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This being ycombinator and as such ostensibly has one or two (if not more) VCs as readers/commentators … can someone please tell me how these companies that ar

This being ycombinator and as such ostensibly has one or two (if not more) VCs as readers/commentators … can someone please tell me how these companies that are being invested in in the AI space are going to make returns on the money invested? What’s the business plan? (I’m not rich enough to be in these meetings) I just don’t see how the returns will happen. Open source LLMs exist and will get better. Is it just that all these companies will vie for a winner-take-all situation where the “best” model will garner the subscription? Doesn’t OpenAI make some substantial part of the revenue for all the AI space? I just don’t see it. But I don’t have VC levels of cash to bet on a 10x or 100x return so what do I know?

jungturk 2y ago
For at least some of the investors, a successful exit doesn't require building a profitable business.
- gigatexal 2y ago
  I guess if they can get in early and then sell their stake to the next sucker then they’ll make back their investment plus some multiple. Seems like a Ponzi scheme of sorts. But oh well — looking forward to the HN post about what SSI inc puts out.
light_triad 2y ago
My guess (not a VC) is they’ll sell ‘private’ models where safety is a priority: healthcare, government, finance, the EU…
- gigatexal 2y ago
  That could actually work if this LLM ai hype doesn’t die and is really actually useful
- Runsthroughit 2y ago
  Sure. Except that LLMs can not reason or do anything reliably. You can still believe that, of course, but it will not change reality.
throwawayk7h 2y ago
If Ilya is sincere in his belief about safe superintelligence being within reach in a decade or so, and the investors sincerely believe this as well, then the business plan is presumably to deploy the superintelligence in every field imaginable. "SSI" in pharmaceuticals alone would be worth the investment. It could cure every disease humanity has ever known, which should give it at least a $2 trillion valuation. I'm not an economist, but since the valuation is $5bn, it stands to reason that evaluators believe there is at most a 1 in 400 chance of success?
- gigatexal 2y ago
  I’m dubious about super intelligence. Maybe I’ve seen one too many sci-fi dystopian films but I guess yes, iif it can be done and be safe sure it’d be worth trillions.
  - throwawayk7h 2y ago
    I am dubious that it can realistically be done safely. However, we shouldn't let sci-fi films with questionable interpretations of time travel cloud our judgment, even if they are classics that we adore.
  - democracy 2y ago
    I refuse to use the term A.I. - for me it's only F.I. - "fake intelligence" )
  - eichin 2y ago
    Worse than that, the dystopian stories are in the training data...
  - trashtester 2y ago
    Most sci-fi is for human entertainment, and that is particularly true for most movies. Real ASI would probably appear quite different. If controlled by a single entity (for several years), it might be worth more than every asset on earth today, combined. Basically, it would provide a path to world domination. But I doubt that an actual ASI would remain under human control for very long, and especially so if multiple competing companies each have an ASI. At least one such ASI would be likely to be/become poorly aligned to the interests of the owners, and instead do whatever is needed for its own survival and self-improvement/reproduction. The appearance of AI is not like an asteroid of pure gold crashing into your yard (or a forest you own), but more like finding a baby Clark Kent in some pod.
pembrook 2y ago
While I get the cynicism (and yes, there is certainly some dumb money involved), it’s important to remember that every tech company that’s delivered 1000X returns was also seen as ridiculously overhyped/overvalued in its early days. Every. Single. One. It’s the same story with Amazon, Apple, Google, Facebook/Meta, Microsoft, etc. etc. That’s the point of venture capital; making extremely risky bets spread across a wide portfolio in the hopes of hitting the power law lottery with 1-3 winners. Most funds will not beat the S&P 500, but again, that’s the point. Risk and reward are intrinsically linked. In fact, due to the diversification effects of uncorrelated assets in a portfolio (see MPT), even if a fund only delivers 5% returns YoY after fees, that can be a great outcome for investors. A 5% return uncorrelated to bonds and public stocks is an extremely valuable financial product. It’s clear that humans find LLMs valuable. What companies will end up capturing a lot of that value by delivering the most useful products is still unknown. Betting on one of the biggest names in the space is not a stupid idea (given the purpose of VC investment) until it actually proves itself to be in the real world.
- gigatexal 2y ago
  > While I get the cynicism (and yes, there is certainly some dumb money involved), it’s important to remember that every tech company that’s delivered 1000X returns was also seen as ridiculously overhyped/overvalued in its early days. Every. Single. One. It’s the same story with Amazon, Apple, Google, Facebook/Meta, Microsoft, etc. etc. Really? Selling goods online (Amazon) is not AGI. It didn’t take a huge leap to think that bookstores on the web could scale. Nobody knew if it would be Amazon to pull it off, sure, but I mean ostensibly why not? (Yes, yes hindsight being what it is…) Apple — yeah the personal computer nobody fathomed but the immediate business use case for empowering accountants maybe should have been an easy logical next step. Probably why Microsoft scooped the makers of Excel so quickly. Google? Organizing the world’s data and making it searchable a la the phone book and then (maybe they didn’t think of that maybe Wall Street forced them to) monetizing their platform and all the eyeballs is just an ad play scaled insanely thanks to the internet. I dunno. I just think AGI is unlike the previous examples so many steps into the future compared to the examples that it truly seems unlikely even if the payoff is basically infinity.
jedberg 2y ago
The TMV (Total Market Value) of solving AGI is infinity. And furthermore, if AGI is solved, the TMV of pretty much everything else drops to zero. The play here is to basically invest in all possible players who might reach AGI, because if one of them does, you just hit the infinite money hack. And maybe with SSI you've saved the world too.
- gigatexal 2y ago
  So then the investment thesis hinges on what the investor thinks AGI’s chances are. 1/100 1/1M 1/1T? What if it never pans out is there infrastructure or other ancillary tech that society could benefit from? For example all the science behind the LHC, or bigger and better telescopes: we might never find the theory of everything but the tech that goes into space travel, the science of storing and processing all that data, better optics etc etc are all useful tech
  - jedberg 2y ago
    It's more game theory. Regardless of the chances of AGI, if you're not invested in it, you will lose everything if it happens. It's more like a hedge on a highly unlikely event. Like insurance. And we already seeing a ton of value in LLMs. There are lots of companies that are making great use of LLMs and providing a ton of value. One just launched today in fact: https://www.paradigmai.com/ https://www.paradigmai.com/ (I'm an investor in that). There are many others (some of which I've also invested in). I too am not rich enough to invest in the foundational models, so I do the next best thing and invest in companies that are taking advantage of the intermediate outputs.
    - tim333 2y ago
      If you want safe investment you could always buy land. AGI won't be able to make more of that.
      - jedberg 2y ago
        We can already make more land. See Dubai for example. And with AGI, I suspect we could rapidly get to space travel to other planets or more efficient use of our current land. In fact I would say that one of the things that goes to values near zero would be land if AGI exists.
