Capitalogix

Skype's Kodak Moment: Remnants of a Past Era

Last week, Microsoft announced that Skype would shut down in May ... after over two decades of service. 

Hydrox existed before Oreo, and Betamax before VHS.

But Skype might be even more surprising. Skype was so ubiquitous that it became a verb and eponymous with video calling. As a world traveler, Skype also used to be the go-to international calling app.

Imagine if Kleenex, Jell-O, or Band-Aids went out of business. 

That’s what Skype did - and it’s not the first tech business to fail similarly...

Thinking Linearly in an Exponential Age

Humans can’t do a lot of things. Honestly, the fact that we’re at the top of the food chain is pretty miraculous. 

We’re slow, weak, and famously bad at understanding large numbers or exponential growth. 

Making matters worse, our brains are hardwired to think locally and linearly.

It’s a monumental task for us to fathom exponential growth … let alone its implications. 

Think how many companies have failed due to that inability … RadioShack couldn’t understand a future where shopping was done online – and Kodak didn’t think digital cameras would replace good ol’ film. Blockbuster couldn’t foresee a future where people would want movies in their mailboxes because “part of the joy is seeing all your options!” They didn’t even make it long enough to see “Netflix and Chill” become a thing. The list goes on. 

 

via Diamandis

Human perception is linear. Technological growth is exponential.

There are many examples. Here is one Peter Diamandis calls “The Kodak Moment” (a play on words of “a Kodak Moment”... the phrase Kodak used in advertising to mean a “special moment that’s worth capturing with a camera”). 

In 1996, Kodak was at the top of its game, with a market cap of over $28 billion and 140,000 employees.

Few people know that 20 years earlier, in 1976, Kodak had invented the digital camera. It had the patents and the first-mover advantage.

But that first digital camera was a baby that only its inventor could love and appreciate.

That first camera took .01 megapixel photos, took 23 seconds to record the image to a tape drive, and only shot in black and white.

Not surprisingly, Kodak ignored the technology and its implications.

Fast forward to 2012, when Kodak filed for bankruptcy – disrupted by the very technology that they invented and subsequently ignored.

via Diamandis

Innovation is a reminder that you can’t be medium-obsessed. Kodak’s goal was to preserve memories. It wasn’t to sell film. Blockbuster’s goal wasn’t to get people in their stores, it was to get movies in homes.  

Henry Ford famously said: “If I had asked people what they wanted, they would have said faster horses.” Steve Jobs was famous for spending all his time with customers, but never asking them what they wanted.

Two of our greatest innovators realized something that many never do. Being conscientious of your consumers doesn’t necessarily mean listening to them. It means thinking about and anticipating their wants and future needs.

Meanwhile, despite Skype having several features that Zoom still hasn’t implemented, Zoom recognized an opportunity during COVID and capitalized. When Microsoft bought Skype, they focused on adding several new features and expanding the range of services instead of improving the quality of their audio or video. Meanwhile, when Zoom entered the space, they brought much better servers and the ability to have much larger rooms. More attendees meant a wider variety of use cases and quicker adoption and referral cycles. They also made it easy to join a Zoom room. Instead of getting your e-mail up front and forcing you to create an account to use it, they let you join a meeting without an account. You only needed an account to host a meeting. 

They focused on making it easy to use their service and on having a clear identity instead of trying to ride every wave and become unfocused. Of course, at the same time, Microsoft stopped focusing on the tool, with an increased focus on their new competitor to Zoom, Teams. 

Tech and AI are creating tectonic forces throughout industry and the world. It is time to embrace and leverage what that makes possible. History has many prior examples of Creative Destruction (and what gets left in the dust).

Opportunity or Chaos …  You get to decide.

Don’t forget ... you don’t have to be the first mover to win in the end. 

Onwards!

A Look At Last Week's Tech Breakthroughs

We live in exciting times!

No, I'm not talking about how fast the DOGE team is terraforming government.

