ATuring 2022, Silicon Valley suffered from an unfortunate stock market slump, suffering declines in corporate orders – particularly in cloud services – which also led to a significant number of layoffs.
Suddenly, venture capital investments, which were down significantly all over the world, have just rebounded by 41% in the first quarter of 2023 compared to the last quarter of 2022 (after four quarters of decline) in Silicon Valley , solely due to the enthusiasm of entrepreneurs and investors for generative artificial intelligence (AI), following the ChatGPT surge of late November 2022. First, Big Tech has all shifted into high gear, even in China, given the spectacular lead taken by Microsoft’s association with OpenAI, the founder of ChatGPT. And, again, many start-ups are being created.
Another reason for this explosion is that tech players who had been interested in metaverse or Web3 technologies are now focusing on generative AI.
The disappointing results of the promises of Web3 are at the origin of the change. Meta-Facebook’s strong commitment in this area would even explain its delay in launching generative AI products. The newspaper The Guardian headlined on May 11: “Can AI help make business [Meta] relevant again? “.
The “brain valley”
Not all of these new AI startups have a defensible business model, but investors are flocking to the gate in this sector for fear of missing out. It is true that many of these start-ups develop their products around the major linguistic models (LLM [acronyme anglais de large language models]) of AI developed by a few Big Techs: many projects are actually features rather than stand-alone products.
However, there is a risk that AI Big Tech will no longer open access to their linguistic models to others to create new products. OpenAI has thus discreetly announced that it is closing its access taps to its GPT-4 system, which powers ChatGPT. And Twitter has suspended access to its platform to outside developers.
Many engineers who had left Silicon Valley and San Francisco during the lockdowns are returning there to create companies that mainly provide products based on generative AI. The neighborhood of Hayes Valley, San Francisco, where these entrepreneurs are concentrated, is now called the “brain valley”, in reference to (artificial) intelligence. We forgot telework at these start-ups!
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