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Way too many founders don't understand the impact of competing with cloud vendors. Almost all enterprises have pre-committed budgets for cloud which means unle

Way too many founders don't understand the impact of competing with cloud vendors. Almost all enterprises have pre-committed budgets for cloud which means unless your product is FOSS it's going to be hard to convince someone to bet their business on it. Especially given that in this fundraising environment there is a 95% chance they won't be around in a year or two anyway. It's going to be a brutal few years especially if we are heading into a period of diminishing returns in terms of LLM accuracy.

devjab 2y ago
I’m also sort of curious as to how much of a market research they’ve done if they’re trying to compete with Azure and AWS. Even before the recent LLM rush took off, AI was a thing. In the city of Copenhagen there was a project to digitalise a few million case files (which is 10-100 documents per case file), and how it was done was basically with an intermediary company who knew the training and a cooperation with Microsoft. Yes, I’m dumping down the complexity of it all, but once the training period of half a year was over, Azure made a lot (and I mean a lot) of infrastructure available for not a lot of money and the process completed in a week or so. Since it had to happen and because it was a PoC the same project was also done by real humans. This was the “actual” project and every time deadline and whatnot the AI project had came from how long it would take X humans to do it. I can’t recall how many X was, but it was enough to meet the legal deadline for when these case files had to be digitised and sorted correctly. The human project was the result, and then the AI PoC was later used as a lesson on whether it could be done this way or not. It can, it was more accurate and not more expensive. Anyway… I’m not sure who would’ve been capable of competing with Azure. (Outside the usual suspects). Maybe a company of Hetzner could? But you would need someone who can offer you a massive amount of computing on demand, and the only companies which are going to have that are big vendors. Maybe it’s different with LLMs because the requirement is a continuous thing rather than something you need for a short period of time?
- deleted 2y ago
  [deleted]
- jononor 2y ago
  Assuming: 50 million files, assuming 4x concurrency per CPU, taking 1 second each, would take approx 150 CPU days. Using just 10 machines it could be done in 15 days. This does not fundamentally seem like a massive project in terms of compute? If time per instance would go up factor 10x, if one would allow 30days execution, could be done by 50 machines. I think that most compute providers can do that (given some months notice)?
morgante 2y ago
> Almost all enterprises have pre-committed budgets for cloud which means unless your product is FOSS it's going to be hard to convince someone to bet their business on it. This isn't a death knell. 1. If you get into the marketplace, enterprises can spend their commit against you. 2. A few million in ARR is ~nothing to a hyperscale cloud, but meaningful to most startups. If you find the right positioning, you can get their sales team selling your solution on many deals.
- nextworddev 2y ago
  Author here. Yes, that said getting into the ISV / APN partner program can be a major pain in the butt and take quite long (from a startup’s perspective where time is precious)
- golly_ned 2y ago
  Hyperscale cloud has stringent security and compliance requirements, and within hyperscale cloud, it's institutionally difficult to lobby for spending on a startup. I spent about six years in hyperscale cloud and never saw a case where we spent a few million on a startup.
  - morgante 2y ago
    You seem to have misunderstood, I'm not referring to the hyperscaler spending money themselves. If you don't think any ISVs are making millions through the marketplace you're simply mistaken. I worked at Google Cloud and personally know at least one startup that made the majority of their revenue through cloud partnerships.
borroka 2y ago
That's the observation. I work for a huge company, both in terms of number of employees and geographical reach. I/we receive emails, offers, and declarations of interest each month/year from dozens of start-ups selling some AI infra system, labeling service, GenAI whatever. We are not buying anything and we won't. We already have contracts in place with cloud vendors--the usual suspects: Google, Microsoft, Amazon--and the rest of the infra is developed in-house. Why should we buy subscription-based and high-maintenance products from an a16z-funded AI infrastructure company that might shut down operations in two years and say "bye-bye, it's been great"? The former Uber/Michelangelo team that built Tecton, Netflix's Metaflow that later became Outerbounds, I have no idea who they are selling their AI infra products to.

devjab 2y ago

I’m also sort of curious as to how much of a market research they’ve done if they’re trying to compete with Azure and AWS. Even before the recent LLM rush took off, AI was a thing. In the city of Copenhagen there was a project to digitalise a few million case files (which is 10-100 documents per case file), and how it was done was basically with an intermediary company who knew the training and a cooperation with Microsoft. Yes, I’m dumping down the complexity of it all, but once the training period of half a year was over, Azure made a lot (and I mean a lot) of infrastructure available for not a lot of money and the process completed in a week or so. Since it had to happen and because it was a PoC the same project was also done by real humans. This was the “actual” project and every time deadline and whatnot the AI project had came from how long it would take X humans to do it. I can’t recall how many X was, but it was enough to meet the legal deadline for when these case files had to be digitised and sorted correctly. The human project was the result, and then the AI PoC was later used as a lesson on whether it could be done this way or not. It can, it was more accurate and not more expensive. Anyway… I’m not sure who would’ve been capable of competing with Azure. (Outside the usual suspects). Maybe a company of Hetzner could? But you would need someone who can offer you a massive amount of computing on demand, and the only companies which are going to have that are big vendors. Maybe it’s different with LLMs because the requirement is a continuous thing rather than something you need for a short period of time?

deleted 2y ago
[deleted]
jononor 2y ago
Assuming: 50 million files, assuming 4x concurrency per CPU, taking 1 second each, would take approx 150 CPU days. Using just 10 machines it could be done in 15 days. This does not fundamentally seem like a massive project in terms of compute? If time per instance would go up factor 10x, if one would allow 30days execution, could be done by 50 machines. I think that most compute providers can do that (given some months notice)?

morgante 2y ago

> Almost all enterprises have pre-committed budgets for cloud which means unless your product is FOSS it's going to be hard to convince someone to bet their business on it. This isn't a death knell. 1. If you get into the marketplace, enterprises can spend their commit against you. 2. A few million in ARR is ~nothing to a hyperscale cloud, but meaningful to most startups. If you find the right positioning, you can get their sales team selling your solution on many deals.

nextworddev 2y ago
Author here. Yes, that said getting into the ISV / APN partner program can be a major pain in the butt and take quite long (from a startup’s perspective where time is precious)
golly_ned 2y ago
Hyperscale cloud has stringent security and compliance requirements, and within hyperscale cloud, it's institutionally difficult to lobby for spending on a startup. I spent about six years in hyperscale cloud and never saw a case where we spent a few million on a startup.
- morgante 2y ago
  You seem to have misunderstood, I'm not referring to the hyperscaler spending money themselves. If you don't think any ISVs are making millions through the marketplace you're simply mistaken. I worked at Google Cloud and personally know at least one startup that made the majority of their revenue through cloud partnerships.

borroka 2y ago

That's the observation. I work for a huge company, both in terms of number of employees and geographical reach. I/we receive emails, offers, and declarations of interest each month/year from dozens of start-ups selling some AI infra system, labeling service, GenAI whatever. We are not buying anything and we won't. We already have contracts in place with cloud vendors--the usual suspects: Google, Microsoft, Amazon--and the rest of the infra is developed in-house. Why should we buy subscription-based and high-maintenance products from an a16z-funded AI infrastructure company that might shut down operations in two years and say "bye-bye, it's been great"? The former Uber/Michelangelo team that built Tecton, Netflix's Metaflow that later became Outerbounds, I have no idea who they are selling their AI infra products to.