Patel left Substack initially after reaching a few million in revenue to avoid the 10% fee.
“And then I left when we hit a few million of revenue. More and more of the revenue was coming from not Substack. The reason was like, Hey, Substack takes 10%.”
Patel says inference providers sell public endpoints at flat or negative margins, compensating through private deployments.
“Most of the inference providers are selling at flat margins or even negative for their public endpoints. And they then make it up when people do private deployments.”
Patel describes public inference as a loss leader to generate private sovereign and enterprise engagements.
“And so I think that's what a lot of this is, is you end up with the public business as like a loss leader just to generate private engagements, whether it be sovereigns or enterprises.”
Patel questions whether neo clouds targeting developers on short-term rentals can achieve ROI.
“Those that are just targeting developers on short term rentals, they may not be able to get their ROI back.”
Patel argues neo clouds with long-term enterprise and hyperscaler deals will succeed over on-demand providers.
“And so those are probably less likely to be able to succeed versus those who are locking in these massive deals with or long term deals that may not be massive but with enterprises or with AI labs, or with the hyperscalers who have no capacity because the demand is just so incredible.”
Patel says his business model shifted so that 95% of revenue now comes from selling datasets.
“the business transformed into, you know, selling data, right, or build building datasets and selling them. Right? And when the business truly flipped to that, we're now 95% of the revenue is that data”