this post was submitted on 19 Aug 2025
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[–] Thorry84@feddit.nl 5 points 2 days ago* (last edited 2 days ago) (1 children)

What's your point?

Sure that's the point of venture capital, throwing some money at the wall and see what sticks. You'd expect to have most of them fail, but the one good one makes up for it.

However in this case it isn't people throwing some money at startups. It's large companies like Microsoft throwing trillions into this new tech. And not just the one company looking for a little niche to fill, all of them are all in, flooding the market with random shit.

Uber and Spotify are maybe not the best examples to use, although they are examples of people throwing away money in hopes of some sort of payoff (even though they both made a small profit recently, but nowhere near digging themselves out of the hole). They are however problematic in the way they operate. Uber's whole deal is exploiting workers, turning employees into contractors just to exploit them. And also skirting regulations around taxis for the most part. They have been found to be illegal in a lot of civilised countries and had to change the way they do business there, limit their services or not operate in those countries at all. Spotify is music and the music industry is a whole thing I won't get into.

The current AI bubble isn't comparable to venture capital investing in some startups. It's more comparable to the dotcom bubble, where the industry is perceived to move in a certain direction. Either companies invest heavily and get with the times, or they die. And smart investors put their money in anything with the new tech, since that's where the money is going to be made. Back then the new tech was the internet, now the new tech is AI. We found out the hard way, it was total BS. The internet wasn't the infinite money glitch people thought it was and we all paid the price.

However the scale of that bubble was small as compared to this new AI bubble. And the internet was absolutely a trans-formative technology, changing the way we work and live forever. It's too early to say if this LLM based "AI" technology will do the same, but I doubt it. The amount of BS thrown around these days is too high. As someone with a somewhat good grasp of how LLMs actually work on a fundamental level, the promised made aren't backed up by facts. And the amount of money being put into this aren't near any even optimistic payoff in the future.

If you want to throw in a simple, over simplified example: This AI boom is more like people throwing money at Theranos than anything else.