Inflection says it won’t compete in building next-generation AI models, but acquires startups

AI startup Inflection announced on Tuesday that it will not compete in building next-generation AI models, despite acquiring three other startups.

This comes as the company, which was one of the hottest AI startups a year ago, has experienced major changes in its management structure after Microsoft hired its then-chief executive officer Mustafa Suleyman to run its own consumer AI business.

New CEO reveals Inflections plans

A year ago, Inflection vowed it could build a model and compete with and outperform technology from the likes of OpenAI and Meta. Fast-forward to Tuesday, and the firm has had a shift in thinking. Microsoft reportedly paid as much as $650 million to acquire most of its staff and license its technology. The company, a firm competitor of Microsoft-backed OpenAI was also reportedly Making bold moves, shifting towards selling AI software, but maintaining its Pi chatbot operations.

Now, the new CEO Sean White, told TechCrunch that the firm was no longer competing in developing the next generation of AI models, although he said they could compete on the enterprise front.

“I am not going to, and don’t feel the need to, compete with a company that is trying to build the next 100,000-GPU system.”

White.

He seemed to reference the handful of well-funded firms that can develop frontier AI models now, including Microsoft, which now houses the startup’s founders.

“When I say we can’t compete with them, I think part of it is that I don’t want to compete with them trying to make that next generation model,” added White.

“I do think we’re actually still competing with them, particularly for the enterprise. But in the end, our solution of how we architect this and the tools that we’re bringing are really that enterprise layer that actually is going to meet their needs,” he said.

According to TechCrunch, White opines that AI models are just fine for addressing the needs of most enterprises today.

The new acquisitions to help Inflection build tools for global enterprises

During the same interview, White also revealed that Inflection had acquired three startups in the past two months. He said the move was to help the company build up tools it can offer to global enterprise customers using AI models that are available today.

The firms are Jelled.AI, which uses AI to manage employee inboxes while the other is BoostKPI, an AI startup that offers data analytics tools. In October the company announced that it had acquired an automation consulting firm known as Boundaryless to expand its overseas footprint.

White also revealed that his firm is still using its own models today, although that does not mean it will not use other AI models in the future.

He added that his firm was not ruling out licensing AI models from its former competitors in the future.

White however expressed skepticism about how test-time compute scaling, which many are calling the next generation of AI models can address business use cases.

“I mean, there’s a little piece of me that says, ‘Haha! Now we all have latency in our inference, so we’re going to call it thinking,’ as opposed to just saying, ‘Yeah, we’ve just got more latency because these things are getting bigger and harder,’” said the Inflection CEO.

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