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Generative AI tools like ChatGPT have been all the rage lately. Microsoft’s bet on OpenAI has paid off in spades. Hell, even Bing—yes, Bing—is suddenly sexy. Microsoft’s rapid ascension is forcing its competitors to scramble. Case in point: Google dropped its knockoff Bard the other day after its CEO declared a code red.
This begs the question: Is generative AI just a fad, or is something more fundamental taking place?
In The Nine: The Tectonic Forces Reshaping the Workplace, I argue for the latter.
Follow the Money
A decent—albeit imperfect—way to figure out what’s going on involves following the money. Bob Woodward learned as much fifty years ago:
Estimates vary, but here are a few. The Organization for Economic Cooperation and Development reported that the global annual value of VC investments in AI firms in 2020 was $75 billion. In 2012, that number was less than $3 billion.
Over the last nine years, there’s been a precipitous thirty-fold, inflation-adjusted rise in AI investment:
Investors clearly see AI dollar signs, but what about generative AI in particular? The top dogs at the prominent VC firm Sequoia Capital believe it “has the potential to generate trillions of dollars of economic value.” Pitchbook reports that VCs have increased their investment in generative AI by 425 percent since 2020 to $2.1 billion.
Investors want to make money. Ho hum. But what about the people who are making budgeting and spending decisions? Are they buying into the AI hype?
In short, yes.
In September 2022, the MIT Technology Review released the results of an extensive survey of CIOs and other business leaders. The topics included enterprise systems, AI, and their strategic plans. Here are some interesting findings:
The surveyed companies’ data and AI strategies are closely interlinked. Over three-quarters (78%) of the executives we surveyed—and almost all (96%) of the leader group—say that scaling AI and machine learning use cases to create business value is their top priority for enterprise data strategy over the next three years.
Despite the report’s stilted language, it’s clear that the C-suite increasingly recognizes the vast potential of AI. As for why I suspect that several forces are at play.
CXOs Get It
First, workers are expensive, demanding, and finicky about where they work. Beyond that, AI has matured considerably in recent years. It’s become less abstract. Recent advances (such as ChatGPT) have convinced some grizzled skeptics of its capabilities, but don’t believe me.
OpenAI’s valuation stands at $29 billion.
Jasper is an AI copywriting app for marketers. In October 2022, it raised $125 million, valuing the company at $1.5 billion. In the words of co-founder and CEO Dave Rogenmoser, “About two years ago, we realized (AI) had crossed a threshold. It started producing better end results.”
And just to put a bow on OpenAI, its valuation stands at $29 billion.
Simon Says: Generative AI is here to stay.
Expect more AI unicorns in the years ahead. Much like Mosaic and the iPhone, we may look back at the launch of ChatGPT as a transformational moment. It doesn’t matter that I don’t use it.
What say you?