[HN Gopher] Mistral AI raises $640M at $6B valuation
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Mistral AI raises $640M at $6B valuation
Author : trybackprop
Score : 96 points
Date : 2024-06-11 20:48 UTC (2 hours ago)
(HTM) web link (www.generalcatalyst.com)
(TXT) w3m dump (www.generalcatalyst.com)
| underyx wrote:
| Any source for the valuation number? Article does not mention.
| wdh505 wrote:
| Usually it is a proportion. 100k for 10% of the company is a 1M
| valuation
| lionkor wrote:
| Yes but that does not explain why better text prediction is
| worth $6B to these people
| JumpCrisscross wrote:
| > _that does not explain why better text prediction is
| worth $6B to these people_
|
| Same reason Cohere has a weirdly-high valuation relative to
| revenue: it's a national champion.
| underyx wrote:
| Any source for the 10% number?
| sodality2 wrote:
| That sounds like an example to demonstrate the concept
| zandroid wrote:
| Any source for that is an example?
| sodality2 wrote:
| If someone pays 100k for 10%, the valuation is 100k * 10
| = 1M. There's not really a source for that, that's just
| how market valuations work
| underyx wrote:
| Oh, well that didn't answer my original question at all
| then.
| esafak wrote:
| https://www.saas-capital.com/blog-posts/private-saas-
| company...
| underyx wrote:
| This does not mention Mistral at all. Are all replies to
| me in this thread from LLM agents?
| swyx wrote:
| https://www.ft.com/content/7a70a8a6-4a2a-47c5-8483-d0b829f3
| 2...
| trybackprop wrote:
| Here are three sources:
|
| Mistral AI employee:
| https://x.com/dchaplot/status/1800601722722935153
|
| TechCrunch: https://techcrunch.com/2024/06/11/paris-based-ai-
| startup-mis...
|
| Wall Street Journal: https://www.wsj.com/tech/ai/french-
| startup-mistral-ai-raises...
| t-writescode wrote:
| All this external money raising when it comes to AI scares me.
|
| For companies that are built off these AI services, there's a
| very real fear that the prices we're getting on API calls aren't
| covering the costs of the requests themselves under some
| assumption that costs will magically go down, or we'll get locked
| in.
|
| I hope the companies like Mistral and OpenAI know that if they're
| selling API access below cost they could be the origin of a
| __lot__ of companies closing and choose to make sure their
| operating costs are sustainable. (I understand creating new
| features and new models taxes additional capitol and that's a
| perfectly fine use of VC money. But selling a $1.00 for $0.90 is
| dangerous and bad.)
| ToucanLoucan wrote:
| Fear? That's been a fact as far as I've been aware since the
| big blowup back in mid '23. It got _better, ish,_ with some of
| the updates they 've dropped but it's still catastrophically
| losing money on every call.
|
| I'm guessing that's going to be the needle that finally pops
| this bubble, because as neat as a lot of shit going on with
| various models is, nobody is going to pay _what it actually
| costs_ to run the things in order to have that neatness.
| t-writescode wrote:
| Citation? Because I haven't been able to find any such thing
| in my research.
| ToucanLoucan wrote:
| Some quick googling says OpenAI is losing $700,000 per day
| operating it's models, which some other quick googling say
| are processing roughly 10 million queries per day, which if
| we do quick back-of-napkin math is about 7 cents per query.
|
| Currently their lowest-tier price is $20/month, and limits
| users to 80 queries per hour. If we assume that 7 cents
| number and our hypothetical user actually uses those 80
| queries for whatever odd reason, that's $5.60 it costs
| OpenAI, which if that user used them for say, 8 hours (the
| typical work day), that's $44.80 for OpenAI on a user who's
| only paid $20. And that's one day, that $20 currently gets
| them a month of access to that 80 queries per hour. I
| _hope_ for the dream of profitability that they would get
| throttled at some point. So the user could, in theory,
| already render their subscription a net loss for OpenAI
| with 4 workdays of steady usage.
|
| And yes this is strictly back-of-napkin math here but it
| would explain why "OpenAI" and "bankrupt" keep appearing in
| the tech press over and over.
