Oh, the stock market where investors can ride the rollercoaster of profiting from well-run businesses and speculators can buy those juicy lottery tickets on startups that’ll probably crash and burn. Let’s look at some numbers: between 1975 and 2018, 59% of IPOs had negative returns within three years, and 37% were down 50% or more. Yikes.
But who cares about failure when there’s a shiny new gig economy to fantasize about? Between 2017 and 2021, venture-capital funding broke records in the US, Europe, and Asia. People were dreaming big, envisioning a world without private cars, physical banks, or doctor’s offices.
Well, reality check those dreams got crushed, along with stock prices of publicly traded startups, shrinking valuations of privately traded startups, and a sharp decline in IPOs and SPACs. In the first quarter of 2023, global VC funding dipped to $76 billion, a 53% drop from the previous year. And let’s not even talk about the drought in debt financing for startups.
What’s causing this downward spiral? Unprofitable unicorns, that’s what. About 90% of publicly traded unicorns are bleeding cash, with 22 of them racking up more than $3 billion in losses. Uber, WeWork, Rivian Automotive, Teladoc Health, Lyft they’re all part of this not-so-exclusive losing club.
So what’s the next shiny object for desperate investors and struggling startups? AI, of course! We’re on the brink of an AI bubble that might rival the dot-com and cryptocurrency bubbles. Just slap an “AI” label on your startup, and watch the money roll in who needs details, right?
Well, hold on to your hats, because we’re skeptical of this AI hype. Large language models (LLMs) like ChatGPT might be great at generating text, but they’re not exactly in touch with reality. These black boxes can’t tell truth from fiction, and using them for critical tasks could lead to legal, financial, and reputational risks. Even Yann LeCun, Chief AI Scientist at Meta AI, admitted that machine learning has its limitations.
Sure, the AI bubble might keep some startups afloat for a while and spawn new ones, but long-term profitability needs more than just fancy word generators. Let’s cool it with the grand claims that AI will bring productivity gains on par with steam power and electricity. That kind of puffery is just the kind of disinformation AI excels at and we don’t need more of that.
