Been a long cold lonely winter
As the winter snow keeps accumulating in the Northeast and the tech news continues to pile up with it, I thought it would be fun to once again pay homage to Dan Shaughnessy, the long-time sports columnist at the Boston Globe, who regularly writes columns gathering his random thoughts about recent sports news.
So here goes: Picked up enterprise tech news pieces while waiting for the next snowstorm to hit.
*Wall Street dumping and running every time one of the LLM vendors makes an announcement that steps on an established software company's territory is frankly getting a little annoying. Investors have been in abject panic over the impact of AI on SaaS companies and the stocks have taken a vicious beating this year.
As Salesforce CEO Marc Benioff said in this week's earnings call, "This is not a rational market." Benioff, who is generally prone to hyperbole, was never more understated than with that line. A quick look at several recent major SaaS company earnings reports shows they appear to be doing quite well, thank you very much:
Part of the problem is that investors are trying to guess the estimated impact of AI without taking into account a company’s corresponding ability to evolve and roll with the changes. Sure, it's clear that software will be forever changed by AI, but that doesn't mean it's going to destroy every software company on the planet.
As Tien Tzuo, an early Salesforce employee and founder at subscription management platform Zuora, told me in a profile this week, SaaS vendors have to recognize the real threat AI brings: "Let's assume that we're all under existential threat, and let's work through it." The 'working-through-it' part is the crucial piece that investors seem to be missing. These companies aren't sitting back helplessly hoping, and the numbers seem to reflect that.
Quiz: What was the dominant CRM vendor with 45% market share in the late 1990s.
*If you ever wanted proof of the complexity involved in implementing AI at scale in the enterprise, you got it in droves this week when OpenAI announced it was partnering with major systems integrators McKinsey, Boston Consulting Group, Capgemini and Accenture to help organizations get out of the dreaded proof of concept phase.
The whole idea behind implementing AI inside large firms is to increase efficiency, lower costs and produce a positive return on investment as quickly as possible. The problem is that when you bring in these outside firms, even if they help you get there faster, these firms rarely come cheap, which somewhat ironically means, even if you get more projects to production, it's going to take all that much longer to achieve payback.
Frontier model companies like OpenAI are struggling to show their value inside the enterprise, with survey numbers continually stuck at around a third success rate, defined by getting an AI project from proof of concept into production. That has led to increasing frustration and threats of cutting AI budgets. OpenAI is betting that by aligning with these firms, it could help organizations get to the AI promised land faster. Perhaps. But it just might come with a hefty consulting bill attached.
*Anthropic is feuding with Defense officials, who are balking at the AI company's insistence that its models have guardrails to safeguard them from harmful activities like mass surveillance or control over weapons without human oversight. Based on my personal use of LLMs, this seems like a prudent demand.
In the “you can’t make this stuff up” department, Defense officials would love to force the issue and require Anthropic to let them use the models however they wish. Except, I kid you not, the powers that be think the LLM maker’s models are too good to resist. “The only reason we’re still talking to these people is we need them and we need them now. The problem for these guys is they are that good,” a Defense official told Axios.
Their PR and marketing departments must have been doing backflips after hearing that kind of endorsement.
On Thursday afternoon, Anthropic CEO Dario Amodei published a blog post saying the company would not back down. He wrote, "Regardless, these threats do not change our position: we cannot in good conscience accede to their request."
But in a case of interesting timing, this fight comes the same week Anthropic announced it was dropping its signature safety pledge, making the stance look just a little more opportunistic.
So much for PR and marketing’s short-lived feel-good moment.
Quiz Answer: Siebel Systems
~Ron
