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Ilya Sutskever's SSI Inc raises $1B

reuters.com

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Re: Ilya Sutskever's SSI Inc raises $1B

#561

Post by austin-cheney »

gigatexal wrote: post #306

This being ycombinator and as such ostensibly has one or two (if not more) VCs as readers/commentators … can someone please tell me how these companies that are being invested in in the AI space are going to make returns on the money invested? What’s the business plan? (I’m not rich enough to be in these meetings) I just don’t see how the returns will happen. Open source LLMs exist and will get better. Is it just tha…

Likely the business plan is multiple seed rounds each at greater principals but lower margins so that the early investors can either sell their shares or wait, at greater risk, for those shares to liquidate. The company never has to make money for the earliest investors to make money so long as sufficient interest is generated for future investors, and AI is a super hype train.

Eventually, on a long enough timeline, all these tech companies with valuations greater than 10 billion eventually make money because they have saturated the market long enough to become unavoidable.

Re: Ilya Sutskever's SSI Inc raises $1B

#562

Post by stephenitis »

leesec wrote: post #229

Again I read the comments and can't think of any place less optimistic or understanding of technology than Hackernews. Lot's of armchair critics thinking they know better than the guy who help built AlexNet. I should be surprised but I'm not anymore, just disapointed. One of the smartest computer science researchers is taking a stab at the most important problem of our lifetimes, we should be cheering him on.

The sentiment and reaction to this is quite negative indeed.

I think maybe it's because some people's Nvidia and stock holdings had a rough day...

Seriously let's hope he builds a great team, gets the infrastructure he needs, and nails this!

Re: Ilya Sutskever's SSI Inc raises $1B

#563

Post by sirspacey »

dartos wrote: post #109
sirspacey wrote: post #85

Lots of dismissive comments here. Ilya proved himself as a leader, scientist, and engineer over the past decade with OpenAI for creating break-through after break-through that no one else had. He’s raised enough to compete at the level of Grok, Claude, et al. He’s offering investors a pure play AGI investment, possibly one of the only organizations available to do so. Who else would you give $1B to pursue that? That’…

All I’m saying is you used the word “if” a lot there. AGI assumes exponential, preferably infinite and continuous improvement, something unseen before in business or nature. Neither siri nor Alexa were sold as AGI and neither alone come close to a $1B product. gpt and other LLMs has quickly become a commodity, with AI companies racing to the bottom for inference costs. I don’t really see the plan, product wise. Moreo…

I’m curious if you’d be willing to share more of your personal context?

My intent is to be helpful. I’m unsure of how much additional context might be useful to you.

Investor math & mechanics is straight-forward: institutional funds & family offices want to get allocations in investors like a16z because they get to invest in deals that they could not otherwise invest in. The top VCs specialize in getting into deals that most investors will never get the opportunity to put money into. This is one of them.

For their Internal Rate of Return (IRR) to work out at least one investment needs to return 100x or more on the valuation. VCs today focus on placing bets where that calculation can happen. Most investors aren’t that confident in their ability to predict that, so they invest alongside lead investors who are. a16z is famous for that.

There are multiple companies worth $1T+ now, so this isn’t a fantasy investment. it’s a bet.

The bet doesn’t need to be that AGI continues to grow in power infinitely, it just needs to create a valuable company in roughly a ten year time horizon.

Many of the major tech companies today are worth more money than anyone predicted, including the founders (Amazon, Microsoft, Apple, Salesforce, etc.). An outlier win in tech can have incredible upside.

LLMs are far from commoditized yet, but the growth of the cloud proves you can make a fortune on the commoditization of tech. Commoditization is another way of saying “everyone uses this as a cost of doing business now.” Pretty great spot to land on.

My personal view is that AGI will deliver a post-product world, Eric Schmidt recently stated the same. Products are digital destinations humans need to go to in order to use a tool to create a result. With AGI you can get a “product” on the fly & AI has potentially very significant advantages in interacting with humans in new ways within existing products & systems, no new product required. MS Copilot is an early example.

It’s completely fine to be dismissive of new tech, it’s common even. What bring me you here?

I’m here on HN because I love learning from people who are curious about what is possible & are exploring it through taking action. Over a couple decades of tech trends it’s clear that tech evolves in surprising ways, most predictions eventually prove correct (though the degree of impact is highly variable), and very few people can imagine the correct mental model of what that new reality will be like.

I agree with Zuck:

The best way to predict the future is to build it.

Re: Ilya Sutskever's SSI Inc raises $1B

#564

Post by Mistletoe »

reissbaker wrote: post #522
gigatexal wrote: post #306

This being ycombinator and as such ostensibly has one or two (if not more) VCs as readers/commentators … can someone please tell me how these companies that are being invested in in the AI space are going to make returns on the money invested? What’s the business plan? (I’m not rich enough to be in these meetings) I just don’t see how the returns will happen. Open source LLMs exist and will get better. Is it just tha…

In general VC is about investing in a large number of companies that mostly fail, and trying to weight the portfolio to catch the few black swans that generate insane returns. Any individual investment is likely to fail, but you want to have a thesis for 1) why it could theoretically be a black swan, and 2) strong belief in the team to execute. Here's a thesis for both of these for SSI: 1. The black swan: if AGI is a…

How will we know when we have achieved AGI with intelligence greater than human-level?

