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12 days ago, one of the biggest stories in tech and business unfolded that will affect us all.
On January 30th, the AI Company Anthropic released open-source plugins for its workplace AI offering - Cowork - for legal, finance, sales and marketing.
There was a freakout of epic proportions. Thomson Reuters plunged a record 15.8%. LegalZoom sank 19.7%. Even the advertising giant WPP shed 15%. The software sector collapsed to the tune of $285 billion of market capitalization evaporating in a single day.
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Basically, everyone could see a present-day scenario where AI performs multi-step legal research, financial modeling, and even software development with the push of a button. Thus software as a service companies, even giants like Salesforce and Microsoft, took a dive as their massive franchises could be set to lose a ton of value as companies could perform complicated tasks without the help of expensive software products; why would I need to pay Salesforce a per-desk subscription fee when I could just produce a custom version for my company?
The Super Bowl was replete with AI ads showing companies using AI to devise apps or file a report instantaneously. One of them said, “Take the day off!” from work and let AI do it for you.
A LOT of workers are going to be taking days off from work, but they might find that their desk has been cleaned out by the time they get back.
Anthropic CEO Dario Amodei has been saying for months that AI – probably his company’s – will wipe out 50% of entry-level white-collar work in the next 1 to 5 years.
He wasn’t kidding.
Of course, some people came out and tried to make this seem like business-as-usual. Jensen Huang, the CEO of Nvidia called the sell-off “irrational.” Some of the stocks rebounded slightly in the days afterward. There are stories out about various companies who have given AI too much responsibility having second thoughts and remorse over firing too many programmers.
What I want everyone to understand is that AI is to knowledge work and corporate offices what robots and machines were to the factory floor. Have you been inside a large corporation? What is everyone doing? A lot of folks are producing internal reports, maintaining a process, or helping various systems talk to each other.
Each of these is going to disappear. The systems will talk to each other, the reports will be instantaneous, and the processes will maintain themselves.
Customer service is another big function. AI is assuming more and more of this, in part because many younger consumers would rather not pick up the phone and talk to a human being and the chatbots are getting better.
As companies get leaner and meaner, they’re going to be jettisoning workers right and left.
Expect it to get very rough out there. I had a meeting with an executive at a Fortune 500 company a number of days ago. They are cutting a management layer and thousands of employees. It hasn’t been publicly announced.
By the way, corporate margins are at or near record highs. Companies will make money; they just might not need as many people to do so.
When the history of this time is written, January 30th will be one of the signs of what’s to come. Plan accordingly.
I started Noble Mobile in part to help people save money during a very tough economic time. Go to noblemobile.com/yang for 3 months off your wireless bill, the best deal around. It’s been a blast seeing people on the book tour. Book tour dates in New Jersey, DC, LA, SF, and Seattle can be found here. Offline is coming to Miami this week and then D.C. and SF. See you out there! Keep looking up.
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