Ilya Sutskever's SSI Inc raises $1B

It's because is Ilya.

This deal was cooked way back, though, perhaps even before the coup.

Now, can they make a product that makes at least $1B + 1 dollar in revenue? Doubt it, I honestly don't see a market for "AI safety/security".

This feels like a situation with a sold out train to a popular destination, where people are already reselling their tickets for some crazy markup, and then suddenly railway decides to add one more train car and opens flash ticket sale. Investors feeling missing out on OpenAI and others are now hoping to catch this last train ticket to the AI.

It's 1999 all over again.

Welcome to capitalism. It’s all about your existing capital and connections. Capital attracts capital.

Totally blind on this, hoping for someone to shed some light: do these investors get some pitch, information or some roadmap of what company intends to create, how will it earn revenue, how will it spend money or how will it operate?

For these kinds of capital-intensive startups, though, that almost seems like a requirement, and I guess there are really 2 "types" of valuations.

In this case, everyone knows it takes hundreds of millions to train models. So I'm investors are essentially rolling the dice on an extremely well-regarded team. And if it takes about a billion just to get off the ground, the valuation would need to at least be in the couple billion range to make it worth it for employees to work there.

That feels very different than say selling a company where founders are cashing out. In that case, the business should expect to meaningful contribute to revenue, and quickly.

People are investing in Sutskever, not the company.

It's the brand name effect. Ilya's name will get in much more dollars. Hopefully something profitable comes out at the other end.

I'm neither a VC nor in the VC market, but I believe such valuation comes primarily from the name Ilya Sutskever. Having such a high-profile as the founder would give more credibility to the company, unlike what we witnessed in recent years where companies like Theranos et al. that were valued at tens of billions for no obvious reason. Despite having said the above, we might still agree that the AI hype is probably the second generation of the dot-com bubble.

Add another 500m to NVDA's quarterly profits?

How many niche verticals SaaSes that raised like $200 million only to go to zero? Even if this can't beat OpenAI models a commodity LLM which is about as good (and they have proven that they can build) is probably worth close to the investment

These are capital intensive businesses.

There's no liquidity until they are making money.

It means that AI startups are actually a really poor value proposition compared to traditional tech companies, because your multiplier is limited. First round $50M valuation leaves a lot more opportunity to get rich.

This kind of structure isn't as unusual for capital intensive businesses.

makes sense if you factor in the cost of renting GPUs to build generative AI models

But it's not a bubble right?

There is significant possibility that true AI (what Ilia calls superintelligence) is impossible to build using neural networks. So it is closer to some tokenbro project than to nuclear research.

Or he will simply shift goalposts, and call some LLM superintelligent.

Closest thing we have to a Manhattan Project in the modern era?

Minus the urgency, scientific process, well-defined goals, target dates, public ownership, accountability...

A non-cynical take is that Ilya wanted to do research without the pressure of having to release a marketable product and figuring out how to monetize their technology, which is why he left OpenAI.

A very cynical take is that this is an extreme version of 'we plan to spend all money on growth and figure out monetization later' model that many social media companies with a burn rate of billions of $$, but no business model, have used.

superintelligence is reached

i read the article but I am not sure how they know when this condition will be true.

Is this obvious to ppl reading this article? is it emperor has no clothes type situation ?

Both need a crap tonne of electricity.

OpenAI initially raised 50m in their institutional round.

1b was a non profit donation, so there wasn't an expectation of returns on that one.

Could be more comparable to Clubhouse, which VCs quickly piled $100m into[1a], and which Clubhouse notably turned into layoffs [1b]. In this case, the $1b in funding and high valuation might function predominantly as a deterrent to any flippers (in contrast, many Clubhouse investors got quick gains).

Moreover, the majority of the capital likely goes into GPU hardware and/or opex, which VCs have currently arbitraged themselves [3], so to some extent this is VCs literally paying themselves to pay off their own hardware bet.

While hints of the ambition of the Manhattan project might be there, the economics really are not.

[1a] https://www.getpin.xyz/post/clubhouse-lessons-for-investors [1b] https://www.theverge.com/2023/4/27/23701144/clubhouse-layoff... [3] https://observer.com/2024/07/andreessen-horowitz-stocking-ai...

To my ears, it's more like a ambitious pharma project.

There's plenty of players going for the same goal. R&D is wildly expensive. No guarantee they'll reach the goal, first or even at all.

Ilya went to university in israel and all founders are jewish. Many labs have offices outside of the US, like london, due to crazy immigration law in the us.

