The enormous computing cost of training and running models has forced a new generation of AI companies to reorient their sales strategy, writes Yahoo Finance’s Hamza Shaban.
He reports:
If the defining adage of the social media era was that you are the product, what new economic metaphors will the AI transition inspire?
A key difference between the new crop of AI startups and the mobile-era cohort of software companies is how they view the work and value of acquiring new users.
User growth was the coin of the realm for the past several decades, as sharply portrayed in a definitive scene from “Silicon Valley.”
Why should app developers seek out revenue streams when they can simply run companies that are “pre-revenue?” After all, once you show revenue, investors will start judging your company’s financial performance. Better to chase the dream of a big payday in the future than worry about making modest money now.
The AI infrastructure investment train is running this playbook, in a way. Spending is the new growth. But something’s changed.
“AI-driven startups are building businesses that differ widely from the highly successful but now outdated ‘software as a service’ (SaaS) business model,” wrote DataTrek co-founder Nicholas Colas in a note to clients earlier this week.
In other words, this isn’t your grandfather’s SaaS.
Read more here in the takeaway from today’s Morning Brief.