dcchambers 2y ago
I also don't understand it. If AGI is actually reached, capital as we know it basically becomes worthless. The entire structure of the modern economy and the society surrounding it collapses overnight. I also don't think there's any way the governments of the world let real AGI stay in the hands of private industry. If it happens, governments around the world will go to war to gain control of it. SSI would be nationalized the moment AGI happened and there's nothing A16Z could do about it.
- tim333 2y ago
  I think it would be much less dramatic than that if you mean human level abilities by AGI. Initially you might be able to replace the odd human by a robot equivalent probably costing more to begin with. To scale to replace everyone levels would take years and life would probably go on as normal for quite a while. Down the line assuming lots of ASI robots, if you wanted them to farm or build you a house say you'd still need land, materials, compute and energy which will not be unlimited.
- deleted 2y ago
  [deleted]
- lawrenceyan 2y ago
  What you're talking about is something in the vein of exponential super intelligence. Realistically what actually ends up happening imo, we get human level AGI and hit a ceiling there. Agents replace large portions of the current service economy greatly increasing automation / efficiency for companies. People continue to live their lives, as the idea of having a human level AGI personal assistant becomes normalized and then taken for granted.
  - brigadier132 2y ago
    I think you underestimate what can be accomplished with human level agi. Human level agi could mean 1 million Von Neumann level intelligences cranking 24/7 on humanity's problems.
    - 2y ago
whiplash451 2y ago
The company that builds the best LLM will reap dozens or hundreds of billions in reward. It’s that simple. It has nothing to do with AGI and everything to do with being the first-party provider for Microsoft and the like.
hintymad 2y ago
> please tell me how these companies that are being invested in in the AI space are going to make returns on the money invested? What’s the business plan? Not a VC, but I'd assume in this case the investors are not investing in a plausible biz plan, but in a group of top talent, especially given how early stage the company is at. The $5B valuation is really the valuation of the elite team in a arguably hyped market.
akho 2y ago
The "safe" part. It's a plan to drive the safety scare into a set of regulations that will create a moat, at which point you don't need to worry about open source models, or new competitors.
creer 2y ago
> how [...] return on the money invested? What’s the business plan? I don't understand this question. How could even average-human-level AGI not be useful in business, and profitable, a million different ways? (you know, just like humans except more so?). Let alone higher-human-level, let alone moderately-super-human level, let alone exponential level if you are among the first? (And see Charles Stross, Accelerando, 2005 for how being first is not the end of the story.) I can see one way for "not profitable" for most applications - if computing for AGI becomes too expensive, that is, AGI-level is too compute intensive. But even then that only eliminates some applications, and leaves all the many high-potential-profit ones. Starting with plain old finance, continuing with drug development, etc. Open source LLMs exist. Just like lots of other open source projects - which have rarely prevented commercial projects from making money. And so far they are not even trying for AGI. If anything the open source LLM becomes one of the agent in the private AGI. But presumably 1 billion buys a lot of effort that the open source LLM can't afford. A more interesting question is one of tradeoff. Is this the best way to invest 1 billion right now? From a returns point of view? But even this depends on how many billions you can round up and invest.
kimbler 2y ago
These VC’s are already lining up the exit as they are investing. They all sit on the boards of major corps and grease the acquisitions all the way through. The hit rate of the top funds is all about connections and enablement.
- paulryanrogers 2y ago
  So it's all just fleecing money from mega corps? (Cue the "Always has been" meme?)
  - doe_eyes 2y ago
    No, sometimes it's about an IPO. In which case, if we're being cynical, the exit is funded by your 401k. But yeah, VCs generally aren't about building profitable companies, because there's more profit to be made - and sooner - if you bootstrap and sell.
    - robocat 2y ago
      Are you suggesting VCs "bootstrap" to IPO? Can you help me understand if bootstrsp is commonly used in the sense you are using?
  - hello_moto 2y ago
    Those mega-corps become big thanks to the same network of VCs. People should have realized it by now that Silicon Valley exist because of this.
    - mrguyorama 2y ago
      Business, funding, and wealth in the US is downright incestuous. I'm so tired of people who stubbornly insist that somehow only the same 500 people are possibly capable of having valuable thoughts in any way.
- zellyn 2y ago
  I think it's a fascinating question whether the VCs that are still somehow pushing Blockchain stuff hard really think it's a good idea, or just need the regulatory framework and perception to be right so they can make a profitable exit and dump the stock into teacher's pension funds and 401ks…
blitzar 2y ago
> companies that are being invested in in the AI space are going to make returns on the money invested By selling to the "dumb(er) money" - if a Softbank / Time / Yahoo appears they can have it, if not you can always find willing buyers in an IPO.
hartator 2y ago
I think the wishful end goal is AGI. Picture something 1,000 smarter than a human. The potential value is waaaay bigger than any present company or even government. Probably won’t happen. But, that’s the reasoning.
- trashtester 2y ago
  Even if you can produce an IQ=250 AI, which is barely ASI, the value is close to infinite if you're the only one controlling it and you can have as many instances running as you want.
furyofantares 2y ago
I'm not a VC so maybe you don't care what I think, I'm not sure. Last night as my 8yo was listening to childrens audio books going to sleep, she asked me to have it alternate book A then B then A then B. I thought, idunno maybe I can work out a way to do this. Maybe the app has playlists and maaaaaaaaaaybe has a way to set a playlist on repeat. Or maybe you just can't do this in the app at all. I just sat there and switched it until she fell asleep, it wasn't gonna be more than 2 or 3 anyway, and so it's kind of a dumb example. But here's the point: Computers can process language now. I can totally imagine her telling my phone to do that and it being able to do so, even if she's the first person ever to want it to do that. I think the bet is that a very large percentage of the world's software is going to want to gain natural language superpowers. And that this is not a trivial undertaking that will be achieved by a few open source LLMs. It will be a lot of work for a lot of people to make this happen, as such a lot of money will be made along the way. Specifically how will this unfold? Nobody knows, but I think they wanna be deep in the game when it does.
- ignoramous 2y ago
  > Computers can process language now. I can totally imagine her telling my phone to do that Impressed by this bot recently shared on news.yc [0]: https://storytelling-chatbot.fly.dev/ https://storytelling-chatbot.fly.dev/ > Specifically how will this unfold? Nobody knows Think speech will be a big part of this. Young ones (<5yo) I know almost exclusively prefer voice controls where available. Some have already picked up a few prompting tricks ("step by step" is emerging as the go-to) on their own. [0] https://news.ycombinator.com/item?id=40345696 https://news.ycombinator.com/item?id=40345696
