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Why AI Infrastructure Startups Are Insanely Hard to Build

nextword.substack.com

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Re: Why AI Infrastructure Startups Are Insanely Hard to Build

#71

Post by rapsey »

ozim wrote: post #66
rapsey wrote: post #32

Earlier quoted context omitted.

> VC pouring money in LLM infra is legitimately crazy to me. VC business model is throwing money at the wall and seeing what sticks. They love congratulating themselves on how smart they are but at the end of the day their overall returns trail S&P 500. They are salespeople and their job is to sell themselves to private capital on how smart and connected they are.

I think they don't even trail S&P 500 - with all the dirty tricks up their sleeves they roll losses over and over. Bottom will fall off at some point when hype train stops rolling, but so far it was good years as we have hype after hype. I am waiting what will be next one after AI, because quantum computing feels like too hard to become a hype, the same with space ventures, there is some upward trend going on there b…

AI is a long term trend, next is more products on top of AI. Just like the internet.

Biotech and space will both be trends but slower and less bubbly because the cost to play is high, though the returns are possibly huge in both.

Re: Why AI Infrastructure Startups Are Insanely Hard to Build

#72

Post by pas »

siva7 wrote: post #44

It bugs me that all we are seeing in the vc-backed startup scene seems to be ai infrastructure startups. We got something close to ai and all people come up with is they want to be the next ai marketplace store or the millionth infrastructure startup that does exactly the same like their competitors. How boring.

YC funds 200-500 companies each year, there's plenty of interesting ones.

Re: Why AI Infrastructure Startups Are Insanely Hard to Build

#73

Post by EdwardDiego »

blitzar wrote: post #70

Did any of the startups in question actually ever want to build AI infrastructure or did they all pivot from Metaverse to Crypto to AI in the great pivotting of 2022. Given VC's penchant for throwing cash at grifters in the latest hype space is it any suprise that some of the beneficiaries are looking for a quick exit before they have to do any actual work?

Yeah those grifter pivots were amazing. Like professional ice skaters.

I'm just surprised the Long Island Iced Tea Corp / Long Blockchain Corp hasn't become the Long LLM Corp yet.

Re: Why AI Infrastructure Startups Are Insanely Hard to Build

#74

Post by ozim »

swalsh wrote: post #31

I'm not sure I'm exactly at the edge of things, but I have 2 companies trying to setup regular meetings with me to be a beta customer. Both have promised I can help define a new product, but when I list my real problems... they aren't in the mission. Everyone wants to solve RAG (that's easy, don't need help) or they want to give me a gui I don't need, or wrap open source software like vllm. Or "solve privacy" (which…

That is basically every SaaS solution problem. You are not going to want to pay them for your custom development because you would like pay "generic solution price".

That is why you have to pay for your own dev team as SaaS vendor is not going to be your custom development team - as your custom problem is not available for easy resell to other customers.

Re: Why AI Infrastructure Startups Are Insanely Hard to Build

#75

Post by okanat »

xg15 wrote: post #23

In a nutshell: If there's a goldrush, you get rich by selling shovels. ... unless there are already 200 shovel shops next to each other...

and unless some of the shovel shops not have an iron mine, a steel factory and a stamping shop as well.

They can sell the stuff 1/5 of the price and you're not getting rich anytime soon.

Re: Why AI Infrastructure Startups Are Insanely Hard to Build

#76

Post by GoAwayPulomi »

nextworddev wrote: post #56
siva7 wrote: post #44

It bugs me that all we are seeing in the vc-backed startup scene seems to be ai infrastructure startups. We got something close to ai and all people come up with is they want to be the next ai marketplace store or the millionth infrastructure startup that does exactly the same like their competitors. How boring.

Author here. Wait until you see the ChatGPT for Law landscape! /s

This will be as fun of a read in 7 years as reading about IBM Watson's impact on the medical field is now.

Re: Why AI Infrastructure Startups Are Insanely Hard to Build

#77

Post by spacecadet »

ankit219 wrote: post #67

Great article. I am not going to name names, but over the last one year, whenever there is a concept that became popular in Gen AI, thousands of startups pivoted to doing that. Many come from software background where the expectation was that if the code works on one dataset, it would work for everything. You can see this with 1/ Prompt engineering 2/ RAG 3/ and now, after Apple's WWDC, it's adapters. Enterprises I h…

Its rent seeking and grifting. As technology has become easier to get into, a huge number of "startups" are low level people just looking to make noise, get their cut, and bail. Its a bad look, up there with fast fashion.

An acquisition here amounts to teams luck surface.

Re: Why AI Infrastructure Startups Are Insanely Hard to Build

#78

Post by anonylizard »

BrunoJo wrote: post #8

Good tips, especially the point about narrowing the scope. At https://Lemonfox.ai we started with a LLM, image and speech-to-text API. Now we are only focusing on the speech-to-text API as the other areas are already very crowded and there's a lack of innovation in the speech-to-text space.

Like how do you plan on competing against multimodals, which keep getting cheaper and clearly can do audio->text? Or existing incumbents like Deepgram? Or just the generic APIs provided by the big clouds.

Re: Why AI Infrastructure Startups Are Insanely Hard to Build

#79

Post by rapsey »

pas wrote: post #68
rapsey wrote: post #30

Earlier quoted context omitted.

> Who knew that Snowflake and Databricks would emerge against the incumbents. Snowflake is not profitable. I doubt Databricks is. Their market and business is crap.

if they are not profitable with these prices ... what the fuck they are doing!? do they just have company coke-athons all day every day?

It is a sales and engineering heavy business. Very difficult to generate large returns.

Re: Why AI Infrastructure Startups Are Insanely Hard to Build

#80

Post by soneca »

rapsey wrote: post #24
dvt wrote: post #18

Infra has always been a tarpit idea. Google didn't start out as an "infra" company, and neither did Amazon or Facebook. In fact, the few "infra companies" that did start back then (companies like Godaddy) are minuscule compared to the aforementioned. VC pouring money in LLM infra is legitimately crazy to me. It's clear as day that there will be winners of this AI cycle, but, as always, they will be companies that pro…

> Even OpenAI doesn't really have a product. They are making a ton of money off subscriptions.

Yep. Obviously they have a product. Millions and millions of people that are not software engineers or any very tech-savvy persona use their product. And a lot of those people pay for it. It’s just silly to say they don’t really have a product.

Specially given the rest of GP comment, OpenAI seems to be the Google, Facebook of the industry and will be the infrastructure company of it (already is kind of)

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