Investors & Friends,
Let’s shift our focus this quarter from the typical short-term financial myopia to explore an emerging topic with the potential to revolutionize how we live and work: Artificial Intelligence. AI has long captivated futurists and prognosticators, who have forever proclaimed that “in just a few years” it will arrive. For those of us enthralled by new technology but grounded in practicality, everyday applications for interactive AI have seemed distant—until now.
AI has subtly infiltrated our lives for quite some time, manifesting in indirect ways. Consider the uncanny accuracy of Google or Apple Maps in predicting travel times, the algorithms curating personalized advertisements and content in our social media feeds, or the predictive auto-complete functions in search engines. But until recently, we lacked the ability to directly interact with artificial intelligence. Now we can and the applications are extraordinary. I believe that within the next decade (or even sooner), AI applications will dramatically transform the employment landscape, exponentially boost our collective productivity, and consequently, substantially increase our GDP and economic capacity.
You may already be familiar with the recent release of the AI program ChatGPT, developed by the company OpenAI. If not, I encourage you to explore it. Instead of explaining what a “large language model (LLM)” like ChatGPT is and how it functions, let’s focus on the ways it and similar programs will change our lives by examining some early examples of its real-world impact.
Healthcare Applications
Far beyond merely ‘searching for symptoms,’ AI will offer personalized healthcare advice and significantly enhance the capabilities of human healthcare professionals. Consider the anecdotal example below, which demonstrates how this innovative program has positively influenced a real person and the well-being of their four-legged companion. Note the conversational nature of the interaction, the way the AI program interprets the query, processes the provided data, formulates a response in natural language, and delivers an accurate answer.
Yes – this is one anecdotal example, and there are certainly challenges with accuracy, but it will only improve from here. The healthcare applications of AI are immense, ranging from ‘doctor in your pocket’ (or veterinarian) scenarios like this to significantly boosting the productivity of human healthcare professionals. Soon, when you undergo a cancer screening MRI, your images will be analyzed by an AI system. When used in conjunction with a human, AI can considerably enhance the accuracy of exam interpretations. According to an NYU study:
“When tested separately on 44,755 already completed ultrasound exams, the artificial intelligence (AI) tool improved radiologists’ ability to correctly identify the disease by 37 percent and reduced the number of tissue samples, or biopsies, needed to confirm suspect tumors by 27 percent.”
-https://nyulangone.org/news/artificial-intelligence-tool-improves-accuracy-breast-cancer-imaging
AI is already sequencing new medicines and decoding genomes. It will soon be a ubiquitous and invaluable part of our healthcare system.
Another transformative healthcare application aids visually impaired individuals with everyday tasks. The app “Be My Eyes,” which currently relies on a network of approximately 6 million volunteers, assists users by “seeing” items and describing them or helping with tasks that require sight. AI, powered by ChatGPT, is now integrated into this app, freeing up human volunteers for more complex tasks. This results in leveraged productivity, dramatically increasing the app’s capacity to help people. AI proves to be as accurate as humans and is always available.
Technical Applications
Natural language-to-code generators are already being deployed across software development companies. These AI systems allow users to describe in plain text what they want to accomplish in an application or website, and the AI writes the code for them. It can search for and correct bugs in existing code, providing experienced programmers with a powerful assistant, and enabling recent college graduates to contribute meaningfully to complex projects. As much of our economy is now driven by software, I anticipate a surge in new and improved software applications due to these breakthroughs.
In a staggering leap forward, during the latest OpenAI demo, ChatGPT transformed a hand-drawn sketch into a functional HTML website. Soon, anyone will be able to create a video game, web application, or website using pictures, sketches, and natural text, without needing to know a single line of code. Meanwhile, those who do possess coding skills will have superhuman output. “Learn to code” will become “learn to prompt AI.”
AI is already equal to the smartest humans on standardized testing and will soon be orders of magnitude better than every living person. We have known about the unbeatable AI chess systems for years, soon it will be unbeatable at everything. Users will be able to generate legal contracts on demand, write articles and papers, and synthesize large complex data sets into usable charts and graphs for human consumption. Research that previously took humans hours, days, or weeks, will take minutes. Many of the articles you are reading on news websites are already written by AI. It will soon be the majority of them.
Everyday Applications
AI will influence every aspect of our lives, from the big important things to seemingly mundane yet equally remarkable tasks. The recent release of ChatGPT, “GPT-4,” integrates with applications you are already familiar with. You may ask it for “Mexican food restaurant recommendations” in a city you are visiting, and since it is connected to Yelp and OpenTable, it can give you the best-reviewed options and make the reservation for you. Or if you are staying in you can ask for “Mexican food recipes,” and ChatGPT, connected to Instacart, will select the ingredients, add them to your cart, and have it delivered to your door.
