Tech's COVID Hangover

So many layoffs! I can't open Hacker News or LinkedIn without seeing constant stories about the next tech company to lay off hundreds or thousands of employees. For a couple years there, the tech industry was hotter than I had ever experienced in my career.

It never quite made sense to me, but I was riding the wave. Well, that wave has now crashed, and I'm left wondering what happened.

Ben Thompson of the Stratechery blog, a frequent guest on the front page of Hacker News, wrote recently about The Four Horsemen of the Tech Recession, and I found the analysis pretty interesting.

In particular, his discussion of the "COVID hangover" caught my attention. Essentially, demand for digital transformation in companies around the world suddenly sped up when the pandemic hit. Planned investments to modernize were all made at once, rather than the slow rollout that they envisioned before the world suddenly changed. Growth in the tech sector is now slowing as the demand was "pulled forward." Thompson explains…

When corporations the world over were forced literally overnight to transition to an entirely new way of working they needed to scale their server capabilities immediately: that was only realistically possible using cloud computing. This in turn likely accelerated investments that companies were planning on making in cloud computing at some point in the future. Now, some aspect of this investment was certainly inefficient, which aligns with both Amazon and Microsoft attributing their cloud slowdowns to companies optimizing their spend; it’s fair to wonder, though, how much of the slowdown in growth is a function of pulling forward demand.

…the COVID pull-forward was massive, but underneath the inevitable hangover there was a meaningful long-term shift to digital broadly.

The layoffs and slowdown in hiring we're seeing now after the massive boom in hiring during the pandemic is…

precisely because these [only-possible-on-the-Internet] jobs — and similarly, many of the COVID-specific workloads like work-from-home and e-commerce — were digital that it is tech that is in a mini-recession even as the so-called “real” economy is doing better than ever.

The level of growth in the tech industry that kicked off during the pandemic was not sustainable, but if it represented a pulling forward of pent-up demand, then it would make sense that there would be a slowdown in spending to follow. Hopefully after the hangover we get back to a healthy level of demand, that while not at the highest of highs, will be sustainable.

The AI Can't Destroy Anything Worth Preserving

The front page of Hacker News has been flooded lately with articles about ChatGPT, a seemingly magical AI tool that can generate realistic paragraphs of text that can seem indistinguishable from human written text.

My favorite article on the topic is ChatGPT Can't Kill Anything Worth Preserving by John Warner, a former English teacher. In that article, Warner is talking specifically about the prospect of students using AI to cheat on writing assignments, as it seems that ChatGPT can often fool the people grading them. He points out that if writing assignments are so tedious, boring, and formulaic that students aren't interested in doing the exercise themselves, and if an AI can write a passible solution, then we have to conclude that the exercise itself is absurd and not worth asking students to do. The AI is just a more convenient and efficient form of cheating than has been available to bored students for years.

Before ChatGPT was the hot topic on Hacker News, there were daily articles about GitHub Copilot and DALL-E 2. 

I've written before on this blog about the disturbing effect of automation in areas of work that one holds dear. In my post Be the Automator, I described the experience of discovering as a junior software engineer that there were tools called "code generators" that could automatically write code for you. I felt an existential threat at the time, but learned over the following years that not having to write tedious and formulaic code myself is a blessing rather than a curse.

My general feeling for many years has been that, fundamentally, the task of automation is about human liberation. It's demeaning to make a human being do something that they don't want to do if a machine can do the job just as well (or better). If the code I'm writing is so trivial that an AI assistant like Copilot can write it for me, then by all means let the machine do it! If English students are writing prose so trivial that ChatGPT can do it for them, then let the machine do it, and give them something better to do.

To paraphrase the title of Warner's article, the AI can't destroy anything worth preserving. If a machine can do it, a machine should do it. We might learn some hard lessons along the way that we weren't as creative as we thought.