Jeffrey Funk

Jeffrey Funk is the winner of the NTT DoCoMo Mobile Science Award and the author of six books including his most recent one: Unicorns, Hype and Bubbles: A Guide to Spotting, Avoiding and Exploiting Investment Bubbles In Tech.

Archives

Why isn’t the AI bubble ‘Common Knowledge’ and Pop?

_{Profits and revenues have been replaced by new metrics}_{Jeffrey Funk
January 16, 2026}

People often invest in companies not because they think the companies will succeed, but because they think others will invest.

The Generative AI Bubble Has Begun to Pop

_{From hype to hard realities in the age of artificial intelligence}_{Jeffrey Funk
December 17, 2025}

Recently, talk of a bubble has increased as it has become clear that OpenAI, and likely other AI software companies, may never become profitable.

A Lack of Transparency Threatens AI — and the American Economy

_{Even the Wall Street Journal does not appear to understand the nature of the looming problems}_{Jeffrey Funk
November 18, 2025}

AI software startups should be required to release audited numbers so that we can at least understand the current state of the AI economy.

Different Bubbles, Different Methods of Detection: What of AI?

_{Circular financing is one of the signs. Even the media are beginning to catch on}_{Jeffrey Funk
October 15, 2025}

Circular financing is the last gasp for OpenAI and the cloud services. They need it to maintain the mirage of an economic boom despite big losses and small revenues for AI software.

Why OpenAI Will Collapse: LLMs Are Not Economical

_{If a model is not refreshed every few months, it quickly turns from a helpful assistant into a debt generation machine with outdated knowledge}_{Georg Zoeller, Jeffrey Funk
September 24, 2025}

Companies can apply OpenAI’s models to a limited set of data and questions, creating a smaller model that is cheaper to train, update, and run.

AI Is a Long Way From Replacing Software Coders

_{Despite C-suite claims, they are not likely to take our jobs any time soon because they do not understand what words mean and how words relate to the physical world}_{Jeffrey Funk and Gary Smith
August 4, 2025}

LLMs excel at simple coding tasks but are still too unreliable to use without extensive human supervision on complex tasks where mistakes are expensive.

AI in Education: Is the System Being Gamed — or the Student?

_{AI makes it easier to game the system, but many users are also being gamed}_{Jeffrey Funk
July 30, 2025}

Users, whose output is used to train the AI systems, will pay higher electricity costs on account of them while experts eventually earn top salaries.

Is Microsoft’s New AI System Better Than Doctors? Probably Not.

_{A critic notes that Microsoft’s AI system didn’t solve the problems, but merely repeated the solutions that it was trained on}_{Jeffrey Funk
July 3, 2025}

Trying to understand the rationale of big monopolists such as Microsoft and Google is often a fool’s errand.

The Job Market is Telling Us Something About AI and Jobs…

_{But it’s not telling us the same things as the AI hypesters are telling us}_{Jeffrey Funk and Gary Smith
July 1, 2025}

The job market for recent college grads may be warning us that participation trophies for college and ChatGPT use have long-run costs.

AI Productivity Hype: The New “Cargo Cult Science”?

_{Physicist Richard Feynman coined the term to describe imaginary scenarios for success based on simple misunderstanding of realities}_{Jeffrey Funk
June 18, 2025}

The tech sector can push AI hype that resembles cargo cult science to its investors because of changes in media resulting from 30 years of the internet.

AI’s Contradictory Impact on Productivity: Squeezing a Balloon

_{AI appears to give support workers a big revolution in productivity. But it is somewhat like a child squeezing a balloon; the air pushes out someplace else}_{Jeffrey Funk
May 26, 2025}

Individual workers may claim huge productivity gains for their work, ignoring the impact of AI on the work of downstream employees within the same process.

University Science War: Ideas vs “Dollars per Net Square Footage”

_{Katalin Karikó, obscure and mistreated at the University of Pennsylvania, won the Nobel Prize. Shouldn’t we have some questions?}_{Jeffrey Funk
April 11, 2025}

Karikó’s story, as outlined in her book, highlights a big problem with universities: ideas matter less than sheer numbers of papers published.

Today’s Startups Are Doing Much Worse Than Those of the Past

_{The percentage of startups profitable at IPO time has steadily declined since the 1980s and most valuable ones take longer to become profitable}_{Jeffrey Funk
March 17, 2025}

We should certainly stop making overly optimistic claims about America’s system of startups, science, and technology.

Why LLMs Are Not Boosting Productivity

_{If LLMs were as reliably useful as economist Tyler Cowen alleges, businesses would be using them to generate profits faster than LLMs generate text. They aren’t.}_{Jeffrey Funk and Gary Smith
March 6, 2025}

So far, AI is dragging down economic growth by diverting so much human talent and natural resources away from more productive uses.

Does Everyone Think We Should Exaggerate Scientific Advances?

_{Many “breakthroughs” reported breathlessly in media are nowhere close to resulting in usable products or services}_{Jeffrey Funk
February 24, 2025}

Companies, universities and almost everyone else hypes the latest advances while those who question the hype are told that they are the problem.

Unequal Profits: Why AI Needs Successful Applications

_{Readers may be surprised to learn that these widely touted AI advances are not making their developers much money}_{Jeffrey Funk
February 11, 2025}

In the short run this system is being propped up by the big tech players but for a stable future, it needs to be self-sustaining.

Do High AI Startup Valuations Mean Great Success, or Desperation?

_{The answer is important but is not as clear as we might think. First, let's look at the background}_{Jeffrey Funk
January 13, 2025}

Consider a recent news report: “Anthropic is in advanced talks to raise $2 billion in a deal that would value it at $60 billion, more than triple its valuation from a year ago” says the Wall Street Journal. Anthropic’s last venture capital (VC) funding round, less than two months ago, raised $2 billion, bringing its total funding to $9.6 billion. OpenAI had raised $6.6 billion, last October just a year after it raised $10 billion from Microsoft the previous year and just months after it also raised funds on the debt and secondary markets. So that $6.6 billion round was the largest VC funding round ever, a little larger than the $6 billion that Elon Musk’s generative AI startup, xAI, raised in 2023. It nearly doubled OpenAI’s valuation to $157 billion, and brought its …