What Will the AT&T Executives Serve Their Lawyers at the Security Breach Debrief?
July 15, 2024
This essay is the work of a dinobaby. Unlike some folks, no smart software improved my native ineptness.
On the flight back to my digital redoubt in rural Kentucky, I had the thrill of sitting behind a couple of telecom types who were laughing at the pickle AT&T has plopped on top of what I think of a Judge Green slushee. Do lime slushees and dill pickles go together? For my tastes, nope. Judge Green wanted to de-monopolize the Ma Bell I knew and loved. (Yes, I cashed some Ma Bell checks and I had a Young Pioneers hat.)
We are back to what amounts a Ma Bell trifecta: AT&T (the new version which wears spurs and chaps), Verizon (everyone’s favorite throw back carrier), and the new T-Mobile (bite those customer pocketbooks as if they were bratwursts mit sauerkraut). Each of these outfits is interesting. But at the moment, AT&T is in the spotlight.
“Data of Nearly All AT&T Customers Downloaded to a Third-Party Platform in a 2022 Security Breach” dances around a modest cyber misstep at what is now a quite old and frail Ma Bell. Imagine the good old days before the Judge Green decision to create Baby Bells. Security breaches were possible, but it was quite tough to get the customer data. Attacks were limited to those with the knowledge (somewhat tough to obtain), the tools (3B series computers and lots of mainframes), and access to network connections. Technology has advanced. Consequently competition means that no one makes money via security. Security is better at old-school monopolies because money can be spent without worrying about revenue. As one AT&T executive said to my boss at a blue-chip consulting company, “You guys charge so much we will have to get another railroad car filled with quarters to pay your bill.” Ho ho ho — except the fellow was not joking. At the pre-Judge Green AT&T, spending money on security was definitely not an issue. Today? Seems to be different.
A more pointed discussion of Ma Bell’s breaking her hip again appears in “AT&T Breach Leaked Call and Text Records from Nearly All Wireless Customers” states:
AT&T revealed Friday morning (July 12, 2024) that a cybersecurity attack had exposed call records and texts from “nearly all” of the carrier’s cellular customers (including people on mobile virtual network operators, or MVNOs, that use AT&T’s network, like Cricket, Boost Mobile, and Consumer Cellular). The breach contains data from between May 1st, 2022, and October 31st, 2022, in addition to records from a “very small number” of customers on January 2nd, 2023.
The “problem” if I understand the reference to Snowflake. Is AT&T suggesting that Snowflake is responsible for the breach? Big outfits like to identify the source of the problem. If Snowflake made the misstep, isn’t it the responsibility of AT&T’s cyber unit to make sure that the security was as good as or better than the security implemented before the Judge Green break up? I think AT&T, like other big companies, wants to find a way to shift blame, not say, “We put the pickle in the lime slushee.”
My posture toward two year old security issues is, “What’s the point of covering up a loss of ‘nearly all’ customers’ data?” I know the answer: Optics and the share price.
As a person who owned a Young Pioneers’ hat, I am truly disappointed in the company. The Regional Managers for whom I worked as a contractor had security on the list of top priorities from day one. Whether we were fooling around with a Western Electric data service or the research charge back system prior to the break up, security was not someone else’s problem.
Today it appears that AT&T has made some decisions which are now perched on the top officer’s head. Security problems are, therefore, tough to miss. Boeing loses doors and wheels from aircraft. Microsoft tantalizes bad actors with insecure systems. AT&T outsources high value data and then moves more slowly than the last remaining turtle in the mine run off pond near my home in Harrod’s Creek.
Maybe big is not as wonderful as some expect the idea to be? Responsibility for one’s decisions and an ethical compass are not cyber tools, but both notions are missing in some big company operations. Will the after-action team guzzle lime slushees with pickles on top?