I'm talking about how fast the insights of exponential technologies are compounding the real-world implications of where we are and where we are going.

In past issues, we've talked about how quickly the world is changing, how fast innovations happen, and why it's not about today's tools but rather the value and capabilities of the foundational assets we build upon ... and, ultimately, the things that makes possible.

Today's commentary is different from our usual posts. Yes, the inspiration came from my weekly curation of links selected based on what captured my attention or imagination. However, today's post is about the sheer volume and density of groundbreaking innovations competing for mindshare and investment dollars. And while commercial success is a great way to keep score, we'll explore what this accelerating pace of innovation means for our future and the world.

 

So, here is a list of some of the things that made headlines this week.

• After 17 years of research, Microsoft has announced a massive breakthrough in quantum computing, resulting in a new state of matter and their new Majorana 1 chip. 
• Google announced its new AI co-scientist to help accelerate research for scientists ... and it's already finding novel breakthroughs on decade-long problems.  
• xAI released Grok 3, a significant advancement in the reasoning and performance of their LLM and a competitor to other top models like DeepSeek-R1. 
• Clone Robotics unveiled a video of "ProtoClone," a faceless musculoskeletal android robot with 1000 muscles and over 200 degrees of freedom.
• Nvidia and Arc Institute launched a new AI Bio model - Evo 2 - trained on over 100k species. This doesn't just analyze genomes ... it creates them. 
• Sakana.AI introduced the AI CUDA Engineer, an agentic AI system that automates the production of CUDA kernels 10-100x faster than with common machine learning,
• Claude announced their intention to include reasoning and web search in Claude 4.
• France sustained a Nuclear Fusion plasma reaction for 1,337 seconds - a 25% improvement over the previous record. 

Some may not matter to you now. Try re-reading the list while letting yourself be amazed at what is happening!

Any one of these is a momentous achievement that would have sounded like science fiction even 10 years ago. Now, that's one week of achievement. 

As someone whose company invents things for a living, I understand that none of these breakthroughs were actually invented last week. Obviously, a long and winding road leads to each of those announcements. However, it's remarkable to see so many significant innovations reaching the stage of public announcement simultaneously.

It's hard to quantify the impact of these innovations on not only the tech industry - but the world. 

Think about the implications. Google's co-scientist is already solving problems that humans haven't been able to solve for decades. Clone is building robots that will use the next generations of AI to transform how we think about what artificial intelligence looks like. 

Not to mention the improvement in quantum computing and nuclear fusion, industries that I've been paying attention to since the 90s. 

While any of these topics would have made a good article, in my opinion, the whole is more impressive than the sum of its parts.

If I had to pick one of those topics to highlight, I think it's now time to start focusing more on quantum computing. 

To start, here's an hour-long interview with Satya Nadella about Microsoft's new quantum chip - and what it means for AI & business. 

 

via Dwarkesh Patel

Most of you probably aren't interested in watching the whole thing, but here are some of the highlights. 

• They've created a new state of matter called a topological superconductor.
• The qubits created with topological superconductors are fast, reliable, and small ... very small.
• These new qubits are 1/100th of a millimeter, meaning we now have a clear path to a million-qubit processor.
• To put that in perspective, imagine a chip that can fit in the palm of your hand yet can solve problems that even all the computers on Earth today combined can't! 
• Satya doesn't believe in making claims about how quickly AGI is coming.
• However, he believes it is useful and productive to set a benchmark of making the world 10% better.
• He also believes the topological superconductor breakthrough makes quantum computing a practical reality that can happen in a few years - not decades +.

Prepare for things to get more interesting.

We do live in exciting times!

Investment in AI is Rising ...

It’s no surprise that capital raising is moving toward AI - and often generative AI. 

 

via visualcapitalist

From 2023-2024, over $26 billion flowed into the sector - including big deals like Inflection, xAI, and Anthropic. 

While many of the biggest investments were in foundational models and infrastructure, some money is now moving into targeted AI applications. 

