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Cake day: June 14th, 2023

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  • Ahhh this is where we disagree: on the meaning of the word established. To me, established means widely accepted and recognized as true. To you, it means obviously true.

    This is where the IPO process I described above comes into play. It takes information and establishes it to become widely known and without doubt. The current existence of AI believers/boosters is evidence that AI profitability is not established, even if it is true.



  • The true profitability of frontier AI labs remains to be established. Right now we’re constantly seeing this cycle of new models being trained, released, and then scaled back with smaller context windows and hidden behind model routers to avoid paying the full costs of inference. But these tricks blunt the usefulness of the frontier models, leading to competitors stealing customers with their latest models. It’s an arms race where the costs of training dwarf everything else, but even the costs of inference may not be profitable.

    At the same time, Chinese companies keep releasing new open weight models which are severely undermining the value proposition of the frontier AI labs. Customers of the frontier labs may be unwilling to subsidize model training if they can bypass that cost and run the open weight models on their own hardware.


  • Declines in stock price are very common after IPOs, to the point that post-IPO stocks are considered a bad investment until the company can establish a sustainable trend of profitability and growth.

    What happens with IPOs is this: a lack of market common knowledge of what the value of a company should be gets combined with the IPO price set by the company and their advisors (usually a big investment bank such as Goldman Sachs). Just before the stock begins trading, you can think of all investors as being divided into 2 groups:

    1. People who are really hyped about the company and think the stock price will go up from the IPO price
    2. Everyone else, who are more skeptical and think the stock price will go down

    When the stock actually begins trading, the group 1 people often tend to discover that group 2 is a lot bigger than they are, and there are not many buyers for the high priced post-IPO stock. They are then forced to cut their losses and sell before they lose even more money. This process can result in the stock changing hands quite rapidly until it finally settles to a true market price (what it’s actually worth). This also has the effect of communicating information about the true price of the stock to everyone involved: the hyped people get whacked in the face with reality, and the skeptical people learn that the company does have some value (usually anyway, there have been exceptions).














  • Oil is a force multiplier, definitely. But any nation that declined to pursue an oil-based economy during the oil boom years would’ve been swept aside or doomed to irrelevance. It’s like someone throwing a loaded gun into the middle of a prison riot. You either grab for the gun and start shooting or you take cover and try not to get shot.


  • I don’t think it’s unique in that. Before oil, we fought over land, food, spices, tea, steel, gold, and silver.

    Recall that the modern nation state came out of the Peace of Westphalia that followed the Thirty Years’ War. Just over 2 centuries before that was the Hundred Years’ War.

    Think of all the wars Romans fought trying to colonize and subjugate everyone. As well all the wars trying to defend themselves from the Carthaginians and the Persians and even the many uprisings of their slaves.

    Let’s not forget all the wars in Asia! The Warring States period of Chinese history lasted over 250 years. The Sengoku period of Japan was also marked by over a century of frequent warfare.

    The Egyptians and their many wars against the Nubians. The Zulu Empire of Shaka. The Aztecs and their wars to obtain sacrificial victims. The Mongolian Empire. The Comanche Empire. The Inca Empire. The Babylonian Empires. The Assyrian Empires.

    On and on and on and on it goes. Empires and wars all the way back to the beginning of organized society (even before agriculture). Humans fight. It’s why we form gangs and get visceral thrills from violence. Violence is taboo in modern society for a reason: it’s not just dangerous and damaging to social order, it’s addictive.