| tbruckner wrote:
| > catastrophically losing money on every call
|
| You're going to have to bring some actual numbers on that
| speculation.
| nickpsecurity wrote:
| It's a classic problem. The trick is to make sure you're not
| competing on cost alone. Small to midsized companies are better
| off focusing on other differentiators. The extra money those
| differentiators brings makes their business more sustainable,
| too.
|
| You can actually see it in paid, web stacks. There's free ones,
| esp FOSS, that are really good. So, the paid contenders try to
| be better at other things. There's many of them in the market,
| too, despite over a decade of free alternatives.
| ptero wrote:
| Mistral's open models are not large. If Mistral were to shut
| down users could easily find another provider to run inference
| or bring it in house. I think even their commercial models are
| relatively cheap to run (at least compared to flagships from
| the big houses), so even if Mistral were to increase the usage
| prices to reflect true costs it is unlikely to bankrupt most
| users. My 2c.
| crazygringo wrote:
| Why does it scare you? Why do you think it's dangerous and bad?
|
| It's a well-established, economically rational business model
| to subsidize prices in order to gain market share.
|
| Uber has been very successful at it. Amazon has had great
| success. It's standard.
|
| Investors know what they're doing and know that some companies
| won't be able to sustain it and will go out of business. It's a
| calculated, known risk.
|
| And users don't really need to be concerned. Just enjoy the low
| prices while they last. If the service you use goes out of
| business, it's pretty easy to switch to another.
| yjftsjthsd-h wrote:
| > Why does it scare you? Why do you think it's dangerous and
| bad?
|
| > It's a well-established, economically rational business
| model to subsidize prices in order to gain market share.
|
| Because once they have the market share, they raise prices
| and/or make the product worse in order to get their money
| back.
|
| > And users don't really need to be concerned. Just enjoy the
| low prices. If the service you use goes out of business, it's
| pretty easy to switch to another.
|
| Well that's the question, isn't it? _If_ the market stays
| healthy and they don 't take the oxygen out of the room and
| kill the competition and switching costs stay low, _then_ yes
| by all means enjoy the free ride but plan for its end. But...
| do plan for it.
| worldsayshi wrote:
| >they raise prices and/or make the product worse in order
| to get their money back
|
| They should only be able to do that if they have a
| considerable moat though?
| eitally wrote:
| I think the bigger risk is that they _don 't_ get the
| market share and then they're tempted to make unethical
| decisions to keep afloat as their unbalanced inputs &
| outputs start to drive increasing pressure from their
| investors.
| IanCal wrote:
| > It's a well-established, economically rational business
| model to subsidize prices in order to gain market share.
|
| Right but it means you can't depend on that price remaining
| low. If it's below cost, the price _must_ rise. That may be
| important for anyone building businesses on top.
|
| > it's pretty easy to switch to another.
|
| Well that assumes the others have true lower prices.
| crazygringo wrote:
| > _the price must rise. That may be important for anyone
| building businesses on top._
|
| Well yes but every business owner knows that, or should
| know that. That's a known business risk. We're all adults
| here.
|
| If your business fails because you naively assumed that
| prices you rely on will never go up, then that's on you.
| Eisenstein wrote:
| Every business owner does not know what prices for other
| companies actually are -- they assume that they are being
| charged a price which has been determined by the market
| and is worthwhile to the seller to cover costs and
| profit.
|
| By taking outside money and subsidizing certain market
| players so that they can sell their goods at below market
| value (because that is what is happening) you are
| undermining the market and punishing players who are
| acting rationally.
|
| This would be absolutely no different than taking tax
| money and subsidizing certain companies over others to
| destroy competition and then claiming that it was a
| market decision.
|
| 'We are all adults here' is not a magical phrase that
| makes cheating OK.
| IanCal wrote:
| > Well yes but every business owner knows that, or should
| know that.
|
| Know that they are buying services below cost? I don't
| think so.
|
| It's a reasonable bet that compute costs generally trend
| downwards, and in a competitive market where the key
| thing you're paying for is compute that should also trend
| downwards.
