Capitalogix

A Few Graphs On The State Of AI in 2023

Every year, Stanford puts out an AI Index¹ with a massive amount of data attempting to sum up the current state of AI. 

Last year it was 190 pages ... now it's 386 pages.  The report details where research is going and covers current specs, ethics, policy, and more. 

It is super nerdy ... yet, it's probably worth a skim. Here are some of the highlights that I shared last year. 

Here are a few things that caught my eye and might help set some high-level context for you. 

Growth Of AI

via 2023 AI Index Report

One thing that's very obvious to the world right now is that the AI space is growing rapidly. And it's happening in many different ways.

Over the last decade, private investment in AI has increased astronomically ... Now, we're seeing government investment increasing, and the frequency and complexity of discussion around AI is exploding as well. 

A big part of this is due to the massive improvement in the quality of generative AI. 

Technical Improvements in AI

via 2023 AI Index Report

This isn't the first time I've shared charts of this nature, but it's impressive to see the depth and breadth of new AI models. 

For example, Minerva, a large language and multimodal model released by Google in June of 2022, used roughly 9x more training compute than GPT-3. And we can't even see the improvements already happening in 2023 like with GPT-4. 

While it's important to look at the pure technical improvements, it's also worth realizing the increased creativity and applications of AI. For example, Auto-GPT takes  GPT-4 and makes it almost autonomous. It can perform tasks with very little human intervention, it can self-prompt, and it has internet access & long-term and short-term memory management. 

Here is an important distinction to make … We're not only getting better at creating models, but we're getting better at using them, and they are getting better at improving themselves. 

All of that leads to one of the biggest shifts we're currently seeing in AI - which is the shift from academia to industry. This is the difference between thinking and doing,  or promise and productive output.

Jobs In AI

via 2023 AI Index Report

In 2022, there were 32 significant industry-produced machine learning models ... compared to just 3 by academia. It's no surprise that private industry has more resources than nonprofits and academia, And now we're starting to see the benefits from that increased surge in cashflow moving into artificial intelligence, automation, and innovation. 

Not only does this result in better models, but also in more jobs. The demand for AI-related skills is skyrocketing in almost every sector. On top of the demand for skills, the amount of job postings has increased significantly as well. 

Currently, the U.S. is leading the charge, but there's lots of competition. 

The worry is, not everyone is looking for AI-related skills to improve the world. The ethics of AI is the elephant in the room for many. 

AI Ethics

via 2023 AI Index Report

The number of AI misuse incidents is skyrocketing. Since 2012, the number has increased 26 times. And it's more than just deepfakes, AI can be used for many nefarious purposes that aren't as visible.

Unfortunately, when you invent the car, you also invent the potential for car crashes ... when you 'invent' nuclear energy, you create the potential for nuclear bombs. 

There are other potential negatives as well.  For example, many AI systems (like cryptocurrencies) use vast amounts of energy and produce carbon. So, the ecological impact has to be taken into account as well.

Luckily, many of the best minds of today are focused on how to create bumpers to rein in AI and prevent and discourage bad actors. In 2016, only 1 law was passed focused on Artificial Intelligence ... 37 were passed last year. This is a focus not just in America, but around the globe. 

Conclusion

Artificial Intelligence is inevitable. It's here, it's growing, and it's amazing.

Despite America leading the charge in A.I., we're also among the lowest in positivity about the benefits and drawbacks of these products and services. China, Saudi Arabia, and India rank the highest. 

If we don't continue to lead the charge, other countries will …Which means we need to address the fears and culture around A.I. in America. The benefits outweigh the costs – but we have to account for the costs and attempt to minimize potential risks as well.

Pioneers often get arrows in their backs and blood on their shoes.  But they are also the first to reach the new world.

Luckily, I think momentum is moving in the right direction. Watching my friends start to use AI-powered apps, has been rewarding as someone who has been in the space since the early '90s. 

We are on the right path.

Onwards!

