The Real Story Behind AI Layoffs and Investments

Think AI is just about magical automation and instant job cuts? Think again. The real story behind AI layoffs and investments is far more surprising. It’s one CEO boards don’t want you to hear.

At the recent MENA Investment Congress, I presented my book Artificial Stupelligence: The Hilarious Truth About AI with a focus on the sobering realities behind AI’s sparkling promises.

Among many insights, two themes made the strongest impression:

• the frenzy of venture capital fever dreams around AI, and
• the humans still quietly pulling the strings behind the curtain.

These framed the core message about why CEOs feel pressured to slash jobs in AI’s name and the costly consequences of that gamble. Stick around — the best part is yet to come.

VC Fever Dreams: Betting Big on Illusions

The slide that made the deepest impression during my talk was what I’ve come to call the “VC Fever Dreams.” Trillions of dollars have flooded AI ventures, buoyed by grand predictions of Artificial General Intelligence (AGI): machines that will outthink humans any day now. Hedge funds are launched on the back of AI prophecies by 23-year-olds, and tech leaders compare upcoming AI breakthroughs to the “Manhattan Project.” The hype is electric, relentless, and vastly disproportionate to the current state of the technology.

The real game changers, the truly transformative innovations rarely make the headlines.

History begs for caution. Flying cars have been “just around the corner” for more than a century. Nuclear fusion has stubbornly remained “30 years away” for seven decades. Space colonization has so far delivered only a handful of lonely astronauts in orbit. Blockchain, much like many AI applications today, is a classic solution in search of a problem. Self-driving cars still demand more human supervision than enthusiasts care to admit. And what became of the Metaverse? Does anyone even remember it?

The real game changers, the truly transformative innovations rarely make the headlines. YouTube once started as a dating site. Airbnb began with two broke founders renting out space on an air mattress. These quietly disruptive ideas challenge the hype-driven narratives that dominate AI conversations today.

The Wizard of Oz Behind the AI Curtain

We hire humans to build AI so AI can replace humans.

Here’s the delicious irony that emerged in my talk: despite AI’s slick image as a high-tech oracle, many of today’s AI “successes” depend heavily on humans working behind the scenes. Take Scale AI, recently acquired by Meta for $14.8 billion. It relied on low-wage workers in places like Kenya labeling data, i.e. painstakingly drawing boxes around images, teaching “machines” what to see. Builder. ai, a former billion-dollar unicorn, touted AI-driven app creation; the reality was a room of 700 human developers in India coding projects manually.

This looping paradox means we hire humans to build AI so AI can replace humans. A cycle that adds a layer of “artificial stupelligence” to the entire narrative.

CEOs Under the Gun: Layoffs in the Name of AI

Framing those cuts as “job reductions powered by AI” transforms the narrative.

Then why do we keep hearing about all these sweeping layoffs in the name of AI? Economic headwinds place CEOs under crushing pressure to deliver results. Reporting layoffs due to missed targets rarely wins cheers. However, framing those cuts as “job reductions powered by AI” transforms the narrative. It earns you accolades, hero status, and perhaps even a bonus.

Look at Klarna, which fired 700 employees two years ago to “embrace AI,” only to suffer a $40 billion valuation crash and a messy rehiring campaign. One would think that this cautionary tale should have prevented other companies from making the same mistake, right? Wrong. In July this year, the Commonwealth Bank of Australia cited AI to axe dozens of call center agents. They had to rehire them all within a month when the phones didn’t answer themselves. It’s like firing your chefs because you bought a fancy microwave that promised gourmet meals.

The $3 Trillion Mirage and the Real Costs

Achieving AGI anytime soon faces daunting real-world hurdles.

The disconnect is staggering. Over the past three years, $3 trillion, approximately 10% of the U.S. GDP, has poured into AI investments, yet revenues linger at a mere $50 billion. The big bet? AGI, the mythical day when machines outsmart humans.

But achieving AGI anytime soon faces daunting real-world hurdles: immense energy requirements, exponentially rising costs of expert data labeling, physical constraints of data centers, and AI’s complete lack of genuine understanding of the world. These challenges make the dream frustratingly distant and do little to improve ROI. This AI gold rush feels less like a strategic prospecting effort and more like a collective fever pitch.

Meanwhile, the human cost escalates: displaced workers, strained teams, and botched rollouts. And companies that tackle actual problems find themselves with less funding.

Closing Remarks: Beyond the Hype

At the close of my MENA Congress talk, I left the audience with this: while AI promises big changes, it remains firmly tethered to human ingenuity and labor, whether coding in Bangalore or labeling data in Nairobi. Before rushing to declare AI the job-killer hero, consider who really keeps the lights on.

Artificial intelligence isn’t an alien overlord poised to take over. It’s a human-made puzzle — still far from solved. Sometimes, the smartest response isn’t panic or hype, but common sense and a dash of humor.

Book Signing at MENA Investment Congress

Following my presentation at the MENA Investment Congress, I had the pleasure of hosting a book signing session for my book. It was rewarding to connect with so many curious minds eager to explore the paradoxes of AI beyond the headlines.

Special thanks to CFA Society Emirates for organizing this fantastic event and providing a platform where critical conversations on technology, finance, and innovation could unfold with both rigor and wit.