Odd Lots: "Jerry Neumann on the Problem With Investing in AI Right Now"

Podcast: Odd Lots
Hosts: Joe Weisenthal & Tracy Alloway (Bloomberg)
Guest: Jerry Neumann (Venture Capitalist, Columbia Business School professor, author)
Date: November 12, 2025

Episode Overview

This episode tackles the hot topic of AI investing, questioning whether the current AI boom offers genuine paths to wealth for investors. Guest Jerry Neumann, a veteran venture capitalist, academic, and co-author of "Founder vs. Investor," shares his provocative thesis: "AI will not make you rich." Neumann unpacks parallels between the AI revolution and past transformational technologies—especially containerization—arguing that structural factors and market dynamics often mean incumbents, not visionary upstarts, capture most of the new value. The conversation explores speculation versus real opportunity, whether we're in an AI "bubble," and what investors can truly expect as AI integrates into the economy.

Key Discussion Points and Insights

1. Where Are the AI Pure Plays? (02:00–04:01)

• Joe Weisenthal notes the lack of publicly traded "AI pure-play" companies, with Nvidia being the closest analog.
• Tracy Alloway: "Here you have this thing that a lot of people would say is revolutionary technology...but there doesn’t really seem to be that much pure play."
• The market is currently favoring "picks and shovels" (infrastructure, chips, cooling) rather than direct AI products.

2. Is AI Actually Making People Rich Right Now? (05:22–06:34)

• Neumann challenges the narrative that AI is already creating vast fortunes:

  "Money's not money till it's cash." (Jerry Neumann, 05:29)

• He cautions that early-stage value creation doesn't always equate to value capture for investors.

3. AI vs. Previous Tech Revolutions — The Containerization Analogy (06:34–12:37)

• Jerry draws a detailed parallel between AI and the transformative (but slow, and not hugely lucrative for new entrants) impact of shipping containerization.
• Shipping containers revolutionized logistics but didn’t mint a wave of new billionaires—the biggest gains accrued to incumbents (e.g., Maersk) and society at large.
• Neumann: "Technologies always come in these technological systems if they're worthwhile...the hard part here was building the system, not the individual technologies." (11:43)
• Story of Sealand: The upstart who initiated containerization profited mainly by selling out early to an incumbent.

4. Why Incumbents Keep Winning (18:05–19:12)

• Neumann: The current advantage in AI is less about technological moats, more about resources—"Anybody can build a foundation model, right? If you have the money."
• The pace of actual technology change is now "evolutionary, not revolutionary," so cash and scale are the new moats.

5. The Exit Problem: IPOs, Consolidation, and Market Timing (19:36–24:48)

• Neumann and the hosts explore how consolidation is likely: Most startups are hoping to be acquired by incumbents.
• Hard to predict or time the "IPO window," so the wise VC seeks companies that can become self-sustaining while waiting for an exit.

6. Comparing Today's AI Market to the Dot-Com Bubble (24:48–26:08)

• Difference: Dot-com public involvement was more direct (employees, consumers had significant financial exposure), whereas much current AI investment comes from large, risk-averse entities (big tech firms).
• Consensus: Today's AI economy may have less direct "wealth effect" and systemic risk compared to dot-com days.

7. Are We in a New Tech Wave—or the End of One? (26:42–29:36)

• Neumann invokes Carlotta Perez’s framework of technological cycles, arguing that AI may be the climax of the existing computer revolution, not the start of something entirely new.
• "This is not a new technological revolution. I think it's the end of the old one." (Jerry Neumann, 28:45)

8. What’s the Path to Profiting from AI? (29:36–33:16)

• For VCs, the "IKEA moment" hasn't arrived yet; the massive incumbent winner exploiting AI, analogous to Ikea in containerization, hasn’t appeared.
• The winners aren't those who cut costs with tech, but those who use it to offer more and grow bigger:

  "If you’re firing people because of AI, you’re doing it wrong." (Jerry Neumann, 33:18)

9. Will Legacy Firms or New Entrants Thrive Most? (40:28–40:56)

• Drawing on historical analogies, Jerry expects legacy firms to adapt and thrive—as with Walmart and Ikea post-containerization—rather than upstarts dominating.

10. Bubble Talk: Is AI Overvalued? (41:05–42:28)

• Neumann sees signs of "overvaluation" and an infrastructure bubble (e.g., chip and data center overbuilding), but:

  "I think things are overvalued, and I think there may be a infrastructure bubble…But, I don’t think you’re going to need as many chips in the future as you are buying today." (Jerry Neumann, 42:06)

• He distinguishes this from more dangerous "true bubbles" (which involve leverage and greatly harm the broader economy on collapse).

11. Investor and Public Sentiment in Bubbles (48:42–49:28)

• Bubbles are fun yet stressful for participants:

  "If I'm in it, I'm really anxious…Am I gonna sell at the right time? I'm also kicking myself for not investing more." (Joe Weisenthal, 48:42)

• Neumann agrees: "Bubbles are fun, especially if you're young and stupid...but it's stressful both after." (Jerry Neumann, 49:20)

12. Who Will Win—and How? Final Takeaways

• Massive, lasting gains will go to companies that use AI as an enabler to expand businesses and pass value to consumers—not simply to cut costs.
• The “AI will not make you rich” message is aimed at investors expecting quick or obvious windfalls; actual long-term winners may be boring, established firms applying AI as infrastructure.

Memorable Quotes

• "Money's not money till it's cash." (Jerry Neumann, 05:29)
• "There’s a difference between value creation and value capture...who’s going to get that value?" (Neumann, 06:09)
• "Technologies always come in these technological systems if they're worthwhile...[the real revolution is] building the system, not the individual technologies." (Neumann, 11:43)
• "If you’re firing people because of AI, you’re doing it wrong...You should be using AI to say, ‘I can use my people to do more. I can grow my company, I can vary my products, I can take more market share.’" (Neumann, 33:18)
• "This is not a new technological revolution. I think it's the end of the old one." (Neumann, 28:45)
• "Bubbles are fun, especially if you're young and stupid...but it's stressful both after." (Neumann, 49:20)
• “From a consumer standpoint, why do I care if your workflow...is more efficient because of AI? Either the product is better or it’s not.” (Joe Weisenthal, 35:52)

Notable Segments (Timestamps)

• AI public market conundrum and investor picks-and-shovels talk: 02:00–03:27
• Containerization analogy and its limited windfall: 06:34–12:37
• Moats in AI—cash, not code matters: 18:05–19:12
• Legacy v. upstart AI winners: 40:28–40:56
• Bubble discussion and what it really is: 41:05–42:41
• Investment psychology in bubbles: 48:42–49:28

Episode Tone

• Inquisitive, lightly irreverent, skeptical of hype cycles but genuinely searching for deeper mechanisms at play.
• Jerry Neumann brings a thoughtful, historical-analytical perspective, gently deflating the notion of easy money in AI without dismissing its technological importance.

Bottom Line

AI is revolutionary, but don’t expect to get rich by chasing the next hot startup. The biggest winners are likely to be resource-rich incumbents that use AI as leverage to scale, not to shrink. Real returns may come slowly and subtly, as happened with prior “invisible” innovations like containerization. For investors, patience, historical perspective, and skepticism about hype remain essential.