🍌S3T May 24 2024 - GenAI & the million monkeys problem + crypto's political breakthrough

Happy Friday Everyone, and welcome back to the S3T newsletter and podcast for May 24 2024. This week we are looking at changing sentiments in two key technologies: In the private sector, sentiment toward GenAI is increasingly negative, while in Washington, there are surprising shifts toward positive views of crypto.

In this edition of the S3T Podcast and Newsletter:

• 🍌 GenAI vs. The Million Monkeys Problem: GenAI massively accelerates production but also creates a massive supervisory workload. This imbalance raises questions about its broad applicability.
• 🔥 The Decline of GenAI Hype: GenAI is now seen as one type of AI, not the future of AI. Its limitations and legal liabilities are becoming clear, prompting a shift to more reliable AI approaches.
• 🧟 Stopping Zombie Projects: Focus on eliminating unproductive projects to better allocate resources. Effective gatekeeping is essential in the age of generative AI.
• 📈 Big Week for Crypto Politics: Legislative progress supports the crypto industry's growth. Setbacks for the anti-crypto stance in Washington, DC highlight shifting political dynamics.
• 🐦 Nature Notes: Merlin Bird ID: The Merlin Bird ID app has a new user-friendly interface. It helps identify birds by their songs, available on iOS and Android.

🎧 Listen to this episode on the S3T Podcast - Be sure to follow the S3T podcast so you never miss a show!

Opinions expressed are those of the individuals and do not reflect the official positions of companies or organizations those individuals may be affiliated with. Not financial, investment or legal advice. Authors or guests may hold assets discussed.

🍌GenAI & The Million Monkeys Problem

We are reaching an inflection point in our infatuation with GenAI: Investors, executives and IT leaders are asking should we cut our losses or keep trying to find a way to make it work?

Remember the old debate: a million monkeys + million typewriters + million years = decent novel?

Have you ever debated this with someone? I've debated people who were convinced that a novel was eventually inevitable with enough monkeys and enough time (I could never get there). But regardless of which side you come down on, the debate always misses some obvious practical questions:

• Who's paying for all the bananas?
• Supplying and maintaining the typewriters?
• Who's proofreading all those pages?
• And who seriously thinks this is the best way to write a novel?

You could boil these questions down into 2 problems to solve:

• Problem #1: How to handle the Production workload: supplying/maintaining a million typewriters & monkeys, feeding and taking care of them for an impossibly long time etc.
• Problem #2: How to handle the Resulting Output - ie the Supervisory workload: supervising the monkeys and proofreading their output and actually locating the novel in that mass of text.

GenAI solved Problem #1 but made Problem #2 virtually impossible to solve.

GenAI solves the million monkeys and million typewriters and removes the need for a million year wait time. But it leaves unsolved (and unsolveable?) another problem: The enormous and so far underestimated supervisory workload of GenAI has suddenly created an imbalance in our workforce. There aren't enough people to review and sanity check all of the output GenAI tools are capable of generating. And the rate of generation is only going to get faster.

This should prompt us to same question we should ask about the million monkey's scenario. Is this really the best way to produce a novel? or a drug design? or a medical recommendation? or a software application?

GenAI increasingly seen as a flavor of AI not the future of AI

Gen AI hype is dying down. This doesn’t mean that there are no use cases out there. But it does mean - hopefully - we're done with the delusion that GenAI was a silver bullet for business value. Many are realizing its limitations.

• Metas AI Chief Yann Lecun says LLMs are incapable of required levels of reasoning and planning for reliably safe AI - is moving on to other approaches.
• The legal liabilities implicit in GenAI - owing to the limited transparency of OpenAI and other the GenAI developers - continue to surface. Microsoft could be fined 1% of its annual income over Bing AI.
• Clinicians and others in industries where context and accuracy matters are also ready to move on. See Graham Walker's corrections to Google's "AI Overview" of causes of abdominal pain (screenshot below):

This flavor of AI is going to take its place alongside the others as we mature our ability to select the right approach for the specific use case, vs. thinking all use cases must be solved by one approach.

So here to remind us to keep things in perspective is a short poem written by - who else, ChatGPT:

The AI Spice Rack

Generative AI, oh what a spice!
It’s like cinnamon, quite nice.
But not every dish needs a cinnamon stick;
Some recipes call for a different trick.

In our vast tech pantry, take a peek
At AI flavors unique and chic.
Domain-specific, sharp and strong,
They’re the right salt where cinnamon’s wrong.

So mix and match with savvy and flair,
Each AI tool has its own affair.
Find the perfect blend, the ideal mix,
For tech solutions that truly fix!

And there you have it everyone, spicy advice for your AI Strategy 😸 and a reminder that - if it's wordplay you're after, GenAI is awesome! But if it's safe medications, load-bearing engineering, secure software or other things that can't fail, then you may need a little something more.

