Episode 206: ChatGPT Year 1, Robots Multiplying by Thousands, and Destructive Private Equity

[00:00:00] From somewhere deep in the cloud, and the corners of the earth, this is The Killing It Podcast

[00:00:10] with a focus on helping you make sense and dollars of all things I.T. With your hosts,

[00:00:17] Dave Sobel, Ryan Morris, and Karl Palachuk.

[00:00:22] Welcome everybody to episode 206 of The Killing It Podcast.

[00:00:32] Are you impressed that I remembered how to introduce this podcast?

[00:00:36] We even take breaks and we still have the rhythm like we come right back in, we pregame

[00:00:41] for 20 minutes and warm ourselves up. It's all the same. Welcome back.

[00:00:46] You know how they say it takes 30 days to create a habit?

[00:00:48] It takes 206 episodes to make it completely impossible to forget how to do that.

[00:00:54] Well, I did freak out because I was like, okay, wait, I'm the one who starts, right?

[00:01:00] You are the one that starts. But I ask a question and we're going to have a quick rapid

[00:01:04] fire.

[00:01:05] You're forced to pick a 2024 trend that isn't AI. What's now most important?

[00:01:13] Sadly, for 2024, I'm going to say it's money probably related to private equity.

[00:01:21] We'll get back to that later.

[00:01:23] He's previewing topic three, Ryan. What's yours?

[00:01:26] So I will go with a business operations topic, collaboration with InVender ecosystems

[00:01:35] because everybody is talking about it and by the way, nobody actually does it so don't

[00:01:40] believe them with the marketing slicks. But we'll hit that.

[00:01:44] Oh, I'm going to tease then. I've got a future of distribution video dropping on my feeds

[00:01:49] before your end. So mine then is going to actually be, I think it's still going to be labor.

[00:01:54] I think the actual issue is going to be training and the availability of labor in the IT space

[00:02:00] because I don't see that getting any better. I actually see it get worse without using

[00:02:05] the two letter acronym I just banned. I think that's a contributing factor. So it's that.

[00:02:10] But there you go. Let's, uh, before we dive in this episode brought to you by a class I'm teaching

[00:02:17] starting in January, navigating emerging technologies for MSPs. We're going to put the link

[00:02:22] in the show notes to sign up. It's a five week class. Going to walk through the methodology that I

[00:02:27] use for analyzing technologies and how you can apply that in your business to find trends and

[00:02:33] be effective in your service provider business. Join me. It's going to be a lot of fun.

[00:02:38] First time I've ever taught a class in this format. So it'll be, it'd be very fun. It's original

[00:02:43] stuff. I've never done this before. So welcome aboard for the educational process. I'm expecting

[00:02:48] it to be a lot of fun and very educational. I'm going to dive us in with topic number one guys.

[00:02:55] It is a year plus since chat GPT was unleashed on the world and it's worth revisiting kind of

[00:03:04] now that we've been at this for a year. Like what do you see the big impact and what has it changed

[00:03:11] in the way you're seeing services operations run? I will say a couple things. First of all,

[00:03:17] Happy Birthday, chat GPT. Uh, you're one. Well done. You're one. You did it. Um, but uh, second thing

[00:03:26] is I'm really impressed with how much people have embraced it first. And sometimes embraced it

[00:03:34] more than their bosses want them to more than the media thinks they should, you know, so far and so on.

[00:03:39] But it's rare to have a new technology that people love out the gate, right? And so far,

[00:03:47] it hasn't I haven't seen it used in pornography at all. So it may be the first technology to not be driven

[00:03:54] by how it helps the poor. Oh, Carl, it's out. You know, I'm this is a, this is a family friendly show,

[00:04:02] but uh, let's just observe by the way that like as a quick aside, there's a lot of framework problems

[00:04:09] around it because some significant deep fake problems there. Student harassment happening with,

[00:04:15] you know, around that, uh, sex bots, AI bots for for that. There's a whole set of use cases in

[00:04:22] market going on over there. It's been, you know, it is yet another one. But what I think is interesting

[00:04:27] about is that it's paralleling where oftentimes we see that industry, the adult industry lead,

[00:04:33] particularly we saw it in video. We've seen it in some of the interactive features. It was driving

[00:04:38] ahead. This it feels like it's kind of concurrent with what we're seeing in the in the major marketplace.

