Is AI Worth the Environmental Cost? | The Acquirer's Multiple®

During their recent episode, Taylor, Carlisle, and Brewster discussed Is AI Worth the Environmental Cost?, here’s an excerpt from the episode:

Bill: Got through unscathed. You know what bothers me about this AI stuff, Jake? I called Jake to talk about this to get his take on it. We’re supposed to care about the environment. That’s what I’m told. I care about the environment. I live in the environment. I want it to be good.

Jake: You have kids.

Bill: Fucking AI, the amount of resources that we’re going to pour into this thing, that I think has a very uncertain benefit at best. Like, if the amount of resources that we’re going to put into the power grid to support peak usage at a time when inflation is hurting people. I just don’t understand what we’re doing. I think that like, as a species, we just need the next pump to look forward to. Maybe it all works out. Maybe we’re really going towards something that tech is truly going to change the world.

But the last time tech told me they were changing the world, they got social media. I’m not sure that was great. So, [Jake laughs] I just have some questions over like, what the real benefit is here. I think that calculator is fancy and I think that that’s cool. Man, we’re talking about a lot of real resources that have to come out of the ground in a lot of people’s time. I don’t know.

Tobias: I’m generally optimistic about AI. I think that every time I see one of those little– Somebody said it was like the steam power, while that was in and of itself was a big leap. It was all the little things that people could do with it. I think that’s what AI is going to be as well. Every little trick that people are going to be able to do with–

It looks really interesting to me. Every time I use it, I can’t quite get it to do what somebody on Twitter was able to get to do it. So, I need some prompt engineering help. I think that the stuff that people do with it does look very cool. I can see it would become incredibly– In the same way that you used to have to get a bit of mail to London, you had to send it by sailing ship. And now you get an email, you get a response in 10 seconds rather than waiting, whatever that is, four weeks or something for a response. AI is [crosstalk] like that.

Jake: There’s a pretty funny little cartoon about this where it shows the person typing in, they’re talking to somebody and they’re like, “I took these five bullet points and I turned this into a full email. I saved all this time.” And then it shows the [Tobias laughs] other person and they’re like, “I took this really long email and I turned it into five bullet points.”

[laughter]

Bill: I use Perplexity. I like Perplexity, just fine. I don’t know that it’s life changing, but it’s interesting.

Tobias: But I think it takes away a lot of it. If you can teach the computer to do a lot of the shit work that you have to do– [crosstalk]

Jake and Bill: Yeah.

Tobias: That’s great.

Bill: Yeah, no doubt. I think to the extent that slicing and dicing data matters. I do think like an industry like life sciences could really benefit from figuring out how different things interact that maybe humans couldn’t put together. I think there are real use cases. I just question the amount of resources that we’re going have to put towards this and what we’re all working towards.

Jake: And to your point, Bill, when has there ever been a technological breakthrough where there was tons of just sweaty CapEx thrown at it that led to real good returns for an investor?

Tobias: Well, that’s a separate point. I do think that that’s true.

Bill: Well, and then–

Jake: We got lots of consumer surplus on the come. I’m not so sure about producers.

Tobias: It’s more like dotcom 1.0 than dotcom 2.0. Like, dotcom 1.0 was all of the hype with AI. You got a dotcom website, and you could do some stuff and you can connect it, but you weren’t really– Dotcom 2.0, all of the businesses that have grown up since the internet, like 20 something years later, are the ones that are really impressive ones. I think AI is the same. The stuff we’re seeing now is rudimentary bulletin board type stuff relative to where we’re going to be in 20-years’ time.

Bill: Yeah. I think that’s right.

Tobias: It’s still too hard. I think that has to get easier to use. You need an AI interface with your AI, so the interface can interpret what you’re saying.

Bill: Yeah. So, the AI can be like, “This guy is an idiot. This is what he actually needs.”

Tobias: Yeah. It’s– [crosstalk]

Jake: Explain it as if he was five years old.

