The Generative A.I. Macro Trend in A.I.

Generative A.I. is accelerating into 2023, why is that a big deal?


Michael Spencer

10 months ago | 8 min read

I had to make this annoying image to easily explain what Venture Capital hype is doing.

Hey Futurists,

With wired calling Generative A.I. “limitless creativity” and a16z proclaiming Generative A.I. saying ‘art isn’t dead it’s just machine generated’, I really have to wonder.

One thing I will admit is Microsoft likely has an unfair advantage in this game and GPT-4 is hotly anticipated. Just look at what OpenAI is funding.

Venture Capital is doing a fair job at proclaiming Generative A.I. is the next big trend, even as skeptics abound. I don’t know about you, but I think I fall somewhere in the balanced middle.

According to Base10.VC:

The AI platform shift, led by generative AI, will create as much value as the cloud platform shift, completely changing the broader knowledge economy and getting us closer to unlocking the potential of The World’s Brain.

That’s probably not true, but it’s a fun story to cover! The TAM of Generative A.I. is actually rather small in the early 2020s but I think it can lead to some fairly interesting startups and products.

Tracking the startups, the trends and the news is what my Newsletter A.I. Supremacy is all about.

Base10 Says Generative A.I. Is a Major Knowledge Economy Shift

A Cambrian explosion? Software 3.0, guys these are just human based prompts. It will take years for them to be useful in code, gaming, tools and video. If not decades to find mainstream adoption.

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We haven’t entered an era of limitless creativity yet via A.I. but we are seeing some pretty limitless hype around Generative A.I. Hype like advertising sells on the internet and I understand there are some pretty serious incentives by Venture Capital and creators to take this approach without regards for journalistic integrity or talking about the pros and cons.

I’m trying to balance my coverage around the hype vs. some of the A.I. ethics concerns. I really hope that comes across in my work which amounts to mostly curation, synthesis and identifying trends.

The way we describe what Generative A.I. is going to change, maybe each quarter from now on. From images to code, tools, video, music and gaming. It’s inevitable now.

What is Generative AI

Generative AI is a category of machine learning where computers can generate original new content in response to prompts from the user. Today text and images are the most mature applications of this technology, but there is work underway in virtually every creative domain, from animation, to sound effects, to music, to even creating virtual characters with fully fleshed out personalities.

It’s my pleasure to try to unpack the noise from the reality and summarize the incredible companies in the space. Microsoft and Google are at the head of the pack in their ability to integrate this into their software, products and revenue streams. And rapid consolidation in the space could occur in a winner-takes-all framework of how BigTech has been left to become dominant monopolies in the U.S.

Scott Galloway in his latest No Mercy No Malice Newsletter covered A.I. and it’s an important warning:

Lately tech has been about failures. How technology has failed us. The more sober assessment is that humans are failing tech.

From Robotaxis to the Metaverse to crypto we have created unrealistic expectations for the promises of emerging tech. You could make an argument we are about to do the same thing with Generative A.I, Quantum computing and Software 3.0 generally speaking.

I myself would like to debate with a digital clone of Scott Galloway, and with generative-AI, I’ll likely soon be able to do so. I make some stunning revelations about what industries could benefit the most from Generative A.I. below in this argile.

We want to believe that Silicon Valley could finally evolve into something useful and that founders are deploying complex foundational models against real-world problems that are creating new software applications and fundamentally changing the way old industries work. There are incentives for us to believe even as Silicon Valley is declining that there is a transformative new world of hope around the corner.

Generative A.I. in Gaming

Where a16z is on point is in a crucial area and that is the Generative A.I. will be the future of gaming development. This is what Microsoft realized sometime in 2021 and will fund OpenAI no matter the cost since that end-game is too lucrative, by the way far more lucrative that Generative A.I. in tools, coding and so forth.

To give you an idea of how lucrative this will be, the global gaming market size is anticipated to reach USD 504.29 billion by 2030, exhibiting a CAGR of 10.2% during the forecast period, according to a new report published by Grand View Research, Inc. Imagine a RimWorld, developed and optimized by A.I.? What’s also clear is the leader of the Generative A.I. movement could develop into serious companies based on the ease of funding we’ve seen so far with the likes of Jasper.AI and Stability.AI.

Momentum in A.I. Research

The acceleration of A.I. research we are seeing has many dynamics, including the unprecedented levels of research collaboration globally and research labs that are popping up. Clearly DeepMind and OpenAI were just the beginning, and we’re already seeing offshoots of the offshoots.

The A.I. Supremacy cold-tech competition between China and the U.S. will also hasten R&D just like we are seeing in the Quantum computing and Quantum machine learning sector.

Now you will notice like anyone, the majority of academics in A.I. on said papers are either Chinese or Chinese studying in America. The increasing of A.I. papers in Chinese is also often overlooked. Now that’s a Cambrian Explosion and it means China is taking this more seriously than anyone else.

Number and Quality of A.I. Papers is Increasing Quickly in the 2020s

Social media may be ruining childhood, and crypto has immolated billions of dollars but inspite of decades of hype about A.I., it will take many more decades to see the field truly grow up. Could this time be different?