[00:04:43] So I thought I think that's notable. You know, I would observe that I think so to Carl's point,

[00:04:49] and Dave, I think you might have been the one who said this a while back in one of our episodes

[00:04:53] that it's a technology that we will say is from the masses, not from the professionals, right?

[00:04:58] Where the tool is not brought to you by your friends in the IT department and then they train you

[00:05:04] on how and why to use this thing. It's humans that go out in the wild and they find it and they like

[00:05:09] it and they create with it and they bring it to work and they say hey, is this reasonable? I'll

[00:05:15] say there are two fundamental observations that I have a year into this process. Number one

[00:05:21] is that while the technology absolutely hallucinates, it sounds more believable now than it did,

[00:05:29] right? Like you and I a year ago when we would open that thing up and it would ask

[00:05:33] it a question and it would tell you a lie, you would go that's instantly a lie. I can absolutely

[00:05:38] tell that that's not true. It's getting better and it's partly grammar. It's partly style and

[00:05:45] the way that it writes but that's something I think we still need to be paying attention to.

[00:05:50] My second observation is it was deliriously naive or intentionally misleading

[00:05:58] for anyone in the AI space to ever have characterized this as a not-for-profit for the benefit

[00:06:04] of all mankind. Bullshit! That was always going to be a commercialized entity and we all just

[00:06:12] saw the human resources issues that were going on with the folks over at the board, at Open AI.

[00:06:19] It was always going to be a commercial entity and that I think is the proper way to think of it.

[00:06:25] Not how do we make this good for mankind but how do we control the commercial impulse of this

[00:06:31] technology? What I've been most interested is just to watch everything flow. Like everything is

[00:06:36] happening like we've got the regulation element of this, we've got business frameworks going

[00:06:40] around that, we've got ethical considerations. Like it almost feels like a technology that without

[00:06:46] coordination is getting rolled out very systematically and more thoughtfully than I might expect.

[00:06:54] By the way there's extremes on both sides right? Like there's those that you know go at any

[00:07:00] pace, there's those that don't do anything because it's bad but you see the mainstream of the

[00:07:05] conversation and it's very bounded, generally pretty responsible. Like it's pretty intelligent, we've got

[00:07:14] legal frameworks on both sides of the pond that are coming together at whatever speed you'd expect

[00:07:20] from those governments but the answer isn't zero. You've got companies rolling out their own

[00:07:26] frameworks the way they're looking at it, I actually have to say like for one year of a technology

[00:07:32] there's been a lot of ground covered that makes a lot of sense yet there's still a lot of upside.

[00:07:39] Like there's still so much work that can be done in this space, why I'm continuing to be intrigued

[00:07:44] by it. Well and we on this show talked about ethics and AI for a year before GPP was real. So you

[00:07:54] know what it is one of the few technologies where that conversation was pretty mature by the time

[00:08:00] that there was a release date and to just spurred by what Ryan was saying I've been impressed with how

[00:08:07] many people have become creative because of this. You know there's always this fear like the one

[00:08:14] thing people say oh it's going to eliminate jobs, no it's going to eliminate jobs for people who

[00:08:19] don't use it but it'll create jobs for those who do use it and I've seen on YouTube and TikTok

[00:08:27] and so many places where people have just their creativity has exploded because just like humans

[00:08:37] humans don't create anything we combine right it is a combinatorial thing that creates one

[00:08:43] thing gets attached to a second thing and now you've got a new device that's where creativity

[00:08:48] happens in the human brain. We shouldn't expect the computer to do that any more slowly or

[00:08:55] do a worse job than we do and so it allows people to say hey what about this, what about this,

[00:09:00] what about this, and outcomes not one example, 32. And you pick the one you like and then you

[00:09:07] create 32 more out of that and it's shocking and fast. And Carl I will completely echo that because

[00:09:15] it's creative in what we typically think of as creative right the arts, the entertainment, whether

[00:09:21] it's writing or music or images but I've also seen people use it in what I think are bonafide creative

[00:09:28] ways in business scenarios right. We spend a lot of time in our consulting practice challenging

[00:09:35] people's plans and thinking like are you sure that's the right way to go, are you sure that

[00:09:40] that's how they're going to respond what if they respond differently? You can use this technology

[00:09:45] now to do scenario testing in ways that are much more as you said Dave patient much more willing

[00:09:53] to go with my 11 12 13 iterations of that scenario and not get angry and and stomp out of the room.