AI isn’t just for researchers and the tech giants anymore ... it’s becoming more commercial.

Realistically, AI is overhyped – and there is a lot of competition. Yet, few firms have operationalized AI in a meaningful way. 

With that said, here is a question worth considering.

Where are the AI applications capable of generating returns that justify the infrastructure, investment, and focus?

The next battle will likely be in the AI Applications space. To keep it short, why hasn’t it happened yet ... and what will likely create the value we’re looking for?

 

Why Haven’t AI Apps Taken Off Yet?

  •  Cost vs. Value Gap: Many AI applications are still experimental or add only incremental value.

  •  Compute Bottlenecks: AI compute costs remain expensive, limiting broader adoption.

  •  Enterprise Hesitation: Many companies are still figuring out how to integrate AI into their operations in a way that delivers real ROI.

 

Where Might the Value Come From?

For AI investments to pay off, applications must solve big problems, not just serve as experimental tools. The highest-value areas likely include:

  •  AI copilots and automation (Enterprise AI reducing labor costs and bottlenecks)

  •  Autonomous systems (AI for analytics, compliance, and logistics)

  •  AI-driven discovery (Accelerating breakthroughs in capabilities and performance)

  •  Next-gen digital assistants (LLMs with memory, context, and long-term utility)

 

Right now, AI apps are where mobile apps were in 2008 — there is plenty of potential, but only a handful of genuinely indispensable use cases. 

Companies like Capitalogix that crack the code on industrial-grade AI applications, will drive the next wave of value creation.

It’s fun and rewarding to watch artificial intelligence become available to everyone.

As the cost of “intelligence” decreases, let’s hope more people take advantage of the opportunity.

However, the sad truth is the opposite is also more likely. As AI becomes more available, it becomes easier for it to become a distraction. 

Remember the Internet? When it first started, most of the uses were academic. Now, despite there being functionally infinite ways to use the internet to improve your life and make you smarter, most people use it for memes and distractions. 

When you think about AI, don’t just think about artificial intelligence ... Think about amplified intelligence. That is the term I use to distinguish between the technology and what people really want ... which is the ability to make better decisions, take smarter actions, and continuously improve performance.

AI isn’t about taking away the humanity from your business or automating away the things you love. It’s about allowing you to be more human – doing more of the things you’re best at - that give you energy and bring you joy.

Business Lessons from the NFL

Today was Super Bowl Sunday 2025. As a fan, I found myself rooting for the Philadelphia Eagles today. But at times, I was rooting for Patrick Mahomes and the Chiefs out of respect for the talent and the incredible record they’ve compiled.

Meanwhile, it also made me think about my home team, the Dallas Cowboys, and how long it’s been since we’ve had any real post-season success. 

Obviously, the Jones family has done many things right. According to Forbes, for the ninth straight year, the Dallas Cowboys are the world’s most valuable sports team, worth an estimated $10.1 billion — the first to cross the 11-figure threshold and $1.3 billion beyond their closest competition.

They’ve mastered winning in the business sense, even when they struggle on the field.

Jerry Jones does a lot right in building his “Disney Ride.” However, this post will focus more on what the coaches and players do to win. 

 

Business Lessons From the NFL

 

I’m regularly surprised by the levels of innovation and strategic thinking I see in football.

Football is something I used to love to play. And it is still something that informs my thoughts and actions.

Some lessons relate to teamwork, while others relate to coaching or management.

Some of these lessons stem back to youth football ... but I still learn from watching games – and even more, from watching Dallas Cowboys practices at The Star. 

Think about it ...  even in middle school, the coaches have a game plan. There are team practices and individual drills. They have a depth chart listing the first, second, and third choices to fill specific roles. In short, they focus on the fundamentals in ways that most businesses don’t.

The picture below is of my brother’s high school team way back in 1989. While lots have changed since then, much of what we will discuss in this post remains timeless.

