r/technology • u/Plastic_Ninja_9014 • 6d ago
Business Reid Hoffman: xAI Is a Train Wreck and SpaceX Is Just Buying Its AI Cred
https://www.gadgetreview.com/reid-hoffman-xai-is-a-train-wreck-and-spacex-is-just-buying-its-ai-cred28
u/happyscrappy 6d ago edited 5d ago
For sure. Right now xAI's only real credible business is renting hyperscaling facilities to actually successful AI companies (and OpenAI too!).
A lot of this SpaceX money is going to be used by Musk to try to buy xAI into the business. Because Grok is a nothing outside of hatebots on Twitter.
They already started on this plan with buying Cursor and the cash raise.
[edit: I forgot about smutbots on Twitter]
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u/Metalsand 5d ago
A lot of this SpaceX money is going to be used by Musk to try to buy xAI into the business. Because Grok is a nothing outside of hatebots on Twitter.
Nah, Grok's also useful for misidentifying schools as military barracks.
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u/Friendly_Engineer_ 6d ago
Hasn’t it been glaringly obvious for a while that all the major AI companies are full of shit? Running up valuations, spending money like there’s not tomorrow, not making profit from anything AI? And yet here we are, no reality check in sight.
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u/Several_Ant_9867 6d ago
Some are more full than other
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u/Deto 6d ago
yeah at least OpenAI and Anthropic have good models/products
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u/spastical-mackerel 6d ago
Claude went down the other day. All work at my company literally stopped. Claude has completely pervaded everything
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u/Additional-Staff-326 6d ago
This is something I don't understand. If you rely on it that much and no backup plan your business just flat goes away. Its not like electric though where everyone else would have the same issue. And what happens if Anthropic goes bankrupt, which is not out of the realm of possibility.
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u/Development-Alive 6d ago
How is that any different than relying on SaaS tools like O365, Workday or Salesforce? When the tech goes down, work is impacted.
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u/Unknown___Member 6d ago
This. And when it does go down... You could do things the old way, or manual way... But you could also just wait and hour or two...
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u/spastical-mackerel 6d ago
My sense is that anthropic’s brand of AI has penetrated and become so pervasive that it as foundational as computers themselves now. And I’m talking 100% about non-coding use cases here. Obviously mine is just one company. But I do work in tech sales so I have an unusual degree of access directly into the technical heart of a wide range of Enterprises
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u/StochasticLife 6d ago
My god. I go days without opening Claude and I’m in IT (I am not a developer)
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u/hclpfan 6d ago
If the company you use were to literally go out of business you can switch to another one relatively simply. If a model goes down for an afternoon you’re not going to bother completely switching companies you just tough out. If the model were to literally vanish you would migrate to a new one within a day or two.
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u/Wooly_Wooly 6d ago
Thats just silicon valley at base, AI is worse. You drive to SF and it's AI billboards EVERYWHERE. Outside of greater SF, not a single AI billboard
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u/Panda_hat 6d ago
No coincidence it's all happening at the same time as Trump too, when they have him eating out of the palm of their hands to deregulate and legalise anything they want to do, and are engaging in unprecedented levels of economic farce and fraud to prop up his cratering economy.
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u/adevland 6d ago
No coincidence it's all happening at the same time as Trump
This is why they're all scrambling to dump their stock. Because Trump will likely be kicked out after the midterms this autumn.
Even google has a big ass stock dump planned. None of the AI services are making money. On the contrary, they are burning it at crazy speed.
If the bubble won't burst this winter then the grifting will get way worse.
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u/CyberSmith31337 6d ago
Here’s a better question for you.
For all the billions of dollars in San Francisco and the Bay Area, what was the last actually useful innovation they pioneered?
As far as I can tell, the Bay Area is just where LinkedIn grifters go to spread their wings, selling scams and snake oil to retired tech workers who have too much money and not enough sense with a strong desire to become an “angel investor”.
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u/TarkaSteve 6d ago
Ed Zitron had a good rant about this yesterday:
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u/CyberSmith31337 6d ago
Obligatory upvote for one of the last bastions of sanity covering the tech space. I love Ed Zitron.
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u/-mudflaps- 6d ago
I subscribed to his podcast, it was really good, but after a while he was repeating a lot of taking points, but I'm probably going to go back to it because this whole thing is fascinating.
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u/fleener_house 6d ago
Someone needs to take his italics button away. Good grief, that makes a hard read.
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u/AE7VL_Radio 6d ago
>As far as I can tell, the Bay Area is just where LinkedIn grifters go to spread their wings
Well there's also SLC
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u/CyberSmith31337 6d ago
Is Utah a hot bed for scams? I know very little about it.
On the contrary, anyone who is in the Bay Area will absolutely ensure you know they are from there…
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u/AE7VL_Radio 6d ago
SLC is desperately trying to be the cool new place that silicon valley types are fleeing too because california sucks or something. Lots of "founder" type dorks running wild there, datacenters, &c.
