Funding Frenzy: Hugging Face Secures $235M Investment from Tech Giants

0:00So the headline here essentially is that Hugging face which is a leading repository for open source AI models, right? So all of these open source AI models are kind of hosted on Hugging Faces. This is the place where you're going to get them, find them, and discover a lot of these projects. They recently secured$235 million in their Series D funding. And this is elevating the company's valuation to around$4.5 billion. Absolutely insane. So the fundraising round had, of course, some major investors in here that I kind of discussed in the intro. but essentially we have Google, Amazon, also AMD, Intel, IBM, NVIDIA, Salesforce.

0:39These are massive companies. So people really see the value in Hugging Face, what they're doing, and they're putting money in to kind of get a bite of this. And, you know, while I typically, to be honest, like there's something that kind of annoys me when there's like a, I don't know, like an independent company and then it gets these, the massive tech giants to invest in it. Cause I'm like, Oh, is it kind of like bought by them? Right? Like Hugging Face is like all about open source. So if Google and Amazon and Salesforce are all putting money in, are they going to try to, are they going to pull like an open AI and go kind of like be less of the open source kind of community thing?

1:09I think that in this case, it's, it's okay. You know, all the big players right now are investing in them. Like Hugging Face is already famous for what it's famous for. It's, it's known for what it does. And I think the big guys are putting money in to kind of, you know, save face, look good, and also be part of this next wave that AI is inevitably going to bring. So yeah, I don't know. I think at the end of the day, some probably isn't too bad of a thing, but the companies are notably interested in the development of generative AI foundation models and the processors that really drive them. So the platform, if you don't know, it's often kind of likened to GitHub with its role in hosting machine learning and other AI models.

1:50It has the code, it has data sets, and essentially right now, I think it's really riding the wave of increased investor interest in generative AI, right? Like, this is a very hot topic, a big area. It's interesting, because when you talk about companies receiving a lot of funding right now, everyone's like, Oh, my gosh, yeah, AI companies are getting so much money. And like, like, they are right, like, here's over$200 million that they were able to just pick up, you know,$4 billion valuation, that's hard for companies to do nowadays. But I think what's really important and kind of critical here is a lot of the companies that are receiving these big, huge checks, and the big amounts are companies that were are quite established AI companies doing something really impressive.

2:27They already have traction. They already have product market fit. And those are the ones that are being rewarded heavily. Not so much, although not completely, you know, this isn't 100 % true, but it's lesser these like brand new startups. And a lot of them are kind of ones that have been playing for a little bit. But you know, there are people like Inflection AI and other ones that are kind of new, but just with a team with a track record, and they're able to get, you know, some pretty big sums of money too. So in any case, very, very interesting to see where this goes. Hugging Face provides essentially a home for several popular AI models.

3:00So stability, AI, stable diffusion, Meta's Llama 2, and kind of all of its variants. And I think in a strategic move, Amazon's AWS and Hugging Face have also joined forces to make AWS the preferred cloud provider for Hugging Face's services. It's kind of interesting because even in this most recent round, we have like Google Ventures that is coming in and funding them. And it's interesting because you see all of anyone, anyone doing anything with AI these days, they're getting like investments from cloud providers. I mean, OpenAI got money from Microsoft and they're, you know, on Microsoft Azure as their cloud provider.

3:38And then you had companies like Anthropic, which is, you know, one of the top three most funded AI companies. And Anthropic took like 200 or 300 million dollars from, you know, Google Cloud and made Google Cloud their main provider. So you see like all these provider plays. It's interesting that Hugging Face did the provider play with AWS right before Google invested in. So Google, you know, I'm sure Google would have loved to have them on Google Cloud, but it was, you know, they came in a little bit later when they had already kind of set up that deal. So I think that's kind of interesting. The other interesting thing here is I feel like there's a little bit of a riff right now in Google.

4:13There's kind of two sides. There's the Google Cloud and then there's Google Ventures. And Google Ventures is more, you know, backing ventures and making investments and stuff. And then there's like the Google Cloud guys that are like, they're making investments essentially to boost the usage of their services. So it's kind of interesting because they don't invest in the exact same companies. And they made it very clear when Google Cloud invested into Anthropic, they're like, this isn't like, I don't know, they're like, this isn't like a Google Ventures investment. This is like a Google Cloud play, which is meant to be like a strategic investment, blah, blah, blah, blah.

4:44So I don't know, it's kind of interesting, there seems to be like a little, a little attention on the Google side for who's who's getting who and why they're they're investing in them in these new AI startups. So the CEO Clement Delangu stated that the latest round of funding will be used to quote, grow the team currently at 170 and invest in more open source AI and platform building. In an email interview, he really emphasized the crucial role of the open source community stating, quote, it's validating both for Hugging Face, but also for the broader open source AI ecosystem. Companies want to build AI themselves, and they need open source AI for this.

5:21So I think while the term open source can kind of often be misinterpreted or confused, the generative AI sector has a thriving open source community. Many leading AI companies are increasingly kind of opting for a model of, you know, restricted openness, you could say, quote unquote. But essentially, they release their AI model to the public, but also enforce certain conditions through a limited user license. We see this out of meta with their Lama function, right? And even their like Lama 2, I think definitely they're doing better. But like Lama 1, they sent it out and they're like, okay, this is an open source model.

5:58It's super cool. Everyone can use it. But oh, also companies can't use it for anything commercial. So it was like, okay, sort of useless, like unless I'm going to just run it on my own personal computer for some real personal use case, like the audience is very, very small, you can't really productize that. So I think that is an interesting thing that's happening in the industry. But you know, Llama 2 from that, I think they fixed some of that, some of that confusion and those problems. But I do think it's, it is pretty interesting. And I think that this kind of Some people say that this balanced approach allows developers to experiment and innovate while aligning with the company's objectives.

6:36Some people criticize that, but there's a little debate on that. I think the massive investment in Hugging Face not only underlines the growing market demand for early access to advanced AI models, but also really highlights the crucial role of open source platforms in advancing the entire generative AI landscape. I, for one, think that AI is going to live or die by that, the real success of this platform. I would like AI to be more like the internet that feels very much more open in a lot of regards versus just being closed AI like Sam Altman's closed AI that he has. So it'll be interesting to see where this goes and if Hugging Face can, you know, push off the corporate pressures and keep a lot of these AI models open source, available for everyone, and keep kind of that beautiful open source ecosystem thriving.