Cognition Labs Seeks $2B Valuation

https://www.wsj.com/tech/ai/a-peter-thiel-backed-ai-startup-cognition-labs-seeks-2-billion-valuation-998fa39d

by atomlib • 2 years ago

58 62 2 years ago

wsj.com

mouse_• 2 years ago

the crash is gonna be really, really bad.

msp26• 2 years ago

It's going to be amazing for hobbyists to get GPUs on the cheap.

iforgotpassword• 2 years ago

48GB VRAM gaming let's GOOOOOO.

But seriously, most of that stuff is completely useless for anything but machine learning tasks, which you'll find some hobbyists for, but for all that stuff that is floating around right now? As a hobbyist you need one GPU.

willis936• 2 years ago

I'm really excited for it. It's clear to me that the AI proponents are psychopaths trying to do scary and dangerous things to prove their tech is powerful. They should do something useful, like dig dirt.

https://apnews.com/article/openai-voice-engine-aigenerated-c...

vasili111• 2 years ago

New and more chips will come and make AI more cheap. I do not expect AI too crash, it is too useful.

ewalk153• 2 years ago

17x is a big hurdle to overcome. Likely: - models will get a lot more efficient for storing and retrieving information - the marginal value created with this same hardware will increase - the market price for this hardware will continue to fall similar to historic norms

I expect this to set a floor on the crash.

We will continue to get better and better predictions at more affordable prices.

sp3325• 2 years ago

Even amortized over a few years, they clearly expect to be able to raise prices soon. If Microsoft stops laundering revenue through OpenAI, and as Stability switches away from free stuff, the best AI tools are about to get a lot more expensive.

zarzavat2• 2 years ago

Nah it’s the opposite. At the moment there’s a lot of low hanging fruit, AI companies can make money from the difference between GPT4 and free models.

Once we get free models that are as good as GPT4, while there will still be a market for a “GPT5”, the current applications will experience serious price competition.

sp3325• 2 years ago

If OpenAI has to make a profit or at least lose less money to please investors, they will raise the price of GPT4 or flat out cancel it.

zelphirkalt• 2 years ago

Hopefully until then we will have stuff that, without requiring specific hardware or hardware from specific vendors, easily runs on home computers. Best with the ability to let the models relearn from chosen sources of knowledge.

imtringued• 2 years ago

Your first concern makes no sense. You can have specific hardware that is widely available on home computers. In fact, you soon won't be able to buy a computer without them.

spaceman_2020• 2 years ago

They’ll need to be better and more autonomous to justify the prices

No one is going to pay $100 for “better than Google search” chatGPT, even if its AGI tier

But paying $100 for a “junior dev who takes over all the grunt work” is still a value buy

nextworddev• 2 years ago

In theory, paying $499/mo could be justified if it improves a Senior / Staff developer's productivity by even 10% (more than say ChatGPT)

bedhead• 2 years ago

Raise prices on what? There are barely any revenue generating AI products with a line of paying customers. I look around an I still don’t see anything. At the end of the day there have to be viable business models at the end of the line in order to support all this otherwise this too is just a house of cards.

chollida1• 2 years ago

. If Microsoft stops laundering revenue through OpenAI

Not sure this is the phrase you meant as no one is accusing Microsoft of laundering money via OpenAI.

sp3325• 2 years ago

MS put money into OpenAI and OpenAI spends the money on Azure. It's basically Microsoft handing themselves cash and pretending that it's revenue.

setgree• 2 years ago

For SOTA, probably, but it looks like current gen technology is going to be free soon. Intel is proposing to have copilot run locally, for example: https://www.tomshardware.com/pc-components/cpus/intel-confir...

sp3325• 2 years ago

I think they will have to build actual products instead of just making a model available and having customers figure out something useful to do with it.

wrsh07• 2 years ago

I'm curious why you think this

My understanding is that the APIs are profitable, and the best alternative (spin up mixtral on cloud provider) isn't that expensive. So there's some downward pressure there.

