Shaun Johnson’s Post

It seems like we have a new exit model in AI. 🔊 Vanilla M&A and IPOs are so passé, this is the age of the 'not-quite-an-acquisition' exit for AI startups where Big Tech acqui-hires the founders and licenses the tech, leaving the company only a shell of its former self. Remember when, in March, Microsoft had 'quasi-acquired' Inflection AI by poaching the stellar founding team to launch a new division called Microsoft AI and licensing the underlying tech from the company itself for $650M, making the investors whole. Well, Amazon pulled a similar move last week with Adept, a startup that is building AI agents for the enterprise. Why are we seeing this deal pattern emerge? Here are my guesses: 🤼 Talent. ▶ Even more than compute, talent is the most valuable currency in the AI ecosystem. There are a finite number of individuals with the technical skill-set, lived experience, leadership ability, and vision to execute on this ask. Microsoft and Amazon wanted the founders of Inflection and Adept more than the companies themselves. Company-building was just Phase 1 of the toughest job interview of all time. 💰 Capital. ▶ All AI endeavors are nauseatingly resource intensive and founders are in a perpetual cycle of fundraising to put the next meal on the table/ add the next GPU cluster to their infrastructure. It is bound to be a sweet relief to be plugged into an unlimited money machine and just focus on building the tech. 🔬 R&D. ▶ Big Tech is leveraging the AI startup ecosystem as a dynamic off-balance-sheet R&D lab. Startups battle it out to get from 0 to 1, and then they cherry pick those whose vision is most aligned with their internal strategy and plug it into the monster data and distribution juggernaut they've built over time. By partnering up with Big Tech, AI startups go from having big dreams and no business model to immediately commercializing their tech at scale. A true Silicon Valley Cinderella moment. 🤝 Anti-Trust. ▶ There have been rumblings from regulators around the dominant role that the largest tech companies are playing in the AI ecosystem. This partnership mechanism stops short of an acquisition and the disclosure requirements it would bring. However, it does seem that even these deals may attract regulatory scrutiny as the FTC takes a closer look. Because if it walks and quacks like a duck, it should probably be regulated as one.

most people don't know about this guy. Noam Shazeer, ceo of characterAI The site gets 200M+ visitors per month. Before that... • worked ~20 years at Google • invented much of the current revolution in LLMs • raised $150M for this startup led by a16z (pre-revenue) • in early talks to raise $100M+ in a new funding round at $5B valuation AI is just getting started... have you heard of this guy? ———————— I share daily AI tips and summaries in my newsletter. Join 100,000+ CEOs, VCs, and analysts here → https://lnkd.in/egBDAQDV #AI #business #growth

Last week, Sarah Hinkfuss and I co-hosted a fun breakfast in London with founders in Vertical AI to trade notes on building and scaling in our new AI world. Thanks to our co-hosts Akash and Laura from Earlybird Venture Capital for making us feel at home in London! Some of the topics we covered: -How to think about different GPU providers, what criteria to assess, and when to move on from the hyperscalers -All things people: Chief of Staff, first sales hire, time spent on recruitment, setting an example as a leader (e.g. Wade from Moov) -The job of startups in AI is to find the space between where the foundation model’s off-the-shelf solution ends and the expertise/abilities of the incumbents begin -OpenAI etc won't be able to serve all verticals and both consumer/enterprise use cases. Focus innovation on areas where foundation model improvements make you STRONGER. The notion of a 'wrapper' needs more nuance in terms of the depth of workflow/system design you're doing on top -Counterposition against incumbents by (1) developing proprietary data advantages, having labelling teams in-house (e.g. LegalOps team at EvenUp) and (2) being more radical with UI/UX, even if they have the distribution -Even if improvements in foundation models (e.g. larger context windows) lift the tide for all boats, startups can still win on delivering the solution at lower cost than incumbents -Selling services requires different SLAs; accuracy, latency and coverage matter. Explore different pricing models to ensure steady margin profile If you’re a founder, operator or enterprise buyer, let me know if you’d be interested in joining future discussions!

