Palihapitiya predicts enterprises will face a critical decision between cloud convenience and on-prem data security due to AI.
“When they realize that that is a problem, the enterprise will have to decide, do I just give up and keep running all of this stuff in the cloud in a shared experience, or do I bear the incremental cost of running this stuff in a more coordinated manner that I control on prem?”
Palihapitiya uses GEICO actuaries as an example of why companies cannot use open LLM instances with proprietary data.
“Do I, if I'm GEICO, want to have all of my actuaries using all of our proprietary private and confidential data on risk pricing in an open instance of an LLM?”
Palihapitiya says his company now sets token budgets for developers due to AI costs escalating rapidly.
“We're getting to a place where we have to basically now say, what is the token budget that we're willing to give our best devs?”
Palihapitiya says a $100 billion revenue customer brings retirees out of retirement to explain COBOL code.
“They have to go and get retirees to I swear to God, dude, this is a $100,000,000,000 a year company out of retirement to come into the office to explain what this COBOL code does.”
Palihapitiya asserts AI has not delivered measurable productivity gains yet despite token consumption in enterprises.
“But underneath that is not AI because we know this. It hasn't done anything measurable yet at the end consumption of these tokens.”
Palihapitiya reports Fortune 20 company spent $200M on AI tokens seeking $1B savings but got minimal results.
“CEO asked for a billion in AI generated OpEx savings at the beginning of the year. So we're six months in. The team has spent $200,000,000 on tokens and with minimal results.”
Palihapitiya concludes actual AI ROI from publicly available data is between zero and two percent of EPS growth.
“And so the answer, far as all publicly available data, was that the actual ROI was somewhere between zero and two percent.”
Palihapitiya predicts CEOs will discover unexpected OpEx misses from runaway AI token spending they don't know about.
“for us. The CEOs and the CFOs, in my opinion, probably have no idea how much token maxing is going on inside of their organizations.”
Palihapitiya promotes 8090 Software Factory Q&A session for enterprise leaders
“If you are an enterprise product or engineering leader evaluating Software Factory, come join our Q&A on Aug 12. https://t.co/clK67EWCJz”
Palihapitiya reports Gartner estimates one-fifth of enterprise SaaS spend now at risk from build option
“The Build vs Buy Math Just Flipped For thirty years a software renewal was a simple question of renew or shop for a cheaper seat, because building the thing yourself was never realistic. That has changed. Gartner now puts roughly a fifth of enterprise SaaS spend, around”
Palihapitiya reports Gartner estimates one-fifth of enterprise SaaS spend now at risk from build option
“The Build vs Buy Math Just Flipped For thirty years a software renewal was a simple question of renew or shop for a cheaper seat, because building the thing yourself was never realistic. That has changed. Gartner now puts roughly a fifth of enterprise SaaS spend, around”
Palihapitiya corrects commenter mixing equity value with enterprise value on Airtable sale
“@deedydas You’re mixing up equity value with enterprise value.”
Palihapitiya says third-party harness plus model interchangeability changes enterprise risk profile
“This is a really good development. As model costs converge, the next likely step will be the use of independent 3rd party harnesses/control planes (8090 Software Factory, Palantir, Nous’ Hermes etc). A 3rd party harness + the ability to use any model quasi-interchangeably is https://t.co/GtB9aXKN3d”
Palihapitiya says major lab zero data retention insufficient for large enterprises
“@draecomino It doesn’t work in all cases as has been shown. It’s “reasonable best efforts” at best. For big companies this will be a non starter as they learn more.”
As the cost gap between open AI models narrows, businesses will shift toward third-party control systems, benefiting companies like Palantir.
“ or control planes that can work with multiple AI models. According to him, companies like Palantir could benefit from growing enterprise demand for AI control, data security and protection of proprietary information. Venture capitalist and All-In podcast co-host Chamath Palihapitiya said Friday that as the cost gap between open models narrows, businesses will pivot towards '3rd-party harnesses,' which could be good news for companies like Palantir (PLTR). ”
Palihapitiya says third-party harness plus model interchangeability changes enterprise risk profile
“This is a really good development. As model costs converge, the next likely step will be the use of independent 3rd party harnesses/control planes (8090 Software Factory, Palantir, Nous’ Hermes etc). A 3rd party harness + the ability to use any model quasi-interchangeably is https://t.co/GtB9aXKN3d”
Palihapitiya says major lab zero data retention insufficient for large enterprises
“@draecomino It doesn’t work in all cases as has been shown. It’s “reasonable best efforts” at best. For big companies this will be a non starter as they learn more.”
Palihapitiya notes Gartner says enterprise software buying group now 11-15 people, build-vs-buy math flipped
“Build-vs-Buy Math is Now Squarely in Build For the entirety of the SaaS wave, it was always cheaper and faster to buy software vs build what you needed. But the buying cycle continues to get more complicated. Gartner says the buying group for a complex enterprise software”
Palihapitiya notes Gartner says enterprise software buying group now 11-15 people, build-vs-buy math flipped
“Build-vs-Buy Math is Now Squarely in Build For the entirety of the SaaS wave, it was always cheaper and faster to buy software vs build what you needed. But the buying cycle continues to get more complicated. Gartner says the buying group for a complex enterprise software”
Palihapitiya argues four recent control planes govern model selection and cost but miss original intent
“On Control Planes… Four companies shipped an enterprise AI control plane in the last two weeks. They all do one thing well which is govern which model answers a request and what it costs. That’s a real problem and I’m glad it’s getting solved. But what none of them capture is”
Palihapitiya says Global 2000 earnings growth has zero to do with AI despite token consumption
“@JTLonsdale Not saying there aren’t exceptions but I’m talking about the existing, largest companies. Those that comprise the Global 2000. They are the source of most of these tokens and revenues to the labs. Their earnings growth has literally zero to do with AI or anything remotely close…”
Palihapitiya says Global 2000 earnings growth has zero to do with AI despite token consumption
“@JTLonsdale Not saying there aren’t exceptions but I’m talking about the existing, largest companies. Those that comprise the Global 2000. They are the source of most of these tokens and revenues to the labs. Their earnings growth has literally zero to do with AI or anything remotely close…”
Palihapitiya suggests AI changes IT transformation program vendor selection calculus
“Every large IT transformation program starts with a seemingly defensible choice. You pick a firm nobody can criticize you for picking, to help you transform. That made sense when the key question was whether anyone could build the thing at all. But AI changes this. The”