Runway Scores $308M to Supercharge AI Video Innovation

0:00Runway has just announced the raise of$308 million. dollars. This is their Series D and an absolutely huge jump. Runway, for those unfamiliar, is a company that creates AI-generated video. And to be honest, they're pretty much the front runner. Now, they have big competition for sure from OpenAI with Sora and even from Google. But really, Runway's been around for a lot longer than anyone else. And I remember when Runway first was kind of making the rounds, same time as ChatGPT came out, they'd had this model for a while. It was pretty bad, if I'm being 100 % honest. Very frequently, it looked kind of like animated GIFs.

0:36There was no physics. Things would move out of proportion, and they were kind of wacky. It was low quality. You could only generate a few seconds. So this was, you know, when ChatGPT came out. They have come a long way since then. Today, Runway videos look quite impressive. And I even remember when OpenAI launched Sora, and I was like, oh my gosh, Sora is going to completely smoke Runway. and about three weeks later, if I remember correctly, Runway came out with a new model that was on par with Sora. And the great thing about Runway was that it was actually launched and live, whereas Sora was unavailable for a very long time.

1:09They were kind of having beta tested people using it and doing safety testing and it wasn't publicly available. And even to this day, while Sora is publicly available, you don't really hear it talked a lot about. And that's because it costs$200. You have to be on the$200 a month tier in order to actually use it. And so it just isn't very used. Meanwhile, Runway, you can have much lower tiers. It's more affordable. And the absolute best thing about Runway is that it has an API. So developers can integrate it into tools. I myself am looking at integrating it into the AI box platform. People love being able to generate AI tools.

1:45And I think maybe one of the drawbacks or things people are concerned about is, yes, it is more expensive, obviously, than running a chat with ChatGPT because you're generating a video and this is like generating a thousand images or, you know, stitching them together and that's how you make a video. But at the same time, it's way cheaper than hiring an actual film crew and you're still only paying, you know, maybe 25 cents a video or something like that. So it's quite, quite impressive and you can do some really amazing things with it. So who actually paid them the money? General Atlantic was the one that led this round.

2:14They also had Fidelity Management, Billy Guilford, NVIDIA SoftBank and some others. So obviously some big heavy hitters, right? When you see Nvidia getting in, when you see SoftBank getting in, this is a Series D round and Runway is a clear leader. No one's really concerned that Runway has lost their secret sauce or that the competition is going to be too hard for them. I think everybody wants a lot of competitors. No one wants OpenAI to run away with this. And I think it's kind of interesting because it feels like OpenAI has a very talented team. They come up with really incredible products. But the big drawback is they have so many products coming out that like, you know, they just had their latest version of Dolly, which is amazing and fantastic.

2:50And it's an incredible image generator that apparently has generated over 700 million images since it launched like a week ago or a week or two ago. So that's amazing. But the thing is, that wasn't updated for like two and a half years. So the improvement jump was massive. People were like, oh, my gosh, it got so much better. But for the two years in the meantime, everyone just had to use MidJourney because OpenAI's Dolly model was pretty bad and not actually that great. So I think the problem with OpenAI is that they have these really impressive launches or maybe even demos. And then it's a long time before they get updated, whereas you can have a company like Runway or MidJourney that can make much quicker iterations.

3:29And they'll have smaller improvements, but they happen way more frequently. So as soon as they catch up, they can kind of run away with it where OpenAI gets stuck until they have their next big, huge update. So that's just kind of my observation of what is happening here. And the reason why I think Runway is not being severely threatened by OpenAI. And I think they have a lot of there's a lot of potential here. So up until this date, Runway has raised five hundred and thirty six million, which means that this three hundred million they just raised is quite impressive. Right. That's a huge chunk of that.

3:59And this is what Runway said in relation to all this. They said, quote, today marks an important milestone as Runway announces a significant next step towards our goal of creating a new media ecosystem with world simulators. They said, our recent advancements aren't merely incremental improvements. They form foundations for an entirely new approach to media and ecosystem built on AI systems that can simulate our world. Okay. So I think that what they're trying to get at here is they're like, this isn't just an incremental improvement. And so they just, okay, so I guess like cutting to the chase, they just released their latest version, which I think is like called V4 or something.

4:35And it is impressive. It does a lot of cool things. I'll cover, or Gen4. I'll cover some of the cool things that they'd released this week in Gen 4. But a lot of people were like, okay, this is better than your previous version, but it's just incrementally better. It's just a little bit better. So maybe just 20 % better. And this is kind of what I was getting at before with like OpenAI and doing the big releases that kind of wow everyone versus doing these incremental ones. Yes, it's 20 % better. What they're trying to say, though, is they've rewritten how these videos are actually being generated, which means it's the foundation for something that can get a lot better.

