Microsoft touts cloud power for Y Combinator startups | Real Time Headlines

EzDubs is a developer of language translation technology that started out like many tech startups. It launches on the public cloud Amazon and Google.

However, after EzDubs completed its Y Combinator launch last year, the company quickly made the switch, adding Microsoft’s Clouds blend into the mix. That’s because the founders of EzDubs learned partnership This enables Y Combinator companies to earn $350,000 worth of credits on Microsoft Azure.

EzDubs co-founder Padmanabhan Krishnamurthy told CNBC it was a “message from heaven.” Krishnamurthy said the credits are particularly useful because Microsoft has been at the forefront of the artificial intelligence boom, investing in OpenAI and hosting dozens of projects using the company’s large language models (LLMs).

On Azure, EzDubs has access to the high-end graphics processing units (GPUs) required for the new wave of AI model training that no other cloud provider can match.

“At the time, it was a given,” said Krishnamurthy, who co-founded his company in 2022, when generative artificial intelligence was booming. “It was exactly the setup we needed. ” and GPU availability “almost no one else has.”

The EzDubs story can be heard in various forms from startups in the field of artificial intelligence. While Amazon Web Services maintains the market lead in cloud infrastructure and Google remains a popular choice for companies using multiple clouds, Microsoft’s clear advantage in artificial intelligence gives the company an advantage, at least in the new era. This is true when it comes to starting a company.

Amazon said in its second-quarter earnings report on Thursday, AWS revenue Annual growth of 19%, lagging behind Microsoft Growth 29% In recent times, this has included other cloud services besides Azure.

AWS is the first cloud provider to hand out credits to young companies, hoping they will be hooked and eventually become big spenders when the credits run out. AWS’ Start the program The service was launched in 2013, following the launch of key EC2 (compute) and S3 (storage) services in 2006, helping to solidify Amazon’s dominance in the public cloud space.

Microsoft’s access to vast GPU clusters, combined with its long history as a ubiquitous enterprise technology company in IT departments, is changing that narrative. Of course, money is also important.

In November, Microsoft formed a partnership with Y Combinator — known for helping to catalyze Dropbox, Airbnb, Stripe and others – provided $350,000 in credits to startups entering the accelerator. Startups participating in other projects, such as Alchemist Accelerator and Alt Capital’s Generate, are also eligible.

Amazon followed in April, $500,000 announced An AWS spokesperson said in an email that we provided $200,000 in credits to Y Combinator, including $200,000 in cloud credits and $300,000 in credits for use of the cloud provider’s Trainium and Inferentia artificial intelligence chips. Proof of concept. The spokesperson said the current offer includes $350,000 in AWS credits and $300,000 reserved for developing customized chips.

Microsoft corporate vice president Annie Pearl told CNBC that before the Y Combinator partnership, only about 5% of the companies in the program were developing on Azure. By May, more than 50% of people were using Azure, she said. A spokesperson later said that 58% of Y Combinator startups had accepted Microsoft’s credit offer, a number that did not reflect actual Azure usage.

AWS said it sees a different dynamic.

“This statement is not true for us,” an AWS spokesperson said in an email, referring to Pearl’s statement that more than half of Y Combinator startups are using Azure. “In the early stages, startups may accept promotional credits from different cloud vendors, but as they mature and need to decide who to hand over the future of their organization, they will overwhelmingly switch to one with the best security, reliability and reliability provider.

Amazon said in April Blog article More than 80% of startups in Y Combinator’s 2022 and 2023 batches operate on AWS.

Microsoft and Amazon’s competition for startups extends far beyond accelerator programs. Last month, AWS doubled to $200,000 the maximum amount that startups can use when raising Series A funding in the past year. CNBC reports. The company can receive $150,000 in Azure credits under the Microsoft for Startups Founders Hub program.

Looking at the entire cloud market, industry data shows that Microsoft has narrowed Amazon’s lead. According to research firm Canalys, AWS had a market share of 31% in the first quarter of this year, and Azure ranked second with a market share of 25%. Canalys said that three years ago, AWS controlled 32% of the market, while Microsoft had 19% estimated.

Microsoft CEO Satya Nadella In its October earnings call, it said that more startups are turning to Azure due to demand for the OpenAI model.

“We are expanding our reach with digital-first companies,” he said. “Leading AI startups use OpenAI to power their AI solutions, and as a result, they become Azure customers.”

InKeep, whose technology allows companies to use chatbots to scour internal documents, chose to use Azure when participating in Y Combinator in early 2023, shortly after OpenAI launched ChatGPT. OpenAI’s underlying LLM is not available on other clouds.

“Especially when I was starting out, OpenAI really had the most advanced models,” InKeep co-founder and CEO Nick Gomez said in an interview. InKeep also started using Google’s Cloud platform for certain workloads.

Gomez said Azure has less downtime than other clouds, allowing for quick action even when working on compute-intensive AI models. He said data privacy is very important to customers when it comes to artificial intelligence training. OpenAI initially used customer profiles to train models, but later stopped practicingCEO Sam Altman told CNBC’s Andrew Ross Sorkin last year.

“People always ask, ‘Are you training with our material?'” Gomez said. “Being able to say, ‘Hey, no, we don’t use Azure, we use Azure, they don’t keep it, they don’t train it,’ that definitely helps reassure a lot of people.”

It turns out that cloud infrastructure is not a winner-takes-all market. Amazon, Microsoft and Google are all seeing steady growth in business revenue, Canalys believes expect It will grow 20% this year to nearly $350 billion.

This is partly because large companies are increasingly using partly cloudy Ensure they are not overly reliant on a single vendor and leverage different services and technologies from different providers. For startups that rely on venture capital to fuel operations, accepting credit from multiple vendors allows them to control expenses, which is especially important given the high cost of running artificial intelligence workloads.

Prady Modukuru, co-founder and CEO of Sync Labs, a developer of lip-sync technology, said accepting points is “almost like raising money.”

“No one can afford to spend $20,000 to $30,000 a month on infrastructure costs,” said Modukuru, a former product manager at Microsoft.

Modukuru said Sync Labs has used Amazon, Google and Microsoft, but started using Azure earlier this year at Y Combinator. He said this is the only place the company can find GPUs.

“We just make a request and within an hour and a half, we have them available on Azure,” Modukuru said. “That’s what we need as a startup.”

Modukuru said that earlier this year, Sync Labs talked with Microsoft technicians during office hours to learn how to run high-performance code on multiple GPUs. AWS also provides its experts to Y Combinator founders, a spokesperson said.

AWS has other ways to challenge Microsoft and its close partnership with OpenAI. For example, Amazon pour billions of dollars invested in Anthropic, which is developing its own LL.M. Daksh Gupta, CEO of Greptile, a startup that helps developers work with source code, said Anthropic has released a model that is at least as good as OpenAI’s GPT-4.

Gupta said that since Anthropic’s models are available on AWS, Greptile plans to stop using the Azure OpenAI service and instead use AWS’s competing Bedrock tool.

“There’s no point in scrimping on the quality of the experience,” he said. “We spend whatever we need to.”

Still, OpenAI gives Microsoft a huge lead in artificial intelligence and forces AWS into the unfamiliar position of trying to catch up. Kareem Nassar, who co-founded EzDubs with Krishnamurthy, said that OpenAI’s rapid market penetration has helped Microsoft deal with the complex AI infrastructure maintenance problem.

“I know it’s battle-tested,” Nassar said. “I didn’t have huge bugs. You could tell it had some mileage.”