Eric Schmidt's Real Take on the AI Bubble

AGI timelines and the San Francisco narrative

00:00So the theory of great geniuses is that they understand one area extremely well and they're so brilliant the lady or man can then take their ideas and apply it to a completely different domain. If we can solve that problem then I think it's over. Then we get to AGI and then it's a whole different world. >> So Eric Schmidt just gave another eye openening interview about AGI. He unveiled the exact how we get to AGI and also mapped the time we can achieve it. Let's listen to this before we dive in deeper. >> It feels like there's been um a pullback a little bit from the AGI narrative which I think I think is actually a good thing. I think it's more conducive to calm rational policym. What's your

00:43perception of AGI right now? Where where are we on that whole train? So, so, um, so first place, the speech that the president delivered about a month ago about AI strategy, which I think you probably wouldn't say it, but you kind of wrote it for him, was exactly right. Right. So, thank you. >> David collaborated with an amazing leader who we all respect and admire so much, Eric. >> Yes. Uh, so, nevertheless, >> saying I wrote it was was way too strong. I mean, actually, but anyway, If you didn't write it, then it must have been your twin. But in any case, um the you got you got the emphasis right, which was that investment in research, investment in the kind of stuff that we do is really really important.

01:31I don't agree with you on this on this AGI thing because there's this group which I call the San Francisco um narrative because they all live in San Francisco and their narrative goes something like this. Um today we're doing agents. Uh the agentic revolution will change businesses which I agree with. Um that what happens is the systems will become recursively self-intelligent. With recursive self-improvement as it's called if you have a scale-free problem and a scale-free problem for example is programming or math where you can just keep doing it. You get these enormous fast gains if you buy enough hardware, do enough software so forth and so on. that is still underway. The collective of that says that in the

02:17next three-ish years they believe that we will get forms of super intelligence and the way they define it is basically a savant a chemist soant a physics soant a mathematician soant I don't agree with the three years but I do agree that it'll be maybe six or seven years >> but if it's a savant in you know a particular area is that general intelligence >> it's not general intelligence Yet general intelligence is when it can set its own objective function. >> Right? >> And >> there's no evidence of that. >> There's no evidence right now of the ability to set your own objective function. Um the the the thinking and I'm writing a paper on this so I've been studying it is that the the the technical problem is non-stationerity of

The technical barrier: non-stationarity and analogy

03:03mathematical proofs. And that what you're doing is you're trying to solve against objective function but the objective function keeps changing which is how humans operate. your goal changes every day. Whereas computers have trouble with that. As a math problem, we don't have an algorithm yet for LLMs that can do that. People are working on it. Um and the the test will be can you basically um using the information available in 1902, can you derive the same thing that Einstein did with special relativity followed by general relativity? We cannot do that today. Um and most people believe that the way this will be solved is through analogy. So the theory of great geniuses is that they understand one area extremely well

Humans are end to end, AI is middle to middle

03:51and they're so brilliant the lady or man can then take their ideas and apply it to a completely different domain. If we can solve that problem then I think it's over. Then we get to AGI and then it's a whole different world. I think one of the reasons why it's hard to replace a human and you know JK and I debate this is that humans are end to end. You know we can do the whole job. You have sort of a complete understanding. You can pivot very easily. AI at least as we know it today is not end to end. It has to be prompted. You get an answer. That answer has to be validated. Then you have to ask a new question because it never gives you exactly what you want. You have to apply more context. You have to

04:33go through an iterative loop. Finally, you get to an answer that has business value. The way biology puts it is that AI is not endtoend. It's middle to middle. Humans are endtoend. And so, as a result of that, instead of AI replacing all of us, AI will be very synergistic with humans because we can define the objective function. We do the prompting and we work with it to iterate and it does a lot of the work in the middle. Um, that seems to me like a very optimistic, less doomeristic take on it. What you just said is exactly what's going to happen for the next few years that each of us will have assistance which on our command and our prompting will be incredibly helpful to whatever problem we have you know personal uh you

05:17have people who are using these things for relationship advice for you know talking to their kids I mean it's all crazy stuff um but the fact of the matter is that's it the to me the real question is when does it cross over to having its own valition its own ability to seek information and solve new problems s that's a different animal. >> But have we seen any evidence of recursive self-improvement yet? >> Um, not yet. I'm I'm I've funded a number of startups which claim to be close to it, but of course these are startups and you never know, which tells me it's 5 10 years. >> Okay, so just in 5 to 10 years, that will be enormously fast for a new tech industry. And recursive self-improvement is the key element that define AGI and