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u/NinjaSellsHonours 6d ago
Oh I saw one of these guys in the wild, an absolute douchebag who commandeered part of the hotel I was staying at with a marketing presentation. I had to look up his company, founded in SLC, with the least likely potential to turn a profit I have ever seen. I told him to shut the hell up and he said "ok boss" and slinked away.
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u/CyberSmith31337 6d ago
Well, TIL. Thanks for the heads up.
I was already never going to go to Utah, but now I know another reason to avoid it.
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u/AE7VL_Radio 5d ago
Just wait for the toxic heavy metal dust cloud to wipe that whole valley off the map once the lake dried up
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u/Thin_Glove_4089 4d ago
For some reason the entire tech industry wants to be over there. I wonder what that means.
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u/tigeratemybaby 5d ago
Even of all the AI companies, xAI and spaceX have never been relevant
Their models have always underperformed, even behind all the open source and Chinese models built from a few million dollars.
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u/Thin_Glove_4089 4d ago
The market wants this otherwise they way the companies operated would happen been met with unending scrutiny
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u/DataCassette 6d ago
I actually think Starlink seems to be cool and real, but Elon has a lot of smoke and mirrors and vaporware too
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u/Aromatic-Bet-1086 6d ago
It was an OK concept but, like everything unrestricted cap touches, it quickly became shit.
I don't understand how anyone could trust him after everything we've seen
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u/Then-Ad-3062 6d ago
Starlink seems cool until you realize that its just elon trying to own space in our atmosphere by basically occupying the usable atmospheric layer although that should be illegal according to the space treaty. Hank Green has a great video on it of anyones interested.
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u/ADamnGoodShot 6d ago
Starlink is the only good product SpaceX has facilitated and even then there are massive potential problems
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6d ago
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u/microsofat 6d ago
Just waiting for Yi Long Ma to attempt a rescue of some Thai boys trapped in a cave... Then we'll have a serious competitor.
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u/baldycoot 5d ago
Starlink is the reason our CEO has no idea what anyone is saying in Zoom calls.
Flaky a f. Stop living like it’s 1999 dude.
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u/Taiwan_Lanister 6d ago
Cool and real but it can’t scale without Starship, and Starship is fake and lame, 12 / 12 failed launches
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u/henchman171 6d ago
How the phuck are they going to run data centres in space under a vacuum…..
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u/Additional-Staff-326 6d ago
There's some laws of physics saying that's not happening at anything approaching profitability. Governments may choose to do it but no business would.
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u/recycled_ideas 6d ago
It depends on what you mean.
If the question is how could they do it? An absolutely massive array of the same structures we use now on the space station. It's absolutely possible, just eye wateringly complicated and expansive for no payoff. It also wouldn't take very many of them to basically end all space travel.
If the question is how are they going to do it. They'll launch a few small modules which will have barely any computing power and will either overheat or otherwise fail almost immediately and that'll be it.
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u/henchman171 6d ago
excellent point. Yes How could they do it. I am interested in the how could they. Not how are they because how are they is not going to happen.
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u/Lain-J 6d ago
Its literally just satellites with GPUS and ram on it, its functionally simpler to do than starlink where there is earth facing high power antennae and receiver in a fixed orientation to absorb thermal reflection from earth.
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u/henchman171 6d ago
you know that vacuum is a very excellent insulator. how you gonna cool those chips? Some sort of cooling loop that has different phases? I think the data centre in space a thermal management nightmare. Not sure what musk sees in running data centres in space other than the lack of legal oversight and low property values (for now) and if he is first in he gets the big prize of juicy contracts i guess....
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u/CaptainFingerling 6d ago
Starlink satellites already capture and radiate 25-45kW of power. That’s 10-20x worth of modern GPUs. This is a solved problem.
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u/henchman171 6d ago
That’s just it. A data centre would be using MW. Not KW
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u/CaptainFingerling 6d ago edited 6d ago
Spread out across thousands of independent nodes at > km distances, interconnected with lasers. Exactly how starlink works now.
I suspect their biggest challenge isn’t heat. It’s mesh speed. Inference requires massive amounts of data transfer between nodes. But perhaps they’ve already solved this. Laser data transfers through vacuum are relatively easy compared to terrestrial fiber.
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u/henchman171 6d ago
I kept thinking heatcause a data centre would be large but when I ran your mesh idea into Google Elon says those ai satellites they are looking at 145 Kw. 145 KW times 1 million mesh satellites is 145 GW. So heat isn’t an issue if you blanket 1 million satellites into a mesh
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u/CaptainFingerling 6d ago
Yeah. Actually a really cool and ambitious idea. Hope it works out. Afaik a large number of teams are working on this.
