DJ Patil has spent the past several months on a listening tour. Wherever he travels, he finds a local university, pings faculty and students and anyone else who wants to show up, and runs an AMA. He’s heard from grad students who can’t get callbacks, hospital administrators absorbing federal policy changes that land like a change in the laws of physics, and executives who can’t forecast their AI spending past six months. He’s trying to synthesize all of it and help reframe the wider conversation.
DJ co-coined the term “data scientist,” served as America’s first chief data scientist under President Obama, and was chief scientist at LinkedIn. He’s a longtime O’Reilly author, going back to Building Data Science Teams and Ethics and Data Science, and he’s on the founding team at Devoted Health, where he’s spent the past decade building the kind of data infrastructure most organizations are still struggling to put in place. He calls it “the tidy house.” He sat down with me to talk about the gap between what the technology can do and what most institutions can actually absorb.
The broken promise
What DJ keeps hearing on his tour is anger and angst. One word that keeps coming up is “terrified.” Workers are worried about layoffs. Meanwhile, students, including those from top-tier universities like MIT, Carnegie Mellon, and UC Berkeley, have been applying to 300+ internships and getting fewer than 10 callbacks. Many had zero offers going into the summer. And the industry’s response has been to tell them to learn more AI and burn more tokens. What it comes down to, DJ explained, is “effectively a broken promise”:
We said, “Go to college, get these things, you’re going to get an internship, you’re going to get job training, you’re going to pay off your student loans, and then you’re going to have all the other things that are part of that social contract.”
What the students are feeling for the first time [is]…“Wait, if I can’t get this internship,…I’m fundamentally off trajectory from getting this job.” And it doesn’t have to be a technical person. It could be someone that is in marketing. It could be someone that’s in the liberal arts. It could be a researcher. . . .There are plenty of students that I have talked to who are supposed to be going to a doctoral PhD program or a medical school or something like that. The slots aren’t there because of the overall budget impacts. And so whether you call it AI impact or economic reframing, the thing is broken.
This is where I’ve been trying to build a counter narrative. The story coming from the AI labs is destructive: “We’re going to put all of you out of work, and we’ll figure out the rest once the intelligence explosion arrives.” That’s bad PR for AI, but it’s also magical thinking. An economy is a circulatory system. You can’t put your customers out of work and at the same time expect that the economy will hum along as usual. A catastrophic recession could easily interrupt the funding that keeps AI on its growth path and the concentration of value that they assume will fund universal basic income and an expanded safety net.
That’s why I’m a fan of mechanism design: start from the outcome you want, then figure out the rules of the game that produces it. Right now, they’ve designed a game that concentrates all the value in the hands of AI first movers. They could be designing a game that generates value throughout the economy. But they aren’t building affordances for that.
YouTube ContentID is a good example of mechanism design leading to economic value creation. When unauthorized music use by online video creators triggered a backlash from rights holders, YouTube replied to the takedown notices with a way for both the people who owned the music and the people who wanted to use it to get paid. A whole creator economy came out of that design choice. The labs have the same opportunity in front of them and mostly aren’t taking it.
DJ had one concrete mechanism in mind:
Imagine OpenAI and Anthropic and Microsoft. . .get together and [say], “If you’re building something for your local community, we’ll fully subsidize the token cost for some period of time.”. . .We’re talking about marginal token usage relatively on the spectrum of things, but the potential innovation and use of AI to help local communities could be astounding. You’re not putting anybody out of a job with that. . . .You’re filling the holes that already exist in the system.
The OpenAI Foundation just announced it will put $1 billion into public-benefit projects this year, including $250 million aimed at building economic futures. It’s a start. But it mostly seems designed to ameliorate the bad effects of AI rather than to forestall them by building a more inclusive AI future. If the labs start investing in the human-plus-AI economy rather than just studying the job losses, the payoff to local communities could be real.
A makerspace to bridge the internship gap
DJ’s plan is to build a bridge. He’s launching a program, basically a makerspace, for students who don’t have an internship this summer. Over two four-week sprints, an initial cohort will get mentors, speakers, and the space to explore whatever they’re interested in. It doesn’t have to be AI. Whether they’re doing investigative journalism, screenwriting, or building civic tech, participants will get some experience with current tools and produce a tangible asset they can use to prove what they know. As I told DJ in our conversation, I think he’s really on to something, and I’d love O’Reilly to be part of what he’s building.
