Technology and Innovation Community

Good morning community,

These days we use and think about AI every day. Every day. That's our new reality. My teenage son gave me a book by Robert Heinlein recently "The moon is a harsh mistress". Humanity's future. Lots of cities on the Moon governed by autocratic government who in turn are governed by Earthside Luna Committee. The computer on the moon developed consciousness and helps a group of dissidents to make revolution happen. Many ideas there in that sci fi book are our reality now. The dinkum thinkum (conscious computer) is omnipowerful and omnipresent, making all those videos, computations, listening in etc.)

What world are you envisioning as investors?

Attachment(s)

the-state-of-ai-in-2025-vf McKinsey.pdf   7.62 MB 1 version

Hi Aya, coincidentally, I've been spending time with colleagues and other knowledgeable people in the market trying to figure out what it actually takes to reconfigure current workflows around AI. It sounds simple, but in a large organisation, that is HARD. Even more so in a regulated environment, because many workflows are subject to regulatory scrutiny, controls, auditability requirements, etc. Smaller firms without those headwinds have been much freer to redesign how they work. Pretty exciting to watch in real time.

More sobering, though, like many people in our community, I've also been reading more deeply into AI disruption. For anyone running or trying to build a lasting business, it's important to understand what may happen to your customers, not just your own cost base. In the press, there are lots of opinions but not always much analytical grounding. For example, simply saying "AI will create new jobs" in isolation feels more like a faith statement than an investment thesis -- and as investors, we usually try to avoid faith statements. At the same time, seeing layoffs at Meta, Oracle, Amazon, PayPal, Cloudflare, Block, etc. alongside STRONG earnings and enormous AI capex programs explicitly framed as productivity initiatives cuts against the usual intuition that layoffs mainly accompany weak business conditions.

I happened upon this paper (The AI Layoff Trap ) from UPenn and Boston University, which analyses how AI layoffs could reshape competitive markets. The core argument is that AI-driven layoffs are not simply a social problem but potentially a game-theoretic inevitability. Individual firms rationally automate to reduce costs and stay competitive, but when all firms do this simultaneously, they erode the purchasing power of the very workers who also function as consumers. The result is a macro coordination failure: productivity and corporate profits rise while aggregate demand weakens. The paper frames this as a Prisoner's Dilemma where even executives who understand the long-term risks cannot slow automation without risking competitive disadvantage. It also argues that many proposed fixes (UBI, retraining, worker ownership, voluntary coordination, etc.) fail because they do not change the firm-level incentive to automate in the first place.