Because it's a startup hub, there is great engineering talent there, and the cost of living is lower than the US.

Israel has insane engineering and science talent.

Israel is the largest AI startup hub.

Why not? The Bay isn't the only place with talent. Many of the big tech powerhouse companies already have offices there. There's also many Israeli nationals working the US that may find moving back closer to family a massive advantage.

Ilya has discussed this question: https://www.youtube.com/watch?v=YEUclZdj_Sc

The argument about AGI from LLMs is not based on the current state of LLMs, but on the rate of progress over the last 5+ years or so. It wasn't very long ago that almost nobody outside of a few niche circles seriously thought LLMs could do what they do right now.

That said, my personal hypothesis is that AGI will emerge from video generation models rather than text generation models. A model that takes an arbitrary real-time video input feed and must predict the next, say, 60 seconds of video would have to have a deep understanding of the universe, humanity, language, culture, physics, humor, laughter, problem solving, etc. This pushes the fidelity of both input and output far beyond anything that can be expressed in text, but also creates extraordinarily high computational barriers.

the more that it becomes clear that LLMs really are just "fancy autocomplete", even if it's really really fancy autocomplete

I also don't really see AGI emerging from LLMs any time soon, but it could be argued that human intelligence is also just 'fancy autocomplete'.

I think the plan is to raise a lot of cash and then more and then maybe something comes up that brings us closer to AGI(i.e something better than LLM). The investors know that AGI is not really the goal but they can’t miss the next trillion dollar company.

On the other hand, I'm kind of baffled that we're still talking about "AGI" in the context of LLMs.

I'm not. Lots of people and companies have been sinking money into these ventures and they need to keep the hype alive by framing this as being some sort of race to AGI. I am aware that the older I get the more cynical I become, but I bucket all discussions about AGI (including the very popular 'open letters' about AI safety and Skynet) in the context of LLMs into the 'snake oil' bucket.

I have this rock here that might grant wishes. I will sell it to you for $10,000. Sure it might just be a rock, but if it grants wishes $10k is a very cheap price!

All I’m saying is you used the word “if” a lot there.

AGI assumes exponential, preferably infinite and continuous improvement, something unseen before in business or nature.

Neither siri nor Alexa were sold as AGI and neither alone come close to a $1B product. gpt and other LLMs has quickly become a commodity, with AI companies racing to the bottom for inference costs.

I don’t really see the plan, product wise.

Moreover you say: > Ilya proved himself as a leader, scientist, and engineer over the past decade with OpenAI for creating break-through after break-through that no one else had.

Which is absolutely true, but that doesn’t imply more breakthroughs are just around the corner, nor does the current technology suggest AGI is coming.

VCs are willing to take a $1B bet on exponential growth with a 500B upside.

Us regular folk see that and are dumbfounded because AI is obviously not going to improve exponentially forever (literally nothing in the observed universe does) and you can already see the logarithmic improvement curve. That’s where the dismissive attitude comes from.

I repeatedly keep seeing praise for Ilyas achievements as a scientist and engineer, but until ChatGPT OpenAI was in the shadow of DeepMind, and to my knowledge (I might be wrong) he has not been that much involved with ChatGPT?

the whole LLM race seems deaccelerate, and all the hard problems about LLMs seems not do have had that much progress the last couple of years (?)

In my naaive view I think a guy like David Silver the creator/co-lead of Alpha-Zero deserves more praise, atleast as a leader/scientist. He even have lectures about Deep RL after doing AlphaGo: https://www.davidsilver.uk/teaching/

He has no LinkedIn and came straight from the game-dev industry before learning about RL.

I would put my money on him.

If AGI works, in any capacity or at any level, it will have a lot of big customers.

This is wrong. The models may end up cheaply available or even free. The business cost will be in hosting and integration.

Even with Ilya demonstrating his capabilities in those areas you mentioned, it seems like investors are simply betting on his track record, hoping he’ll replicate the success of OpenAI. This doesn’t appear to be an investment in solving a specific problem with a clear product-market fit, which is why the reception feels dismissive.

I'm also confused by the negativity on here. Ilya had a direct role in creating the algorithms and systems that created modern LLMs. He pioneered the first deep learning computer vision models.

well since it's no longer ok to just suck up anyone's data and train your AI, it will be a new challenge for them to avoid that pitfall. I can imagine it will take some time...

They’d need a year or two just to rebuild a ChatGPT-level LLM, and they want to go way beyond that.