Recursive self-improvement and super intelligence

05:59ASI. Let's go deeper into this with Eric. >> People who are now looking at how do you control a super intelligence with a dumb intelligence, right? And there's math that I did not understand which says that to some degree you can contain it, but we don't know. Um, but I think this the first point to make is that recursive self-improvement or recursive intelligence is where the system is learning itself and you're beginning to see agentic solutions that are doing self-learning. Um, I expect by the end of this year, so six months, you'll be getting you you'll start using systems that are learning as you're using them. It's the natural progression. One of the reasons to think that the hardware investments that you're seeing, which

06:41are insanely large, make sense is that that those reasoning models are infinitely more expensive than a Google search. Many many thousands of times more electricity queries and so forth and so on. And so you the recursive stuff has already started. The general consensus there are different definitions of AGI is that AGI means it's generally intelligent. Now generally intelligent means that you get up there in the morning and you have free will. Uh I think largely invented here in France and you you have free will and you basically have this notion of I get up, I do what I want, I learn what I want, I seek what I want. That kind of strategic intelligence is not yet present in these systems. The

07:25consensus is that occurs my own dates are between you know four to six years relatively soon. The step after that is when the system the general term there is super intelligence. It's where the system is smarter than the sum of all humans. And the test for for super intelligence is pretty simple. It can prove something that we know to be true but we cannot understand the proof. We humans no human can understand it. Even all of us together cannot understand it but we know it's true. Henry would say what is that? Is that magic? He also would say and we said in the book that when people see that they may take up arms against it because it'll be so frightening to humans. A number of us wrote a a paper on super intelligence

National security and race conditions

08:15where we speculated how do you contain super intelligence? I do a lot of national security work and how do you deal with the fact that your competitor might be ahead of you? Well, in network effect businesses, which is what I've lived in for my whole life, didn't have a name when I started, but there understand that all the most valuable companies in the world are essentially network effect businesses because network effects work. What happens when you've got two countries where one is ahead of the other? And I'll give you a simple example. This is you and me. We have our little tech startup. We have a thousand people so forth. And then one day you and I decide that we're going to have AI researchers. That is computers

08:55doing AI research. And how many do we have? Well, we have a million because we we have enough money. And all they need is electricity. You know, they don't eat pizza, they don't sleep, whatever. So now your slope of innovation goes like that. this in a network effect business. This is likely to produce slopes of gains at this level. The opponent may decide that once you get there, they'll never catch up and then you can do really bad things to them. Then you have an issue essentially a race condition of preeemption. So these are just the beginnings of these ideas. But if you believe that AI is this powerful, then every aspect of human experience will be touched by it, including national security, politicians, democracies, and

09:41so forth. I spend lots of time in conversations with people who say, will democracy uh survive AGI, right? I mean, these are really the core questions about humanity that are being raised by the arrival of this intelligence. >> Pretty wild interviews so far. So in the upcoming part, let's see what Dr. Schmidt talks about the AI bubble and the historically important discovery for our mankind. >> If you ask most of the executives in the industry, they will say the following. They'll say that we're in a period of overbuilding. They'll say that there will be over capacity in two or three years. And when you ask them, they'll say, "But I'll be fine and the other guys are going to lose all their money." So

Is the AI boom a bubble?

10:25that's a classic bubble, right? What would mean what would it be? What would need to be true for that not to be a bubble? If you believe the San Francisco consensus and you believe that reasoning, which is done through inference and through these back and forth um essentially reinforcement learning chains, if you believe that those are going to be the defining aspects of humanity, then it's underhyped and we need even more. I know that sounds insane, right? But that's the basis of the reasoning. I personally don't know. Um I've looked at this pretty hard because you have these massive data centers and Nvidia is quite happy to sell them all the chips, you know, and uh the real estate developers are used to borrowing

11:14money to build these things. I've never seen a situation where hardware capacity was not taken up by software. There was an old saying when I was young that was grove giveth and gates taketh away, right? Referring to Intel. So you the old-timers will remember that the Intel chips would get better, but your computer never got faster. And we used to say, why does it not get faster? Well, because in this case, Microsoft would add all these extra features. So I think it's it's unlikely based on my experience that this is a bubble. It's much more likely that you're seeing an whole new industrial structure. So one way to think about this is the discovery of LLMs and foundation models which we're properly going to give credit to

