I’ve been a huge fan of Patrick O’Shaughnessy since I was on his Invest Like the Best podcast. Patrick asks good questions and, in a world that now abounds with answers, the most valuable people are the ones who can ask the best questions.
Back in May, Patrick asked me an interesting question: where is AI in the tech cycle and what does that say about investing in it? I told him my thoughts. He said, “great, can you turn that into 3000 words?” for his new magazine, The Colossus Review. I told him I didn’t have time to write 3000 words, but I’d be happy to write 5000 words. That piece is now out. The setup is:
Anyone who invests in the new new thing must answer two questions: First, how much value will this innovation create? And second, who will capture it? Information and communication technology (ICT) was a revolution whose value was captured by startups and led to thousands of newly rich founders, employees, and investors. In contrast, shipping containerization was a revolution whose value was spread so thin that in the end, it made only a single founder temporarily rich and only a single investor a little bit richer.
Is generative AI more like the former or the latter? Will it be the basis of many future industrial fortunes, or a net loser for the investment community as a whole, with a few zero-sum winners here and there?
I think it’s pretty good. Take a read.