Generative models are AI's next pillar of value creation Models like DALL·E and Stable Diffusion are creating a new paradigm for AI applications.

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Illustration of an oasis in the middle of a field covered in snow

Dear friends,

As the winter holiday approaches, it occurs to me that, instead of facing AI winter, we are in a boiling-hot summer of AI.

The vast majority of economic value created by AI today comes through the tool of supervised learning, trained to generate short labels (such as spam/not-spam) or a sequence of labels (such as a transcript of audio). This year, generative AI, which is built on top of supervised learning, arrived as a second major tool that enables AI to generate complex and compelling outputs such as images or paragraphs of text.

Some previous attempts to develop major new tools — for example, reinforcement learning — have not yet borne fruit commensurate with their hype. But generative AI is working well enough that it’s creating a new paradigm for AI applications.

And supervised learning is still far from achieving even a small fraction of its potential! Millions of applications that can be solved by supervised learning have not yet been built. Many teams are still trying to figure out best practices for developing products though supervised learning.

In the coming year and beyond, I look forward to wrestling with generative AI to create massive amounts of value for everyone. I feel lucky to be alive in this era, when technology is growing rapidly and we have an opportunity to create the future together! I feel even luckier to share this world with my family and with you.

Happy holidays,



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