The highest-paid actor in Hollywood has invested in the world's most successful AI company

Voted for OpenAI, Stability AI and Anthroic in one breath.

Written by: Tang Yitao

Editor: Jing Yu

Source: Geek Park

The wave of AI boom brought about by ChatGPT has come so fast that the whole world has been caught off guard. Especially for investment institutions, when they reacted, the valuations of leading companies such as OpenAI have already been on the rocket, and behind them are Silicon Valley giants, and they have no way to start.

However, one investor successively invested in OpenAI, Stability AI and Anthroic, three of the hottest companies in the AI field.

This person is the Hollywood actor Ashton Kutcher (Ashton Kutcher) - an actor who once played Apple founder Jobs in the movie. As the highest-paid actor in Hollywood, he is also successful in Silicon Valley by accident on the set of Los Angeles.

As co-founder and partner of venture fund Sound Ventures, Kutcher manages more than $1 billion. In the past 10 years, his investment projects include Airbnb, Duolingo, Nest, Pinterest, Robinhood, Shazam, Spotify, Skype. Today, these companies are already large companies with a market value of at least several billion dollars.

Kutcher once played the late Apple founder Steve Jobs in "Jobs"｜Douban Movie

Basically, he didn't miss any outlets.

So, of course, Sound Ventures launched a new $240 million artificial intelligence fund this month. Three AI companies in the limelight - Stability AI, OpenAI, and Anthroic, founded by former OpenAI executives - have all accepted its investment.

In an instant, the "shadow" of Jobs became the new "Godfather of AI".

Only invest in 6 projects in a lifetime

The strategy of Kutcher's new fund somewhat defies traditional venture capital principles.

The $240 million will only be invested in six companies, Sound Ventures said. Sound Ventures declined to disclose the amount of investment in the three companies mentioned above, but on average, each company will also receive $ 40 million in investment. That said, it's a high-risk, high-reward investment.

The reason for this strategy is the high concentration of AI. The high entry cost of large models determines that players can only be big companies, leaving few opportunities for startups. This is why OpenAI has shifted from a research institution to a commercial company,

"We're going to have to monetize it (OpenAI) somehow at some point: the computational cost is just too high," OpenAI CEO Sam Altman (Sam Altman) explained to the public. According to Morgan Stanley's analysis, ChatGPT costs OpenAI 2 cents per reply, burning at least $100,000 per day. In 2022, OpenAI will lose $540 million.

Sound Ventures expects artificial intelligence to play a major role in the entertainment industry, and Sound Ventures has the advantage that Kutcher has extensive experience in both industries.

As for what AI companies will invest in next, Sound Ventures said that there is no currently unidentified AI business type, and it just hopes to be part of the revolutionary transformation.

"We believe this may be the most significant technology we will experience since the Internet," Kutcher said in a statement. Changing businesses and everyday life. That’s the conversation we want to be a part of.”

Cast "Three Big" in the gap

When the vast majority of investment institutions, none of the three AI companies mentioned above made the investment. How did Kutcher's Sound Ventures invest in three companies in succession among giants such as Microsoft and Google, making multiple bets?

Among the three companies that have invested, OpenAI and Anthropic have obvious rivalry.

OpenAI was founded with a high degree of idealism. It does research work similar to universities, advocates non-profit, and makes research results open to the public. Unlike universities, OpenAI is not funded by the government, but by Elon Musk, Linkedin co-founder Reid Hoffman, Paypal co-founder Peter Thiel (Peter Thiel) and other Silicon Valley bigwigs.

Although these people are already among the richest people on the planet, as mentioned above, the computational cost of AI is too high to make research sustainable. According to IRS documents, OpenAI spent $7.9 million on cloud computing in 2017, accounting for about a quarter of its total spending that year.

As a result, OpenAI established a commercial subsidiary, OpenAI LP, in 2019, transforming from a non-profit company to a commercial company in disguise, and then accepted a $1 billion investment from Microsoft.