What do you expect? This seems like a hard problem to solve. Hard problems take time.

Just until the $50B series A

If you raise 1B in VC, it'd be shame to burn it all at once :D

There's no reason it's intelligence should care about your goals though. the worry is creating a sociopathic (or weirder/worse) intelligence. Morality isn't derivable from first principles, it's a consequence of values.

I don't see how this argument makes any sense. Imagine that you have a sentient super intelligent computer, but it's completely airgapped and cut off from the rest of the world. As long as it stays that way it's both safe and super intelligent, no?

That's controversial to say the least. Especially if there's something like reinforcement learning involved.

https://en.wikipedia.org/wiki/Existential_risk_from_artifici...

This might be the largest seed round in history (note that 1B is the cash raised, not the valuation). You think that's an indication of the hype dissipating?

A valuation at seed mentioned to possibly be in the region of $5bn means that these investors expect there's a reasonable chance that this company, which at this point will be one among many, might become one of the largest companies in the world as that's the kind of multiple they'd need given the risks of such an early stage bet.

That doesn't sound like the hype is dissipating to me.

Tell me you don't understand what those numbers mean without telling me you don't understand..

Can you explain your reasoning? To many these numbers seem to suggest the exact opposite.

lol wat

What numbers and what valuation at seed round would indicate to you that they did consider it world changing and disruptive?

$1B doesn't seem like "dissipating" to me ...

Lol good one.

Explain why you think $1B at $5B valuation isn't overvaluation? This strikes me as over-indexing on Ilya + teams ability to come up with something novel while trying to play catch-up.

If Ilya is sincere in his belief about safe superintelligence being within reach in a decade or so, and the investors sincerely believe this as well, then the business plan is presumably to deploy the superintelligence in every field imaginable. "SSI" in pharmaceuticals alone would be worth the investment. It could cure every disease humanity has ever known, which should give it at least a $2 trillion valuation. I'm not an economist, but since the valuation is $5bn, it stands to reason that evaluators believe there is at most a 1 in 400 chance of success?

My guess (not a VC) is they’ll sell ‘private’ models where safety is a priority: healthcare, government, finance, the EU…

For at least some of the investors, a successful exit doesn't require building a profitable business.

While I get the cynicism (and yes, there is certainly some dumb money involved), it’s important to remember that every tech company that’s delivered 1000X returns was also seen as ridiculously overhyped/overvalued in its early days. Every. Single. One. It’s the same story with Amazon, Apple, Google, Facebook/Meta, Microsoft, etc. etc.

That’s the point of venture capital; making extremely risky bets spread across a wide portfolio in the hopes of hitting the power law lottery with 1-3 winners.

Most funds will not beat the S&P 500, but again, that’s the point. Risk and reward are intrinsically linked.

In fact, due to the diversification effects of uncorrelated assets in a portfolio (see MPT), even if a fund only delivers 5% returns YoY after fees, that can be a great outcome for investors. A 5% return uncorrelated to bonds and public stocks is an extremely valuable financial product.

All money is green, regardless of level of sophistication. If you’re using investment firm pedigree as signal, gonna have a bad time. They’re all just throwin’ darts under the guise of skill (actor/observer|outcome bias; when you win, it is skill; when you lose, it was luck, broadly speaking).

Indeed, one should be sophisticated themselves when negotiating investment to not be unduly encumbered by the unsophisticated. But let us not get too far off topic and risk subthread detachment.

Edit: @jgalt212: Indeed, one should be sophisticated themselves when negotiating investment to not be unduly encumbered by shades of the unsophisticated or potentially folks not optimizing for aligned interests. But let us not get too far off topic and risk subthread detachment. Feel free to cut a new thread for further discussion on the subject.

Almost every recent AI startup with buzz has had a16z as its primary investor.

Why is that?

Why do you say that? I feel out of the loop

What’s wrong with their website? Seems fast and gives me the information I need.

What’s mildly annoying to me is their domain only returns an A record.

yes, it's countersignaling

'Proper' websites are marketing and signalling. If you're creating a company that doesn't intend to do either of those till it has a product, why bother with more?

If you're too stupid to notice then why did you notice?

(I think it's branding, yes. A kind of "we don't care about aesthetics, we care about superintelligence" message)

Website in question, for the curious: https://ssi.inc

On the contrary, I think it's a great website. They made it clear from the get go that they're not selling any products any time soon, why would they need a flashy website? They're looking for scientists, techies and the like, and the website reflects their target audience.

