Quack, Quack… If it sounds like a duck, it’s a bubble | Shimmy Says Ep. 22

Hey everyone, it's shimmy, and welcome to this week's Shimmy says, Hey, just a heads up Shimmy says, as you know, is live on Thursdays, but I've got a second. Shimmy says, that's coming at you tomorrow Friday. So stay tuned for that at two 30 Eastern time as well.

Um, but for today's shimmy says, I wanted to talk about something and you may or may not agree with me. I think a lot of you are gonna agree with me. You know what I hear a quack, quack in the background And, and that, thanks Paul for the, for the duck.

But, you know, there's that old saying, if it walks like a duck, if it quacks like a duck, it's usually a duck. And I'm talking about the ai, uh, market that we find ourselves in, where it's sucking the air out of everything and dominating every conversation, whether, you know, especially in tech, but everyone you talk to is, you know, ai, what's, what's going on with ai? Is it gonna take my job?

How's it gonna change things? I can't wait. I can wait.

I don't think it'll ever come. I've lived through a bunch of different bubbles in my life. The first bubble that I remember as an adult was in the eighties.

It was real estate. Everybody was buying as much real estate as you could for as no money down. Savings and loans were giving out mortgages like water.

Um, you know, the, the no income verification, no money down. It was crazy. And everyone kept saying, well, no, it's the new normal.

We're in a new paradigm. We know the thing about real estate. God doesn't make it anymore.

And so buy whatever you can. I knew we were in trouble. 'cause one time at the time.

So I was in my twenties, I'm in New Jersey. And the funny thing about New Jersey, I think it's still like this, you can't pump your own gas. They got a guy who comes and pumps the gas.

And I'm listening to the guy who pumps the gas talk to a friend of his, and they're talking about buying a three family brownstone somewhere in Jersey City or something. And I'm thinking to myself, these are two 20 something year old kids who pump gas for a living. What are they doing?

Buying a three family brownstone in Jersey City? And I said, that's a good sign of a bubble, right? When, when people like that are, are participating, it's usually because the real people with money have taken their money out already.

And sure enough, boom, we hit a bit of a recession. Interest rates went sky high. And you know what?

Real estate went down. A lot of people took a bath, they had foreclosures, they were upside down in their condos and co-ops in New York and, and everywhere else. And it was a bubble.

And, and a lot of people got left holding that bag. com bubble. And I was, for this one, I was fully in with both feet, right?

I had started a company that became a hosting company. I sold it to a company that was roll up in the hosting company. And the hosting space turned into an a SP and a, a managed infrastructure provider.

We went public just two, three months before the bubble burst. And it was the same thing. It was the same exact thing.

Everyone said it was a new normal, uh, a new reality that, yeah, it looked pretty explosive and ish, but it's, you know, this is, get used to it. This is what it is. And, and I was guilty, right?

Buying stocks in the morning, selling them in the afternoon, and making money every day. All, you know, all these stocks I thought were gonna put my kids through college. And, and it was the same thing as as the gas station story.

One day I'm in the airport flying somewhere or another, and there's two people across from me. Were waiting at the gate. Two guys.

They looked like farmers. They were in like overalls, denim overalls and stuff. And I hear them talking about the relative merits and, and uh, and uh, uh, cash to, to profits ratio and EBITDA of Yahoo.

And yeah, I think it was price slide. And I said to myself, if these two guys who aren't sophisticated at all are day trading like this and, and internet stocks because it, they can't lose. They think it's time to get out.

com bubble crashed and crashed. com bubble crashed at right before it. com servers we're going to need.

'cause back then we were putting up servers. There was no clout. You were rack mounting servers.

We need more data centers. Oh, and you know, these T one lines and DS three lines are not enough. We're going to need more.

Were bandwidth. And we got a light up fiber and, and we had all these fiber companies that were, man, they were building fiber and laying fiber like mad. com bubble burst.

And you know what? I remember that was maybe 2000, 2000 going into 2001 on. com days and then not use in the, when the bubble burst for us to build, use that excess capacity of fiber and data centers and stuff like that.

Bandwidth and data centers. Today, I'm hearing the same things. We're building data centers.

There's not enough data center space. We gotta build AI factories. We're pledging one and a half trillion with a T one and a half trillion dollars to AI factories and data centers.

And we're talking about building new nuclear power and, and we're using as much solar and hydroelectric, hydroelectric power crap will even, we'll fire up coal plants if we have to. And we're gonna run all these data centers that are gonna need all this energy. Oh, and we can't air cool these data centers, that's how hot they run.

We need liquid cooling and everything that that brings. And I'm thinking and, and we just can't build them enough. 75% of the data centers under construction today are already spoken for.

AI's gonna change everything. It's taking your job, my job, their job, and the next job. And we're putting in billions, trillions of dollars into ai.

We're firing people in the name of ai. We're saying there's gonna be no more junior developers and why the AI is gonna change this, that, and the other thing. In the meantime, I've seen two reports in the last couple weeks.

One out of MIT and one from McKinsey. McKinsey was the conservative one. They said 80% of generative AI projects have added zero to the bottom line.

MIT says 95% of the projects they tracked have added zero to the bottom line. So I ask you, are we in a bubble? We are.

Now, here's the good news. Just 'cause we're in a bubble doesn't mean that AI is not valuable. It doesn't mean that AI may one day live up to the, to the hope's, dreams and aspirations we have for it.

com, you know, way of doing business has the digital transformation. It took a pandemic, it took a lot longer than we thought or we expected or we were building for. But we did.

And today we do need more fiber in data centers and so forth. But it doesn't happen overnight. And it's not gonna happen overnight with ai.

No matter how much money we're spending, no matter how much hype and oxygen we feed this fire, it's not, AI's not gonna do everything we wanted to do today or even tomorrow, maybe in a couple years from now, but not today, in tomorrow. And, and you keep, I I don't blame AI for it, right? com taste the irrational exuberance that we're seeing around ai.

That's just what, this is irrational exuberance. And it doesn't mean that, you know, AI's not real powerful and it's going to get there. Heck, even Sam Altman from Open AI questions or says, you know, we might be in an AI bubble.

So having lived through these bubbles before, what's shimmy's advice to you? Don't believe the hype. Don't believe the hype.

Don't stop doing ai. Keep doing ai. Stay on top of it.

Use it where it's helpful. Use it where it makes sense, but it's not a panacea. It's not gonna do everything they say it's gonna do today or in the near term.

And keep doing what you're doing because when that bubble bursts, you wanna make sure you have a chair to sit in when the music stops. So when you hear that duck quacking and walking, like, you know, it's not an Aflac commercial. It, it's the bubble bursting.

This shimmy. Stay tuned tomorrow for my show on CSO Paola. Another thing we need to talk about.