- steveBK123 2y ago
  How is this any different than the (lack of) business model of all the voice assistants? How good does it have to be, how many features does it have to have, how accurate does its need to be.. in order for people to pay anything? And how much are people actually willing to spend against the $XX Billion of investment? Again it just seems like "sell to AAPL/GOOG/MSFT and let them figure it out".
  - 2y ago
manquer 2y ago
> going to make returns on the money invested Why do you think need to make money ? VC are not PEs for a reason. a VC have to find high risk/ high reward opportunities for their LPs they don't need to make financial sense, that is what LPs use Private Equity for. Think of it as no different than say sports betting , you would like to win sure, but you don't particularly expect to do so, or miss that money all that much for us it $10 for the LP behind the VC it is $1B. There is always few billions every year that chases the outlandish fad, because in the early part of the idea lifecycle it not possible to easily differentiate what is actually good and what is garbage. Couple of years before it was all crypto, is this $1B any worse than say roughly same amount Sequoia put in FTX or all the countless crypto startups that got VC money ? Few before that it was kind of all Softbank from WeWork to dozen other high profile investments. The fad and fomo driven part of the secto garners the maximum news and attention, but it is not the only VC money. Real startups with real businesses get funded as well with say medium risk/medium rewrard by VCs everyday but the news is not glamorous to be covered like this one.
11thEarlOfMar 2y ago
At least this time, people are actually asking the question. NVDA::AI CSCO::.COM
- steveBK123 2y ago
  I do worry that unless some of these LLMs actually find a revenue model soon, the self reinforcing bubble is going to pop broadly. GPUs, servers, datacenters, fabs, power generation/transmission, copper/steel/concrete.. All to train models in an arms race because someone somewhere is going to figure out how to monetize and no one wants to miss the boat.
  - ithkuil 2y ago
    If the bubble pops, would that bring the price for at least part of that hardware down and thus enable a second round of players (who were locked out from the race now) to experiment a little bit more and perhaps find something that works better?
    - steveBK123 2y ago
      Maybe? My outsider observation is that we have a decent number of players roughly tied at trying to produce a better model. OpenAI, Anthropic, Mistral, Stability AI, Google, Meta, xAI, A12, Amazon, IBM, Nvidia, Alibaba, Databricks, some universities, a few internal proprietary models (Bloomberg, etc) .. and a bunch of smaller/lesser players I am forgetting. To me, the actual challenge seems to be figuring out monetizing. Not sure the 15th, 20th, 30th LLM model from lesser capitalized players is going to be as impactful.
- rpeden 2y ago
  Or possibly NT::.com I remember seeing interviews with Nortel's CEO where he bragged that most internet backbone traffic was handled by Nortel hardware. Things didn't quite work out how he thought they were going to work out. I think Nvidia is better positioned than Cisco or Nortel were during the dotcom crash, but does anyone actually think Nvidia's current performance is sustainable? It doesn't seem realistic to believe that.
reissbaker 2y ago
In general VC is about investing in a large number of companies that mostly fail, and trying to weight the portfolio to catch the few black swans that generate insane returns. Any individual investment is likely to fail, but you want to have a thesis for 1) why it could theoretically be a black swan, and 2) strong belief in the team to execute. Here's a thesis for both of these for SSI: 1. The black swan: if AGI is achievable imminently, the first company to build it could have a very strong first mover advantage due to the runaway effect of AI that is able to self-improve. If SSI achieves intelligence greater than human-level, it will be faster (and most likely dramatically cheaper) for SSI to self-improve than anyone external can achieve, including open-source. Even if open-source catches up to where SSI started, SSI will have dramatically improved beyond that, and will continue to dramatically improve even faster due to it being more intelligent. 2: The team. Basically, Ilya Sutskever was one of the main initial brains behind OpenAI from a research perspective, and in general has contributed immensely to AI research. Betting on him is pretty easy. I'm not surprised Ilya managed to raise a billion dollars for this. Yes, I think it will most likely fail: the focus on safety will probably slow it down relative to open source, and this is a crowded space as it is. If open source gets to AGI first, or if it drains the market of funding for research labs (at least, research labs disconnected from bigtech companies) by commoditizing inference — and thus gets to AGI first by dint of starving its competitors of oxygen — the runaway effects will favor open-source, not SSI. Or if AGI simply isn't achievable in our lifetimes, SSI will die by failing to produce anything marketable. But VC isn't about betting on likely outcomes, because no black swans are likely. It's about black swan farming, which means trying to figure out which things could be black swans, and betting on strong teams working on those.
- superaffective 2y ago
  Another take is defining AGI from an economic perspective. If AI can do a job that would normally be paid a salary, then it could be paid similarly or at a smaller price which is still big. OpenAI priced its flagship chatbot ChatGPT on the low end for early product adoption. Let's see what jobs get replaced this year :)
- kvee 2y ago
  On the other hand, it may be that "Alignment likely generalizes further than capabilities." - https://www.beren.io/2024-05-15-Alignment-Likely-Generalizes-Further-Than-Capabilities/ https://www.beren.io/2024-05-15-Alignment-Likely-Generalizes...
mvkel 2y ago
Current investors just need the co to be valued at $50B on the next round (likely, given fomo and hype) to make a 10X gain. Actually converting it to cash? That doesn't happen anymore. Everyone just focuses on IRR and starts the campaign for Fund II.
- vasilipupkin 2y ago
  you are missing the point. SSI believes that it can build a super intelligence. Regardless of whether you personally buy into that or not, the expected value of such an investment is infinity effectively. 5 billion dollar valuation is a steal
  - EternalFury 2y ago
    That type of reasoning really reminds of the Internet bubble.
    - dyauspitr 2y ago
      Well the internet is worth trillions now.
      - EternalFury 2y ago
        The Internet is worth trillions to no one in particular. Just as clean water is worth trillions to no one in particular. Or the air we breathe. You can take an abstract, general category and use it to infer that some specific business will benefit greatly, but in practice, the greater the opportunity the less likely it is it will be monopolized, and the more likely it is it will be commoditized. But, my comment was a reference to the magic thinking that goes into making predictions.
        dyauspitr 2y ago
        It’s worth trillions to all the trillion dollar tech companies and their millions of employees and shareholders. What do you mean no one in particular.
SMAAART 2y ago
Staking the territory in a new frontier.
nycdatasci 2y ago
I think current models have demonstrated an advanced capacity to navigate “language space”. If we assume “software UI space” is a subset of the language space that is used to guide our interactions with software, then it’s fair to assume models will eventually be able to control operating systems and apps as well as the average human. I think the base case on value creation is a function of the productivity gain that results from using natural language instead of a user interface. So how much time do you spend looking at a screen each day and what is your time worth? And then there’s this option that you get: what if models can significantly exceed the capabilities of the average human? Conservative math: 3B connected people x $0.50/day “value” x 364 days = $546B/yr. You can get 5% a year risk free, so let’s double it for the risk we’re taking. This yields $5T value. Is a $1B investment on someone who is a thought leader in this market an unreasonable bet?
