Interview, Fireside Chat
The Ads Business Model Will Die & Lessons from Working with Elon at Twitter | Parag Agrawal
- Agent usage is predicted to surge to 1,000 times human web traffic, necessitating new technology and business models capable of surviving three orders of magnitude in demand growth.
- Web search efficiency must improve by 10 to 100 times to accommodate this volume, with latency requirements dropping to 100 milliseconds for voice agents compared to 500 milliseconds for humans.
- Output formats are expected to shift from "blue links" to tokens or file system entries, while voice agents may trigger push-based events for persistent tasks rather than pull-based queries.
- Model strategies will diverge, with smaller models achieving fixed performance levels every six months while frontier models continue growing to address high-value incremental quality needs.
- Compute resources may be allocated repeatedly for the same problem to marginally improve answers, with 5 to 20% of GPU allocation projected for web search stacks within the next few years.
- The routing layer will retain value amidst tight and volatile GPU and token supply, while data transactions at inference time are projected to become highly valuable in three to five years.
- Web search pricing is anticipated to drop by one order of magnitude or more, potentially achieving a 10x reduction within three years to align with optimal costs that are currently ten times higher.
- Agents are expected to eventually access all platforms on undefined terms, potentially dissolving the current advertising industry in favor of payment models based on variable information utility.
- The overall market size for content and web interaction is expected to increase as agents add utility, rather than merely shifting existing value share.
- A specific company projects scaling revenue in line with a 3x to 7x year-on-year inference market growth rate, with a potential $100 billion valuation achievable in the next few years.
- Social acceptance of agents accessing bank accounts and spending money is anticipated, though likely occurring beyond a three-month timeline.
- Wealth dispersion is noted as a risk for excessive disparity without intervention, while companies refusing horizontal integration risk being boxed out by vertical strategies.
- The next decade is characterized by expected chaos and change, with individuals able to build tools to materialize the future, potentially leading to the emergence of "hegions."