Benedict Evans: prediction

Transcript context

…What's really just funny about this trend is you would think consultants were going to be gone. No, we don't need all these people anymore. AI is going to do their work. Instead, the most cutting edge AI labs are the ones most investing in these folks. I think it's pretty surprising. Well, one of the strands in my presentation, so I split the presentation into three sections. There's a section on capital, which is basically, where is all this CapEx going and are the model labs going to have differentiation? And then there's a section on deployment, which is basically, what does it mean for the software industry? And then the third section is, how does this change stuff? And one of the sort of strands I tried to pull together in the section on change is, what's the hard part of the job? Is the hard part of the job writing the code line by line? Is the hard part of the job giving you the SKU, or making the PowerPoint? Or is the hard part of the job something else? Is it the task or the job? And pulling that apart, sometimes the task is the job. The classic example is like an elevator attendant. If I live in a building that has an attended elevator, we have a manual elevator, so there's no button. There's a lever and the dormant drives you to your floor. It's a vertical speed cut. It's like one of those cramps in San Francisco. They drive you to the store, to your floor. And then those all got automated after the '50s, and now you press a button, and pressing the button is a job. So there were some things where the button, the job was a task and the task got automated. What happens much more, and this is why people talked about the Jevons paradox is this pricey elasticity, because the Jevons paradox is just price elasticity, applied price elasticity. If you make it cheaper to do something, what happens? Do you do the same for less money? Or do you do more for the same amount of money? Or do you do more for more money because you've got new ROI? And if you look at something like the history of accounting, or indeed professional services, this is a joke I made on Twitter back when it was Twitter, was like, young people won't believe this, but before Excel, junior investment bankers worked really long hours. And now thanks to Excel, Goldman's associates will work at lunchtime on Fridays. It's like, well, why is that not what happened? You could make the same point as software development. Before IDEs, and libraries, and operating systems, developers had to write all the code. Now if you write an iPhone app, 90% of the code is written for you by Apple. Apple wrote the modem driver, and the graphics drivers, and the file system. You don't need to write any of that. So, we've got intents as many engineers now. Well, no. And so then you kind of have to look at an industry and work out, well, which is it and what is the hard part? One of the analogies that occurred to me here is to look at the history of e-commerce, which is that what Amazon does is it gets you the SKU if you know what the SKU is. If you know what SKU you want, you want that microphone stand. This part number, you can go to Amazon and get it. If you don't know what microphone to get, probably shouldn't start on Amazon. SKU is. If you know what SKU you want, you want that microphone stand. This part number, you can go to Amazon and get it. If you don't know what microphone to get, probably shouldn't start on Amazon. Multiply that by many, many, many product categories. And so what Amazon does is get you the SKU, but knowing what SKU you want is another job. Claude Code can write you the code, but what code do you want? It can make you the features. Sure, but what features do you want? Who's your customer? What's the right product for that customer? How are you going to take it to market? And long way of answering a question, why do you hire McKinsey? Are you hiring them to get a 75-slide deck? Well, narrowly, Claude cowork will make a really, really crappy version of that. And you'll get all this kind of AI grifters on LinkedIn and Twitter and so on saying, "Hey, I made a McKinsey deck with Claude," and you look at it and you think, "Yeah, that's a bunch of doc crap." That's not what you'd get from McKinsey. But even if it was, that's not what you paid them for. What you actually pay Bain to do is to go and walk all over your company and work out. Yes, but why is it that you didn't do that? And how do the politics of this work? And what do you actually need to do? And let's go and talk to your customers and work out what they actually think, as opposed to what's on the first page of Google. It's all the other stuff. And the PowerPoint is just like the task, but that's not what you hired them for. The same with Amazon versus the retailer, the same with software development. So you've got that kind of split. The other analogy that occurred to me here is looking at the sort of class of industry that got steamrolled by the internet, because they had those two things and you could split the part. So you had the physical manufacturing or physical distribution, and then you had the other, the thing, what was the actual thing? Classic examples would be newspapers and recorded music. So record companies do not think of themselves as being in the business of manufacturing small pieces of plastic, but that was what they actually did. And when that went away, they were screwed. Same thing with newspapers. Newspapers did not think of themselves as manufacturing. And trucking companies. When you decouple that, then that becomes a problem. But often you can't decouple that, or that wasn't really the problem; or you make that thing cheap and then all this other stuff happens as well. And so all of this is just vastly more complicated than saying, "Well, hey, we're just going to automate the accountants or we're going to automate the consultants." I mean, there's two charts in the presentation of the number of people employed as accountants, which went up right the way through the 20th century, and has gone up again since the beginning of the 21st century. So you have adding machines, and punch cards, and mainframes, and databases, and ERP, and cloud, with spreadsheets and PCs, and the number of accountants keep going up. And so why is that? Well, it's more complicated than automation.…

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