Joshua Brower, a 26-year-old UK-based entrepreneur, recently supercharged his core product in a way he could hardly have imagined just a few years ago. His startup DoNotPay developed a chatbot that can negotiate erroneous or excessive fines and fees on people’s behalf — think unfair parking tickets — by building a database of expertise based on its own history of human interactions. The bot often required manual intervention, but in December the bot “talked” to Comcast’s online customer service and managed to save someone $120 on a broadband bill. Brower said this was the first time such a bill had been negotiated purely by AI. How? Brower had access to GPT-3, OpenAI’s large language model that understands language and sounds human. Brower is now planning an AI lawyer who can whisper to people through earphones when they are in traffic court. His startup, valued at $210 million, is one of them building services on generative AI tools such as GPT-3 and DALL-E. Others offer to draft emails, open marketplaces, or replace Google searches. They are coming at a time of sweeping changes in technology, a key industry that market and regulatory squeezes could make to become more productive.
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The business models of Big Tech, which until recently churned out more than $1 trillion in revenue every year, are coming under pressure. Google and Facebook’s advertising monopoly is shifting in a market where Amazon.com and potentially Apple are bigger threats. A tougher antitrust law on the horizon in Europe is already forcing changes at Amazon and Apple to make life easier for much smaller competitors.
This confluence of circumstances may sound familiar to anyone who has worked in technology for a long time. The layoffs and share-price declines that marked 2022, a painful year, have happened before and generally accelerated thereafter. Booms and busts are part of tech history, and even amid the turmoil coming from Elon Musk’s Twitter and the world of crypto, there’s good reason to expect the next tech boom to usher in 2023.
For years, technical workers have had the upper hand in the industry’s labor market. Meta hired an astonishing 30,000 people during the pandemic, prompting Mark Zuckerberg to cut 11,000 jobs in November. Stripe, Snap and Amazon recently made similar cuts, while Musk slashed Twitter’s workforce from 7,500 to about 2,000 in less than six weeks. According to Layoffs.fyi, around 150,000 tech workers will lose their jobs in 2022. This painful shake-up was necessary. For the last five to 10 years, the tech industry has offered precious few breakthroughs in the form of wringing money out of old business models. Our most important tool is still a rectangular hand-held tool. Google is so afraid of disrupting its main revenue source, advertising money, that it has barely changed search, and Amazon’s AWS is still printing money as the world’s largest cloud provider. Meta, at least, has attempted a radical venture into virtual reality. But the industry and its biggest players haven’t been very innovative.
He has also acted like a giant squid sucking up tech talent to the detriment of startups. It was nearly impossible for a new company to compete for senior engineers when paying firms like Stripe offered more than $450,000 per year for the position. Want a lead engineer to oversee a new product line? Too bad, because according to Levels.fyi, Facebook paid close to $1 million per year for the role.
Venture capital funding for low-margin tech startups – think firms offering food delivery and telemedicine services instead of software – is dwindling after years of overabundance of business ideas that should never have been funded. VC investors say they are now turning to firms that build software and offer higher margins. Combined effect: Tech startups that are cash-rich enough to survive two years or more without fundraising can groom the best engineers and managers. In other words, instead of talent being wasted on a wide range of businesses that will go nowhere, it is moving towards businesses that are well structured and put to good use.
Another factor will help move things along: a massive government bounty. In the early 1990s, when the Internet was still called the “information superhighway”, the US passed its High Performance Computing Act to help build the country’s online infrastructure. This played a significant role in stunting the early development of the web. Some $600 million of this went to the University of Illinois, where a team of developers created the first graphical web browser known as Mosaic. Now some US tech firms could benefit from a $52.7 billion investment in chip research under the US Chips and Science Act.
For once, Tech is holding his feet to the fire. After years of rapid growth and nifty perks, this may be the only way for the industry to innovate and make more room for others.
Permi Olsson is a Bloomberg Opinion columnist covering technology.
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