Stephen E Arnold, July 15, 2024
AI and Electricity: Cost and Saving Whales
July 15, 2024
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Grumbling about the payoff from those billions of dollars injected into smart software continues. The most recent angle is electricity. AI is a power sucker, a big-time energy glutton. I learned this when I read the slightly alarmist write up “Artificial Intelligence Needs So Much Power It’s Destroying the Electrical Grid.” Texas, not a hot bed of AI excitement, seems to be doing quite well with the power grid problem without much help from AI. Mother Nature has made vivid the weaknesses of the infrastructure in that great state.
Some dolphins may love the power plant cooling effluent (run off). Other animals, not so much. Thanks, MSFT Copilot. Working on security this week?
But let’s get back to saving whales and the piggishness of those with many GPUs processing data to help out the eighth-graders with their 200 word essays.
The write up says:
As a recent report from the Electric Power Research Institute lays out, just 15 states contain 80% of the data centers in the U.S.. Some states – such as Virginia, home to Data Center Alley – astonishingly have over 25% of their electricity consumed by data centers. There are similar trends of clustered data center growth in other parts of the world. For example, Ireland has become a data center nation.
So what?
The article says that it takes just two years to spin up a smart software data center but it takes four years to enhance an electrical grid. Based on my experience at a unit of Halliburton specializing in nuclear power, the four year number seems a bit optimistic. One doesn’t flip a switch and turn on Three Mile Island. One does not pick a nice spot near a river and start building a nuclear power reactor. Despite the recent Supreme Court ruling calling into question what certain frisky Executive Branch agencies can require, home owners’ associations and medical groups can make life interesting. Plus building out energy infrastructure is expensive and takes time. How long does it take for several feet of specialized concrete to set? Longer than pouring some hardware store quick fix into a hole in your driveway?
The article says:
There are several ways the industry is addressing this energy crisis. First, computing hardware has gotten substantially more energy efficient over the years in terms of the operations executed per watt consumed. Data centers’ power use efficiency, a metric that shows the ratio of power consumed for computing versus for cooling and other infrastructure, has been reduced to 1.5 on average, and even to an impressive 1.2 in advanced facilities. New data centers have more efficient cooling by using water cooling and external cool air when it’s available. Unfortunately, efficiency alone is not going to solve the sustainability problem. In fact, Jevons paradox points to how efficiency may result in an increase of energy consumption in the longer run. In addition, hardware efficiency gains have slowed down substantially as the industry has hit the limits of chip technology scaling.
Okay, let’s put aside the grid and the dolphins for a moment.
AI has and will continue to have downstream consequences. Although the methods of smart software are “old” when measured in terms of Internet innovations, the knock on effects are not known.
Several observations are warranted:
- Power consumption can be scheduled. The method worked to combat air pollution in Poland, and it will work for data centers. (Sure, the folks wanting computation will complain, but suck it up, buttercups. Plan and engineer for efficiency.)
- The electrical grid, like the other infrastructures in the US, need investment. This is a job for private industry and the governmental authorities. Do some planning and deliver results, please.
- Those wanting to scare people will continue to exercise their First Amendment rights. Go for it. However, I would suggest putting observations in a more informed context may be helpful. But when six o’clock news weather people scare the heck out of fifth graders when a storm or snow approaches, is this an appropriate approach to factual information? Answer: Sure when it gets clicks, eyeballs, and ad money.
Net net: No big changes for now are coming. I hope that the “deciders” get their Fiat 500 in gear.
Stephen E Arnold, July 15, 2024
AI Weapons: Someone Just Did Actual Research!
July 12, 2024
This essay is the work of a dinobaby. Unlike some folks, no smart software improved my native ineptness.
I read a write up that had more in common with a write up about the wonders of a steam engine than a technological report of note. The title of the “real” news report is “AI and Ukraine Drone Warfare Are Bringing Us One Step Closer to Killer Robots.”
I poked through my files and found a couple of images posted as either advertisements for specialized manufacturing firms or by marketers hunting for clicks among the warfighting crowd. Here’s one:
The illustration represents a warfighting drone. I was able to snap this image in a lecture I attended in 2021. At that time, an individual could purchase online the device in quantity for about US$9,000.
Here’s another view:
This militarized drone has 10 inch (254 millimeter) propellers / blades.
