Prompt Playbook: Big Questions in AI PART 3

Hey Prompt Entrepreneur,

I was recently in Beijing and my Mandarin reached its limits during a conversation with a local nainai (grandmother).

She was insistent about recommending her favourite dumpling shop, gesturing enthusiastically while I smiled and nodded, catching maybe every third word. The Beijing dialect is tricky sometimes! Legit sound like Pirates (love it).

Then she did something that stopped me in my tracks. She pulled out her phone typed something out in Chinese to DeepSeek, and within seconds, showed me her screen—her recommendation perfectly translated into English, complete with the shop's address and specialties.

This wasn't a tech enthusiast showing off the latest gadget. This was a Beijing grandmother in a local hutong using AI as naturally as she'd use WeChat to message her family.

This is different.

Let’s get started:

The Recurring Question

"So, honest opinion—is AI actually transformative, or are we just in another hype cycle?"

This question comes in various forms, but the underlying concern is always the same: Are we witnessing a genuine technological revolution, or just the latest in a long line of overpromised tech trends?

In the business world in particular this is a pointed question. It boils down to “do we need to spend money on this or is this all junk hype?”

Your answer to this question can significantly impact how seriously people take your expertise. Too cynical, and you risk looking like you're missing the biggest technological shift of our generation. Too optimistic, and you might come across as just another hype merchant.

Three Competing Perspectives

Position 1: "It's Just Another Tech Bubble"

The cynical view sees AI as the latest in a series of overhyped technologies. It’s an easy argument to make if we point to recent history:

“Remember blockchain? The Internet of Things? Crypto? NFTs? The metaverse? Each was supposed to revolutionise everything, and where are they now? AI is just the newest shiny object for venture capitalists and tech companies desperate to pump their valuations.”

In this view, companies are slapping "AI" (and now "agentic" in 2025, lol) onto everything to attract investment, just as they added ".com" to their names in 1999 or "web3 blockchain" in 2017. The bubble will burst, leaving behind failed startups and wasted investments.

Position 2: "The Singularity Is Upon Us"

At the opposite extreme, the sci-fi utopian view declares that we're witnessing the dawn of a new era in human existence:

"The singularity isn't coming - it's here. Within years, AI will surpass human intelligence in every domain. We'll cure cancer, fix climate change, upload our consciousness to the cloud, merge with machines, and transcend our biological limitations. Every problem will be solved by super intelligent AI systems."

All hail our new AI overlords!

This perspective sees current AI capabilities as just the beginning of an exponential curve that will rapidly transform humanity beyond recognition.

Position 3: "Transformative Technology, Overhyped Applications"

My view occupies a more nuanced middle ground. Seeing a pattern here? Boring aren’t I?

I believe AI represents a genuinely transformative technology akin to the internet, but many current applications are indeed overhyped.

The Internet Parallel

To understand AI's potential impact, I find it helpful to draw parallels with the internet revolution.

I recently completed a three-hour motorbike trip to My Son, the ancient Champa temples in Vietnam. The journey took me over rice fields, across no-car bridges, and through remote countryside. This trip would have been absolutely impossible without the internet—GPS navigation, translation apps, booking platforms, payment systems, weather updates, and the ability to research the destination beforehand.

The internet has become so pervasive that we barely notice how it underpins nearly every aspect of modern life. We don’t even think about it - unless it goes down! 😅 

AI is heading down a similar path. It’s on par with the internet in terms of importance.

The Bubble Within the Revolution

But transformative technologies can be both revolutionary and overhyped simultaneously. Huh?

Remember the dotcom boom of the late 1990s? Maybe not - probably younger than me!

Companies basically slapped ".com" to their names and watched their valuations soar. Pets.com became the poster child for excess—spending millions on Super Bowl ads and a Macy’s parade balloon to sell pet food online before spectacularly imploding.

The bubble burst in 2000, wiping out hundreds of companies and trillions in market value. Critics declared the internet overhyped.

Yet what emerged from the ashes? Google. Amazon. eBay. PayPal. The infrastructure and innovations of the dotcom era laid the foundation for companies that would fundamentally reshape commerce, information access, and communication.

