SITALWeek #441
Welcome to Stuff I Thought About Last Week, a personal collection of topics on tech, innovation, science, the digital economic transition, the finance industry, and whatever else made me think last week.
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In today’s post: higher rates are perversely driving inflation higher; pathology gets an AI upgrade; the information vacuum that arises when AI converses reflexively; the art of cue cards; recycling old art forms; an intriguing addition to The Drake Equation leaves us far lonelier; and, a look at how nostalgia impacts waves of consumer demand.
Stuff about Innovation and Technology
Pathological Progress
Microsoft has released an open-access whole-slide pathology model, GigaPath, trained on over one billion images in more than 170,000 real-world slides: “This is the first whole-slide foundation model for digital pathology with large-scale pretraining on real-world data. Prov-GigaPath attains state-of-the-art performance on standard cancer classification and pathomics tasks, as well as vision-language tasks. This demonstrates the importance of whole-slide modeling on large-scale real-world data and opens new possibilities to advance patient care and accelerate clinical discovery.” GigaPath has already achieved state-of-the-art performance versus other models. I wonder how long it will be before we have a whole-body pathology model?
Digital Surrogate Delusion
In a recent Verge podcast, the founder of Zoom, Eric Yuan, suggested that our virtual avatars will be taking meetings on our behalf, allowing humans to work less. Yuan also expects these avatars to answer emails, etc. While I’ve proposed creating virtual employees – ranging from historical to fictional – for various purposes, and I’ve even joked that we could have our AI agents replace us in meetings, the actual implementation of this latter idea would create a circular reference that would fail quickly. LLMs only progress via learning from humans and the content we create (there are scenarios where LLMs can train using simulated worlds, but we would need to see evidence of emergent properties and novel idea generation for those agents to be of practical value). Thus, if we were to hand off tasks requiring executive function to LLMs, they would pretty quickly be operating in a vacuum lacking new information and context. One estimate puts it as early as 2026 that LLMs could run out of content (and I’ve pointed out the risks of cutting off AI in Will Generative Search Sideline its Teacher?). If we were to pursue this idea of taking our “hands off the wheel” by replacing ourselves with avatars as Yuan suggests, we are likely to see an increase in volatility across the economy from higher velocity, convoluted decision making. Things tend to happen faster, and with more extreme outcomes, in the digital-only realm. There are other logical absurdities to the Zoom CEO’s plans, such as how would a new hire participate? (Why not just create new AI employees instead of hiring people that would have to be trained by their own AI agents?) What about when an employee leaves the company – does the company still own the person’s AI agent, and can that agent keep working for the company? Why not just train avatars for your entire employee base and then fire them all? My best guess is that, instead of agents tied to people, there will be independent agents designed for specific tasks. Those agents will communicate with each other and with us, and we will still interact directly with our carbon-based coworkers for the foreseeable future. Eric Schmidt says that if agents start talking to agents in ways that humans can’t follow, then we should panic and (literally) pull the plug. I disagree, as I think these agents working together will create a super-economy worth hundreds of trillions of dollars, but it’s likely to be tangential to our analog world.
Miscellaneous Stuff
On Cue
Wally Feresten has been holding cue cards for performers on Saturday Night Live for 34 years. Additionally, he has served on various other late-night shows and also runs a company of cue carders in NYC. He’s such an establishment at NBC studios that his “character” of cue-card Wally sometimes becomes the center of the comedy itself. Wally has to adapt cards (which are still handwritten and edited last minute) for readability and to match the rhythm and reading speed of each performer. This profile on Feresten is on a new site called LateNighter. The publisher is dedicated to covering the fascinating world of late-night comedy shows, and their podcast Inside Late Night is excellent if you’re as big of a comedy fan as I am.
Recycled Art
Ron Howard recently discussed his new Jim Henson documentary on Conan O’Brien’s podcast, commenting on how Hensen recycled and elevated an old art form: “But Jim was looking for that breakthrough. But it was a moment of transformation, and he seized that opportunity. But it's interesting that he wound up grabbing an ancient art form and elevating it. When I was a kid sitting around, we were talking about the Andy Griffith show. A lot of the character actors who would come on that show would be bitching and moaning because radio was dead or Vaudeville had gone. And yet we all know that those mediums didn't vanish. There isn't a Vaudeville circuit per se, but there's stand up, there's Cirque de Soleil. The art forms are as relevant as ever.”
