Azeem Azhar

If you think about the internet, the value accrued to downstream companies making the applications and to users like us who get an unpaid for consumer surplus from all the free services we've enjoyed for the last 20 or 30 years.

The value didn't really accrue to the people who laid the first fiber lines or built the first modems.

But that's not a common pattern.

I mean, if you look at the internal combustion engine, that took a completely different shape.

So the car companies over the decades captured most of the profits.

But the oil companies who are upstream and the finance companies who are enabling the purchases of the cars were not far behind in their share of the profit pool.

But both of those sectors enjoyed far better margins than the automarks.

We don't necessarily know with general purpose technologies where profit pools will lie, who will make the money.

AI makes it even harder because AI is not just a simple general purpose technology.

It's also the invention of a new method of invention.

In a way, it looks in on itself differently

and can help us come up with new approaches to do new things, both in AI and in other domains.

And what that means is that it will create things that will change the assumptions about how you structure firms, how industries take their shape, and ultimately where profits can be made.

It's quite hard to imagine this because we're asking for so much to change that it is baked in assumptions we don't

really think about every day, but it will in some ways have that kind of impact.

Let's take a look at the software market.

So it's $155 billion a year, $160 billion a year spent on developers in a market that's worth probably a couple of trillion globally.

Well, AI is enabling people like me now to write software for myself.

And the coding tools market, which is only two years old, has already turned into a $3 billion revenue market.

If you look at cursor and replit and chat and build and other types of things.