Cohere president Martin Kon says a lot of the hot artificial intelligence startups on the market today are building the equivalent of fancy sports cars. His product, he says, is more like a heavy-duty truck.
“If you’re looking for vehicles for your field technical service department, and I take you for a test drive in a Bugatti, you’re going to be impressed by how fast and how well it performs,” Kon told CNBC in an interview. However, he said, the price coupled with the space limitations and lack of a trunk will be a problem.
“What you actually need is a fleet of F-150 pickup trucks,” Kon said. “We make F-150s.”
Founded by ex-Google AI researchers and backed by Nvidia, Cohere is betting on generative AI for the enterprise rather than on consumer chatbots, which have been the talk of the tech industry since OpenAI released ChatGPT in late 2022.
In June, Cohere raised $270 million at a $2.2 billion valuation, with Salesforce and Oracle participating in the funding round. Company executives have attended AI forums at the White House. And Cohere is reportedly in talks to raise up to $1 billion in additional capital.
“We don’t comment on rumors,” Kon told CNBC. “But someone once told me startups are always raising.”
The generative AI field has exploded over the past year, with a record $29.1 billion invested across nearly 700 deals in 2023, a more than 260% increase in deal value from a year earlier, according to PitchBook. It’s become the buzziest phrase on corporate earnings calls quarter after quarter, and some form of the technology is automating tasks in just about every industry, from financial services and biomedical research to logistics, online travel and utilities.
Although Cohere is often mentioned alongside AI heavyweights like OpenAI, Anthropic, Google and Microsoft, the startup’s focus on enterprise-only chatbots has set it apart.
Competitors offer AI products for both consumers and businesses. OpenAI, for instance, launched ChatGPT Enterprise in August, and Anthropic opened up consumer access to its formerly business-only Claude chatbot in July.
Kon, who’s also the company’s operating chief, said that by staying focused just on the enterprise, Cohere is able to run efficiently and keep costs under control even amid a chip shortage, rising costs for graphics processing units (GPUs) and ever-changing licensing fees for AI models.
“I’ve rarely seen, in my career, many companies that can successfully be consumer and enterprise at the same time, let alone a startup,” Kon said. He added, “We don’t have to raise billions of dollars to run a free consumer service.”
Current clients include Notion, Oracle and Bamboo HR, according to Cohere’s website. Many customers fall into the categories of banking, financial services and insurance, Kon said. In November, Cohere told CNBC it saw an uptick in customer interest after OpenAI’s sudden and temporary ouster of CEO Sam Altman.
Kon acknowledges that changing dynamics in the hardware industry have presented persistent challenges. The company has had a reserve of Google chips for well over two years, Kon said, secured in Cohere’s early days to help it pretrain its models.
Now, Cohere is moving toward using more of Nvidia’s H100 GPUs, which are powering most of today’s large language models.
Cohere’s relationships with strategic investors are another area where it differs from generative AI competitors, Kon said. Many companies have raised from the likes of Nvidia and Microsoft with some conditions that are tied to use of their software or chips.
Kon is adamant that Cohere has never accepted a conditional investment, and that every check it’s cashed – including from Nvidia – had no strings attached.
“In our last round, we had multiple checks the same size; we had no conditions associated with any one of them,” Kon said. “We explicitly made that decision so we could say we’re not beholden to anyone.”
Cohere’s decision to focus on enterprise-only chatbots may help the company stay out of the murky territory of misinformation concerns, particularly as election season nears.
In January, the Federal Trade Commission announced an AI inquiry into Amazon, Alphabet, Microsoft, OpenAI and Anthropic. FTC Chair Lina Khan described it as a “market inquiry into the investments and partnerships being formed between AI developers and major cloud service providers.” Cohere was not named.
Kon says the company’s growth so far has largely been around areas like search and retrieval, which require their own separate AI models. He calls it “tool use,” and it involves training models on where, when and how to look for information that an enterprise client needs, even if the model wasn’t trained on that data originally.
Search, Kon said, is a key piece of generative AI that’s getting less attention than other areas.
“That’s certainly, for enterprise, going to be the real unlock,” he said.
In discussing the timeline for expansion, Kon called 2023 “the year of the the proof of concept.”
“We think 2024 is turning into the year of deployment at scale,” he said.
