example, forming a stable relationship, understanding the concept of ethical compass, and making decisions that do no harm. (Hey, remember that slogan from the Dark Ages of Internet time?)
The write up concludes:
One of the more striking takeaways of the study was that young people’s growing reliance on AI summaries for quick-hit facts could “deskill” their ability to engage in active learning. However they also noted that this only really applies if AI replaces independent study entirely — meaning LLMs are best used to support, rather than substitute, critical thinking. The authors concluded: “We thus believe that while LLMs can have substantial benefits as an aid for training and education in many contexts, users must be aware of the risks — which may often go unnoticed — of overreliance. Hence, one may be better off not letting ChatGPT, Google, or another LLM ‘do the Googling.'”
Now that’s a remedy that will be music to Googzilla’s nifty looking ear slits. Use Google, just skip the AI.
I want to point out that doing things the old fashioned way may be impossible, impractical, or dangerous. Rejecting newer technologies provides substantive information about the people who are in rejection mode. The trick, in my dinobaby opinion, is to raise children in an environment that encourages a positive self concept, presents a range of different learning mechanisms, and uses nifty technology with parental involvement.
For the children not exposed to this type of environment in their formative years, it will be unnecessary for these lucky people to be permanently happy. Remember the old saying: If ignorance is bliss, hello, happy person.
No matter how shallow the mass of students become and remain, a tiny percentage will learn the old fashioned way. These individuals will be just like the knowledge elite today: Running the fastest and most powerful vehicles on the Information Superhighway. Watch out for wobbling Waymos. Those who know stuff could become roadkill.
Stephen E Arnold, November 14, 2025
Microsoft Could Be a Microsnitch
November 14, 2025
Remember when you were younger and the single threat of, “I’m going to tell!” was enough to send chills through your body? Now Microsoft plans to do the same thing except on an adult level. Life Hacker shares that, “Microsoft Teams Will Soon Tell Your Boss When You’re Not In The Office.” The article makes an accurate observation that since the pandemic most jobs can be done from anywhere with an Internet connection.
Since the end of quarantine, offices are fighting to get their workers back into physical workspaces. Some of them have implemented hybrid working, while others have become more extreme by counting clock-ins and badge swipes. Microsoft is adding its own technology to the fight by making it possible to track remote workers.
“As spotted by Tom’s Guide, Microsoft Teams will roll out an update in December that will have the option to report whether or not you’re working from your company’s office. The update notes are sparse on details, but include the following: ‘When users connect to their organization’s [wifi], Teams will soon be able to automatically update their work location to reflect the building they’re working from. This feature will be off by default. Tenant admins will decide whether to enable it and require end-users to opt-in.’”
Microsoft whitewashed the new feature by suggesting employees use it to find their teammates. The article’s author says it all:
“But let’s be real. This feature is also going to be used by companies to track their employees, and ensure that they’re working from where they’re supposed to be working from. Your boss can take a look at your Teams status at any time, and if it doesn’t report you’re working from one of the company’s buildings, they’ll know you’re not in the office. No, the feature won’t be on by default, but if your company wants to, your IT can switch it on, and require that you enable it on your end as well.”
It is ridiculous to demand that employees return to offices, but at the same time many workers aren’t actually doing their job. The professionals are quiet quitting, pretending to do the work, and ignoring routine tasks. Surveillance seems to be a solution of interest.
It would be easier if humans were just machines. You know, meat AI systems. Bummer, we’re human. If we can get away with something, many will. But is Microsoft is going too far here to make sales to ineffective “leadership”? Worker’s aren’t children, and the big tech company is definitely taking the phrase, “I’m going to tell!” to heart.
Whitney Grace, November 14, 2025
Walmart Plans To Change Shopping With AI
November 14, 2025
Walmart shocked the world when it deployed robots to patrol aisles. The purpose of the robot wasn’t to steal jobs but report outages and messes to employees. Walmart has since backtracked on the robots, but they are turning to AI to enhance and forever alter the consumer shopping experience. According to MSN, “Walmart’s Newest Plan Could Change How You Shop Forever.”
