I dunno. You can argue over whether they're overpaying, but it's not like Huggingface is Clinkle. They hit $150 million in ARR this year, they have tons of runway, and according to reports, have just started to even burn the money they raised a few years ago.

I get that it's fun to be glib about the stupidity of tech elites and investors in general, but Huggingface have been pretty open about their financials and are, in my opinion as a practitioner in the field, one of the most responsible orgs in our space. They've been a pillar of open source ML for years now and have made a very positive impact on our ecosystem.

Nvidia is getting a real business generating revenue, and the center of the universe for open models. Both seem like pretty valuable attributes, from Nvidia's perspective.

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jameshart a day ago | parent | next [-]

150 million a year? Why, at that rate NVidia will make their money back in just 86 years.

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calebkaiser a day ago | parent | next [-]

Solid point. I'm sure Nvidia went into this deal expecting completely flat growth and no other benefits to their core business. Sorta like how Meta never increased Instagram's revenue from $0 and is still waiting for it to pay off that billion dollar acquisition price.

Or like GitHub, which was generating something like 200 million in ARR and had never hit profitability when Microsoft bought it for $7.5 billion back in 2018. I'm sure it has come as nothing but a happy surprise to Microsoft that GitHub generated $1 billion in 2023. They had initially penciled it in for 38 years til ROI.

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DrewADesign 16 hours ago | parent [-]

With all the spending and valuations in the AI space being so reasonable and grounded in reality, sure. Huggingface will surely be exactly like GitHub and Instagram with their extremely low and stable per-user overhead, and large, extremely dedicated user bases.

	▲	calebkaiser 9 hours ago \| parent [-]
		I just feel like you're saying things based on a general vibe about "AI companies" but didn't pause to look up the particular company being discussed. Huggingface reached profitability 2 years ago. They've reportedly just started to touch the cash they raised 3 years ago. They have a tiered pricing model with metered pricing on resource heavy services. Seems pretty stable? Your point about their user base is even weirder. They play essentially the same role for the ML community that GitHub does for software engineers, so I mean, yeah I'd pretty much expect their relationship with users to be "exactly like" GitHub's for the most part? They're where everyone has published their models for the last 6 years at least, going back to pre ChatGPT and the recent AI boom. There aren't realistically any other major model hubs, certainly not with anything near their footprint.

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nkmnz a day ago | parent | prev | next [-]

Basic napkin math: 5% IRR means they'd only need to 4.5x their revenue to make this roughly work. If they can finance this cheaper and/or do not have better options for their cash, it's even less.

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dgellow a day ago | parent | prev [-]

If you assume no growth

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abrookewood a day ago | parent | prev [-]

Can someone help me out - who pays for things on HF? Are they charging the model providers?

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calebkaiser a day ago | parent [-]

It's not too dissimilar from GitHub, but geared towards ML. They have a 9/mo pro plan for individual users for upgraded storage/usage, and an enterprise version of Hub that larger orgs can pay for. I think the enterprise has some contract minimum + 50/mo per seat. https://huggingface.co/pro

They also have inference endpoints with metered prices, and their spaces product (though i'd imagine this is a smaller portion of revenue).

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DrewADesign 21 hours ago | parent [-]

I’d be curious to see how much that’s subsidized. Maybe they’re different, but when I see ML and monthly plan in the same sentence, I see zero sustainability.

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calebkaiser 19 hours ago | parent [-]

I'm curious why?

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DrewADesign 17 hours ago | parent [-]

Why I don’t think it’s sustainable to run a compute-intensive business on low monthly plans? If they’re like OpenAI and Anthropic, monthly plan users can spend many times the amount of money in a month than they pay, and unlike regular lower-compute SaaS businesses, overhead increases significantly with usage. That means the more users many of these services get, the more money they lose. Some surmise OpenAI was hiding the actual cost in marketing expenses to make their business look less unprofitable. Anthropic was smart enough to focus on customers most likely to be willing to pay for API pricing, so they’re in a better position. If hugging face is primarily focused on selling monthly accounts rather than token based billing which bills more as the company’s expenses increase, its not likely to ever be sustainable without significant changes.

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calebkaiser 7 hours ago | parent | next [-]

I think maybe just click around Huggingface's site a bit? They don't run a compute-intensive business on low monthly plans. You're describing frontier labs that sell access to their enormous models with subsidized subscriptions, but that's just an entirely different company/model than Huggingface. They've been around in their current form since around 2018. They provide a GitHub like service for hosting and sharing models primarily, and they also provide infra for optimized compute (for training and inference) that you can purchase through them, but you pay as you go for the compute and they have their premium baked into the price.

Their lead advocate just posted this describing things: https://x.com/mervenoyann/status/2092924706508698025

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aseipp 15 hours ago | parent | prev [-]

Most of HF's revenue comes from their enterprise customers; you essentially get direct access to their MLEs (Slack) as well as their software stack, hence the per-seat cost and annual minimum contract price. In that sense they are not particularly "compute-heavy" in terms of what they "really" sell.

	▲	DrewADesign 15 hours ago \| parent [-]
		Ah so it sounds like they might be closer to a regular SaaS.