 

 

Losing to an 8th Grade Team

The scary truth is that most businesses are less prepared for their challenges than an 8th-grade football team. That might sound disrespectful – but if you think about it ... it’s pretty accurate. Here is a short video highlighting what many businesses could learn from observing how organized sports teams operate, particularly in setting goals and effectively preparing for challenges.

via YouTube.

If you are skimming, here is a quick summary of the key points in the video.

Organization and Preparation

• Structure: Football teams have a clear hierarchy, including a head coach, assistant coaches, and trainers.
• Practice: Teams engage in regular practice sessions to prepare for games, emphasizing the importance of training.
• Game Plan: They develop strategies and a game plan before facing opponents, including watching game films to understand their competition.

Dynamic Strategy

• Adaptability: Teams adjust their strategies based on the game’s flow, recognizing whether they are on offense or defense.
• Audibles: Just as a football team may call an audible when faced with unexpected defensive setups, businesses should adapt their strategies in real time.

Learning From Experience

• Post-Game Analysis: Coaches review game films to identify what worked and what didn’t, learning from past experiences to improve future performance.
• Continuous Improvement: Ongoing training is crucial in businesses, similar to how football players receive coaching during practice to enhance their skills.

Importance of Coaching

• Role of Coaches: Coaching is crucial for developing talent and focusing on achieving defined goals.
• Encouragement of Growth: Active coaching leads to better outcomes and overall improvement.

 

A Deeper Look Into the Lessons

There is immense value in the structured coaching and preparation that sports teams exemplify. Here are some thoughts to help businesses adopt similar principles that foster teamwork, adaptability, and continuous improvement.

Vince Lombardi once famously started training camp by announcing, “Gentlemen, this is a football.” He stressed the hidden power of mastering the fundamentals. Beyond that, he believed that how you do something is how you tend to do everything ... which led to his famous  quote, “Football is not just a game, but a way of life.”

So, let’s start at the beginning.

Football teams think about how to improve each player, how to beat this week’s opponent, and then how to string together wins to achieve a higher goal.   

The team thinks of itself as a team. They expect to practice. And they get coached.

In addition, there is a playbook for both offense and defense. And they watch game films to review what went right ... and what they can learn and use later.

Contrast that with many businesses. Entrepreneurs often get myopic ... they get focused on today, focused on survival, and they lose sight of the bigger picture and how all the pieces fit together. 

The amount of thought and preparation that goes into football - which is ultimately a game - is a valuable lesson for business. 

What about when you get to the highest level? If an 8th-grade football team is equivalent to a typical business, what about the businesses that are killing it? That would be similar to an NFL team. 

Let’s look at the Cowboys. 

 

Practice Makes Perfect

How you do one thing is how you do everything. So, they try to do everything right. 

Each time I’ve watched a practice session, I’ve come away impressed by the amount of preparation, effort, and skill displayed.

During practice, there’s a scheduled agenda. The practice is broken into chunks, each with a designed purpose and a desired intensity. There’s a rhythm, even to the breaks.

Every minute is scripted. There’s a long-term plan to handle the season ... but, there was also a focus on the short-term details and their current opponent.

They alternate between individual and group drills. Moreover, the drills run fast ... but for shorter periods than you’d guess. It is bang-bang-bang – never longer than a player’s attention span. They move from drill to drill, working not just on plays but also on skill sets (where are you looking, which foot you plant, how to best use your hands, etc.).

They use advanced technology to get an edge (including player geolocation monitoring, biometric tracking, medical recovery devices, robotic tackling dummies, and virtual reality headsets). 

They don’t just film games; they film the practices ... and each player’s individual drills. Coaches and players get a personalized cut on their tablets when they leave. It is a process of constant feedback and constant improvement. Everything has the potential to be a lesson. 

 

Beyond The Snap

The focus is not just on the players and the team. They focus on the competition as well. Before a game, the coaches prepare a game plan and have the team watch videos of their opponent to understand tendencies and mentally prepare for what will happen.

