Comparisons between the current uncertainty around big-tech artificial intelligence stock plays and the uncertainty that ultimately led to the dotcom burst of the late 90’s and early 00’s are coming to a head as advisors have begun recommending caution and investors have started cycling out of big-tech. Some are predicting a repeat of the dotcom bubble, others are calling it a remix and others still are predicting this time around could be even worse. While the same mass speculation is rampant and many current financial trends seem to mirror those that lead into the new millennium, there is one key difference we have when comparing this potential bubble to the last: we can look at what happened before to guide our decisions going forward.
Artificial intelligence (AI) isn’t going away and its impact on our lives and businesses will only continue to grow as the technology becomes more powerful. Even as the dotcom bubble burst it birthed what are now some of the most valuable businesses in the world. Learning from the mistakes of the dotcom era means not just avoiding the pitfalls of rampant speculation, but also identifying where the true value lies and positioning oneself to be better off once the dust settles. Through a combination of business fundamentals and taking lessons from the past, the potential of AI technology can also be harnessed when others are hesitant about its staying power.
Amidst the swirling mist of AI chatbots that purport to summarize hours long presentations into succinct 5 minute pitches and unsettling half-realistic images of public figures, exists a host of real-world applications for AI technology that are measurably improving existing industries.
Bubble or Not…
The dotcom burst is remembered as a period of overvaluation, but no one living in the present day could say with a straight face that the internet hasn’t transformed nearly every aspect of business in the last 25 years. It was clear in the late 90’s that there was massive value to be found in the promises of the internet, but identifying where that value was proved far more difficult. Speculation drove most of the rise in over-valuations rather than any realized revenue streams. As a result when markets corrected, it was these speculative plays that were dropped first and hardest. As dotcom stocks fell, traditional equities in industries like healthcare and utilities grew, a trend that is repeating itself now as AI tech is taking a tumble.
But skip forward 20 years and the internet economy is thriving. Online retail has proved to be a vast improvement on the retail experience of print catalogs and home shopping channels. News and educational resources are much more accessible and for better or for worse it is much easier to communicate with our peers and coworkers around the globe. Just because a technology is new and speculative doesn’t mean it can be dismissed out of hand. The problem isn’t a lack of value, it’s a lack of understanding where that value lies. The same can be said of the current state of AI affairs; the flashiest plays with the highest potential for exponential growth are prioritized while true understanding of the intrinsic value of the tech is widely unknown.
The Idea of Profits
Despite our best efforts, humans are inherently irrational beings. We make decisions based on feelings and nonexistent metrics just as often as we use statistics and fundamentals. The danger of speculative trading is that it is always more exciting to think you see something that others don’t. Those instincts are only reinforced when those speculations lead to stock market growth and other individuals confirm your view of the world through their actions. Even as real-world profits and utility fail to materialize, more money is poured in with the hopes that the value will one day materialize. The question is does that value materialize before or after the hype comes to an end? In the 00’s it did not…
Going Back to Basics
As we prepare our plans for the looming AI bubble, we should count ourselves lucky to be able to look to events from the early 00’s to guide us. Technology is an incredibly powerful tool that can fill industry gaps and bring exponential growth to industries that have been stagnant for years. While it is exciting to invent a new problem to solve and create the next product or service the world can’t live without, it is much more feasible to adopt the new technologies into existing industries to solve inefficiencies that already exist.
Proven industries with a track record of utility are able to most effectively employ new tech to improve their services and propel themselves ahead of competitors. Rather than convince consumers of a need they never knew they had, why not fill their existing needs faster and more cost effectively?
It is nearly impossible to predict how fast technology will improve over the next five months let alone the next five years. We don’t know how we will be consuming media and we don’t know how governments will regulate AI and other new technologies. What we do know is that buildings will need plumbing and electricity, walls will need painting and roofs will need shingles, goods will be warehoused, transported and delivered around the world and properties will need fences built around them. Artificial intelligence is already being leveraged in those industries to silently improve customer experiences, reduce wait times, cut costs, and improve environmental sustainability.
Most tradespeople know, for example, how much time and resources go into the surveying and quoting of a new project. Oftentimes this takes place before any money has exchanged hands and without any guarantee of a contract. Through smart adoption of AI technology paired with GPS and other advanced mapping and surveying tools, this process can be greatly streamlined. Contractors can spend more of their valuable time completing projects and customers get access to a much faster estimate on their costs and timetables.
Warehouse managers alike have also silently adopted new technologies into inventory operations to improve conditions for employees and customers alike. Delivery services and fulfillment companies are using AI to improve routes and reduce idle time.
Shiny isn’t Good or Bad, it’s Just Shiny
History has shown that any new technology will be feared, misunderstood, and then ultimately adopted by the masses. Speculation and excitement around the next big thing will inevitably lead some to overvalue its potential in ways that are detrimental to the success of actual advancements. Whenever a bubble as potentially burstable as dotcoms in the 00’s or AIs in the 20’s comes along, look to what about the new tech is actually creating value. Stay away from wild speculation but don’t let it turn you off from the ways it can truly improve the way business is done. It is entirely possible to be excited about promising potential without getting caught up in unproven speculation.
Author:
Matt Sivewright is the Founder and CEO of EverFence. With over 20 years of experience in the fencing industry, Matt has created a new marketplace that instantly quotes fencing projects and connects the customer to a network of qualified contractors ready to take on the project right away. By continuously adopting the most applicable new technologies Matt and EverFence have stayed at the forefront of the industry providing the best experience for customers and fencing professionals alike.