|
| That's different to finding out that everyone's been
| selling things way under the true cost.
| crazygringo wrote:
| > _Know that they are buying services below cost? I don
| 't think so._
|
| To the contrary, _of course_ you should know.
|
| If you know anything about tech businesses, you know that
| startups being funded by massive amounts of VC keep
| prices artificially low initially, and that they then
| rise.
|
| This is tech startup 101 stuff.
|
| It's fine if you're not aware of this as an engineer. But
| if you're building a business and therefore have a
| business model where you've identified known risks,
| there's no excuse for you not to be aware of it.
| observationist wrote:
| Investors don't know what they're doing. This is laughably
| apparent. They're monkeys throwing bananas at dart boards.
| There's that whole negative externality thing. There aren't
| alternatives to FAANG because they've viciously used their VC
| money to drive out competition, used their lawyers to
| litigate competition into extinction, and every other tool at
| their disposal to press an advantage in consumer exposure.
| This isn't a fair market where the best product wins; it's a
| game of "who's got the most money."
|
| https://en.wikipedia.org/wiki/Enshittification
|
| This is how the world gets shittier. It's a whole thing. It's
| a large part of why things are as bad as they are.
|
| But hey, yeah, don't worry about it, they _obviously_ know
| what they 're doing.
| simonw wrote:
| Because they are platform companies.
|
| If I launch a business that makes sense given the current
| pricing of LLMs, and the price then goes up by a factor of
| ten, my own unit economics may not make sense any more.
|
| There's an Uber comparison here: back when Uber was cheap,
| some people made life decisions about where they lived and
| worked that were predicated on being able to afford a commute
| in an Uber (since public transport doesn't serve a lot of
| places, at least in the US).
|
| This hurt a lot when the prices went up a few years later!
| __loam wrote:
| Using capital to subsidize costs and sell your product for
| less than it's worth actually seems like a huge market
| failure to me, and is the consequence of huge concentrations
| of capital in the hands of a small and shrinking group of
| people. The only people who can afford to compete are the
| already wealthy. It stifles competition.
|
| As a consumer it should definitely concern you if you're
| using poorly financed or unsustainable products. Maybe it's
| great now but I would rather have a slightly more expensive
| product that is more stable than one that suddenly had to
| make the experience a lot worse because they burned a lot of
| cash and had a down round.
| LordDragonfang wrote:
| >It's a well-established, economically rational business
| model to subsidize prices in order to gain market share.
|
| Economically rational for the business owner, maybe, but it
| inevitably results in eventual enshittification for the
| consumer. (And Uber isn't a great example of this; its share
| price has only recently surpassed what it was at IPO 4 years
| ago, and many companies don't even do _that_ well)
| 0xcde4c3db wrote:
| > If the service you use goes out of business, it's pretty
| easy to switch to another.
|
| I'm not sure how well that works if vendors differentiate
| themselves through proprietary models and backend
| integrations. As far as I know, Mistral only releases weights
| for some of its models, with others being proprietary.
| d_watt wrote:
| It's due diligence to understand your cost of goods sold using
| open source models where possible.
|
| Don't actually spend the business effort to use them if it's
| not worth it, but have a business continuity plan to be able to
| switch over, especially if a "single source provider" going out
| of business or changing it's pricing could represent a
| existential thread to your business.
|
| It's the same as any other tech vendor.
| nwiswell wrote:
| > selling a $1.00 for $0.90 is dangerous and bad.
|
| If you're this price sensitive to compute your business was
| never long-term viable. Underlying costs change by this much in
| a year anyway.
| blackeyeblitzar wrote:
| One thing to consider is that they are EU-based. That means
| they will meet the EU's regulatory demands (safety, censorship,
| whatever). They will have a unique place in serving EU
| customers and look like a safe bet for companies headquartered
| there. They may also be the default choice for governments in
| the EU.
| braza wrote:
| Of course, the EU has a large user base and economically
| strong demographics. Still, even knowing mistral excellence
| it's hard to conceive that they will serve 27+ countries with
| different languages, demographics, and cultures.
| moomoo11 wrote:
| Why's that bad? If companies were building something that can
| be trivialized so easily that's on them.