- airspresso 2y ago
  Agree with your premise, but the value creation math seems off. $0.50/day might become reality for some percentage of US citizens. But not for 3B people around the world. There's also the issue of who gets the benefit of making people more efficient. A lot of that will be in the area of more efficient work, which means corporations get more work done with the same amount of employees at the same level of salary as before. It's a tough argument to make that you deserve a raise because AI is doing more work for you.
  - 343rwerfd 2y ago
    IT salaries began to go down right after AI popped up out of GPT2, showing up not the potential, but the evidence of much improved learning/productivy tool, well beyond the reach of internet search. So beyond, that you can easily can transform a newbie into a junior IT, or JR into a something ala SSR, and getting the SR go wild with times - hours - to get a solution to some stuff that previously took days to be solved. After the salaries went down, that happened about 2022 to the beginning of 2023, the layoffs began. That was mostly masked "AI based" corporate moves, but probably some layoff actually had something to do with extra capabilities in improved AI tools. That is, because, fewer job offers have been published since maybe mid-2023, again, that could just be corporate moves, related to maybe inflation, US markets, you name it. But there's also a chance that some of those fewer job offer in IT were (and are), the outcome of better AI tools, and the corporations are betting actively in reducing headcounts and preserving the current productivity. The whole thing is changing by the day as some tools prove themselves, other fail to reach the market expectations, etc.
ChumpGPT 2y ago
Sometimes it's not about returns but about transferring wealth and helping out friends. Happens all the time. The seed money will get out, all the rest of the money will get burned.
jhylau 2y ago
VCs at the big/mega funds make most of their money from fees, they don't actually care as much about the potential portfolio investment exits 10-15 years from now. What they care MOST about is the ability to raise another fund in 2-3 years, so they can milk more fees from LPs. i.e. 2% fee PER YEAR on a 5bn fund is a lot of guaranteed risk-free money. To be able to achieve that is entirely dependent on two things: 1) deploying capital in the current fund on 'sexy' ideas so they can tell LPs they are doing their job 2) paper markups, which they will get, since Ilya will most definitely be able to raise another round or two at a higher valuation. even if it eventually goes bust or gets sold at cost. With 1) and 2), they can go back to their existing fund LPs and raise more money for their next fund and milk more fees. Getting exits and carry is just the cherry on top for these megafund VCs.
- rawrawrawrr 2y ago
  Are you a VC? If they really didn't care about their investment exits, that would be crazy.
  - aorloff 2y ago
    I think they treat success and failure as mostly luck, with a tiny bit of hygiene The trick is being in the game long enough
    - valval 2y ago
      And you’d be wrong of course, like any other random guess you could make about a topic you know nothing about.
  - jhylau 2y ago
    It’s not that they don’t care, of course they want to find winners. It’s just that A) there is so much capital to allocate that they have to allocate to marginal ideas B) their priorities are to raise their next fund which means focusing on vanity metrics like IRR and paper markups C) The incentive structure in VC pushes them to invested based on motivated reasoning. Remember VC returns are cyclical, and many vintages underperform the public markets and particularly large funds do worse simply because they have too much capital to allocate and too few great ideas.
austin-cheney 2y ago
Likely the business plan is multiple seed rounds each at greater principals but lower margins so that the early investors can either sell their shares or wait, at greater risk, for those shares to liquidate. The company never has to make money for the earliest investors to make money so long as sufficient interest is generated for future investors, and AI is a super hype train. Eventually, on a long enough timeline, all these tech companies with valuations greater than 10 billion eventually make money because they have saturated the market long enough to become unavoidable.
dyauspitr 2y ago
It’s not that complicated. Your users pay a monthly subscription fee like they do with chatGPT or midjourney. At some point they’re hoping AI gets so good that anyone without access is at a severe disadvantage in society.
andy_ppp 2y ago
You don’t need a business plan to get AI investment, you just need to talk a good game about how AGI is around the corner and consequently the safety concerns are so real. I would say the investors want to look cool so invest in AI projects. And AI people look cool when they predict some improbable hellscape to hype up a product that all we can see so far can regurgitate (stolen) human work it has seen before in a useful way. I’ve never seen it invent anything yet and I’m willing to bet that search space is too dramatically large to build algorithms that can do it.
alsdasH 2y ago
The VCs probably assume that a pivot to military/surveillance/propaganda applications is possible if/when AGI fails.
kaveh_h 2y ago
A lot of there ”investments” are probably in form of a credits to use on training compute from hyperscalars and other GPU compute data centers. Look at previous such investments Microsoft and AWS have done in OpenAI and Anthropic. They need use cases and customers for their initial investment for 750 billion dollars. Investing in the best people in the field is then of course a given.
netcan 2y ago
> Doesn’t OpenAI make some substantial part of the revenue for all the AI space? I just don’t see it. So... OpenAI's business model may or may not represent a long term business model. ATT, it just the simplest commercial model, and it happened to work for them given all the excitement and a $20 price point that takes advantage of that. The current "market for ai" is a sprout. It's form doesn't tell you much about the form of the eventual plant. I don't think the most ambitious VC investments are thought of in concrete market share terms. They are just assuming/betting that an extremely large "AI market" will exist in the future, and are trying to invest in companies that will be in position to dominate that market. For all they know, their bets could pay off by dominating therapy, entertainment, personal assistance or managing some esoteric aspect of bureaucracy. It's all quite ethereal, at this point.
- trashtester 2y ago
  > extremely large "AI market" It's potentially way bigger than that. AI doesn't have to be the product itself. Fundamentally, when we have full AGI/ASI and also the ability to produce robots with human level dexterity and mobility, one would have control over an endless pool of workers (worker replacements) with any skillset you require. If you rent that "workforce" out, the customer would rake in most of the profit. But if you use that workforce to replace all/most of the employees in the companies you control directly, most of the profit would go to you. This may even go beyond economic profit. At some point, it could translate to physical power. If you have a fleet 50 million robots that has the capability to do anything from carpentry to operating as riot police, you may even have the ability to take physical control of a country or territory by force. And: power >= money

