Comment by bunderbunder
1 day ago
Those companies are certainly writing more code. But It isn’t clear that they are increasing their economic productivity. It could even conceivably have the opposite effect by fueling a race to the bottom.
e.g. an interesting possible canary in this coal mine is that there’s been a 200% increase in the rate of new apps appearing on Apple’s App Store, but it has not been accompanied by a 200% increase in the rate at which people are buying apps.
The AI pundits often seem to apply the logic that code output is directly proportional to revenue and/or profit, and as such it follows that an AI usage increase leads to more code which leads to more revenue.
I don't believe this aligns with the reality of any major company, unless your business is in the literal sense "selling code" your revenue and profit is tangential to the quantity of code you produce. Google is a good example of this: most of their revenue and profit comes from their ad network, which is disconnected from their development productivity and instead heavily reliant on network effects and time in market. If I was a new competitor with infinite AI funds to throw at whatever problem I choose, I can't simply capture their market by developing an exact copy of Google's ad platform. In the same way, Google can't substantially grow their ad network by coding "more" or "better", they still need more customers and consumers to interact with their network to see any increase in revenue.
So it doesn't directly follow that a productivity increase will inherently follow an AI usage increase.
Agreed. I think it’s more likely to expect that most of it is pure waste.
My impression is that most software development work is not profitable. Either the project is abandoned, or it fails, or it gets shipped but doesn’t generate positive ROI. But, like how venture capital works, the minority of projects that are successful make enough money to cover the rest.
Some portion of this is because demand for software projects in general is less than perfectly elastic. So more software does not automatically mean more software sales.
It also seems plausible that, in general, companies tend to fund the projects that are most likely to be profitable. They aren’t perfect at it, but I doubt they’re just rolling dice.
Which would imply that the new work companies can take on thanks to developer productivity gains will tend to be ones that are less likely to generate positive ROI.
meaning AI may only produce a net increase in waste, which only serves to erode profits.
Add to that that it’s been years now and we still don’t have an example of someone army-of-oneing a killer app or anything like that. It’s beginning to feel like another iteration of the amazing blockchain revolution that was always & forever just around the corner.
The unlocked economic activity won’t come from a Google competitor writing code faster. A lot of it will come from “boring” businesses who could benefit from custom software but haven’t had the means to create it themselves. In some cases they may not even know their problem can be solved by software, but some AI they are using for repetitive tasks will notice and offer to build an app for them.
I would go as far as to say writing more Code has almost no impact on their economic productivity. What drives those companies is infrastructure and networks
So far the place where I've seen "more code being written" having a postive effect, has been in paying down tech debt and reduction of overhead. We've rewritten services (bringing multiple microservices back under moduliths) and cut costs. But I'm talking about net-negative code. That's not the point you're making. I agree that puking out 20 new features likely wouldn't gain us more revenue.
That’s great for consumers.
A lower signal/noise ratio is never better for consumers.
If the quality of all apps remains high, but if there is an increase of low quality apps it may not necessarily be great for consumers as it becomes difficult to distinguish which are the good and bad quality apps, making it risky to purchase apps.
Not necessarily. European grocery shoppers report higher satisfaction with the shopping experience than American grocery shoppers do.