[00:10:01] It'll go with you but boy you can consider practical business questions and we've actually used it

[00:10:07] in workshops with sales teams and with business owners and to great effect creativity it's not just

[00:10:13] this is the way we do it around here everybody get in line it's I don't know let's test it and see

[00:10:20] what the options are that's very exciting and I don't mind saying like you know when I think about

[00:10:24] Hulu because everybody talks about the hallucinations my quick comeback all the time is yeah because

[00:10:29] humans are perfect all the time like I think this is important to to remind everybody is that we're

[00:10:34] not necessarily comparing to perfect it's about where the risk tolerance is and putting it in

[00:10:40] the right places you know do I want an AI making decisions about you know nuclear weapons no not

[00:10:47] really right but I also don't necessarily always want humans doing that either the areas where

[00:10:52] understanding you know you're not putting it in a place where where the miss where every mistake

[00:10:57] will be critically important and where you're talking about right we're like you know there are

[00:11:02] bad ideas in a brainstorm right I don't mind saying everybody say there's no bad ideas there are bad

[00:11:07] ideas but that's okay you want a creative space that allows for that and you can view hallucinations

[00:11:15] the same thing you need to understand that it's not the same tool as search it's different

[00:11:22] well and we will develop new ways of brainstorming while they say okay have we gotten off track great

[00:11:27] push the reset button and AI chat GPT will reset its brain much more thoroughly than you will right because

[00:11:37] we'll remember we were just talking about this and you said that like no stop we said reset

[00:11:43] so it'll be a new way of thinking which is good maybe humans will actually begin to evolve

[00:11:51] all right second story is robots you know the two things we love most here are AI and robots so

[00:12:01] we're linking to an article about the absolute explosion of robots that you're about to see

[00:12:07] it's going to be a new factory in Oregon to mass produce humanoid robots meaning they're bipedal

[00:12:14] and they you know not necessarily that they look like people but they walk around like people

[00:12:19] and it's not just that one company other companies are doing the same thing

[00:12:26] you're probably all seeing the Boston Dynamics dog that walks like a dog and can you know dance

[00:12:33] and flip backwards and all that kind of stuff aside from dancing these robots are going to be

[00:12:40] literally next generation interacting with human beings and if you have any clients who are in

[00:12:46] manufacturing and in some cases customer service this may be something that you're going to have

[00:12:53] to work with in your organization so it's really I think it's quite interesting there's so many

[00:12:59] uses for this I'm not sure why we want them to walk and talk like humans except that maybe it'll

[00:13:05] make us feel safer but I think it'll be a cool new technology when I see a robot walking across my

[00:13:13] front yard and stepping on my flowers instead of a human delivering the mail I'm not visiting

[00:13:19] Westworld I don't know about you I mean it's a look so it's an interesting point about like do they

[00:13:26] need to look like humans because by the way you know like we've got an i-robot room but in the house

[00:13:30] and there's one that does not need to look like a human pushing a vacuum I am completely fine with

[00:13:35] it looking like a disk that the cat can sit around the house ours don't I've tried but you know

[00:13:47] like there's there's an element of like yes if that form factors useful but what I I'll go to

[00:13:53] the larger point and say like I think we are going to start seeing more and more robots and by the

[00:13:57] way powered by some AI because we can now do a lot of autonomous decisions and can have it do a

[00:14:03] lot of that quote unquote thinking on its own so that it can make basic decisions within parameters

[00:14:09] and be able to do things this is an accelerated version of the production line of automation

[00:14:16] that we've seen in a lot of different spaces we should embrace it we should do the two parts is

[00:14:23] understanding implications and the second order effects that go on around it and by the way

[00:14:29] everybody cool consulting opportunity is understanding the impacts of that in your customers

[00:14:33] and customers businesses and the second area is as we need to be careful about understanding how to

[00:14:40] invest in education and training for workers as society to create those and I will also observe

[00:14:47] for employers you're going to necessarily think about the skills you need you're probably

[00:14:51] going to need to invest yourself in building some of those those skills into your own teams see

[00:14:58] and Dave you go to kind of where I think the crossroads is in this in this discussion do we think

