'We're going to see a lot of carnage': VC investor says AI boom will create giants — and topple overhyped startups (www.businessinsider.com)

Mel Williams, cofounder and partner at TrueBridge Capital Partners, warns that the AI boom will produce a few enormous winners while toppling many overhyped startups. Speaking from a fund-of-funds vantage (TrueBridge backs firms like Founders Fund, Thrive and Sequoia and manages about $8 billion), he says the market is "frothy" at early stages: founders with pedigrees from OpenAI and top labs often raise large rounds at high valuations with little evidence of product-market fit. Growth-stage deals, by contrast, are more tethered to revenue and public-market comparables. Williams expects a decade of intense value creation but also "a lot of carnage" as excess capital corrects. Technically, Williams argues AI amplifies venture’s power-law dynamics because AI software scales instantly with near-zero marginal cost, enterprises are rapidly allocating explicit AI budgets, and consumers adopt viral products (e.g., ChatGPT) quickly. Those forces mean companies that achieve product-market fit can become dominant very fast, while misses are punished severely. With AI accounting for roughly 50–60% of venture activity, he believes the imbalance will trigger a harsh market correction even as the overall venture landscape outside AI remains relatively healthy.