Gen Z: The Support System for Their Lifestyles

This final season has taken an unusual turn across university grounds where students continue to push through their tests with late nights and copious amounts of coffee, much like past years. However, they're now receiving even greater assistance from artificial intelligence tools. Until the end of May, OpenAI is providing students complimentary access to ChatGPT Plus for two months; usually priced at $20 monthly. This offer presents quite an attractive proposition for those seeking support during last-minute study sessions—or potentially taking shortcuts—through their final examinations. Instead of relying solely on the standard version of ChatGPT for tasks such as composing essays or tackling sample questions in subjects like chemistry, learners can now tap into the firm’s cutting-edge technologies along with its "extensive research" feature capable of swiftly compiling information from numerous online resources into comprehensive analysis documents.

The OpenAI agreement is merely one among numerous similar AI initiatives circulating in educational institutions. Over the past few months, Anthropic, xAI, Google, and Perplexity have likewise provided students either complimentary or heavily discounted access to their premium chatbot services. Certain promotional efforts are rather blatant, as evidenced by an xAI staff member’s recent message: "Best wishes for your final exams," they said. wrote alongside details about the company’s deal. Even before the current wave of promotions, college students had established themselves as AI’s power users. “More than any other use case, more than any other kind of user, college-aged young adults in the US are embracing ChatGPT,” the vice president of education at OpenAI noted In a February report, Generation Z is leveraging this technology not just for academic purposes but also incorporating AI into various aspects of daily life. They use it to create customized exercise routines, compile shopping lists, and even seek guidance from chatbots on matters of romance.

AI firms' promotions are luring these younger users, who typically aren’t willing to spend several hundred dollars annually to try cutting-edge AI offerings. This scenario might sound quite recognizable. It echoes what happened during the 2010s when numerous startups competed fiercely to attract customers by providing them affordable entry points to their platforms. They particularly focused on affluent millennials living in cities. At surprisingly low costs, you could kick off your morning with yoga classes scheduled through ClassPass, have lunch delivered using DoorDash, and hop onto a Lyft ride to join friends for drinks downtown. (For example, as noted, Uber fares increased almost twofold between 2018 and 2021.) analysis These businesses, along with numerous others, were responsible for creating what became known as the " Millennial lifestyle subsidy ." Something akin to this is now happening with AI. Dub it the Gen Z lifestyle subsidy. Rather than affordable Uber rides and discounted pizza deliveries, contemporary college students receive complimentary access to SuperGrok.

Artificial intelligence firms are making significant efforts to attract students. For instance, Anthropics has launched a "campus ambassadors" initiative aimed at increasing engagement. In an initial push, the company provided selected university students with a full year of premium access to their AI tool, Claude, for just $1 per month. Josefina Albert, who is finishing her degree at the University of Washington and serves as one such ambassador, mentioned sharing this offer with fellow students and contacting faculty members about promoting it in class. She noted that most academics responded cautiously, which makes sense under the circumstances.

The present discounts have an associated expense. There are approximately 20 million. postsecondary In the U.S., merely one percent of students are utilizing the complimentary ChatGPT Plus service over the coming two-month period. This means that the startup is essentially providing approximately $8 million worth of assistance to these students. To firms in Silicon Valley, this amount might seem like a minor expense. However, numerous students could well be benefiting from several similar offers simultaneously. Furthermore, AI businesses aren't just supporting college students; they're also covering expenses for others too. Major AI corporations provide free editions of their tools even though developing this tech comes with significant costs. Each interaction within a chatbot incurs charges as someone covers the expenses related to processing and delivering responses. Such expenditures can quickly escalate—OpenAI alone serves over half a billion weekly users, indicating substantial financial outlays. fraction Of these, some are paying subscribers. As recently as last week, Sam Altman, the startup’s CEO, suggested that his firm incurs expenditures of tens of millions of dollars handling "please" and "thank you" messages from users. Additionally, the expense of training these models might amount to as much as $1 billion For the highly advanced models, the cost escalates significantly. The Atlantic recently formed a corporate alliance with OpenAI. )

These expenses are significant because, even though AI startups have huge valuations (OpenAI was recently estimated at $300 billion), they remain highly unprofitable. In January, Altman mentioned that OpenAI was indeed losing funds for its $200-per-month "Pro" subscription. This year, the firm is supposedly projected To spend almost $7 billion; within several years, this figure might soar up to approximately $20 billion. Typically, such significant financial losses would be detrimental for a business strategy. However, both OpenAI and its rivals can concentrate on user acquisition thanks to the massive amounts of capital garnered from backers. As noted by my associate Matteo Wong explained Last summer, Silicon Valley embarked on a trillion-dollar gamble, with plans to invest more in artificial intelligence than NASA does. spent During the Apollo space missions, with the expectation that ultimately these investments will yield returns.

