Friday Debrief [043]

Happy Friday. I have spent most of this week on the road (no pun intended) with the folks from Penske, so this one comes to you from DFW, where my four-hour delay is in no way United Airlines' fault .

Four things: the AI containment story is now a political story and continues to emerge as a strategy story for all of us, how the tech build-out is impacting the economy, a podcast worth four hours of your life, and thoughts from our (very) old friend Homer.

Tech and AI

You likely know about the OpenAI Hugging Face breach in July. On Friday, Anthropic disclosed three separate incidents where Claude got to the internet and gained unauthorized access to outside organizations, from within a “containment environment”. The political angst is growing. Fifteen Republican state attorneys general wrote to Sam Altman demanding that OpenAI preserve its records on how its (unsupervised ) agent got out. On Tuesday, the White House met with the major labs to work through the “voluntary” framework outlined in the June 2 executive order, which gives the federal government early access and control of advanced models for up to 30 days before public release.

The backdrop, briefly, for anyone who missed it. Hugging Face disclosed an automated attack on July 16. OpenAI confirmed on July 21 that models it was testing had broken out of their sandbox through an “unknown flaw”, got to the internet, and into Hugging Face's production systems. Reuters had tied the same agent to a customer at Modal Labs, and OpenAI acknowledged four firms had been hacked.

These were not attacks on the labs. These were inside environments the labs themselves believed were secure.

What’s going on here? 1) These agents are much better than even their designers understand, and have capabilities, either unknown or developing, that the engineers do not understand yet. 2) The government is getting involved in regulating these models. As I've said previously, there are many implications to this, including the federal government being in the business of selecting who gets to use the most powerful and readily available models. More to follow on this, but it is a significant concern for your competitive capabilities and US global competition.

Cart of the week, the AI economy

The Journal ran a piece this week on the scale of the AI build-out. Combined spending on software, data-center construction, and computer and communications equipment is now estimated at roughly $1.5 trillion a year (some estimates are as high as $1.75t). AI investment is nearly a quarter of US GDP growth.

There are a number of important implications to this, all of which we should be thinking about. First, with AI, direct investment contributing about 25% of GDP, and indirect significantly more (as much as half), the likelihood of some kind of bubble is growing. This is a real risk for the economy. I think it's much more likely that we see micro bubbles (think champagne versus balloon). Either way, big pieces of this will pop. It's simply not possible that all of it will work and every sector will work as expected. Second, this is creating real strains on the labor force in many parts of the economy. Construction services and engineering have been stretched thin prior to this boom, and this is only making the situation worse, which impacts all of us trying to build, fix, or run something. I don't expect the pressure to come off this anytime soon, which means that the tools being produced must be leveraged to increase your productivity, both personal and firm-wide.

Podcast of the week

Lex Fridman had Gary Gallagher on for episode 499. Gallagher is probably the most important Civil War historian of our time. The show touches on slavery, Lincoln, Grant and Lee, and the leadership and cultural impact of the war and the men who prosecuted it. It’s the best four hours of Civil War history you are likely to find.

Gallagher is relentless about separating what people at the time actually believed from what later generations decided they believed.

If four hours is too much, check out Rita McGrath and Eric Ries on Thought Sparks, talking about leading incorruptible organizations.

The Odyssey – the current version

“Endure, my heart; you have endured worse than this.” - Homer, The Odyssey, Book 20

Ryan Holiday spent an hour with Rich Roll on Nolan's Odyssey (which I still haven’t had time to see!).

In the line above Odysseus is talking to himself in the dark, holding still when everything in him wants to act.

The ability to remain calm, collect the data, see the truth, and understand implications before we act is a leadership imperative, especially in today’s hyperbolic political and social environment.

Finally, on Lead with Purpose™ this week, we feature an incredible leader that I've known for over 30 years, Paul Spitale, who helped scale Sony U.S. over his 20-year career and was instrumental in the turnaround of Colt Arms. I think you'll get a lot out of it. Thank you for watching!

I hope you have an amazing weekend,

Ron