I expect ChatGPT is priced right where anthropic and OpenAI want. It's generating cash, and if you're a heavy user they can rate limit or offer a higher tier

Is that higher tier what you're expecting?

blueflow3• 2 years ago

Wasn't this predictable? I think this is the 3rd or 4th AI bubble bursting in my lifetime.

rubyfan2• 2 years ago

remember Watson?

blueflow3• 2 years ago

Yes. I had the mention of it already typed out but decided that its not adding much to my point. IBM Watson was some mysterious thing that got shipped with Windows 95 or 98 and i (as a kid) didn't understood what it could do.

gardnr2• 2 years ago

Hotdog or not?

blueflow3• 2 years ago

I'm assuming this is a reference to Silicon Valley (2014): https://www.youtube.com/watch?v=vIci3C4JkL0

sdenton4• 2 years ago

It was a lot more fun when vc was buying everyone cheap taxis and movie nights.

ignoramous• 2 years ago

What's wrong with them buying you coding assistants? Sounds to me like more time on hand to prolong those movie nights.

In seriousness, the upside with code assistants is increasingly clear. And may be the bet that these would continue to improve quadratically is worth taking if you're a VC. In fact, PG argues that buying into hype cycles is the default: https://paulgraham.com/herd.html

TomSwirly• 2 years ago

How is it clear that coding assistants have an upside for anyone past a complete beginner?

So far, the utility on existing codebases is less than zero.

continue to improve quadratically

Using what metric?

leto_ii• 2 years ago

Sounds to me like more time on hand to prolong those movie nights.

Unfortunately that's not how things work under capitalism. To the extent that coding assistants make a difference in productivity (in my experience quite limited gains), that will just mean that you get more work done for the same time and salary.

SillyHNDorks• 2 years ago

Quelle surprise! Technerds doing what they are good at: spending other people's money.

schmorptron• 2 years ago

Being the largest shovel maker and the only one with a solid software ecosystem for those shovels(?) during a gold rush will do that, huh?

shoo• 2 years ago

tangent, one of the funnier stats I've heard recently: the price/revenue ratio for Nvidia stock is about 37. the price/revenue ratio for truth social is over 1000.

ethanbond• 2 years ago

Cults gonna cult

Looked this up and yeah, that’s insane. Their share price per user is above $1,000 while Reddit is $150, X is $80. Crazy stuff!

kukkamario• 2 years ago

Well one is actual company and other is a money laundering scheme to funnel foreign money to potential future president...

RantyDave• 2 years ago

I had this exact thought today. Awful, isn't it?

tomp• 2 years ago

What evidence do you have that it’s foreign money? As opposed to domestic money?

fancyfredbot2• 2 years ago

If inference costs 17x revenue you'd better raise prices because bringing in customers is just going to increase costs. If training costs 17x revenue you'd better bring in some customers, but you might be alright in the long term if you've trained something useful.

rvz2• 2 years ago

If training costs 17x revenue you'd better bring in some customers, but you might be alright in the long term if you've trained something useful.

Yes. The key is 'if' and that is the hidden risk when training a model which can overfit or under-perform.

That cost is in the tens of millions and they (Cognition Labs) better make some revenue to cancel all of this out.

fancyfredbot2• 2 years ago

There's nothing especially remarkable about taking some risk - everything from drug discovery to drilling for oil involves large up-front costs with uncertain returns.

It sounds a bit like Cognition labs can afford to take a few losing bets costing tens of millions (based on $2bn valuation) but investors seem to be speculating that they'll find something which works in the end.

atomlib• 2 years ago

My original post title: “WSJ: AI industry spent 17x more on Nvidia chips than it brought in in revenue”

Mirror that I should've posted instead https://www.msn.com/en-us/money/companies/a-peter-thiel-back...

tempodox• 2 years ago

Now that is selling shovels in a gold rush.

le-mark• 2 years ago

History repeats, in this AI “gold rush” it’s best to be the person selling the shovels.

m_fayer• 2 years ago

This time there’s a gold rush in both gold AND shovels. It really feels like there’s no break between the bubbles anymore.

rchaud• 2 years ago

Even that isn't going to hold forever, as Nvidia's current valuation assumes that demand for their chips will only keep growing at the same rate or more.

blueboo• 2 years ago

If it looks like a bubble and sounds like a bubble…

But AGI

morpheos137• 2 years ago

Does this surprise anyone with a modicum of intelligence?

In the past 40 years we went from:

1. PCs (real productivity gain) as now all every home and office could afford a computer running important things like spreadsheets and word processors.