It is said that this transformation led to the birth of Anthropic. Its founders, siblings Dario and Daniela Amodei, previously served as OpenAI's vice president of research and vice president of security/policy, respectively. After accepting Microsoft's investment, the two disagreed with OpenAI in terms of development direction and philosophy, and led five other OpenAI employees to establish Anthropic.

Anthropic and OpenAI are believed to be behind a proxy battle between Google and Microsoft｜YouTube

Unlike other entrepreneurial projects, because of the high threshold of large models, it is difficult to avoid the fact that usually only giants, or companies supported by giants, are eligible for admission. Behind OpenAI is Microsoft, and behind Anthropic is Google. Google has invested close to $400 million in Anthropic since its inception, and Google Cloud is Anthropic's preferred cloud service provider.

To some extent, the competition among AI companies is becoming a proxy war among large companies, but Stability AI has taken another path-open source. Its founder, Emad Mostak, believes that large models need more supervision, not just operating within large companies, and the openness of the community system is also crucial. As of November 2022, Stability AI has only 100 employees, but its open source community has reached 100,000 people.

In October 2022, Stability AI completed a $101 million angel round of financing led by Coatue Management and Ligthspeed Venture Partners. Mostak said that Stability AI will raise funds on its own terms, so it will be completely independent.

It is worth noting that the current AI track is actually still in its early stages, and the profit model and product form are far from mature, and the high threshold determines the competitive landscape of a small number of companies.

From this point of view, Sound Ventures' strategy of concentrating funds to invest in a small number of companies is quite "chicken thief"-it not only invests in competitors supported by large companies, but also supports open source companies with potential. It's not a major investor in either company, but it's likely to profit no matter which one wins.

Kutcher doesn't miss a beat.

From 30 million to 250 million

Kutcher's acting career began in 1998 on the sitcom '70s Show. Two years later, he established the production company Katalyst, and hired his chief digital officer from the well-known venture capital media TechCrunch, and began to get involved in angel investment.

In 2009, Kutcher invested $1 million in Skype at the invitation of Marc Andreessen, the co-founder of another well-known VC, a16z. Eighteen months later, Microsoft bought Skype for $8.5 billion.

By 2010, Kutcher had formed the A-Grade investment fund with two other partners, Guy Oseary and Ronald Burkle, the former manager of Madonna and U2 , who is a billionaire who owns a private investment firm.

Finding a partner who knows more about technology is a common way for star investors. Contrary to stereotypes, Kutcher is the more patient of the Kutcher-Osli portfolio, while Osli is the more impulsive one. "I'm more inclined to focus on the 10-year time frame, and Guy sometimes gets into short-term disasters." "So we balance each other out quite well in this regard." Kutcher told the American media iety.

Kutcher (left) and Osley (right) | Source: Forbes

Early in his investment career, Kutcher realized the importance of finding "needs" and "customers" who paid for them. Kutcher said he initially started investing because he wanted to connect new companies that solve everyday problems with those who need those solutions: "Companies that pursue happiness will end up doing well." "If you have the ability to Help people find ways to love, health or friendship, and the dollar will go after that."

A-Grade screening startups have three main points:

• Attract founders they want to work with
• Take solving problems as a mission, saving or enriching time
• Have a business model that can be enhanced through their participation

Under the guidance of this strategy, in the first two years of its establishment, A-Grade made three investments that now seem to be absolutely correct: investing $500,000 in Uber, $1 million in Airbnb, and $3 million in Spotify. Dollar. Today these are multi-billion dollar companies.

Although there are also some failed investments, such as BlackJet and Fab.com, but from the statistics of "Forbes", the return on investment of A-Grade is stable at about 3.3 times. In 6 years, A-Grade has grown from $30 million to $250 million under management.

As Mark Anderson said: "If you can consistently get 3X returns, you are one of the best venture capitalists." Kutcher is not only a successful star investor, he is actually the best investment people