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$1B raise, $5B valuation. For a company that is a couple months old and doesn't have a product or even a single line of code in production. Wild.
by paxys 2y ago
$1B raise, $5B valuation. For a company that is a couple months old and doesn't have a product or even a single line of code in production. Wild.
- sidcool 2y agoIt's the brand name effect. Ilya's name will get in much more dollars. Hopefully something profitable comes out at the other end.
- hn_throwaway_99 2y agoFor these kinds of capital-intensive startups, though, that almost seems like a requirement, and I guess there are really 2 "types" of valuations. In this case, everyone knows it takes hundreds of millions to train models. So I'm investors are essentially rolling the dice on an extremely well-regarded team. And if it takes about a billion just to get off the ground, the valuation would need to at least be in the couple billion range to make it worth it for employees to work there. That feels very different than say selling a company where founders are cashing out. In that case, the business should expect to meaningful contribute to revenue, and quickly.
- delusional 2y agoThis explains what would need to be true for this to make sense, but i doesn't explain how it makes sense right now. How is this going to ever pay the investors back? How is it going to raise more money at such an insane valuation? I just dont see how you justify such a crazy valuation from day 1 financially.
- SpicyLemonZest 2y agoThe company's pitch isn't exactly a secret. The one and only thing they're planning to do is build an ML model smarter than a human being, which would be immensely valuable for a wide variety of tasks that currently require human input. You see a lot of commentators jumping through hoops to deny that anyone could believe this is possible in the near future, but clearly they and their investors do.
- moralestapia 2y agoIt's because is Ilya. This deal was cooked way back, though, perhaps even before the coup. Now, can they make a product that makes at least $1B + 1 dollar in revenue? Doubt it, I honestly don't see a market for "AI safety/security".
- HarHarVeryFunny 2y agoI wonder if "Super Intelligence" means anything .. just LLMs, or maybe they are pursuing new architectures and shooting for AGI ?
- lijok 2y agoThey're shooting straight for AGI
- moralestapia 2y agoAGI would definitely be a major historical milestone for humanity ... ... however, I'm on the camp that believes it's not going to be hyper-profitable for only one (or a few) single commercial entities. AGI will not be a product like the iPhone where one company can "own" it and milk it for as long as they want. AGI feels more like "the internet", which will definitely create massive wealth overall but somehow distributed among millions of actors. We've seen it with LLMs, they've been revolutionary and yet, one year after a major release, free to use "commodity" LLMs are already in the market. The future will not be Skynet controlling everything, it will be uncountable temu-tier AIs embedded into everything around you. Even @sama stated recently they're working on "intelligence so cheap that measuring its use becomes irrelevant". /opinion
- fkyoureadthedoc 2y agoIt's certainly in their best interest not to tell us that it's just going to be another pile of LLMs that they've trained not to say or do anything that isn't business friendly.
- 2y ago
- EGreg 2y agoWelcome to capitalism. It’s all about your existing capital and connections. Capital attracts capital.
- theptip 2y agoTalent attracts capital. Ilya is a legendary visionary, with a proven track record of turning billions into hundreds of billions. Of course he can raise unlimited money.
- deleted 2y ago[deleted]
- EGreg 2y agoThere is so much talent in the world that didn’t join PayPal and get silicon valley investors and go on to make billions of dollars and found other companies. The PayPal mafia includes Elon Musk, Peter Thiel, etc. They now parlayed that capital into more platforms and can easily arrange investments. Heck Peter Thiel even works with governments (Palantir) and got J D Vance on Trump’s ticket, while Elon might be in his admin. Kolomoisky got Zelensky elected in Ukraine, by launching a show about an unlikely guy who wins the presidency and named the party after the show. They call them oligarchs over there but it’s same thing. The first guy to 1 million followers on Twitter was Ashton Kutcher. He had already starred in sitcoms and movies for years. This idea that you can just get huge audiences and investments due to raw talent, keeps a lot of people coming to Hollywood and Silicon Valley to “make it” and living on ramen. But even just coming there proves the point — a talented rando elsewhere in the world wouldn’t even have access to the capital and big boys networks. They all even banked at the same bank! It’s all extremely centralized: https://community.intercoin.app/t/in-defense-of-decentralized-finance/2775 https://community.intercoin.app/t/in-defense-of-decentralize...
- zeroonetwothree 2y agoThose people weren’t handed that success. You are acting as if they were born billionaires, which is far from true. It’s not personally my goal to amass immense wealth and start giant companies (I would rather work minimally and live hedonically) but I am impressed by those that do so.
- kklisura 2y agoTotally blind on this, hoping for someone to shed some light: do these investors get some pitch, information or some roadmap of what company intends to create, how will it earn revenue, how will it spend money or how will it operate?
- dkasper 2y agoI’m sure they have a pitch deck. It’s pretty obvious a big chunk will go to compute costs for model training & research. But mostly it’s about the people in any company at this stage, same as any seed funding but on a different monetary scale.
