I have a little confession. Sometimes I like to go into Best Buy and just listen. I pretend to be shopping or modem bearings or a left handed torque wrench. What I’m really doing is hearing how people sell computers. I remember when 8x CD burners were all the rage. I recall picking one particular machine because it had an integrated Sound Blaster card. Today, I just marvel at how the associates rattle off a long string of impressive sounding nonsense that consumers will either buy hook, line, and sinker or refute based on some Youtube reviewer recommendation. Every once in a while, though, I hear someone that actually does understand the lingo and it is wonderful. They listen and understand the challenges and don’t sell a $3,000 gaming computer to a grandmother just to play Candy Crush and look up grandkid photos on Facebook.

The Experience Matters

What does that story have to do with the title of this post? Well, dear young readers, you may not remember the time when Best Buy Blue was locked in mortal competition with Circuit City Red. In a time before Amazon was ascendant you had to pick between the two giants of big box tech retail. You may remember that Circuit City went out of business in 2009 thanks to the economic conditions of the time, but the real downfall of the company happened years earlier.

One of the things that set Circuit City apart from everyone else was their sales staff. They earn commissions based on helping customers. That meant they had to know their stuff to keep making money. And the very best of them could make a LOT of money. It also contributed a lot to the performance of the stores. The very best of the best were making a dent in the profit margins of the stores. What should management do about that?

If you guessed something sane and positive, you’d be wrong. In 2003, they eliminated their commissioned sales staff and fired nearly 4,000 of the best. You can just imagine what happened next. Sales plummeted. The associates left behind weren’t the top performers. They struggled to hit the revenue targets. Management panicked. They tried to rehire the furloughed overachievers at entry-level hourly rates. There was raucous laughter and lots of middle fingers. And five years later Circuit City collapsed into fodder for Youtube historians to analyze.

What doomed Circuit City was not an economy bubble popping. It wasn’t Amazon or the rise of independent influencers. It wasn’t cheap parts or dupes of the best camcorders and tape recorders. It was the hubris to think that the people that had spent their careers learning the ins-and-outs of technology were replaceable but less skill and less cost to the business. Inexperience may sound impressive to those that don’t understand but the knowledgable customer knows the difference. The Circuit City execs learned that lesson the hard way. But our old friend George Santayana has a new generation to teach.

Repeating The Past

How could you possibly decide to fire your best performers and replace them with something cheap that spouts out approximate answers that look correct but are ultimately useless when applied in reality? What kind of CEO would think about that just to shave some numbers off the bottom line in the name of Shareholder Value?

Oh. Yeah.

AI.

LLMs are making advances by leaps and bounds compared to just eighteen months ago. But they are not a replacement for people that understand the actual technology. LLMs don’t learn the way that people learn. They are trained and refined to find better solutions to problems but they don’t “learn”. They just get slightly better over time about not putting adverbs in every sentence they write. People make math mistakes that blow up switches and routers. LLMs eventually learn that the word “double” doesn’t always mean double.

To an executive, LLMs sound impressive. They’re filled with impressive words that mean a lot of nothing. To knowledge workers, LLMs create approximations of words that have no meaning. Nowhere is this more apparent in the fact that we’ve created entire acronyms of things like Retrieval Augmented Generation (RAG) to reduce the likelihood that an LLM will just make something up because it sounds good. If you need someone other than just make something up because it’s what an executive wants to hear I’m way cheaper than any GPU cluster that NVIDIA is shipping today, including power consumption costs.

Shaving Dollars and Sense

Circuit City thought that customers wouldn’t know the difference between Bob the Sales Juggernaut’s expansive knowledge of DVD players and Billy the New Guy’s attempts to sound as impressive as Bob. The kinds of people that will pay top dollar for a plasma TV know the difference. The kinds of people that rely on Bob to tell them what to buy because they’re too busy to shop don’t. Circuit City thought they could save on the bottom line by removing experience and they removed the entire bottom line, along with everything above it too.

The rumblings are already there in the market. Entry level tasks will be handled by AI so we can focus on higher-order thinking. The real value is going to be in the way that experts solve problems. At least until we figure out the next thing after LLMs which can try to approximate the thinking of those experts. Then we start the cycle all over again. And those experts? Do you know where they got the knowledge? But doing the meaningless entry-level tasks until they mastered them. They learned as they worked. They tweaked their own algorithms without the need for fifty new GPUs.

Tom’s Take

Thinking you can replace experience with cheap substitutes leads to disaster every single time. “Good enough” isn’t good enough when people know enough about the subject to understand they’re hearing garbage. In fact, I’d argue that AI might be good enough to do the one thing that Circuit City didn’t figure out for years. If your executive team is so great at making poor decisions that they could be replaced by a soulless software program, maybe they should be replaced instead. You might still go out of business eventually but the reduced salaries at the top might keep the lights on a little longer. Who knows? Maybe AI could learn a thing or two that way.