Post AvgZsJ7ZfiyLEKTL7Y by ozzelot@mstdn.social
(DIR) More posts by ozzelot@mstdn.social
(DIR) Post #AvgMl4ZC5Wn0eubwTw by pluralistic@mamot.fr
2025-07-01T06:03:57Z
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If there's one area where tech has shown a consistent aptitude for innovation, it's in accounting tricks that make money-losing companies appear wildly profitable. And AI is the greatest innovator of all (when it comes to accounting gimmicks).--If you'd like an essay-formatted version of this thread to read or share, here's a link to it on pluralistic.net, my surveillance-free, ad-free, tracker-free blog:https://pluralistic.net/2025/06/30/accounting-gaffs/#artificial-income1/
(DIR) Post #AvgMl5wywZPawykSCO by pluralistic@mamot.fr
2025-07-01T06:04:34Z
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Since the dotcom era, tech companies have boasted about giving stuff away but "making it up in volume," inventing an ever-sweatier collection of shell-games that let them hide the business's true profit and loss.The all-time world champeen of this kind of finance fraud is Masayoshi Son, founder of Softbank, who acts as the bagman for the Saudi royals' personal investments. Remember last decade when the tech press was all abuzz about "unicorns" - startups that were worth $1b?2/
(DIR) Post #AvgMl7CcHvVopl4SCu by pluralistic@mamot.fr
2025-07-01T06:04:46Z
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That was Son: he would take a startup like Wework, declare its brand to be worth $1b, invest an infinitesimal fraction of $1b in the company based on that valuation (sometimes with a rube co-investor) and declare the valuation to be "market-based." A whole string of garbage companies achieved unicornhood by means of this unbelievably stupid trick:https://pluralistic.net/2022/05/27/voluntary-carbon-market/#trust-me3/
(DIR) Post #AvgMl8MZyN4kQwjvNI by pluralistic@mamot.fr
2025-07-01T06:05:04Z
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Of course, every finance bro is familiar with Stein's Law: "anything that can't go on forever eventually stops." Sure, the Saudi royals could be tapped to piss away $31b on Uber, losing $0.41 on every dollar for 13 years, but eventually they're going to turn off the money spigot and attempt to flog their shares to retail and institutional suckers. 4/
(DIR) Post #AvgMl9KqMJHVRqw3JA by pluralistic@mamot.fr
2025-07-01T06:05:12Z
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To make that work, they have to invent *new* accounting tricks, like when Uber "sold" its failing overseas ride-hailing businesses to international rivals in exchange for stock, then declared that these companies' illiquid stock had skyrocketed in value, tipping Uber into the black:https://pluralistic.net/2022/08/05/a-lousy-taxi/#a-giant-asterisk5/
(DIR) Post #AvgMlAC1Aboe6loWBs by pluralistic@mamot.fr
2025-07-01T06:05:22Z
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Even companies that are actually profitable (in the sense of bringing in more revenue than it costs to keep the business's lights on) love to juice their stats, and the worst offenders are the Big Tech companies, who reap a vast commercial reward from creating the illusion that they are continuing to grow, even after they've dominated their sector. Take Google: once the company attained a 90% global search market-share, there were no more immediate prospects for growth. 6/
(DIR) Post #AvgMlAoIsGRO1Vj5rk by pluralistic@mamot.fr
2025-07-01T06:05:39Z
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I mean, sure, they could raise a billion new humans to maturity and train them to be Google customers (e.g., the business plan for Google Classroom), but that takes more than a decade, and Google needed growth *right away*. So the company hatched a plan to make search *worse*, so that its existing users would have to search multiple times to get the information they sought, and each additional search would give Google another chance to show you an ad:https://pluralistic.net/2024/04/24/naming-names/#prabhakar-raghavan7/
(DIR) Post #AvgMlBmvEsvj3W5VLs by pluralistic@mamot.fr
2025-07-01T06:05:51Z
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But that was small potatoes. What Google - and the rest of the tech sector - needed was a *massive* growth story, a story about how their companies, worth *trillions of dollars*, could double or triple in size in the coming years. There's a kind of reflexive anti-capitalist critique that locates the drive to tell growth stories in ideology: "endless growth is the ideology of a tumor," right?8/
(DIR) Post #AvgMlCgDvHALp1xfY8 by pluralistic@mamot.fr
2025-07-01T06:06:00Z
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But spinning an endless growth story isn't merely ideological. It's a firmly materialistic undertaking. Companies that appear to be growing have market caps that are an order of magnitude larger than companies that are consisdered "mature" and at the end of their growth phase. For every dollar that Ford brings in, the market is willing to spend $8.60 on its stock. For every dollar *Tesla* brings in, the market is willing to spend $118 on its stock.9/
(DIR) Post #AvgMlDOtFCtY3YrLAe by pluralistic@mamot.fr
