One lesson I’ve learned over the past 28 years in the Capital Markets is that companies should not feed into hype in order to bolster their Enterprise Value.
Rather than feed into hype, CEOs and management teams ought to focus on driving the business and educating investors. The average institutional investor does not understand the nuances nor operational challenges associated with deploying advanced automation capabilities (AI, ML, NLP, LLMs, predictive analytics, etc.), within the enterprise. I don’t say this to be insulting, but rather because it is true. The average buysider’s coverage is too broad which makes it difficult to become expert in any one area (blame industry economics which have spread buyside and sellside resources thin).
CEOs and CFOs need to do a better job of educating investors as it relates to fast-moving, complex technologies. Rather than feed into the hype (Tom Siebel at C3.ai for example), public company CEOs ought to under-promise and over-deliver versus investor expectations for Revenue and Earnings. Focus on driving results. Focus on employees. As it relates to investors, help them understand your business beyond the investor deck and earnings calls. Help them understand the “AI” landscape, the related technology stack beyond your company, where your company fits and most importantly – explain what your competitive advantages are and how you plan to defend them. This approach will build investor trust.
When investors ultimately figure out that AI growth is not what they imagined (they probably will do so by the end of this year or early next), they will not shoot your company first and ask questions later if your company is one that was honest, transparent and helpful to their learnings. Hype jobs like Tom Siebel’s C3.ai who only strive to obfuscate will eventually be ferreted out and discarded by investors. Rightfully so.