Games are the most complex form of entertainment, in terms of the sheer number of asset types involved (2D art, 3D art, sound effects, music, dialog, etc). Games are also the most interactive, with a heavy emphasis on real-time experiences and immersive communities. Ecosystems like Minecraft, Roblox and even Amazon’s ‘New World’ MMO show that the demand for gaming and peer experiences around gaming continues to grow.

Each year brings a new new thing in tech: wearables, mobile, 3D printing, blockchain, Web 3.0, the metaverse. But Generative A.I. and the future of gaming, seem to be well matched in goals and capabilities. If GPT-4 will impact coding, you can be game developers will be watching.

Tencent, Microsoft, Sony, ByteDance, Nintendo and Epic Games, among others, should taking notice.

Source: a16z Games

The way digital creators like game developers will be augmented with Generative A.I. across different aspects of their industry is actually pretty interesting. From the voice-acting of NPCs to the visuals of these immersive worlds, Generative A.I. has the potential to speed up the process tremendously. Microsoft owned Bethesda, has been working on the IP of of its upcoming Starfield game that comes out next year in 2023, for the better part of a decade.

What if that took instead of 10 years, six months? The pace that we could get new games would accelerate and new kinds of games would become possible. I say this simply because Gaming is the metaverse, outside of the industrial and enterprise Metaverse which Apple and Microsoft are most likely to dominate. There too Generative-AI could enable interactions.

Generative A.I year of 2023

What many are therefore suggesting is that 2023 is the year of Generative A.I’s truly foundational year. While GPT-3 was a huge lead from GPT-2 in 2020, it’s only in 2022 that it became clear what that actually meant. I expect GPT-4 to have a more immediate impact in 2023. What we’ve learned suggests that Artificial Intelligence will be the next platform shift–following cloud, social, and mobile–and is in 2022 where Cloud was in 2006-07, with Generative AI leading the rapid charge.

Generative A.I. is to 2023-24 what the Cloud was in 2006-07.

If this prediction turns out to be true, we are in for one hell of a ride. It’s so much more than weird artwork or pretty images.

Davis Song’s list of Generative A.I. startups is now over 150. This includes things you wouldn’t ordinarily think about that Generative A.I. can augment including:

  • Search
  • Chatbots
  • Voice coding
  • Knowledge management
  • Sales
  • Legal
  • Design
  • Product Insights

This then is rightfully seen as a hybrid-form of AI-human intelligence, another layer of software’s dynamic no-code integration of A.I. in society, across industries and across business objectives.

Generative A.I. has a Chance to Upgrade the Internet

At best, Generative A.I., could change the way we do search, video, gaming and experience things online and give digital more options for developers, engineers, coders and companies to build and offer value.

In a no-code world then, combining the creative vision of an artist with the technical skills of a programmer is a new job. Prompt-based skills means A.I. will power the world in a low-code environment that blurs the lines between technical skills and creative directors.

This means more startups with clearer value propositions that can scale faster. This could provide a tech boom of innovation, if you are bullish about the potential of Generative A.I. If also depends if companies like Microsoft are allowed to make walled gardens with the technology or if it’s more democratized. When you own GitHub and are the main sponsor of OpenAI with promises to delivery them even more funding, and a Gaming giant, now here is a conflict of interest.

First-movers in integrating their business model with Generative-AI could be futuring proofing their companies. Certainly Microsoft is the first that comes to mind. Smart companies from ByteDance to Canva, are already integrating the tech into their products and software.

But what do I know? What does the Prof think?

Artificial intelligence. I believe we’re in the midst of a great leap forward in AI, and that this tech will be transformative, not just lucrative, thanks to its utility. - No Mercy No Malice - Scott Galloway

Okay then I guess the verdict is in.

Generative AI refers to machine learning algorithms and models that enable computers to use existing content like text, audio and video files, images, and even code to create completely new content.

Source: Base10.VC

Stable Diffusion has Seen the Fastest Adoption Rates in History

Source: a16z

It took me a while even to see the Stable Diffusion line in this graph. It’s hard to conceive. I guess A.I. > Web 3.0.

Generative AI is seeing the fastest uptake by developers we’ve ever seen say the Venture Capitalists who compare it with abysmal crypto adoption rates of long ago. It’s like comparing apples and oranges, but makes for a good graph!

“This will Change Everything”

Professor Galloway continues: Just in the past few months we’ve seen progress in AI capabilities that has left even skeptics impressed. A “golden decade” one researcher called it. A scientist at the Max Planck Institute said, “This will change medicine. It will change research. It will change bioengineering. It will change everything.”

We all want the future to be transformative, we all crave human and technological progress or that our ignorance, stupidity and self-destructiveness might somehow be magically cured.

We have to dare to hope and push forwards. In 2020 there wasn’t a single drug in clinical trials that had been developed using an AI-first approach. Today there are 18. Chris Anderson is famous for saying, “Every abundance creates a new scarcity.” In this era of Generative A.I. low-code tools will enable us to be more creative.

I don’t know if A.I. will upgrade us, but we should study the startups that will claim (Base.10.VC) to be doing so. Generative A.I. will amount to something. And between China and the U.S. yet another race has begun.

Thanks for reading!

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Created by

Michael Spencer

I am a curator, analyst and futurist writer.







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