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> 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

• 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
        > Particularly if enterprise companies are being rate limited and incentivized to look for other options What other options? SuperMicro has an 18 month backlog. Same with Dell, HPE, and all the other compute manufacturers and everything in-between. It's impossible to buildout because best case you would operationalize in 24 months, at which point you would be around 4 years behind SOTA because it takes years to train, and that money would be better spent trying to negotiate a more competitive inference terms. --- The crux of the issue with the Dot-Com boom and bust was that most enterprise were not purchasing the products of most startups. The Dot-com boom/bust was largely a B2C play. The current generation of AI products are entirely targeted at business applications, where I can justify reallocating spend on SaaS and maybe some headcount to a specific AI product which has a much more predictable cost model. There is a B2C boom brewing now thanks to OpenClaw, but all that action is in China and India, not the US or Europe. --- Edit: can't reply > The emergence of something akin to DeepSeek 14 months ago that proves you don’t need all this power to get the desired results Already has. India's Sarvam has GPT-4 or Deepseek comparable performance. There's a second model of similar scope in the works in India. I know of 2 other projects in the UAE and KSA with a similar scope, 1 project in South Korea, and 1-2 in Japan. The thing is, sovereign AI is the name of the game - no country wants to be dependent on Anthropic or OpenAI for government critical applications. But this isn't an issue from a valuation perspective because it's these sovereign model projects that are also subsidizing domestic hyperscaler buildouts across APAC, as historically most compute was centered in SG+MY. > That’s an interesting observation It's because there are less luddites and more openness to experiment. If you spent your entire life using digital payments, running a digital storefront, and doing paperwork via an app you are much more open to playing around with digital and agentic workflows. I've noticed most western HNers are significantly older (in their 40s-50s) and are much more resistant to new tech as a result, especially as most didn't grow up with digital products for much of their life. > why are you here then? Force of habit like taking a smoking. There are also the occasion tidbits of good info, but this is growing less common. > I’d question if they are adverse or simply measured and able to see through hype because it’s not their first rodeo There's a difference between hype ("AI will take all our jerbs") and reality ("Agentic workflows are becoming incorporated in most operational workflows but with a human in the loop, and that requires expanded capacity. In a lot of cases, agentic workflows will suck, but so did human developed workflows for cost centers"). People whose thinking is closer to the latter will be more successful professionally speaking. It's the same way HN used to reflexively crap on cloud and K8s, but it has now become the industry norm.