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20VC: Perplexity's Aravind Srinivas on Will Foundation Models Commoditise, Diminishing Returns in Model Performance, OpenAI vs Anthropic: Who Wins & Why the Next Breakthrough in Model Performance will be in Reasoning
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
Value in AI Companies Lies in People, not Models
The true value of companies like Open AI and Anthropic does not lie in the machine learning models they possess, but in the expertise of the individuals who are building these models. These key individuals hold tacit knowledge crucial for training cutting-edge models and innovating on algorithmic reasoning breakthroughs. The accumulation of computational power combined with the unique skill sets of these individuals is what justifies the high valuation of these companies, despite their seemingly senseless revenue and valuation numbers. The real asset is not just the output of the models, but the team of experts who develop them. While machine learning models have become commodities, the talent behind these models remains highly valuable and is not easily replaced. As a result, these experts are well-compensated to ensure they stay within these companies, as their knowledge is retained within the organization and not shared publicly. This non-commoditized knowledge and talent are the true essence of value in AI companies.
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