Is AI coming for your job? Depends on who you ask

Astonishingly, the age of AI introduced by the November, 2022 release of ChatGPT has been around long enough that we’re starting to build up what you can think of as conventional wisdom! Most CEO’s calmly assert that its effect on jobs will be to automate dull work and let the amazing, creative humans in their operations do what they do best. That’s comforting, but is it correct?

The debate about artificial intelligence's impact on employment has taken an interesting turn with payments startup Klarna CEO Sebastian Siemiatkowski's recent statements. Not only has he been vocal about how many workers his company has already been able to do without, he is predicting that soon the machines will be so competent that they can replace most human jobs, including his own!

Ask most executives to publicly articulate what they think the effect of AI on jobs will be and you get pretty vague answers. Most CEO statements about AI and jobs follow a predictable pattern: reassurance about job creation while quietly implementing automation.

Reid Hoffman, for example, doesn’t think the tech will take your job, just necessitate changes in how you work. IBM’s CEO Arvind Krishna, writing in Fortune, reassuringly says “Today, A.I. solutions are being deployed across companies to help tackle the kind of tasks most people find repetitive, which frees up employees to take on higher-value work.” He then goes on to note that one of his HR functions has gone from 700 people to 50! Microsoft CEO Satya Nadella is also optimistic, saying that workers will get fatter paychecks once AI is embedded. As he put it: “I think of the AI era as expertise at your fingertips so you can take somebody who’s in the front line, whether it’s in retail or whether it is in healthcare. It perhaps will even improve the wages because they are now able to give more expert health advice or more expert work is being done by nonexperts.”

A Different Take

Siemiatkowski argues that AI won't simply eliminate or create jobs - it will fundamentally reshape work itself. In a shot over the bow for anybody involved in media or creative work, the Chief Marketing Officer for Klarna claims that the company has saved around $10 million annually by not relying on human artists to create images, human lawyers to review contract language, people to monitor press coverage and the work of 700 customer service agents.

In a fascinating podcast, Siemiatkowski pulls no punches on how much he expects AI to make some career trajectories obsolete. “People say, ‘Oh, don’t worry, there’s going to be new jobs,’” he said on a podcast last summer, before citing the thousands of professional translators whom A.I. is rapidly making superfluous. “I don’t think it’s easy to say to a 55-year-old translator, ‘Don’t worry, you’re going to become a YouTube influencer.’” And he is quite aware that the world he foresees (or that is perhaps already here) is not to everyone’s liking. As he said, ““We did a tweet later on about the marketing things we are doing about A.I., where we have less need for photographers,” he said in the podcast interview. “That had a violent reaction online.”

So why risk the backlash?

Well, it turns out that Klarna had a rough time going through a pandemic boom and post-pandemic crash when investors, spooked by high interest rates and wondering how scalable the company would be, pulled back. At it’s peak in 2021, Klarna’s valuation was $45.6 billion and it even took out a Superbowl ad in the 2021 game (have a look – it’s kind of fun!). By 2022, investors enthusiasm put the company’s value at $6.7 billion.

Ouch.

Job cuts and a battle with an internal union ensued. He eventually acceded to a collective bargaining agreement, but noted that unionized companies were not necessarily what his investors were after!

Amidst all this, recognizing the potentially transformative power of AI, he reached out to OpenAI Sam Altman (whose calendar must have been pretty full during this time), and began encouraging employees to play around with the new tools as much as possible. “My understanding is that you told Sam and OpenAI that you wanted to be their guinea pig,” an interviewer asked him on another podcast. His response? “I want to be their favorite guinea pig.”

The AI story seems to have burnished the company’s standing in the eyes of the investing community, with some observers anticipating that its upcoming IPO is one of the most anticipated of the year.

But nobody is talking about the coming inflection point

Being blunt about the capabilities of AI may well be working for Klarna, but few other leaders or tech industry sages are willing to be so graphic. With the advent of agentic AI (software programs that can actually complete many specific tasks on behalf of a person), the prospect that whole swaths of low and middle skilled office work might simply evaporate. Some people are suggesting that such agents can write code and interact with other agents, becoming like virtual employees (and potentially reducing the demand for people who do those jobs now).

If AI spending feels a lot to you like the late 90’s Internet bubble, you are not alone. No less an authority than David Cahn of Sequoia ominously observed: “In September 2023, I published AI’s $200B Question. The goal of the piece was to ask the question: “Where is all the revenue?” At that time, I noticed a big gap between the revenue expectations implied by the AI infrastructure build-out, and actual revenue growth in the AI ecosystem, which is also a proxy for end-user value. I described this as a “$125B hole that needs to be filled for each year of CapEx at today’s levels.” He actually points out problems with getting a return on investment in AI that are eerily consistent with Carlota Perez’s analysis of how technology shifts almost always create bubbles.

This has every indication of creating a strategic inflection point – a shift in the environment that changes what is possible by a factor of 10. Often, the winners and losers are not clear at the outset, but if history teaches us any lessons, the rise of a technology like this creates a bubble. When the bubble bursts, many investors will rue the day but their investment creates the infrastructure on which the next technological revolution will be built.

The issues are:

1. Lack of pricing power / low barriers to entry for the new technologies;

2. Speculative over-investment;

3. Depreciation;

4. Benefits to the larger society; punishing losses for investors.

Putting this all in context

As Perez finds, economic bubbles unleashed by promising new technologies occur when investment capital is drawn into what she calls the “casino economy.” This is very normal in the transition between one technology regime and other, in our case between the mass production, petroleum-based, suburbs and highways-oriented model many countries in the West enjoy and the digitally based, potentially greener economy we’re moving into.

My guess is that the “Nothing to see here” party line most CEO’s have taken understates the long term impact it will have. It’s likely to be another illustration of Amara’s law: that we tend to overestimate the effect of a technology in the short term, and underestimate it in the long term.

Meanwhile, we’re figuring out what AI means for the traditional work done by consulting firms and designing the Reinvention Summit in Dublin in April. Be in touch if this sounds interesting!