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It takes so much money to be a player in this space; the ante went from ~$100k (GOOG, FB) to like $4B or 100k H100s. That's how I arrive at the statement as 99

by sfmz 2y ago

It takes so much money to be a player in this space; the ante went from ~$100k (GOOG, FB) to like $4B or 100k H100s. That's how I arrive at the statement as 99% don't have the cash.

dmix 2y ago
There's a lot of people making AI companies outside LLM model development
- hn_throwaway_99 2y ago
  There are, but then the question really becomes "what is the moat"? I.e. lots of these companies are essentially just providing wrappers around the best models coupled with some type of RAG approach. FWIW, I believe there is a defendable moat for the players that have really good UI and are really focused on end-user solutions. E.g. I pay for Cursor.sh because I believe it is an easy net win for my productivity. But I do really wonder if these "AI application" companies can support their lofty valuations. I feel like most of them will have limited pricing power because if they try to price too high it's easy for someone to say "OK, we'll just go to a competitor, or even pull it in house."
  - BillLucky 2y ago
    Truly combine technology with the needs of industry customers and try new value gains. This is the moat.
  - Ekaros 2y ago
    I am not sure if there is too many moats. But I am starting to wonder do you always need one. You won't win startup lottery to trillion. But you can still have solid business that generates profit and sells real working reasonable solutions to real customers. Then again this is obviously wrong site for that...
    - red-iron-pine 2y ago
      "if it can't be a unicorn why even live?"
n_ary 2y ago
The barrier to entry has always been the winning factor for lot of rapid growth businesses. In previous era, it was ability to afford massive cloud infra and army of expensive SWE to build global scale distributed systems. AirBnB, Uber, Lyft, Stripe, Paypal, Google, Netflix and all the “internet” tech had many competitors but only these could afford the cloud scale growth and overtake the market. In LLM era, it is the compute cost of the hardware that is differentiating the barrier to entry for winners and anything that do not have massive budget for both training and marketing are never heard of unless they are in self-hype narrow field(Cursor). It is also sad that, AI is hyped to progress environmental and medical research and there were some impressive feats, but all the hype and money is literally going to chatbot shops, hence marketing budget is also another barrier to entry.

by sfmz 2y ago

It takes so much money to be a player in this space; the ante went from ~$100k (GOOG, FB) to like $4B or 100k H100s. That's how I arrive at the statement as 99% don't have the cash.

dmix 2y ago

There's a lot of people making AI companies outside LLM model development

hn_throwaway_99 2y ago
There are, but then the question really becomes "what is the moat"? I.e. lots of these companies are essentially just providing wrappers around the best models coupled with some type of RAG approach. FWIW, I believe there is a defendable moat for the players that have really good UI and are really focused on end-user solutions. E.g. I pay for Cursor.sh because I believe it is an easy net win for my productivity. But I do really wonder if these "AI application" companies can support their lofty valuations. I feel like most of them will have limited pricing power because if they try to price too high it's easy for someone to say "OK, we'll just go to a competitor, or even pull it in house."
- BillLucky 2y ago
  Truly combine technology with the needs of industry customers and try new value gains. This is the moat.
- Ekaros 2y ago
  I am not sure if there is too many moats. But I am starting to wonder do you always need one. You won't win startup lottery to trillion. But you can still have solid business that generates profit and sells real working reasonable solutions to real customers. Then again this is obviously wrong site for that...
  - red-iron-pine 2y ago
    "if it can't be a unicorn why even live?"

n_ary 2y ago

The barrier to entry has always been the winning factor for lot of rapid growth businesses. In previous era, it was ability to afford massive cloud infra and army of expensive SWE to build global scale distributed systems. AirBnB, Uber, Lyft, Stripe, Paypal, Google, Netflix and all the “internet” tech had many competitors but only these could afford the cloud scale growth and overtake the market. In LLM era, it is the compute cost of the hardware that is differentiating the barrier to entry for winners and anything that do not have massive budget for both training and marketing are never heard of unless they are in self-hype narrow field(Cursor). It is also sad that, AI is hyped to progress environmental and medical research and there were some impressive feats, but all the hype and money is literally going to chatbot shops, hence marketing budget is also another barrier to entry.