Is AI Pets.com or Chewy?
Timing matters
At the height of the dot-com frenzy, Pets.com and Webvan promised to reinvent shopping…and failed spectacularly.
25 years later, Chewy and Instacart are billion-dollar companies doing…the same thing.
So what changed? Mostly timing.
Consider the state of the market in 2000:
Most Internet connections were dial-up: slow and unreliable
Logistics for eCommerce delivery barely existed
Buying grocery and pet food online felt “weird”
Consumers thought online payments were risky
They had the right idea, they just had it too early.
By 2012, when Chewy and Instacart launched, we had reliable broadband, robust supply chains and confidence in online shopping.
Today feels like a sequel with AI as the star (Tech Bubble II: The Wrath of Altman?). 🤔
The technology is evolving at a breakneck pace, faster than consumers and business leaders can keep up.
Economics writer Noah Smith (who is excellent!) has a fresh take on the AI bubble, framing the risk in terms of speed of adoption:
“Even if AI creates all the value its biggest boosters say it’ll do — supercharges growth, enables the automation of most kinds of production, and so on — it might not do it fast enough for the data center “hyperscalers” to pay back everything they borrowed.”
The question isn’t if AI will create value, it already is!
Chatbots, AI programming, content creation, customer service, resume screening, contract review… okay, okay, we get it. 😵💫
The real question is whether that value spreads through the economy fast enough for tech companies to recoup the trillions they are investing.
I’m optimistic, especially as big tech companies are funding much of this with cash instead of debt.
But as investments mount, adoption speed will decide who becomes the next Chewy…and who ends up as Pets.com.
The timing analogy with Chewy is spot on, especially when you consider how much infrastrucure needed to be in place before the business model could actualy work. The 2012 launch window was perfect with broadband penetration high enough and consumer trust in ecommerce established. Its a great reminder that being right too early is often worse than being slightly late to a trend.