- _fat_santa 2y agoI heard this on a reddit thread a while back but rings very true here. > If you are seeking capital for a startup with a product, you have to sell the startup on realities (ie how much revenue you are making). If you are seeking capital for a startup with no product, you can sell the startup on dreams, which is much much easier but also way riskier for investors. Since these guys don't have a product yet, they 100% sold it on big dreams combined with Ilya's track record at OpenAI.
- fragmede 2y agoA step removed from the no revenue scene from HBO's Silicon Valley https://youtu.be/BzAdXyPYKQo https://youtu.be/BzAdXyPYKQo
- trashtester 2y ago> combined with Ilya's track record at OpenAI. I think it's Ilya's track record all the way since AlexNet, including his time at Google AND OpenAI. He's not a one-trick-pony.
- Yizahi 2y agoThis feels like a situation with a sold out train to a popular destination, where people are already reselling their tickets for some crazy markup, and then suddenly railway decides to add one more train car and opens flash ticket sale. Investors feeling missing out on OpenAI and others are now hoping to catch this last train ticket to the AI.
- crowcroft 2y agoI don't have anything to add, but want to say – that is a great analogy.
- justinclift 2y agoSounds like it's destined to be a looooong train with many carriages. ;)
- Yizahi 2y agoThe problem is a content to train LLMs (I assume that Ilia will continue this line or research). Big content holders are already raising moats and restricting access or partnering with a single existing LLM corporation. And also time, because all this involves a lot of hardware. Any subsequent competitor will have to scale higher and higher wall just to catch up (if the LLM progress doesn't stall and get into diminishing returns).
- m4rtink 2y agoAdd that the tracks have not even been built &trains purchased and we are back at google old railway craze/bubble! Do YOU want to miss out being a share holder on this new line that will bring immeasurable wealth ?? ;-)
- appplication 2y agoImagine being in a position where you can spend $1B on a high risk gamble, unconcerned if you lose it all, all in pursuit of more wealth. Simultaneously too wealthy to imagine and never wealthy enough. Capitalism is quite the drug.
- Zelphyr 2y agoIt's 1999 all over again.
- yashap 2y agoAgreed, the AI bubble is very, very real. Not that LLMs are all hype, they’re certainly impressive with useful applications, but AI companies are getting insane valuations with zero proof that they’re viable businesses.
- gary_0 2y ago[deleted]
- automatic6131 2y agoBut... that's exactly right though? Also >Agreed, the car bubble is very, very real. Not that the internal combustion carriage is all hype, it's certainly impressive with useful applications, but car manufacturers are getting insane valuations with zero proof they're viable businesses.
- yashap 2y agoThe successful companies that came out of the dot com bubble era actually proved their business viability before getting major investment, though. Amazon is one of the most famous successes of the era. Bezos quit his job, launched the business out of his garage, with seed money being $10K of his own savings, and was doing $20K/week in sales just 30 days later. And I believe their only VC round before going public was an $8 investment from Kleiner Perkins. But they were a company who proved their viability early on, had a real product with rapid revenue growth before getting any VC $$. I’d say this SSI round is more similar to Webvan, who went public with a valuation of $4.8 billion, and at that time had done a grand total of $395K in sales, with losses over $50 million. I’m sure there are good investments out there for AI companies that are doing R&D and advancing the state of the art. However, a $1 billion investment at a $5 billion valuation, for a company with zero product or revenue, just an idea, that’s nuts IMO, and extremely similar to the type of insanity we saw during the dot com bubble. Even more so given that SSI seemingly don’t even want to be a business - direct quote from Ilya: > This company is special in that its first product will be the safe superintelligence, and it will not do anything else up until then … It will be fully insulated from the outside pressures of having to deal with a large and complicated product and having to be stuck in a competitive rat race. This doesn’t sound to me like someone who wants to build a business, it sounds like someone who wants to hack on AI with no oversight or proof of financial viability. Kinda wild to give him $1 billion to do that IMO.
- oezi 2y agoAdd another 500m to NVDA's quarterly profits?
- trashtester 2y agoNVDA's profits at the moment is limited by TSMC production capacity, not what they're able to sell....
- hiddencost 2y agoThese are capital intensive businesses. There's no liquidity until they are making money. It means that AI startups are actually a really poor value proposition compared to traditional tech companies, because your multiplier is limited. First round $50M valuation leaves a lot more opportunity to get rich. This kind of structure isn't as unusual for capital intensive businesses.
- redbell 2y agoI'm neither a VC nor in the VC market, but I believe such valuation comes primarily from the name Ilya Sutskever. Having such a high-profile as the founder would give more credibility to the company, unlike what we witnessed in recent years where companies like Theranos et al. that were valued at tens of billions for no obvious reason. Despite having said the above, we might still agree that the AI hype is probably the second generation of the dot-com bubble.
- fsndz 2y agomakes sense if you factor in the cost of renting GPUs to build generative AI models
- gaws 2y agoPeople are investing in Sutskever, not the company.
- chakintosh 2y agoBut it's not a bubble right?
- jsyang00 2y agoHow many niche verticals SaaSes that raised like $200 million only to go to zero? Even if this can't beat OpenAI models a commodity LLM which is about as good (and they have proven that they can build) is probably worth close to the investment
- stiltzkin 2y ago[dead]
- deleted 2y ago[deleted]