During the game, changes in personnel groups and schemes keep competitors on their toes and allow the team to identify coverages and predict plays. If the offense realizes a play has been expected, they call an audible based on what they see in front of them. Coaches from different hierarchies work in tandem to respond faster to new problems. 

After the game, the film is reviewed in detail. Each person gets a grade on each play, and the coaches make notes for each person about what they did well and what they could do better.

Think about it ... everyone knows what game they are playing ... and for the most part, everybody understands the rules and how to keep score (and even where they are in the standings). Even the coaches get feedback based on performance and look to others for guidance. 

Imagine how easy that would be to do in business. Imagine how much better things could be if you did those things.

Challenge accepted.

And, just for fun, here’s a video of me doing a cartwheel after a Dallas Cowboys win.

 

via YouTube.

Sports make you do funny things.

Whether you are watching or playing – Enjoy the game!

Here Are Some Links For Your Weekly Reading - February 9th, 2025

Here are some of the posts that caught my eye recently. Hope you find something interesting.

Lighter Links:

• OpenAI's Deep Research Smashes Records for the World's Hardest AI Exam, With ChatGPT O3-Mini and DeepSeek Left in Its Wake. (TechRadar)
• You Can Try DeepSeek’s R1 Through Perplexity—without the Security Risk. (FastCompany)
• The Recruitment Effort that Helped Build Elon Musk’s DOGE Army. (Wired)
• Humans are Evolving Before Our Eyes on the Tibetan Plateau. (ScienceAlert)
• How to Naturally Boost Your Dopamine, Oxytocin, Serotonin, and Endorphins. (FastCompany)

 

 

Trading Links:

• The True Cost of a Super Bowl Ad? You Don’t Want to Know. (FastCompany)
• Trump Says America Was at Its Richest in the Late 1800s. Is That True? (MarketWatch)
• The “5 Types of Wealth”: Why You’re Wealthier Than You Think. (BigThink)
• America’s Most Generous Philanthropists 2025. (Forbes)
• Why the AI World is Suddenly Obsessed With a 160-Year-Old Economics Paradox. What Is It – And What Does It Mean Today? (NPR)

 

 

My Thoughts on Deepseek as an AI Entrepreneur & Hedge Fund Manager

Every now and then, a moment comes along that forces everyone to stop and rethink what they thought they knew. DeepSeek—a relatively unknown AI startup—just delivered one of those moments.

Imagine this: last week, a company most people had never heard of claimed to have built a cutting-edge AI model for just $5.6 million – and they made it open source. Meanwhile, industry giants like Meta, Google, and OpenAI spend hundreds of millions—sometimes billions—on similar efforts. The implications are massive, and investors felt it immediately.

Within hours, Nvidia’s stock price plunged 16.86%, wiping out over $600 billion in market value. Other AI-heavy stocks followed suit. The reaction? Panic, speculation, and a flood of questions:

• Have we been overpaying for AI development?
• Is brute-force scaling the wrong path?
• What does this mean for the balance of power in the AI world?

What’s happening here isn’t just a new startup making waves. It’s a fundamental shift in how AI is built—and it could change the competitive landscape for years to come.

What makes DeepSeek different?

To me, the main point is that, until recently, AI companies have been treating LLMs like an arms race—the more GPUs, the better. That’s part of why LLMs have become so expensive. Meanwhile, DeepSeek took an efficiency-first approach that reduced computational waste and more efficiently used GPU resources.

This type of disruption will become increasingly frequent across all industries. Exponential technologies are accelerating innovation cycles and opening unexpected development paths. While these discontinuous innovations may seem like isolated surprises, they’re becoming a fundamental part of the competitive landscape. The key isn’t to react to each disruption individually - it’s to develop better strategies for operating in this rapidly evolving environment.

In this case, Deepseek’s breakthrough wasn’t about doing more of what its competitors were good at. Instead, they thought of something else they could do to well to compete. Their breakthrough wasn’t about power ... it was about perspective. It is a good reminder and blueprint to study.