Walmart plus to make the shopping experience smarter by using OpenAI’s ChatGPT. Samsung is also part of this partnership that will offer product suggestions to shoppers of both companies. The idea of incorporating ChatGPT takes the search bar and search query pattern to the next level:
“Far from just a search bar and a click experience, Walmart says the AI will learn your habits, can predict what you need, and even plan your shopping before realizing you’re in need of it. “ ‘Through AI-first shopping, the retail experience shifts from reactive to proactive as it learns, plans, and predicts, helping customers anticipate their needs before they do,’ Walmart stared in the release.
Amazon, Walmart, and other big retailers have been tracking consumer habits for years and sending them coupons and targeted ads. This is a more intrusive way to make consumers spend money. What will they think of next? How about Kroger’s smart price displays. These can deliver dynamic prices to “help” the consumer and add a bit more cash to the retailer. Yeah, AI is great.
Whitney Grace, November 14, 2025
Sweet Dreams of Data Centers for Clippy Version 2: The Agentic Operation System
November 13, 2025
Another short essay from a real and still-alive dinobaby. If you see an image, we used AI. The dinobaby is not an artist like Grandma Moses.
If you have good musical recall, I want you to call up the tune for “Sweet Dreams (Are Made of This) by the Eurythmics. Okay, with that sound track buzzing through your musical memory, put it on loop. I want to point you to two write ups about Microsoft’s plans for a global agentic operating system and its infrastructure. From hiring social media influencers to hitting the podcast circuit, Microsoft is singing its own songs to its often reluctant faithful. Let’s turn down “Sweet Dream” and crank up the MSFT chart climbers.
Trans-continental AI infrastructure. Will these be silent, reduce pollution, and improve the life of kids who live near the facilities? Of course, because some mommies will say, “Just concentrate and put in your ear plugs. I am not telling you again.” Thanks, Venice. Good enough after four tries. Par for the AI course.
The first write up is by the tantalizingly named consulting firm doing business as SemiAnalysis. I smile everything I think about how some of my British friends laugh when they see a reference to a semi-truck. One quipped, “What you don’t have complete trucks in the US?” That same individual would probably say in response to the company name SemiAnalysis, “What you don’t have a complete analysis in the US?” I have no answer to either question, but “SemiAnalysis” does strike me as more amusing a moniker than Booz, Allen, McKinsey, or Bain.
You can find a 5000 word plus segment of a report with the remarkable title “Microsoft’s AI Strategy Deconstructed – From Energy to Tokens” online. To get the complete report, presumably not the semi report, one must subscribe. Thus, the document is content marketing, but I want to highlight three aspects of the MBA-infused write up. These reflect my biases, so if you are not into dinobaby think, click away, gentle reader.
The title “Microsoft’s AI Strategy Deconstructed” is a rah rah rah for Microsoft. I noted:
- Microsoft was first, now its is fifth, and it will be number one. The idea is that the inventor of Bob and Clippy was the first out of the gate with “AI is the future.” It stands fifth in terms of one survey’s ranking of usage. This “Microsoft’s AI Strategy Deconstructed” asserts that it is going to be a big winner. My standard comment to this blending of random data points and some brown nosing is, “Really?”
- Microsoft is building or at least promising to build lots of AI infrastructure. The write up does not address the very interesting challenge of providing power at a manageable cost to these large facilities. Aerial photos of some of the proposed data centers look quite a bit like airport runways stuffed with bland buildings filled with large numbers of computing devices. But power? A problem looming it seems.
- The write up does not pay much attention to the Google. I think that’s a mistake. From data centers in boxes to plans to put these puppies in orbit, the Google has been doing infrastructure, including fiber optic, chips, and interesting investments like its interest in digital currency mining operations. But Google appears to be of little concern to the Microsoft-tilted semi analysis from SemiAnalysis. Remember, I am a dinobaby, so my views are likely to rock the young wizards who crafted this “Microsoft is going to be a Big Dog.” Yeah, but the firm did Clippy. Remember?
