Business models for Gen AI

You’ll get the semicolon joke only if you’ve coded in Java or the C family.

Here’s the part that’s not a joke:

Venture capital firm Sequoia estimates that in 2023, the AI industry spent $50 billion on the Nvidia chips used to train the generative AI models, but generated only $3 billion in revenue. My understanding is that the spending figure doesn’t even include the rest of the costs, just the chips.

It will take a serious creative leap to find a business model and close the gap between cost and value. Until business use cases move beyond better search and answer generation, the gap will continue to widen as the willingness to pay for existing services does not appear to be anywhere near the cost of development (user base growth for LLMs has already stalled).

Credit for the Venn goes to Forrest Brazeal.