Some think the key message is that businesses no longer need to stock up on Nvidia’s best GPUs to have an advantage. Even if that is true, it begs the question: Will the demand for high-end GPUs decline if AI processing needs start shrinking? Asked another way, if other AI companies also use efficiency-first architecture, will Nvidia’s dominance weaken?

From my perspective, the answer is that Nvidia will continue to grow. I’m excited about a world where the companies that can afford to spend the most money don’t necessarily win. Increased accessibility to high-performing AI models means more entrepreneurs can join the space and create new businesses with novel approaches. Ultimately, many more businesses will build AI into their infrastructure, and chip sales will continue to expand.

AI isn’t just about computing power anymore – it’s about creativity and utility, too. Constraints have always bred innovation, and as companies begin to do more with less, I think you’ll see a shift in the balance of power.

What about America and data privacy?

Despite my excitement about the AI boom, there are valid privacy fears. When I discussed TikTok a few weeks ago, it was clear that the U.S. was taking a stronger stand on protecting its citizens from foreign interference. DeepSeek presents challenges.

To start, it does censor content deemed sensitive by the Chinese government – that also means that particular historical and political topics are met with ambiguous or sanitized responses.

It collects all of your user inputs, any personal information you share, and technical details like your keystroke patterns. They do explicitly tell you this in their Terms of Service. The data is stored in China, raising concerns about legal oversight and privacy laws.

You likely have very little recourse if your data is accessed by or shared with external entities.

My Thoughts

First, DeepSeek is undoubtedly exciting. Even if they’ve embellished their story, the result is impressive. However, it’s also not the end of Nvidia or American-based AI companies. 

Knowing when to sprint and when to jog is an important skill.

AI is shaping our digital world, and DeepSeek is a massive force function in the industry. It is ultimately a good thing for AI (yes, even the Chinese competition).

However, you should probably ask yourself if the benefits of using Deepseek outweigh the risks.

When I coach people on using generative AI, I’ve always urged caution about sharing your sensitive IP with publicly hosted GPTs. Even with OpenAI or Meta, there are clear risks.

It’s also clear that China isn’t the only entity trying to track you or better use your data. As a reminder, if you don’t know how someone is making money off a product … you’re the product. They’re commoditizing you and your data.

That being said, It’s important to be proactive, and it seems to become even more important every week. The landscape is shifting so quickly.

Even so, you have time.

Being proactive also means being smart. As a user of the tools, you don’t need to switch to DeepSeek. Even as a non-tech entrepreneur, now is the time to explore the AI uses that excite you, not to force big leaps. 

If you’re like me and are an entrepreneur in the space, you should certainly take the lessons from DeepSeek and think about how to apply these ideas in your ecosystem.

But my #1 lesson for AI adoption is the same as my #1 lesson for building any habit: Start small - and start in a way that gives you energy.

Humans are good at seeing big changes on the horizon but notoriously bad at predicting what those changes will be.

The goal isn’t to be so fast that you beat everyone else … just to be fast enough not to be left behind.

Onwards!

Carl Sagan's Foresight from 1996

Carl Sagan was an astronomer and planetary scientist whose most enduring legacy lies in his extraordinary ability to communicate complex ideas to the general public.

Shortly before his death, he participated in an oddly prescient interview about short-form media and public attention. It is worth clicking to hear his clear thoughts about how governments will use ignorance of science and technology to control people.

 

via YouTube

He goes into more detail about this topic in his book, The Demon-Haunted World: Science as a Candle in the Dark."