Probably will be an unpopular opinion here but I think declining performance is more likely related to unclear business models backed by immature technology driven by large hype trains they themselves created.

How have you measured "declining performance" in a matter of ~3 months and traced it back to a single person's departure?

100% OpenAi performance is decreasing. I basically use Claud sonnet exclusively and canceled my OpenAi subscription for personal use. my company still uses them because you cant currently fine-tune a Claud model, yet.

They're probably just scaling back resources to the existing models to focus on the next generation. I feel like I have seen OpenAI models lose capability over time and I bet it's a cost optimization on their part.

OpenAI's velocity seemed to tank after the Anthropic founders left.

"Safe" means "aligned with the people controlling it". A powerful superhuman AI that blindly obeys would be incredibly valuable to any wannabe authoritarian or despot.

Unsafe AI would cause human extinction which is bad for shareholders because shareholders are human persons and/or corporations beneficially owned by humans.

Related to this, DAO's (decentralized autonomous organizations which do not have human shareholders) are intrinsically dangerous, because they can benefit their fiduciary duty even if it involves causing all humans to die. E.g., if the machine faction in The Matrix were to exist within the framework of US laws, it would probably be a DAO.

Safe super-intelligence will likely be as safe as OpenAI is open.

We can’t build critical software without huge security holes and bugs (see crowdstrike) but we think we will be able to contain something smarter than us? It would only take one vulnerability.

I don't understand how "safe" AI can raise that much money.

enterprises, corps, banks, governments will want to buy "safe" AI, to push liability for mistakes on someone who proclaimed them "safe".

We don’t know the counter factual here… maybe if he called it “Unsafe Superintelligence Inc” they would have raised 5x! (though I have doubts about that)

I wonder if they can even effectively make use of the funds in a reasonable enough timeline.

I read that it cost Google ~$190 million to train Gemini, not even including staff salaries. So feels like a billion gives you about 3 "from scratch" comparable training runs.

Given the dire need of GPUs, I don't suspect they would have any trouble finding the good use of the funds

They’ve probably already ordered like $250mm of GPUs.

I'm drawing a blank on the paper and can't find it casually Googling, but there are fairly well understood mathematical models for how neurotransmitters cause neurons to fire or not fire. It is just probabilities when you zoom out enough. One paper modeled part of a rat brain, visual cortex I think, using this by basically coding up some simulated neurons and neurotransmitters, then turned it on. They were able to get the program and the live rat brain to display similar patterns when showing them various images.

I feel like this could be a path to GI without "truly" understanding the human brain: make a large enough simulation of the brain and turn it on. I actually do think we understand enough about the nuts and bolts of neuron interaction to achieve this. What we don't understand is where neurons firing turns into consciousness. It seems like it is probably just an emergent property of a complex enough neuron graph.

Until we have a complete understanding of how our own GI works down to the exact bio-mechanical level, we can't achieve AGI.

This doesn't make any sense.

Wait until you learn about Anesthesia!

Would be nice to be the sales rep assigned to that rando no name company ;)

I'm beginning to wonder if these investors are not just pumping AI because they are personally invested in Nvidia and this is a nice way to directly inject a couple of 100M into their cashflow.

indeed, more speculative monies chasing returns.

such a large round implies hardware for yet another foundational model. perhaps with better steering etc..

Along with Super in Superintelligence.

I keep wondering the same thing myself. I google it occasionally but never come up with anything.

The conventional teaching that I am aware of says that you can scale across three dimensions: data, compute, parameters. But Ilya's formulation suggests that there may be more dimensions along which scaling is possible.

to be honestly from the way "safe" and "alignment" is perceived on r/LocalLLaMA in two years its not going to be very appealing.

We'll be able to generate most of Chat GPT4o's capabilities locally on affordable hardware including "unsafe" and "unaligned" data as the noise-to-qubits is drastically reduced meaning smaller quantized models that can run on good enough hardware.

We'll see a huge reduction in price and inference times within two years and whatever SSI is trained on won't be economically viable to recoup that $1B investment guaranteed.

all depends on GPT-5's performance. Right now Sonnet 3.5 is the best but theres nothing really ground breaking. SSI's success will depend on how much uplift it can provide over GPT-5 which already isn't expected to be significant leap beyond GPT4

If we were sure we could build superhuman intelligence, the valuation would've been a lot higher!

FTX was incredibly profitable, and their main competitor Binance is today a money printing machine. FTX failed because of fraud and embezzlement, not because their core business was failing.

Sometimes data falls off of the back of a truck.