hYip and Tinkering go together. As excitement about building the next big thing, people fall over themselves to join. A year and a half ago, the future was the future. Corporations have appointed chief officers of the metaverse, and futurists worry about Web 3.0. The idea has not gone away. Columbia held its first court case last month (imagine a video game called Wii Justice and you get the picture). But the excitement has evaporated, at least for the time being. Microsoft disbanded its industrial metaverse team last month; The career prospects of the metaverse’s top brass are even more hypothetical than they’d like.
Other technologies have suffered the same reversal. There was a point when it was very fashionable to rave about blockchain and cryptographic and non-fungible tokens. Now the attention of users, investors and managers is firmly focused on artificial intelligence (Amnesty International). Since imgptAnd Amnesty International The chatbot, which became publicly available at the end of November, has generated another wave of hype. More than 100 million people have asked him to rewrite it Ikea furniture instructions in iambic pentameter or something equally lively; Venture capital funds put money in Amnesty International Startups are rushing incumbents to demonstrate how they will use technology to do everything from customer service to coding.
Hype doesn’t have to end in disappointment. Some techniques are less speculative than others; The metaverse is still very much theoretical, for example, while Amnesty International It is a well established field. Even when bubbles burst, companies that change the world can be left behind. The hype cycle promoted by consulting firm Gartner is real. In essence, it describes a period of uncontrolled enthusiasm for a new idea followed by a backlash.
This makes for bittersweet hype for entrepreneurs. Excitement can help unlock funding and attract users. Some believe hype is a public good, vital in enabling new technologies to take off. But it can also lead to problems. The question is how to manage the hype for the better.
One of the obvious temptations for entrepreneurs is to capitalize on the hype by making wild — even deceptive — promises. A research paper from 2021 by Paul Mumtaz from University of California The Anderson School of Management looked into the once-fashionable field of initial coin offerings (icos), in which new digital currencies are issued to the public directly. Mr. Mumtaz found that issuers not only systematically exaggerated their token prospects but that investors fell in love with them. Exaggerated claims have made more money in less time than accurate claims. ICOIt’s less interesting these days, but it seems the chance of scamming investors is still there: Over 100 New Cryptocurrencies Created With Chatgpt in their name.
Deliberate exaggeration may be a perfectly logical strategy if entrepreneurs are raising money all at once. But if they want to build a company, leverage capital in frequent funding rounds or maintain a close relationship with investors and users, hype can become a liability. Some of the risks are clear: disappointment and damage to credibility if things don’t go as promised. There are other, more subtle risks: Being tied to a particular technology can reduce the space that startups have to focus on a new product or business model.
Even the hype calls for care. A recent paper by Daniel Logue of the University of Technology Sydney and Matthew Grimes of Judge Business School looked at the different paths taken by a number of social investment markets created in 2013 as the buzz around impact investing grew. The authors contrast the more attractive London approach to exchange, which attracted high-profile support, promised a financial revolution and then collapsed, with its more successful Canadian counterpart, which relied more on expert advice and incrementalism.
The pros and cons of hype were also evident in Chat’s short public lifegpt. Hype has helped make it the fastest growing consumer technology in history. But flaws in the technology are now attracting just as much attention. Microsoft, which has integrated an upgraded version of the chatbot into its Bing search engine, has restricted access to the new version and placed limits on the number of questions users can ask in a row (an idea worth embracing in all meetings). As Grimes points out, entrepreneurs promoting entirely new products can be expected to distort reality without inflating expectations. How they deal with the noise can help determine whether they can pull off this difficult balancing act. ■
Read more from Bartleby, our columnist on management and work:
Inconspicuous efficiency brings disadvantages as well as benefits (February 23)
Why It’s Time to Film Your Coffee Meetings at Work (February 16)
The pitfalls of loving your job too much (February 9)
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