The second write up picks up on the same theme: Microsoft is going to do really big things. “Microsoft Is Building Datacenter Superclusters That Span Continents” explains that MSFT’s envisioned “100 Trillion Parameter Models of the Near Future Can’t Be Built in One Place” and will be sort of like buildings that are “two stories tall, use direct-to-chip liquid cooling, and consume “almost zero water.”
The write up adds:
Microsoft is famously one of the few hyperscalers that’s standardized on Nvidia’s InfiniBand network protocol over Ethernet or a proprietary data fabric like Amazon Web Service’s EFA for its high-performance compute environments. While Microsoft has no shortage of options for stitching datacenters together, distributing AI workloads without incurring bandwidth- or latency-related penalties remains a topic of interest to researchers.
The real estate broker Arvin Haddad uses the phrase “Can you spot the flaw?” Okay, let me ask, “Can you spot the flaw in Microsoft’s digital mansions?” You have five seconds. Okay. What happens if the text centric technology upon which current AI efforts are based gets superseded by [a] a technical breakthrough that renders TensorFlow approaches obsolete, expensive, and slow? or [b] China dumps its chip and LLM technology into the market as cheap or open source? My thought is that the data centers that span continents may end up like the Westfield San Francisco Centre as a home for pigeons, graffiti artists, and security guards.
Yikes.
Building for the future of AI may be like shooting at birds not in sight. Sure, a bird could fly though the pellets, but probably not if they are nesting in pond a mile away.
Net net: Microsoft is hiring influencers and shooting where ducks will be. Sounds like a plan.
Stephen E Arnold, November 13, 2025
AI Is a Winner: The Viewpoint of an AI Believer
November 13, 2025
This essay is the work of a dumb dinobaby. No smart software required.
Bubble, bubble, bubble. This is the Silicon Valley version of epstein, epstein, epstein. If you are worn out from the doom and gloom of smart software’s penchant for burning cash and ignoring the realities of generating electric power quickly, you will want to read “AI Is Probably Not a Bubble: AI Companies Have Revenue, Demand, and Paths to Immense Value.” [Note: You may encounter a paywall when you attempt to view this article. Don’t hassle me. Contact those charming visionaries at Substack, the new new media outfit.]
The predictive impact of the analysis has been undercut by a single word in the title “Probably.” A weasel word appears because the author’s enthusiasm for AI is a bit of contrarian thinking presented in thought leader style. Probably a pig can fly somewhere at some time. Yep, confidence.
Here’s a passage I found interesting:
… unlike dot-com companies, the AI companies have reasonable unit economics absent large investments in infrastructure and do have paths to revenue. OpenAI is demonstrating actual revenue growth and product-market fit that Pets.com and Webvan never had. The question isn’t whether customers will pay for AI capabilities — they demonstrably are — but whether revenue growth can match required infrastructure investment. If AI is a bubble and it pops, it’s likely due to different fundamentals than the dot-com bust.
Ah, ha, another weasel word: “Whether.” Is this AI bubble going to expand infinitely or will it become a Pets.com?
The write up says:
Instead, if the AI bubble is a bubble, it’s more likely an infrastructure bubble.
I think the ground beneath the argument has shifted. The “AI” is a technology like “the Internet.” The “Internet” became a big deal. AI is not “infrastructure.” That’s a data center with fungible objects like machines and connections to cables. Plus, the infrastructure gets “utilized immediately upon completion.” But what if [a] demand decreases due to lousy AI value, [b] AI becomes a net inflater of ancillary costs like a Microsoft subscription to Word, or [c] electrical power is either not available or too costly to make a couple of football fields of servers to run 24×7?
I liked this statement, although I am not sure some of the millions of people who cannot find jobs will agree:
As weird as it sounds, an AI eventually automating the entire economy seems actually plausible, if current trends keep continuing and current lines keep going up.