[00:15:04] of this as humans who are comfortable interacting with a machine or do we think of this as engineers

[00:15:11] who are confident that the machine can perform the intended function right you guys aren't surprised

[00:15:17] that I'm going to use a movie reference here to draw the distinction we had an i-robot movie before

[00:15:23] it was a vacuum right we'll Smith etc humanoid robots looked like us were stronger than us faster than

[00:15:29] us etc and we got into the discussion of are we okay with that but we also had a movie called

[00:15:35] wally where none of those machines looked like a human they looked like the function for which they

[00:15:41] were designed if you were a sweeping robot if you were a washing robot a cooking robot you were

[00:15:46] designed to do that as a human who has lifted many things um and then developed a bad back as a

[00:15:54] result of that and now is very very concerned about proper lifting mechanics is a bipedal robot

[00:16:01] shaped and and formed like us the right tool to use to lift a heavy item in a warehouse or

[00:16:09] manufacturing operation or is there a mechanically superior way to design and deploy a machine might not

[00:16:16] have a million cross functions but it would have perfected the one function that it's trying to do

[00:16:24] I kind of think that the future is more functional in robots than it is comfortable more

[00:16:32] more you know the humanoid interactivity I understand why people go there and I understand

[00:16:38] where where people are starting to think of the applications for that I fear that one will cause

[00:16:44] so much icky factor reaction where people are like that was sort of a human but not as opposed to

[00:16:52] I saw the robot going around the floor and it was sweeping up and it and I stepped over it it was

[00:16:58] fine I didn't interact with it it didn't interact with me but I knew exactly what it was intended

[00:17:04] to accomplish I can think of 10,000 applications on the functional side where I look at my bad back

[00:17:12] and I go are we building robots with better backs than we have because if not I don't want to use

[00:17:17] them to lift heavy things because I can forecast what the outcome of that is going to be. Ryan that's

[00:17:23] the power loaders from aliens if we want to go from actual bad back and who knows to Ryan for not

[00:17:29] doing a minority report we didn't mention minority report in the entire show so on the on the warehouse

[00:17:35] I do have to say Amazon is actually interested in this in part because they put in so many robots

[00:17:42] and they can do so much and then there's a point at which they have to have a human just because of

[00:17:48] the ability to do certain things requires two fingers here and five fingers there and a wrist

[00:17:56] and an elbow and you know this may actually feel that gap for them but I think when you think about

[00:18:02] the robots whether it's the vacuum cleaner or if you've traveled to an airport in Asia right the

[00:18:10] little things that sweep the floor and pick up the dirt and so forth they are designed to look

[00:18:16] like a non-human thing that does one function but if you want customer service if you want somebody

[00:18:23] just something to stand behind a desk and interact with human beings I think the less it looks like

[00:18:29] a computer with a screen that doesn't care about you the better and the next generation are going

[00:18:36] to have skin and that's that's where the creepy factor comes in you have to decide whether you know

[00:18:43] are you comfortable when your robot has skin but you know this is literally all gonna come to fruition

[00:18:50] in our lifetimes and probably before the turn of the next decade well and as you say Carl the

[00:18:57] the manufacturing is not theoretical here this we are tooling factories for the purpose of turning out

[00:19:04] 10,000 of these things in Oregon in the very near future and they're not nearly the only company

[00:19:10] playing in the space this this is not a concept question this is okay it's coming hey how do you

[00:19:17] feel about it be what are you gonna use it for and then how do we make sure that we actually get

[00:19:24] the intended effect and not the unintended consequences and from the movie iRobot I will

[00:19:29] remind everybody there are three laws there are three laws of robotics and we have to abide by

[00:19:35] those things but we can get into that in much more depth than another conversation all right let's

[00:19:43] dive into topic number three sirs we're gonna talk about the future of money in investing in business

[00:19:51] specifically in the technology industry right if you think of the context of venture capital

[00:19:55] and private equity there has been a way that it interacted with startups scale-ups and mass market

[00:20:03] invention of new technologies over the past 10 maybe maybe 20 years we're seeing that it's

[00:20:10] changing now as interest rates go up as money factors get changed significantly we are now being

[00:20:17] faced with the question of could we ever rationalize investing in a company like for example Uber

[00:20:25] that at the time when it was founded it had no revenue it had no profit it scaled up it didn't