|
| Imo. A company can use whatever wrapper services but the
| business they serve should be smarter.
| lumost wrote:
| There is an interesting dynamic right now. NVidia is selling
| cards at somewhere around 98% margin, they are then investing
| money into these startups - who will then spend some fraction
| back on NVidia hardware. It's a smart strategy by NVidia, as
| they can effectively leverage past revenue to create future
| revenue - but it's unclear what business models will be
| sustainable coming out of this investment.
| churchill wrote:
| You can only keep an Ouroboros loop going for only so long.
| At some point, you'll need to inject fresh, demand-driven,
| customer revenue into the machine.
| elorant wrote:
| Nvidia's strategy is to build a cloud service to avoid being
| locked out once all the other major players develop their own
| chips. So by owning an LLM they could provide their own
| service with their own hardware.
| yumraj wrote:
| TBH, what should scare you is that most of the AI startups are
| building on top of someone's APIs.
|
| So, in most cases they have no moat. They are going to close,
| and while some will close due to operational cost issues as you
| identified, a lot more will close since they have no defensible
| business/revenue model.
| llamaimperative wrote:
| Right, but one group closes by definitionally not doing
| anything value added. The other group closes by building
| something value added within a heavily distorted economic
| environment.
| yumraj wrote:
| Agree. But, if the source API pricing is increased,
| theoretically any startup that has actually created
| something of value and stickiness should be able to adapt.
|
| Or, even better if they can price future API price
| increases in their own pricing, today.
| popalchemist wrote:
| API prices of the private AI platforms are more or less
| comparable to self-hosted OSS solutions like Meta's LLAMA 3.
|
| So at least for current gen, you're ok.
| DevX101 wrote:
| I'd be interested to know the real cost. Are they selling $1.00
| for $0.90 or are they selling $1.00 for $.10?
|
| If it's the latter, way more startups on SOTA models will
| become unviable once the investor subsidies dry up.
| dvt wrote:
| Mistral is one of the few AI companies I am extremely excited to
| see get better funded.
|
| I'm working on a local product (coming soon(tm)) that uses
| Mistral-7B-Instruct-v0.2 under the hood. Parsing screen reader
| text (and taking actions, etc.) via local LLMs is, in my humble
| opinion, the future of computing. Even though getting it right is
| hard, and there's lots of edge cases, it's pretty awesome when it
| works. Mistral has been (by far) the most reliable model to date.
| I'm likely going to be fine tuning it over the next few months,
| but here it is working on Windows and MacOS in both web
| browser[1] and file manager[2] contexts.
|
| [1] https://vimeo.com/931907811
|
| [2] https://dvt.name/wp-content/uploads/2024/04/image-11.png
| candiddevmike wrote:
| Do you currently or plan to pay Mistral for any of this? Trying
| to understand how they would make you a customer in the future.
| eitally wrote:
| The use case you described is essentially the future of all the
| RPA vendors, too. BluePrism, UIPath, Pega, Automation Anywhere,
| etc. They all started as screen scrapers & BPML parsers to
| "automate" processes. With the power of LLMs they become
| powerful enough to actually automate things (and also put
| hundreds of thousands of offshore manual tech laborers out of
| work). BPM automation supercharged by LLMs is systems
| integrators' nightmare.
| champagnepapi wrote:
| Looks like Mistral AI just caught a $640 million mistral!
| pier25 wrote:
| lol
|
| For reference: https://en.wikipedia.org/wiki/Mistral_(wind)
| popol12 wrote:
| Still not getting the joke
| JimRyan wrote:
| a windfall
| fragmede wrote:
| windfall ai just got a windfall
|
| (this kills the joke)
| dash2 wrote:
| That seems weirdly low given AI hype. Why is OpenAI worth more
| than ten times more?
| moffkalast wrote:
| Why not? OAI is still a year ahead of everyone else in R&D
| while Mistral doesn't currently offer any SOTA models.
| CesareBorgia wrote:
| _With La Plateforme and Le Chat -- whose names exude the elegance
| emblematic of the company's French roots_
|
| Bizzare
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