There are many comparisons being made between the current AI buildout and the Internet and dotcom buildout that started almost 30 years ago and ended in a bust in the early 2000s. Ethan Mollick recently reminded me that Amara’s Law is a useful way to think about this comparison. That is, we tend to overestimate the effects of a new technology in the short term and underestimate its effects in the long term.
The dotcom and network buildouts that occurred in the late 1990s were significant. It was the start of my career, I witnessed the exuberance, and I saw many companies flourish and then disappear. In hindsight, the peak of that exuberance may have been attending a private Elton John concert for Nortel customers in a downtown Atlanta ballroom.
At the time, new online companies were leveraging the web to set up new businesses that would completely disrupt the status quo. Telecom companies raced to build new networks using optical networking technologies that would move massive amounts of data around the world. Most of the companies that were part of this “gold rush” no longer exist or were acquired for “cents on the dollar.” But the investments that were made facilitated how the web is part of our lives today.
The birth of e-commerce
For example, one new business that launched in 1998 was Pets.com, based on a business plan for selling pet supplies online. Great idea, but this business model was not ready for the time, with the company losing money on every sale due to high costs of shipping, especially the heaviest products. Amazon, which owned 54% of the company at one point, was one of the companies that successfully solved this logistics problem. Today, almost all my pet supplies get shipped to me, including the heavy products, which was the very business model that Pets.com bet on. But this only works because a whole logistics industry for online purchases has since flourished beyond the postal and courier companies of that era, and too late for Pets.com.
These events also produced Uber, launching within a decade of the dotcom bust, with that business leveraging web connectivity and online mapping and payments, all delivered from a mobile app. Uber was one of the companies that helped normalize app-based logistics, payments, and delivery coordination. Those capabilities are now part of the broader e-commerce landscape that was missing for Pets.com but is integral to companies like Chewy.com. Uber is also no longer just a taxi company, launching UberEats (originally UberFRESH), which was preceded by DoorDash and Instacart.
What this situation for Pets.com highlights is that transformational technologies need many other facets to be successful, since they are literally transforming the market. Pets.com had a great idea, but it is now Chewy.com that is leveraging the logistics technologies built up by Amazon, Uber and other transportation tech companies. There are other factors, such as Internet penetration, e-commerce maturity and consumer acceptance, which have also been important for the growth of the dotcom industry.
Value creation
In hindsight, the contrast between Pets.com and Chewy.com highlights the ultimate value-add of the Internet and dotcom boom. The value was the modernization of the logistics industry, the efficiency of complete e-commerce transactions including returns, and the migration and creation of many online businesses.
For AI, there is significant discussion about how the massive spending will generate a return. At the centre of the debate is a basic question of where the value-add is. Significant levels of automation and efficiencies are at the core of the potential value-add, but there are still questions about how these efficiencies will be implemented and adopted by organizations. Also, people are concerned about what displacement will occur, and vague references to re-skilling and future employment-producing innovations will not alleviate those concerns.
Where are we going?
Personally, I am already leveraging these efficiencies, I can point to concrete benefits, and I know more are coming. But I think large parts of society and the market that are still figuring out how AI will be implemented and used productively.
There is no doubt that AI will be part of our world in the future, just as the Internet and dotcoms promised their future almost 30 years ago. But aside from the many dotcoms that failed, many of the network builders and equipment providers also failed. The fiber buildout from that time created multi-decade value, while the equipment and vendor-financing arrangements lost value in a few years and sometimes almost immediately, and the innovations, such as Uber, took many years to come to maturity.
The lesson of Amara’s Law is not that the AI buildout is fake. It is that timing, winners, business models, and useful innovations are much harder to predict than the existence of technological change. If the dotcom era is a guide, the value will accrue to those who best leverage the AI infrastructure to deliver real benefits to the largest number of users.
In closing, two pop-culture references come to mind: a Wendy’s commercial and the Jurassic Park movie. For the short-term AI buildout, the question is still “Where’s the beef?” while for the long-term impact, the warning may be: “Objects in mirror are closer than they appear.”
Sources
Mollick, E. (2024, January 6). Signs and portents. One Useful Thing. https://www.oneusefulthing.org/p/signs-and-portents
Pets.com. (n.d.). In Wikipedia. Retrieved June 10, 2026, from https://en.wikipedia.org/wiki/Pets.com
Roy Amara. (n.d.). In Wikipedia. Retrieved June 10, 2026, from https://en.wikipedia.org/wiki/Roy_Amara
Inferential Loop 