Weird. Cost cutting is a standard operating tactic. AI is an excuse to dump expensive and hard-to-manage humans. Whether AI can do the work is another question. Shifting from AI delivering value to server infrastructure shows one weakness in the argument. Ignoring the societal impact of unhappy workers seems to me illustrative of taking finance classes, not 18th century history classes.
Okay, here’s the wind up of the analysis:
Unfortunately, forecasting is not the same as having a magic crystal ball and being a strong forecaster doesn’t give me magical insight into what the market will do. So honestly, I don’t know if AI is a bubble or not.
The statement is a combination of weasel words, crawfishing away from the thesis of the essay, and an admission that this is a marketing thought leader play. That’s okay. LinkedIn is stuffed full of essays like this big insight:
So why are industry leaders calling AI a bubble while spending hundreds of billions on infrastructure? Because they’re not actually contradicting themselves. They’re acknowledging legitimate timing risk while betting the technology fundamentals are sound and that the upside is worth the risk.
The AI giants are savvy cats, are they not?
Stephen E Arnold, November 13, 2025
US Government Procurement Changes: Like Silicon Valley, Really? I Mean For Sure?
November 12, 2025
Another short essay from a real and still-alive dinobaby. If you see an image, we used AI. The dinobaby is not an artist like Grandma Moses.
I learned about the US Department of War overhaul of its procurement processes by reading “The Department of War Just Shot the Accountants and Opted for Speed.” Rumblings of procurement hassles have been reaching me for years. The cherished methods of capture planning, statement of work consulting, proposal writing, and evaluating bids consumes many billable hours by consultants. The processes involve thousands of government professionals: Lawyers, financial analysts, technical specialists, administrative professionals, and consultants. I can’t omit the consultants.
According to the essay written by Steve Blank (a person unfamiliar to me):
Last week the Department of War finally killed the last vestiges of Robert McNamara’s 1962 Planning, Programming, and Budgeting System (PPBS). The DoW has pivoted from optimizing cost and performance to delivering advanced weapons at speed.
The write up provides some of the history of the procurement process enshrined in such documents as FAR or the Federal Acquisition Regulations. If you want the details, Mr. Blank provides I urge you to read his essay in full.
I want to highlight what I think is an important point to the recent changes. Mr. Bloom writes:
The war in Ukraine showed that even a small country could produce millions of drones a year while continually iterating on their design to match changes on the battlefield. (Something we couldn’t do.) Meanwhile, commercial technology from startups and scaleups (fueled by an immense pool of private capital) has created off-the-shelf products, many unmatched by our federal research development centers or primes, that can be delivered at a fraction of the cost/time. But the DoW acquisition system was impenetrable to startups. Our Acquisition system was paralyzed by our own impossible risk thresholds, its focus on process not outcomes, and became risk averse and immoveable.
Based on my experience, much of it working as a consultant on different US government projects, the horrific “special operation” delivered a number of important lessons about modern warfare. Reading between the lines of the passage cited above, two important items of information emerged from what I view as an illegal international event:
- Under certain conditions human creativity can blossom and then grow into major business operations. I would suggest that Ukraine’s innovations in the use of drones, how the drones are deployed in battle conditions, and how the basic “drone idea” reduce the effectiveness of certain traditional methods of warfare
- Despite disruptions to transportation and certain third-party products, Ukraine demonstrated that just-in-time production facilities can be made operational in weeks, sometimes days.
- The combination of innovative ideas, battlefield testing, and right-sized manufacturing demonstrated that a relatively small country can become a world-class leader in modern warfighting equipment, software, and systems.
Russia, with its ponderous planning and procurement process, has become the fall guy to a president who was a stand up comedian. Who is laughing now? It is not the perpetrators of the “special operation.” The joke, as some might say, is on individuals who created the “special operation.”
Mr. Blank states about the new procurement system:
To cut through the individual acquisition silos, the services are creating Portfolio Acquisition Executives (PAEs). Each Portfolio Acquisition Executive (PAE) is responsible for the entire end-to-process of the different Acquisition functions: Capability Gaps/Requirements, System Centers, Programming, Acquisition, Testing, Contracting and Sustainment. PAEs are empowered to take calculated risks in pursuit of rapidly delivering innovative solutions.