The boxy looking thing below the rotors houses electronics, batteries, and a payload of something like a Octanitrocubane- or HMX-type of kinetic charge.
Imagine four years ago, a person or organization could buy a couple of these devices and use them in a way warmly supported by bad actors. Why fool around with an unreliable individual pumped on drugs to carry a mobile phone that would receive the “show time” command? Just sit back. Guide the drone. And — well — evidence that kinetics work.
The write up is, therefore, years behind what’s been happening in some countries for years. Yep, years.
Consider this passage:
As the involvement of AI in military applications grows, alarm over the eventual emergence of fully autonomous weapons grows with it.
I want to point out that Palmer Lucky’s Andruil outfit has been fooling around in the autonomous system space since 2017. One buzz phrase an Andruil person used in a talk was, “Lattice for Mission Autonomy.” Was Mr. Lucky to focus on this area? Based on what I picked up at a couple of conferences in Europe in 2015, the answer is, “Nope.”
The write up does have a useful factoid in the “real” news report?
It is not technology. It is not range. It is not speed, stealth, or sleekness.
It is cheap. Yes, low cost. Why spend thousands when one can assemble a drone with hobby parts, a repurposed radio control unit from the local model airplane club, and a workable but old mobile phone?
Sign up for Telegram. Get some coordinates and let that cheap drone fly. If an operating unit has a technical whiz on the team, just let the gizmo go and look for rectangular shapes with a backpack near them. (That’s a soldier answering nature’s call.) Autonomy may not be perfect, but close enough can work.
The write up says:
Attack drones used by Ukraine and Russia have typically been remotely piloted by humans thus far – often wearing VR headsets – but numerous Ukrainian companies have developed systems that can fly drones, identify targets, and track them using only AI. The detection systems employ the same fundamentals as the facial recognition systems often controversially associated with law enforcement. Some are trained with deep learning or live combat footage.
Does anyone believe that other nation-states have figured out how to use off-the-shelf components to change how warfighting takes place? Ukraine started the drone innovation thing late. Some other countries have been beavering away on autonomous capabilities for many years.
For me, the most important factoid in the write up is:
… Ukrainian AI warfare reveals that the technology can be developed rapidly and relatively cheaply. Some companies are making AI drones using off-the-shelf parts and code, which can be sent to the frontlines for immediate live testing. That speed has attracted overseas companies seeking access to battlefield data.
Yep, cheap and fast.
Innovation in some countries is locked in a time warp due to procurement policies and bureaucracy. The US F 35 was conceived decades ago. Not surprisingly, today’s deployed aircraft lack the computing sophistication of the semiconductors in a mobile phone I can acquire today a local mobile phone repair shop, often operating from a trailer on Dixie Highway. A chip from the 2001 time period is not going to do the TikTok-type or smart software-type of function like an iPhone.
So cheap and speedy iteration are the big reveals in the write up. Are those the hallmarks of US defense procurement?
Stephen E Arnold, July 12, 2024
NSO Group Determines Public Officials Are Legitimate Targets
July 12, 2024
Well, that is a point worth making if one is the poster child of the specialized software industry.
NSO Group, makers of the infamous Pegasus spyware, makes a bold claim in a recent court filing: “Government and Military Officials Fair Targets of Pegasus Spyware in All Cases, NSO Group Argues,” reports cybersecurity news site The Record. The case at hand is Pegasus’ alleged exploitation of a WhatsApp vulnerability back in 2019. Reporter Suzanne Smalley cites former United Nations official David Kaye, who oversaw the right to free expression at that time. Smalley writes:
“Friday’s filing seems to suggest a broader purpose for Pegasus, Kaye said, pointing to NSO’s explanation that the technology can be used on ‘persons who, by virtue of their positions in government or military organizations, are the subject of legitimate intelligence investigations.’ ‘This appears to be a much more extensive claim than made in 2019, since it suggests that certain persons are legitimate targets of Pegasus without a link to the purpose for the spyware’s use,’ said Kaye, who was the U.N.’s special rapporteur on freedom of opinion and expression from 2014 to 2020. … The Israeli company’s statement comes as digital forensic researchers are increasingly finding Pegasus infections on phones belonging to activists, opposition politicians and journalists in a host of countries worldwide. NSO Group says it only sells Pegasus to governments, but the frequent and years-long discoveries of the surveillance technology on civil society phones have sparked a public uproar and led the U.S. government to crack down on the company and commercial spyware manufacturers in general.”
