Gerstner explains that ARR (annual recurring revenue) gets high multiples because it's predictable like cable subscriptions.
“ARR stands for annual recurring revenue. And recurring revenue, like a monopoly cable subscription, gets a really high multiple. That's why softwares have gotten high multiples. They're very predictable.”
Gerstner observes LLMs are being relegated to interpretation roles rather than core decision-making in AI projects.
“a lot of the incremental work that's being done on AI projects are stitching together external databases with the LLM and the LLM gets relegated to being an interpreter of the human or to being the interpreter of the data back to the human, but is not involved necessarily in the data store”
Gerstner is asked about Apple evaluating Perplexity and other LLM providers for potential partnerships.
“I haven't heard your thoughts on the revelation that people inside Apple were kicking the tires at Perplexity and some of the other LLM providers and AI companies.”