Hello again, dear readers!

Forget The Matrix. Don’t worry about Terminator. Humanity is currently hurtling towards a different type of AI dystopia that’s much scarier because it’s so much more likely to happen. Below, I explore what we can expect in terms of economic disruption, job loss, cost disease, and more.

Also, to hybrid or not to hybrid? How is the great hybrid experiment going in terms of productivity, collaboration, and culture? Ask most employees and they’ll tell you it’s going extremely well… but employers may disagree. Check it out below.

This issue features the usual bunch of AI Insights and recommendations for the week's podcasts, books, shows, charts, and tweets, followed by a final chuckle.

Let’s get going.

Industry Highlights: AI's real impact should worry us more than sci-fi scenarios

When we think about the future of artificial intelligence, it’s easy to get caught up in the wild, sci-fi-esque predictions of a Terminator-like hellscape. You know the drill: rogue AIs wreaking havoc, bioweapons in the hands of robo-terrorists, and humanity desperately trying to outthink machines that have outsmarted us. While these scenarios grab headlines and spark conversations, they might not be the most pressing issues we should be concerned about, according to The Economist.  

The reality check

The tech titans of Silicon Valley are sounding alarms that we could be on the brink of something transformative. In just a few years, AI might surpass the average human in all cognitive tasks. Even if the odds of this happening are debatable, we should still think seriously about the implications.

A rapid evolution

AI has already exceeded many expectations. Just this year, LLMS achieved remarkable feats, like scoring gold in the International Mathematical Olympiad a full 18 years ahead of what experts anticipated. With tech companies racing to develop more powerful models, the potential for AI to become a game changer is immense. By 2027, predictions suggest we could have AI systems that are exponentially more capable than today’s versions.

So, what does this mean for the near future? While some fear the catastrophic consequences of a misaligned AI, we might be better off focusing on the more immediate, likely impacts of AI integration into our everyday lives.

Economic disruption and plummeting wages

Imagine a world where AI accelerates innovation at a pace we can barely comprehend. Unlike the past, where demographic constraints limited growth, AI doesn’t have such boundaries. If AI can automate the discovery of ideas and technologies, we could see an explosion of economic growth.

But this growth could create significant disruptions. As AI takes over more tasks, the labor market will shift dramatically. Wages for many jobs might plummet as human workers compete with machines. Meanwhile, those rare “unicorns” with human skills that complement AI could see their earnings skyrocket, leading to a widening gap between the wealthy and everyone else.

As AI becomes more integrated into industries, we might experience a phenomenon known as “cost disease.” This means that while some sectors boom due to automation, others could struggle. For instance, if AI can produce certain goods at a fraction of the cost, prices for those goods might drop. However, jobs that require a human touch could see wages rise due to scarcity. This economic imbalance could make it tough for many to keep up with rising costs in areas like housing and childcare.

Market rollercoaster

The financial landscape will likely be a rollercoaster ride. As tech companies vie for dominance, we could see wild fluctuations in stock prices as it becomes clear which companies are winning the AI race. This frenzy for investment could also lead to inflation, especially if central banks can’t keep pace with rapid economic changes.

And let’s not forget macroeconomic instability. Countries that don’t adapt to the AI boom could face significant challenges, including capital flight and rising instability. The potential for inflation could skyrocket as people rush to spend their newfound wealth.

The political winds are against AI safety

The political winds are increasingly against AI safety as the rush for advancement overshadows ethical considerations. We're already seeing AI ethics and safety fall by the wayside, and it's not just about concerns over AI super troops. We need to think critically about how AI will impact the economy, jobs, and societal structures. In this landscape, Anthropic distinguishes itself by placing safety at the forefront of its mission, and (encouragingly), it is enjoying increasing commercial success for doing so.

A call for wisdom

To quote The Economist, one way to view the AI acceleration is “as the continuation of a long miracle, made possible only because people embraced disruption… Humanity may find its intelligence surpassed. It will still need wisdom.”

The rise of AI could lead to a society that’s wealthier but more unequal. We must be proactive in rethinking our political, educational, and social systems to ensure that we harness AI for the greater good.

While the idea of an apocalyptic AI future is captivating, the real challenges we face are much more immediate and grounded in economic reality. Let’s focus our energies on understanding and mitigating these impacts rather than worrying about a Matrix or Terminator scenario. 

