Tinkering with LLMs

I’ve been tinkering with LLMs.

First, I created a chatbot using all my blog posts. Then I created a model to produce blog entries based on my writing.

As I went through this process, I asked myself some questions along the way :

  • Does the ML model ingest my posts & keep them? What if I’d like to remove them from the logs or training set or output for others?
  • The blogbot often returned no answers for questions I thought would be straightforward. How can I ensure the response rate is 99%+ before launching?
  • Which post is better : hand-written, ChatGPT, or custom-trained models? How would I judge? More views? Written in my voice with alliteration & rhetoric? Use of the & instead of “and”? Injects links to other related posts?
  • When is a blogbot a better user experience than search? With search, I can know that I’ve plumbed the depths of the blog, looking at every relevant post for an answer. How do I do that with a bot?
  • The latency for both is significant : 5 to 25 seconds depending on the query. Google observed 400ms increase in latency decreases traffic by 20%. Will users be more patient with bots than with search?
  • What if I reimagined the home page of tomtunguz.com as a chatbot interface rather than a list of all posts? That UI would personalize the experience for each visitor & each session, but it would hamper browsing? Which is the more important use case?

I imagine many product teams are asking analogous questions about how to leverage these new models.

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The Greatest Profitability Turnaround in Software History

Which database generated a -$1.8b loss & within a year produced $130m in profits? Ethereum.

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Last year, I compared MongoDB & Ethereum growth to draw a parallel between two major database companies. This year, web3 activity has fallen dragging revenues along for the roller coaster ride.

image Ethereum revenues have collapsed 82%, which makes the earnings change that much starker. What other business suffered a loss of 80% of revenue & went from burning $2b per quarter to producing more than a hundred million in profit?

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When 1 is Bigger than 4 for AI

I asked ChatGPT about the numbers 1 & 4. Which one is bigger?

Sometimes, 1 was bigger. Othertimes, 4 was bigger. Sharon Zhou ran this experiment at scale to showing the order of yes & no matters in the response.

image This is called a non-deterministic or stochastic answer. Similar inputs do not consistently produce identical outputs. The answers have inconsistent logic.

We live with stochastic systems daily : weather reports, ETAs on Google maps, stock portfolio construction. We are stochastic - humans can be moody, err in our calculations, or change our minds with new information.

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Every Customer is a Design Partner - Leading Your Sales Motion with Sales Engineering

When a startup is born, founders lead sales. Design partners, pilots, or founder-led sales - they have many names - these customers work with a startup to solve a problem.

Conversations about contracts & pricing are kicked down the road until the customer sees value & the path to capture it.

Said another way, founder-led sales are sales engineering sales, not account executive sales.

As a company scales, founders transition sales to others. The default behavior is for founders to pass sales to account executives.

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Microsoft's Billion Dollar AI Business

I’m watching public company earnings to identify early trends in the software market to inform startups’ plans for 2023. Yesterday, Microsoft & Google announced earnings. Amazon, Cloudflare, & Mongo announce later this week.

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Google Cloud Platform (GCP) & Microsoft Azure had strong quarters with about 28% annual revenue growth each. The decline in growth rate from the last two quarters continues with each service seeing another 4 percentage point drop in growth rate each.

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Software Spending Growth Will Accelerate by 40% in 2023, But it Doesn't Feel that Way

Software spending in 2024 should rise 12%, increasing from 9% last year according to Gartner. Overall spending will rise from $4.4t to $4.6t. Why doesn’t it feel that way?

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Devices will be the only category to decline. CDW, a $20b distributor of software & hardware, announced earnings last week & their results echoed these. CDW has a significant government & education business.

  • SMB revenues decreased 13%
  • Education declined 9% with a 68% drop in hardware sales
  • Government grew 13.5%
  • Healthcare increased 8%
  • Overall software grew 8%

The data sets are largely consistent : high single digit growth in most areas outside of hardware.

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Why Every Startup Needs an AI Strategy

Every company will be an AI company. Every startup needs an AI strategy - not just for fundraising or press appeal.

User expectations have changed. When one email composer window autocompletes sentences, every email product will need to follow. When one customer support bot provides a meaningfully better experience to answer questions, every competitor will match it.

ChatGPT & Midjourney have educated hundreds of millions that we can & should expect more from software. Now those teeming masses will demand it.

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How Much will the US Early Stage Venture Market Contract in 2023?

In The Figures that Will Move the Venture Capital Market in the Next 3-5 Years, I wrote about the correlation between interest rates & venture capital investing.

In the past two years, the correlation has grown stronger from -0.46 correlation to -0.51.

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The correlation is strong enough to build a simple prediction of early stage venture capital activity in 2023.

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This simple model uses the 10 year bond rate plus the amount of early stage venture capital raised in the previous year. The chart above shows the predicted invested in grey & actuals in orange. The model has a very small p-value with a pretty strong correlation R^2 of 0.63 for only 2 variables.

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ChatGPT & Taylor Swift

For each of the 14 weeks, more people searched for ChatGPT than Taylor Swift according to Google Trends data.

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You won’t find people outside of tech hubs googling for microservices or layer 2 blockchains or serverless databases with any great frequency. But Minnesotans & Idahoans & Vermontans are searching for ChatGPT.

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People are curious about AI. They want to test it, prod it, break it, be surprised by it.

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Economics in the Sometimes Strange World of Web3

Blockchains are databases application developers use to build novel user experiences. Just as hundreds of different databases exist in web2, different blockchains have evolved in web3.

In September, I published the State of Web3 in Data. I’ve been watching one of those charts very closely : slide 25 which tracked L2s & L1s.

Layer 2s (or L2s) like Arbitrum & Optimism, sit atop Ethereum (an L1). They provide faster & less expensive transactions for application developers.

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