AI Has an Uber Problem
A handful of deep-pocketed investors distorts the market, fueling a race for monopoly that inhibits product-market fit.
“The economic problem of society…is a problem of the utilization of knowledge which is not given to anyone in its totality.”
—Friedrich A. Hayek, “The Use of Knowledge in Society”
Silicon Valley venture capitalists and many entrepreneurs espouse libertarian values. In practice, they subscribe to central planning: Rather than competing to win in the marketplace, entrepreneurs compete for funding from the Silicon Valley equivalent of the Central Committee. The race to the top is no longer driven by who has the best product or the best business model, but by who has the blessing of the venture capitalists with the deepest pockets—a blessing that will allow them to acquire the most customers the most quickly, often by providing services below cost. Reid Hoffman called this pattern “blitzscaling,” claiming in the subtitle of his book with that name that it is “The Lightning-Fast Path to Building Massively Valuable Companies.”
I disagree. It is a dark pattern, a map to suboptimal outcomes rather than the true path to competition, innovation, and the creation of robust companies and markets. As Bill Janeway noted in his critique of the capital-fueled bubbles that resulted from the ultra-low interest rates of the decade following the 2007–2009 financial crisis, “capital is not a strategy.”