There’s a certain ferocity in the tech industry these days that both mimics past eras of big change like cloud computing (high costs in the early days), and unlike anything we’ve ever seen before (record revenues accompanied by mass layoffs).
One possible explanation: Tech executives, especially CEOs, collectively suffer from artificial intelligence delusions of grandeur. And at least one tech CEO has said as much: Box founder Aaron Levie.
“CEOs are uniquely susceptible to AI psychosis because they are so far removed from the last mile of work that needs to be done to create more value with AI,” Levie wrote to X.
CEOs “play with AI,” develop a prototype or create a contract, to use Levie’s examples, and then make the leap to believe that agents can do the job.
But these top executives aren’t the people who have to review code, find bugs, and identify calls to hallucinatory libraries before software is developed. They’re not responsible for training AI models on a company’s idiosyncratic contract terms, nor do they need to spend days trying to find sneaky terms, as Levie suggests.
In other words, Levie’s theory posits that CEOs don’t really understand processes well enough to know what actually can and cannot be automated. But this lack of knowledge does not prevent them from acting on their convictions.
It’s important to note that Levie is not an AI hater. The exact opposite. He mostly posts AI positivity on X to his 2.7 million followers, blogging titled “Headless software is the future” about how software built for AI agents is the way forward. He also puts his money where his mouth is, backing AI startups as an active angel investor.
So what should CEOs do? Levie advises CEOs to use AI “a ton” to really see what it can and can’t do, “and come out the other side with an appreciation for both the good and the real work.”
I have enough faith in humanity to believe that there are CEOs out there trying to do just that, but right now, they seem to be in the minority.
In the first five months of 2026 alone, the tech industry saw nearly as many layoffs as in all of 2025: 115,430 people have been laid off by 152 tech companies so far in 2026, compared to 124,636 people laid off by 275 companies in 2025, according to the industry tracker Layoffs.fyi.
And most companies have pointed to artificial intelligence as a reason for cutting those jobs. Many argue that the biggest tech companies are washing AI or crediting AI productivity gains to the past or future when other business decisions and metrics are actually driving the cuts.
However, some of these stories are amazing. Zeb Evans, the CEO of project management and productivity software startup ClickUp, proudly told X that he had laid off nearly a quarter of his employees — 22 percent — after deploying some 3,000 AI agents to do internal work.
Evans swore this was not done to cut costs. Instead, he wants a workforce made up of people who run AI agents and spend their days quickly reviewing the agents’ work. He believes this will create a “100x org,” as he calls it.
While AI can be a very useful tool, the data on AI and productivity do not support such assumptions. By miles.
A meta-analysis of another study published in October at UC Berkeley’s California Management Review found “no strong relationship between AI adoption and overall productivity gain.”
Research published in March by The National Bureau of Economic Research concluded that AI adoption has improved productivity, but noted “a productivity paradox, in which perceived productivity gains are greater than measured productivity gains.”
After you’ve created thousands of agents to work on jobs, researchers at MIT concluded that agents are simply not doing human-quality work yet in many cases. They predict at the current rate of LLM improvement, the models “will be able to complete most text-related tasks with success rates of, on average, 80%-95% by 2029 at a minimally adequate level of quality.”
In other words, artificial intelligence is on track to outperform on most tasks in about three years. These researchers believe it will take a few more years for the agents to overtake humans.
Meanwhile, research published in Harvard Business Review showed that when everyone uses AI to produce more stuff, the bottleneck just shifts to executives. Their job is waiting for the people who have to authorize all the things that everyone produces. If everyone is empowered to act, then from what OpenAI experienced last year, we can say that things can get out of control.
Are CEOs ready for this? If not, the most certain outcome of the CEO’s continued AI psychosis will simply be organizational chaos.
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