Tis the season for venture shakeups

Author

Alex Wilhelm
December 23, 2024 • Estimated Reading Time: 7 minutes

Top News

  • Tis the season for venture shakeups: As the year comes to an end and some venture capitalists head to Washington, others are heading for the exits. Bloomberg dug into the trend, noting that some VCs have made enough cash to step back, while some other partners are finding that their results failed to live up to expectations in a post-ZIRP world. TechCrunch’s rundown of the list of well-known VCs that have sought new horizons this year is illustrative.

  • Telegram rights its financial ship: Social network and messaging service Telegram has 12 million subscribers who pay it a monthly fee. But the Times reports that that accounts for less than 50% of its total revenue, with Telegram doing very well on the advertising front. It appears that work to moderate the service a bit more closely is helping attract brand-name advertisers. For those who prefer Telegram to Signal, financial stability is a holiday gift.

  • All about AI models: As reporting makes it clear that the path to better AI models won’t be smooth or linear, Microsoft is working to stand more stably on its own. Reuters reports that Redmond is “working on adding internal and third-party artificial intelligence models to power its flagship AI product, Microsoft 365 Copilot,” to not only depend on OpenAI a bit less but also to save money. Of course, Microsoft owns a good-sized chunk of OpenAI, but it’s not its majority owner, but not enough it appears to avoid cost concerns.

TWiST500

To get slightly meta, the TWiST500 newsletter is going out today and Friday, giving the team a few days to breathe easy and recharge for a very busy 2025.

That, out of the way, is a little riff on why Human Native and TollBit are on the TWiST500. In the AI news brief above, we linked to a WSJ story about how OpenAI’s GPT 5 training has hit a few roadblocks. From that article:

For its prior models, OpenAI used data scraped from the internet: news articles, social-media posts and scientific papers.

To make Orion smarter, OpenAI needs to make it larger. That means it needs even more data, but there isn’t enough. […]

OpenAI also started developing what is called synthetic data, or data created by AI, to help train Orion. The feedback loop of AI creating data for AI can often cause malfunctions or result in nonsensical answers, research has shown.

The takeaway? The idea that the value of training data will go down over time doesn’t seem to be correct for now, which means that training data will retain value. Good. That means that big media companies can collect checks, and the value loop will help both AI model companies and publishers alike, right?

Some people are skeptical. Including Om Malik, one of the Internet’s own and a long-time writer and investor. His recent essay on how media companies are going to get steamrolled is worth reading. Here’s his closing riff:

You stay still, but your AI agent goes out and fetches, distills, and synthesizes the content and renders it in whatever format you want — audio, video, or text. This is the future. None of the media business models will work in the future — neither advertising nor paywalls. Today’s content deals, like the one The Atlantic signed with OpenAI, are akin to the sugar high you get from soda. The sugar high is followed by the inevitable crash.

Agreed, unless there was a third option for media companies to monetize. Enter TWiST500 companies TollBit and Human Native, which want to build enduring marketplaces between AI model companies and publishers. This means more publications can be earned from AI, which could help keep more media entities in business. That’s good because synthetic data has yet to beat out human-generated text, and if AI kills its own upstream sources, we’re all going to be parched.

I am not convinced that any single business model will save media from continued financial duress today, but I do think that if the two startups are aiming accurately at the future, their vision for what’s to come could help media economics find at least a partial path out of the ‘chasing traffic from Google to sell low-value ads against’ or ‘hard paywalls and sharply limited audience size’ choice from hell that many pubs struggle with today. — Alex

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