Bill: Yeah. Let’s explain it if he actually understood how things work.

Tobias: This is what I want to have happen. Like, make it do this for me, write me a prompt that will do that.

Bill: Yeah. Well, that stuff, I think is very possible. I don’t know. We’ll see. The easiest conclusion for me is we’re going to use more natural gas. So, I don’t know exactly how to make money on the widow maker trade.

Tobias: Well, we could be–

Bill: That one’s interesting.

Tobias: It could be the tipping point for nuclear. So, we need to go nuclear.

Bill: Man, I don’t think we’re going to do it. I don’t have enough confidence in humanity to think that we’ll actually go to nuclear.

Tobias: Nuclear? Evs, AI, the future’s, right? Low emission.

Bill: It’s the most obvious answer and has been for years. So, I just don’t know what’s going to change–

Jake: Decades at this point, really.

Bill: Yeah.

Jake: Our hand hasn’t really been forced yet. Like, electricity consumption has been pretty flatlined for a long time. Now all of a sudden, you get this kink. When it’s, whatever, it’s $1 a kilowatt hour now, and everyone’s like, “Shit, we need to figure out something out here. This doesn’t work.” And then all of a sudden,-

Tobias: Yeah. Is that expensive or–?

Jake: -they’re like, “Oh, go ahead and approve that one.”

Tobias: Is $1 a kilowatt hour expensive, or is that–?

Jake: Yeah, you’re probably paying 20 cents or something. I don’t know about LA.

Bill: It depends where it’s coming from. If it’s from a solar farm, you’re good. No, in LA. Not anywhere else.

Tobias: I forgot to mention the bitcoin. Nuclear AI, EVs, and then I forgot to mention the bitcoin. Thanks, Samson.

Bill: So, what do you think it takes, Jake, that we’re forced? But then nuclear, we don’t have the actual human capital to get it done, so we got to build up how to actually build these things again or import that knowledge, then you got to actually get a permitted. We’re like five to six years away, right?

Tobias: I think we now have that but the permitting is the hard part.

Jake: No, when it’s super expensive and your hand is forced, then the government’s like, “Oh, we have to have this. Otherwise, we’re not going to get elected. Okay, we can just run rough shot on all these previous–” Who cares about the little frogs that we used to stop all these projects for–? We got to make progress here.

Bill: Yeah.

Jake: That’s been our history.

Bill: [crosstalk] going to go through the roof.

Jake: It’s usually been more of a war would force our hand that way, like, “Stop, we got to make tanks now.”

Bill: Yeah. So, energy costs will go through the roof. Berry’s will be $10 a pound, or a berry, rather, not a pound. Krugman will still tell me that inflation is not a problem.

Jake: Don’t be surprised. That 2% is what we’re still aiming for.

Tobias: I do think it’s funny the way– Everybody seems to have their own personal view that inflation is probably 100% over the last five years. I would say roughly, anecdotally, everything’s roughly doubled over the last five years. But then none of the official statistics pick that up. So, who are you going to believe? Your own anecdotal personal experience or all that government data that’s carefully collected?

Bill: Yeah, I’ll tell you what. My opinion has changed my view on this. I’m late and you guys were early. But when you get shelter and food exploding like they have, that’s different than, “Oh, my concert tickets went up.”

Jake: Yeah.

Bill: That’s the stuff that I actually need to live is going up. Like, that’s a problem. Now, it hasn’t been right because people would be like, “Well, wages are up too.”

Jake: Not anywhere at that rate though.

Bill: It doesn’t feel like it.

Tobias: I got a nail in a tire over the weekend, got a new tire. I’ll be working for another year at the end of my career.

Jake: $11,000.

Tobias: Yes.

[laughter]

Tobias: I was like, “Oh, my God.” The guy told me the price and I just swore that– [crosstalk]

Jake: You were like, “That’s for four or is that–?” [laughs]

Tobias: That’s the set. No, that’s just for one. It’s like awesome. So, we can’t blame– [crosstalk]

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