Reason 1: The Fields Only Reward Top Performers#

The first reason AI money-making schemes often fail is that the areas where these programs supposedly work well only really pay off for the absolute best performers. And right now, AI simply doesn’t produce content as good as the best humans can.

A super popular “AI hustle” you’ll hear about is creating fully automated YouTube channels. The plan usually goes like this:

• Use ChatGPT to write the video script.
• Use Midjourney or similar AI to create visuals (like a slideshow).
• Use free online software to put it all together into a video.
• Post it on YouTube and hope to make money from ads (that “sweet ad revenue”).

Here’s the reality check for that:

• To even qualify for monetization on YouTube (joining the Partner Program), a channel used to need 4,000 hours of watch time and 1,000 subscribers.
• This was so hard that YouTube lowered the requirement to 3,000 hours of watch time and 500 subscribers.
• Even with the lower bar, less than one percent of channels ever qualify for monetization.
• And even among the channels that do get monetized, most are only making a few dollars a day.
• It took me, and most other creators I talk to, more than a year of making content before we were even eligible to be monetized.

Letting AI do all the work plays right into one of the key grift ingredients: people need to believe it will be easy.

The problem is, AI isn’t very good yet. You don’t see many successful channels run by robots not because people aren’t trying, but because the YouTube algorithm just doesn’t push them out there. It prefers better videos made by real creators putting in real effort. You might find the energy of people like Mr. Beast or the Paul Brothers weird, but they are way more engaging than an AI reading a script, so they get millions of views while the millions of people trying automated channels get next to nothing.

Drop Shipping is another common grift that has this same apparent advantage (it seems easy) which is actually its biggest weakness (it’s not competitive). If you haven’t been pitched the Drop Shipping dream yet, it works like this:

• Find cheap products from overseas companies, often on sites like Alibaba.
• Set up your own website to sell these products for more money.
• When someone buys from your site, you buy the item from the overseas seller and just give them your customer’s address to ship to.
• You keep the difference in price.

The issue? You’re competing with thousands of other people doing the exact same thing. You’re also competing with giants like Walmart and Amazon. They offer:

• Faster delivery times
• Better brand recognition
• Lower prices
• A wider product selection
• Millions of visitors constantly browsing their sites

On top of that, people selling Drop Shipping courses rarely mention that your customer could just go on Alibaba themselves and buy the product cheaper.

Creating content using AI runs into all these same problems. It’s pitched as an easy way to build a business or make extra cash, but it’s never going to truly compete with people putting in real effort to create a better product or service. How long would you watch a video with an AI voice reading a script generated by a computer? Wouldn’t you rather watch content from dedicated creators on YouTube? Of course you would. And since YouTube wants you to stay on their platform as long as possible, they will always promote content that keeps people engaged, which AI-generated content currently struggles to do.

Reason 2: The Ways It Can Make You Money Sound Credible#

The lack of competition due to the zero barrier to entry is just the first problem. The second reason AI has become such a fertile ground for grifts is that the ways people claim it can make you money sound believable.

ChatGPT just mixes together information it found online, but it can still do some pretty impressive things. We’re all trying to figure out if it’s magic, just algorithms, or if it will save or destroy us.

Another popular AI money-making idea is letting ChatGPT pick stocks for you. Big financial influencers have made videos about this, and even respected news outlets like CNN Business have published articles suggesting AI chatbots could pick stocks better than a professional fund manager.

Hopefully, to most of you, that sounds completely ridiculous, because it is. But it’s easy to see why people might fall for it:

• Financial education is seriously lacking in places like America and many other countries.
• People are often just told “you should invest” and left to figure it out.
• Paying for a professional financial advisor is expensive – paying someone $2,000 to tell you what to do with your remaining $8,000 makes active investing pointless for smaller amounts.
• This leaves turning to people online who give general advice (which isn’t right for everyone) or, in some cases, advice sponsored by… (this is where the original text mentioned a sponsor, FTX).

Another thing people know is important but don’t know much about is AI. So, speaking with even a little bit of authority on both finance and AI can attract a large audience.

There are computer programs used by major investment firms called Quant funds. These are coded by people with PhDs in stats, physics, and computer science. They use millions of data points to try and get a tiny edge in trading. This fact makes the claim about AI investing sound credible – ChatGPT is also an impressive computer program using a huge dataset, and it’s been able to pass things like the bar exam on its first try. So, shouldn’t it be able to do what those Quant algorithms do?