For Full Access Members:

🧟How to stop GenAI (and other) Zombie Projects from distracting your focus and resources

Understanding how to identify and stop zombie projects will help you focus budget and resources on initiatives that will bring the best ROI.

✅ Shift to effective gatekeeping in the age of generative AI

Organizational leaders and talent recruiters must navigate an unusual shift in the composition of the workforce, by focusing relentlessly on 4 key priorities.

(For more great learning click the Member portal link at the top of the page).

Big Week for Crypto Politics

Three days and three big setbacks for the anti-crypto base in Washington DC this week:

• On Tuesday FDIC chair Martin Gruenberg resigned under pressure from Congress over rampant culture issues within the FDIC organization. Not lost on the crypto community was Gruenberg's alleged role in Operation Chokepoint 2.0 an attempt to block the crypto community's access to banking services (so named after an earlier alleged "chokepoint operation" aimed at other businesses). This Jan 2023 example of bank guidance (PDF) - while illustrating cross agency collaboration - unfortunately also showed a lack of understanding of how crypto works.
• Then on Wednesday, the House passed the FIT Bill - the Financial Innovation and Technology for the 21st Century Act with significant numbers of bi-partisan support. 71 Democrats broke rank with the Elizabeth Warren / Gary Gensler anti-crypto stance to support the digital assets legislation.
• Finally on Thursday the SEC granted approvals to Nasdaq, NYSE and CBOE to allowing them to list ETFs tied to Ethereum. This follows the similar approval for Bitcoin earlier this year. Additional paperwork (S-1 statements) still need to be done before live trading can begin but analysts expect this can be done in the next 2-12 weeks.

If you've been a reader of S3T you've known about the unfortunate anti-crypto bias in Washington over the past few years, and are probably happy to see some constructive bi-partisan legislation going forward to enable regulatory clarity for this crucial emerging industry.

A brief history of what's been in play:

• Early on, a faction of well-meaning Democrat leadership had - in my view - misread crypto as a just another casino for Wall St big boys rather than seeing it as new set of building blocks that in the right hands could create a more equitable, efficient, and transparent financial ecosystem than traditional finance ever did.
• This lack of clarity at the Congressional level allowed a SEC-CFTC turf-war over who would get to regulate crypto. This political food fight appears to have been won by SEC Chair Gary Gensler via his shock-and-awe campaign of enforcement actions against crypto companies. These were consistently protested by Gensler's own team, and the courts consistently disagreed with Gensler's logic. Simultaneously, the SEC was cozily ideating future crypto regulation with the one entity that turned out to be the biggest scam of them all: FTX.
• In the process this well meaning group of federal finance stakeholders played into the hands of the very group they hoped to constrain: traditional finance (aka "TradFi) which harbors deep fears about crypto's ability to unseat their parasitic intermediation of finance (high fees, low yields for banking customers, discriminatory lending, etc). All of which makes for a text book lesson in how regulatory capture sneaks up on even the most wary regulators.

As noted in the S3T newsletter of Dec 29 2023, the Democrats have been in danger of coming down on the wrong side of the crypto debate and handing Republicans a block of voters that could decide the election (Speaking here as a left leaning member of a diverse family which spans the political spectrum). Now with the election just 5 months away, the Democrats appear to be recalibrating their positions. Is it too little too late?

Other Economic News

Easier borrowing conditions for companies

The Chicago Fed’s National Financial Conditions index has fallen to a 2 year low - which ostensibly means it is getting easier for companies with good credit to borrow money.

Tougher market conditions for talent

CIO State of IT Jobs May 17, 2024 - IT workers having a challenging year so far:

• 48% of tech workers are experiencing feelings of burnout
• 60% will likely switch jobs within the year
• 63% want remote work (42% percent of return-to-office hardliners have lost staff, 50% have lost preferred candidates)
• 69% of CIOs will upskill / reskill current staff, as companies across the board struggle to find relevant AI talent.

New college grads also face challenges: the job market for new college grads is down almost 6% compare to last year.

Nature Notes

Merlin Bird ID

Merlin - the bird identification app that can tell you what bird you're hearing - has gotten a really nice makeover. The new simplified interface lets you turn on the "listen mode" faster.

About them Cicadas

There are 190 species of cicada in North America (and about 3000 species worldwide). Here is a photo guide to about 70 of them with recordings of their specific songs.

Have a great weekend and a great week ahead!

S3T is the essential newsletter, podcast, and learning platform for change leaders. Learn with me Ralph Perrine every week as we review the top developments and insights you need to stay ahead of the curve, build your ethics & leadership skills, and drive intentional beneficial innovation. Sign up today at WWW.S3T.ORG!