Uses and abuses of publicity

Other technologies have faced similar vicissitudes. There was a time when it was very fashionable to rave about blockchain, crypto and non-fungible tokens. Now the attention of users, investors and managers is firmly fixed on artificial intelligence (AI). Since ChatGPT, an AI chatbot, was made available to the public in late November, it has generated another wave of hype. Over 100 million people have asked to rewrite the IKEA furniture instructions into iambic pentameter or something equally important; Venture-capital funds are pouring money into AI startups; Established companies are rushing to describe how they will use the technology to do everything from customer service to coding.

There is no need to preach in despair. Some technologies are less speculative than others; The metaverse is still largely hypothetical, for example, while AI is an established field. Even when bubbles burst, they can leave behind world-changing companies. The hype cycle promoted by consultancy Gartner is real. In short, it describes a period of uncontrolled enthusiasm for a new idea, followed by a backlash.

This makes the hype bitter for entrepreneurs. Excitement can help unlock funding and attract users. Some think of propaganda as a public good, which is important in keeping new technologies running. But this can also cause problems. The question is how to manage the publicity for the best.

An obvious temptation for entrepreneurs is to take advantage of the hype by making wild—even deceptive—promises. A 2021 paper by Paul Momtaz of the UCLA Anderson School of Management looked at the once-fake field of initial coin offerings (ICOs), in which new cryptocurrencies are issued directly to the public. Mr. Momtaz found that issuers not only systematically overplayed the potential of their tokens, but investors fell for it. Exaggerated claims raised more money in less time than accurate claims. ICOs are far less publicized these days, but the opportunity to rouse investors clearly remains: over 100 new cryptocurrencies have been created that bear the name ChatGPT.

Deliberate exaggeration can be a perfectly logical strategy if the entrepreneurs are raising money one time. But if they want to build a business, tap capital in repeated funding rounds, or maintain close relationships with investors and users, promotion can become a liability. Some of the dangers are clear: disappointment and damaged credibility if things don’t go as promised. Other dangers are more subtle: Getting too tied to a specific technology can reduce the room that startups have to pivot to a new product or business model.

So propaganda calls for care. A recent paper by Danielle Logue of UNSW Sydney and Matthew Grimes of Judge Business School looked at the different paths taken by the many social-investment stockmarkets set up in 2013 as impact investing grew. The authors compare the glitzy outlook of an exchange in London that attracted high-profile endorsements, promised a financial revolution and later collapsed with that of its more successful Canadian peer, which relied more on expert advice and incrementalism. Have done

The pros and cons of publicity have also been evident in ChatGPT’s short public life. The hype helped make it the fastest growing consumer technology in history. But the flaws in the technology now attract just as much attention. Microsoft, which has integrated a souped-up version of the chatbot into its Bing search engine, has restricted access to the new version and capped the number of questions users can ask it (a standard adopted across all meetings). Idea) . As Mr. Grimes points out, entrepreneurs who are pushing entirely new products are expected to distort reality without exaggerating expectations. How they handle the publicity could help determine whether they can pull off this difficult balancing act.

Read more from our columnist, Bartleby, on management and work:

Wild Capacity Brings Advantages as Well as Drawbacks (23 February)

Why is there a time to take shots of coffee meetings at work? (16 February)

Disadvantages of loving your job a little too much (February 9)

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