_____________________________________

¹Nestor Maslej, Loredana Fattorini, Erik Brynjolfsson, John Etchemendy, Katrina Ligett, Terah Lyons, James Manyika, Helen Ngo, Juan Carlos Niebles, Vanessa Parli, Yoav Shoham, Russell Wald, Jack Clark, and Raymond Perrault, “The AI Index 2023 Annual Report,” AI Index Steering Committee, Institute for Human-Centered AI, Stanford University, Stanford, CA, April 2023. The AI Index 2023 Annual Report by Stanford University is licensed under

The Benner Cycle: Making Market Predictions

When I first got interested in trading, I used to look at many traditional sources and old-school market wisdom.  I particularly liked the Stock Trader's Almanac. 

While there is real wisdom in some of those sources, most might as well be horoscopes or Nostradamus-level predictions.  Throw enough darts, and one of them might hit the bullseye. 

Traders love patterns, from the simple head-and-shoulders, to Fibonacci sequences, and the Elliot Wave Theory.

Here's an example from Samuel Benner, an Ohio farmer, in 1875.  That year he released a book titled "Benners Prophecies: Future Ups and Down in Prices," and in it, he shared a now relatively famous chart called the Benner Cycle.  Some claim that it's been accurately predicting the ups and downs of the market for over 100 years.  Let's check it out. 

 

 

Here's what it does get right ... markets go up, and then they go down ... and that cycle continues.  Consequently, if you want to make money, you should buy low and sell high ... It's hard to call that a competitive advantage.

Mostly, you're looking at vague predictions with +/- 2-year error bars on a 10-year cycle. 

However, it was close to the dotcom bust and the 2008 crash ... so even if you sold a little early, you'd have been reasonably happy with your decision to follow the cycle.

The truth is that we use cycle analysis in our live trading models.  However, it is a lot more rigorous and scientific than the Benner Cycle.  The trick is figuring out what to focus on – and what to ignore. 

Just as humans are good at seeing patterns where there are none ... they tend to see cycles that aren't anything but coincidences. 

This is a reminder that just because an AI chat service recommends something, doesn't make it a good recommendation.  Those models do some things well.  Making scientific or mathematically rigorous market predictions probably aren't the areas to trust ChatGPT or one of its rivals.

Be careful out there.

Should We Temporarily Halt The Progress of Generative AI?

Several high-profile names (including Elon Musk) have penned an open letter calling for the pause of the creation of models more powerful than GPT-4. 

In March, OpenAI unveiled GPT-4, and people were rightfully impressed. Now, fears are even greater about the potential consequences of more powerful AI. 

The letter raises a couple of questions. 

Should we let machines flood our information channels with propaganda and untruth? Should we automate away all the jobs, including the fulfilling ones? Should we develop nonhuman minds that might eventually outnumber, outsmart, obsolete and replace us? Should we risk loss of control of our civilization? - Pause Giant AI Experients: An Open Letter

The crux of their message is that we shouldn't be blindly creating smarter and more robust AI until we are confident that they can be managed and controlled to maintain a positive impact. 

During the pause the letter calls for, the suggestion is for AI labs and experts to jointly develop and implement safety protocols that would be audited by an independent agency. At the same time, the letter calls for developers to work with policymakers to increase governance and regulatory authorities. 

My personal thoughts? Trying to stop (or even pause) the development of something as important as AI is naive and impractical. From the Industrial Revolution to the Information Age, humanity has always embraced new technologies, despite initial resistance and concerns. The AI Age is no different, and attempting to stop its progress would be akin to trying to stop the tide. On top of that, AI development is a global phenomenon, with researchers, institutions, and companies from around the world making significant contributions. Attempting to halt or slow down AI development in one country would merely cede the technological advantage to other nations. In a world of intense competition and rapid innovation, falling behind in AI capabilities could have severe economic and strategic consequences.

It is bigger than a piece of software or a set of technological capabilities. It represents a fundamental shift in what's possible.

The playing field changed.  We are not going back. 

The game changed.  That means what it takes to win or lose changed as well.

Yes, AI ethics is an important endeavor and should be worked on as diligently as the creation of new AI.  But there is no pause button for exponential technologies like this.

Change is coming.  Growth is coming. Acceleration is coming. Trying to reject it is an exercise in futility. 

We will both rise to the occasion and fall to the level of our readiness and preparedness.  

