Why the majority of AI businesses will end up as ‘roadkill’

As OpenAI pursues a public benefit structure and global expansion, the influence of the AI powerhouse cannot be understated. However, where hundreds of new businesses jump on the AI bandwagon each year to follow in the footsteps of those successful before them, 90% will inevitably fail.

Every few years, a new hype cycle emerges. Venture Capitalists (VCs), under pressure to deliver exponential returns to their limited partners, are constantly searching for the next big thing. In the 90s, it was the ‘dot com’ boom; today, it’s AI.

While a few pioneering companies are genuinely innovating and developing groundbreaking AI technology, a perfect storm is brewing in the background. As the hype cycle intensifies, a multitude of players, both large and small, rush to capitalize on the trend, often without a clear understanding of the underlying technology or its potential applications.

An accelerating trend

Several macro factors have converged to fuel AI’s rapid advancement. The huge decline in the cost of computing power and storage, coupled with ubiquitous internet access and decades of algorithmic research, have created the ideal conditions for AI’s practical application. While academics have long theorized about the potential of AI with vast datasets, the prohibitive cost of infrastructure has hindered their ability to make these theories a reality.

However, a major shift occurred as the cost of supporting AI models became more affordable and accessible. This democratization of AI infrastructure paved the way for deep thinkers to showcase the technology’s capabilities and possibilities. The myriad of potential business applications for AI sparked a wave of interest and investment. For example, Google’s acquisition of DeepMind for $400 million a decade ago served as a pivotal moment.

This level of activity attracted hype investors, eager to capitalize on the AI boom, pouring substantial funds into the field. This influx of capital created a chaotic landscape as investors raced to invest in AI…