Even OpenAI is tired of enterprise AI hype

Welcome to Runtime! Today: why OpenAI's COO doesn't think generative AI is an enterprise magic bullet, the Linux Foundation lays off staff, and the latest funding rounds in enterprise tech.

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Weights and measures

It's been a little over a year since OpenAI unleashed ChatGPT on a tech industry that was desperate for something new to believe in, having watched the metaverse and Web3 storylines flame out. As companies slashed enterprise tech spending in 2023, tech vendors latched on to the idea that generative AI could be the spark that would reignite spending growth.

But OpenAI COO Brad Lightcap recently told CNBC that generative AI buyers looking for a "silver bullet" fix to their business challenges are bound to be disappointed by what the technology can accomplish at this stage of its evolution. As Redpoint's Scott Raney warned last month, that spark will take some time to develop into a fire.

• "I think the overhyped aspect is that (AI), in one fell swoop, can deliver substantive business change," Lightcap said in the interview, conducted after OpenAI's Dev Day in early November.
• "We talk to a lot of companies that come in and they want to kind of hang on us the thing that they’ve wanted to do for a long time – 'We want to get revenue growth back to 15% year over year,' or 'We want to cut X million dollars of cost out of this cost line,'” he said. "And there’s almost never a silver bullet answer there – there’s never one thing you can do with AI that solves that problem in full."
• Lightcap thinks there are signs of progress when it comes to using generative AI technology to boost individual productivity, such as coding assistants like GitHub Copilot.
• However, "if you look at historical trends of past phase shifts in technology, there’s always this really important experimentation phase. It’s very hard to get the technology right from day zero," he said.

That could come as a disappointing surprise to businesses that, fueled by promises of an "iPhone moment" in enterprise tech, are investing heavily in generative AI strategies out of both hope and fear.

• Over half of companies recently surveyed by O'Reilly expect their adoption of generative AI to increase overall productivity, which could allow them to hold the line on costs, and 21% expect those investments to increase revenue.
• "We’ve never seen adoption proceed so quickly," wrote Mike Loukides of O'Reilly, which has seen a lot of emerging technologies over 40 years.
• But one key difference with generative AI compared has been the top-down nature of its adoption inside the enterprise, unlike cloud computing, which many CIOs woke up to discover they were using long after their developers launched their first virtual instance.
• "Boards are scared," said Nishita Henry, who manages Deloitte's relationship with AWS, in an interview last week at re:Invent 2023. "They were disrupted by cloud, because it did happen bottom-up and they didn't necessarily see the future of it."

Enterprise technology is often sold by convincing businesses that either The New Thing is the ultimate revenue growth hack, or that their competitors will eat them for lunch if they don't get on board; never mind whether The New Thing is fully baked.

• "My spicy take on this is I think the most important things that get built on top of this technology are actually things that haven’t been created yet," OpenAI's Lightcap told CNBC.
• One enormous difference between generative AI and failed promises like Web3 and the metaverse is that the business and technology cases for using the latter two disintegrated upon even the smallest amount of scrutiny.
• AI has gone through many hype cycles over the past decades, but there are real breakthroughs behind the generative AI boom and a clear roadmap toward improving the performance and potential of this technology.
• Still, one year into the generative AI boom, it seems clear that companies have more time to evaluate how these technologies best fit their business needs than they might have thought six months ago.

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Free as in unemployed

The Linux Foundation laid off several staffers last week across its sales and marketing organization, Runtime has learned. It's not clear how many people were affected as part of what sources described as a reorganization; as of 2020 the nonprofit employed more than 200 people.

The foundation and its spin-offs, such as the Cloud Native Computing Foundation, serve as a neutral home for open-source projects that are an important part of enterprise tech, from Linux itself to Kubernetes. The organization puts on several huge events each year to spread the gospel of enterprise open-source software; more than 9,000 people attended KubeCon North America 2023 in Chicago, although that was down significantly from the 12,000 people that attended the 2019 event in San Diego.

But the Linux Foundation has also drawn criticism for its spending on executive salaries compared to what their peers actually working on enterprise tech are making, which totaled over $9 million in its most recent financial report, as published by ProPublica (click on Schedule J). After receiving an inquiry on Monday, a representative for the Linux Foundation was unable to provide a statement about the layoffs by publish time.

Enterprise funding

Together.ai raised $102.5 million in Series A funding (!) to develop open-source AI tools that allow companies to train and deploy their own models.

AssemblyAI scored $50 million in Series C funding for its own work on making speech AI models easier to use.

Vast Data raised an undisclosed amount of funding that values the data-platform startup at over $9 billion, according to The Information.

Replicate raised $40 million in Series B funding to help customers run and fine-tune open-source AI models.

bitdrift landed $15 million in Series A funding to allow mobile developers to add observability tech into their applications.

The Runtime roundup

AWS employees have warned that Amazon Q — introduced as a preview last week at re:Invent — is prone to some really bad hallucinations and can leak training data, according to Platformer.

A coalition of tech companies led by IBM and Meta launched the AI Alliance, which "is focused on fostering an open community and enabling developers and researchers to accelerate responsible innovation in AI while ensuring scientific rigor, trust, safety, security, diversity and economic competitiveness."

Twilio laid off 5 percent of its employees after seeing slower-than-expected growth from its Segment acquisition, leading to pressure from activist investors.

MongoDB reported a 30% jump in revenue and raised its quarterly and full-year guidance, but the day traders weren't impressed and sent its stock down 4 percent in after-hours trading.

Thanks for reading — see you Thursday!