See the article for several examples of suspected targets around the world. We understand both the outrage and the crack down. However, publicly arguing about the targets of spyware may have unintended consequences. Now everyone knows about mobile phone data exfiltration and how that information can be used to great effect.
As for the WhatsApp court case, it is proceeding at the sluggish speed of justice. In March 2024, a California federal judge ordered NSO Group to turn over its secret spyware code. What will be the verdict? When will it be handed down? And what about the firm’s senior managers?
Cynthia Murrell, July 12, 2024
OpenAI Says, Let Us Be Open: Intentionally or Unintentionally
July 12, 2024
This essay is the work of a dinobaby. Unlike some folks, no smart software improved my native ineptness.
I read a troubling but not too surprising write up titled “ChatGPT Just (Accidentally) Shared All of Its Secret Rules – Here’s What We Learned.” I have somewhat skeptical thoughts about how big time organizations implement, manage, maintain, and enhance their security. It is more fun and interesting to think about moving fast, breaking things, and dominating a market sector. In my years of dinobaby experience, I can report this about senior management thinking about cyber security:
- Hire a big name and let that person figure it out
- Ask the bean counter and hear something like this, “Security is expensive, and its monetary needs are unpredictable and usually quite large and just go up over time. Let me know what you want to do.”
- The head of information technology will say, “I need to license a different third party tool and get those cyber experts from [fill in your own preferred consulting firm’s name].”
- How much is the ransom compared to the costs of dealing with our “security issue”? Just do what costs less.
- I want to talk right now about the meeting next week with our principal investor. Let’s move on. Now!
The captain of the good ship OpenAI asks a good question. Unfortunately the situation seems to be somewhat problematic. Thanks, MSFT Copilot.
The write up reports:
ChatGPT has inadvertently revealed a set of internal instructions embedded by OpenAI to a user who shared what they discovered on Reddit. OpenAI has since shut down the unlikely access to its chatbot’s orders, but the revelation has sparked more discussion about the intricacies and safety measures embedded in the AI’s design. Reddit user F0XMaster explained that they had greeted ChatGPT with a casual "Hi," and, in response, the chatbot divulged a complete set of system instructions to guide the chatbot and keep it within predefined safety and ethical boundaries under many use cases.
Another twist to the OpenAI governance approach is described in “Why Did OpenAI Keep Its 2023 Hack Secret from the Public?” That is a good question, particularly for an outfit which is all about “open.” This article gives the wonkiness of OpenAI’s technology some dimensionality. The article reports:
Last April [2023], a hacker stole private details about the design of Open AI’s technologies, after gaining access to the company’s internal messaging systems. …
OpenAI executives revealed the incident to staffers in a company all-hands meeting the same month. However, since OpenAI did not consider it to be a threat to national security, they decided to keep the attack private and failed to inform law enforcement agencies like the FBI.
What’s more, with OpenAI’s commitment to security already being called into question this year after flaws were found in its GPT store plugins, it’s likely the AI powerhouse is doing what it can to evade further public scrutiny.
What these two separate items suggest to me is that the decider(s) at OpenAI decide to push out products which are not carefully vetted. Second, when something surfaces OpenAI does not find amusing, the company appears to zip its sophisticated lips. (That’s the opposite of divulging “secrets” via ChatGPT, isn’t it?)
Is the company OpenAI well managed? I certainly do not know from first hand experience. However, it seems to be that the company is a trifle erratic. Imagine the Chief Technical Officer did not allegedly know a few months ago if YouTube data were used to train ChatGPT. Then the breach and keeping quiet about it. And, finally, the OpenAI customer who stumbled upon company secrets in a ChatGPT output.
