Cybersecurity CEO says we're in an AI bubble. Here's what he looks for when investing in a startup.

"Serial entrepreneur, Shlomo Kramer, told Business Insider that althoughthe promise of AI is "happening at a pace that is much slower" than expected, he still believes in its ability to deliver results in the long-term. He compared the current moment to the dot-com boom of the late 1990s, which led to the demise of many companies. "There was a lot of devastation,"said Kramer, who runs the company aimed at securing organizations' digital and AI transformation."

""But e-commerce is obviously a major part of our life, and the same is going to be with AI." While Kramer believes some AI startups are overvalued, he said many are also reasonably priced - and he continues to invest in companies he thinks are promising. He said that every startup needs a "good combination of team, market, product." When evaluating the company's product, he said he looks forspecific criteria that make it a worthwhile investment."

"Kramer said he looks to check off three boxes when evaluating a product. First, he said it needs a "hook." The concept should be "quick to understand," he said, and something that he grasps intuitively without having to overthink or rationalize it. "It feels right," Kramer said. Second, the product should have the potential to evolve into a platform, or at least a "mini platform" that can expand into something broader over time, the CEO said."

An AI investment bubble is underway, echoing the dot-com boom's mix of overvaluation and eventual durable winners. Some AI startups are overvalued while many remain reasonably priced and continue to attract capital. Investment decisions hinge on alignment of team, market, and product. Product evaluation uses three criteria: an intuitive hook that is quick to understand, potential to evolve into a platform or mini-platform over time, and a clear vision for use cases that enable monetization. AI progress is slower than some expected, but long-term transformative value and enduring businesses are expected to emerge.

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