The Future of Work: The hybrid work dilemma: Why it's not working (yet)

A friend of mine messaged me yesterday while he was standing on a train station platform, grumbling about his company’s latest decision to up the in-office requirements from one day a week to two.

“No work gets done on office days,” he wrote. “Just meetings and performative theatre.”

It seems companies are stubbornly pushing for hybrid work arrangements, even though the evidence suggests it’s not working as planned. So, what’s the answer? A full return to five days in the office, or a complete embrace of remote work?

The current state of hybrid work

A recent HBR article paints a bleak picture of hybrid work, claiming it wrecks collaboration, increases social isolation, and weakens company culture. Many organizations are struggling to bring their teams back on-site due to a lack of office space, employees scattered across different locations, or the fear of losing valuable talent if they enforce stricter return-to-office policies. Yet, leaders often overlook a crucial fact: managing remote and hybrid workers requires a different playbook than what worked when everyone was in the office.

Research shows that around 64% of companies are adopting hybrid models, while a whopping 83% of workers prefer some form of hybrid or remote work. But despite this preference, many employees are still finding it hard to be productive in these setups. In fact, 77% of workers believe that office mandates are more about a lack of trust than actual business needs, and 81% of employers agree.

Coffee badging

Enter "coffee badging." This is where employees show up at the office just to clock in, often for a quick coffee or a brief chat with colleagues, before heading back to work remotely. This trend really highlights the disconnect: people are fulfilling their physical presence requirements but still crave the flexibility that remote work offers.

Honestly, this situation says a lot about the shortcomings of our current hybrid model. While many organizations think they’re providing flexibility, it often feels like a half-hearted attempt to check a box.

What do employees want?

Despite the ups and downs of hybrid work, employees are clearly in favor of it. The numbers are telling: hybrid work is now common in 64% of companies, but traditional in-office work is on the decline. The percentage of employers requiring daily office attendance has dropped from 49% to 32%.

Many employees report that hybrid work boosts their overall well-being and satisfaction, which in turn leads to better retention rates. Yet it’s obvious that not all organizations know how to manage this shift effectively. For example, 84% of employees say they’re more productive when working outside the traditional office, but many companies seem unprepared to take advantage of this.

The path forward

While hybrid work is gaining traction, the current approach isn’t cutting it for fostering genuine collaboration and innovation. To really make this work, companies need to take some concrete steps:

1. Revise management practices: Implement strategies tailored specifically for remote and hybrid teams, focusing on collaboration and communication.
   

2. Invest in technology: Businesses need to invest in tools that facilitate seamless interaction among remote workers. The right tech can bridge the gap that distance creates.
   

3. Establish clear guidelines: Create structured guidelines that define expectations for both in-office and remote work, ensuring everyone is on the same page.
   

4. Encourage meaningful in-person interactions: Facilitate opportunities for employees to connect face-to-face. While remote work has its perks, nothing beats the camaraderie built through in-person collaboration.
   

5. Embrace flexibility: Flexibility is key to employee satisfaction and productivity, so allow for adjustments based on individual and team needs.

The hybrid work model may be popular, but it’s not quite delivering on its promises yet. To really benefit from this arrangement, organizations need to adapt their management styles and invest in the resources necessary to foster collaboration and cooperation. While I totally get the desire for hybrid work among employees, companies must tackle the inherent challenges to make this model effective.

AI Insights

1. Jobs outside IT with AI skills attract a salary premium: Got mad AI skills but don’t work directly in tech? Jobs ads reveal that everyday roles such as HR and marketing with an AI element are attracting as much as $18,000 more than their peers. Job posts outside tech that require generative AI skills have soared 800% in four years.

2. AI is coming for event managers’ jobs: Twenty-three (human) attendees recently found themselves at the first AI-organized event on record. Four autonomous AI agents planned and ran a multi-week project including creating content, building slides for the event, issuing invitations and chasing RSVPs, promoting the event on Twitch, and surveying attendees. 

3. DOGE AI Deregulation Tool gets to work: DOGE has rolled out an AI that will analyze 200,000 regulations and is expected to identify 100,000 for removal, using “mostly automated decisions with limited staff review.” Whoever is running DOGE after Musk has forecast trillions in savings from reduced compliance… so long as the AI doesn’t inadvertently remove federal rules that we actually need.