Please, make your own decision about the company. Personally I find it amusing to identify yet another outfit operating with the same thrilling erraticism as other Sillycon Valley meteors. And security? Hey, let’s talk about August vacations.
Stephen E Arnold, July 12, 2024
Big Plays or Little Plays: The Key to AI Revenue
July 11, 2024
I keep thinking about the billions and trillions of dollars required to create a big AI win. A couple of snappy investment banks have edged toward the idea that AI might not pay off with tsunamis of money right away. The fix is to become brokers for GPU cycles or “humble brags” about how more money is needed to fund the next big thing in what venture people want to be the next big thing. Yep, AI: A couple of winners and the rest are losers at least in terms of the pay off scale whacked around like a hapless squash ball at the New York Athletic Club.
However, a radical idea struck me as I read a report from the news service that oozes “trust.” The Reuters’ story is “China Leads the World in Adoption of Generative AI Survey Shows.” Do I trust surveys? Not really. Do I trust trusted “real” news outfits? Nope, not really. But the write up includes an interesting statement, and the report sparked what is for me a new idea.
First, here’s the passage I circled:
“Enterprise adoption of generative AI in China is expected to accelerate as a price war is likely to further reduce the cost of large language model services for businesses. The SAS report also said China led the world in continuous automated monitoring (CAM), which it described as “a controversial but widely-deployed use case for generative AI tools”.”
I interpreted this to mean:
- Small and big uses of AI in somewhat mundane tasks
- Lots of small uses with more big outfits getting with the AI program
- AI allows nifty monitoring which is going to catch the attention of some Chinese government officials who may be able to repurpose these focused applications of smart software
With models available as open source like the nifty Meta Facebook Zuck concoction, big technology is available. Furthermore the idea of applying smart software to small problems makes sense. The approach avoids the Godzilla lumbering associated with some outfits and, second, fast iteration with fast failures provides useful factoids for other developers.
The “real” news report does not provide numbers or much in the way of analysis. I think the idea of small-scale applications does not make sense when one is eating fancy food at a smart software briefing in mid town Manhattan. Small is not going to generate that. big wave of money from AI. The money is needed to raise more money.
My thought is that the Chinese approach has value because it is surfing on open source and some proprietary information known to Chinese companies solving or trying to solve a narrow problem. Also, the crazy pace of try-fail, try-fail enables acceleration of what works. Failures translate to lessons about what lousy path to follow.
Therefore, my reaction to the “real” news about the survey is that China may be in a position to do better, faster, and cheaper AI applications that the Godzilla outfits. The chase for big money exists, but in the US without big money, who cares? In China, big money may not be as large as the pile of cash some VCs and entrepreneurs argue is absolutely necessary.
So what? The “let many flowers bloom” idea applies to AI. That’s a strength possibly neither appreciated or desired by the US AI crowd. Combined with China’s patent surge, my new thought translates to “oh, oh.”
Stephen E Arnold, July 11, 2024
Cloudflare, What Else Can You Block?
July 11, 2024
I spotted an interesting item in Silicon Angle. The article is “Cloudflare Rolls Out Feature for Blocking AI Companies’ Web Scrapers.” I think this is the main point:
Cloudflare Inc. today debuted a new no-code feature for preventing artificial intelligence developers from scraping website content. The capability is available as part of the company’s flagship CDN, or content delivery network. The platform is used by a sizable percentage of the world’s websites to speed up page loading times for users. According to Cloudflare, the new scraping prevention feature is available in both the free and paid tiers of its CDN.
Cloudflare is what I call an “enabler.” For example, when one tries to do some domain research, one often encounters Cloudflare, not the actual IP address of the service. This year I have been doing some talks for law enforcement and intelligence professionals about Telegram and its Messenger service. Guess what? Telegram is a Cloudflare customer. My team and I have encountered other interesting services which use Cloudflare the way Natty Bumpo’s sidekick used branches to obscure footprints in the forest.
