AE x AI

As we wrap up 2025, the tech industry is taking a victory lap for 'solving' natural language. We have LLMs that can pass the Bar exam, write poetry, and mimic human empathy. But if you look beneath the surface of the 'Chat' hype, you’ll see the cracks in the foundation. I’m calling it now: 2026 will be the year the Chatbot dies. From Consumption to Production The Chatbot is a consumption good. It’s a way for humans to consume information more efficiently. But as I’ve argued throughout this year, the marginal utility of "more information" is crashing toward zero. In 2026, the focus will shift from Conversation to Capital . We are going to stop 'talking' to our computers and start "employing" them. The technologies we’ve seen emerging in late 2025—projects like Clawdbot and the move toward Local-First Agents —are the early signs of a transition toward Autonomous Capital. The Rise of the Agentic Loop In 2026, we will see the 'Agentic Loop...

We are currently in a 'Prompt Engineering' gold rush. Everyone is trying to find the magic sequence of words to make an LLM spit out the perfect essay, the perfect code, or the perfect image. But as an observer of economic cycles, I can’t help but notice a familiar pattern. We are overvaluing the input and ignoring the marginal utility of the output . The Collapse of Content Value In Austrian Economics, Carl Menger taught us that the value of a 'higher-order good' (like a prompt) is derived from the value of the "lower-order good" it produces (the content). Right now, the cost of generating a paragraph of text is trending toward zero. When the supply of 'good enough' content becomes infinite, its marginal utility collapses. If everyone can generate a 1,000-word strategy memo in three seconds, the value of that memo isn't the 1,000 words—it’s effectively zero. The Shift from 'Chat' to 'Agency' I believe we are hitting the ceiling of...