Billionaire investor Mark Cuban expects these seven businesses to fail over the next decade as technology and the economy evolve.
AI laggards
Mark Cuban issued a stark warning to businesses that don’t take artificial intelligence seriously. To Cuban, scoffing at AI is the equivalent of joking about the internet back in the early ’90s.
In other words, if you aren’t leveraging these technologies to streamline your work and cut costs, you’ve already fallen behind. He says we’re quickly reaching a point where there are going to be two kinds of companies: AI companies and dead companies.
Low-barrier brands
This includes businesses that almost anyone can start, like food trucks, clothing brands, and clothing resellers. It doesn’t take much money or many employees to start a business like this, so lots of people try.
Competition will drive prices down, and profits will be razor-thin. When the economy slows, and people stop spending money on restaurants and new clothes, these companies won’t have money stashed away to help them weather the storm.
Restaurants are especially vulnerable due to high rents, food prices, and hourly employees. Clothing brands also suffer because style trends change rapidly, and they may be left with boxes of unsold inventory that are now out of style.
Traditional media
Mainstream media companies like local newspapers, cable networks, and book publishers have been protected up to now because it used to cost a fortune to start a magazine or TV network.
Advancements in AI and technology now allow anyone to film HD videos, record podcasts that sound professionally edited, and even churn out legitimate-looking articles at almost no cost. Now independent creatives and influencers can easily build an audience and distribute their work without the help of legacy publishers.
Cuban says these businesses will lose their influence and bargaining power with advertisers. As more and more people turn to individuals for their news and entertainment, these companies will run out of money.
Platform dependents
If your entire business lives on Amazon, Etsy, or TikTok, Cuban thinks you are in a dangerous position. The problem with websites like Etsy and TikTok is that you don’t actually own your customers.
If TikTok changes its algorithm so your fans can’t find your page, or Amazon doubles its fees, you could lose your entire income overnight.
AI startups
Even though Cuban is an AI enthusiast, he says nearly all AI startups will fail. He compares this new AI boom to the search engine boom of the mid-’90s.
At one time, there were dozens of search engines like Yahoo, InfoSpace, and AltaVista. These days, there’s just Google.
He thinks once the floodgates open on AI projects, only a few big winners will remain. Thousands of tiny companies will discover they don’t have a unique advantage, and when the investors run out of money, those companies will dry up.
Government contractors
Mark Cuban also said companies that solely rely on government grants, or those that have guaranteed government contracts, are just as doomed. When a business knows it’ll get a monthly check from the government as long as it follows certain guidelines, there’s no reason to be efficient.
But what happens if the government needs to cut spending? Just like everyone else, they suffer during tax revenue declines. But because they don’t have to compete for customers, they lack the innovation of businesses that do.
Scaleless businesses
Entrepreneurs with businesses that aren’t built for scale might soon have problems, too. Cuban warns of a red rural recession where small-town businesses can’t compete with the tech giants and corporations with millions of customers.
These businesses won’t be able to afford AI technology that allows bigger businesses to operate more cheaply.
At the same time, they can’t sell to enough customers to grow larger and make up the difference. As corporations automate more tasks and lower prices, local businesses will bleed cash until they go under.
