Misunderstanding of Venture Capital on Generative AI

The Menlo report states that enterprises spent $2.5 billion on artificial intelligence in 2023.

Recently, over 35 venture capital firms and more than 15 companies have pledged their support for responsible AI, guided by the Responsible Innovation Lab (RIL). To support these commitments, a 15-page Responsible AI Protocol has been released, providing practical guidance for investors and startups.

While responsible AI is not a bad idea, many in Silicon Valley believe it could slow down progress. This is just one example of how venture capital can enter and disrupt ecosystems.

This is not the first time. Venture capital always messes up technology. A report from Menlo Ventures has been circulating on social media. The report states that enterprises spent approximately $2.5 billion on generating artificial intelligence in 2023. The report further adds that the market is still in its infancy.

The Menlo report estimates that enterprises spent $2.5 billion on generating artificial intelligence in 2023, compared to $70 billion for traditional AI and $400 billion for cloud software. Surprisingly, these numbers are not clearly segmented or contextualized, making it challenging to assess their accuracy or relevance.

Furthermore, this makes no sense at all, as the cloud is a key element of generative AI and they cannot be separated like this. Interestingly, earlier this year, Menlo stated that they expected generative AI to cannibalize and expand today's $140 billion consumer and enterprise software market, contradicting their own claims.

On the other hand, investment bank Goldman Sachs states that generative AI can improve productivity by over 1% per year after widespread adoption. However, to achieve this, enterprises must invest around $200 billion globally in technology and labor by 2025.

It seems that every investment firm comes up with mismatched numbers based on their own research.

Lux Capital recently published a blog titled "How Many Creators Will Survive in Generative AI?" The blog suggests that while AI has limitations, it may replace much of the creative work done by humans. The author believes that many jobs in fields such as news, marketing, and social media lack originality and can be automated.

The Lux Capital report states, "Today, about 90% or even 98% of the output of the creative class can be replaced by generative AI." This is absolutely unnecessary and creates fear among internet users.

Vinod Khosla expresses a similar sentiment, saying, "If I look out to 2040, about 15 to 20 years from now, I believe 80% of jobs will be done by AI and better than humans." Additionally, he adds, "I am a very optimistic person, and we must actively address its negative consequences."

On the other hand, Marc Andreessen states in his latest blog, "The Optimistic Technologist Manifesto," that technology has taken away our jobs, lowered our wages, and exacerbated inequality, which is a lie spread by pessimists.

Meanwhile, Sequoia Capital has released a blog stating that generative AI is entering its second phase, aiming to solve human problems end-to-end. The blog indicates that new applications of AI are different from the initial ones. Enterprises now use foundational models as part of larger solutions, rather than the entire solution.