Powerful Foundational AI Models are Quickly Moving from Lab to the Real World

The Economist | Dec 6, 2022

AI percentage of VC deals - Powerful Foundational AI Models are Quickly Moving from Lab to the Real World

Image: The Economist and PitchBook

A survey by McKinsey, a consultancy, found that this year 50% of firms across the world had tried to use AI in some way, up from 20% in 2017

  • Chatgpt, a new ai tool that has recently been released for public testing.  Excitement is also palpable among corporate users of AI, its developers and those developers’ venture-capital backers.
    • Microsoft is said to be in talks to increase its stake in OpenAI, a builder of foundation models and Chatgpt’s provider.
    • Alphabet, Google’s parent company, is reportedly planning to invest $200m in Cohere, a rival to OpenAI.
    • In the past 12 months large American firms in the S&P 500 index have acquired 52 AI startups, compared with 24 purchases in 2017, according to PitchBook
  • In 2022 venture capitalists have ploughed $67bn into firms that claim to specialise in AI, according to PitchBook.  The share of VC deals globally involving such startups has ticked up since mid-2021, to 15% so far this quarter
    • The buzzing AI scene is an exception to the downbeat mood across techdom, which is in the midst of a deep slump.
    • Between January and October, 28 new AI unicorns (private startups valued at $1bn or more) have been minted.

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  • These algorithms hold two big promises for business:
    • The first is that foundation models are capable of generating new content.  Other startups build applications on top of other companies’ foundation models. Jasper and Copy.AI both pay OpenAI for access to GPT3, which enables their applications to convert simple prompts into marketing copy.
    • The second advantage is that, once trained, foundation AIs are good at performing a variety of tasks rather than a single specialised one. Take GPT3, a natural-language model developed by Openai, which forms the basis for Chatgpt. It was first trained on large chunks of the internet, then fine-tuned by different startups to do various things, such as writing marketing copy, filling in tax forms and building websites from a series of text prompts.

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  • Users of foundation models can also tap an emerging industry of professional prompters, who craft directions so as to optimise the models’ output. PromptBase is a marketplace where users can buy and sell prompts that produce particularly spiffy results.  Lets you hire expert “prompt engineers”, some of whom charge a $50-200 per prompt.

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