So, You’re Saying There’s a Chance?
Back in #315, I discussed the various inputs into the Drake Equation (which is used for estimating the abundance of communicative alien life in the known universe), specifically focusing on “L” – the length of time intelligent, radio-capable civilizations persist. I noted that L is typically couched in terms of how long intelligent civilizations survive before being destroyed by war or catastrophe. I suggested that maybe the bigger factor was whether birth rates can remain high enough to sustain an intelligent population, or if advanced technology’s degenerative effect on the “specialness” of life infects the civilization with melancholy, ultimately causing it to fade away. However, there are a number of interesting variables to ponder besides L, and recent research theorizes that we have been vastly overestimating the number of planets capable of supporting intelligent life (fi) by overlooking the criticality of mixed aquatic and terrestrial habitat and sustained plate tectonics. In brief, researchers theorize that primitive life must necessarily evolve in water while advanced life evolves on land, and plate tectonics support growth, biodiversity, and moderate evolutionary pressure. Thus, when planetary composition and tectonic action are factored into fi, it turns out that less than 0.003% – 0.2% of planets might potentially harbor conditions suitable for advanced civilizations to emerge. Effectively, it reduces estimates by around three orders of magnitude. The Drake Equation is, of course, just a thought exercise given the wide range of estimates for each variable; for example, the JWST discovering galaxy formation much earlier than expected could positively impact the potential number of advanced civilizations out there. The real value of the Drake exercise remains how it leads us to think about the longevity of our own species, and whether we will exit the celestial playing field with the proverbial bang or whimper.
Stuff About Demographics, the Economy, and Investing
High Rates Drive Long-Term Inflation
This unintuitive inversion of conventional wisdom (if you can call anything related to economic theory “wisdom”) is likely one of the reasons that Fed policy has become less effective over time. The combination of higher rates and systemically high levels of debt have several unintended consequences. One issue I’ve addressed in the past is that companies, especially those backed by PE with high debt loads, can raise prices to cover interest expenses. Another, perhaps more important, side effect is decreased investment. The problem is the Fed wants to slow the economy down because of their artificial 2% inflation target (which is based on nothing of consequence), but there exist key economic chokepoints that require significant investment in order to increase supply and lower prices. For example, rental rates comprise 40% of the core data the Fed uses to tune interest policy; however, higher rates have slammed the brakes on apartment development, despite the US seeing some of its highest absolute population growth on record, keeping upward pressure on rental prices. Likewise, the green transition – which will ultimately bring deflationary renewable energy – is hampered by high rates. This inflationary Catch-22 should be a self-evident absurdity for anyone paying attention and represents a black eye on Fed policy. As I’ve said in the past, inflation-fighting measures should focus on the sources of inflation, not the blunt tools that can actually drive the opposite effect.
When Were You Eleven?
The answer to that question provides the decade that you will nostalgically remember as being the best of times. WaPo reports on the fascinating data that show everyone thinks that everything – from the best movies and music to trustworthy news and political unity – peaked during their second decade of life. After that, it’s all downhill. Some of the vertices are sharp, for example, music was clearly at its zenith during your socially/emotionally critical teen years (which is also why “pop” music is targeted at teenagers and why band popularity tends to track teen demographic trends as much (or more) than it represents enduring quality, e.g., the Baby Boomers and The Beatles). These data, of course, only reflect averages, not individual paths; but, if you’re an investor, this nostalgic skew is important to remember when you are researching various fads and fashions. For example, Harley-Davidsons sold well in the 90s and 2000s when Boomers hit their 50s, likely thanks to 1960s culture and movies like the 1969 film Easy Rider, only for demand to slacken as Boomers aged. The material desires and behaviors that might appear popular or unpopular may have more to do with demographically restricted nostalgia than with more general, enduring trends.
✌️-Brad
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The content of this newsletter is my personal opinion as of the date published and is subject to change without notice and may not reflect the opinion of NZS Capital, LLC. This newsletter is an informal gathering of topics I’ve recently read and thought about. I will sometimes state things in the newsletter that contradict my own views in order to provoke debate. Often I try to make jokes, and they aren’t very funny – sorry.
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