Stability AI founder and chief executive Emad Mostaque has stepped down from the top role and from the unicorn startup‘s board, the buzzy firm said Friday night, making it the second hot AI startup to go through major changes this week. Stability AI, which has been backed by such investors as Lightspeed Venture Partners and Coatue Management, doesn’t have an immediate permanent replacement for the CEO role but has appointed its COO Shan Shan Wong and CTO Christian Laforte as interim co-CEOs. Read below to find out more about it. #ceo #cto #stabilityai #ai #tech #technology #investors #technology #decentralizedai

"Investors have poured $330 billion into about 26,000 A.I. and machine-learning start-ups over the past three years, according to PitchBook, which tracks the industry. That’s two-thirds more than the amount they spent funding 20,350 A.I. companies from 2018 through 2020." "A.I. start-ups have been challenged by that gap between spending and sales. Anthropic, which has raised more than $7 billion with backing from Amazon and Google, is spending about $2 billion a year but pulling in only about $150 million to $200 million in revenue, said two people familiar with the company’s financials, who requested anonymity because the figures are private." Turns out "losing money on every sale, but making it up on the volume" is not a good business strategy. My main lesson from the first tech bubble is that when venture money is plugging the hole between what a service costs and what the end user will pay, bad things will happen. That does not mean that there will not be winners and even big winners in the AI startup-land. It means that diligence is even more important. In particular, understand what value is being offered to end users and whether it supports the revenue model of the venture. #venturecapital #ai

Hey everyone! 💬 Times might be tough for startups, but we're not backing down! 💪 We're facing the current #challenges head-on with a solid game plan. Here's what we're doing to ensure we keep thriving: 📈 #Profitability First: While growth is essential, we believe in the power of sustainable profitability. Our focus is on optimizing unit economics and emphasizing our unique selling proposition to stand out in the market. 👥 #Building a Dream Team: The key to #success lies in our team! 🤝 We're on the lookout for experienced hires with the right mindset to tackle the delicate balance between growth and #profitability. 🤖 #AI for the Win: Artificial Intelligence has unlocked endless possibilities for us! 🌐 We're leveraging AI applications across different domains of our business to boost productivity and make better use of our resources. We're determined to overcome these challenges and come out even #stronger! 🌟 Thanks for being a part of our journey. Stay tuned for more updates, and let us know in the #comments whats your thought about this topic! 💛 #StartupLife #Innovation #Teamwork #AI #ProfitabilityFirst #Challenges #Urbify

Very good article... in few words, the non acquisition of Inflection AI is a trick to avoid Antitrust problems for Microsoft

For better or worse, it seems there’s going to be a lot of consolidation of smaller ai startups via acquisition by Magnificent Seven tech companies… would be interesting to see if any startups resist acquisition and grow into a behemoth themselves 🤔🤔🤔

The latest SVB State of the Markets report, which was published this week, is packed with great insights, from the health of venture at large to burn rate analysis and valuation trends. One of the highlights from the report is the #AI Deep Dive, which benefits from decades of our proprietary data and experience serving the #innovationeconomy. Two data points from the chart below stood out for me: 1. While median valuations for seed stage AI startups were up 35% from 2021-23, the median valuation for Series C stage AI startups fell 58% from 2021-23, which was greater than the median for all Series C deals, which fell 37%. Despite some of the noise, we are seeing disciplined venture investing in the AI space. 2. The role of corporates in AI startups (Amazon, Google, Microsoft and Nvidia) cannot be ignored, and they are playing across all parts of the AI landscape, from investing to partnering and R&D. The full report is available here: https://lnkd.in/gjFGrf4r

New Post: Stability AI CEO resigns because you’re ‘not going to beat centralized AI with more centralized AI’ - https://lnkd.in/gqf7Vhgg - Stability AI founder and chief executive Emad Mostaque has stepped down from the top role and the unicorn startup‘s board, the buzzy firm said Friday night, making it the second hot AI startup to go through major changes this week. Stability AI, which has been backed by investors including Lightspeed Venture Partners and Coatue Management, © 2024 TechCrunch. All rights reserved. For personal use only. - #news #business #world -------------------------------------------------- Download: Stupid Simple CMS - https://lnkd.in/g4y9XFgR -------------------------------------------------- or download at SourceForge - https://lnkd.in/gNqB7dnp