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The use and abuse of hype


Hype and absurdity go together. As excitement about the next big thing builds, people are falling over themselves to get on board. A year and a half ago, the metaverse was the future. Companies appointed Chief Metaverse Officers and futurologists chatted about Web 3.0. The idea has not disappeared. Colombia held its first court case in the metaverse last month (imagine a video game called Wii Justice and you’ll get the idea). But the excitement has evaporated, at least for now. Microsoft disbanded its industrial metaverse team last month; chief metaverse officers’ career prospects are more virtual than they’d even like.

Other technologies have undergone the same reversal. There was a time when it was very fashionable to be excited about the blockchain, crypto and non-fungible tokens. Now the attention of users, investors and administrators is firmly on artificial intelligence (AI). Since ChatGPT, an AI chatbot, was made available to the public at the end of November, it has sparked a new wave of hype. More than 100 million people have asked to rewrite IKEA furniture instructions in iambic pentameter or something equally important; venture capital funds invest in AI startups; established companies are scrambling to explain how they’ll use the technology to do everything from customer service to coding.

A hype does not have to end in a disappointment. Some technologies are less speculative than others; for example, the metaverse is still largely imaginary, while AI is an established field. Even when bubbles burst, they can leave world-changing companies behind. The hype cycle, popularized by Gartner, a consulting firm, is real. Essentially, it describes a period of uncontrolled enthusiasm for a new idea, followed by a backlash.

That makes the hype bittersweet for entrepreneurs. Excitement can help free up money and attract users. Some see hype as a public good, vital to triggering new technologies. But it can also lead to problems. The question is how best to manage the hype.

An obvious temptation for entrepreneurs is to capitalize on the hype by making wild – even deceptive – promises. A 2021 paper by Paul Momtaz of UCLA Anderson School of Management looked at the once fashionable field of initial coin offerings (ICOs), in which new cryptocurrencies are issued directly to the public. Mr. Momtaz found that not only did issuers systematically overestimate the prospects of their tokens, but investors fell for it. Exaggerated claims made more money in less time than accurate claims. ICOs are much less hyped these days, but the opportunity to mislead investors apparently remains: over 100 new cryptocurrencies have been created with ChatGPT to their credit.

Intentional exaggeration can be a perfectly logical strategy when entrepreneurs are raising money once. But if they want to build a business, raise capital in repeated rounds of funding, or maintain a close relationship with investors and users, hype can become a risk. Some dangers are obvious: disappointment and compromised credibility when things don’t go as well as promised. Other dangers are more subtle: Being too associated with a specific technology can reduce the room startups have to pivot to a new product or business model.

So hype calls for care. A recent article by Danielle Logue of UNSW Sydney and Matthew Grimes of Judge Business School looked at the different paths taken by a number of social investment equity markets that were established in 2013 as the buzz about impact investing grew. The authors contrast the glitzy approach of one London exchange, which received 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 have also become evident in ChatGPT’s short public life. Hype helped make it the fastest growing consumer technology in history. But the flaws in the technology are now attracting just as much attention. Microsoft, which has integrated an improved 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 discussing in all meetings). to take over). . As Mr. Grimes points out, entrepreneurs who launch entirely new products are expected to distort reality without raising expectations. How they handle hype can help determine whether they can pull off this difficult balancing act.

Read more from Bartleby, our columnist on management and work:

Inconspicuous competence carries both disadvantages and advantages (February 23)

Why it’s time to take pictures of coffee gatherings at work (February 16)

The pitfalls of loving your job a little too much (February 9th)

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Joanna Swanson

Joanna Swanson is Europe correspondent at the Thomson Reuters Foundation based in Brussels covering politics, culture, business, climate change, society, economies and inclusive tech. With specific focus in breaking news, she has covered some of the world's most significant stories.