2025-07-01T06:06:09Z
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That means that when Tesla and Ford compete to buy something - like another company, or the labor of highly sought after technical specialists - Tesla has a nearly unbeatable advantage. Rather than raiding its precious cash reserves to fund its offer, Tesla can offer *stock*. Ford can only spend as many dollars as it brings in through sales, but Tesla can make more stock, on demand, simply by typing numbers into a spreadsheet.10/
(DIR) Post #AvgMlE3IoxDm4tlcA4 by pluralistic@mamot.fr
2025-07-01T06:06:16Z
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So when Tesla bids against Ford, Ford has to use dollars, and Tesla can use shares. And even if the acquisition target - a key employee or a startup that's on the acquisitions market - wants dollars instead of shares, Tesla can stake its shares as collateral for loans at a rate that's 1,463% better than the rate Ford gets when it collateralizes a loan based on its own equity:https://pluralistic.net/2025/05/07/rah-rah-rasputin/#credulous-dolts11/
(DIR) Post #AvgMlEmg6FW8Lczqt6 by pluralistic@mamot.fr
2025-07-01T06:06:31Z
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In other words, if you can tell a convincing growth story, it's *much* easier to grow. The corollary, though, is that when a growth company *stops* growing, when it becomes "mature," it experiences a massive sell-off of its stock, as its share price plummets to a tenth or less of the old "growth" valuation.12/
(DIR) Post #AvgMlFc518dMv32u0W by pluralistic@mamot.fr
2025-07-01T06:06:39Z
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That's why the biggest tech companies in the world have spent the past decade - the decade *after* they monopolized their sectors and conquered the world - pumping a series of progressively stupider bubbles: metaverse, cryptocurrency, and now, AI.Tech companies don't need these ventures to be successful - they just need them to seem to be plausibly successful for long enough to keep the share price high until the next growth story heaves over the horizon. 13/
(DIR) Post #AvgMlGL6Jke9Ag6rBI by pluralistic@mamot.fr
2025-07-01T06:06:51Z
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So long as Mister Market thinks tech is a "growth" sector and not a "mature" sector, tech bosses will be able to continue to pay for things with stock rather than cash, and their own stockholdings will continue to be valued at sky-high rates.14/
(DIR) Post #AvgMlHDL4621stUAim by pluralistic@mamot.fr
2025-07-01T06:06:59Z
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That's why AI is being crammed into absofuckingloutely everything. it's why the button you used to tap to start a new chat summons up an AI that takes seven taps to banish again - it's so tech companies can tell Wall Street that people are "using AI" which means that their companies are still part of a growth industry and thus entitled to gigantic price-to-earnings ratios:https://pluralistic.net/2025/05/02/kpis-off/#principal-agentic-ai-problem15/
(DIR) Post #AvgMlI2jyz9GSJXDqC by pluralistic@mamot.fr
2025-07-01T06:07:10Z
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The reality, of course, is that people *hate* AI. Telling people that your product is "AI enabled" makes less likely to use it:https://www.tandfonline.com/doi/full/10.1080/19368623.2024.2368040#d1e1096People - who have had an infinitude of AI crammed into down their throats - are already sick of AI. Policymakers and financiers - credulous dolts who fall for tech marketing hype every! fucking! time - are convinced that AI Is The Future. 16/
(DIR) Post #AvgMlJ0IPYmrR1OmfY by filobus@sociale.network
2025-07-01T07:17:31Z
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@pluralistic that's why we should really think better when we call our societies "democracy"It could be the right term if you think technically about how decision makers are chosen (maybe)But it doesn't describe at all who really decides policies in a society, where is going to, how consequences of success and failure is distributedIt's a term with real limited usefulness, and it's used to cover all bad decisions with a blanket of omissions
(DIR) Post #AvgMlPpD3B4uafGWrQ by pluralistic@mamot.fr
2025-07-01T06:07:25Z
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This presents a dilemma for tech companies, who research the hell out of how people actually use their products and thus must be extremely aware of how hated AI is, but whose leadership is desperate to show investors that they are about to experience explosive growth through the miracle of AI.17/
(DIR) Post #AvgMlXEzTirNaeNiW8 by pluralistic@mamot.fr
2025-07-01T06:07:34Z
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The reality is that AI is a very bad business. It has dogshit unit economics. Unlike all the successful tech of the 21st century, each generation of AI is more expensive to make, not cheaper. And unlike the most profitable tech services of this century, AI gets *more costly to operate* the more users it has.18/
(DIR) Post #AvgMlfOr8vVMtZ3i0O by pluralistic@mamot.fr
2025-07-01T06:07:43Z