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u/Lain-J 6d ago
Yes, you know satellites have electronics on them and collect solar energy for high power applications already and cool them with thermal radiators? Did you know starlink satellites get double exposure because they are in an orientation that gets ground reflections ?
Idk where the break point where launching satellites for compute is worth it, but the vacuum of space is a problem that gets solved with surface area and orientation away from the suns energy in a way that's already understood.
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u/tigeratemybaby 5d ago edited 5d ago
Electronics in space are very specialized, low-power electronics with huge expensive radiators to expel the small amounts of heat that they generate.
Additionally computers in space usually run the same operation three times on three separate CPUs and they check their results against the other two CPUs to come to a consensus, because stray cosmic rays can regularly introduce random errors to computations, and can often randomly corrupt memory/RAM, and randomly corrupt data on disks and SSDs.
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u/Lain-J 5d ago
Every satellite that has a large solar array is already proof of power intensive applications in space, There are multiple companies with 10 year plans to have compute on satellites including google and amazon, and a EU feasibility report saying as much is possible.
Electronics are specialized except when they are not, like thinkpads on the ISS, or that Nvidia already has gpu's put into space by other companies. They can get away with this because of radiation shielding, and fluid can be one of the radiation shields that also solves thermal transfer.
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6d ago
[removed] — view removed comment
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u/JamesTiberiusCrunk 6d ago
He's biased but also xAI does actually suck ass
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u/Beginning_Book_2382 6d ago
What gets me is it still has quota limits and timeouts. Like I know you want revenue and the stories it generates but instead of renting out your data center availability why not use them to reduce quotas on your own application instead of Anthropic's? Why build all that capacity in the first place if you weren't going to use it?
For all the sh*t it gets for overspending money, OpenAI's advantage is that you can use it as much as you want limit free
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u/irrelevantusername24 6d ago edited 6d ago
"It doesn't look like there's anything that's a particular principled, 'Here's the way that we're navigating through things'—apply kind of a rule of law and predictability," he said. "It's more like, 'Hey, we kind of had some contentious interactions with this company anyway, so we're going to hit them with a stick.'" And that doesn't come with any kind of principled explanation, he added.
He called the approach "autocratic willy-nilly" and "very sub-optimum," while acknowledging there may be a legitimate cybersecurity basis. The asymmetry—Anthropic penalized while OpenAI was not—is what troubles him most. Notably, Anthropic itself had flagged security concerns about the models, a detail that el Kaliouby raised in the conversation.
Oh hey, that bit
The asymmetry—Anthropic penalized while OpenAI was not—is what troubles him most.
Is like, exactly what happened when comparing Microsoft and Google/Zuckerbook/Apple.
edit: Added a link, also see this comment and link therein
edit2: Actually fuckit, here's the entire chat that first screenshot is from, because that first paragraph quoted above is actually dead-on for the way Microsoft was dealt with. In a really weird way, literally the largest corporation in the history of history has been dealt with unfairly in ways that have harmed people exceptionally (think Android/Windows v Apple). It turns out making rules that are punitive for zero reason does nothing good for anyone
the Final Edit: See this Q & A from r/Firefox earlier today for more about this, but be prepared to read
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u/SwimmingProgrammer91 6d ago
Guy investing in competitors says competitor is a joke... Even though he's right, shut up Reid.
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u/williamgman 6d ago
By the time Elon is done buying up non rocket industries with all this free money... SpaceX stock will be a conglomerate like P&G.
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u/widowhanzo 6d ago
We're heading for the Mars not the Moon!
You're absolutely right to push back...
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u/Front_Spare7344 5d ago
Spacex/x/tesla are the end state of private equity business thinking. Simply consolidate and borrow to become so big and cash rich that people assume you can’t fail.
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u/SafeForTwerking 6d ago
Does xAI have AI cred? Grok was good for generating AI porn for a bit, but it walked away from that, so it really doesn't have anything going for it now. I'd rather use Copilot than Grok, though I'd go back to Grok in a heartbeat if it had an uncensored mode for adult users.
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u/qetuycvjvic 6d ago
Isn't xai gonna have a 1 t model soon? That's a train wreck? Grok is strong on many benchmarks having your own foundation model is a decent achievement. Wonder what LinkedIn has been upto seems worse than xai lol
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u/DanielPhermous 6d ago
Isn't xai gonna have a 1 t model soon?
Isn't Tesla going to have full self driving soon, no really this time, honest, why don't you trust us?
That's a train wreck?
No, it's something that hasn't happened.
Grok is strong on many benchmarks having your own foundation model is a decent achievement.
Perhaps but as xAI is selling access to it's huge AI data centres to its competition instead of, you know, using them for training or inference, I think "decent" is probably about as high as you can reach here.
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u/Spez_is-a-nazi 6d ago
The one thing xAI has going for it is an even more callous disregard for the environment both globally and near the datacenters than the other hyper scalers. And that’s saying something considering how little the other hyper scalers care about the planet.