ChatGPT is Netscape

The release of chatGPT 3.5 feels just like the release of the first Netscape product.

I was fortunate to work in Silicon Valley during the dot com boom. It was a fun and crazy time. Although the internet, email, world wide web, and web browsing (e.g. Mosaic) all existed earlier, it was Netscape that started the dot com gold rush.

After Netscape, the web became so much more accessible for far more people that the ecosystem around it created an enormous amount of adoption, innovation, startups, investments, and wealth creation. A startup time line:

• Netscape was founded in April of 1994 by Jim Clark and Marc Andreesen; released their first product (Mosaic Netscape 0.9) in October 1994. Kleiner Perkins wrote the funding check. By early 1995 they had 75% market share in the small but exploding market of web browsers. In August 1995 they went public, initially planned for $14 per share, but increased to $28 at the last minute; the stock soared to $75 before closing at $58 after the first trading day. ?
• Amazon was founded in July 1994 by Jeff Bezos in Bellevue, WA and raised funding from Tom Alberg and other Seattle angels in 1995. Their IPO was May 1997.
• Yahoo was founded March 1995 to help organize and search the exploding web. Their acronym name from “Yet Another Hierarchically Organized Oracle” reflects the zeitgeist of the time. They went public in April 1996.
• eBay was founded in September 1995 by Pierre Omidyar, who was among the first to realize the enormous network graph effect of web users. With 200,000+ auctions during all of 1996, they hit 200,000 in January 1997 alone, which led Benchmark Capital to invest $6.7M for 22.1% of the company. eBay went public in September 1998.
• E*TRADE was founded in the 1980's, quickly embraced the web, and went public in August 1996. I have been a customer ever since.
• Netflix was founded in August 1997 after Reed Hastings sold his previous company PureAtria for $750M to Rational Software, where I worked at the time. This was then the biggest acquisition in Silicon Valley history.?Netflix planned their IPO for fall of 2001, but with the dot com crash, and the 9/11 attacks, they canceled. Eventually they went public May 2002 at $310M valuation.
• Google was founded in September 1998 after Andy Bechtolsheim wrote the first $100k angel check. Jeff Bezos and Ram Shriram participated in the $1M seed round in November 1998 and Sequoia and Kleiner Perkins led the $25M Series A round the following year. Google entered a very crowded Search market (anyone remember AltaVista, Excite, WebCrawler, Lycos, InfoSeek and many more?); investors were in general pretty negative on the Search market at the time. With Google’s product being so much better than others, they rapidly gained market share, and once they figured out monetization their revenue exploded. They went public in May 2004 at $23.1B valuation
• Paypal was founded in March 1999 by Peter Thiel and others; in March 2000, they merged with x.com, Elon Musk’s startup. They went public in February 2002 in a sour market at a valuation of $800M; eBay acquired them in October 2002 for $1.5B.

These were some of the gold nuggets in the gold rush. In any gold rush, most people will find only rocks, and there were plenty of those as well. Anyone remember Pets.com, Webvan.com or WorldCom?

There were hundreds if not thousands of companies created during this gold rush. We all know how the dot com bubble ended in the dot com crash starting in March of 2000, see NASDAQ chart. The run from Netscape to crash was ~6-7 years. After the crash, however, everyone took the internet and the web for granted, like we do today.

I think we will see a similar pattern in the AI goldrush we are now in. chatGPT has created an enormous user base and interest, and a ton of new and old companies are getting into AI. In a gold rush, there will be some gold, but most people will just find rocks, and as Lacey Hunter suggested in a private chat, some of the rocks will be painted in gold color.

So how will it end? AI will boom for ~6-7 years and crash by ~2030? ?By then there will be massive innovation and many new companies created. After the bust, we will all take AI for granted, like we take the web for granted today.

What do you think?

Update: As of May 2023 there are 13 Gen AI unicorns.