Mind the hype cycle

I’ve been finding myself making the same hand gesture on a lot of Zoom calls recently. I flick my finger up, wiggle it up and down, and trail off to the right in a straight line.

I draw this oscillating line when I talk about AI. Or crypto. Or the “metaverse.” Or even Taylor Swift tickets (apparently more than half of American adults are fans?). It’s the hype cycle, and it looks like this:

Every zeitgeisty “next big thing” goes through this wave of expectations and backlash. The technology research firm Gartner developed this framework and labeled its five stages:

• Technology Trigger: The starting gun. A new technology is developed or unveiled, a new thing hits the market, and the wave gets its initial momentum.
• Peak of Inflated Expectations: This new thing is everything. It will solve all our problems. It will transform the economy. Our cities, our lives, our jobs, and our world will all be transformed by this thing.
• Trough of Disillusionment: This thing is actually terrible. It’s useless. Everybody was wrong, and it was a waste of time and attention. Investment and attention dries up.
• Slope of Enlightenment: Well, actually maybe the thing actually makes some sense. It’s not everything for everybody, but it is something for some people. The thing has had time to mature and find its footing.
• Plateau of Productivity: Ok, so this is what the thing really is. Let’s fit the thing into our lives in a way that makes sense. The thing can be sustainable.

If we look at this pattern, we can begin predict how things in tech and culture might develop. A year ago, crypto and web3 was everywhere. Investors were throwing money at any company in the space. NFT profile photos littered Twitter. The 2022 Super Bowl alone featured $39 million worth of ads from crypto companies. It was the stratospheric Peak of Inflated Expectations.

A year later, there wasn’t a crypto single Super Bowl ad, and half the companies that advertised during the previous year’s game were kaput. Bitcoin has tanked. We’re digging the Trough of Disillusionment.

Will that industry climb out? Maybe. Maybe not. Not everything makes it back to that plateau. And some things take a long, long time to get there – see the COVID-era resurgence of QR codes after a decade in the dustbin, or cinephiles snatching up blu-rays as streamers begin to send series and films into digital rights purgatory.

For years, New York Magazine used to run a similar graph in its culture section, going from Pre-Buzz, Buzz, Rave Reviews, Saturation Point, Overhyped, Backlash, and eventually to Backlash to the Backlash. The similarity between this cultural chart and the innovation curve is this: things can’t stay at the top forever. Like a swinging pendulum settling in its arc, finding the right fit into our world takes time.

Is generative AI going to change everything? I personally think it’s quite a bit more likely to than Ethereum is, but maybe I’m just riding up to that peak of hype. I’ve seen too many breathless talks and read too many hyperbolic articles about smart home devices, voice assistants, wearables, and other hot new things to bet the farm on becoming a professional “prompt engineer,” as some cheerleaders recommend.

That’s the boring lesson of the hype cycle. Sometimes it makes sense to go all-in, sometimes things really are game-changing. (Decades ago, Jeff Bezos did this when he saw that the internet was growing 2,300% a year.)

But most things aren’t that. Most of the time you shouldn’t blow things up until you see where that equilibrium lands.

Update - August 2024:

This summer, it looks like generative AI has begun to finally slide down the path towards the Trough of Disillusionment. A number of companies have backed off of aggressive AI adoptions, tech stocks have had a bumpy couple months, and a cultural backlash is brewing. And while OpenAI continues to debut buzzy concepts in video, search, and other arenas, ChatGPT still can't tell you how many "R"s are in the word "strawberry."

There's validity to all of this. But if history is any guide, I bet that soon, with the shininess wearing off, we'll see this industry mature into that productive equilibrium. The truly interesting stuff always seems to happen when people aren't paying as much attention.