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OpenAI and Anthropic spend million of dollars a year training models like GPT-4 and Claude , but competitive damage dumping is making the business around these political platform rather precarious . Aidan Gomez , chief executive officer of compete AI supplier Cohere , say that selling access to models is chop-chop becoming a “ zero margin business ” in apodcast appearanceon Monday . For now , these AI models cost more than they make .
“ If you ’re only selling models , for the next piddling while , it ’s gon na be a really dodgy game , ” said Gomez in an interview with 20VC ’s Harry Stebbings . By “ selling models , ” he means sell API access to those AI models ; OpenAI , Anthropic , Google and Cohere offer this service to developers , and they ’re all facing a similar problem .
“ It ’s gon na be like a zero margin job because there ’s so much price dumping . People are giving away the poser for free . It ’ll still be a big job , it ’ll still be a pretty high figure because the great unwashed need this technical school — it ’s grow very chop-chop — but the margins , at least now , are gon na be very compressed . ”
Companies building AI models on the cutting border are in fierce competition with each other . The most reliable strategy for improving AI model today is adding more compute , which means cutting big checks to Nvidia for the hardware needed to make AI mannequin a haircloth chic . At the same time , there ’s a race to the bottom . OpenAI and Google have lather price for access their AI example in rules of order to retain user — while Meta ’s open source models are merely free to license .
“ That ’s why there is a wad of excitation at the program layer , ” aver Gomez , cite OpenAI ’s $ 20 a month ChatGPT subscription . Gomez says Cohere ’s AI models will be an attractive business in the farsighted term , but Cartesian product could be a meaningful way to generate revenue until then .
In other words , today ’s AI models misplace money — fate of it . While Microsoft and Google can subsidise or simply brave out that loss , that ’s not commonly the causa for startup . Cohere is one of the last remaining startup developing frontier AI framework , alongside OpenAI , Anthropic and Mistral . Other startups like them — inflexion , Adept , Character.ai — have beenacqui - hired by with child cloud provider , provide an unprofitable patronage model husk behind while preserving their potent technology .
However , Big Tech is kind ofeating these young companies alivebefore they have a prospect to become contender .
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“ It ’s really life-threatening when you make yourself a subsidiary of your cloud supplier , ” said Gomez , noting that venture capitalists just want a nice return , while cloud providers may desire something more . “ It ’s just not good business . ”
Companies creating cut - border AI models are in an increasingly difficult position . There ’s speculation that innovations in model architecture , data efficiencies or computing big businessman will engender Brobdingnagian returns for these AI example some day . However , there ’s no telling when , or if , that sidereal day will come . And apparently , not every AI startup today will be around see it .