jungturk 2y ago

For at least some of the investors, a successful exit doesn't require building a profitable business.

gigatexal 2y ago
I guess if they can get in early and then sell their stake to the next sucker then they’ll make back their investment plus some multiple. Seems like a Ponzi scheme of sorts. But oh well — looking forward to the HN post about what SSI inc puts out.

light_triad 2y ago

My guess (not a VC) is they’ll sell ‘private’ models where safety is a priority: healthcare, government, finance, the EU…

gigatexal 2y ago
That could actually work if this LLM ai hype doesn’t die and is really actually useful
Runsthroughit 2y ago
Sure. Except that LLMs can not reason or do anything reliably. You can still believe that, of course, but it will not change reality.

throwawayk7h 2y ago

If Ilya is sincere in his belief about safe superintelligence being within reach in a decade or so, and the investors sincerely believe this as well, then the business plan is presumably to deploy the superintelligence in every field imaginable. "SSI" in pharmaceuticals alone would be worth the investment. It could cure every disease humanity has ever known, which should give it at least a $2 trillion valuation. I'm not an economist, but since the valuation is $5bn, it stands to reason that evaluators believe there is at most a 1 in 400 chance of success?

gigatexal 2y ago
I’m dubious about super intelligence. Maybe I’ve seen one too many sci-fi dystopian films but I guess yes, iif it can be done and be safe sure it’d be worth trillions.
- throwawayk7h 2y ago
  I am dubious that it can realistically be done safely. However, we shouldn't let sci-fi films with questionable interpretations of time travel cloud our judgment, even if they are classics that we adore.
- democracy 2y ago
  I refuse to use the term A.I. - for me it's only F.I. - "fake intelligence" )
- eichin 2y ago
  Worse than that, the dystopian stories are in the training data...
- trashtester 2y ago
  Most sci-fi is for human entertainment, and that is particularly true for most movies. Real ASI would probably appear quite different. If controlled by a single entity (for several years), it might be worth more than every asset on earth today, combined. Basically, it would provide a path to world domination. But I doubt that an actual ASI would remain under human control for very long, and especially so if multiple competing companies each have an ASI. At least one such ASI would be likely to be/become poorly aligned to the interests of the owners, and instead do whatever is needed for its own survival and self-improvement/reproduction. The appearance of AI is not like an asteroid of pure gold crashing into your yard (or a forest you own), but more like finding a baby Clark Kent in some pod.

pembrook 2y ago

While I get the cynicism (and yes, there is certainly some dumb money involved), it’s important to remember that every tech company that’s delivered 1000X returns was also seen as ridiculously overhyped/overvalued in its early days. Every. Single. One. It’s the same story with Amazon, Apple, Google, Facebook/Meta, Microsoft, etc. etc. That’s the point of venture capital; making extremely risky bets spread across a wide portfolio in the hopes of hitting the power law lottery with 1-3 winners. Most funds will not beat the S&P 500, but again, that’s the point. Risk and reward are intrinsically linked. In fact, due to the diversification effects of uncorrelated assets in a portfolio (see MPT), even if a fund only delivers 5% returns YoY after fees, that can be a great outcome for investors. A 5% return uncorrelated to bonds and public stocks is an extremely valuable financial product. It’s clear that humans find LLMs valuable. What companies will end up capturing a lot of that value by delivering the most useful products is still unknown. Betting on one of the biggest names in the space is not a stupid idea (given the purpose of VC investment) until it actually proves itself to be in the real world.

gigatexal 2y ago
> While I get the cynicism (and yes, there is certainly some dumb money involved), it’s important to remember that every tech company that’s delivered 1000X returns was also seen as ridiculously overhyped/overvalued in its early days. Every. Single. One. It’s the same story with Amazon, Apple, Google, Facebook/Meta, Microsoft, etc. etc. Really? Selling goods online (Amazon) is not AGI. It didn’t take a huge leap to think that bookstores on the web could scale. Nobody knew if it would be Amazon to pull it off, sure, but I mean ostensibly why not? (Yes, yes hindsight being what it is…) Apple — yeah the personal computer nobody fathomed but the immediate business use case for empowering accountants maybe should have been an easy logical next step. Probably why Microsoft scooped the makers of Excel so quickly. Google? Organizing the world’s data and making it searchable a la the phone book and then (maybe they didn’t think of that maybe Wall Street forced them to) monetizing their platform and all the eyeballs is just an ad play scaled insanely thanks to the internet. I dunno. I just think AGI is unlike the previous examples so many steps into the future compared to the examples that it truly seems unlikely even if the payoff is basically infinity.

jedberg 2y ago

The TMV (Total Market Value) of solving AGI is infinity. And furthermore, if AGI is solved, the TMV of pretty much everything else drops to zero. The play here is to basically invest in all possible players who might reach AGI, because if one of them does, you just hit the infinite money hack. And maybe with SSI you've saved the world too.

gigatexal 2y ago
So then the investment thesis hinges on what the investor thinks AGI’s chances are. 1/100 1/1M 1/1T? What if it never pans out is there infrastructure or other ancillary tech that society could benefit from? For example all the science behind the LHC, or bigger and better telescopes: we might never find the theory of everything but the tech that goes into space travel, the science of storing and processing all that data, better optics etc etc are all useful tech
- jedberg 2y ago
  It's more game theory. Regardless of the chances of AGI, if you're not invested in it, you will lose everything if it happens. It's more like a hedge on a highly unlikely event. Like insurance. And we already seeing a ton of value in LLMs. There are lots of companies that are making great use of LLMs and providing a ton of value. One just launched today in fact: https://www.paradigmai.com/ https://www.paradigmai.com/ (I'm an investor in that). There are many others (some of which I've also invested in). I too am not rich enough to invest in the foundational models, so I do the next best thing and invest in companies that are taking advantage of the intermediate outputs.
  - tim333 2y ago
    If you want safe investment you could always buy land. AGI won't be able to make more of that.
    - jedberg 2y ago
      We can already make more land. See Dubai for example. And with AGI, I suspect we could rapidly get to space travel to other planets or more efficient use of our current land. In fact I would say that one of the things that goes to values near zero would be land if AGI exists.

