Seems AI is no magic bullet yet and its still early days. For AI start-ups especially their margins are lower and they are more like traditional service providers in that they will likely roll out customized deployments. The sky-high costs of cloud compute time for machine learning and the painstaking human effort needed to clean up the data needed to train AI systems are also major financial sinkholes.
If you’re not a hyperscaler, or close pals with one, eye-watering cloud bills can reach tens and hundreds of thousands of dollars, or even spill over to the millions of dollars – something most startups cannot afford.
The human labor required to clean the training data can be outsourced to third parties, but these services quickly rack up in costs, even if you pay people poorly, and run into privacy headaches. AI software has to be retrained regularly to adapt to the dynamic nature of data, and algorithms written and tweaked for specific customer or application workloads.
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And forget SaaS-y upstarts: These machine-learning darlings are more like traditional service outfits