[00:20:32] make profit forever and ever and it was sustained by venture capitalists who were very patient

[00:20:39] and willing to say when it's a trillion dollars then i'll collect my money from it

[00:20:46] our p-e-n-v-c players going to be patient like that or are they going to expect that while we

[00:20:54] are inventing the future we also run the business like grown-ups and generate actual profit from

[00:21:01] operations money investors in the technology industry guys what do you think the future

[00:21:08] i will say you have to make a distinction between venture capitalists who basically

[00:21:14] buy businesses or build businesses to succeed and private equity who want to they've got a whole

[00:21:22] different model right they've got a bunch of money they collect money when they get let's say a

[00:21:27] billion dollars they buy up a bunch of companies and then they try to make changes within them

[00:21:33] to maximize payouts but now they've got a billion dollars worth of something that they can take

[00:21:38] to a bank and take loans out of two to four billion dollars and now they can go do whatever the

[00:21:46] hell they want but a lot of that money is used to pay back the investors who were promised

[00:21:52] 20 40 50 percent and i just think you know that game is so short-lived like people get in and

[00:22:00] they say i will be here for four years and i will be gone and i need to double my money in that time

[00:22:05] like if i can't make that happen i'll take my money somewhere else and my problem is with that model

[00:22:12] they don't actually care about the service they don't care about the companies they buy or sell

[00:22:16] they don't care about the end users they don't care about the channel members they they literally

[00:22:21] all they care about is the payout and when they leave our industry which i think they will

[00:22:28] they will leave a small dream mess behind and they will not care about it and you will not be as

[00:22:34] a an IT service provider you will not be in any financial danger per se but imagine if one third of

[00:22:42] your vendors simply cease to exist or were forced to merge with each other or no longer had

[00:22:49] relationship that you have enjoyed i i don't think it's good news for us and it can't it doesn't

[00:22:56] have to end that way but right now looking at other industries that's the most likely scenario

[00:23:02] that we're looking at so for me the private equities become one of those areas where i'm enjoying

[00:23:10] exploring the feces behind each one and i've come to just sort of recognize the they are not all

[00:23:15] the same and they're very different and the so for example car you you described we all talk about

[00:23:20] that p e playbook right that's one particular kind that invests one particular sets of funds

[00:23:26] one particular mantra one particular style i don't like it freely admit i don't like that uh

[00:23:32] would encourage people to listen to my interview with Brendan Ballot from the DOJ who's written a book

[00:23:37] on the topic and also doesn't like it too and has lots of good reasons why and that's true in a lot

[00:23:43] of software vendors they've done but some of the services private equity look a little different and

[00:23:49] they have that style and several others right and what's interesting about p is because they come

[00:23:54] in so many flavors they are also figuring out new interesting creative ways to extend their life

[00:24:01] span so for example they are creating new funds that can buy things from the old funds and allow

[00:24:07] people the to to leave to move around like they're good at excel everybody like they're good at

[00:24:13] moving things around they're like so so understand that not all are created equal car i think you're right

[00:24:23] i think that there will be some some software vendors that change aggressively i think there will be

[00:24:29] some services organizations that do i will be interested to see the competitive factors that come

[00:24:35] out of that because every time you describe like service providers going down that's always an

[00:24:41] opportunity for a new provider to do to be different and leverage in some new way so i like a

[00:24:48] competitive space i distinctly like will point out that there is private equity i do not think

[00:24:54] is doing right by anyone other than the shareholders and investors and i think that's bad for the

[00:25:03] industry i'm not convinced it's like armageddon on everybody but i do think that will be smoking

[00:25:11] cratering holes for certain spot fairflex see and i exactly step carefully my my question always is

[00:25:20] what is the expertise the money brings to the business if you are bringing investment

[00:25:25] are you simply going to be a silent investor allow the people who are running it to do more

[00:25:32] bigger faster because now they have money are you going to be a noisy investor and you are going

[00:25:38] to get involved and change operations because you bring operating expertise within the scope of

[00:25:45] that specific business or do you bring money expertise absent any of the operating expertise

[00:25:52] and your value is simply i brought money and my job is increase revenue decrease cost with zero

[00:25:58] emotion attached to it so that i can take more money out of this thing if you bring expertise