There’s a kind of person who has always been at the center of the O’Reilly community and never waited for a job description. High school dropouts who started companies. People who looked around, found something that needed doing, and did it. DJ is one of them. He’s a community college kid who learned from a good local library, from the books with the “funny animals” on the cover, and from open source. That path is still open. The early O’Reilly business came out of exactly this instinct. We were a tech-writing consulting shop, and when we ran out of paid work, we wrote manuals that didn’t exist yet but that we thought were needed. Later, when there were big conferences for every corporate technology and none for open source, we ran the first one for Perl. Conferences became a whole new business for us. You look for the gap and you fill it.
DJ pushes the same idea down to the level of the neighborhood:
If you want to feel rewarded, go fix something in your neighborhood. Go help out the food pantry. Go help out the local foster child care system. Go help out. . .parks and rec. Use those skills to go do something, and then you’re going to see. . .people respond in a different way. . . .The target-rich area for problems is massive. You just have to look.
I’ve never bought the jobless-future story. Back when I wrote WTF? in 2016, I pointed out that there is so much around us that needs to be made better. The constraint has never been a shortage of problems. AI gives us new tools for solving them. It should be a way to put people to work, not out of work.
The organization is the bottleneck
DJ has also been visiting hospitals and clinics and talking to CIOs and CTOs as part of the tour, and what he’s seeing is alarming.
The federal changes to Medicaid and the Affordable Care Act are landing on systems that were already near collapse. Hospitals that depended on outpatient procedures like colonoscopies for margin are watching volumes drop 20% to 30% because people can’t afford insurance. Some are running $1 million a day behind, a $300 to $400 million shortfall for the year.
At the same time, AI companies are telling those same hospitals to move into the new world, and partly because of the “you will soon be replaced” narrative from the AI labs, labor is responding the way the Kaiser nurses did in California, where any use of AI was off the table as a bargaining condition. As DJ pointed out, we can’t afford to disregard AI, when it has the potential to automate the most painful parts of healthcare workers’ jobs and let them “do the job they’re trained for” without the administrative burden. Businesses need to change not just their narrative but their strategy. They need to be saying, “We’re going to use AI to help you do more for our customers. We’re going to make your job more human and let the machines deal with the BS.”
The constraint here is organizational capacity, not technology. The Silicon Valley default assumes that incumbents will just get disrupted by startups, the way media was by Google and Meta and retail was by Amazon. There’s some truth to that. But disruption takes much longer than people think, and in a domain this central, the delay means real harm to real people. Healthcare is a third of the economy. You can’t just let it fail and rebuild it fresh while people depend on it for survival.
There’s a version of this where the efficiencies AI creates get plowed back into better patient care. There’s also the version that’s actually happening in most places, where private equity captures the savings as profit. The difference is institutional design, and that’s where reform isn’t happening. I saw this directly with a Code for America project called Clear My Record. A California initiative had turned a number of petty crimes into misdemeanors, but very few people were petitioning to have their status changed. We started using software to streamline an absurdly convoluted criminal record expungement process, but then we asked ourselves why we were helping people fill out forms that shouldn’t exist. The law had already changed the record. The process should have been a database update, not something that required a petition to the court. That’s the kind of problem AI was born to solve. It can help us refactor old stuck processes and move to something way better.
Done right, DOGE could have been an opportunity to carry out that kind of real institutional change at scale. Instead it became a wrecking ball, and it’s given the whole idea of institutional reform a bad name.
Data infrastructure is the competitive advantage
DJ’s term for the alternative he’s living with at Devoted is “the tidy house.” He built the boring infrastructure years before LLMs existed, and that’s why the company could move the moment AI arrived.
One of the ways we’ve tried to make this work is fundamentally still data 101, unified data environments, data flows that are clean, that have a lot of organization. . . .Because we invested so heavily in that infrastructure, the dumb, boring, painful parts of making sure you’ve got a really great data warehouse, great data engineering pipes, all of the metadata that goes with it, when AI shows up, you get to use it right away. Now you get to focus on the orchestration, the harness, all those pieces.
