3/19/2024: What Happened to Inflection AI?

Today’s AI breaking news is that a large portion of Inflection AI is being absorbed into Microsoft. Inflection AI was a ChatGPT challenger that was started by Reid Hoffman (LinkedIn Founder, Microsoft Board Member, Greylock VC and former Board Chair of OpenAI) and two AI experts including Deep Mind co-founder, Mustafa Suleyman. It raised $1.5B so far and was last valued at $4B. They didn’t seem to gain much traction since they launched last year though. I tried it once and pretty much forgot about it. It appears that the company is being restructured and the largest investor Microsoft is acqui-hiring(?) most of the team including the two AI expert co-founders. But Reid Hoffman will stay behind along with a small team and pivot the business to enterprise AI.

It’s hard to tell if this is a desperate restructuring situation or Microsoft playing another master hand in AI. AI startups that are burning cash/GPU like no tomorrow probably will face tough choices in the upcoming year if they don’t gain sufficient traction. How many ChatGPT, Gemini,  character.ai and perplexity.ai’s out there can the world sustain? Probably not that many. Most investments into AI companies are probably going to zero.