The AI impact on Gen Z is going to be profound (and painful)

The number of parents expressing surprise to me that their recently graduated children can’t find jobs has become a persistent trend. Is it too soon to be AI? The data says yes, my hunch says something else.

This is a graph of graduate employment across five countries. Normalising for Covid bumps it seems where you’d expect it to be?

Now, my simple bear/bull investment models on an AI-influenced future are:

1. Bearish: AI is effectively process improvement which hits a ceiling because of reliability. ASI/AGI is mostly an investor fomo belief structure. The ultimate outcome is margin improvement (less people required, more productivity).

2. Bullish: AI has a 100x impact from where we are today i.e. some definition of ASI/AGI is achieved. The outcome is a radically altered economic landscape.

Irrespective of outcome, there is no version where AI is not significantly altering the knowledge working landscape first and it seems reasonable to believe that this will start at graduate-level. Almost everyone proves this thesis daily with their Claude/CGPT use cases. I literally have a job description for an LFG Holdings analyst which is now 95% solved for by a couple of $20 monthly subscriptions.

For context, Gen Z and Millennials produce about 60-70% of knowledge worker output across the west, representing something like a third of the combined GDP in the US and EU.

Gen Z is likely going to be the most impacted generation by whatever AI future we’re barrelling into. Speaking with some people running companies, the near-term view on headcount and hiring is less: some AI-augmented (probably paid more), some AI-replaced. Coincidentally, Deloitte released an interesting survey on this general topic a couple of weeks ago which suggested that (only) ~29% of Gen Z are actually using AI tools at work and I suspect this might correlate quite strongly with their future employment prospects.

Now they lookin' at you funny when you walkin' down the street

Lookin' at you like food/tryna see what they can eat

There is a lot to think about here (and I am). One of the great challenges around investing in the future is that knowing what it will look like is not the same thing as knowing where to place your bets to capture value from it.

Reading

Over the weekend I was perusing Coatue’s keynote slides from their EMW conference. Philippe and co do a very good job of both being open about the conflicting market signals and yet broadly bullish about the future (I suppose a fund manager has a certain type of confirmation bias). You should read them.

Bill Gurley is one of the very best thinkers on the challenges of private markets and capital models. His conversation with Patrick O’Shaughnessy is no exception.

If Gen-Z will be the working demographic most impacted by AI, advertising might be the industry equivalent. Eric has some thoughts.

We are finally getting closer to better metrics on Discord ROI. Levellr’s case study with Google Pixel is real progress.

I finally finished The Power Broker and it’s magnificent (I added it to my personal essentials list). I’d love to recommend it for your Summer reading but honestly it’ll probably take you at least twice that. Start reading it anyway. You will understand New York (and other things) in an entirely different way.