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Comment by mlguy123 | Hacker News Reader

throwaway since since i used to be affiliated with them.

HF did an amazing job in community building, transformers library and being the central store for all oss models. That said they are ages away from PMF and just have a bunch of different products non of them commercially successful (services, autotrain, quantization, HF hub for EE, inference end points etc). The majority of their revenue comes from partnerships with SageMaker/Azure where they pay them for sending users their way which wouldn't continue to grow.

While it's always a possibility for a FANG company to buy them IMO they are completely screwed. At a $4.5B valuation they will have to reach at minimum $250m in ARR to IPO and at the moment they're probably stuck at around $25m ARR.

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https://www.forbes.com/sites/alexkonrad/2023/07/13/ai-startu...

> Its revenue run rate has spiked this year and now sits at around $30 million to $50 million, three sources said — with one noting that it had more that tripled compared to the start of the year.

Throwaway for a similar reason.

I can't for the life of me understand the strategy that Clem and team have, other than raise as much money as possible just because they can. My experience with their sales teams was just absolutely awful, and it gave me no hope that they can grow ARR as soon as they need to. We practically begged them to sell us something, but it wasn't until we went elsewhere definitively that they seemed interested.

I wonder if they, intentionally or inadvertently, have optimized for investment scale at the expense of everything else? There is a market demand for "pure" AI startups that can take 9 figure investments. It's (comparatively) "easy" to optimize to be that company, but extremely hard to find a way to live up to the hype and provide a return in the investments, and this strategy often ruins the company.

They will be acquired. Either by Google or MS.

MS has already invested $10B in OpenAI, so they aren’t going to be a buyer.

Google has poured hundreds of million into Anthropic due to Eric Schmidt, so they aren’t going to be a buyer.

Meta?

Both Anthropic and OpenAI are not a replacement for huggingface. Which has complete monopoly on model hosting right now.

Monopoly is a stretch. Half of the models I try come direct from GitHub (and almost 100% of all model code comes from GH too).

Hosting binaries isn't really a stable business model.

But the weights are all on HF no?

No that's what I was getting at. For roughly half the models I come across, the weights are published on HF. For the other half, the weights are available via GitHub (either the releases section, or a link to something like Google Drive).

Why Google (who has their own AI stuff) or MS (who has a hand in OpenAI) and not, say, Samsung?

Branding and trust. ML folks love HF, and rightly so. They have great software libraries, host everyone's models, generally great UX all around. They do a great job of making it easy to do cutting edge stuff, while still making it possible to do bleeding edge stuff. They appeal to basically all ML folks in a way few other companies do.

Google could grow GCP by more deeply integrating HF into GCP, I think, while retaining as much of the HF brand and interface as possible.

Big friction point might be ethics, since HF is still seen as the "good guys" and where some folks who left Google over ethical concerns landed.

MS makes sense since they could integrate it with github and azure into an ML platform that they could sell to their enterprise consumer base. It would also be a great addition to teams, bing and word suite.

Yeah that was my concern as well. I used to work for an AI company that ended up in the same predicament, they raised way too much money at a high valuation and in the process cut down the potential acquirer pool to 3-4 companies. They are now a zombie with worthless common shares, no shot at an acquisition and nowhere near enough revenue to go public.

“I didn’t realize you could raise less money.”

I wouldn't be surprised if they would eventually get acquihired by nVidia. Simply providing all that code and infrastructure to the community is a big boon to raise the value and sales of nVidia hardware; the classic strategy principle - commoditize your complements.

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