Open Models and Maturation: Assessing the Generative AI Market
In this episode of the AI + CFI podcast, CFI partners Guido Appenzeller and Matt Bornstein discuss the state of the generative AI market, about 18 months after it really kicked into high gear with the release of ChatGPT — everything from the emergence of powerful open source LLMs to the excitement around AI-generated music.
If there’s one major lesson to learn, it’s that although we’ve made some very impressive technological strides and companies are generating meaningful revenue, this is still a a very fluid space. As Matt puts it during the discussion:
“For nearly all AI applications and most model providers, growth is kind of a sawtooth pattern, meaning when there’s a big new amazing thing announced, you see very fast growth. And when it’s been a while since the last release, growth kind of can flatten off. And you can imagine retention can be all over the place, too . . .
“I think every time we’re in a flat period, people start to think, ‘Oh, it’s mature now, the gold rush is over. What happens next?’ But then a new spike almost always comes, or at least has over the last 18 months or so. So a lot of this depends on your time horizon, and I think we’re still in this period of like … if you think growth has slowed, wait a month and see it change.”
They also touch on the question of training data, and whether licensing proprietary data represents a real moat. Guido doesn’t think so:
“If I license a book, that maybe gives me a fraction of a million tokens, and we want to train on 50 trillion tokens. So in order to really make a difference, I would have to find trillions of proprietary tokens. And it’s just, practically speaking, infeasible.
“Since the Renaissance, this idea had been that knowledge is publicly accessible and will be shared. And I think that’s still reverberating here where, at the end of the day, because this knowledge is probably available on the internet, everybody trains on the same data set.”
If you liked this episode and want to hear more about the state of generative AI in 2024, check out some of our earlier episodes, including Scoping the Enterprise LLM Market (featuring Databricks VP of Generative AI Naveen Rao) and Remaking the UI for AI (featuring CFI General Partner Anjney Midha).
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Guido Appenzeller is an investor at Andreessen Horowitz, where he focuses on AI, infrastructure, open source technology, and silicon.
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Matt Bornstein is a partner on the enterprise team at Andreessen Horowitz, where he focuses on new data systems and technologies underpinning artificial intelligence.
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Derrick Harris is an editor at CFI , managing the content workflow across the Infra and American Dynamism teams.
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More About This Podcast
Artificial intelligence is changing everything from art to enterprise IT, and CFI is watching all of it with a close eye. This podcast features discussions with leading AI engineers, founders, and experts, as well as our general partners, about where the technology and industry are heading.