AI After the Bust

I was a postgraduate student when the dot com mania hit. Everyone was trying to start an online business, and investors were throwing fistfuls of cash at anyone with a shonky business plan and a page of HTML. Of course, in 2000 it all went bad, the bubble burst in the (in)famous dot-bomb crash. And a lot of dot com companies disappeared. Many years ago I read the book "Dot Bomb" by J. David Kuo that described how this happened with the internet company Value America. Part of that book's subtitle was along the lines of "from lunatic optimism, to panic and crash"There is a similar bubble now with AI. Everyone is shovelling AI into their products, or they're starting an AI company that pushes their own twist on large language models, or they're trying to find a way to insert AI into their operations just to be able to say they use AI.The bubble is going to burst. And when it does, a lot of AI companies are going to get taken out.So does this mean the end of AI?Well, no. When the dot com bubble burst, a lot of internet companies were taken out, but other companies survived. These are the companies that actually provided useful services, like Google, or sold products people actually wanted, like Amazon, or facilitated small commercial operations like eBay and TradeMe. Since then, they have become part of the fabric of our existence, part of the background hum of our lives. And other internet companies have also arisen that build on the idea that if you do something useful, in a way that makes it easy for money to get to you, money will get to you. In my opinion, the same principle applies to AI. Those AI companies that provide a useful service, in such a way that money can easily get to them, will continue to make money and will thrive. Those companies that do not do these things will not survive. The lunatic optimism will fade away, just as it did with the dot coms. And the panic that accompanies a crash will fade away. And those that survive the crash, will keep going, and AI will be just become part of the background hum of our lives.

Apr 10, 2025 - 00:41

I was a postgraduate student when the dot com mania hit. Everyone was trying to start an online business, and investors were throwing fistfuls of cash at anyone with a shonky business plan and a page of HTML. Of course, in 2000 it all went bad, the bubble burst in the (in)famous dot-bomb crash. And a lot of dot com companies disappeared. Many years ago I read the book "Dot Bomb" by J. David Kuo that described how this happened with the internet company Value America. Part of that book's subtitle was along the lines of "from lunatic optimism, to panic and crash"

There is a similar bubble now with AI. Everyone is shovelling AI into their products, or they're starting an AI company that pushes their own twist on large language models, or they're trying to find a way to insert AI into their operations just to be able to say they use AI.

The bubble is going to burst. And when it does, a lot of AI companies are going to get taken out.

So does this mean the end of AI?

Well, no. When the dot com bubble burst, a lot of internet companies were taken out, but other companies survived. These are the companies that actually provided useful services, like Google, or sold products people actually wanted, like Amazon, or facilitated small commercial operations like eBay and TradeMe. Since then, they have become part of the fabric of our existence, part of the background hum of our lives. And other internet companies have also arisen that build on the idea that if you do something useful, in a way that makes it easy for money to get to you, money will get to you.

In my opinion, the same principle applies to AI. Those AI companies that provide a useful service, in such a way that money can easily get to them, will continue to make money and will thrive. Those companies that do not do these things will not survive. The lunatic optimism will fade away, just as it did with the dot coms. And the panic that accompanies a crash will fade away. And those that survive the crash, will keep going, and AI will be just become part of the background hum of our lives.