How are the largest VCs viewing the early stages of the AI Era, from the perspective of investment, technology moats, economics, early adoption and future use-cases.

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SHOW TRANSCRIPT: The Cloudcast #879 Transcript

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AI Eats the World (Presentation - Benedict Evans)

IS SILICON VALLEY STILL THE CENTER OF TECH INNOVATION?

Companies are investing tons of money
Breakthrough results haven’t emerged yet (business models, profits)
It’s not clear that there is a technology moat; but maybe a capital moat
Model training costs are expected to rise 5x to 10x - worse economics??
Lots of VC investment and vendor 2nd-order investments
LLM costs are creating marginal cost of software (been since the mainframe)
Model quality vs. price is improving, but price of the services (e.g. ChatGPT-Pro) is increasing - how much extra value is being delivered?
How will open source impact AI?
“If anything in life is certain, semiconductors are cyclical, commodity tech goes to marginal cost, and every new tech produces a bubble.”
Today’s GenAI question - is it accurate and useful? How can we tell, and how can it improve (or does it need to)?
Start with a simple concept - AI gives us unlimited interns - how can you extrapolate that? How would this have been extrapolated for the original internet (create content, translate language, write code, etc.)
Use cases are still not easy to see beyond Chatbots (and variants), Coding Assistants
Consulting revenue from GenAI is bigger than technology - and still most/many projects still in trials.
Technology can take a long time to adopt - Cloud still only has 30% of workloads (15yrs old)
66% of CEO’s don’t expect their first GenAI app in production until sometime in 2025, 50% at least 2H of 2025.
[Shadow AI] SaaS AI will accelerate adoption, if it follows Cloud pattern - external forces are more motivated to attack business “change” than internal teams
[Build vs. Ecosystem] Do the LLM vendors become the application vendors? Where does the LLM start and stop (infra, platform, API, apps, etc.)
[Learning from the customers] Do the LLM vendors use their knowledge advantage to build the apps?
GenAI Apps Categories - Make something better, Replace something, Just do the thing
“AI is just whatever is wrong/broken now” - How well does AI understand “broken”
Will people be the biggest problem in AI progress?
[Decoupling] Looks at global markets for Internet today - ecommerce/retail, food delivery, advertising, media, autonomous driving,
[Elevator Example] Automation gets rid of people
No real conclusion

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