What Happens After the Hype? Lessons from Mobile Internet’s Long Road to Success

[Shomila Malik]

We’re beginning to see the end of the AI hype cycle, and thank goodness. That doesn’t mean that there aren’t uses for aspects of the technology, but it does mean that some of the hyperbole will diminish as investors and speculators move on to the next thing.

As Ecrue founder Shomila Malik points out here:

“The question isn’t whether the current AI investment cycle will face a reckoning. It’s what form that reckoning takes — and what comes after.”

The lessons she draws from the mobile industry’s hype and decline also parallel what happened during the dotcom crash, when a lot of companies went away but a lot of underlying useful infrastructure was left for the next generation of innovations. But a facet of how those two events were different is exactly how they imploded:

“The difference between a pop and a deflation often comes down to how adaptable the infrastructure is. 3G networks built for one vision of mobile internet ended up powering something completely different — but they still got used. The investment wasn’t wasted, just redirected. Time will tell if AI will be a deflation like mobile internet or a ear deafening explosion like the dot com crash.”

Either way, investment is way ahead of proven capabilities or even business models. Companies like OpenAI are losing money hand over fist. At some point, these endeavors have to touch oxygen, and either they’ll find their way to stunning profitability, or they’ll fizzle into acquisitions at best and leave some interesting ideas behind.

My bet? Ten years from now we’ll be looking at a series of smaller, more focused models that perform well-scoped tasks really well, and we’ll look back at the hype around generalized megamodels — and particularly AGI — with rolled eyes and a slight shudder when we remember the environmental and human impacts.

[Link]