The Supply Aside

📕 Read -  The Man Who Would Be King

In "The Man Who Would Be King," Karen Elliott House provides a compelling portrait of Mohammed bin Salman, the Saudi crown prince who is best described as a modernizing autocrat. As House highlights, MBS has dramatically broken from centuries of tradition, pushing for radical reforms that prioritize economic diversification and social freedoms, while still maintaining a tight grip on power. Rather than trying to compare MBS to a contemporary politician like Trump, House finds his closest analogue in historical figures like Peter the Great (the Tsar who modernized and Westernized Russia). Despite being a pivotal force in redefining Saudi Arabia for a new global order, MBS definitely doesn’t embrace democratic ideals. So, should we admire or fear him? 

What Else I’m Reading

• Deadly Manhattan shooting leads to security business surge: Security firms across New York and elsewhere have reported a sharp uptick in RFIs as businesses explore the cost of increased security, including more digital surveillance and armed guards. 

• Executives are prioritizing their mental and physical health: In a society that has long admired leaders who drive themselves to exhaustion and burnout, it’s refreshing to read this article about chief executives who recognize the importance of recovery, just like elite sportspeople. 

• The Forgotten Generation lives up to its name: Boomer CEOs are working past their expected retirement date, and when they finally pass the torch; it isn’t necessarily to Gen X executives-in-waiting. Rather, it’s to Millennials. This article explores the disappointment experienced by an entire generation, and the case for not overlooking Gen X in succession planning. 

📺 Watch - Commanding Heights: The Battle For The World Economy

Originally aired in 2002, Commanding Heights still hits hard today. I'm revisiting it to understand how we got to where we are, with free markets clashing against state control and the rise of globalization. It’s wild how many of today’s debates, like inflation and global trade wars, echo what this documentary tackled over 20 years ago. The quality of the interviews is top-notch, featuring insights from key figures like Milton Friedman, Paul Volcker, and Joseph Stiglitz, who really bring the ideas to life. It's still relevant and razor-sharp, making it a must-watch for anyone curious about our economic landscape.

👂 Listen - How I built this: Chobani by Hamdi Ulukaya

If you have a sweet tooth like me, you would be familiar with Chobani and its endless variety of delicious flavors ranging from vanilla to triple choc brownie. This episode of How I Built This features Chobani founder Hamdi Ulukaya. Fresh off the boat from Türkiye, Ulukaya started a small feta cheese company in New York before taking out a loan to buy an abandoned yoghurt factory for $700,000, equipment included. He used this facility to introduce Greek-style yoghurt to the U.S., thicker, creamier and more packed with protein than the ‘regular’ yoghurt most Americans were familiar with. Ulukaya describes how he coped with skyrocketing sales, rapid growth, bad business decisions and a near-bankruptcy before Chobani became a staple of almost every grocery aisle.  

💡 Think - The United States of Artificial Intelligence

Nvidia just crossed 4 trillion in market cap, outpacing the GDP of almost every country on Earth. AI hype is sky-high, and if you ask Silicon Valley, we’re a few years away from either utopia or Terminator. Some predict 20–30% annual GDP growth driven by self-improving AI. As for the economists, they're guessing maybe 1–9% over the next decade. 

The disconnect stems from adoption. McKinsey says nearly 80% of companies are dabbling in AI, but fewer than 20% have seen meaningful ROI. I'd guess it's even less than half that number. But it is early innings, and we know power infrastructure can’t keep up. Trust in AI decision-making is still shaky. And companies aren’t exactly laying off humans en masse just yet... but probably will sooner than we think.

It’s not all doom and gloom here, as AI is undeniably a game-changer. But transformational tech doesn’t follow VC pitch decks. It follows power grids, CFO signoffs, and process redesigns. So, before we all pledge allegiance to the United States of Artificial Intelligence, let's take a beat.

Charts of the Week

Quote of the Week

Tweet of the Week

The Final Chuckle

Thanks so much for reading. I’d love to know what you think about this issue and how I can make it more useful to you. If you have suggestions or topics you want to see me address, email me at [email protected]!

-- Naseem