12:05the team at OpenAI at the time is a historically important discovery. it began right to give them some credit although in fairness quite a few of those people used to work for me uh we won't bring that up but we'll give them credit that historical event is a very big deal overall AI is no longer just a tool it is a force reshaping business society and culture no one knows how this is all going to work yet but preparation matters let's wrap things up with this powerful speech from the former open AAI chief chief scientist. >> There is something a little different going on right now. You all leave, we all leave in the most unusual time ever. And this is something that people might say often, but I think it's actually

Ilya Sutskever on AI's extreme future

12:55true this time. And the reason it's true this time is because of AI, right? Obviously, I mean, from what I hear, the AI of today has already changed what it means to be a student by a pretty considerable degree. That's I uh especially I that's what I I sense and I think it's true. But of course, the impact of AI goes beyond that. What happens to the kind of work we do? Well, it's starting to change a little bit in some unknown and unpredictable ways. And some some some work may feel it sooner, some work might feel it later. With today's AI, you can go on on uh on Twitter and you can look at what AI can do and what people say and you might feel a little bit of that. You wonder, hey, which skills are useful? Which ones

13:50will be less useful? So, you got these questions going on. And so you can say that the current level of challenge is how will it affect work and our careers. But the thing the real challenge with AI is that is really unprecedented and really extreme and it's going to be very different in the future compared to the way it is today. Like you know we've all seen AI. We've all spoken to a computer and a computer has spoken back to us which is a new thing. Computers would not do this in the past, but now they do. So, you speak to a computer and it understands you and it speaks back to you and it also does it in voice and it write some code. It's it's pretty crazy, but there are so many things it cannot

14:37do as well and it's so efficient. So, you can say it still needs to catch up on a lot of things, but it's evocative. It's good enough that you can ask yourself, you could imagine, okay, fine, in some number of years, some people say it's in three, some people say it's in five, 10, numbers are being thrown around. It's a bit hard to predict the future, but [snorts] slowly but surely or maybe not so slowly, AI will keep getting better. And the day will come when AI will do all of our all the things that we can do. Not just some of them, but all of them. Anything which I can learn, anything which any any one of you can learn, the AI could do as well. How do we know this? By the way, how can I be so sure?

15:23How can I be so sure of that? The reason is that all of us have a brain and the brain is a biological computer. That's why we have a brain, the brain is a biological computer. So why can't a digital computer, a digital brain do the same things? This is the one sentence summary for why AI will be able to do all those things because we have a brain and the brain is a biological computer. And so you can start asking yourselves what's going to happen? What's going to happen when computers can do all of our jobs? Right? Those are really big questions. Those are dramatic questions. And right now like you start thinking about it a little bit. You go, gosh, that's a little intense. But it's actually only part of the intensity

16:05because what's going to happen? What what will we the collective V want to use these AIs for? Do more work, grow the economy, do R&D, do AI research. So then the rate of progress will become really extremely fast for some time at least. These are such extreme things. These are such unimaginable things. So right now I'm trying to pull you into that a little bit into this headsp space of this really extreme and radical future that AI creates. But it's also very difficult to imagine. It's very very difficult to imagine. It's very difficult to internalize and to really believe on an emotional level. Even I struggle with it. And yet the logic seems to dictate that this very likely should happen. So

16:56what does one do in such a world? You know there is a quote which is like this uh uh which goes like this. It says you may not take interest in politics but politics will take interest in you. So the same applies to AI many times over. And in particular I think that by simply using AI and looking at what the best AI of today can do, you get an intuition. You get an intuition. And as AI continues to improve in one year, in two years, in three years, the intuition will become stronger. And a lot of the things that we are talking about now, they will become much more real. They'll become less imaginary. In the end of the day, no amount of essays and and explanations can can compete with what we see with our

17:50own senses, with our own two eyes. And especially with AI, the very smart, super intelligent AI in the future, there will be very profound issues about making sure that they are they say what they say and not pretend to be something else. And I'm really condensing a lot into a small amount of information here in time here. But overall by simply looking at what AI can do not ignoring it when the time comes that will generate the energy that's required to overcome the huge challenge that AI will pose and the challenge that AI poses in some sense is the greatest challenge of humanity ever and overcoming it will also have the will also bring the greatest reward and in some sense whether you like it or

18:40not your life is going to be affected by AI to a great extent and so looking at it paying attention and then generating the energy to solve the problems that will come up that's going to be the main