Today on Runtime: how CoreWeave is taking on Big Cloud, Satya Nadella is taking a hard look at Microsoft Research, and this week in enterprise moves.
Can't spell gumption without GPU
It's not every day that you come across a startup willing and able to challenge the Big Three cloud infrastructure providers, but as a new AI spring dawns, CoreWeave is taking a shot.
CoreWeave, which started out as a cryptocurrency mining operation, is focused on delivering the raw ingredients for the generative AI boom at extremely competitive prices. It caters to AI labs and startups that need Nvidia's GPUs to get their AI efforts off the ground.
- "When the Big Three are building a cloud region, they're building to serve the hundreds of thousands or millions of what I would call generic use cases for their user base, and in those regions they may only have a small portion of capacity peeled off for GPU compute," said Brian Venturo, chief technology officer at CoreWeave, in a recent interview.
- The company — straight out of the New Jersey suburbs — has raised $371 million since pivoting to cloud GPU computing, including a $221 million round last month.
- That round was backed with money from Nvidia, which has struggled to keep up with demand for its GPUs as the AI hype train of 2023 generates unprecedented demand for its chips.
- Two months ago, a company may not have existed, and now they may have $500 million of venture capital funding. And the most important thing for them to do is secure access to compute; they can't launch their product or launch their business until they have it," Venturo said.
Nvidia's GPUs have been the engine for the two biggest tech booms of the last decade: cryptocurrencies and AI.
- Way back in 2007, the chip company had the foresight to develop the CUDA programming model to make it easier to write software for its GPUs, which at the time were primarily used for gaming.
- However, it became clear over the next several years that GPUs were great tools for executing specific types of programs over and over again in parallel, compared to CPUs from Intel and AMD, which were designed to anticipate a wide variety of computing needs.
- "I'm very convinced that Nvidia's open ecosystem around CUDA and AI Enterprise is a huge moat for the Nvidia platform, just in that so much work has been done on it," Venturo said."
Now with more than 150 employees, CoreWeave is focused on building cloud infrastructure for startups and private AI labs, with three data centers in operation in New Jersey, Las Vegas, and Chicago.
- CoreWeave's main business consists of renting GPUs by the hour, including the newest Nvidia H100 GPUs (which can be hard to find) but also older versions that cost far less to run per hour.
- The company will build custom private infrastructure for larger customers, while others rent GPUs (and some traditional compute) on bare-metal servers managed entirely by CoreWeave.
- According to an analysis prepared by Andreessen Horowitz, CoreWeave's pricing is well below what customers can expect to pay for GPUs from AWS, Microsoft, Google, and even Oracle, which has been aggressively courting price-conscious AI customers.
After demand for generative AI technologies and research exploded in the early part of this year. that approach is paying off.
- The company currently has 1,300 customers, up from about 300 at the same time last year, Venturo said.
- "Now we're in a position (where) we're building for some of the largest AI labs on the planet at scale, and other cloud providers just can't do it as fast as we can," Venturo said. "It's been pretty wild."
Searching for answers
Microsoft has faced very little pushback from investors and the media for making the decision to abruptly reverse course on decades of internal AI research and investment to go all-in on OpenAI's technology last year. According to The Information, CEO Satya Nadella had a few questions about what happened.
“OpenAI built this with 250 people. Why do we have Microsoft Research at all?” Nadella asked Microsoft Research head Peter Lee last December in a heated meeting as Microsoft was gearing up to roll out its new OpenAI-centric strategy. The executives eventually smoothed over their differences, but it's a fair question: What exactly does Microsoft have to show from its years of investment in AI, in terms of major lines of business?
After all, OpenAI's work is largely based on research conducted at Google. And while OpenAI's breakthroughs over the last few years probably couldn't have come to fruition as quickly without Microsoft's billions and its Azure cloud division, the expertise required to build the infrastructure needed to support cutting-edge AI research is certainly not exclusive to Microsoft.
It is really, really hard for big tech companies to stay current, but Microsoft has managed to pull off that feat several times in its history. However, if it's true that OpenAI's fast-mover advantage has less staying power than a lot of people might think, at some point Microsoft will need to come up with its own plan to move forward.
Brian Moseley, Alex Schmelkin, and Jane Tran launched Sixfold, a new generative AI startup focused on the insurance industry.
Leigh Marie Braswell joined Kleiner Perkins to invest in AI startups after two years at Founders Fund.
The Runtime roundup
Nvidia's stock surged by 25% Thursday after it reported blockbuster earnings thanks to the AI boom, and it said there's no end to that boom in sight (which is what has been said about every boom that ever boomed, but…)
Nutanix also enjoyed a strong quarter, beating Wall Street expectations for revenue and profit while raising its outlook.
AWS appears to be off to a rocky start with its new generative AI tools, according to Bloomberg.
Stock market watchers think the rise in C3.ai's stock in 2023 is due to the fact that its ticker is "AI," as opposed to anything it has actually done this year.
Google Cloud fixed a gnarly bug in its CloudSQL database service that could have allowed attackers to gain control of a database and potentially other cloud services.
Thanks for reading — see you Saturday!