The number of (legitimate) publicly-traded internet-related companies in the late 90's that were accessible to the average investor was also incredibly small. Legitimate small companies are rarely traded on exchanges in general, as they have no reason to solicit investment from the general public. It's the same phenomenon behind crowdfunding; if you have a legitimate product in development, you can simply convince a conventional lender to loan you the initial capital.
The only access investors have to outsized gains are through investing in the companies that invest in these companies. What small investors need are private equity index funds.
Someone else mentions Netflix vs. Blockbuster. Small investors would have been doubly screwed if they could only invest in Blockbuster because Netflix was still private.
Generative AI is very useful for creating rigged demos, which are particularly useful when people want to believe. Widespread skepticism might have some effect, but there are always skeptics, and no particular reason to believe there won’t be any winners to make venture capitalists happy with a few of their bets, enough to pay for the failures.