Wrong. The programs Quant funds use only work when they follow a strategy exactly, and often they don’t work. When they do work, it’s usually only for a short time before the market figures out what they’re doing and copies it. That’s very different from passing the bar exam, which is mostly about memorizing legal precedents. ChatGPT’s huge training data gives it an advantage there – an average person with some basic legal knowledge could probably pass the bar if they could bring a laptop with a massive archive of case law into the exam room, but they can’t.

Investing is totally different. Any strategy you can get by typing a simple question into ChatGPT will have zero competitive edge because anyone else can do the exact same thing. Also, ChatGPT:

• Does not take your personal financial situation into account.
• Its training data often only goes up to a certain point (like 2021), making it potentially out of date for fast-moving markets.

The reason good financial creators on YouTube don’t tell you exactly what stocks to buy is because they know it’s impossible to give good, specific advice to such a huge, diverse audience. This is frustrating for them because they see others making lots of money by claiming to be financial experts and giving advice that’s actually harmful to people. So, don’t ever expect creators like Meet Kevin to sell you a stock investing course (the text humorously includes a clip where this creator says “thank you so much for considering this course” followed by “you are fake news”).

It’s also frustrating for the audience! People like Patrick Boyle, The Plain Bagel, and Ben Felix are financial professionals with real qualifications, licenses, and certifications, making them much better equipped to give advice. But precisely because of their experience, they know they cannot give specific advice to an unknown audience. A simple recommendation like “buy a broad market index fund” is good advice for some people, but it could be terrible advice for someone with short-term financial goals, high-interest debt, or no emergency savings. As YouTubers, we can’t control who watches, so the safest and best approach is not to give any specific financial advice at all.

ChatGPT has the same limitations. It doesn’t understand your finances. It just predicts the most likely next word to type based on its training data. So, even if it looks like it can make things easier, please do not use it for financial advice.

The AI hype is made to sound even more credible because, honestly, some people are going to get rich from this technology. The fear of missing out (FOMO) on an exciting trend like this can make it hard to think clearly.

The people who are likely to make millions in this AI industry fall into three main groups:

1. People who can actually create programs like ChatGPT. These are geniuses in machine learning who can start their own companies or get massive salaries from big tech companies needing top talent.
2. People who have already invested in AI companies that are now seeing their value increase due to investor excitement and hype.
3. People who run regular, existing businesses that can use AI to make their operations more efficient. This is different from trying to build a business entirely from scratch using only AI.

If you’re not in one of these groups, that’s okay! Nobody can be in the right place at the right time every single time, and chasing trends just because they’re hyped up is usually a costly mistake.

Reason 3: It’s Easy to Claim a Secret Formula#

The third reason AI is becoming such a great grift is how easy it is for people to claim they have a “secret” method to make it all work.

AI programs are user-friendly, but they still have a learning curve. To really use them effectively, you’ll likely need to look up guides online to figure out how to get them to do what you want. This creates an easy opportunity for people to make big claims and get clicks.

They might claim their “secret” is harmless, but it’s not always. One of the biggest problems in the online finance space is a strategy sometimes called the “bait and backpedal”.

• This is when a YouTuber uses a clickbait title like “How to Use ChatGPT to Become a Millionaire”.
• Then, in the video itself, they say absolutely nothing about how the program is actually supposed to make you a million dollars.
• People who are good at this will even protect themselves by saying later in the video that people shouldn’t risk their money and that AI isn’t meant for making lots of money – that’s the “backpedal” part.
• This way, if anyone calls them out, they can just say, “Well, you clearly didn’t watch the whole video.”

But by then, the damage is done. Not everyone who sees a catchy thumbnail will click on the video. On average, for every one view my channel gets, the video needs to be shown to about 15 people (I’m not very good at clickbait, so my numbers might be worse). A lot of people will just see the thumbnail claiming “ChatGPT can make you a millionaire” and never watch the video that says the exact opposite.

Reason 4: It’s Easy to Believe It Could Change Your Life#

And that brings us to the fourth reason: it’s easy to believe that these easy AI methods could really change your life.

Starting a business or investing successfully isn’t exciting. If it feels exciting, you’re probably doing something wrong. Investing is a long-term, often boring process that rewards discipline much more than chasing the latest trend. Starting a business is similar, just with the added ingredient of a lot of really hard work.

An easy shortcut sounds amazing, of course. But one of the best examples of why skipping the boring hard work doesn’t work is actually the second richest family in America. They run their massive business in such a traditional, old-school way that their executives still have to sign in using a punch card! Not chasing trends like AI is exactly a big part of how they have stayed wealthy.

To understand the hidden brilliance behind doing things the old way, you can watch a video about how a broke candy maker built the fourth largest private company in America (Note: This is referencing another video by the creator).

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