Re: Ilya Sutskever's SSI Inc raises $1B

#565

Post by EternalFury »

vasilipupkin wrote: post #546
mvkel wrote: post #540

Earlier quoted context omitted.

Current investors just need the co to be valued at $50B on the next round (likely, given fomo and hype) to make a 10X gain. Actually converting it to cash? That doesn't happen anymore. Everyone just focuses on IRR and starts the campaign for Fund II.

you are missing the point. SSI believes that it can build a super intelligence. Regardless of whether you personally buy into that or not, the expected value of such an investment is infinity effectively. 5 billion dollar valuation is a steal

That type of reasoning really reminds of the Internet bubble.

Re: Ilya Sutskever's SSI Inc raises $1B

#566

Post by rawrawrawrr »

jhylau wrote: post #559
gigatexal wrote: post #306

This being ycombinator and as such ostensibly has one or two (if not more) VCs as readers/commentators … can someone please tell me how these companies that are being invested in in the AI space are going to make returns on the money invested? What’s the business plan? (I’m not rich enough to be in these meetings) I just don’t see how the returns will happen. Open source LLMs exist and will get better. Is it just tha…

VCs at the big/mega funds make most of their money from fees, they don't actually care as much about the potential portfolio investment exits 10-15 years from now. What they care MOST about is the ability to raise another fund in 2-3 years, so they can milk more fees from LPs. i.e. 2% fee PER YEAR on a 5bn fund is a lot of guaranteed risk-free money. To be able to achieve that is entirely dependent on two things: 1)…

Are you a VC? If they really didn't care about their investment exits, that would be crazy.

Re: Ilya Sutskever's SSI Inc raises $1B

#567

Post by hello0904 »

jhylau wrote: post #559
gigatexal wrote: post #306

This being ycombinator and as such ostensibly has one or two (if not more) VCs as readers/commentators … can someone please tell me how these companies that are being invested in in the AI space are going to make returns on the money invested? What’s the business plan? (I’m not rich enough to be in these meetings) I just don’t see how the returns will happen. Open source LLMs exist and will get better. Is it just tha…

VCs at the big/mega funds make most of their money from fees, they don't actually care as much about the potential portfolio investment exits 10-15 years from now. What they care MOST about is the ability to raise another fund in 2-3 years, so they can milk more fees from LPs. i.e. 2% fee PER YEAR on a 5bn fund is a lot of guaranteed risk-free money. To be able to achieve that is entirely dependent on two things: 1)…

So the question I have is, who are these LP's and why are they demanding funds go into "sexy" ideas?

I mean it probably depends on the LP and what is their vision. Not all apples are red, come in many varieties and some for cider others for pies. Am I wrong?

Re: Ilya Sutskever's SSI Inc raises $1B

#569

Post by neom »

hello0904 wrote: post #567
jhylau wrote: post #559

Earlier quoted context omitted.

VCs at the big/mega funds make most of their money from fees, they don't actually care as much about the potential portfolio investment exits 10-15 years from now. What they care MOST about is the ability to raise another fund in 2-3 years, so they can milk more fees from LPs. i.e. 2% fee PER YEAR on a 5bn fund is a lot of guaranteed risk-free money. To be able to achieve that is entirely dependent on two things: 1)…

So the question I have is, who are these LP's and why are they demanding funds go into "sexy" ideas? I mean it probably depends on the LP and what is their vision. Not all apples are red, come in many varieties and some for cider others for pies. Am I wrong?

The person you're responding to has a very sharp view of the profession. imo it's more nuanced, but not very complicated. In Capitalism, capital flows, that's how it works, capital should be deployed. Larges pools of capital are typically put to work (this in itself is nuanced). The "put to work" is various types of deployment of the capital. The simplest way to look at this is risk. Lets take pension funds because we know they invest in VC firms as LPs. Here* you can find an example of the breakdown of the investments made by this very large pension fund. You'll note most of it is very boring, and the positions held related to venture are tiny, they would need a crazy outsized swing from a VC firm to move any needles. Given all that, it traditionally* has made no sense to bet "down there" (early stage) - mostly because the expertise are not there, and they don't have the time to learn tech/product. Fee's are the cost of capital deployment at the early stages, and from what I've been told talking to folks who work at pension funds, they're happy to see VCs take swing.

but.. it really depends heavily on the LP base of the firm, and what the firm raised it's fund on, it's incredibly difficult to generalize. The funds I'm involved around as an LP... in my opinion they can get as "sexy" as they like because I buy their thesis, then it's just: get the capital deployed!!!!

Most of this is all a standard deviation game, not much more than that.

https://www.otpp.com/en-ca/investments/our-advantage/our-per... https://www.hellokoru.com/

Re: Ilya Sutskever's SSI Inc raises $1B

#570

Post by aorloff »

rawrawrawrr wrote: post #566
jhylau wrote: post #559

Earlier quoted context omitted.

VCs at the big/mega funds make most of their money from fees, they don't actually care as much about the potential portfolio investment exits 10-15 years from now. What they care MOST about is the ability to raise another fund in 2-3 years, so they can milk more fees from LPs. i.e. 2% fee PER YEAR on a 5bn fund is a lot of guaranteed risk-free money. To be able to achieve that is entirely dependent on two things: 1)…

Are you a VC? If they really didn't care about their investment exits, that would be crazy.

I think they treat success and failure as mostly luck, with a tiny bit of hygiene

The trick is being in the game long enough

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