Will all of this CapX on infrastructure for GenAI pay off (WSJ)? Are we in a bubble?

That is the question at the top of mind for everyone as the race to be first, to build the biggest and fastest AI supercomputer, is in full swing with some of the smartest minds in tech. Listen to Larry Ellison about how important this is.

And the venture dollars💰 pour in to startups - look at that chart 👀 (WSJ)

So yes, folks want to know what’s the ROI and when - where is the enterprise spend and where are the applications? Michael Dell has some thoughts to share:

💯 ignore the news, it's still early for GenAI deployment in the enterprise, the low hanging fruit use cases like support and coding are showing value but the real moment comes when costs to use models continue to 📉, securing data + models improve, + agentic workflows allow users to have a Jarvis vs. a Clippy.

Jensen Huang recently spoke at the Goldman Sachs conference (full notes here from Lin) but here’s the big picture for us to remember, AI is not just about software - it’s way bigger:

For the very first time, we're going to create skills that augment people.

And so that's why people think that AI is going to expand beyond the trillion dollars of data centers and IT, and into the world of skills.

Generative AI is not just a tool, it is a skill.

A digital chauffeur is a skill. A digital assembly line worker robot. A digital customer service. A chatbot. A digital employee for planning NVIDIA's supply chain. A digital SAP agent.

We use a lot of service now in our companies and we have digital employee service.

Now we have all these digital humans, essentially. And that's the wave of AI that we're in now.

Every one of our software engineers would essentially have companion digital engineers working with them 24/7, that's the future.

The way I look at NVIDIA, we have 32,000 employees. Those 32,000 employees are surrounded by hopefully 100x more digital engineers."

OG Marc Benioff chimes in this past week with his 100% attention to rebranding Salesforce as Agentforce. Once again, the positioning is around jobs to be done which is way bigger than just enterprise software spend. Click through and watch the video.

All of this skepticism on data center and chip spend is warranted, and it’s to be expected as per the Gartner Hype Cycle - we are now in the Trough of Disillusionment for Generative AI which means in the next 3-5 years it will start delivering value.

The enterprises are already shifting their budgets, and it’s going to be big but delayed. Here’s is an excerpt from the latest Goldman Sachs IT Spending Survey from this week:

To be clear, we are talking about Tens of Billions of Dollars 💰💰💰💰💰 to be reallocated, shifted, and maybe increased in certain cases.

Once again, this pain and ROI question is all to be expected - stay the course, build amazing shit, and solve real customer problems and in the long run we will all be better off!

💪🏼 LFG

As always, 🙏🏼 for reading and please share with you friends and colleagues.

Scaling Startups

#don’t forget to put on your helmet 🏈 🪖 when it comes to customers - selling and success! I can’t tell you how many discussions I’ve had with founders about this.

#everyone needs to sell - a reminder

and a reminder from What’s 🔥 #409

This dovetails nicely with my talk with Paul Salamanca from the Top One Percenter show on why everyone needs to learn how to sell. Listen in!

#great summary of the allinsummit with some nuggets from Elon, Marc Benioff, and more

#solid advice - don’t be desperate - listen in

Enterprise Tech

#OpenAI releases o1 (Strawberry), its first model with ‘reasoning’ abilities (The Verge)

#but is it the absolute breakthrough that many are saying?

#user experience matters and ease of use and speed can always be improved for all software! also wrote about it back in Nov. 2020 in What’s 🔥 #213

#👀 super impressive from Glean

#Speaking of why Glean is growing so fast in the enterprise is because people don’t understand is how hard it is to get all of the plumbing right for enterprise AI for fine grained permissions and access. This podcast with Guy Podjarny (founder Tessl + Snyk) and Tamar Yehoshua (Glean, President, Product & Tech) is a must listen!

In this episode of AI Native Dev, host Guy Podjarny sits down with Tamar Yehoshua, a seasoned tech leader with an impressive career in engineering and product leadership roles at Amazon, Google, Slack, and currently, Glean. Tamar shares her journey and the innovative work being carried out at Glean, an enterprise AI platform. The discussion delves into Glean's dual interface for search and chat, the critical importance of security and privacy in AI solutions, and the architectural insights behind Glean's RAG-based solution. Tamar also sheds light on the evolution from AI to generative AI at Glean, the challenges of building AI solutions for enterprises, and strategies for user adoption and behavior change. Looking ahead, Tamar envisions a future where AI assistants handle repetitive tasks, allowing employees to focus on more creative and high-leverage activities. 

Enterprise AI Solutions Need to be Different - Glean and ex-Slack CPO, Tamar Yehoshua, on RAG, Changing Behavior and Bring-Your-Own-Model. Tessl Episode

#founder mode - Benioff also back to save Salesforce with one goal in mind, agentic workflows - similar to how Sergey came back to Google to catch up in the AI race - this is going to be fun to watch 🍿

#always ❤️ the InfoQ trends report, specifically the AI, ML, + Data Engineering one - broken out nicely from Innovators (agents are the future + more security needed!) in terms of what tech vs. late majority or more mainstream - read it here (h/t Daniel Bryant)

*AI Agents, like coding assistants, will also see more adoption, especially in corporate application development settings.

*AI safety and security will continue to be important in the overall management lifecycle of language models. Self-hosted models and open-source LLM solutions can help improve the AI security posture.

#yes AI coding assistants can generate code but is it quality code?

#WarpStream bought by Confluent in streaming data space but what’s most interesting besides exiting in 1 year is the idea of BYOC - bring your own cloud and how Jay Kreps positions the new product (TechCrunch)

As Confluent co-founder and CEO Jay Kreps told me, he thinks that what sits in between those two existing models is what he calls the “bring your own cloud” (BYOC) model.

“There’s definitely a set of people who want some self-managed piece of software. They’re going to go around themselves,” he explained. “And there’s a set of people who want a fully managed cloud. But in some of these organizations, there’s a set of use cases that either have requirements around the data in their environment not being able to leave or just need a fair amount of customization that leaves them doing everything themselves, which is not ideal. So this kind of ‘bring your own cloud’ is like a nice middle position where you can have something that’s like a cloud offering, but it could be in your environment with a fair amount of control.”

#sure, cloud providers are buying all of the chips but is there enterprise demand?

#

Markets

#💯 both are true - enterprise app layer growth coming next few years

#Sailpoint looking to hire bankers to go public - leading identity security software platform last taken private by Thoma Bravo in 2022 for $6.9B with lots of time spent going from an on-prem to cloud deployment. Sailpoint’s annual recurring revenue approached $600 million, it said in September 2023. (Bloomberg)

#more liquidity for investors as CoreWeave looking to do a tender offer at $23B (Bloomberg)

CoreWeave, a cloud computing provider that’s among the hottest startups in the artificial intelligence race, is in talks to arrange a sale of existing shares valuing it at $23 billion, according to people with knowledge of the matter.

The Roseland, New Jersey-based company, led by CEO Michael Intrator, is discussing a transaction that would allow existing shareholders such as employees to tender between $400 million and $500 million worth of their holdings, said the people, who asked not to be identified discussing confidential information. Terms haven’t been finalized and could still change, one of the people said.