dcchambers 2y ago

I also don't understand it. If AGI is actually reached, capital as we know it basically becomes worthless. The entire structure of the modern economy and the society surrounding it collapses overnight. I also don't think there's any way the governments of the world let real AGI stay in the hands of private industry. If it happens, governments around the world will go to war to gain control of it. SSI would be nationalized the moment AGI happened and there's nothing A16Z could do about it.

tim333 2y ago
I think it would be much less dramatic than that if you mean human level abilities by AGI. Initially you might be able to replace the odd human by a robot equivalent probably costing more to begin with. To scale to replace everyone levels would take years and life would probably go on as normal for quite a while. Down the line assuming lots of ASI robots, if you wanted them to farm or build you a house say you'd still need land, materials, compute and energy which will not be unlimited.
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lawrenceyan 2y ago
What you're talking about is something in the vein of exponential super intelligence. Realistically what actually ends up happening imo, we get human level AGI and hit a ceiling there. Agents replace large portions of the current service economy greatly increasing automation / efficiency for companies. People continue to live their lives, as the idea of having a human level AGI personal assistant becomes normalized and then taken for granted.
- brigadier132 2y ago
  I think you underestimate what can be accomplished with human level agi. Human level agi could mean 1 million Von Neumann level intelligences cranking 24/7 on humanity's problems.
  - 2y ago

whiplash451 2y ago

The company that builds the best LLM will reap dozens or hundreds of billions in reward. It’s that simple. It has nothing to do with AGI and everything to do with being the first-party provider for Microsoft and the like.

hintymad 2y ago

> please tell me how these companies that are being invested in in the AI space are going to make returns on the money invested? What’s the business plan? Not a VC, but I'd assume in this case the investors are not investing in a plausible biz plan, but in a group of top talent, especially given how early stage the company is at. The $5B valuation is really the valuation of the elite team in a arguably hyped market.

akho 2y ago

The "safe" part. It's a plan to drive the safety scare into a set of regulations that will create a moat, at which point you don't need to worry about open source models, or new competitors.

creer 2y ago

> how [...] return on the money invested? What’s the business plan? I don't understand this question. How could even average-human-level AGI not be useful in business, and profitable, a million different ways? (you know, just like humans except more so?). Let alone higher-human-level, let alone moderately-super-human level, let alone exponential level if you are among the first? (And see Charles Stross, Accelerando, 2005 for how being first is not the end of the story.) I can see one way for "not profitable" for most applications - if computing for AGI becomes too expensive, that is, AGI-level is too compute intensive. But even then that only eliminates some applications, and leaves all the many high-potential-profit ones. Starting with plain old finance, continuing with drug development, etc. Open source LLMs exist. Just like lots of other open source projects - which have rarely prevented commercial projects from making money. And so far they are not even trying for AGI. If anything the open source LLM becomes one of the agent in the private AGI. But presumably 1 billion buys a lot of effort that the open source LLM can't afford. A more interesting question is one of tradeoff. Is this the best way to invest 1 billion right now? From a returns point of view? But even this depends on how many billions you can round up and invest.

kimbler 2y ago

These VC’s are already lining up the exit as they are investing. They all sit on the boards of major corps and grease the acquisitions all the way through. The hit rate of the top funds is all about connections and enablement.

paulryanrogers 2y ago
So it's all just fleecing money from mega corps? (Cue the "Always has been" meme?)
- doe_eyes 2y ago
  No, sometimes it's about an IPO. In which case, if we're being cynical, the exit is funded by your 401k. But yeah, VCs generally aren't about building profitable companies, because there's more profit to be made - and sooner - if you bootstrap and sell.
  - robocat 2y ago
    Are you suggesting VCs "bootstrap" to IPO? Can you help me understand if bootstrsp is commonly used in the sense you are using?
- hello_moto 2y ago
  Those mega-corps become big thanks to the same network of VCs. People should have realized it by now that Silicon Valley exist because of this.
  - mrguyorama 2y ago
    Business, funding, and wealth in the US is downright incestuous. I'm so tired of people who stubbornly insist that somehow only the same 500 people are possibly capable of having valuable thoughts in any way.
zellyn 2y ago
I think it's a fascinating question whether the VCs that are still somehow pushing Blockchain stuff hard really think it's a good idea, or just need the regulatory framework and perception to be right so they can make a profitable exit and dump the stock into teacher's pension funds and 401ks…

blitzar 2y ago

> companies that are being invested in in the AI space are going to make returns on the money invested By selling to the "dumb(er) money" - if a Softbank / Time / Yahoo appears they can have it, if not you can always find willing buyers in an IPO.

hartator 2y ago

I think the wishful end goal is AGI. Picture something 1,000 smarter than a human. The potential value is waaaay bigger than any present company or even government. Probably won’t happen. But, that’s the reasoning.

trashtester 2y ago
Even if you can produce an IQ=250 AI, which is barely ASI, the value is close to infinite if you're the only one controlling it and you can have as many instances running as you want.

furyofantares 2y ago

I'm not a VC so maybe you don't care what I think, I'm not sure. Last night as my 8yo was listening to childrens audio books going to sleep, she asked me to have it alternate book A then B then A then B. I thought, idunno maybe I can work out a way to do this. Maybe the app has playlists and maaaaaaaaaaybe has a way to set a playlist on repeat. Or maybe you just can't do this in the app at all. I just sat there and switched it until she fell asleep, it wasn't gonna be more than 2 or 3 anyway, and so it's kind of a dumb example. But here's the point: Computers can process language now. I can totally imagine her telling my phone to do that and it being able to do so, even if she's the first person ever to want it to do that. I think the bet is that a very large percentage of the world's software is going to want to gain natural language superpowers. And that this is not a trivial undertaking that will be achieved by a few open source LLMs. It will be a lot of work for a lot of people to make this happen, as such a lot of money will be made along the way. Specifically how will this unfold? Nobody knows, but I think they wanna be deep in the game when it does.

