Investors are piling billions into AI startups. One prominent investor thinks it’s a bad idea.
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A new contrarian piece by retired venture investor Jerry Neumann that’s doing the rounds in the venture capital community has bad news for investors: AI won’t make you rich.
Major new technological breakthroughs aren’t always a gold rush. Railroads, electricity, cars, microprocessors — each sparked decades of innovation and made thousands of founders and investors rich. But some technological waves haven’t been as kind to founders and investors.
Take containerization. In the 1950s, shipping containers slashed costs, sped delivery, and reshaped global trade. Yet almost no one profited except a tiny handful of early movers. The real winners? Companies like IKEA and Walmart, which leveraged the system to dominate supply chains, delight customers, and quietly build fortunes.
AI is the new containerization, argues Neumann. Unlike the PC revolution of the 1970s, AI in 2025 is predictable, capital-intensive, and dominated by a few giants: Microsoft, Google, OpenAI, and so on. Experimentation is restricted, upside is capped, and the element of surprise — the secret ingredient of wealth creation — is gone.
Neumann’s takeaway for investors: Don’t chase AI model companies or applications. Instead, look for businesses in healthcare, education, or professional services that will use AI to slash costs and expand access. Companies that use AI the way IKEA used containers — efficiently, quietly, and at scale, will be the ones to win. You can read the full piece here.