To me it's a red flag when a company takes on Softbank funding. I worked at a portfolio company earlier in my career.
Their MO is to offer lots of money at inflated valuation vs domestic investors. This is compelling for founders - lots of money to grow, for less dilution.
That said, there's very little value Softbank adds other than the money. No connections, no advice, and it's generally not a helpful long term partnership. They also don't seem to conduct the level of scrutiny that other investors do, because they have so much cash and want to muscle into hot deals. And possibly also because founders wouldn't want to deal with their scrutiny vs domestic options.
Ultimately you take the money when you are greedy or don't have other good options. And neither is a good signal.
I think Sam is driving as aggressively as he can, given AI seems like a winner takes all type market. Domestic investors are balking at the exponential increase in needed investment amounts given economic uncertainty and lack of justified return. Meanwhile Softbank has been catching up and has been dying to get in on OpenAI. So here's the opportunity.
Maybe this works out and OpenAI is going to land this. But more likely, OpenAI is acting like the music is running out soon and they're throwing a hail mary. And Softbank's limited partners are going to be left holding the bag.
> given AI seems like a winner takes all type market
Does it, though? LLMs seemed magic when they arrived, and they continue to get better, but it seems like it takes a ton of hand-holding and experimentation to get useful work out of them. That opens up the field for different players to thrive in different niches, finding ways to make AI work for different applications in different industries.
In the realm of using LLMs for software development, for which you'd expect HNers to have a decent amount of hands-on experience, you see multiple LLMs from multiple companies mentioned in every conversation.
I think the LLM success stories are going to be companies that discover niches where the state of the art is sufficient to significantly reduce the amount of labor required for labor-intensive jobs, but it takes a combination of AI mastery and domain savvy to make it happen. Theoretically, companies like OpenAI should have a head start at finding and exploiting those opportunities, but history says the big success stories will emerge as the survivors of a gold rush where thousands or tens of thousands of companies are founded to "bring AI to X" where X is healthcare, insurance, shipping, underwear, etc. 99% of those companies will fail, a few will find seams of ore to exploit, and one or two will become the Microsoft or Amazon of their generation.
What is the support for the idea that AI is a winner takes all market? I don't see any network effects or lock-in in this market. If you built a IDE that queries two different services, I don't think anyone would object or notice. Is the idea that all of those users providing actual user-data makes the next generation better? I haven't seen much evidence for that either, everyone seems to have slowed down and been disappointed with the pace of their improvements.
I do see that OpenAI has a brand recognition that, e.g. Anthropic doesn't have, but what else leads you to think that it is winner take most/all?
> What is the support for the idea that AI is a winner takes all market?
A lot of people seem to have the idea (or at least SELL the idea, I'm not sure if they actually believe it) that this all leads to superhuman intelligence AGI and whoever hits that first is the "winner takes all" winner.
But yeah firstly as someone who uses LLMs often I don't believe there is reason to think that LLMs lead to AGI (and I think people selling the idea that this is a foregone outcome are hucksters).
And secondly, even if I ended up being wrong about that, there's no indication that any of the known groups working on LLMs is very far ahead of anyone else on LLM technology so even if you believed that LLMs are going to lead to AGI I don't see why that wouldn't just mean that like 3-5 super human intelligences were created around the same time which is still not a winner takes all situation unless those AIs go full Skynet and only one ends up standing at the end. (This last part is a joke, hopefully).
> A lot of people seem to have the idea (or at least SELL the idea, I'm not sure if they actually believe it) that this all leads to superhuman intelligence AGI and whoever hits that first is the "winner takes all" winner.
... Wait, why would making the basilisk give you a monopoly? Do they think their magic super intelligence would do their bidding or something? Have they never seen any sci-fi?
(The idea that LLMs will lead to superhuman intelligence seems ludicrous on the face of it, but even going along with that it doesn't make any sense.)
> unless those AIs go full Skynet and only one ends up standing at the end. (This last part is a joke, hopefully).
But is it a joke? One could argue that Skynet follows from Omohundro's Basic AI Drives: It's self-protection technologically extended backward in time.
> given AI seems like a winner takes all type market
Unfortunately for OpenAI and Softbank, it seems like AI will not be "winner take all", and may actually be quite commoditized. It's as easy as choosing a different model in a dropdown in Cursor or whatever your tool of choice.
When your local VC can't keep up with other investors, they make bold claims about intangible things like connections and advice that you can't easily verify. Safer to go with the money.
Their MO is to offer lots of money at inflated valuation vs domestic investors. This is compelling for founders - lots of money to grow, for less dilution.
That said, there's very little value Softbank adds other than the money. No connections, no advice, and it's generally not a helpful long term partnership. They also don't seem to conduct the level of scrutiny that other investors do, because they have so much cash and want to muscle into hot deals. And possibly also because founders wouldn't want to deal with their scrutiny vs domestic options.
Ultimately you take the money when you are greedy or don't have other good options. And neither is a good signal.
I think Sam is driving as aggressively as he can, given AI seems like a winner takes all type market. Domestic investors are balking at the exponential increase in needed investment amounts given economic uncertainty and lack of justified return. Meanwhile Softbank has been catching up and has been dying to get in on OpenAI. So here's the opportunity.
Maybe this works out and OpenAI is going to land this. But more likely, OpenAI is acting like the music is running out soon and they're throwing a hail mary. And Softbank's limited partners are going to be left holding the bag.