Cloudflare has other capabilities too; for instance, the write up reports:
Cloudflare assigns every website visit that its platform processes a score of 1 to 99. The lower the number, the greater the likelihood that the request was generated by a bot. According to the company, requests made by the bot that collects content for Perplexity AI consistently receive a score under 30.
I wonder what less salubrious Web site operators score. Yes, there are some pretty dodgy outfits that may be arguably worse than an AI outfit.
The information in this Silicon Angle write up raises a question, “What other content blocking and gatekeeping services can Cloudflare provide?
Stephen E Arnold, July 11, 2024
Common Sense from an AI-Centric Outfit: How Refreshing
July 11, 2024
This essay is the work of a dumb dinobaby. No smart software required.
In the wild and wonderful world of smart software, common sense is often tucked beneath a stack of PowerPoint decks and vaporized in jargon-spouting experts in artificial intelligence. I want to highlight “Interview: Nvidia on AI Workloads and Their Impacts on Data Storage.” An Nvidia poohbah named Charlie Boyle output some information that is often ignored by quite a few of those riding the AI pony to the pot of gold at the end of the AI rainbow.
The King Arthur of senior executives is confident that in his domain he is the master of his information. By the way, this person has an MBA, a law degree, and a CPA certification. His name is Sir Walter Mitty of Dorksford, near Swindon. Thanks, MSFT Copilot. Good enough.
Here’s the pivotal statement in the interview:
… a big part of AI for enterprise is understanding the data you have.
Yes, the dwellers in carpetland typically operate with some King Arthur type myths galloping around the castle walls; specifically:
Myth 1: We have excellent data
Myth 2: We have a great deal of data and more arriving every minute our systems are online
Myth 3: Out data are available and in just a few formats. Processing the information is going to be pretty easy.
Myth 4: Out IT team can handle most of the data work. We may not need any outside assistance for our AI project.
Will companies map these myths to their reality? Nope.
The Nvidia expert points out:
…there’s a ton of ready-made AI applications that you just need to add your data to.
“Ready made”: Just like a Betty Crocker cake mix my grandmother thought tasted fake, not as good as home made. Granny’s comment could be applied to some of the AI tests my team have tracked; for example, the Big Apple’s chatbot outputting comments which violated city laws or the exciting McDonald’s smart ordering system. Sure, I like bacon on my on-again, off-again soft serve frozen dessert. Doesn’t everyone?
The Nvidia experts offers this comment about storage:
If it’s a large model you’re training from scratch you need very fast storage because a lot of the way AI training works is they all hit the same file at the same time because everything’s done in parallel. That requires very fast storage, very fast retrieval.
Is that a problem? Nope. Just crank up the cloud options. No big deal, except it is. There are costs and time to consider. But otherwise this is no big deal.
The article contains one gems and wanders into marketing “don’t worry” territory.
From my point of view, the data issue is the big deal. Bad, stale, incomplete, and information in odd ball formats — these exist in organizations now. The mass of data may have 40 percent or more which has never been accessed. Other data are back ups which contain versions of files with errors, copyright protected data, and Boy Scout trip plans. (Yep, non work information on “work” systems.)
Net net: The data issue is an important one to consider before getting into the let’s deploy a customer support smart chatbot. Will carpetland dwellers focus on the first step? Not too often. That’s why some AI projects get lost or just succumb to rising, uncontrollable costs. Moving data? No problem. Bad data? No problem. Useful AI system? Hmmm. How much does storage cost anyway? Oh, not much.
Stephen E Arnold, July 11, 2024
A Digital Walden Despond: Life without Social Media
July 11, 2024
Here is a refreshing post from Deep Work Culture and More about the author’s shift to an existence mostly offline, where he discovered … actual life. Upon marking one year without Facebook, Instagram, or Twitter / X, the blogger describes “Rediscovering Time and Relationships: The Impact of Quitting Social Media.” After a brief period of withdrawal, he learned to put his newly freed time and attention to good use. He writes:
“Hours previously lost to mindless scrolling were now available for activities that brought genuine enrichment. I rediscovered the joy of uninterrupted reading, long walks, and deep conversations. This newfound time became a fertile ground for hobbies that had languished in the shadows of digital distractions. The absence of the incessant need to document and share every moment of my life allowed me to be fully present in my experiences.”