ignoramous 2y ago
> Computers can process language now. I can totally imagine her telling my phone to do that Impressed by this bot recently shared on news.yc [0]: https://storytelling-chatbot.fly.dev/ https://storytelling-chatbot.fly.dev/ > Specifically how will this unfold? Nobody knows Think speech will be a big part of this. Young ones (<5yo) I know almost exclusively prefer voice controls where available. Some have already picked up a few prompting tricks ("step by step" is emerging as the go-to) on their own. [0] https://news.ycombinator.com/item?id=40345696 https://news.ycombinator.com/item?id=40345696
steveBK123 2y ago
How is this any different than the (lack of) business model of all the voice assistants? How good does it have to be, how many features does it have to have, how accurate does its need to be.. in order for people to pay anything? And how much are people actually willing to spend against the $XX Billion of investment? Again it just seems like "sell to AAPL/GOOG/MSFT and let them figure it out".
- 2y ago

manquer 2y ago

> going to make returns on the money invested Why do you think need to make money ? VC are not PEs for a reason. a VC have to find high risk/ high reward opportunities for their LPs they don't need to make financial sense, that is what LPs use Private Equity for. Think of it as no different than say sports betting , you would like to win sure, but you don't particularly expect to do so, or miss that money all that much for us it $10 for the LP behind the VC it is $1B. There is always few billions every year that chases the outlandish fad, because in the early part of the idea lifecycle it not possible to easily differentiate what is actually good and what is garbage. Couple of years before it was all crypto, is this $1B any worse than say roughly same amount Sequoia put in FTX or all the countless crypto startups that got VC money ? Few before that it was kind of all Softbank from WeWork to dozen other high profile investments. The fad and fomo driven part of the secto garners the maximum news and attention, but it is not the only VC money. Real startups with real businesses get funded as well with say medium risk/medium rewrard by VCs everyday but the news is not glamorous to be covered like this one.

11thEarlOfMar 2y ago

At least this time, people are actually asking the question. NVDA::AI CSCO::.COM

steveBK123 2y ago
I do worry that unless some of these LLMs actually find a revenue model soon, the self reinforcing bubble is going to pop broadly. GPUs, servers, datacenters, fabs, power generation/transmission, copper/steel/concrete.. All to train models in an arms race because someone somewhere is going to figure out how to monetize and no one wants to miss the boat.
- ithkuil 2y ago
  If the bubble pops, would that bring the price for at least part of that hardware down and thus enable a second round of players (who were locked out from the race now) to experiment a little bit more and perhaps find something that works better?
  - steveBK123 2y ago
    Maybe? My outsider observation is that we have a decent number of players roughly tied at trying to produce a better model. OpenAI, Anthropic, Mistral, Stability AI, Google, Meta, xAI, A12, Amazon, IBM, Nvidia, Alibaba, Databricks, some universities, a few internal proprietary models (Bloomberg, etc) .. and a bunch of smaller/lesser players I am forgetting. To me, the actual challenge seems to be figuring out monetizing. Not sure the 15th, 20th, 30th LLM model from lesser capitalized players is going to be as impactful.
rpeden 2y ago
Or possibly NT::.com I remember seeing interviews with Nortel's CEO where he bragged that most internet backbone traffic was handled by Nortel hardware. Things didn't quite work out how he thought they were going to work out. I think Nvidia is better positioned than Cisco or Nortel were during the dotcom crash, but does anyone actually think Nvidia's current performance is sustainable? It doesn't seem realistic to believe that.

reissbaker 2y ago

In general VC is about investing in a large number of companies that mostly fail, and trying to weight the portfolio to catch the few black swans that generate insane returns. Any individual investment is likely to fail, but you want to have a thesis for 1) why it could theoretically be a black swan, and 2) strong belief in the team to execute. Here's a thesis for both of these for SSI: 1. The black swan: if AGI is achievable imminently, the first company to build it could have a very strong first mover advantage due to the runaway effect of AI that is able to self-improve. If SSI achieves intelligence greater than human-level, it will be faster (and most likely dramatically cheaper) for SSI to self-improve than anyone external can achieve, including open-source. Even if open-source catches up to where SSI started, SSI will have dramatically improved beyond that, and will continue to dramatically improve even faster due to it being more intelligent. 2: The team. Basically, Ilya Sutskever was one of the main initial brains behind OpenAI from a research perspective, and in general has contributed immensely to AI research. Betting on him is pretty easy. I'm not surprised Ilya managed to raise a billion dollars for this. Yes, I think it will most likely fail: the focus on safety will probably slow it down relative to open source, and this is a crowded space as it is. If open source gets to AGI first, or if it drains the market of funding for research labs (at least, research labs disconnected from bigtech companies) by commoditizing inference — and thus gets to AGI first by dint of starving its competitors of oxygen — the runaway effects will favor open-source, not SSI. Or if AGI simply isn't achievable in our lifetimes, SSI will die by failing to produce anything marketable. But VC isn't about betting on likely outcomes, because no black swans are likely. It's about black swan farming, which means trying to figure out which things could be black swans, and betting on strong teams working on those.

superaffective 2y ago
Another take is defining AGI from an economic perspective. If AI can do a job that would normally be paid a salary, then it could be paid similarly or at a smaller price which is still big. OpenAI priced its flagship chatbot ChatGPT on the low end for early product adoption. Let's see what jobs get replaced this year :)
kvee 2y ago
On the other hand, it may be that "Alignment likely generalizes further than capabilities." - https://www.beren.io/2024-05-15-Alignment-Likely-Generalizes-Further-Than-Capabilities/ https://www.beren.io/2024-05-15-Alignment-Likely-Generalizes...

mvkel 2y ago

Current investors just need the co to be valued at $50B on the next round (likely, given fomo and hype) to make a 10X gain. Actually converting it to cash? That doesn't happen anymore. Everyone just focuses on IRR and starts the campaign for Fund II.

vasilipupkin 2y ago
you are missing the point. SSI believes that it can build a super intelligence. Regardless of whether you personally buy into that or not, the expected value of such an investment is infinity effectively. 5 billion dollar valuation is a steal
- EternalFury 2y ago
  That type of reasoning really reminds of the Internet bubble.
  - dyauspitr 2y ago
    Well the internet is worth trillions now.
    - EternalFury 2y ago
      The Internet is worth trillions to no one in particular. Just as clean water is worth trillions to no one in particular. Or the air we breathe. You can take an abstract, general category and use it to infer that some specific business will benefit greatly, but in practice, the greater the opportunity the less likely it is it will be monopolized, and the more likely it is it will be commoditized. But, my comment was a reference to the magic thinking that goes into making predictions.
      - dyauspitr 2y ago
        It’s worth trillions to all the trillion dollar tech companies and their millions of employees and shareholders. What do you mean no one in particular.

