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Most companies using AI are 'lighting money on fire,' says Matthew Prince
- Saig6 3y agohttps://web.archive.org/web/20231213125011/https://fortune.com/2023/12/12/cloudflare-ceo-matthew-prince-companies-lighting-money-fire-with-ai/ https://web.archive.org/web/20231213125011/https://fortune.c...
- layer8 3y agoReader mode also worked for me.
- bell-cot 3y agoYes, true. OTOH - if enough idiots...er, I mean people with no clue about the actual technology...are getting drunk on the "AI!!!" Kool-Aid, then adding "AI" to your own products can be a least-bad business decision. Doesn't matter whether AI could possibly improve your product, or not. Mentally, you write it off as a trend-chasing marketing expense.
- Oras 3y agoThere is no elaboration on why he said that or the context. > Prince also took shots at the major cloud providers, especially Amazon, during the talk about the infrastructure side of AI. He pointed to the shortage of GPUs as one of his top concerns about both the current infrastructure and lack of competition in AI, but argued this problem is “somewhat artificial.” I was expecting to see a point of view, reasons, or examples, but the article is just clickbait.
- _bohm 3y agoYeah, the article really has no more information than the headline
- EGreg 3y agoMost people reading articles are wasting their time. That’s all
- CrzyLngPwd 3y agoIt's a clickbait headline.
- rs999gti 3y ago> It's a clickbait headline. It is but this is part of the hype cycle, "leaders" in the space make proclamations, which in five years if they are correct makes them seen as visionaries.
- rewmie 3y ago[dead]
- wredue 3y agoI remember a story a HN user shared about how they lifted their businesses reporting and switched it out for an AI instead. I guarantee that business is lighting money on fire.
- iAkashPaul 3y agoSure but only for companies banking on grabbing users before stopping free-tiers or raising prices to match actual GPU/compute costs like MS/OpenAI/GitHub Copilot etc. The rest are able to deliver great classification, summarisation, extraction, QnA & automated customer care & art(?).
- sokoloff 3y agoEven if Matt is correct in his statement, that could still be entirely logical and +EV for them. If you tell me there’s an 89% chance that my experiment with gen-AI will yield nothing, all I need is for the payoff of that experiment to have a net-present-value of 10x my investment in the experiment for it to be an experiment worth considering. (Even less if some of that 89% will inform future experiments, even if there’s no current monetary payback.)
- bottled_poe 3y agoThat’s a big if, but does seem plausible for well-founded use cases.
- itsoktocry 3y agoThis only makes sense in a repeatable game or across the industry, not for any individual experiment. Would you take a 11% chance of a billion dollars vs death?
- adql 3y agoBut you're losing investors money not your own
- rightbyte 3y agoAt that point you already succeeded with your business. In the really risky phase it is all credit card, that you need to recoup.
- sokoloff 3y agoThe worst case of maxing out a personal credit card is not generally comparable to individual death. Loads of people with way less earning power than SWEs have that amount of debt. It's a pain in the ass, but it's not terminal. (It's also dischargeable in bankruptcy in the worst 0.1% case.)
- 3y ago
- gslin 3y agohttps://archive.is/XEoTR https://archive.is/XEoTR
- dmezzetti 3y agoThis is only true if you start with "We have to use AI, let's find a problem". There are plenty of production-ready use cases such as retrieval augmented generation (RAG) and generative AI to assist with the creative writing or illustration process. There are also plenty of ways to spend way more money than necessary. Plenty of great open source solutions that have almost caught up as we end 2023.
- Sai_ 3y agoDon’t think the AI ELO ratings agree with you.
- mistercheph 3y agoYou mean the ratings that show a language model you can run on consumer hardware today within 100 ELO points of Industry SOTA?
- phpisthebest 3y agoThe path of creative AI has to be the most Ironic story of this whole technological tale. The AI Utopia that was imaged was a world of AI robots all doing our labor so everyone can sit around being "creative" and artist, no on would have to clean the streets, pickup trash, work in that factory etc... We would have a utopia where humans would just be free loving creatives all sitting around painting, writing their great novels, etc... The reality it, Humans will doing that manual labor for decades to come has AI replaces all creative jobs in a much quicker time...