Lemon8, a photo-sharing app by Bytedance, and RedNote, a Shanghai-based content-sharing platform, have seen a surge in popularity in the U.S. as “TikTok refugees” migrate to alternative platforms ahead of a potential ban.
Now a law that could see TikTok shut down in the U.S. threatens to ensnare these Chinese social media apps, and others gaining traction as TikTok-alternatives, legal experts say.
As of Wednesday, RedNote — known as Xiaohongshu in China — was the top free app on the U.S. iOS store, with Lemon8 taking the second spot.
While the legislation explicitly names TikTok and ByteDance, experts say its scope is broad and could open the door for Washington to target additional Chinese apps.
“Chinese social media apps, including Lemon8 and RedNote, could also end up being banned under this law,” Tobin Marcus, head of U.S. policy and politics at New York-based research firm Wolfe Research, told CNBC.
If the TikTok ban is upheld, it will be unlikely that the law will allow potential replacements to originate from China without some form of divestiture, experts told CNBC.
PAFACA automatically applies to Lemon8 as it’s a subsidiary of ByteDance, while RedNote could fall under the law if its monthly average user base in the U.S. continues to grow, said Marcus.
The legislation prohibits distributing, maintaining, or providing internet hosting services to any “foreign adversary controlled application.”
These applications include those connected to ByteDance or TikTok or a social media company that is controlled by a “foreign adversary” and has been determined to present a significant threat to national security.
The wording of the legislation is “quite expansive” and would give incoming president Donald Trump room to decide which entities constitute a significant threat to national security, said Carl Tobias, Williams Chair in Law at the University of Richmond.
Xiaomeng Lu, Director of Geo‑technology at political risk consultancy Eurasia Group, told CNBC that the law will likely prevail, even if its implementation and enforcement are delayed. Regardless, she expects Chinese apps in the U.S. will continue to be the subject of increased regulatory action moving forward.
“The TikTok case has set a new precedent for Chinese apps to get targeted and potentially shut down,” Lu said.
The fate of TikTok rests with Supreme Court after the platform and its parent company filed a suit against the U.S. government, saying that invoking PAFACA violated constitutional protections of free speech.
TikTok’s argument is that the law is unconstitutional as applied to them specifically, not that it is unconstitutional per se, said Cornell Law Professor Gautam Hans. “So, regardless of whether TikTok wins or loses, the law could still potentially be applied to other companies,” he said.
The law’s defined purview is broad enough that it could be applied to a variety of Chinese apps deemed to be a national security threat, beyond traditional social media apps in the mold of TikTok, Hans said.
Trump, meanwhile, has urged the U.S. Supreme Court to hold off on implementing PAFACA so he can pursue a “political resolution” after taking office. Democratic lawmakers have also urged Congress and President Joe Biden to extend the Jan. 19 deadline.
Synthesia is a platform that lets users create AI-generated clips with human avatars that can speak in multiple languages.
Synthesia
LONDON — Synthesia, a video platform that uses artificial intelligence to generate clips featuring multilingual human avatars, has raised $180 million in an investment round valuing the startup at $2.1 billion.
That’s more than than double the $1 billion Synthesia was worth in its last financing in 2023.
The London-based startup said Wednesday that the funding round was led by venture firm NEA with participation from Atlassian Ventures, World Innovation Lab and PSP Growth.
NEA counts Uber and TikTok parent company ByteDance among its portfolio companies. Synthesia is also backed by chip giant Nvidia.
Victor Riparbelli, CEO of Synthesia, told CNBC that investors appraised the businesses differently from other companies in the space due to its focus on “utility.”
“Of course, the hype cycle is beneficial to us,” Riparbelli said in an interview. “For us, what’s important is building an actually good business.”
Synthesia isn’t “dependent” on venture capital — as opposed to companies like OpenAI, Anthropic and Mistral, Riparbelli added.
These startups have raised billions of dollars at eye-watering valuations while burning through sizable amounts of money to train and develop their foundational AI models.
Read more CNBC reporting on AI
Synthesia’s not the only startup shaking up the world of video production with AI. Other startups offer solutions for producing and editing video content with AI, like Veed.io and Runway.
Meanwhile, the likes of OpenAI and Adobe have also developed generative AI tools for video creation.
Eric Liaw, a London-based partner at VC firm IVP, told CNBC that companies at the application layer of AI haven’t garnered as much investor hype as firms in the infrastructure layer.
