is ai just a bubble?

The transcription discusses the rise and fall of various tech bubbles, including crypto, social media, and AI. It mentions how venture capitalists were initially enthusiastic about investing in crypto startups, but the industry faced challenges and scandals that made investors nervous. However, some firms like A16Z continue to invest in crypto. It also highlights the previous hype around social media platforms like Myspace, which eventually faced difficulties in keeping users engaged. The transcription then discusses the profitability bubble, where startups were pressured to make money. It mentions the struggles of Uber and WeWork, which had high valuations but failed to make a profit. The AI hype cycle is also mentioned, with investors initially eager to invest in AI and machine learning startups, but many of them failed to deliver on their promises. However, the industry has matured, and startups like Galileo, Lensa, and JetGPT are doing impressive work. The future of the AI industry Hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey Do you remember something called crypto? Even though people don't seem to care as much about Web3 and crypto as they did one year ago, let me tell you, when crypto first hit the scene, VCs were all over it. Everybody had a bit of FOMO and venture capitalists were throwing tons and tons of cash into the crypto scene. So back. So at its all-time high, the crypto industry was valued $3 trillion back in 2022. And even if you might think that $10 billion into chat GPT is a lot, a total of $33 billion was invested in crypto startups only last year. Leading the pack was Ripple, Bitmain, Chinese Mining Company, Circle, and of course Coinbase were amongst the largest. Leading the pack was Ripple, Bitmain, and of course Coinbase. Ripple, Bitmain, Circle, and Coinbase were amongst the largest capital raisers out there. To give you an example, over $300 million was invested by Ribbit Capital, Sequoia, and others in the cryptocurrency platform Coinbase in 2018. That's a lot of cash. So even though most of these venture capitalist firms follow a spray-and-pray mythology where you invest in 100 companies and hope that one of them 1,000 or 10,000 access, but needless to say, people really thought that crypto was onto something. Except Sequoia, Bitmain, and others. But going back into the crypto world, since then it has had a fair share of challenges from economic struggles, market forces, and a lot of scandals. Luna, Three Arrows Capital, and let's not forget about all the celebrities, pumps and dumps. All of this made investors really nervous, and money started to flow out of the market again. But not all of them are losing hope. A16Z is the only one that is not losing hope. A16Z, despite all the ups and downs, didn't give up, and they announced a $4.5 billion crypto fund back in May 2022. This is mostly focused on gaming, mobile adoption, and development. So, since we figured out that AI wasn't the first real hype, let's take a look at some of the other big names in the crypto world. Let's start with Bitcoin. Bitcoin is the only crypto fund that is not losing hope. Bitcoin is the only crypto fund that is not losing hope. So, since we figured out that AI wasn't the first real hype, what was before crypto? So, once upon a time, there was another bubble called social. Do you remember Myspace? If you're in a Gen Z, probably not. Well, if we rewind to the beginning of the new millennium, when Web2 was the hot tech in Silicon Valley, social platforms were raising cash like never before. A lot of social media platforms popped up, like Myspace, Facebook, Twitter, the list goes on and on and on. And even though 99% of them are not, a lot of social media platforms popped up, like Myspace, Twitter, and Facebook. Myspace, for example, was the first really booming social media platform, and venture capitalists were throwing money at it left and right. So, Myspace was valued $12 billion at its peak, and when it, at its peak, when Myspace was worth over $12 billion at its peak, when it tried to merge with news corporation from Yahoo. But, the competition started heating up, Facebook started to grow, and even Twitter was only a small twinkle in Jack Dorsey's eye. So, Myspace, such as many other platforms, had big troubles keeping users engaged, which led to a lot of drop in investment and the burst of another bubble. So, you might be thinking, all this money into invested companies, how did the VCs react? And let me tell you, when the market goes south for VCs, things can get really edgy. Suddenly people, suddenly founders and VCs start to remember that their businesses are actually about making money, not spending money. Let me give you a fun case study. The two startup messiahs of the 2010 era were the following two companies, Uber and WeWork. In July 2015, Uber became the world's most valued startup at a whopping of $51 billion, and WeWork, $47 billion. That's a whole lot of shrimp. But, as we know, having a startup and raising money is not all sunshine and rainbows. Uber has faced some really tough times with regulators and lawyers and countries and drivers, which led to a really big drop in their valuation. If we look at WeWork, their big IPO dream in 2019 got cancelled, when investors started realizing that they're not even close to making any money. And on the other hand, Uber has been battling intense competition in the ride-hailing market and had to deal with mad drivers and strict regulations. So, cut out what I said previously about Uber. Both companies had insane balance sheets with crazy valuations, but none of them made profit. More specifically speaking, they both made a lot of minus. This means that some investors are starting to have second thoughts and might choose to invest in other companies if they don't. So, this was the birth of another bubble. We can call it the profitability bubble, when startups were suddenly forced to actually make any money. Crazy, right? So, let's go back to AI. And the AI and machine learning field is not something new, especially to VC investing. With the rise of AI in the 2010s, investors were really eager to throw a lot of money into AI and machine learning. Back then, the formula was simple. Your business model is not good? Add some AI. Your startup idea sucks? Why not use some machine learning? Same thing with blockchain last year, right? So, this was the peak of the hype cycle of AI. The hype was real and everybody wanted to be part of it. But, as usual with these things, the hype didn't match reality. Many of these startups, like Vicarious, Grok, and Cogni, failed to deliver on their promises. And, you know why? Well, because most of them realized that implementing AI and machine learning is harder than they thought. Building hard tech is really hard. So, fast forward to today, where we see a much more mature industry in the AI scene. Most of them are doing quite incredible work that really deserves the money that they're raising. Let's look at Galileo, Lensa, and of course, JetGPT, which serves as the API for most of these startups that are popping up. So, in my opinion, it's quite certain that the AI hype is going to result in a lot of new millionaires. Is it going to be a similar bubble to crypto? I don't think so. Is it going to burst as quickly as social? I don't know. The only thing we can do is wait 5 to 10 years and see how the hype and the development of this industry plays out. In my opinion, the technology is really incredible and can be a game changer. So, let's see where we end up. So, how do you think we're going to look back on this hype cycle? And where do you think this whole AI industry is heading? Let me know in the comments below.