Mistral AI raises $640M at $6B valuation

[t-writescode]

All this external money raising when it comes to AI scares me.

For companies that are built off these AI services, there's a very real fear that the prices we're getting on API calls aren't covering the costs of the requests themselves under some assumption that costs will magically go down, or we'll get locked in.

I hope the companies like Mistral and OpenAI know that if they're selling API access below cost they could be the origin of a __lot__ of companies closing and choose to make sure their operating costs are sustainable. (I understand creating new features and new models taxes additional capitol and that's a perfectly fine use of VC money. But selling a $1.00 for $0.90 is dangerous and bad.)

[d_watt]

It's due diligence to understand your cost of goods sold using open source models where possible.

Don't actually spend the business effort to use them if it's not worth it, but have a business continuity plan to be able to switch over, especially if a "single source provider" going out of business or changing it's pricing could represent a existential thread to your business.

It's the same as any other tech vendor.

[popalchemist]

API prices of the private AI platforms are more or less comparable to self-hosted OSS solutions like Meta's LLAMA 3.

So at least for current gen, you're ok.

[yumraj]

TBH, what should scare you is that most of the AI startups are building on top of someone’s APIs.

So, in most cases they have no moat. They are going to close, and while some will close due to operational cost issues as you identified, a lot more will close since they have no defensible business/revenue model.

[lumost]

There is an interesting dynamic right now. NVidia is selling cards at somewhere around 98% margin, they are then investing money into these startups - who will then spend some fraction back on NVidia hardware. It's a smart strategy by NVidia, as they can effectively leverage past revenue to create future revenue - but it's unclear what business models will be sustainable coming out of this investment.

[nickpsecurity]

It’s a classic problem. The trick is to make sure you’re not competing on cost alone. Small to midsized companies are better off focusing on other differentiators. The extra money those differentiators brings makes their business more sustainable, too.

You can actually see it in paid, web stacks. There’s free ones, esp FOSS, that are really good. So, the paid contenders try to be better at other things. There’s many of them in the market, too, despite over a decade of free alternatives.

[blackeyeblitzar]

One thing to consider is that they are EU-based. That means they will meet the EU's regulatory demands (safety, censorship, whatever). They will have a unique place in serving EU customers and look like a safe bet for companies headquartered there. They may also be the default choice for governments in the EU.

[DevX101]

I'd be interested to know the real cost. Are they selling $1.00 for $0.90 or are they selling $1.00 for $.10?

If it's the latter, way more startups on SOTA models will become unviable once the investor subsidies dry up.

[ToucanLoucan]

Fear? That's been a fact as far as I've been aware since the big blowup back in mid '23. It got better, ish, with some of the updates they've dropped but it's still catastrophically losing money on every call.

I'm guessing that's going to be the needle that finally pops this bubble, because as neat as a lot of shit going on with various models is, nobody is going to pay what it actually costs to run the things in order to have that neatness.

[6bb32646d83d]

GPU companies providing inference on open source models (like deepinfra or togetherAI) are doing so at an extremely competitive cost, making me think that the API pricing of the big players right now is profitable.

(for example, deepinfra has wizardLM-2-8x22B at $0.65/1M output tokens, compared to $6/1M output tokens for 8x22B by Mistral - and of course Mistral has some more expensive, closed source models that perform better)

[ptero]

Mistral's open models are not large. If Mistral were to shut down users could easily find another provider to run inference or bring it in house. I think even their commercial models are relatively cheap to run (at least compared to flagships from the big houses), so even if Mistral were to increase the usage prices to reflect true costs it is unlikely to bankrupt most users. My 2c.

[moomoo11]

Why’s that bad? If companies were building something that can be trivialized so easily that’s on them.

Imo. A company can use whatever wrapper services but the business they serve should be smarter.

[crazygringo]

Why does it scare you? Why do you think it's dangerous and bad?

It's a well-established, economically rational business model to subsidize prices in order to gain market share.

Uber has been very successful at it. Amazon has had great success. It's standard.

Investors know what they're doing and know that some companies won't be able to sustain it and will go out of business. It's a calculated, known risk.

And users don't really need to be concerned. Just enjoy the low prices while they last. If the service you use goes out of business, it's pretty easy to switch to another.

[dvt]

Mistral is one of the few AI companies I am extremely excited to see get better funded.

I'm working on a local product (coming soon™) that uses Mistral-7B-Instruct-v0.2 under the hood. Parsing screen reader text (and taking actions, etc.) via local LLMs is, in my humble opinion, the future of computing. Even though getting it right is hard, and there's lots of edge cases, it's pretty awesome when it works. Mistral has been (by far) the most reliable model to date. I'm likely going to be fine tuning it over the next few months, but here it is working on Windows and MacOS in both web browser[1] and file manager[2] contexts.

[1] https://vimeo.com/931907811

[2] https://dvt.name/wp-content/uploads/2024/04/image-11.png

[eitally]

The use case you described is essentially the future of all the RPA vendors, too. BluePrism, UIPath, Pega, Automation Anywhere, etc. They all started as screen scrapers & BPML parsers to "automate" processes. With the power of LLMs they become powerful enough to actually automate things (and also put hundreds of thousands of offshore manual tech laborers out of work). BPM automation supercharged by LLMs is systems integrators' nightmare.

[candiddevmike]

Do you currently or plan to pay Mistral for any of this? Trying to understand how they would make you a customer in the future.

[underyx]

Any source for the valuation number? Article does not mention.

[trybackprop]

Here are three sources:

Mistral AI employee: https://x.com/dchaplot/status/1800601722722935153

TechCrunch: https://techcrunch.com/2024/06/11/paris-based-ai-startup-mis...

Wall Street Journal: https://www.wsj.com/tech/ai/french-startup-mistral-ai-raises...

[wdh505]

Usually it is a proportion. 100k for 10% of the company is a 1M valuation

[champagnepapi]

Looks like Mistral AI just caught a $640 million mistral!

[pier25]

lol

For reference: https://en.wikipedia.org/wiki/Mistral_(wind)

[CesareBorgia]

With La Plateforme and Le Chat — whose names exude the elegance emblematic of the company’s French roots

Bizzare

[dash2]

That seems weirdly low given AI hype. Why is OpenAI worth more than ten times more?

[moffkalast]

Why not? OAI is still a year ahead of everyone else in R&D while Mistral doesn't currently offer any SOTA models.

[ganzuul]

There is very little "why" in stock market questions and much more "who".