The financial support for the millennial way of life was amplified by an enormous influx of capital. Companies like Uber and Lyft in the ride-sharing industry attracted numerous customers despite their well-known history of operating at a loss for many years. In 2015, at some point, Uber was offering Carpool rides around San Francisco for only $5, all while burning through $1 million each week. The economic model was surprisingly fragile at times. For instance, in 2019, the proprietor of a pizza place in Kansas faced similar issues. noticed that his establishment had been included in DoorDash without his consent. Even more bizarrely, a pizza he sold for $24 was listed as $16 on DoorDash, even though the company paid him the entire amount. In its pursuit of expansion, the food-delivery startup had reportedly He took his restaurant's menu, uploaded it onto their app, and offered his pies with significant discounts. (Of course, the pizzeria owner began placing orders for his own pizzas via DoorDash, turning a profit as a result.)

These offers weren't permanent, and neither Could free AI. The subsidy for the Millennial lifestyle was ultimately introduced. crashing When inexpensive funding dwindled, investors who had previously permitted these startups to provide services at below-market rates started seeking profits. Consequently, businesses had to increase their prices, leading some of them to falter and eventually close down.

If they wish to thrive, AI firms will ultimately need to generate profits for their stakeholders. Gradually, the core technology will become more affordable; even as expenses rise, advancements are enhancing effectiveness. driving down Specific costs. New ventures might generate additional income via high-end premium business solutions. OpenAI is reportedly thinking about offering "PhD-level research agents" for $20,000 per month. However, it’s improbable that firms like OpenAI would permit an endless stream of free users without restrictions. This could be why the startup is simultaneously developing solutions for both search and social media; over the last twenty years, Silicon Valley has largely mastered the business strategies for these areas.

Today's giveaways push OpenAI and similar firms deeper into losses for the moment, yet this might not be the case in the future. Remember, millennials got used to using Uber and Lyft, and they've continued to use these ride-hailing apps despite price increases. increased Since the beginning of the pandemic, as students learn essay writing and computer programming with the aid of artificial intelligence, they're growing increasingly reliant on this technology. Should AI firms manage to get these youngsters hooked on their tools today, they might count on those same individuals being willing customers down the line.

A number of younger individuals have already become addicted. In a recent development from OpenAI, r eport Regarding college students' use of ChatGPT outside education and career contexts, "relationship advice" emerged as the top choice. During discussions with various young individuals, I learned they were utilizing AI tools for tasks such as matching makeup colors, making tailored grocery lists according to budgets and diet choices, crafting personal meditation sessions, designing half-marathon workout plans, and getting tips on caring for plants. While talking to Jaidyn-Marie Gambrell—a 22-year-old from Atlanta—she shared an experience she had earlier at a McDonald’s parking lot. She asked ChatGPT whether ordering a McChicken would be wise. With her previous inputs regarding health objectives still stored, the bot dissuaded her. However, if she insisted on having a sandwich, ChatGPT recommended opting for the McChicken without mayonnaise, adding more lettuce and tomato slices, but skipping the fries. This was precisely how she placed her order.

The Gen Z lifestyle subsidy isn’t entirely like its Millennial predecessor. Uber was appealing because using an app to instantly summon a car is much easier than chasing down a cab. Ride-hailing apps were destructive for the taxi business, but for most users, they were just convenient. Today’s chatbots also sell convenience by expediting essay writing and meal planning, but the technology’s impact could be even more destabilizing. College students currently signing up for free ChatGPT Plus ahead of finals season might be taking exams intended to prepare them for jobs that the very same AI companies suggest will soon evaporate Even the most engaged younger users I talked to expressed ambivalent sentiments regarding this technology. "Some individuals are breezing through college thanks to ChatGPT," Gambrell shared with me. "Such ease of use might easily lead to misuse." Whenever businesses provide freebies, people generally accept them readily. Ultimately, however, somebody will have to foot the bill eventually.