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How was dotcom era a bubble? Sure Webvan went out of business, but Instacart is huge. The very first company trying something out not succeeding is not a bust,

How was dotcom era a bubble? Sure Webvan went out of business, but Instacart is huge. The very first company trying something out not succeeding is not a bust, it's normal risk of early movers. 3D TV seems to be a true bubble so far, I don't know if AI is. I have to think that applications like self driving cars and further automation of manufacturing are here to stay, while chatbots might be a fad, we will see.

ks2048 3y ago
I think the “dot com” bubble refers more specifically to stock market valuations being too high and thus later crashing. Likewise, I don’t think this report refers to “AI” being a fad as much as just AI companies being overvalued. It seems possible to believe that AI will swallow the world and also many AI companies being overvalued.
- rapsey 3y ago
  But there are very few public AI companies. nVidia, Microsoft, Google and Meta? None of them have too crazy of a P/E ratio and all are wildly profitable. The actual silly money is all in the private space and you can't short those.
TedDoesntTalk 3y ago
Many dotcom companies were valued based entirely on potential market and revenue, not on fundamentals.
swivelmaster 3y ago
The dotcom era bubble specifically refers to Webvan-era companies, which were almost universally over-funded and over-valued based on outrageous speculation about the potential of the internet. Instacart was founded about a decade later, and its margins are pretty slim by tech company standards (net income ~$100m on $2.5bn revenue) so I think it's pretty clear that in the year 2000, there's no possible way that Webvan could have succeeded even if it had done everything right. Extrapolate this logic to AI, and the parallel is clear: The current generation of AI over-promises and under-delivers at enormous cost, and yet billions are invested under the premise that quality will go up and costs will go down enough in the next few years to build viable businesses. If those investors are correct and we're just a few years away from useful, cost-effective AI, they'll make their money back. If they're wrong and we're actually a decade away, not a single AI product that hits the market within the next few years will survive.
- Animats 3y ago
  > The dotcom era bubble specifically refers to Webvan-era companies, which were almost universally over-funded and over-valued based on outrageous speculation about the potential of the internet. Webvan was a good idea with bad VCs. They were forced by their funders to expand to too many locations, for the "first mover advantage". So they had 3% market share in 30 cities, instead of 30% market share in 3 cities. Which means a lot of trucks. Which Webvan bought and owned. Webvan drivers were direct employees. The sub-minimum wage gig economy hadn't been worked out yet. The people behind Webvan later did Kiva Systems and helped Amazon get warehouse automation going.
  - swivelmaster 3y ago
    Oh what a shame that the sub-minimum wage gig economy hadn't been worked out yet, what an absolute tragedy for WebVan.
unholythree 3y ago
The Dotcom era was a bubble because a ton of tech companies had business models that were terrible or sometimes just ahead of their time; but investors were eager to get in on these newfangled internet companies that were all going to the moon. It wasn't economical for pets.com to ship 50 lbs bags of dog food in 1999. Amazon made it because back then they just sold books (and maybe cds?) which have always been fairly affordable to ship. https://en.wikipedia.org/wiki/Dot-com_bubble https://en.wikipedia.org/wiki/Dot-com_bubble
kergonath 3y ago
> How was dotcom era a bubble? Look at NASDAQ between 1995 and 2005. I’ve never seen anyone claiming that it was not a bubble. Sure, some companies survived (as some always do, a bubble is not the end of the world), but a lot of people took a bath. > 3D TV seems to be a true bubble so far, I don't know if AI is That is not what a bubble is. A bubble is over-valuation of a bunch of stocks, when all investors want to hop on the same train. The fad is the companies’ stocks, not (necessarily) their products. Nobody was claiming that the Internet was a fad in ~2000, just that investors were so eager that ridiculous startups with dubious business models got tons of money dumped on them for no reason, and that the expectations were out of line with reality, even for successful big companies.

ks2048 3y ago

I think the “dot com” bubble refers more specifically to stock market valuations being too high and thus later crashing. Likewise, I don’t think this report refers to “AI” being a fad as much as just AI companies being overvalued. It seems possible to believe that AI will swallow the world and also many AI companies being overvalued.

rapsey 3y ago
But there are very few public AI companies. nVidia, Microsoft, Google and Meta? None of them have too crazy of a P/E ratio and all are wildly profitable. The actual silly money is all in the private space and you can't short those.

TedDoesntTalk 3y ago

Many dotcom companies were valued based entirely on potential market and revenue, not on fundamentals.

swivelmaster 3y ago

The dotcom era bubble specifically refers to Webvan-era companies, which were almost universally over-funded and over-valued based on outrageous speculation about the potential of the internet. Instacart was founded about a decade later, and its margins are pretty slim by tech company standards (net income ~$100m on $2.5bn revenue) so I think it's pretty clear that in the year 2000, there's no possible way that Webvan could have succeeded even if it had done everything right. Extrapolate this logic to AI, and the parallel is clear: The current generation of AI over-promises and under-delivers at enormous cost, and yet billions are invested under the premise that quality will go up and costs will go down enough in the next few years to build viable businesses. If those investors are correct and we're just a few years away from useful, cost-effective AI, they'll make their money back. If they're wrong and we're actually a decade away, not a single AI product that hits the market within the next few years will survive.

Animats 3y ago
> The dotcom era bubble specifically refers to Webvan-era companies, which were almost universally over-funded and over-valued based on outrageous speculation about the potential of the internet. Webvan was a good idea with bad VCs. They were forced by their funders to expand to too many locations, for the "first mover advantage". So they had 3% market share in 30 cities, instead of 30% market share in 3 cities. Which means a lot of trucks. Which Webvan bought and owned. Webvan drivers were direct employees. The sub-minimum wage gig economy hadn't been worked out yet. The people behind Webvan later did Kiva Systems and helped Amazon get warehouse automation going.
- swivelmaster 3y ago
  Oh what a shame that the sub-minimum wage gig economy hadn't been worked out yet, what an absolute tragedy for WebVan.

unholythree 3y ago

The Dotcom era was a bubble because a ton of tech companies had business models that were terrible or sometimes just ahead of their time; but investors were eager to get in on these newfangled internet companies that were all going to the moon. It wasn't economical for pets.com to ship 50 lbs bags of dog food in 1999. Amazon made it because back then they just sold books (and maybe cds?) which have always been fairly affordable to ship. https://en.wikipedia.org/wiki/Dot-com_bubble https://en.wikipedia.org/wiki/Dot-com_bubble

kergonath 3y ago

> How was dotcom era a bubble? Look at NASDAQ between 1995 and 2005. I’ve never seen anyone claiming that it was not a bubble. Sure, some companies survived (as some always do, a bubble is not the end of the world), but a lot of people took a bath. > 3D TV seems to be a true bubble so far, I don't know if AI is That is not what a bubble is. A bubble is over-valuation of a bunch of stocks, when all investors want to hop on the same train. The fad is the companies’ stocks, not (necessarily) their products. Nobody was claiming that the Internet was a fad in ~2000, just that investors were so eager that ridiculous startups with dubious business models got tons of money dumped on them for no reason, and that the expectations were out of line with reality, even for successful big companies.