My view of this type of streamlining is that it will become less flexible over time. I am not sure when the ossification will commence, but bureaucratic systems, no matter how well designed, morph and become traditional bureaucratic systems. I am not going to trot out the academic studies about the impact of process, auditing, and legal oversight on any efficient process. I will plainly state that the bureaucracies to which I have been exposed in the US, Europe, and Asia are fundamentally the same.
Can the smart software helping enable the Silicon Valley approach to procurement handle the load and keep the humanoids happy? Thanks, Venice.ai. Good enough.
Ukraine is an outlier when it comes to the organization of its warfighting technology. Perhaps other countries if subjected to a similar type of “special operation” would behave as the Ukraine has. Whether I was giving lectures for the Japanese government or dealing with issues related to materials science for an entity on Clarendon Terrace, the approach, rules, regulations, special considerations, etc. were generally the same.
The question becomes, “Can a new procurement system in an environment not at risk of extinction demonstrate the speed, creativity, agility, and productivity of the Ukrainian model?”
My answer is, “No.”
Mr. Blank writes before he digs into the new organizational structure:
The DoW is being redesigned to now operate at the speed of Silicon Valley, delivering more, better, and faster. Our warfighters will benefit from the innovation and lower cost of commercial technology, and the nation will once again get a military second to none.
This is an important phrase: Silicon Valley. It is the model for making the US Department of War into a more flexible and speedy entity, particularly with regard to procurement, the use of smart software (artificial intelligence), and management methods honed since Bill Hewlett and Dave Packard sparked the garage myth.
Silicon Valley has been an model for many organizations and countries. However, who thinks much about the Silicon Fen? I sure don’t. I would wager a slice of cheese that many readers of this blog post have never, ever heard of Sophia Antipolis. Everyone wants to be a Silicon Valley and high-technology, move fast and break things outfit.
But we have but one Silicon Valley. Now the question is, “Will the US government be a successful Silicon Valley, or will it fizzle out?” Based on my experience, I want to go out on a very narrow limb and suggest:
- Cronyism was important to Silicon Valley, particularly for funding and lawyering. The “new” approach to Department of War procurement is going to follow a similar path.
- As the stakes go up, growth becomes more important than fiscal considerations. As a result, the cost of becoming bigger, faster, cheaper spikes. Costs for the majority of Silicon Valley companies kill off most start ups. The failure rate is high, and it is exacerbated by the need of the winners to continue to win.
- Silicon Valley management styles produce some negative consequences. Often overlooked are such modern management methods as [a] a lack of common sense, [b] decisions based on entitlement or short term gains, and [c] a general indifference to the social consequences of an innovation, a product, or a service.
If I look forward based on my deeply flawed understanding of this Silicon Valley revolution I see monopolistic behavior emerging. Bureaucracies will emerge because people working for other people create rules, procedures, and processes to minimize the craziness of doing the go fast and break things activities. Workers create bureaucracies to deal with chaos, not cause chaos.
Mr. Blank’s essay strikes me as generally supportive of this reinvention of the Federal procurement process. He concludes with:
Let’s hope these changes stick.
My personal view is that they won’t. Ukraine’s created a wartime Silicon Valley in a real-time, shoot-and-survive conflict. The urgency is not parked in a giant building in Washington, DC, or a Silicon Valley dream world. A more pragmatic approach is to partition procurement methods. Apply Silicon Valley thinking in certain classes of procurement; modify the FAR to streamline certain processes; and leave some of the procedures unchanged.
AI is a go fast and break things technology. It also hallucinates. Drones from Silicon Valley companies don’t work in Ukraine. I know because someone with first hand information told me. What will the new methods of procurement deliver? Answer: Drones that won’t work in a modern asymmetric conflict. With decisions involving AI, I sure don’t want to find myself in a situation about which smart software makes stuff up or operates on digital mushrooms.
Stephen E Arnold, November 12, 2025
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