Five interesting links for May 18th, 2023
AI-generated SEO content; gamification of trading; economic growth & global warming; non-tech companies invest in AI; AI profits & costs
Following are five interesting links which I’ve collected recently.
Generating SEO content at scale with AI
Substack still does not play nice with Twitter, so the relevant Twitter thread is here. The gist is this: a B2B SaaS company generated thousands of pages of content with an AI tool. Here are the relevant stats:
7,000 pages
300,000 page views per month after 6 months
750,000 page views per month after 12 months
4,000 keywords in positions 1-3 on Google.
13,000 keywords in positions 4-10 on Google.
From the perspective of optimizing content for search engines, this is a remarkable success. Whatever we think of SEO content, this is worth paying attention to, for two reasons: (1) it was automatically generated with AI, and (2) Google either cannot detect AI content or it does not care about AI-generated content which rises above a certain quality threshold.
Here’s an example of some of their AI-generated text. A block quote follows: you’ll note that the writing is fluent, crisp, and eminently readable. Whatever your concerns about either AI-generated content or SEO content, you have to marvel that this can be done at scale, automatically.
As a business owner or manager, you're undoubtedly familiar with the importance of a strategic plan. However, more than a strategic plan is needed to ensure your organization's long-term success. That's where an annual operating plan comes in. An annual operating plan is a detailed blueprint for achieving your business goals over a fiscal year. While your business needs will fluctuate throughout the year, having an annual operating plan will align your company with the goals and objectives to achieve them. In this comprehensive guide, we'll take a closer look at what an annual operating plan is, why having one is essential, how you can create an effective one for your organization, and provide templates and best practices to get you started.
This prose will win no literary prizes. But it is serviceable and functional, and it is better than the vast majority of human-generated writing.
Tool used: Byword.ai.
Company: Causal
Gamification of trading
The financial markets are interesting in that there are two completely different sets of participants, with vastly different levels of sophistication: professional traders and retail traders. Professional traders manage millions, or billions, of dollars, and pay tens of thousands of dollars per year for a Bloomberg terminal subscription or one of its competitors. Retail investors rely on trading apps or websites: Schwab, eTrade, eToro, or Robinhood.
Professional and retail traders trade mostly1 the same financial instruments, but they operate with vastly different levels of sophistication and capital. Anyway, here is Barry Ritholtz writing about his experience with Robinhood:
Early last year, I wanted to learn more about what was going on with the day trading crowd — meme stocks, YOLO, Reddit, etc. — so I opened a Robinhood account.
It was an eye-opening experience to see how trading had become “gamified.” (I entered less than a dozen orders and got executed on fewer than half of them).
Keep in mind, my career began on a trading desk, where we used everything from Instinet to Bloomberg to SOES to Nasdaq Level III. I’ve traded stocks, options, ETFs, mutual funds, and bonds (I know my way around trading programs). In terms of interface and user experience, Robinhood was less like those professional products — it was closer to CandyCrush than it was NQDS.
He concludes with this trenchant observation: “You end up with a very different product when financial people deploy technology than when technology people roll into finance.”
I think this is an obvious, but underappreciated, statement, which bears a little more comment. To the extent that Robinhood was revolutionary, it was revolutionary because it gamified stock trading, and it allowed any random person who could pass a KYC/AML check to essentially gamble on stock directions. Considering that the vast majority of professional traders don’t beat the market on a consistent basis, one has to wonder why retail investors thought that using Robinhood was a good idea. The answer to this question, of course, is simply that the vast majority of retail traders don’t understand the odds of them beating the market. They just want to have fun. Of course there are obvious parallels between gamifying stock trading and sports gambling: the retail participant does not have the edge that he thinks he does, and will lose money on average.
Economic growth & global warming
I’m a big fan of James Pethokoukis’ Substack. You can find one of his posts below. It’s about how economic growth is poised to grow, even if temperatures warm by 3 degrees Celsius:
I don’t want to get into the politics or science of global warming, as I am not an expert in either, and don’t have well-informed opinions. However, I want to note something from the report which James uses for his post:
But the key takeway is that we think global GDP would still nearly double in size between now and mid-century even if the world were to warm by more than we anticipate, largely because developed countries would be affected the least. And even in places where a warmer world would have much bigger impacts on GDP, such as in India and south-east Asia, the physical effects on economic activity would be a headwind to catch-up growth rather than putting economic development in reverse.
Non-tech companies investing in AI
AI seems like one of those general purpose technologies, like the internet or electricity, which will affect all companies, across all industries and sectors. Once you get away from the Silicon Valley hype, and especially the venture capitalists, you can start to see AI penetrating all kinds of industries. Loup Ventures managing partner Doug Clinton notes:
In ten years, every company will have to be an artificial intelligence company or they won’t be competitive. While traditional tech companies have been very forward about their advancements and investments in AI, there are many “non-tech” companies that are making investments in AI as well. As a fun exercise, we put together a portfolio of publicly-traded non-tech companies that are poised to benefit from their efforts in AI.
To build our portfolio, we scaped the last earnings call of every company in the S&P 500 to see which had specifically referenced “artificial intelligence” and/or “machine learning.” We also looked at companies that had been in the news talking about specific AI-related initiatives.
You can read more about his analysis here. The economy is much larger than just technology companies, of course, and it’s probably a good idea for anyone involved in the tech industry to understand how technology is being used in non-tech companies.
AI & the income statement: will it generate revenues or increase costs?
Zerohedge is terminally pessimistic, and this link is no different. The post contemplates a reasonable question, which is this: what if AI only grows costs for companies, and not revenues? What if it is an expensive boondoggle?
While it is clear from this Substack that I think AI is revolutionary technology which will radically alter companies’ trajectories and people’s daily lives, I also think that a lot of people underestimate the extent to which digital transformations are just hard in large companies. If you think that Google’s very public struggles with catching up to OpenAI and Microsoft have been strange to witness, just wait until you read stories about a pharmaceutical manufacturer or a chemicals company undergoing an AI transformation. These things are hard to do, they’re expensive, they have uncertain payoffs, and the history of failed ERP implementations, especially, makes a lot of traditional corporate people very risk averse when it comes to new technology.
Institutional investors of course participate in illiquid and obscure markets which retail traders have no access to.