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>> is the dot-com style correction in the industry required before we truly get a wave of exciting new companies emerge which upend society through the use of L

>> is the dot-com style correction in the industry required before we truly get a wave of exciting new companies emerge which upend society through the use of LLMs > Nope. The Application layer along with Reinforcement Learning and DeepTech funding for hetrogenous computing and quantum/post-quantum has been hot for the past 2-3 years. How does this deal with need for a correction in overvalued companies? And the impact on those who invested in them? You still have a situation where there’s insane excess capacity built out. Akin to fiber during dot com era. And the fallout from when companies like OpenAI need their valuation adjusted. Chewy proved Pets.com thesis right. But that didn’t stop Pets.com from failing as part of a bubble bursting. >> I struggle to decide how this compares/contrasts with the dot com era >Becuase that is not the best comparison when looking at the economics of the industry. A better model is the rise of hyperscalers and SaaS. Can you elaborate? The thing i still don’t see is how this creates the protective moat. As I type this out I think we’ll go through an era of “buying SaaS is stupid, you can just build it yourself” before some SaaS companies prove they can build and maintain better than you (we’re probably in the midst of that already)

alephnerd 7mo ago
> How does this deal with need for a correction in overvalued companies Which companies do you think are overvalued commensurate to revenue? The biggest issue we have for overvaluation is SaaS apps that raised in the 2017-22 period. Terms were extremely lax and made it difficult to pop their bubbles. > The thing i still don’t see is how this creates the protective moat Protective moats are not the name of the game and never have been - they only reduce TAM and make it difficult to exit because comparable multipliers are limited, making valuation extremely difficult. The primary moat has always been distribution, and this is where the foundation model companies have been extremely successful at. AEs who's Rolodexes included the F1000s all left for the foundation model companies and brought their clients with them. Additionally, companies are approaching foundation models the same way you would cloud - a multi-model and a multi-cloud approach to reduce vendor stickiness.
- AbstractH24 7mo ago
  Most companies that raised in the last 24 months. Take Clay.com, what justifies the $5 billion valuation? And all the frontier labs. Because their core offering will be commodified. Finally, Nvidia and the companies whose main offering is computing power. Efficiency and commodification will lead to something akin to the fiber overbuild of the dot com era (like I referenced before) As I type this out, I think there is an inevitable correction. Hard to say if it’s akin to dot com era or not. And those who succeed 15 or 20 years ago will be ready to take advantage of it. Be through capital, through skills and knowledge, or through stealth companies. Question becomes when to pull the trigger on taking any of those of their respective sideline.
  - alephnerd 7mo ago
    > Take Clay.com Their revenue and additonal metrics which I cannot disclose does justify their valuation. Their ICP who are using them (RevOps and Marketing) also love it, and have begun reducing SFDC spend as a result. > Nvidia and the companies whose main offering is computing power. Efficiency and commodification will lead to something akin to the fiber overbuild of the dot com era Most foundation model companies are already rate limiting enterprise customers due to lack of compute capacity. There is an actual bottleneck in capacity that the buildout is solving. > Because their core offering will be commodified Get. This. In. Your. Head. Commodification is treated as a win. It means 3-5 vendors can take majority of the marketshare while expanding TAM and giving later stage investors multipliers they can use to exit. It also means distribution becomes the key factor, and that is a toggle that is easy to manage. > Question becomes if there is or isn’t a correction first. With its associated period of stalled growth (akin to the 2000s post bubble bursting) A correction implies that there is an underutilization of capacity. We are not at that point, and won't be for the next 3-5 years. Additionally, most foundation model companies are trying to expand up the chain into applications as well, much like how hyperscalers transitioned from being IaaS and adding additional abstraction layers to reduce deployment friction.
    - AbstractH24 7mo ago
      You’re justifying today. That was the same answer that made sense during peak dot com era. What you aren’t answering is why to believe the current trajectories will sustain long term. Enterprise companies are being rate limited and incentivized to look for other options and/or finding efficiencies id actually example of why commodification and overbuilding is likely.

alephnerd 7mo ago

> How does this deal with need for a correction in overvalued companies Which companies do you think are overvalued commensurate to revenue? The biggest issue we have for overvaluation is SaaS apps that raised in the 2017-22 period. Terms were extremely lax and made it difficult to pop their bubbles. > The thing i still don’t see is how this creates the protective moat Protective moats are not the name of the game and never have been - they only reduce TAM and make it difficult to exit because comparable multipliers are limited, making valuation extremely difficult. The primary moat has always been distribution, and this is where the foundation model companies have been extremely successful at. AEs who's Rolodexes included the F1000s all left for the foundation model companies and brought their clients with them. Additionally, companies are approaching foundation models the same way you would cloud - a multi-model and a multi-cloud approach to reduce vendor stickiness.

AbstractH24 7mo ago
Most companies that raised in the last 24 months. Take Clay.com, what justifies the $5 billion valuation? And all the frontier labs. Because their core offering will be commodified. Finally, Nvidia and the companies whose main offering is computing power. Efficiency and commodification will lead to something akin to the fiber overbuild of the dot com era (like I referenced before) As I type this out, I think there is an inevitable correction. Hard to say if it’s akin to dot com era or not. And those who succeed 15 or 20 years ago will be ready to take advantage of it. Be through capital, through skills and knowledge, or through stealth companies. Question becomes when to pull the trigger on taking any of those of their respective sideline.
- alephnerd 7mo ago
  > Take Clay.com Their revenue and additonal metrics which I cannot disclose does justify their valuation. Their ICP who are using them (RevOps and Marketing) also love it, and have begun reducing SFDC spend as a result. > Nvidia and the companies whose main offering is computing power. Efficiency and commodification will lead to something akin to the fiber overbuild of the dot com era Most foundation model companies are already rate limiting enterprise customers due to lack of compute capacity. There is an actual bottleneck in capacity that the buildout is solving. > Because their core offering will be commodified Get. This. In. Your. Head. Commodification is treated as a win. It means 3-5 vendors can take majority of the marketshare while expanding TAM and giving later stage investors multipliers they can use to exit. It also means distribution becomes the key factor, and that is a toggle that is easy to manage. > Question becomes if there is or isn’t a correction first. With its associated period of stalled growth (akin to the 2000s post bubble bursting) A correction implies that there is an underutilization of capacity. We are not at that point, and won't be for the next 3-5 years. Additionally, most foundation model companies are trying to expand up the chain into applications as well, much like how hyperscalers transitioned from being IaaS and adding additional abstraction layers to reduce deployment friction.
  - AbstractH24 7mo ago
    You’re justifying today. That was the same answer that made sense during peak dot com era. What you aren’t answering is why to believe the current trajectories will sustain long term. Enterprise companies are being rate limited and incentivized to look for other options and/or finding efficiencies id actually example of why commodification and overbuilding is likely.