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This Week in Australian Startups - Issue #20, 12th May 2023
A leaked internal document from a Google researcher claims that Open Source AI will overtake Google and OpenAI. You can read the full document here, but some of the key arguments they make are;
Open source models are faster, more customisable, more private and more capable
Speed of iteration and stacking improvements are better with open source, and key to essential getting better models
Many “major open problems” considered by Google and OpenAI are already solved by the open source community
The CTO of Hugging Face shared the below graph a few weeks ago as well, demonstrating there will come a natural inflection point where open source models will overtake closed source models.
Whilst this may be true, we know all too well it’s not often the best product that wins. It’s the product that has the best real world value, benefit to users and GTM that wins more often than not.
Ben Thompson writes;
The biggest pushback I have to the memo, though, is that any determination of a moat is inextricably tied to the business model a particular bit of technology is attached to, which is to say that any sort of blanket statement misses important nuance. Take Google itself: the general way in which its search engine works is understood, but small distinctions in quality still matter; it also matters that Google is the default almost everywhere, that it gets much more user data, has such a huge advertising base, etc. It may be the case that in a few years we look at ChatGPT in a similar way: yes, its capabilities may be generally matched, but it has small differences that help, it has more user data, a larger and more diverse plugin ecosystem, etc.
There is a bigger push to Open Source happening, Meta open-sourced a multisensory AI model that combines six types of data. This is significant and a really interesting play by Meta which is contrary to that of the major cloud providers Azure, GCP and AWS.
Majority of AI products on the market today are simply interfaces to ChatGPT, and increasingly tech companies are looking at how they can leverage AI.
There’s a real trade-off for businesses to use models like GPT - they don't own the real IP or AI. When they build any products on these out of the box AI solutions they are effectively just building a nice UI on top of GPT. Every time OpenAI updates their model they may need to update their UI, and there’s no guarantee that OpenAI will be updating its model based on any businesses individual requirements.
This starts to pose a real potential risk. Not only is your “AI” product not really AI nor your product, but there’s a real vendor lock in risk and ultimately no differentiation in the market. Take Notion as an example using OpenAI's ChatGPT model - the only differentiation is that you use the tools within Notion and not OpenAI, and the specific context that provides.
As OpenAI continues to invest in ChatGPT, build it’s plug-in ecosystem why would I pay for NotionAI when someone will create a plugin for Notion into ChatGPT making it more useful as I’d likely be able to connect it to many other tools I am using and pay for AI subscription.
For companies really interested in actually building AI and not just reselling it, this is where adoption of open sourced models can start to look more interesting. Whilst they may not be as capable as Bard or ChatGPT from the start, you can have your own teams fine tune and iterate based on your own businesses requirements - and start to build real IP that will build a moat around your business and improve its valuation.
There’s going to value in both approaches as there is with most technology that powers the web today. Many businesses choose to pay for closed source proprietary software whilst others choose to use open source technologies.
The Sydney Startup Hub is hosting Australia's first 'foodpreneurs' festival (Startup Daily)
Everledger, the blockchain startup from Qld's former chief entrepreneur, in administration (SmartCompany)
Budget gives startups $392 million fund to commercialise ideas, plus $101m for quantum and AI (Startup Daily)
Online alcohol retailer BoozeBud calls in the administrators amid economic downturn (SmartCompany)
Curious Thing introduces Alex, ChatGPT-powered AI agent for FAQ handling that revolutionises inbound customer support (Curious Thing)
Fleet Space Technologies secures a $6.4M contract with Australia’s Defence Space Command agency (AFR)
Ten things startups need to know about the 2023 federal budget (SmartCompany)
Startups focusing on Indigenous health, sports protection wear for women win Amazon Australia innovation grants (SmartCompany)
Budget 2023: what you need to know and what it all means at a glance: major measures, cuts and spends (Startup Daily)
Atlassian’s quarterly revenue is up 24%, but last year’s profit has turned into a $240 million loss (Startup Daily)
Go1 snaps up speed reading app Blinkist to expand in enterprise learning (TechCrunch)
Around the World
The nine biggest announcements from Google I/O 2023 (The Verge)
Google "We Have No Moat, And Neither Does OpenAI" (SemiAnalysis)
New York Times to Get Around $100 Million From Google Over Three Years (WSJ)
IBM intros a slew of new AI services, including generative models (TechCrunch)
LinkedIn to cut 716 jobs and shut its China app amid 'challenging' economic climate (CNN)
OpenAI Is Losing a Flabbergasting Amount of Money on ChatGPT (Futurism)
Meta's ad business slapped with interim measures in France over suspected antitrust abuse (TechCrunch)
‘Break them open’ – new EU rules coming for Big Tech (The Next Web)
TikTok Tracked Users Who Watched Gay Content, Prompting Employee Complaints (WSJ)
Stack Overflow reduces it workforce by 10% (Stack Overflow)
OpenAI’s regulatory woes have barely started (The Verge)
Googlers angry about CEO’s $226M pay after cuts in perks and 12,000 layoffs (Ars Technica)
Shopify cutting 20 percent of workforce (The Hill)
How Shopify bungled its latest layoffs and made employees feel like NPCs (TechCrunch)
Amazon plans to rework Alexa in the age of ChatGPT (The Verge)
Hugging Face and ServiceNow release a free code-generating model (TechCrunch)
Microsoft's Bing AI with GPT-4 goes free with 9 new features (BGR)
Stripe, a longtime partner of Lyft, signs a big deal with Uber (TechCrunch)
UK's antitrust watchdog announces initial review of generative AI (TechCrunch)
Amazon Wants Customers To Change Shipping Habit and Will Pay Them To Do It (TheStreet)
Meta open-sources multisensory AI model that combines six types of data (The Verge)
Australian Funding Rounds
Workplace edtech unicorn Go1 raises new funds, with Insight Partners investing, to acquire German synopsis startup Blinkist (Startup Daily)
Airbnb management proptech MadeComfy beds down $10 million raise (Startup Daily)
Former ‘LinkedIn for blue collar workers’ startup Sample rebrands and pivots for new $2.4 million Seed raise (Startup Daily)
Digital estate planning platform Safewill lands $5.5 million in 2nd Series A two years on (Startup Daily)
International Funding Highlights
After bootstrapping for five years, Instruqt raises a €15M Series A from Blossom Capital (TechCrunch)
Amazon acquires AI firm Snackable to boost podcast features (New York Post)
AI platform to analyze creative advertising raises $5.1M from investors, including a16z (TechCrunch)
Databricks acquires Okera to boost its AI-driven data governance platform (VentureBeat)
Simpplr raises $70M for its AI-powered intranet platform (TechCrunch)
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