The Casino enters the arena + Guillermo Rauch of Vercel on AI factory builders

I think we need to break down the logic of why this week people decided that the AI bubble has burst. And there were some key things that happened that I think we can deconstruct and decide whether or not they're actually worth you know being a hater over. The first one was Sam Ultimate had a dinner that I was not invited to with reporters where he discussed among other things and it was all on the record uh you know GPT5 and some of the disappointments around that which are very real and also at some point said something to the effect of I don't have the quote in front of me basically like yeah I think we're probably there's some exuberance or we're in a bubble right now where some stocks are are very overvalued because

of AI but then in the next sentence also was like but also AI is transformative. It's a classic power move. Elon does this too. It's like you're in this super hypy thing. There's almost nothing to lose by being like, "Yeah, I don't know. People are really think I'm hot shit." Maybe too much, you know? Yeah. Yeah. Yeah. My my my lovers love me too much. My haters don't get it. But if there's something wrong, it's because of something other people did, right? I just want to disregard almost everything Sam says these days. I mean, it's just he's on he says so much and

it's so contradictory that it just doesn't even though it probably did play some part in the sell-off of AI, you know, AIdriven stocks, the idea that, oh, Sam Alultman has declared a bubble, so we must be near some sort of a top. And then there was this MIT survey that came out and I think that probably had the most effect on a lot of people which headline number was that 95% of enterprise AI generative AI projects fail just have zero impact on a

company's efficiency and bottom line and that is that is a bad number. The problem of course is that a headline number versus what was actually in the survey is like pretty different. And this was not like a survey that was put out by a fully disinterested organization. Like it's effectively a pro- AI, right? It's organization. It's always funny when somebody like runs away with one line that you said, but then like you're like, "Oh, but I'm sort of trying to make a pro AI point

here." Yeah. Yeah. Like it's almost like a rat [ __ ] in that sense. Like if you're like one of these people who decides to buy the headline and then you actually like distribute the survey and then anyone actually reads it sees that like the key points that it makes is that AI is not incapable of transforming a business. Just the implementation of AI and its inability to learn and adapt to people's workflow is what's causing it to be unsuccessful. My takeaway from actually reading through this thing quickly quickly was that like the 5% of companies that have been successful with it are like going to win. like it's

really about like the fact that they implemented it better and were able to use this technology is why like it is actually a transformative tech and like one of the co-authors of it is a product manager at Microsoft. I was just looking him up. So like these people that are writing this have a they have like a dog in this fight and it's not like long term it's going to be the flow of the argument is basically everybody sees the potential of Chachi BT and Claude. They try it out, but then they almost like and they just don't do enough to actually get their data

integrated into whatever AI tools they're bringing to their companies. And so then it ends up not being more useful than just like consumer grade stuff. And like here's what you actually need to do to be better than just like using CHBT, right? Like that was the key point. Here's what you need to be doing to make this successful. And that's going to end up probably being the talking point from all of the sales people at the cloud software companies that are selling this stuff is like, "Oh yeah, you read that report. They made these mistakes. You won't make this mistake because you're going to buy it and use it in this way." So it ends up the whole thing was an op.

I've decided I will say I texted a lot of investors this week just like what's your read on the bubble? Like you know people who are like you know investing in these companies often I'm interested in what you know. Yeah. people who are trying to make money like you know it's like if it's a early bubble it's like oh I need to keep going but you know they're they're trying to time the bubble for financial reasons and I did get some you know somebody was like full bubble now trying to decide whether this