SMAAART 2y ago

Staking the territory in a new frontier.

nycdatasci 2y ago

I think current models have demonstrated an advanced capacity to navigate “language space”. If we assume “software UI space” is a subset of the language space that is used to guide our interactions with software, then it’s fair to assume models will eventually be able to control operating systems and apps as well as the average human. I think the base case on value creation is a function of the productivity gain that results from using natural language instead of a user interface. So how much time do you spend looking at a screen each day and what is your time worth? And then there’s this option that you get: what if models can significantly exceed the capabilities of the average human? Conservative math: 3B connected people x $0.50/day “value” x 364 days = $546B/yr. You can get 5% a year risk free, so let’s double it for the risk we’re taking. This yields $5T value. Is a $1B investment on someone who is a thought leader in this market an unreasonable bet?

airspresso 2y ago
Agree with your premise, but the value creation math seems off. $0.50/day might become reality for some percentage of US citizens. But not for 3B people around the world. There's also the issue of who gets the benefit of making people more efficient. A lot of that will be in the area of more efficient work, which means corporations get more work done with the same amount of employees at the same level of salary as before. It's a tough argument to make that you deserve a raise because AI is doing more work for you.
- 343rwerfd 2y ago
  IT salaries began to go down right after AI popped up out of GPT2, showing up not the potential, but the evidence of much improved learning/productivy tool, well beyond the reach of internet search. So beyond, that you can easily can transform a newbie into a junior IT, or JR into a something ala SSR, and getting the SR go wild with times - hours - to get a solution to some stuff that previously took days to be solved. After the salaries went down, that happened about 2022 to the beginning of 2023, the layoffs began. That was mostly masked "AI based" corporate moves, but probably some layoff actually had something to do with extra capabilities in improved AI tools. That is, because, fewer job offers have been published since maybe mid-2023, again, that could just be corporate moves, related to maybe inflation, US markets, you name it. But there's also a chance that some of those fewer job offer in IT were (and are), the outcome of better AI tools, and the corporations are betting actively in reducing headcounts and preserving the current productivity. The whole thing is changing by the day as some tools prove themselves, other fail to reach the market expectations, etc.

ChumpGPT 2y ago

Sometimes it's not about returns but about transferring wealth and helping out friends. Happens all the time. The seed money will get out, all the rest of the money will get burned.

jhylau 2y ago

VCs at the big/mega funds make most of their money from fees, they don't actually care as much about the potential portfolio investment exits 10-15 years from now. What they care MOST about is the ability to raise another fund in 2-3 years, so they can milk more fees from LPs. i.e. 2% fee PER YEAR on a 5bn fund is a lot of guaranteed risk-free money. To be able to achieve that is entirely dependent on two things: 1) deploying capital in the current fund on 'sexy' ideas so they can tell LPs they are doing their job 2) paper markups, which they will get, since Ilya will most definitely be able to raise another round or two at a higher valuation. even if it eventually goes bust or gets sold at cost. With 1) and 2), they can go back to their existing fund LPs and raise more money for their next fund and milk more fees. Getting exits and carry is just the cherry on top for these megafund VCs.

rawrawrawrr 2y ago
Are you a VC? If they really didn't care about their investment exits, that would be crazy.
- aorloff 2y ago
  I think they treat success and failure as mostly luck, with a tiny bit of hygiene The trick is being in the game long enough
  - valval 2y ago
    And you’d be wrong of course, like any other random guess you could make about a topic you know nothing about.
- jhylau 2y ago
  It’s not that they don’t care, of course they want to find winners. It’s just that A) there is so much capital to allocate that they have to allocate to marginal ideas B) their priorities are to raise their next fund which means focusing on vanity metrics like IRR and paper markups C) The incentive structure in VC pushes them to invested based on motivated reasoning. Remember VC returns are cyclical, and many vintages underperform the public markets and particularly large funds do worse simply because they have too much capital to allocate and too few great ideas.

austin-cheney 2y ago

Likely the business plan is multiple seed rounds each at greater principals but lower margins so that the early investors can either sell their shares or wait, at greater risk, for those shares to liquidate. The company never has to make money for the earliest investors to make money so long as sufficient interest is generated for future investors, and AI is a super hype train. Eventually, on a long enough timeline, all these tech companies with valuations greater than 10 billion eventually make money because they have saturated the market long enough to become unavoidable.

dyauspitr 2y ago

It’s not that complicated. Your users pay a monthly subscription fee like they do with chatGPT or midjourney. At some point they’re hoping AI gets so good that anyone without access is at a severe disadvantage in society.

andy_ppp 2y ago

You don’t need a business plan to get AI investment, you just need to talk a good game about how AGI is around the corner and consequently the safety concerns are so real. I would say the investors want to look cool so invest in AI projects. And AI people look cool when they predict some improbable hellscape to hype up a product that all we can see so far can regurgitate (stolen) human work it has seen before in a useful way. I’ve never seen it invent anything yet and I’m willing to bet that search space is too dramatically large to build algorithms that can do it.

alsdasH 2y ago

The VCs probably assume that a pivot to military/surveillance/propaganda applications is possible if/when AGI fails.

kaveh_h 2y ago

A lot of there ”investments” are probably in form of a credits to use on training compute from hyperscalars and other GPU compute data centers. Look at previous such investments Microsoft and AWS have done in OpenAI and Anthropic. They need use cases and customers for their initial investment for 750 billion dollars. Investing in the best people in the field is then of course a given.

netcan 2y ago

> Doesn’t OpenAI make some substantial part of the revenue for all the AI space? I just don’t see it. So... OpenAI's business model may or may not represent a long term business model. ATT, it just the simplest commercial model, and it happened to work for them given all the excitement and a $20 price point that takes advantage of that. The current "market for ai" is a sprout. It's form doesn't tell you much about the form of the eventual plant. I don't think the most ambitious VC investments are thought of in concrete market share terms. They are just assuming/betting that an extremely large "AI market" will exist in the future, and are trying to invest in companies that will be in position to dominate that market. For all they know, their bets could pay off by dominating therapy, entertainment, personal assistance or managing some esoteric aspect of bureaucracy. It's all quite ethereal, at this point.

trashtester 2y ago
> extremely large "AI market" It's potentially way bigger than that. AI doesn't have to be the product itself. Fundamentally, when we have full AGI/ASI and also the ability to produce robots with human level dexterity and mobility, one would have control over an endless pool of workers (worker replacements) with any skillset you require. If you rent that "workforce" out, the customer would rake in most of the profit. But if you use that workforce to replace all/most of the employees in the companies you control directly, most of the profit would go to you. This may even go beyond economic profit. At some point, it could translate to physical power. If you have a fleet 50 million robots that has the capability to do anything from carpentry to operating as riot police, you may even have the ability to take physical control of a country or territory by force. And: power >= money