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Use and abuse of hype

H.type and The absurdity will go with you. As anticipation for the next big thing grows, people flip over trying to get into it. A year and a half ago, the metaverse was the future. Companies have appointed a Chief Metaverse Officer, and futurists have chimed in on his Web 3.0. That thought hasn’t gone away. Columbia filed its first lawsuit in the Metaverse last month (think of a video game called Wii Justice). But the excitement has died down, at least for now. Microsoft disbanded its industrial metaverse team last month. The career prospects of the Metaverse Chiefs are more hypothetical than they’d like.

Other technologies have similarly flipped. There was a time when it was very fashionable to celebrate blockchains, cryptocurrencies and non-fungible tokens. Currently, the attention of users, investors and business owners is firmly focused on artificial intelligence (AI).since chatGPT, AI The chatbot went public at the end of November, creating another wave of hype. Over 100 million people requested a rewrite IKEA Furniture instructions in iambic pentameter or equally important.Venture capital funds are pouring money AI Startups; established companies are rushing to explain how to use this technology, from customer service to coding.

The hype doesn’t have to end in disappointment. Some technologies are less speculative than others. For example, the metaverse is still largely conceptual, AI It’s an established field. Even when the bubble bursts, it could leave behind world-changing companies. The hype cycle popularized by consulting firm Gartner is real. Essentially, it represents an uncontrollable enthusiasm for new ideas and a subsequent backlash.

It makes the hype bittersweet for entrepreneurs. Excitement can help unlock funding and attract users. Some see hype as a public good and essential to getting new technology off the ground. But it can also cause problems. The question is how to manage the hype.

The obvious temptation for entrepreneurs is to use hype to make ridiculous promises. Paper by Paul Momtaz in 2021 UCLA The Anderson School of Management has turned its attention to the once-fashionable field of initial coin offerings (icos), new cryptocurrencies will be issued directly to the public. Momtaz found that not only are issuers systematically overestimating the token’s prospects, but investors are hooked on it. Exaggerated claims raised more money in a short period of time than accurate claims. ICOss is not much touted these days, but there are clearly still opportunities to fool investors. Over 100 new cryptocurrencies with Chat are being createdGPT in their name.

Deliberate exaggeration may be a perfectly logical strategy once an entrepreneur raises money. But if they want to build a business, raise money through repeated funding rounds, or maintain close relationships with investors and users, the hype can turn out to be a disadvantage. Some dangers are obvious. When things don’t go as promised, you’re disappointed and your credibility suffers. Other dangers are more subtle. Being too tied to a specific technology can leave startups with less room to pivot to new products and business models.

So be careful with the hype. A recent paper by Daniel Roeg of the University of Technology Sydney and Matthew Grimes of the Judge Business School explores the different paths taken by the many social investment stock markets that were established in 2013 as the topic of impact investing rose. I checked. The author contrasts the brilliant approach of the London exchange, which amassed a prominent following, promised a financial revolution and then collapsed, with its more successful Canadian peers, which rely more on expert advice and gradualism. target.

The pros and cons of the hype are evident in Chat’s short lifespan.GPTThe hype has made it the fastest growing consumer technology in history. However, the flaws in this technology are now getting a lot of attention. Microsoft, which has integrated an enhanced version of its chatbot into its Bing search engine, has restricted access to the new version and put limits on the number of questions users can ask in a row (an idea worth adopting in every meeting). ). As Grimes points out, entrepreneurs pushing entirely new products are expected to distort reality without raising expectations too high. How they handle the hype will help determine whether they can pull off this difficult balancing act.

Read more from management and work columnist Bartleby:
Unobtrusive abilities bring disadvantages as well as advantages (February 23rd)
Why it’s time to capture your coffee meeting at work (February 16th)
The pitfalls of loving your job too much (February 9)

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https://www.economist.com/business/2023/03/02/the-uses-and-abuses-of-hype Use and abuse of hype

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