Dollar Company

2026-01-28

I read this blog but I can’t find it now. If I do find it I will try to link it to give it credit, it is better than anything I could write. I wish I was a better writer so this would come across better. I think I read this about the time that Uber was coming up, some time in the early 2010’s. Here goes.

A lot of tech companies are trying to live on hype and are burning investor money to build hype and acquire users and hope to raise prices later. But when reality sets in, the hype dies, the companies need profits, users disperse, there is a downturn. It happened with blockchain, it happened with SAAS, it happened with wework, it happened with pets.com, it will probably happen with some AI companies.

I want to illustrate with a fake company. Lets call my company, AI Dollars. I am the founder of AI Dollars.

At AI Dollars we sell dollar bills. Just normal dollar bills. The same dollar bills that you can get at a bank. We have gotten 10 million in seed funding because we have AI in our company name, nice. We used our seed funding to get some dollar bills.

We need to get users so we are going to sell our AI Dollars (which are just normal dollars) and so we are going to offer them for 90 cents. We spend a bunch on marketing as well, we buys google ads, we hire some youtubers and tiktok-ers to get the word out. We burn through some money getting users. Also the users love our value, they are getting our AI dollars for 90 cents. We have brand recognition.

Months go by, users love us. We have a ton of revenue, we are moving so many AI Dollars, our users rave about us, we have a huge social media presence, we are hiring a ton. Also since our revenue numbers look good we raise another round of money, 20 million.

We need to show growth though, we gotta have sales. We reduce our AI dollar price (which are just normal dollars) to 50 cents. Our company is so hot right now. We have a ton of market share. As a founder I am on the cover of tech crunch and stuff. I do a ted talk. Our company is valued at 20x revenue, which is a lot. I am the face of the future. We IPO. I am a billionaire. Other good stuff. I buy a private jet.

More months go by. Revenue keeps going up to the right.

But eventually we need to make profits. So we move the price of our AI dollars to $1.20. And for some reason our revenues drop, and our users go else where. We have to lay off staff, we have a few rounds of layoffs actually. Our stock price tanks. Our share holders are mad, I am no longer a billionaire, eventually we go through bankruptcy. The company is broken up for parts and sold.

And this is the end of AI Dollars.

I feel like people get manic about technology and the future sometimes. Perhaps it is easier for me to see this because I am a pessimist, I do often focus on the negative. I do think some tech companies are literally the future, some companies have really exciting technology that are super unique, and R&D always cost money.

But we as individuals really need to have some skepticism about companies and what they are offering. The market will always go up and down. Often companies will offer things at bellow market rate especially at the beginning, to get hype and build a moat, I know that Uber, Airbnb, and other did it to jump start the ride sharing and home sharing business. But it can’t last forever, and I think we need to focus on profits as well as revenue. If someone can sell AI Dollars for 80 cents that isn’t very hard. I think companies like Wework is cautionary tales.

I think people also get caught up in the hype, in the mania. This is funny because I am starting a company and right now it doesn’t cost anything right now to sign up. We will start charging money in March though, so hopefully we will have profit as well as revenue soon.

-Gary