Deep Dive
Shownotes Transcript
Hey, it's Dave. This morning I was thinking about an ex post by Elon Musk where he says, AI just breaks all conventional valuations.
Elon is talking about how AI has potential to make certain companies radically more valuable. It can completely transform how much companies are valued at and how much money they make. In this video, I want to talk about what I think are the two key opportunities with AI and how companies and people can profit off of them in a way that can result in huge gains.
So the core idea is that AI brings human-level intelligence into products and services in a way that has never been done before. Previously, if you wanted human-level intelligence, you had to have a human there with you, either physically or on a phone or on a Zoom call. Human-level intelligence had a scarcity to it because there's a finite number of humans and they are relatively expensive to involve in a product or service.
The core thing about a product or service is that by scaling it, you're able to increase your reach. In the past, companies have created products and services using human intelligence, but the actual products themselves didn't have human-level intelligence. It takes a lot of human intelligence, let's say, to make a toaster or a refrigerator or even a car, but it doesn't mean that these products themselves contain or offer human-level intelligence to the end user.
The end value that these products and services give to users is limited because what they offer is a far cry from being truly intelligent.
See, a car without human level intelligence is just a car. You have to provide that intelligence to drive it. But if it has human level intelligence, it could actually drive itself. You see, the value proposition is completely different. You can charge maybe $20,000 for a car that can't drive itself, but how much can you charge for a car that can drive itself with human level intelligence? The price goes up like crazy.
See, this is the idea behind why AI is going to be the biggest value creator in the history of the world. It's simply because it's providing a scalable way to distribute human level and perhaps even greater than human level intelligence into products and services.
people pay for the value they receive. And if the value increases fivefold or tenfold, they're gonna be willing to pay a lot more for that product. See, that's what AI does. It increases the value of products by embedding those products with 10 times or 100 times more intelligence than they had before. In my opinion, AI brings us to a place where we are seeing the greatest opportunity in the history of the world
to create new value and to scale that value. As a result, I think we're going to see the biggest generation of wealth in the history of the world by far in the shortest amount of period.
Practically, how does one get involved and profit from this historic change that's taking place? I think number one is if you can get involved in bringing human level or even greater than human level intelligence into new products and services. Or you can reinvent an old product or service by adding that human level intelligence into the product.
And then you scale that product and deliver immense amount of value to people. The cap of your business is going to be so much greater than it was in the pre-AI world. I think this is a huge opportunity for people because AI is just starting to stand up. It's like a baby starting to walk. And we're starting to see AI get that intelligence, that human level intelligence.
And we don't have the full set of products and services yet that fully embed that intelligence. And so that's the immense opportunity that lies right now in front of us across thousands and thousands of areas. The second level that one can profit from this change is through investing.
If you have some capital, then you're able to spot companies that are specializing in bringing human level or greater than human level intelligence into products and services that people really want and need. Also, I'm looking for companies that are leaders in those fields and they're pioneering these products. In other words, they have some type of competitive advantage, some type of greater value proposition that they give to the end users compared to other companies.
There are obviously pitfalls to this because there's going to be a million companies and a million people trying to create value, but many are going to fail because it's a competitive world. The competition to bring AI and the value that AI can bring is going to be truly immense. That's where having your own filter and criteria in how to evaluate these products and services is going to be essential. One important part is being able to personally evaluate these products and services yourself.
Just like for example, I'm able to test drive Tesla's latest FSD software on a daily basis and I can make up my own mind on the potential of the product. Another thing is being familiar with the competition and testing other products in that field. But ultimately, there's always going to be a risk involved with investing and you can always be wrong in your choices and one needs to acknowledge that and make plans in case one is wrong too.
Personally, the past several months I've been working on an education app where I've been taking human level intelligence that AI brings and trying to help my own kids with their education. And it started out with my kids struggling with math and they just absolutely dreaded it. And I started to use AI to create software and an app where it could teach my kids math and allow them to practice math in a fun and enjoyable way. I think there's a lot of potential in ideas and products
where previously it lacked scalable human intelligence. But with the addition of that, it completely transforms the product and delivers super high value. We're going to see a future where you have your own fitness coach, basically an AI that's able to watch you work out and coach you and give you tips and motivate you.
We're going to see you having your own personal sports instructor that watches you play tennis and teaches you how to improve. You have your own AI piano teacher. You have your own AI robots who do physical tasks for you. For example, a Tesla humanoid robot is going to be able to cook for you, clean for you, farm in the backyard for you. It's going to be crazy. I think it's interesting to understand this idea of
how AI is going to change products. And it's gonna change the valuation of companies because of the value of intelligence that goes into these products and services. When you put on these glasses or this perspective, you start to see companies and products and services very differently. And if you put on these glasses early, you're gonna be able to spot some early opportunities.
And with investing, sometimes timing really matters. If you're early, you can make a 10x or even a 100 times greater return just because of timing. Anyways, I just wanted to share these higher level thoughts on the significance of AI and a few practical thoughts of them. I hope it's been helpful. We'll see you guys in my next video. Thanks.