I’m asking more to work out what is the basis of this valuation. Why would Nvidia spend $13B for what seems to be a services that gives things away for free.
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.
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.
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).
Nvidia has a market cap of $5T USD today, and a decent chunk of that is due to LLM speculation.
Does Nvidia want their stock price to be at risk of being tanked by a download service being in the news? No, they want to make sure the party keeps going and is under their direct supervision, and part of that is making sure Hugging Face isn't bought by a competitor or runs out of money.
Yeah, great point. Nvidia could potentially be overpaying. Not sure how that equates to Huggingface being "a file download mirror with a couple of side features dangling off".
While it's probably easier to say this in retrospect, they were eliminating a direct competitor to their core business. Something so advantageous it should have been blocked by regulators.
I can't see this as being as good of a purchase, especially when it's 13x the price of what was seen as an absurdly large amount back then.
Absolutely none of this makes sense and the thing that amazes me is how long it has continued. Future historians will just laugh at how stupid and obvious the crash was.
I’m asking more to work out what is the basis of this valuation. Why would Nvidia spend $13B for what seems to be a services that gives things away for free.
Talking about profit is so passé in the new economic paradigm. The rules have changed— it’s about how much a company is worth. Get with the times.
–Some guys in every bubble I’ve witnessed.
I think Russ Hanneman calls it a "pure play" type of company. He put radio on the internet, so he would know.
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.
150 million a year? Why, at that rate NVidia will make their money back in just 86 years.
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.
Can someone help me out - who pays for things on HF? Are they charging the model providers?
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).
This gets mentioned a lot, but the most valuable companies, by orders of magnitude, have the most profit, by orders of magnitude.
Risk management.
Nvidia has a market cap of $5T USD today, and a decent chunk of that is due to LLM speculation.
Does Nvidia want their stock price to be at risk of being tanked by a download service being in the news? No, they want to make sure the party keeps going and is under their direct supervision, and part of that is making sure Hugging Face isn't bought by a competitor or runs out of money.
> Why would Nvidia spend $13B for what seems to be a services that gives things away for free.
To stop that! Literally. To stop those services being free.
Why would Nvidia destroy the first place we all look for models to load on our Nvidia hardware?
for 6 months?
https://huggingface.co/pricing
I don't understand who this is targeted at. You can download the models, clone the datasets free. Who is paying them and why?
This is like saying GitHub or Google just gives away everything for free
Not really. GitHub has a strong platform of paying customers and a solid product that’s hard to replicate.
Google is obvious.
Hugging Face is a file download mirror with a couple of side features dangling off.
They hit 150 million in annual recurring revenue this year.
Pretty nice dangling side features apparently.
That still leaves the company valued at 86 years of revenue
Yeah, great point. Nvidia could potentially be overpaying. Not sure how that equates to Huggingface being "a file download mirror with a couple of side features dangling off".
Just wait until you hear that Facebook bought Instagram for $1 billion in 2012, when it was generating no revenue.
While it's probably easier to say this in retrospect, they were eliminating a direct competitor to their core business. Something so advantageous it should have been blocked by regulators.
I can't see this as being as good of a purchase, especially when it's 13x the price of what was seen as an absurdly large amount back then.
You are very good at bringing up irrelevant numbers and missing the forest for the trees
You are right, we are in a post numbers and reality economy.
Absolutely none of this makes sense and the thing that amazes me is how long it has continued. Future historians will just laugh at how stupid and obvious the crash was.
Whether you realize it or not Hugging Face's monetization is just as obvious as GitHub's
They make it easy to run models. The models have to run on hardware somewhere.
Possibly, but they were profitable already.
This. They are buying a brick in the xkcd #2347 diagram