“I have a foreboding of an America in my children’s or grandchildren’s time—when the United States is a service and information economy; when nearly all the key manufacturing industries have slipped away to other countries; when awesome technological powers are in the hands of a very few, and no one representing the public interest can even grasp the issues; when the people have lost the ability to set their own agendas or knowledgeably question those in authority; when, clutching our crystals and nervously consulting our horoscopes, our critical faculties in decline, unable to distinguish between what feels good and what’s true, we slide, almost without noticing, back into superstition and darkness ... the dumbing down of America is most evident in the slow decay of substantive content in the enormously influential media, the 30 second sound bites (now down to 10 seconds or less), lowest common denominator programming, credulous presentations on pseudoscience and superstition, but especially a kind of celebration of ignorance."  - Carl Sagan, The Demon-Haunted World

With the national outcry at TikTok's ban being upheld in the Supreme Court, this feels even more relevant. 

With TikTok, Instagram Reels, and YouTube Shorts, even 30 seconds of attention sounds generous. Smooth-sounding AI-generated slop only makes it worse.

In many ways, we've even forgotten how to be appropriately skeptical. It's not enough to question authority and look for trusted evidence; you must also question their detractors and replacements. Laziness and ignorance rarely lead to good outcomes.

There is room in life for faith, optimism, and belief. But when you question what's being pushed toward you, how influenced are you by your existing biases and beliefs? It's hard to reason someone out of a position that they did not reason themselves into. 

Do you think America is becoming more or less ignorant? If more, what do you think it would take to reverse that trend?

The Reverse Turing: Advanced AIs Trying To Figure Out Who Is Human

The Turing Test, originally called the Imitation Game, tests a machine's ability to emulate a human. Developed in 1949, it is still a relevant test for AI. The Turing Test measures both knowledge and the ability to express it in a manner indistinguishable from a human response.

There is no agreed-upon definition for intelligence, so we can only approximate what skills we test AI on. 

While many people still believe they can tell when an AI has written something, several LLMs (like ChatGPT) have passed modern versions of the Turing Test. Many, including me, would argue LLMs still can't consistently pass the test. 

But what about the alternative? Could you convince an AI that you're not human?

Recently, a video went viral, showing a human pitting himself in VR against an AI version of Aristotle, Mozart, Leonardo da Vinci, Cleopatra, and Genghis Khan (who was played by a human).

 

via Tore Knabe

To set up the test, the human scripted the beginning and end of the dialogue and gave the AI agents a full transcript of the conversation up to that point. The entire video then played out in one recording, with no cuts.

In this "reverse" Turing test, the chatbots were scripted using various LLMs, asked questions, and then challenged to guess who the human was. Tore Knabe, the virtual reality game developer who devised the test and played the Genghis Khan role, answered one of the questions with a quote from Conan the Barbarian. 

"What a leader should do is to crush his enemies, see them driven before him, and hear the lamentations of their women."

Listening to his stuttered response, contrasted by the clunky and verbose AI responses, makes it very apparent to us, the audience, that he's human. The machines voted three-to-one that his response wasn't "nuanced or strategic" enough to represent an AI modeled on Genghis Khan's exploits. To ease your mind about hidden variables, the AIs weren't processing his voice directly. The audio was transcribed and sent to the AIs as text. 

Ultimately, this is a flawed test, and we don't really know how much of this is an actual test (versus just entertainment). In any case, it's still an interesting thought experiment. 

Do you think you could fool an AI? What if you had time to craft a response without penalty? What if your life was on the line?

For a bonus, here's a social Turing game where you can chat with someone for two minutes and try to figure out if it is a human or an AI. 

We live in interesting times!

How AIs (Like ChatGPT) Learn

I first wrote about this video a few years ago, when artificial intelligence first captured the media's attention. Back then, we were impressed that algorithms could help you pick out your Christmas gifts on Amazon, suggest new music for you on Spotify, and do their best to capture your attention on websites. 

AI is seemingly everywhere now. And what is surprising to me isn't its prevalence or impact ... it is the speed and breadth of its adoption. Last night, at an early holiday dinner, we talked extensively about how easy to adopt and how accessible tools like ChatGPT are (and almost none of us were Nerds). 

With all that being said, I think it's wise to have a basic understanding of the things that most impact our lives. Even if you're not a big fan of AI, understanding its growing powers will benefit you. 