While other organizations are reconstructing ETL inside context windows and paying for it in GPU costs, Devoted’s team gets to work on the actual clinical problems. As DJ put it, transforming a healthcare system is “like walking and chewing gum while balancing bowling balls on your head and on a unicycle,” with the laws of physics changing on you the whole time. The organizations that come through it will be the ones that did the unglamorous work of keeping clean, flowing data with its lineage and metadata intact. The ones that didn’t will keep paying to reconstruct context they should have had all along.
The pharmacists who built their own agents
The tidy house pays off when you put the tools in the hands of people who already know the domain. At Devoted, clinicians are building things without waiting for a product manager to learn the problem first. These frontline workers have already spent decades understanding it.
A pharmacist. . .says, “Hey, you know what? I’m really worried when I see these kinds of drugs show up together. That’s not a good thing. . . .Why don’t I have an agent that alerts me every time this happens? I should just automate it because maybe one of the patients gets prescribed something by another provider and we don’t see it.” So the pharmacist [says,]. . .”I’m just going to build that agent.” Now I’ve got an agent always looking for bad drug interactions. And another pharmacist says, “I’ve got my own version of that.” . . .So I say, “Hey, agent, I want you to go ask all the pharmacists that we have a quick survey of what might be happening. . . .What are the universe of things that we should be watching out for?” Now I’ve got a robust medical layer. . .looking out and protecting all of our members from bad drug interactions.
One clinician automating the thing they’d always done by hand expands to cover an entire membership of patients. Having the right infrastructure makes it possible to act on decades of accumulated judgment at the scale of the whole system.
The histogram is still the most powerful product
You don’t need exotic tooling to get value out of data, and DJ has a way of puncturing the assumption that you do.
Oftentimes, I tell people, the most powerful data product you can build is still a histogram. Just give me a distribution of what’s going on. . . .AI gives us a tremendous opportunity to let people [access this data quickly], but we’ve got to figure out the guardrails, so people don’t ask [questions] or get answers. . .[without realizing] that there’s a flaw in how they’re asking it.
We’ve been in this loop since the beginning of the data movement, DJ explained. The stewards of the data warehouse stand at the gate and say, “You shall not pass!” Then democratization breaks it open, and the gatekeepers reconstitute themselves in the next era. Hadoop did it last time. LLMs are doing it now, and the temptation to insist that only experts can use the tools correctly is as strong as it’s ever been. You do need ways to catch errors. But the goal should always be access.
The real opportunity is in the layers above AI models
That’s a new discipline forming inside computer science. We are increasingly having to engineer the trade-offs between conventional software and LLMs, when to reach for a local or open weight model, and what inference actually costs against what it returns.
Getting that right requires an expanded view of what economists call mechanism design. While this isn’t how economists talk about it, many advances in technology are really a form of mechanism design: redesigning the rules of a game to get better outcomes. Pay-per-click advertising started as a crude auction that sold to the highest bidder, and then Google refined it into something that worked. Rob McCool wired a web server to a database with CGI and ushered in a decade of invention of new mechanisms for data-driven websites. Or take Apache Kafka, which DJ reminded us began as a project to help LinkedIn rein in its Splunk bill and only later became the foundation for a company and an ecosystem.
We’re at the front of an architectural innovation cycle now, and the biggest opportunities are probably not in the models themselves but in the layers above them. That’s also where a renaissance of open source for the AI era could happen.
DJ and I are both, as he says, “this giant human LLM, summarizing and distilling all the things we’re hearing” from a lot of people. What we’re hearing is that the technology is mostly ready, but our institutions are not. What’s lagging is the organizational and economic infrastructure that lets universities, hospitals, data teams, and the labs themselves actually deploy what’s been built.
It’s time to get busy!
On June 10, Harper Reed, cofounder of 2389 Research, will join me to talk about why the future of software depends on creativity, serendipity, and building weird stuff. And on July 9, Trail of Bits cofounder and CEO Dan Guido will stop by to share his playbook for going AI native. You can register to attend them live here. You can also follow Live with Tim O’Reilly on YouTube, Spotify, Apple, or wherever you get your podcasts.