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Looks like many AI startups are experiencing a bit of some turbulence and chaos in the recent months: First the OpenAI rebellion in November, then the Inflecti

by rvz 3y ago

Looks like many AI startups are experiencing a bit of some turbulence and chaos in the recent months: First the OpenAI rebellion in November, then the Inflection AI acqui-hire from Microsoft not willing to pay the over-valued $4B and deflected that to $600M instead (after making $0 revenue) and now a bit of in-stability at Stability AI with the CEO resigning after many employees leaving. What does that say about the other AI companies out there who have raised tons of VC cash and aren't making any meaningful amount of revenue? I guess that is contributing to the collapse of this bubble with only a very few companies surviving.

abvdasker 3y ago
The big companies fighting to win gen AI have forgotten how to build good products. There seems to be enormous confusion about AI applications — few seem to be willing to commit to a singular focus or application, instead trying to be everything to everyone. The tried and true way to build something big is to bootstrap a killer app that solves a real problem and then expand horizontally to other problem spaces. These companies are trying to do too much too soon (probably because they have too few financial constraints). A lack of focus.
__loam 3y ago
Wait you're telling me you can't make the next trillion dollar industry by incinerating capital while making no money?
- gunapologist99 3y ago
  You have a point, but remember Amazon and Google did exactly that and figured out the business model later.
  - barkingcat 3y ago
    Amazon was ruthless at making money from day 0. Amazon was famous for not taking profit, and instead putting profit back into the company, but revenue? Amazon was generating gobs and gobs and gobs of revenue from day 0.
  - __loam 3y ago
    Surely the same strategy will work during economic contraction and a period of high interest rates and borrowing costs.
  - nextworddev 3y ago
    Big difference is that Amazon and Google had fast growing revenue
  - bamboozled 3y ago
    I am quite sure Google had a lot to offer from day one, which is why they were encouraged to start the business. There wasn’t any open source Google’s. Yes maybe the business model wasn’t perfect but ad revenue was already well and truly a thing by the time Google invented a better search engine. All they had to do was serve the ads and the rest is history.
  - deleted 3y ago
    [deleted]
  - lmeyerov 3y ago
    this seems super misleading Amazon nailed high revenue growth from the very beginning, just reinvesting in growth & deferring the margin story. They could have stopped at any time. Google nailed high traffic from the beginning, so ad sales was always a safe Plan B. The founders hoped to find something more aesthetic to them, failed, and the conservative path worked. The reason I write this is misleading is b/c this is very different from a ZIRP YC era thinking that seems in line with your suggestion: - Ex: JustinTV used their VC $ to pivot into Twitch, and if that didn't work, game over. - Ex: Uber raised bigger & bigger VC rounds until self-driving cars could solve their margins / someone else figured it out. They seem to be figuring out their margins, but it was a growing disaster and unclear if they could with such an unpredictable miracle. In contrast, both Amazon & Google were in positions of huge cash flows and being able to switch to highly profitable growth at any time. They were designed to control their destinies, vs have bankers/VCs dictate them.
d-z-m 3y ago
> OpenAI rebellion This phrasing makes me feel like we're living in some techno-future where corporations are de-facto governance apparatuses, squashing rebellion and dissidents :^)
- jprete 3y ago
  Colonial companies did this all the time, e.g. the British East India Company, and the 1800s American railroads had the Pinkertons. There's also the phenomenon of the company town.

by rvz 3y ago

abvdasker 3y ago

The big companies fighting to win gen AI have forgotten how to build good products. There seems to be enormous confusion about AI applications — few seem to be willing to commit to a singular focus or application, instead trying to be everything to everyone. The tried and true way to build something big is to bootstrap a killer app that solves a real problem and then expand horizontally to other problem spaces. These companies are trying to do too much too soon (probably because they have too few financial constraints). A lack of focus.

__loam 3y ago

Wait you're telling me you can't make the next trillion dollar industry by incinerating capital while making no money?

gunapologist99 3y ago
You have a point, but remember Amazon and Google did exactly that and figured out the business model later.
- barkingcat 3y ago
  Amazon was ruthless at making money from day 0. Amazon was famous for not taking profit, and instead putting profit back into the company, but revenue? Amazon was generating gobs and gobs and gobs of revenue from day 0.
- __loam 3y ago
  Surely the same strategy will work during economic contraction and a period of high interest rates and borrowing costs.
- nextworddev 3y ago
  Big difference is that Amazon and Google had fast growing revenue
- bamboozled 3y ago
  I am quite sure Google had a lot to offer from day one, which is why they were encouraged to start the business. There wasn’t any open source Google’s. Yes maybe the business model wasn’t perfect but ad revenue was already well and truly a thing by the time Google invented a better search engine. All they had to do was serve the ads and the rest is history.
- deleted 3y ago
  [deleted]
- lmeyerov 3y ago
  this seems super misleading Amazon nailed high revenue growth from the very beginning, just reinvesting in growth & deferring the margin story. They could have stopped at any time. Google nailed high traffic from the beginning, so ad sales was always a safe Plan B. The founders hoped to find something more aesthetic to them, failed, and the conservative path worked. The reason I write this is misleading is b/c this is very different from a ZIRP YC era thinking that seems in line with your suggestion: - Ex: JustinTV used their VC $ to pivot into Twitch, and if that didn't work, game over. - Ex: Uber raised bigger & bigger VC rounds until self-driving cars could solve their margins / someone else figured it out. They seem to be figuring out their margins, but it was a growing disaster and unclear if they could with such an unpredictable miracle. In contrast, both Amazon & Google were in positions of huge cash flows and being able to switch to highly profitable growth at any time. They were designed to control their destinies, vs have bankers/VCs dictate them.

d-z-m 3y ago

> OpenAI rebellion This phrasing makes me feel like we're living in some techno-future where corporations are de-facto governance apparatuses, squashing rebellion and dissidents :^)

jprete 3y ago
Colonial companies did this all the time, e.g. the British East India Company, and the 1800s American railroads had the Pinkertons. There's also the phenomenon of the company town.