2. The world wide web. Huge economic and productivity gain from making information acquisition and communication cheaper and more readily available. The apogee of the world wide web was probably in the early 2000s. Google search worked. You could find what you were looking for. eBay and Amazon worked.

To accelerating bullshit based on advertising.

3. Facebook, Google SEO spam, Twitter Reddit. Increasing programing frameworks all of negligibly marginal productivity and economic value.

4. Crypto currency. For some governments world wide turned a blind eye to the creation of private tokens whose only real use cases are speculation (gambling, distributed ponzi), money laundering and or other black and grey market activities of negligible or negative real economic value.

To now 5. "AI" trained on Reddit posts, Wiki articles, stack posts, and Google SEO blog spam. "AI" is basically a glorified, hallucinating chat bot at this stage. Nothing like real intelligence or capable of producing trustworthy reliable output at par with a human expert or a Google search from 20 years ago, before the degradation.

The sigmoid curve strikes again.

Silicon Valley in bringing the world microprocessors, PCs, the commerical WWW. Since then the ratio of bullshit to real innovation has increased at an accelerating rate. Eventually there will be a profound economic.restructuring of the area more in line with reality.

The only reason why it hasn't happened yet since 2009 to present when bullshit proliferated was low interest rates and too much money chasing gains with delusional business propositions.

TrackerFF3• 2 years ago

I don't think anyone is questioning the impact and future of ML/AI products and services.

But as things are right now, the only AI companies with any serious impact are the very companies that train and release the huge and extremely expensive models.

Everyone else seem to be layers on top of those products.

I'm getting immediate flashbacks to the era of "Google killed my startup/product", where google could simply either acquire companies, or implement their own solutions which essentially killed small competition.

gomoboo• 2 years ago

The portion of the article the previous “17x” title referenced:

“In a presentation earlier this month, the venture-capital firm Sequoia estimated that the AI industry spent $50 billion on the Nvidia chips used to train advanced AI models last year, but brought in only $3 billion in revenue.”

rvz2• 2 years ago

How much revenue does Cognition Labs have to justify this valuation?

Even if we forecast this, Devin is using GPT-4. That is going to be very expensive for Cognition Labs for the number of API calls / credits they are doing and it will be a while for them to roll their own model to surpass GPT-4 for Devin to 'replace' developers.

Otherwise, this tells us that we are at the very peak of another VC fuelled AI bubble which will end with lots of losers being unable to generate meaningful revenue and the VCs will push and run this startup into the ground.

TrackerFF3• 2 years ago

I don't understand - what is the moat to these companies?

I head over to their website: https://www.cognition-labs.com/

It's just a landing page. Some information about Devin, their main (only?) product:

https://www.cognition-labs.com/introducing-devin

Have they trained their own network? Is it a fine-tuned version of something else? Is it just some interface against another LLM?

Is it just some startup that's waiting to get acquired, based on hype and valuation alone?

So many questions.

EDIT: The article is paywalled, so can't read it.

fragmede2• 2 years ago

Why does there have to be one?

TrackerFF3• 2 years ago

It just seems like the applied field of ML/AI - especially with products based on LLMs - the barriers of entry are low to non-existent.

Whipping up some MVP product/functionality and interface where the LLMs do all the heavy lifting is a weekend project.

The only gatekeeper seems to be the cost of eventual pre-training, and the LLM queries / API calls themselves.

tzs• 2 years ago

For anyone confused about why so many of the early comments on this story seem kinda dumb it is a combination of two things:

1. It took about 50 minutes before a link to a non-paywalled version of the story was posted so many early commentators were going just on the title, which normally works pretty well but can fail badly when the submitter does a poor job of picking a title.

2. The submitted title was "WSJ: AI industry spent 17x more on Nvidia chips than it brought in in revenue".

gardnr2• 2 years ago

$2B is a low valuation for a company that ostensibly can replace most software developers.

KeplerBoy• 2 years ago

$2B is a low valuation for a company which can replace 1% of software developers.

1vuio0pswjnm7• 2 years ago

Works where archive.{ph,md,is} is blocked:

https://cc.bingj.com/cache.aspx?d=230782937255&w=NYG4LSGzXMn...

neonate• 2 years ago

https://archive.md/ykZHa

Cognition Labs Seeks $2B Valuation

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