Actions have consequences, but so does inaction.  In part, we can't stop because bad actors certainly won't stop to give us time to combat them or catch up. 

When there is some incredible new "thing" there will always be some people who try to avoid it ... and some who try to leverage it (for good and bad purpose).

There will always be promise and peril.

What you focus on and what you do remains a choice. 

Whether AI creates abundance or doomsday for you will be defined largely by how you perceive and act on the promise and peril you perceive. Artificial intelligence holds the potential to address some of the world's most pressing challenges, such as climate change, disease, and poverty. By leveraging AI's capabilities, we can develop innovative solutions and accelerate progress in these areas.

It's two sides of the same coin. A 6-month hiatus won't stop what's coming. In this case, we need to pave the road as we traverse it. 

We live in interesting times!

What do you think?

Predicting The Future With Arthur C Clarke

Last week, I shared a couple of videos that attempted to predict the future. As a result, someone sent me a video of Arthur C Clarke's predictions that I thought was worth sharing.

Arthur C Clarke was a fantastic science fiction writer and a famous futurist. You probably know him as the author of 2001: A Space Odyssey.

Here are his predictions from 1964, nearly 60 years ago.

 

via BBC Archive 

Arthur C. Clarke had a profound impact on the way we imagine the future. Known for his remarkable predictions, Clarke's ideas may have seemed farfetched at times, yet his thoughts on the future and the art of making predictions were grounded in reason.

If a prophet from the 1960s were to describe today's technological advancements in exaggerated terms, their predictions would sound equally ridiculous. The only certainty about the future is that it will be fantastical beyond belief, a sentiment Clarke understood well.

You can be a great futurist even if many of your predictions are off in execution, but correct in direction. For example, Clarke predicted that the advancements in communication would potentially make cities nonexistent. While cities still exist - in much the same way as in the 1960s - people can now work, live, and make a massive difference in their companies from anywhere on the planet, even from a van traveling around the country. Global communication is so easy that it's taken for granted. 

As a science fiction author, some of what he wrote about might seem ridiculous today. For example, super-monkey servants creating trade unions.  Much of what he wrote about was what could happen (and to provide a way for people to think about the consequences of their actions and inactions).  As we discussed last week, humans often recognize big changes on the horizon ... but they rarely correctly anticipate the consequences. 

In summary, even though some of Clarke's predictions were farfetched, they were rooted in a deep understanding of human potential and the transformative power of technology. His ability to envision a fantastical future was not only a testament to his imagination, but also served as an inspiration for generations of scientists, engineers, and dreamers. By embracing the unknown and acknowledging the inherent uncertainty of the future, we can continue to push the boundaries of what is possible and strive for a world that is truly beyond belief.

You won't always be 100% correct, but you'll be much closer than if you reject what's coming. 

Tech Over The Long Run

Humans are wired to think locally and linearly ... because that's what it took to survive in a pre-industrial age. However, that leaves most of us very bad at predicting technology and its impact on our future. 

To put the future of technology in perspective, it's helpful to look at the history of technology to help understand what an amazing era we live in. 

Our World In Data put together a great chart that shows the entire history of humanity in relation to innovation. 

Max Roser via ourworldindata

3.4 million years ago, our ancestors supposedly started using tools. 2.4 million years later they harnessed fire. 43,000 years ago (almost a million years later) we developed the first instrument, a flute. 

That's an insane amount of time. Compare that to this:

In 1903, the Wright Brothers first took flight ... 66 years later, we were on the moon. 

That's less than a blink in the history of humankind, and yet we're still increasing speed. 

Technology is a snowball rolling down a mountain, picking up steam, and now it's an avalanche being driven by AI. 

But innovation isn't only driven by scientists. It's driven by people like you or me having a vision and making it into a reality. 

Even though I'm the CEO of an AI company, I don't build artificial intelligence myself ... but I can envision a bigger future and communicate that to people who can. I also can use tools that help me automate and innovate things that help free me to focus on more important ways to create value. 

The point is that you can't let the perfect get in the way of the good.  AI's impact is inevitable.  You don't have to wait to see where the train's going ... you should be boarding. 

Onwards! 

Can We Predict The Future?!