- adql 3y agoUtopia like that requires people in power to work toward it, not their own bank account state. No tech is going to change that.
- phpisthebest 3y agoUtopia is not possible in the first place, that is what I find amusing in this whole story... the number of people that believe it is. Self Interest is core to the human experience people deny that at their own peril, it is why I believe in capitalism and reject socialism, i understand that all persons at all times work in their self interest anyone that claims their are not is lying to themselves.
- Eumenes 3y agoMost companies taking VC money are doing that, not just AI companies. A startup a friend works at had a company offsite earlier this year, like 50 people, that cost almost $300k for a few days. They rented fancy airbnbs, went on booze cruises, rented out an axe throwing place with full bar, catered multi thousand dollar breakfast/lunches everyday to their offsite venue. They spent one day doing myers brigs tests (LOL). They have lavish perks and benefits for a company with debt, making no money, and have "leadership" that can't even manage a paper bag, let alone a company. When interviewing SWEs, they spend more time on their emotional intelligence and culture fit than technical interviews. The founders are being lectured by a 'head of people' who just runs this playbook at every company they work at, quickly bowing out after 2 years, before destroying the next VC backed startup.
- crazydoggers 3y agoThis was most startups back in 2000. Having witnessed it first hand, I can tell it’s an extremely accurate description. So sad it’s still going on. In the 2000s we had “B2B” that VCs threw money at. AI is just the latest acronym.
- MandieD 3y agoAh, the contrast between the wining and dining that one received around 2000 from startups as a computer science undergraduate, and the chase for any boring government contracting job to make loan payments in 2002-2003...
- paulsutter 3y agoYes they are and thank god for that. It’s the biggest opportunity in history. The upside is so large that it’s worth the effort Each failed company will have lessons learned, teams formed, experience improved, that will benefit the companies that come next
- wila 3y ago> For a straightforward approach, she suggested starting from the ground up with employees and having them create what she calls a “toil bucket,” essentially a list of everything they hate doing that they hope AI could take off their plate. Talking with customers about their issues appears to be number one everywhere? :)
- nikanj 3y agoThe board tasked the CEO with "investing in AI", so the CEO finds a shyster who promises to deliver ML lightning conveniently bottled.
- 3cats-in-a-coat 3y agoThat's so trivial to disprove I don't even know what to say. Replacing just one human with AI saves you hundreds of thousands of dollars per annum even if they're a low-qualified, low-paid one. It's not just salary (with insurance and taxes, health benefits) but also office space, amenities, liabilities. Humans have no way to compete with what's happening.
- mejutoco 3y ago> but also office space, amenities, liabilities. People (probably not the same people) are still resisting this with remote work, but get all excited when it is about AI. Humans are strange.
- 3cats-in-a-coat 3y agoWhat's strange about it? AI doesn't slack when you're not looking at it. While humans do. And teams need tightly knit communication so they can avoid misunderstandings and synchronize together. So. Shared working spaces optimizes the performance of humans, while AI has no physical existence, but its shared working space is feeding it 50MB file of text holding your entire project history. That's the AI office. Much cheaper.
- mejutoco 3y ago> AI doesn't slack when you're not looking at it. While humans do. I have had a different experience. Some humans slack while nobody is looking; some humans slack even if you look; some humans do not slack. Alternatively, as long as you can measure the output, does it matter if someone slacks? But let's say humans may and I can live with it, because it is not a thread about remote work. The strangeness/inconsistency comes from (it would seem) not considering those factors in a business decision regarding humans, but to consider them in a business decision regarding AI. You mirror this inconsistency in your argument, mentioning the savings of amenities and office rental _only_ in the case of AI. This is not a criticism, but I find this interesting, because I always see this topic expressed in this exact same way.
- 3y ago
- makach 3y agoWhat a bizarre statement from someone who ought to know better. Did he graduate from Nokia?
- deleted 3y ago[deleted]
- clwg 3y agoIsn't this essentially just R&D? The hope is that something meaningful will be produced, but it's not necessarily clear what the result will be or whether it will be viable.
