View from the Valley: AI engineers enjoy their independence day

Americans have been celebrating the Founding Fathers telling King George that they were going their own way and would spell colour/color any darn way they wanted. But over the past month many key AI workers have had their own independence day. In this scenario, Google played the role of the staid British and Anthropic the bright young Americans.

On June 1, Anthropic announced it would be going public and filed its S-1 registration with the Securities and Exchange Commission. It hasn’t set the price yet but word on the street is that it values itself at around a trillion dollars.

Now, IPOs offer the chance for the brightest minds to make millions very quickly. How tempting for key AI staff to jump: rather than be a salaried employee at Google, they can join the IPO gold rush.

First to move was the appropriately named John Jumper, Google DeepMind Director. Jumper shared the 2024 Nobel Prize for Chemistry for his work creating AlphaFold, an AI engine that can predict and model protein structures. Now, after a short break, he’s at Anthropic.

He was reportedly soon followed by Jonas Adler, DeepMind’s Principal Research Scientist, and Alexander Pritzel, a Senior Research Rcientist at Google’s AI braintrust. To add insult to injury, Noam Shazeer, Co-Tech Head of Google’s Gemini, announced he too was leaving – although to OpenAI.

All of this is deeply embarrassing for Google, not least because this month the company announced a $80 billion equity program to fund its AI ambitions. It does, at least, have Apple to fall back on. At this month’s WWDC conference Apple announced closer ties to Gemini on its kit, since Apple has decided not to enter the AI arms race and simply hire the technology instead.

But for the IPO, do Anthropic’s figures add up, or will the new arrivals end up out of pocket? The industry’s Cassandra, namely Ed Zitron, claims the AI business is fudging its figures. We shall see.

All this money is taking prices to the Moon

While SpaceX is technically no longer a Silicon Valley company, xAI is, and the IPO this month made Elon Musk a trillionaire. For a brief period at least. Money was also lush for staff who had been there for a long time, so long as they sold at the peak of $200 per share.

This, and the influx of highly paid AI staff into the Valley, has caused massive inflation in key areas, notably housing. House buyers report getting overbid to the tune of millions in the swankier places in San Francisco like Pacific Heights, Nob Hill and the Marina. The situation is even worse in the Silicon Valley nexus of Mountain View, Menlo Park and Palo Alto.

And if you’re a renter… well, good luck. Prices have rocketed over the past year and are only going up. I spent much of last week at the AI Engineers World’s Fair where staff were bemoaning the current situation. And not surprisingly: people are living in shared apartments and converting living rooms into bedrooms to afford to live in the area.

It’s a big change from lockdown, when landlords were offering rent holidays to convince people to move in. If you’re offered a job out here, make sure you have your bases covered before packing your suitcases.

The party’s over

Independence Day is now finished, and the last fireworks are done (hopefully, for those with pets). And the party is over in more ways than one.

For the 100,000 people who turned up to see the holiday fireworks in San Francisco, there were multiple disappointments. The display itself was hidden by Karl the Fog, the name locals have given the phenomenon that keeps the city cool in the summer. All people got to see was vaguely coloured/colored patches of mist.

Waymo didn’t cover itself in glory either. The autonomous cars suffered a hissy fit and caused traffic jams again after the city shut down streets for revellers – the AI just couldn’t handle it. Several ran out of power and had to be towed, causing yet more chaos.

And there’s a definite feeling of foreboding in the air. Those who have been through the internet boom at the turn of the century, the property bust of 2008, and the catastrophe of lockdown, are feeling that something is up again.

AI companies are currently propping up an increasingly sclerotic US stock market, valuations appear to make no sense, layoffs in traditional tech jobs continue to climb, and more than a few people are battening down the hatches for what could be an epic storm ahead.

If the bubble pops the Valley could be a very different place, and it has little to fall back on anymore.

More from Iain Thomson

• Don’t panic, says Katie Moussouris: AI security isn’t replacing humans, it’s proving the need for them
• SpaceX IPO makes Musk the first trillionaire, thanks to your pension funds