Imagine that. The author states more time for reflection and self-discovery, as well as abandoning the chase for likes and comments, provided clarity and opportunities for personal growth. He even rediscovered his love of books. He considers:
“Without the constant distractions of social media, I found myself turning to books more frequently and with greater enthusiasm. … My recent literary journey has been instrumental in fostering a deeper sense of empathy and curiosity, encouraging me to view the world through varied lenses and enhancing my overall cognitive and emotional well-being. Additionally, reading more has cultivated a more reflective mindset, allowing me to draw connections between my personal experiences and broader human themes. This has translated into a more nuanced approach to both my professional endeavors and personal relationships, as the wisdom gleaned from books has informed my decision-making, problem-solving, and communication skills.”
Enticing, is it not? Strangely, this freedom, time, and depth of experience are available to any of us. All we have to do is log out of social media once and for all. Are you ready, dear reader? Find a walled in despond.
Cynthia Murrell, July 11, 2024
Oxygen: Keep the Bait Alive for AI Revenue
July 10, 2024
Andreessen Horowitz published “Who Owns the Generative AI Platform?” in January 2023. The rah-rah appeared almost at the same time as the Microsoft OpenAI deal marketing coup. In that essay, the venture firm and publishing firm stated this about AI:
…there is enough early data to suggest massive transformation is taking place. What we don’t know, and what has now become the critical question, is: Where in this market will value accrue?
Now a partial answer is emerging.
The Information, an online information service with a paywall revealed “Andreessen Horowitz Is Building a Stash of More Than 20,000 GPUs to Win AI Deals.” That report asserts:
The firm has secured thousands of AI chips, including Nvidia H100 graphics processing units, and is renting them to portfolio companies, according to a person who has discussed the initiative with the firm’s partners…. Andreessen Horowitz has told startup founders the initiative is called “oxygen.”
The initiative reflects what might be a way to hook promising AI outfits and plop them into the firm’s large foldable floating fish basket for live caught gill-bearing vertebrate animals, sometimes called chum.
This factoid emerges shortly after a big Silicon Valley venture outfit raved about the oodles of opportunity AI represents. Plus reports about Blue Chip consulting firms’ through-the-roof AI consulting has encouraged a couple of the big outfits to offer AI services. In addition to opining and advising, the consulting firms are moving aggressively into the AI implementing and operating business.
The morphing of a venture firm into a broker of GPU cycles complements the thinking-for-money firms’ shifting gears to a more hands-on approach.
There are several implications from my point of view:
- The fastest way to make money from the AI frenzy is to charge people so they can “do” AI
- Without a clear revenue stream of sufficient magnitude to foot the bill for the rather hefty costs of “doing” AI with a chance of making cash, selling blue jeans to the miners makes sense. But changing business tactics can add an element of spice to an unfamiliar restaurant’s special of the day
- The move from passive (thinking and waiting) to a more active (doing and charging for hardware and services) brings a different management challenge to the companies making the shift.
These factors suggest that the best way to cash in on AI is to provide what Andreessen Horowitz calls oxygen. It is a clear indication that the AI fish will die without some aggressive intervention.
I am a dinobaby, sitting in my rocker on the porch of the rest home watching the youngsters scramble to make money from what was supposed to be a sure-fire winner. What we know from watching those lemonade stand operators is that success is often difficult to achieve. The grade school kids setting up shop in a subdivision where heat and fatigue take their toll give up and go inside where the air is cool and TikTok waits.
Net net: The Andreessen Horowitz revelation is one more indication that the costs of AI and the difficulty of generating sufficient revenue is starting to hit home. Therefore, advisors’ thoughts seems to be turning to actions designed to produce cash, magnetism, and success. Will the efforts produce the big payoffs? I wonder if these tactical plays are brilliant moves or another neighborhood lemonade stand?
Stephen E Arnold, July 10, 2024