5:06And so what they've done is beyond just, I guess, sucking in videos and trying to get it to spit out similar videos. Allegedly, they've created what they're saying is a world simulator. So this means that in order to actually create video, one of the big problems is it's not just like, you know, with a picture, you can kind of suck in other pictures and spit out a picture that seems kind of right. And then maybe there was like we had the phase where everyone had weird 10 fingers and they had to try to fix the finger problem on AI generated images. with video there's a much bigger problem and that is that there has to be physics if a bird flies by in the background it has to like the video has to understand how a bird's wings flap how the physics of that work if a gust of wind hits the bird and it kind of bumps like how everything is interacting with each other and essentially in order to create ai generated video you have to create a real world simulator an actual simulation of how everything functions in the world how physics works, how things interact when you grab a pillow and, you know, shake it, how it, the creases will move as the pillow kind of bends, like all of the little tiny things.

6:07And in a video, you could have like 20 or 30 of these things all interacting at the same time, right? You could have people in the background talking and their hair is blowing in the wind and someone in the front, you know, bending a stick and how it moves and all of that. So it's crazy, right? This is a real world simulator. What Runway does is they have a whole bunch of AI media tools. They have video and image. I should mention, they also do image, which isn't a shocker. In order to make video, you got to generate thousands of images. So they do have an image generation model. And of course, there is a lot of competition, specifically in the image generation model.

6:39And in the video, it's more just OpenAI and Google. And there's a couple other ones. There's Pika Labs, and there's a handful of others that are doing the video as well. But I think Runway might be doing it the best. They have really tried to differentiate themselves. They have a deal with a major Hollywood studio. They've also set aside millions of dollars. Something that I see a lot is they fund like these AI indie films. So they are funding filmers or, you know, producers to make AI produced footage that look really cool. And they have this kind of film festivals every year. That's really kind of cool to see like, oh, look, these were all made by AI.

7:13And even from when the footage was like not that great, I was really impressed with how creative people were and how they were able to actually make things that look good. And then today they're getting better and better. So they have, you know, Gen 4 got released this week. And this, allegedly what Runway is saying is that with this new video generation model, it can create consistent characters, consistent locations, and objects across scenes, right? So you might be me in one scene, and then I'm able to be in a completely different scene. In the past, you would just say like, you know, a white male with blonde curly hair walking on the beach.

7:47and then you'd try to say that exact same description walking down the road. But it might be a completely different white male and it wouldn't look like me at all. So now you're actually able to have consistent characters. And this is what is obviously needed when you're making different shots of a film. You need the same person to make it consistent or, you know, coherent. They say that they can create, quote unquote, coherent world environments. And they can also regenerate elements from different perspectives, which is kind of cool, right? So like I could be talking to the podcast here, for example.

8:17And then all of a sudden the camera pans over to another angle. It's a different perspective, but it's still me in the same place doing the same thing. So this is really cool. The camera moves around. And when you think about how they're having to simulate real world environments, a lot of people say that in order to make these videos, they're simulating like a 3D environment. So they can really move that camera anywhere they want around that environment to see any angle of what's going on there, which is really cool. And you get to a point where if for real films, I imagine real film producers are salivating over the concept of maybe you run through and film something, you upload it to AI, and then you could just pick wherever you want the camera to be anywhere in the shot, zoom in in any which way, it would be quite impressive.

8:55And that's probably where we're going into the future. So this is really amazing. They said with their new Gen 4 product, they hope to hit a$300 million annualized revenue by the end of this year. So by the end of the year, they hope that they'll be on track to make$300 million in revenue. I hope they're able to hit that. I think this is a great company. I'm really excited about what they're doing. One thing that people say is possibly going to get in their way is that there is a big lawsuit against essentially how they've trained their model. People are saying, well, they just sucked up all of this copyrighted artwork and data and videos, and they trained their model off of that.

9:36And to be honest, yeah, I don't doubt they did they say like oh it's all in fair use and whatever there's this whole like lawsuit going on for a lot of companies open ai as well and it kind of goes back to the whole drama with open ai and miriam marati when she was asked by the new york times like hey you guys using youtube to train and she's like i'll have to get back to you on that i don't know and it was like clearly she was uncomfortable and clearly yes they were using youtube to train sort of their video model so evidently runway did the same thing everyone's doing the same thing so they are they have a lawsuit but i think everyone is also probably having a lawsuit it'll be interesting to see how that shakes up.

10:09Obviously, a company like OpenAI has a lot more resources to fight it. Although, you know, 300 million isn't too shabby either for runway. So I'll be curious to see what happens. And to be honest, at this point, at this moment, maybe there's a future where we work on some like, you know, trademark and copyright sharing and payouts to artists. And I think there's some companies doing that, like Adobe is doing a good job with their image generation model. To be honest, from my consumer perspective, I just want these companies to get the best model out as fast as possible. And I know some people will be upset about that controversial hot take, but I just want this, like, I just want an actual video generation model that I can use for a business or I could use for whatever I want.

10:49And maybe once they make something good, then we can start regulating and clamping down and making them pay everyone that they took their data from. But I just want it to come out as soon as possible. So that's where I'm at on it. And I mean, the people that could pay are Adobe and Google and whatever the massive companies are. So sometimes when I see these startups, I have a little empathy and sympathy for them. But I know everyone's not maybe on board with that. That's kind of where I sit on it. I just want the tool out as soon as possible. And I'm sure we'll figure out all the monetization and compensation stuff in the future.

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