Employees Looking for Work Should Beware the AI Bubble
It seemed unlikely in such an uncertain year that we would be in the middle of another bubble. But here we are.
Here are some thoughts on where we are:
While AI is important, it will not be equally transformational for everyone, anymore than adding ".com" to the end of your name was transformational in 1999.
Bill Gurley (one of the most respected VCs with the longest tenure) has said he understood that venture capital will almost always create these kinds of bubbles given enough time.
It seems like we underestimate the amount of excess capital in the market at our own peril. First crypto, then eCommerce aggregators, and tech-enabled logistics have now all given way to AI.
Concentrating all firepower on AI could make things even worse for the sector and hard to separate the wheat from the chaff.
It's not that venture capital is bad. However, too much money could create a lot of bad actors.
For something to be truly transformational, you need to understand how it will save a significant amount of costs or generate a significant amount of profits or revenue (which most will not be able to do), and show results indicating this is happening (which almost none will do)
What's needed for this bubble to end? I think many VC firms will need to go out of business.
What does this mean for founders?
First, just because you see a fundraising opportunity doesn't mean it's a great time to start a business.
Second, not everyone needs to be an entrepreneur. It's totally OK and doesn't diminish your self-worth.
What does this mean for employees looking for work?
For employees, it could be even worse. Ask yourself a few questions:
Ask yourself if you understand how the company is going to make money. What is the business model, and can you explain it to a five-year-old?
What would have to be true for this idea to succeed?
Who is the most likely audience for this app? Is this a healthy audience?
One of the challenges with bubbles is that the company can seemingly solve a problem, but for the wrong audience. One that does not have staying power.
I recently saw an "AI startup" get funding because they will help everyday people build apps. As if the average citizen needs more apps on their phone? Didn't we already have "no-code"? This is incrementalism at best and magical thinking at worst.
Most of all, I'm not writing this to the founders. I'm writing this to the average employee who was recently laid off and now looking for a new home.
If the company doesn't make sense to you, don't join just because of who has funded them.
Just like you shouldn't have joined that eCommerce aggregator that was founded by an investor and not an eCommerce operator you probably should not join that AI startup which was not founded by someone with actual AI expertise and a solid business model.
