I was born in 1997 and have no clue how the .com bubble looked like. With the way they are advertising AI right now (it will solve every problem on earth) it just annoys me, and what’s worse people who aren’t in the ML/DL field are buying it too. I am just curious how the .com was like and how it compares to the current AI bubble?
The dot com bubble was this crazy time where for a brief period a generation didn’t know about this thing that the generation after them was increasingly and rapidly interested in.
So like people use the whole “Wild West” metaphor and it’s really apt. Conglomeration was happening in the 90s with the rise of walmart, home depot, etc and it was becoming clear that opening a retail store was a dying business because the “big guys” were destroying towns. Like it was only a matter of time before a walmart came to your town and shuttered main street
But the internet was different. All these established entrenched companies didn’t care about it, yet. So you could make bank with basic ideas. Like oh, clearchannel owns 70% (now like 95%) of the radio stations in the us. Trying to start anything in that space is foolish, plus there’s all these regulations. But internet radio? Boom, millionaire. Petco and petsmart are rising and putting pet stores out of business. But pets.com? Had prominent national advertising including a float in the macys thanksgiving day parade, a Super Bowl ad, and was listed in nasdaq. Boom, millionaires. Busted after 2 years and now redirects to petsmart tho
Some of them stuck around. Like banking was obviously entrenched with old money but then a couple of rich kids were like what if we use daddies money to do internet banking? Then x.com and PayPal started and now we have elon musk and peter thiels reign of terror
AI seems to have some similarities in that there’s the whole “what if we apply AI to x” thing and VC dummies throw cash at it but it’s not as broad so the bubbles not as big and frankly it’s not as definitively revolutionary. The internet was clearly a game changer. Like anyone with half a brain who used it saw the potential early on; it was a new modality for communication with an unprecedented speed and dearth of information. And after it had matured a few years people started to see how fast it was progressing, especially via stuff like games. We went from doom to quake to final fantasy 8 and everquest in the span of the 90s and anyone paying even a lick of attention saw the potential for things like facetime, netflix, youtube, etc eventually.
But with AI it’s harder to picture. There’s the narrative that it will eventually do stuff and it can do impressive things but for the most part most people’s experience with it is that it’s like having a mediocre employee. Their work is okay but you have to constantly check it because they always make stupid mistakes. They tell you they’ll learn to stop doing that but it’s been several years now and they keep doing it. Just like teslas will self drive in 2018, chatgpt will reach agi any day now, maybe, or maybe it’s an illusion and it’s really just a bunch of if>then statements that are constantly trying to fix themselves but messing up others in the process.
I think you’re missing the stock market part of the dot-com bubble which is very similar to AI, and the core part of the collapse.
The dot-com bubble was a speculative bubble on the stock market with companies getting hugely over valued despite not being profitable on the hope they would make bank. Companies were getting huge amounts in venture capital investment, and floating on the markets to huge valuations all based on expected future earnings.
Then companies started collapsing and not being protiable and eventually the stock market in the Internet companies collapsed. But the Internet didn’t collapse; lots of startups and companies disappeared but companies with solid business models surived, grew and prospered. Amazon, Google, Ebay etc survived the bubble and dominated their areas.
The AI bubble is very similar in that companies with AI focus are getting over valued despite not being profitable. The drive int he market is the same - people want to get in at the ground floor and are not being discerning in what they invest in. Very similar to the docotm era, people don’t yet see exactly how money will be made with AI or which companies will be the ones to triumph. It’s all gambling on things people don’t really understand. The AI bubble will also pop, but again AI as a technology isn’t going anywhere - it is investors who will be harmed and a lot of companies will collapse leaving behind ones that have viable business models.
The dot com bubble burst in March 2000 due to multiple factors - a Microsoft anti trust case loss, the AOL-Time Warner merger being increasingly questioned, and rising interest rates putting pressure on the debt-driven growth of dot-cons.
Looking at AI, it’s clear there is speculative valuations going on with lots of AI companies. And established tech companies are all throwing money at AI. Meta - which has been in trouble for a while as it needs to keep growing due to the stock market but Facebook and Instagram have peaked and face more competition - first tried to pivot to VR (that’s gone very quiet suddenly!) and suddenly has pivoted to AI. Nvidia has been wildly over valued based on its chips being used in AI and other companies stockpiling them for future AI work. Companies are making expensive moves to stake a claim on future AI market share but at the moment there hasn’t been any profitability coming from these tools.
AI will survive, but a lot of companies are very obviously going to get burnt. This feeling was also prevenalt during the dot com era - the difficulty was actually picking the winners not that people didn’t know there was a speculative market bubble during the dot com era. People knew it was going to burst just as we know the AI bubble will burst.