On Simon Willison's excellent blog yesterday,

he pointed out this tweet talking about "near

manic episodes triggered by watching software

shift from scarce to abundant" and "cognitive

overload from living in an inflection point."

That tweet seems to be resonating with a lot of

the software people at the moment.

As for me, I'm feeling a very strong sense of

deja vu right now.

It's eerie.

I felt like I've lived through this before, and

maybe I can help give you some perspective.

The last time things felt like this to me was

26 years ago, now-ish.

I was working at my first startup, NetSpend.com,

but that's a story for another day.

We were almost a month past the Y2K changeover,

which had turned out to be a non-event because

a lot of people had done a lot of work to

prepare for it, but that's yet another story

for another, another day.

In early January of that year, an essay

entitled "bubble.com" had been written by an

analyst

and leaked almost immediately, and was doing

the rounds inside the startup community.

It detailed the case for why the current tech

company valuations were incredibly overvalued,

and a correction was inevitable.

Things were starting to feel tenuous, and I was

getting quite worried.

A couple of months later, not that I knew it

yet, in March, the NASDAQ would hit its

peak, and then it would start falling.

It would lose three-quarters of its value in

the following year and a half, and it

wouldn't see those highs again for 15 years.

And between the warning and the crash was the

big football game of 2000.

I'll be referring to it as the "superb owl" to

avoid copyright trolls.

I couldn't even tell you who was playing, but I

still remember the ads.

There were so many dot-com commercials during

that game, they had their own Wikipedia page.

I remember how jarring it felt to see companies

that were so overvalued and losing money like

crazy spent so much money advertising.

It seemed like deliberately poking the bear, or

at least tempting fate, especially since

one of the ads was the E-Trade monkey dancing

in a garage for 20 seconds, followed by a

screen with the words, "Well, we just wasted $2

million what are you doing with your money?"

Any of this sounding familiar?

The very next "superb owl" in 2001, there was

an E-Trade ad called "Ghost Town", showing

the same monkey riding a horse through a

deserted town, filled with thinly disguised

logos of

failed dot-coms, including a discarded pets.com-

like sock puppet.

The juxtaposition between the reality and the

marketing hype of AI feels just as discordant

and uncomfortable for me as I remember from

that January 2000.

We know that LLMs have plateaued, and that even

some industry insider experts are admitting

it's time to go back into a research phase,

that the valuations and revenue forecasts

are implausible, but despite that, a social

network made exclusively for AI agents to

talk to each other is going viral.

I paused work on a video about that to make this

one. And, although as I'm writing this

I don't know exactly how many AI commercials

are going to be in the game this weekend,

I do already know there will be a lot more than

it seems like there ought to be.

Tens of billions of dollars is being spent to

advertise these companies that are losing

billions of dollars a year, with valuations

already over-inflated to the point where

financial collapse seems inevitable.

Just like with the dot-coms in 2000, this seems

like a last desperate attempt by the

AI companies to stave off disaster.

Continuing a proud tradition of soon-to-be

unemployed marketing departments from FTX

during the

so-called Crypto Bowl in 2022, and stretching all

the way back to Atari's vain attempt

to pivot from video games to home computers in

1984, right after the Christmas video game

crash of 1983.

It's often humorous in retrospect, but it's not

fun in the moment.

It was a scary feeling in January 2000, and it's

a scary feeling now.

But we got through that, and we can get through

this, and the two situations are even more

similar than you probably realize.

Compounded with the tech crash after the dot-com

bubble, there was also a big wave of offshoring

of software and IT positions that also

depressed the tech job market.

It was a double whammy.

Developer jobs were being closed because the

cash bank for them was drying up, and many

of the developer jobs that were still being

funded were being moved overseas.

It turned out, though, that for various reasons,

including the then-immaturity of many of the

foreign firms, poor communication, and high

levels of turnover amongst the big overseas

providers, the code that US companies were

getting from offshore vendors was not up to

the quality that was needed.

It was bad for internet software quality in

general, but it was good for developers because

it forced companies to hire developers in the

US to clean up all the substandard code

that offshore and could create.

Some of us made a lot of money on some of those

cleanup projects.

And that is a lot like the impact that AI is

having on code right now.

Lots of bugs, lots of bad code, lots of

security vulnerabilities are getting pushed out

very

fast.

Absent an imminent, miraculous breakthrough in

AI tech, there's going to be a ton of

demand for developers to clean that code up.

In many ways, AI coding agents can be thought

of as just another iteration of offloading

development tasks to cheaper resources of lower

experience and quality.

And there's another similarity.

Back in the late 1990s, we didn't have Stack

Overflow.

We didn't have GitHub, we didn't have package

managers like `npm` or `pip`, we didn't have

a huge variety of open-source modules we could

pull into our projects.

Hell, we barely had Google.

It was still smaller than Yahoo at the time.

Those advances made software development go

faster, and those of us who predated them

had to learn how to keep up with newer

developers who started off using the new tools.

There was a lot of fear that the new resources

would make developers so much more productive

that the number of developer jobs would drop

forever.

In fact, the opposite occurred.

Those advances meant it became economically

feasible to use software to address a bunch

of problems that had been out of our reach

before.

There's every reason to believe that large

language models will have the same effect.

People have been saying for years that

developer jobs are going to go away, never to

return.

But these days, I'm putting together side

projects on a regular basis with Claude Code

that I never would have bothered to even

attempt before, because the amount of time it

would

have taken to do it the old way wouldn't have

been worth it.

There's a whole new world of projects ahead of

us that would never have been possible

before.

Unfortunately, we can't move forward as long as

we're stuck in this holding pattern.

The valuations are just not sustainable and

there just isn't that much money to go around.

I'll put some link to Ed Zitron's financial

analysis below as well as a link to the bubble.com

paper from 2000 and the follow-up that that

same author wrote last year. Those papers

are also worth reading.

The coming crash is scary, but the sooner it

happens, the sooner we can get through all

of this.

And maybe, like in 2000, the big expensive AI

commercials this weekend will be the harbinger

of the end of the hype.

The bubble has to collapse and the tech world

has to face reality and come to their senses.

Hopefully, it will happen sooner rather than

later because the more inflated it gets, the

worse it's going to be when it pops.

But if you're feeling unsettled, unsafe, or

insecure by all this, understand it's not

just you and know that we've been here before

and that we came out better and stronger on

the other side.

There's every reason to believe that more

opportunities and more interesting projects

are waiting for us once the current irrational

exuberance dissipates.

Hang in there.

We can do this.

Try and enjoy the ads, some of them are

hilarious.

and thanks so much for watching.

Let's be careful out there.