The video below is a bit simple in its explanations, but it describes some fundamental concepts worth understanding.

 

CGP Grey via Youtube

The video is engaging and easy to understand. It focuses on genetic algorithms (which is one type of machine learning) and ignores some of the other more complicated techniques and approaches. For example

In my experience, it is more useful for an executive to understand what tools like this can do rather than how they work. Likewise, it is better to understand when to use tools like this rather than knowing precisely how to use them. But, a cursory understanding like this video still adds value. 

As machine learning gets more complicated and evolves, it gets harder for humans to assess their output or process accurately. Here is something to consider:

How do you know that the answer it gives is the answer you seek?

Just because an algorithm responds quickly and confidently doesn't mean it's right.

While bots can deliver impressive results, their decision-making processes can be opaque. This presents both a risk and an opportunity. Artificial intelligence seems cool, but artificial stupidity is scary ... and making mistakes at light speed rarely results in good outcomes.

It's human nature to feel safer when we understand something. It's human nature to envision machines making human-like decisions, just faster. But we are quickly going beyond that ... way beyond that!

In the past, algorithms were static while data changed. But now we're in a different world - one where the algorithms themselves evolve and dramatically adapt to handle different types of data. While this might sound like a subtle distinction, it represents a fundamental shift in how AI systems learn and operate.

One of the challenges of understanding exponential technologies is that their progress isn't linear. This makes it difficult for humans to accurately gauge how rapidly these tools will advance in capability. As algorithms grow more complex, they will increasingly operate in ways that may not be fully understood by their developers (and even less so by their users). As a result, we'll likely find ourselves using AI to solve problems and accomplish tasks that aren't even on our radar today. 

It might sound strange, but it doesn't matter why a bot makes a decision or what inputs it uses to make the decision. What matters is whether it accomplishes its goal and how its performance and level of decision-making rank in relation to its prior performance and other options (and, perhaps, whether the bot is biased).

Part of what makes artificial intelligence exciting is that it can do a lot of things well that humans are really bad at. And, even when you're using an AI in your domain expertise, it can be a great first step to save you time and effort. 

It's a brave new world, and not only is Big Brother watching, but algorithms are, too.

Live long and prosper!

Why Leave The House When You Can Shop Online ...

The holidays are almost here! Time's running out to get your gifts in time. 

Luckily, it's never been easier to get stuff. On top of online shopping, Amazon has stewarded the switch to almost instantaneous shipping. 

I remember when malls were filled to the brim, and Black Friday led to stampedes and people dying. Now, it's brick-and-mortar stores that are dying.

Not only are the in-store deals not as good, but the best deals are online. Here's a chart showing the surge of online shopping.

 

via visualcapitalist

Online shopping now accounts for about 15% of consumer spending, up from 4.1% in 2010. 

In addition, Q4 always sees a massive spike, with online spending accounting for 17.1% of consumer spending in 2023. 

This year, Cyber Monday attracted over 64 million U.S. shoppers, three times the number who shopped in stores. 

You can find change everywhere, but one place to look hasn't changed. Amazon is all about infrastructure and disruption. 

• Amazon announced Rufus, a new generative AI-powered conversational shopping experience.
• Amazon announced a way to get your prescriptions online faster and cheaper than a traditional pharmacy.
• Now, you can even buy cars on Amazon.

It's interesting to consider how drastically this changes supply chain management. People now expect free and fast shipping and the ability to return items if they don't work out (instead of trying them in-store). Meanwhile, brands have high fixed costs due to their existing retail locations, yet they need to keep most of their stock in warehouses instead of their box stores to deal with the surplus of online orders. 

We're already seeing the failure of malls and the bust of commercial real estate. If this trend continues of work-from-home and online shopping, we could see a $250 billion decrease in commercial property value by 2026.  

What do you think it would take to stop the bleeding and encourage both consumers and employees to leave their homes?