From the debris rose the modern internet. Kinda a big deal.

We're seeing the same pattern with AI. Yes, there's tremendous hype. Yes, many current applications are gimmicky or poorly thought out. Yes, companies are adding "AI" to their pitch decks without meaningful integration.

There will probably be a correction. Maybe a violent one. It’ll be messy and people will decry AI as trash.

But underneath all that froth lies genuinely transformative technology.

I don’t (personally) believe the same can be said of Web3, blockchain, crypto, the metaverse, internet of things etc. They are solutions in search of a problem, fascinating technologies used mainly in SF and environs. Whereas modern AI immediately took hold across broad swathes of the public, young and old.

The Capability Overhang

Ethan Mollick, a professor at Wharton, introduced a concept that perfectly captures our current moment: the "capability overhang."

Even if we stopped all AI development today - no new models, no improvements, no breakthroughs- it would take years for humanity to fully explore and implement all the capabilities that current AI systems already possess.

(God that sounds nice. I’d be able to relax and take a properly holiday too…)

Right now we're like someone who just got their first smartphone and is still using it primarily to make calls, unaware of the thousands of other capabilities waiting to be discovered.

This is because AI belongs to a rare category: general purpose technologies (confusingly the acronym for this is GPTs…). These are innovations that don't just solve specific problems but enable entirely new categories of solutions.

Historical examples include:

• The steam engine

• Electricity

• The microchip

• The computer

• The internet

We could probably chuck in fire and the wheel too.

You may have heard of some of these…they are pretty important.

Each of these technologies took decades or even centuries to reach their full impact. They started with simple applications, went through periods of hype and disappointment, but ultimately transformed society in ways their inventors couldn't have imagined.

This is one of my favourite related images from the year 2000:

That internet? Bit rubbish! It’ll never catch on!

Modern AI shows all the hallmarks of a General Purpose Technology. It's not just a tool for specific tasks—it's a platform upon which countless other innovations can be built.

And right now we’re scratching the surface.

Our Current Phase: Digital Sandbox

We're in the "digital sandbox" phase of AI—similar to the early days of the internet when people were building wild, experimental geocities websites with flashing text and auto-playing MIDI files and animated backgrounds.

(FYI the 1996 Space Jam (Come on and slam, and welcome to the jam) website is still up and available here https://www.spacejam.com/1996/)

Current AI applications often feel like toys. Chat interfaces, image generators, simple automations. We're playing, experimenting, figuring out what's possible.

A lot of the time they are pick up and play then quickly discarded. “Oh that was cool” followed by never using again.

In 20 years, we'll look back at ChatGPT the way we now view early Flash websites or the sound of a dial-up modem—charming artefacts from a more primitive time. We’ll probably smile at how simple we were back then - much as we would about playing Snake on a Nokia 3210.

But just as those early web experiments led to today's sophisticated digital ecosystem, our current AI "toys" are laying the groundwork for profound transformations in how we work, learn, create, and solve problems. It’s just we’re in the midst of it and it’s hard to see.

Argument Summary

When addressing whether AI is overhyped or transformative:

If AI adoption patterns mirror the internet (with normal people using it for everyday tasks),

Then we're witnessing a genuinely transformative technology rather than a niche trend.

If previous tech bubbles (dotcom, crypto, metaverse) show that hype and transformation can coexist,

Then current AI hype doesn't negate its revolutionary potential.

If AI demonstrates characteristics of a general purpose technology,

Then its full impact will unfold over decades, not months.

If we're experiencing a "capability overhang" where current AI abilities exceed our implementation capacity,

Then focusing on practical applications rather than speculative futures provides the most value.

Therefore AI is both overhyped in specific applications AND genuinely transformative as an underlying technology—requiring a nuanced perspective that acknowledges both realities.

This is my perspective—adapt it to your industry and experiences as always! And disagree with me! The key though is helping people see beyond both the hype and the cynicism.

What's Next?

Tomorrow, we'll tackle a question that's becoming increasingly urgent: "What about AI's environmental impact?"

As AI capabilities grow, so do concerns about energy consumption, water usage, and carbon footprints. Big issues that need proper consideration.

Keep Prompting,

Kyle

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