New technologies fascinate me ... As we approach the Singularity, I guess that is becoming human nature. 

Second Thought has put together a video that looks at various predictions from the early 1900s. It is a fun watch – Check it out. 

via Second Thought

It's interesting to look at what they strategically got right compared to what was tactically different. 

In a 1966 interview, Marshall McLuhan discussed the future of information with ideas that now resonate with AI technologies. He envisioned personalized information, where people request specific knowledge and receive tailored content. This concept has become a reality through AI-powered chatbots like ChatGPT, which can provide customized information based on user inputs.

Although McLuhan was against innovation, he recognized the need to understand emerging trends to maintain control and know when to "turn off the button." 

In 1966, media futurist Marshall McLuhan envisioned a form of digital research eerily similar to the customized queries now answered by AI. Then he makes a surprising admission about why he studies technological change—with a lesson I think many need to hear. pic.twitter.com/yEBJv95GvP

— Benjamin Carlson (@bfcarlson) March 22, 2023

While not all predictions are made equal, we seem to have a better idea of what we want than how to accomplish it. 

The farther the horizon, the more guesswork is involved. Compared to the prior video on predictions from the mid-1900s, this video on the internet from 1995 seems downright prophetic. 

via YouTube

There's a lesson there. It's hard to predict the future, but that doesn't mean you can't skate to where the puck is moving. Even if the path ahead is unsure, it's relatively easy to pick your next step, and then the step in front of that. As long as you are moving in the right direction and keep taking steps without stopping, the result is inevitable. 

Generative AI Explained By AI

VisualCapitalist made an infographic on Generative AI using explanations by generative AI ... a bit of a novelty, but still a helpful infographic. 

via visualcapitalist

Basically, generative AI refers to AI that generates new outputs based on the data they have been trained on. Instead of recognizing patterns and then making predictions, they're used to create images, text, audio, and more. 

Please let me know about any tools you think are especially worthy (or that I might have missed). 

With Google and Microsoft entering the space, I think you're about to see a lot of tool churn as they push redundant tools out of the market. Short-term, that'll cause a bit of chaos. Long-term, it will mean that we'll have a better diversity of tools as innovators are forced to be more creative.

South Park, ChatGPT-4, and More ...

This week, South Park released an episode written entirely by ChatGPT ... about ChatGPT. 

Here's a clip. 

... And it's funny ... Which is a testament to the power of ChatGPT.

Then, even more news started to come out. 

First, Google and Microsoft released announcements about integrating AI into their engines and services (like Google Sheets and Microsoft Office). 

Then, the most important news came out. GPT-4 was released ahead of schedule. 

In December 2022, I shared that GPT-3 was trained on 100x more parameters than any previous language model. Well, here's what GPT-4 looks like compared to GPT-3. 

And it is also much more robust. Which is mildly scary to think about ... but also very exciting. 

I was already very excited about what GPT-3 and the applications built on it were making possible, but this takes it to another level. 

Though, I have to be the voice of caution and remind you - don't rely on it as your business. It is a tool to help you increase the speed or scope of a business opportunity. But it isn't mature enough to blindly rely on it to be right – or even factually accurate. GPT-4 was optimized to sound good, which means that it might hallucinate or mislead you, even when it has the correct answer in its dataset. But it will sound good, even when it isn't right.

That being said, it outperforms GPT-3 in every single way. 

via ZDNet

ChatGPT (powered by GPT-4) is now multi-modal, meaning it will take both picture and video inputs. 

Exciting stuff ... Or at least progress.  Onwards!

What's In The Box? The Consequences of Labeling

“Words can be twisted into any shape. Promises can be made to lull the heart and seduce the soul. In the final analysis, words mean nothing.
They are labels we give things in an effort to wrap our puny little brains around their underlying natures,
when ninety-nine percent of the time the totality of the reality is an entirely different beast.
The wisest man is the silent one. Examine his actions. Judge him by them.”
― Karen Marie Moning

The current socio-political climate has me thinking about the consequences of labeling things, creating boxes, and simplifying ideas into news-ready headlines.

via Se7en

With more news sources than ever and less attention span, you see ideas packaged into attention-grabbing parts.  The focus isn't on education or the issues, but on getting the click, making your stay on their page longer, and sending you to a new article utterly unrelated to why you clicked on the page.

