Jaryd, thank you for posting, and Noah is right on the money. After reading his original post a few weeks ago, I wrote the following note to myself:
Humans have a huge comparative advantage over AI in terms of cost. Consider making a robot that can do the same job as a line cook.
The cost of acquiring, maintaining, supporting, and servicing this robot would be infinitely higher than the cost of employing a line cook who is less efficient at any single task but more effective at performing a sum of tasks. Here is how:
1. A robot can’t go to the basement to fetch a box of meat from a freezer;
2. A robot can’t instantly switch from grating onions to frying an omelet;
3. A robot can’t clean itself because electrical appliances, no matter how well done, aren’t compatible with water and soap;
4. A robot can’t repair its own mechanical and electrical components;
5. A mechanical robot will “wear and tear” much faster than a human.
6. Robots can’t make micro decisions the way humans can because robots’ inputs are limited;
That’s why all of the efforts and VC investments to build automated pizzerias have failed. The cost of automation, combined with the cost of infrastructure and support, ended up being higher than the cost of running a human-staffed pizzeria.
Or consider a DaVinci (robot-operated) surgical room vs. non-robotic:
Even though a DaVinci-run surgical room is theoretically capable of working 24/7, it is still limited by the capacity of people who employ it, and the cost of Da Vinci surgery vs. human surgery is many times greater:
Initial cost: A basic 4-arm Da Vinci Si system may have a purchase price of around $1.5 million. On a 5-year lease, the monthly lease for this system could be in the $30,000 to $40,000 range.
The more advanced Da Vinci Xi system, with additional features, may have a purchase price closer to $2 million. On a 5-year lease, the monthly lease for a Da Vinci Xi system could be $40,000 to $50,000.
Per surgery cos:
— The disposable robotic instruments: from $500 to $2,500 per instrument.
— For a typical surgery, the total instrument costs can range from $3,000 to $8,000.
— The sterile drapes and other accessories required can cost $500 to $1,000 per procedure.
— Hospitals can expect to pay $150,000 to $300,000 per year in maintenance and service contracts for a Da Vinci system.
— Initial training for the surgical team can cost $50,000 to $100,000.
— Ongoing staffing costs for a dedicated robotic surgical team can add $200,000 to $500,000 annually to a hospital's operating expenses.
In total, the extra costs associated with using the Da Vinci robotic system for a single surgical procedure can range from $4,000 to $10,000, with the annual maintenance and staffing costs adding several hundred thousand dollars to that.
Also, the Da Vinci-assisted robot requires specialized doctors, meaning that a doctor who can operate on a kidney can’t operate on a liver because this requires a completely different set of skills. On the other hand, a general surgeon can perform just about anything except highly specialized surgeries such as brain or heart transplants.
Summary:
Humans have a huge comparative advantage over robotic solutions in terms of cost, flexibility, adaptability, availability, longevity, decision-making, and many other factors. Opportunity cost — forget about it…
Jaryd, thank you for posting, and Noah is right on the money. After reading his original post a few weeks ago, I wrote the following note to myself:
Humans have a huge comparative advantage over AI in terms of cost. Consider making a robot that can do the same job as a line cook.
The cost of acquiring, maintaining, supporting, and servicing this robot would be infinitely higher than the cost of employing a line cook who is less efficient at any single task but more effective at performing a sum of tasks. Here is how:
1. A robot can’t go to the basement to fetch a box of meat from a freezer;
2. A robot can’t instantly switch from grating onions to frying an omelet;
3. A robot can’t clean itself because electrical appliances, no matter how well done, aren’t compatible with water and soap;
4. A robot can’t repair its own mechanical and electrical components;
5. A mechanical robot will “wear and tear” much faster than a human.
6. Robots can’t make micro decisions the way humans can because robots’ inputs are limited;
That’s why all of the efforts and VC investments to build automated pizzerias have failed. The cost of automation, combined with the cost of infrastructure and support, ended up being higher than the cost of running a human-staffed pizzeria.
Or consider a DaVinci (robot-operated) surgical room vs. non-robotic:
Even though a DaVinci-run surgical room is theoretically capable of working 24/7, it is still limited by the capacity of people who employ it, and the cost of Da Vinci surgery vs. human surgery is many times greater:
Initial cost: A basic 4-arm Da Vinci Si system may have a purchase price of around $1.5 million. On a 5-year lease, the monthly lease for this system could be in the $30,000 to $40,000 range.
The more advanced Da Vinci Xi system, with additional features, may have a purchase price closer to $2 million. On a 5-year lease, the monthly lease for a Da Vinci Xi system could be $40,000 to $50,000.
Per surgery cos:
— The disposable robotic instruments: from $500 to $2,500 per instrument.
— For a typical surgery, the total instrument costs can range from $3,000 to $8,000.
— The sterile drapes and other accessories required can cost $500 to $1,000 per procedure.
— Hospitals can expect to pay $150,000 to $300,000 per year in maintenance and service contracts for a Da Vinci system.
— Initial training for the surgical team can cost $50,000 to $100,000.
— Ongoing staffing costs for a dedicated robotic surgical team can add $200,000 to $500,000 annually to a hospital's operating expenses.
In total, the extra costs associated with using the Da Vinci robotic system for a single surgical procedure can range from $4,000 to $10,000, with the annual maintenance and staffing costs adding several hundred thousand dollars to that.
Also, the Da Vinci-assisted robot requires specialized doctors, meaning that a doctor who can operate on a kidney can’t operate on a liver because this requires a completely different set of skills. On the other hand, a general surgeon can perform just about anything except highly specialized surgeries such as brain or heart transplants.
Summary:
Humans have a huge comparative advantage over robotic solutions in terms of cost, flexibility, adaptability, availability, longevity, decision-making, and many other factors. Opportunity cost — forget about it…
So glad you included Noah Smith's take on this - much needed pragmatic antidote to all the dramatic tropes that people are flinging around!
Jam packed with great resources and tips! TY
Great resources Jaryd, and thanks for including Productify!