“The amount of money that the application layer companies need to raise isn’t as large — and therefore the valuations aren’t necessarily as eye popping” as companies like Nvidia,” Liaw told CNBC last month.
Riparbelli said that money raised from the latest financing round would be used to invest in “more of the same,” furthering product development and investing more into security and compliance.
Last year, Synthesia made a series of updates to its platform, including the ability to produce AI avatars using a laptop webcam or phone, full-body avatars with arms and hands and a screen recording tool that has an AI avatar guide users through what they’re viewing.
On the AI safety front, in October Synthesia conducted a public red team test for risks around online harms, which demonstrated how the firm’s compliance controls counter attempts to create non-consensual deepfakes of people or use its avatars to encourage suicide, adult content or gambling.
The National Institute of Standards and Technology test was led by Rumman Chowdhury, a renowned data scientist who was formerly head of AI ethics at Twitter — before it became known as X under Elon Musk.
Riparbelli said that Synthesia is seeing increased interest from large enterprise customers, particularly in the U.S., thanks to its focus on security and compliance.
More than half of Synthesia’s annual revenue now comes from customers in the U.S., while Europe accounts for almost half.
Synthesia has also been ramping up hiring. The company recently tapped former Amazon executive Peter Hill as its chief technology officer. The company now employs over 400 people globally.
U.K. Technology Minister Peter Kyle said the investment “showcases the confidence investors have in British tech” and “highlights the global leadership of U.K.-based companies in pioneering generative AI innovations.”
The SEC filed a lawsuit against Elon Musk on Tuesday, alleging the billionaire committed securities fraud in 2022 by failing to disclose his ownership in Twitter and buying shares at “artificially low prices.”
Musk, who is also CEO of Tesla and SpaceX, purchased Twitter for $44 billion, later changing the name of the social network to X. Prior to the acquisition he’d built up a position in the company of greater than 5%, which would’ve required disclosing his holding to the public.
According to the SEC complaint, filed in U.S. District Court in Washington, D.C., Musk withheld that material information, “allowing him to underpay by at least $150 million for shares he purchased after his financial beneficial ownership report was due.”
The SEC had been investigating whether Musk, or anyone else working with him, committed securities fraud in 2022 as the Tesla CEO sold shares in his car company and shored up his stake in Twitter ahead of his leveraged buyout. Musk said in a post on X last month that the SEC issued a “settlement demand,” pressuring him to agree to a deal including a fine within 48 hours or “face charges on numerous counts” regarding the purchase of shares.
Musk’s lawyer, Alex Spiro, said in an emailed statement that the action is an admission by the SEC that “they cannot bring an actual case.” He added that Musk “has done nothing wrong” and called the suit a “sham” and the result of a “multi-year campaign of harassment,” culminating in a “single-count ticky tak complaint.”
Musk is just a week away from having a potentially influential role in government, as President-elect Donald Trump’s second term begins on Jan. 20. Musk, who was a major financial backer of Trump in the latter stages of the campaign, is poised to lead an advisory group that will focus in part on reducing regulations, including those that affect Musk’s various companies.
In July, Trump vowed to fire SEC chairman Gary Gensler. After Trump’s election victory, Gensler announced that he would be resigning from his post instead.
In a separate civil lawsuit concerning the Twitter deal, the Oklahoma Firefighters Pension and Retirement System sued Musk, accusing him of deliberately concealing his progressive investments in the social network and intent to buy the company. The pension fund’s attorneys argued that Musk, by failing to clearly disclose his investments, had influenced other shareholders’ decisions and put them at a disadvantage.
The SEC said that Musk crossed the 5% ownership threshold in March 2022 and would have been required to disclose his holdings by March 24.
“On April 4, 2022, eleven days after a report was due, Musk finally publicly disclosed his beneficial ownership in a report with the SEC, disclosing that he had acquired over nine percent of Twitter’s outstanding stock,” the complaint says. “That day, Twitter’s stock price increased more than 27% over its previous day’s closing price.”
The SEC alleges that Musk spent over $500 million purchasing more Twitter shares during the time between the required disclosure and the day of his actual filing. That enabled him to buy stock from the “unsuspecting public at artificially low prices,” the complaint says. He “underpaid” Twitter shareholders by over $150 million during that period, according to the SEC.
In the complaint, the SEC is seeking a jury trial and asks that Musk be forced to “pay disgorgement of his unjust enrichment” as well as a civil penalty.
