Do we need yet another new AI platform? Would new foundation models stand a chance in today’s market? Will OpenAI, Anthropic, etc be the new Tech winners … or will they just get acquired, at some point?

Navigation:

1. Intro (01:34 )


2. Landscape


3. Recent gigantic acqui-hires


4. The Big Players


5. How will the hardware change?


6. Will there be a next wave beyond GPT?


7. Is it too late to come in and disrupt the big players?


8. Conclusion

Our co-hosts:

• Bertrand Schmitt, Entrepreneur in Residence at Red River West, co-founder of App Annie / Data.ai, business angel, advisor to startups and VC funds, @bschmitt


• Nuno Goncalves Pedro, Investor, Managing Partner, Founder at Chamaeleon, @ngpedro

Our show: Tech DECIPHERED brings you the Entrepreneur and Investor views on Big Tech, VC and Start-up news, opinion pieces and research. We decipher their meaning, and add inside knowledge and context. Being nerds, we also discuss the latest gadgets and pop culture news

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Bertrand

Welcome to Tech Deciphered episode 59. Again, this will be an episode on AI. This time we make the case for not starting yet a new AI platform and not investing in one either. What’s happening in AI? I guess all of you have heard about all the massive investment made by some of the leading players, OpenAI, Microsoft, Google, Meta, XAI, Oracle, as well as even some smaller startups from Anthropic to Mistral.

Bertrand

Of course, Amazon has built its own frontier model as well as is providing infrastructure to a lot of players. But isn’t there already too much capital going into AI platforms and isn’t it going too fast?

Nuno

Well, we think probably yes. That’s going to be the thesis of our discussion today. Some of the startups you mentioned, by the way, they’ve raised a ton of money. I mean, Anthropic is well above 8 billion. Mistral is at a couple of billions as well, right, at this stage?

Bertrand

I think we are closer to a billion.

Nuno

It’s around a billion. Yeah, around a billion, several billion for Anthropic. Then there’s a couple of companies we will talk about later that raised a few billion that are no longer independent. It feels like too much. It feels like there’s a gold rush of sorts. It is probably a good analogy. A lot of investors putting capital into it.

Nuno

But at the same time, it’s being matched by the big players, Microsoft, Google, Meta by pushing LLM, XAI, OpenAI, we could argue, is it a big player already or not? But they just raised a ton of money as well. At 150 billion valuation, right? I mean, it’s like…

Bertrand

Yes, 150 billion valuation.

Nuno

It’s like, okay. They’ve already said, well, we are going to continue raising money. We’re going to continue spending a lot of money as well. It feels like a gold rush. It feels like there’s too much capital deployed into it. Something’s got to give, someone’s going to fail. Maybe that’s a good segue to the fact that we already start seeing some moments that are quite interesting.

Bertrand

Maybe to OpenAI, to jump back, to be fair, they’ve reached more than 3 billion of annualized revenues, and that was based on numbers from June. This is very high valuation for sure. But it’s also coming with one of the fastest growing business ever in terms of revenues.

Nuno

Yes. We will see if it’s sustainable, the business that they’re building, because there’s no competition. People are using other services out there in tandem. I see a lot of people, for example, using perplexity rather than ChatGPT. We’ll see if Gemini catches up at some point or not. I would argue they have grown very fast, but they have not faced as much competition as they’re probably starting to face right now. At least that would be my thesis.

Nuno

In any case, we start seeing signals of companies that go to the market and get bought out, and they get bought out for amazing amounts. If we look at Google and there, I would argue, acquihire of Character.ai. It seems to 2.5 billion to get the team and I guess the tech as well. But it feels a bit like acquihire. They’re trying to get the CEO back into the fold at Google. So interesting, I feel.

Nuno

The Inflection one was at least in the highest hundreds of millions. We heard 650 million for the IP licensing deal from Microsoft to get the founder and CEO to join Microsoft to head AI. Let’s say it’s around a billion and let’s call it even, but that’s like another gigantic acquihire.

Nuno

What gives? And it’s a little bit like it feels a little bit like free money. I’ve had a bit of a chance to think about this. It’s not just that it feels a little bit like free money. It’s some of these acquirers, like the Microsoft of the world, et cetera, might still be overvalued themselves, question mark, and therefore they’re basically putting capital because they have the capital to deploy at this stage.

Nuno

But it feels a little bit abusive. It raises all these concerns. If I’m an investor, and I’m backing a company in the AI space that is doing yet another foundational model, or that it’s playing at the limit between infrastructure and platform, and I know it’s going to be cap