This article is less about technology and more about how value is created in businesses. AI simply happens to be the example.
When I first started trying to understand the economics of AI, I found myself drowning in technical jargon.
- GPUs
- Inference
- Tokens
- Context windows
- Compute clusters.
Everyone seemed to be speaking a language that made sense only to engineers.
Then one day I remembered the story of Aladdin (a legendary fictional character best known as the hero of “Aladdin and the Magic Lamp,” one of the most famous tales in The Thousand and One Nights (Arabian Nights)
And suddenly everything became easier to understand.
- There was a genie
- There were wishes
- And there was a lamp
- The genie was the AI model
- The wishes were the prompts and responses
- And the lamp was the source of the magic.
At first, I thought I had figured it out.
–> GPUs were the lamps.
–> Tokens were the wishes.
Case closed?
Or so I thought.
The more I read, the more I realized something wasn’t quite right.
- A GPU without electricity is useless
- A GPU without cooling is useless
- A GPU without networking is useless
- A GPU without engineers, software, capital, and infrastructure is just an expensive piece of silicon.
Which raised an uncomfortable question.
If the GPU isn’t really the lamp, then what is?
That question reminded me of another business I understand…
Contract Poultry (Broiler) Farming
And that’s when I noticed something interesting.
The same thinking mistake was being repeated in both industries.
–> People were focusing on the bird.
–> Just as they were focusing on the genie.
–> While missing the lamp entirely.
When Everyone Studies the Output, Study the Infrastructure Behind it
< –A lesson from poultry, artificial intelligence, and the hidden systems that create value –>
I have spent a good part of my life around poultry businesses in rural India.
And one thing I’ve learned is that outsiders often misunderstand where the business really is.
Ask someone what a poultry company does, and they’ll point at the bird.
- The bird is what they can see
- The bird is what gets sold
- The bird is what appears in photographs, advertisements, and annual reports
- The bird is the hero of the story.
But anyone who has actually run a poultry business knows the bird is merely the outcome.
The real business lies elsewhere.
- In genetics
- In feed
- In biosecurity
- In farmer relationships
- In logistics
- In working capital
- In disease management
- In market access.
The bird is simply the visible expression of an invisible system.
And over the years, I’ve noticed that this pattern repeats itself almost everywhere.
People become fascinated by the visible output while ignoring the infrastructure that made the output possible.
Recently, while reading about artificial intelligence, I saw the same mistake happening again.
Everyone is talking about the genie.
Very few are talking about the lamp.
The genie, in this case, is the AI model.
- ChatGPT writes
- Claude reasons
- Gemini does the research well
- The genie writes articles
- Answers questions
- Creates images
- Solves problems.
It appears intelligent, almost magical.
Naturally, everyone becomes fascinated by it.
But a genie without a lamp is powerless….
And that made me wonder.
What exactly is the lamp?
At first, I thought the answer was GPUs.
After all, every discussion about AI eventually leads to GPUs.
- Companies are spending billions to acquire them
- Countries are competing for them
- Investors are obsessed with them.
Yet the more I thought about it, the less convinced I became.
A GPU sitting alone on a table is not magical.
- Unplug it from electricity
- Remove the cooling
- Disconnect the network
- Take away the engineers
- The software
- The capital
- The land.
And suddenly it becomes nothing more than an expensive piece of silicon.
Which means the GPU isn’t really the lamp.
It is merely part of the lamp!
The lamp is the entire system ->
- The data centers
- The power plants
- The transmission lines
- The cooling infrastructure
- The fiber networks
- The supply chains
- The people who keep everything running.
The AI model is simply the visible outcome of all these invisible layers working together.
Just like the bird.
And that is when I realized this article isn’t really about poultry.
And it isn’t really about AI either.
It is about a thinking mistake we make repeatedly.
We confuse the visible product with the source of value.
During the Industrial Revolution, people admired the machines.
The winners secured coal.
During the internet boom, people admired websites.
The winners built networks.
Today, people admire AI models
Tomorrow, we may discover that the real battle was over power, land, and infrastructure.
Perhaps the winners will be those who control the infrastructure beneath them.
The lesson extends far beyond technology.
Whenever you study a business, look beyond the thing everyone talks about.
Ask yourself:
- What is the bird?
- What is the genie?
- Where is the lamp?
- And what powers it???
Because the visible output usually attracts the attention.
But the invisible system is often where the wealth is created.
Most people spend their lives studying the bird.
A few study the lamp.
And every so often, someone discovers that the lamp is not a thing at all –>
“It is a system”
That is where things become truly interesting….