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You can be forgiven for not knowing this, though. As Ed Zitron points out in a long, excellent article about the credulity and impuissance of the tech press, the actual numbers *suuuuuck*:https://www.wheresyoured.at/make-fun-of-them/* MicrosoftSpending: $80b in 2025Projecting: $13b in 2025Actually: $10b comes from Openai giving back compute credits Microsoft gave to Openai, bringing the true total to $3b.19/
(DIR) Post #AvgMlmxr1CewM8UG1o by pluralistic@mamot.fr
2025-07-01T06:07:52Z
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* MetaSpending: $72b in 2025Receiving: At *most* $600m in gross revenue from selling "smart" Raybans, which might not actually be loss-leaders, meaning it's possible that they're making less than $0.00.* AmazonSpending: $100b in 2025Projecting: $5b in revenue in 2025* GoogleSpending: $75b in 2025Projecting: They won't say, possibly zero.20/
(DIR) Post #AvgMluU141XrfuaXdA by pluralistic@mamot.fr
2025-07-01T06:08:09Z
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As Zitron points out: this industry is projecting $327b in spending this year, with $18b in revenue and zero profits. For comparison: smart watches are a $32b/year industry.Now, what about Openai? Well, they're one of Masoyoshi Son's special children, of a piece with Wework and Uber. Openai is projecting $12.7b in revenue this year, with losses of *$14b*. Add in a bunch of also-rans like Perplexity and Surge, and the revenue rises to $32.3b. 21/
(DIR) Post #AvgMm2agv5dcovlz96 by pluralistic@mamot.fr
2025-07-01T06:08:19Z
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But...if you chuck them in, you also get total exenditure of $370.8b. These are by no means the only funny numbers in the AI industry. Take "Stargate," a data-center initiative with a price tag of $500b. Actual funds committed? $40b.These are terrible numbers, but also, these are some genuinely impressive accounting gimmicks. 22/
(DIR) Post #AvgMmAQLnQ7V7Azq8e by pluralistic@mamot.fr
2025-07-01T06:08:26Z
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They are certain to keep the bubble pumping for months or perhaps years, convincing gullible bosses to fire talented employees and replace them with bumbling chatbots that will linger for years or decades, the asbestos in the walls of our high-tech civilization.I'm at the end of my 24-city book tour for my new novel *Picks and Shovels*!23/
(DIR) Post #AvgMmHzheNYeaqafiK by pluralistic@mamot.fr
2025-07-01T06:08:40Z
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Catch me in #LONDON with RILEY QUINN from #TRASHFUTURE TONIGHT (July 1):https://howtoacademy.com/events/cory-doctorow-the-fight-against-the-big-tech-oligarchy/And in #MANCHESTER at Blackwell's Bookshop on TOMORROW (July 2):https://www.eventbrite.co.uk/e/an-evening-with-cory-doctorow-tickets-130845196805924/
(DIR) Post #AvgMmPk2qTmocbKHQ0 by pluralistic@mamot.fr
2025-07-01T06:08:46Z
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Image:Cryteria (modified)https://commons.wikimedia.org/wiki/File:HAL9000.svgCC BY 3.0https://creativecommons.org/licenses/by/3.0/deed.eneof/
(DIR) Post #AvgNld8je5SVq945HU by elebertus@mastodon.social
2025-07-01T06:53:30Z
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@pluralistic really starting to feel like all gas no brakes straight into a huge wall. It’s felt that way before. Dot com as you said, other hilarious tech events, even the housing collapse and then ‘rona. Current state coupled with AI pressing the gas and generalized civil unrest, it feels different this time.
(DIR) Post #AvgNleD1fcU99k51bk by per_sonne@ciberlandia.pt
2025-07-01T07:33:24Z
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@elebertus @pluralistic Yeah, because this time we really do have a real fascist government in the US, advancing a racist and anti-labour agenda, with a secret police kidnapping people off the street, with a budget the size of a medium sized nation...
(DIR) Post #AvgZsJ7ZfiyLEKTL7Y by ozzelot@mstdn.social
2025-07-01T09:52:21Z
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@niniVulture capitalist... That's good.@pluralistic
(DIR) Post #AvgmEoPTDlce5hLAMS by sensiblequiet@mstdn.social
2025-07-01T09:35:24Z
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@pluralistic Curiously, Sam Altman's quotes in Ed's post are mostly about stories. "I heard people say..." "I heard a story about some scientist guy..."Hey, I heard a story about a guy selling real nice and cheap bridges. Now who wants to give me $40bn to hear more of the story? No-one? Why?This isn't even bait and switch. This is email spam about millions you're about to inherit from your nonexistent uncle. Trust me bro and send me some money to cover the legal expenses.
(DIR) Post #AvgmEpoK0r5yR3yWjg by sensiblequiet@mstdn.social
2025-07-01T09:49:21Z
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@pluralistic Credit where credit is due: they're always a step ahead of us. While we're still talking about how to fact-check in a post-truth world, they got rid of the facts completely.You can't fact-check an "I heard a story" claim. Because maybe he actually did, but so what? It amounts to nothing. And if nothing is enough to sell bullshit to the suckers, then the grifters have won.