[00:26:05] in my field and and i've seen a number of these that have been very successful people who have

[00:26:11] been successful in our industry because they were very very smart and capable at what they were

[00:26:16] doing and as a result accumulated a big old bucket of money and then are turning around

[00:26:21] to invest that in ways that can extend or or multiply their intelligence i think that can work

[00:26:29] very effectively right like let's bring the brains of the smart slash wealthy people who did this

[00:26:36] very very well and the rest of us could probably benefit from that when you get outside of that

[00:26:41] expertise and the money comes from sources that do not know the difference between a channel

[00:26:48] and a tv channel that's a problem and that's going to undermine the essential

[00:26:55] mission and value prop of the technology that they're getting into. The problem here is it's so

[00:27:01] lucrative or as you pointed out Carl it has been up until recently so very lucrative to get in

[00:27:09] we've attracted investors into the technology space in general and into the channel in specific

[00:27:15] who do not know their behinds from a hole in the ground when it comes to the technology

[00:27:21] the delivery model the operating model the value added channel model they don't understand any

[00:27:26] of that stuff and so they just go out on item looks really expensive let's slash it and see what

[00:27:32] happens that's very dangerous but they made a lot of money because money was just multiplying

[00:27:39] now that the rates of return are down now that the cost of money is significantly higher

[00:27:45] i think grown-ups will take fewer just wild-ass guesses into like let's put a million dollars here

[00:27:53] and see what happens i think they will be for their own safety and sanity they will be required

[00:27:59] to test the business proposition and if they don't understand it hopefully they will steer

[00:28:05] clear there's no guarantees there but i just feel like the pain is going to be significantly

[00:28:11] higher for being stupid with your investments i like the pain being higher that's a good thing

[00:28:18] well there's a certain degree of like i mean i think we're also prospecting a little bit that

[00:28:21] like rates are not necessarily going to reduce to the levels that they were before

[00:28:26] that we may look back and say that period of time was an aberration free money was it was a

[00:28:32] period of time and that's not the norm there should be some rules of the road that create

[00:28:38] that ability for you know you can't just do anything because you can't take unlimited risk

[00:28:44] that is actually kind of healthy for a lot of market so i think we may be moving to that

[00:28:49] as we move into twenty-two i think it would be great if there's a way to look at the leadership

[00:28:55] i want people with passion about something i don't care if it's building rockets to marz or

[00:29:01] whatever it is i would love to have people with passion who you know and i do like the term

[00:29:07] run something like adults you know when you look at the last the economy of the last ten years and

[00:29:14] the ten years before that and the ten years before that there were companies that came and went

[00:29:18] you know forty percent or more less of the fortune five hundred disappears every twenty years

[00:29:24] but there's also companies that they went through the last three recessions and they'll go through

[00:29:28] the next three the likes of Microsoft apple intel hp dell they lead the market by building a long

[00:29:39] term business that has no intention of getting out and if part of your strategy is in two years

[00:29:47] three years six years i'm out you have a very different view of what the world looks like and

[00:29:52] what the future looks like and the question is how do we find out right before i go pick a new vendor

[00:30:00] for this tool how do i know whether they have any intention of being around in three years

[00:30:06] before i start well believe me Carl directly in that conversation we've been doing a lot of work

[00:30:13] in channel development partner engagement partner recruiting and ramping right like there we've

[00:30:19] been spending a lot of time in that conversation recently and partners are i've been very happily

[00:30:26] surprised at how many of them ask the question specifically where does your funding come from who

[00:30:32] are the people that are backing the venture what is the business model for this thing and what's

[00:30:36] your exit strategy uh the first time they ask that of a new vendor the vendor gets a little bit like

[00:30:42] will i never how dare you i think it's a perfectly appropriate question and the fact that people

[00:30:48] are asking it that is acting like an adult we have seen this right is right is movie reference

[00:30:56] all right very good well thank you all for being here we're happy to be doing this and where

[00:31:02] our goal is now to try to do these quarterly no promises but uh there's three of us and we'll

[00:31:09] hold each other accountable so we are we like showing up and roughing with one of the three is good fun

[00:31:15] so with that we wish you a great end of year and a great new year and we will see you in 2024

[00:31:22] this has been episode 206 of the Killing It Killing It Podcast

[00:31:44] keep killing it in the technology business