Sequoia Capital
Last year, generative AI moved from the background to the foreground on the AI 50 list. This will be at the forefront of our minds this year as AI begins to deliver significant productivity gains for both enterprise customers and consumers. The majority of AI venture funding in the US in 2023 went to infrastructure, with 60% going to the largest large-scale language model (LLM) providers, but application companies continue to dominate the AI 50 list .
On the other hand, we are beginning to see what companies will look like when they adopt AI. Many companies are now integrating AI into their processes as a way to accelerate their KPIs. We are seeing large companies benefit from integrating AI into their products. Workflow automation platform ServiceNow
now
Panwoo
Tomorrow we can expect to see UX and UI reimagined around AI capabilities. After replicating existing functionality better and cheaper, a completely new user interface evolves to provide a valuable new experience.
What's new this year?
The big moves on this year's AI 50 list highlight how generative AI is improving productivity for businesses and industries. The general productivity category of companies has doubled this year, increasing from four to eight companies as they expand their offering to meet the growing demands of their customers. Writer previously belonged to the Enterprise Marketing category, but we have fleshed out our product line to be applicable to all departments of a company. New to the list, Notion has integrated her AI assistant across its productivity platform and added new features like calendar creation.
Five productivity apps currently serve consumer, prosumer, and enterprise-level customers: OpenAI's ChatGPT, Anthropic's Claude, DeepL, Notion, and Tome. Image editor Photoroom, video generation app Pika, and game builder Rosebud demonstrate the blurring of lines between consumer and prosumer when it comes to creative software. Overall, the companies in this category have also doubled, from 3 to 6.
While industry vertical categories have declined this year, new industry sectors have emerged. The figures in robotics, Tractian in industrial maintenance, and Waabi in autonomous driving are beginning to show how the integration of AI software and hardware will transform work in the physical world.
2023 is a strong year for infrastructure overall, including strong new entrants like Mistral, a major competitor in the underlying model. In the cloud data platform category, Pinecone and Weaviate demonstrated the importance of vector databases. Meanwhile, Databricks also added Anyscale, Baseten, Replicate, and Together to the inference provider category through its acquisition of MosaicML last year. And LangChain has established itself in a category of its own as a general-purpose application development framework for working with LLM.
future company
Previous waves of technological innovation, such as networks, the Internet, and mobile, were primarily communications revolutions. AI promises something different: a productivity revolution similar to the personal computers that shaped the future of business and industry.
As more AIs are developed, they will start working together as a network of AIs. Over the past year, we've seen generative AI extend beyond simple text and code generation to agent interaction. Just as the rise of PCs and then smartphones has increased the demand for Internet bandwidth to transmit data, the evolution of AI agents has created new demands to support ever more powerful computations and crosstalk. Demand for infrastructure will increase.
As Nvidia CEO Jensen Huang puts it, we are entering a world where “every pixel is generated.” In this generative future, building a company itself could become the job of his AI agent. And one day, entire companies may function like neural networks.
Sequoia Capital
What we are seeing in the application environment today is the first iteration of the tools that will be used in the next generation of enterprises. We can probably expect these companies to be smaller in size, but the ease with which they can be generated means that the number of companies will be much larger. New ownership and management structures will make company formation faster and more fluid. Someday, there may be a large company run by a single AI engineer.
In the near future, most businesses will no longer be private businesses, but they will have different needs and problems than businesses today. You need an enterprise product that can solve challenges in knowledge management and content generation, reliability, security, and authentication. The amount of software these companies run will grow and change as code generation and software agents enable more customization and faster cycle iterations.
To win the hearts and minds of tomorrow's businesses, founders need to answer some important questions. What products will these companies make? What kind of infrastructure and applications will they need? How will the workforce change? How will distribution and value capture patterns change? What proportion of the total addressable market will be human versus autonomous AI agents?
what's next
Productivity revolutions like the AI revolution will reduce costs. While this century's technological advances have dramatically lowered the cost of hardware, the costs of human-provided services, from healthcare to education, have skyrocketed. AI has the potential to reduce costs in these critical areas, making them more accessible and affordable. These changes must be made responsibly to reduce job losses and foster job creation. AI allows us to do more with less, but retraining and empowering everyone will require both government and private efforts.
Sequoia Capital
AI stands to change cost structures and improve productivity in some of society's most important areas. By abstracting away from mundane tasks and allowing us to focus our attention on more important issues and better tools for the future, we have the potential to lead to better education, a healthier population, and more productive people. It's hidden. This will enable more people to tackle more problems to create a better society.
The 2024 AI 50 captures this expanding scope of AI. This list includes more popular applications than ever before, and is expected to grow in both depth and breadth in the coming years. 2024 is just the beginning.
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