Avi Goldfarb - The Economic Impact of AI

**Patrick O'Shaughnessy** (0:00)
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Hello and welcome everyone. I'm Patrick O'Shaughnessy, and this is Invest Like the Best. This show is an open-ended exploration of markets, ideas, stories and strategies that will help you better invest both your time and your money. Invest Like the Best is part of the Colossus family of podcasts, and you can access all our podcasts, including edited transcripts, show notes and other resources to keep learning at joincolossus.com.

**SPEAKER_2** (2:09)
Patrick O'Shaughnessy is the CEO and founding partner of Positive Sum and the CEO of O'Shaughnessy Asset Management. All opinions expressed by Patrick and podcast guests are solely their own opinions and do not reflect the opinion of Positive Sum or O'Shaughnessy Asset Management. This podcast is for informational purposes only and should not be relied upon as a basis for investment decisions.
Clients of Positive Sum or O'Shaughnessy Asset Management may maintain positions in the securities discussed in this podcast.

**Patrick O'Shaughnessy** (2:41)
My guest today is Avi Goldfarb. Avi is a professor at the University of Toronto's Rotman School of Management, the Rotman Chair in Artificial Intelligence and Healthcare, as well as the co-author of two best-selling books on AI and its economic impact.
His most recent book, Power and Prediction, is probably the best piece of content I have read in explaining how AI may reshape business models, systems and products.
We recorded this before GPT-4's release last week, which if anything makes Avi's ideas on AI's impact all the more poignant. Please enjoy my conversation with Avi Goldfarb. Avi, we were just chatting before we hit record about ChatGPT. We have to start here. I'm so curious about your reaction to it because it came out almost immediately after your book was published. So we're gonna talk about all the ideas in the book in great detail, but first just give me your unvarnished reaction to when you saw that come out and what you've been thinking about it since.

**Avi Goldfarb** (3:32)
My first reaction was wow. I'd seen large language models before. I'd seen the earlier versions of GPT, including GPT-3 and stuff from OpenAI and they were doing great things, but ChatGPT showed me that it advanced faster than I'd expect. First is wow. And then along with my co-authors, we started to think through, well, what does this mean for the future of AI? What does this mean for AI in business?
And at the time, when we heard people talk about ChatGPT, everyone was focused on, oh no, we're gonna have to change the way we write final exams. Or, oh no, there's a handful of people who make a living from writing text, they're gonna be toast, they're gonna lose their job. And those worries are real. I don't wanna belittle them. They're real worries. But for most people, this struck us as this huge opportunity. And what do we mean by that? Well, there's lots of people who have amazing skills but are not good at writing. And so writing limits their opportunities for work, their opportunities for income. And if they have better writing, then a whole bunch of new business opportunities grow, a whole bunch of new work opportunities grow. And the organizations that figure out how to take advantage of the people who are good at lots of things, but not writing are gonna be the ones that get the first pass and take advantage of ChatGPT. There was this story on Twitter, not gonna speak to the veracity of it, but it was a compelling story. There was this landscaper whose English language skills were terrible. He did not know how to write a customer service email, saying, hey, I'm gonna be there on Wednesday and I'm gonna do whatever I'm gonna do in your backyard and then I'll send you a bill. Getting a coherent note out of this guy was really hard, but the story went that he was a great landscaper, but he struggled to find business. A mentor or one of his clients, a little bit ambiguous who this person was, built an interface with GPT-3 to help the guy to turn his quick notes, hello, arrive Wednesday 9, to a nice coherent email to a potential customer and it seemed to work really well. The story went that the person's business thrived as a result. That kind of a narrative I think is gonna happen a lot, which is someone's gotta reinvent the interface. Something hasn't happened yet, which is somebody has to invent the interface that allows millions of people to take advantage of what this technology can do to write more easily and whether that's gonna be OpenAI that does it or Microsoft that does it or a startup, who knows? But once someone writes that interface and figures it out, then the potential to upskill millions of people is amazing for the economy. Not to ignore the thousands of people who will be worse off.