AI will be integrated with travel websites, email, Excel, Word, and countless other applications. Your individual efficiency in managing daily tasks will increase tenfold. My family and I recently used it to “craft a detailed itinerary of a weekend trip to Chincoteague, Virginia.”
Soon it will be able to make reservations at the places you instruct it to, book hotels, book car rentals, all through a single conversational interface.
Creative Applications
AI has made its way into the visual and creative worlds as well. The application Midjourney is a mind-blowing text-to-image generator, incredible in its ability to accurately represent what it is being prompted to. Users simply type in a text prompt, and the system generates a photorealistic image for them.
Prompt: “food photography, washing salad leaves, but in a luxurious Michelin kitchen style, studio lighting, depth of field”
No, that is not an actual picture of lettuce, nor is it something that can be found on the internet. It is a completely unique, novel image created by AI using nothing but the words typed above.
Prompt: photography shot through an outdoor window of a coffee shop with neon sign lighting, window glares and reflections, depth of field, [person] sitting at a table, portrait, kodak portra 800, 105 mm f1. 8 –ar 2:1
Both examples from @juliewdesign_ on Twitter
Test versions of similar technology are already being applied to video. Soon, you will be able to design an entire photorealistic movie or video game using only text prompts. You will no longer need to be a digital artist (or hire one) for website images, album cover art, logo designs, marketing materials, or even… pictures of yourself.
I recently needed a new headshot and was having trouble booking a photographer. A quality session cost well over $100, required traveling to the studio, waiting for editing, and hoping the lighting was acceptable!
I finally did get a new headshot:
Except that I never had to pose for it. I simply connected the app headshotpro to my Facebook, paid $20, and 10 minutes later got over 100 perfectly lit, perfectly edited headshots to choose from.
I know some of you may think that this and tools like it are WAY too invasive (and creepy) for you to ever use personally, and that point is taken. It won’t be for everyone.
However, the pace at which it will be integrated into our economy and lives will likely be faster and more profound than we can currently imagine. Our brains are not well-equipped to comprehend exponential growth curves. We tend to perceive progress as linear, steady, and gradual. Grasping exponential progress is challenging because few developments are exponentially transformative. This will be.
Speaking of growth curves, below are the growth curves of several major technology applications and the time they each took to reach 100 million users. Chat GPT took just 60 days. The next fastest, Instagram, took almost 1000.
The near-term future for AI appears incredibly promising, while the long-term future presents significant risks. Aligning super-intelligent computer systems with human values may not even be possible, especially considering our difficulty in agreeing on the values we should instill in AI amongst ourselves.
Economically, the employment landscape will undergo radical changes, with many jobs becoming obsolete or requiring far fewer humans to do them.
A recent study cited in a Goldman Sachs research note estimated that 25% of all current jobs are at risk of complete elimination by AI. Nearly half of all administrative support and legal jobs are at risk. However, the same note estimates that up to 60% of all current jobs did not exist in 1940. The history of technological disruption is extensive, and it has consistently created more jobs than it has destroyed. Entirely new industries emerge from technological innovations. Search for “AI Prompter” on Indeed or LinkedIn, and you will find dozens of companies hiring for this entirely new position that didn’t exist before a few months ago. The advent of motor vehicles signaled the end of the buggy driver profession, while the introduction of automatic call routing led to the decline of switchboard operators, and so on.
However, this time might be different. Since AI has applications across numerous industries, it has the potential to disrupt everything simultaneously, a challenge we have not faced before. We may need to radically alter our society to compensate for the lost jobs.
Beyond economic disruption, there is potential for general societal disruption. We have already seen how quickly misinformation spreads online, and soon we will be unable to trust any piece of media we encounter. Any picture, video, or audio you find online could be entirely fake and indistinguishable from authentic content. And because it will be so easy to produce, fake content will almost certainly outnumber real content. It will influence society in profound ways.
Then there are existential risks that, while reminiscent of science fiction, demand serious consideration. The likelihood of a superintelligent AI inadvertently causing an industrial, nuclear, or biological disaster is greater than 0%. Some individuals, including those working in the AI development industry, warn of the risk superintelligent AI poses to the future of humanity’s very existence. In fact, an open letter signed by 10,000 prominent figures, including Elon Musk and Apple co-founder Steve Wozniak, calls for an immediate halt to AI development.
I will end this note with the end of that letter, which I think encapsulates the current moment well:
“Humanity can enjoy a flourishing future with AI. Having succeeded in creating powerful AI systems, we can now enjoy an “AI summer” in which we reap the rewards, engineer these systems for the clear benefit of all, and give society a chance to adapt. Society has hit pause on other technologies with potentially catastrophic effects on society. We can do so here. Let’s enjoy a long AI summer, not rush unprepared into a fall.”
In health & in wealth,
Zachary S. Mineur, CFA
Chief Investment Officer
Independence Square Advisors
https://www.linkedin.com/pulse/2q23-investor-letter-zachary-mineur-cfa