- deleted 3y ago[deleted]
- rs999gti 3y ago> Isn't this essentially just R&D? Yes jam AI into everything, say your company uses AI, in your board meetings blab about AI. Eventually, something sticks and makes money
- clwg 3y agoI share your cynicism, but I think there’s worse ways for corporations to spend capital other than trying to innovate.
- TerrifiedMouse 3y agoIt’s also possible nothing sticks. Look at what blockchain amounted to.
- outside415 3y agoblockchain is still thriving. anti crypto circle jerk here is clownish.
- cs702 3y agoDeveloping, training, retraining, and delivering a competitive AI service today requires an army of expensive people and a huge investment in infrastructure. It's not cheap! Moreover, any improvement, whether it's better generation, longer context, a new modality, cheaper prices, or something else, is quickly replicated by all major groups. They're in a race to see who can spend the most the fastest while charging the least to prevent customers from switching. Meanwhile, free open-source alternatives keep getting better and more efficient. --- Copied and pasted from "AI is already a commodity" (https://news.ycombinator.com/item?id=38561729 https://news.ycombinator.com/item?id=38561729).
- paxys 3y agoEvery big company out there is burning most of its operating expenses searching for the next big thing. Even if throwing a little bit of it into "AI" doesn't get any immediate returns, it's almost irresponsible not to take that gamble considering how large the upside is.
- wuiheerfoj 3y agoMost companies […] are lighting money on fire - is this not the VC model?
- rs999gti 3y ago> Most companies […] are lighting money on fire - is this not the VC model? The VC model, like here on HN, is gambling on winners and losers in the start up space. The losers burn VC money, the winners become the unicorns - whatever, bleh
- chasd00 3y agoI work in consulting, my firm is frothing at the mouth over genai and selling it hard. Companies everywhere have to be getting the full court press to implement some form of a genai integration no matter how absurd. I’ve yet to completely buy in. I’m still learning and experimenting and see some applications where it really does shine but still want to see more before I put my reputation on the line with a client who trusts me. /my firm was also all in with the metaverse so… color me skeptical on their predictions
- impulser_ 3y agoTo be fair, Cloudflare has also been lighting money on fire for 14 years. Maybe not as extreme as some AI companies, but they have never posted a profit once and just became cash flow positive for the first time in 14 years.
- deadbabe 3y agoWhen you’re in growth mode you don’t want profit. All profit must be reinvested.
- throwawaaarrgh 3y agoUntil you get so big so fast it's unsustainable and collapses, but not before the sharks who've been getting rich off your stock inflation dump for a pretty penny
- Wronnay 3y agoIf profit would be reinvested it would be zero and not negative - there is no profit to be reinvested - they need fresh investor blood from time to time ;-)
- dns_snek 3y agoHas Cloudflare been "lighting money on fire"? That would imply that they're chasing some unattainable goal or using their funding unwisely, yet they currently provide an extremely valuable service to a significant portion of the internet and they're rapidly expanding into a well rounded cloud computing platform. Most of these "AI companies" are a novelty that will never deliver anything useful, much less anything remarkable.
- m3kw9 3y agoNot surprised but the risk and reward is there. You buy/rent A100s to train open sourced model to generate value, it could go to waste the minute a new model beats you the next day
- i8comments 3y agoReading what the article actually says beyond the clickbait, there is no reason to take that statement seriously.
- Aeolun 3y agoMost companies are lighting money on fire period. Don't need AI to do it.
- throwawaaarrgh 3y agoShit, they found out it's all just hype! Exit while you can boys!
- cmrdporcupine 3y agoBut that's precisely the goal. The funding / revenue comes from the buzzword. "Doing AI" is peacock feathers. Saw a news segment yesterday about some "AI augmented" "smart" garment ... some textile that can change colour on demand... and uses "AI" to decide that colour. What that has to do with "AI", I have no idea. But the AI piece (plus "sustainable") was the highlight of the piece. Point being, it's the buzzword needed in this decade in order to raise attention and funding. Doesn't mean there's no fire behind the smoke -- intelligent systems ... is how capitalism automate humans out of mechanized processes in order to lower labour costs. There's huge profit in that. At least in the short / medium term.