Complex issues are simplified – not even into their most basic forms – but instead into their most divisive forms ... because there's no money in the middle.

 

via Quote Investigator

The amplified voices are those on the fringe of the average constituents' beliefs – precisely because those are the ones who are often the most outspoken.

Issues that should be bipartisan have been made "us" versus "them," "liberal" versus "conservative," or "right" versus "wrong." The algorithms of most of these sites create echo chambers that increase radicalization and decrease news comprehension.  Identity politics have gotten so strong that you see families breaking apart and friend groups disintegrating ... because people can't imagine sharing a room with someone they don't share the same values as. 

 

via BrainyQuotes.

In psychology, heuristics are mental models that help you make decisions easier.  They're a starting point to save mental bandwidth, allowing you to spend more brain cycles on the important stuff.

That's a great use of "boxes" and "simplification"… but it shouldn't preclude deeper thought on important issues. 

In an ideal world, we would all have the bandwidth to view each case of an issue as a whole issue within itself.  Most things are nuanced, and the "correct" answer changes as you change your vantage point.

I recognize that's not realistic.

Instead, I encourage you to remember to continue to think and learn ... even about things you already know.  Confirmation Bias is one of the more common forms of cognitive bias.  Here is an infographic that lists 50 common cognitive biases.  Click to explore further.

via VisualCapitalist

Important issues deserve more research.  New insights happen between the boundaries of what we know and don't.  Knowledge comes from truly understanding the border between what you are certain and uncertain about. 

I challenge you to look beyond the headlines, slogans, and talking points you like most.  Look for dissenting opinions and understand what's driving their dissent.  Are they really blind or dumb (or are their value systems just weighted differently)?

Not everything needs to be boxed.  Not everything needs to be simple.  You should explore things and people outside of your comfort zone and look to see things from their point of view ... not your own. 

Applying This Lesson  

“I am ashamed to think how easily we capitulate to badges and names, to large societies and dead institutions.”
― Ralph Waldo Emerson, Self-Reliance

I love learning a lesson in one space and applying it to other spaces.  It's one of the cool things about AI.  An algorithm can learn rules in the construction space that may help in the medicine or trading space.  Everything's a lesson if you let it be.

In that vein, the lesson on labeling also applies to yourself and your business.  Don't get me wrong - naming things is powerful.  It can help make the intangible tangible.  However, don't let the label (or your perception of the label) stop you from achieving something greater. 

Many things are true because we believe them to be, but when we let go of past beliefs, the impossible becomes possible, and the invisible becomes visible.  

We are our choices ... and you can make choices today that change who you are (and what you or your business is capable of) tomorrow. 

Hope that helps – Onwards!

My Thoughts On ChatGPT and the AI Revolution

Last week, I shared a post about the rise of ChatGPT. To summarize ... new AI tools (like ChatGPT) are cool, but they can be a distraction if you're not focused on your actual business goals.  Likewise, those tools seem smart, but they are not smart enough to replace you. 

Below is a video containing an edited version of my contributions about using AI in business at a recent Genius Network meeting.

 

via GeniusNetwork.

With something as powerful and game-changing as AI, smart people find a way to take advantage of it (rather than finding ways to avoid or ignore it).

If you keep your head in the dirt, you'll get left behind like Blockbuster, Kodak, or RadioShack. 

With that said, one of the key things I've noticed about new tech is that there's massive churn.  You've seen it with the blockchain and cryptocurrencies.  The companies, products, and modalities that pioneer the industry aren't always the ones who make it.  I think it's because they focus on technology instead of solving their customers' real problems.

Pioneers often end up with arrows in their backs and blood on their shoes.  Too often, this causes them to give up before they achieve real and lasting success.

You don't have to rush, even if it feels like you're falling behind.  To use a surfing metaphor, you shouldn't ignore the coming waves, but you can certainly take the time to wax your board, get in the ocean, and choose which wave you want to ride. 

You can catch the little waves and take advantage of ChatGPT or Midjourney, but as a final reminder, if everyone is doing it, it's not a competitive advantage ... it's the playing field.