Grindr CEO and “gAI” inventor warns AI funding bubble targets wrong areas

Grindr CEO George Arison warns that a “VC bubble” is forming around AI applications, predicting that many promising companies will “get destroyed” by excessive venture capital funding. While positioning Grindr as an “AI-first company” that has embraced artificial intelligence with products like gAI (pronounced “gay-I”), Arison argues that venture capitalists are flooding money into the wrong areas of the AI ecosystem.

The big picture: Arison believes venture capital follows predictable patterns where “a few people will set the trends, then everyone will jump in that direction and too much money will go into that space.”

• He compared the current AI investment frenzy to SoftBank’s problematic investments from five to seven years ago, citing WeWork’s $9 billion funding before bankruptcy and Zume’s $375 million investment before shutdown.
• “How many companies probably should not have taken money from SoftBank five, seven years ago?” Arison said. “Had they not done that, they might have still been around.”

Where the bubble is forming: The VC bubble is specifically concentrated on AI applications rather than foundational architecture or model companies.

• Arison questioned the proliferation of similar AI tools, asking “How many sales agents do you need?”
• He emphasized that the bubble represents an “inevitable component of how venture capital works,” where some companies will fail while others become “very, very successful.”

What they’re saying: Arison suggested that established AI companies have incentives to discourage new investment in the space.

• “If you are an incumbent large AI player, you kind of want to stop a lot of investment from going into this space because you now have a unique competitive advantage,” he explained.
• He noted the rapid pace of innovation, comparing it to his experience with Taxi Magic, which was eventually out-innovated by Uber.

Innovation happening fast: Arison highlighted how quickly AI companies are leapfrogging each other in the competitive landscape.

• “Cursor, which is an innovator, is being out-innovated by Anthropic because Claude Code, a lot of people would say is way better,” he observed, though clarified that Grindr uses both coding tools.
• He praised Elon Musk’s work with Grok, saying “What Elon has done with Grok is actually pretty incredible” and predicting it’s “headed in the direction of it being better than anybody else.”

Bottom line: While Arison doesn’t believe VCs are over-investing in AI overall, he argues the money is going to the wrong places, describing venture capitalists as a “herd” where “wherever the three sheep go, then everybody else follows.”