Not surprising yet fascinating.
Two things stand out, one specific to AI the other more to cloud infrastructure in general.
In the old days when there was a software startup, your series A and series B investments may have been $10M more or less. And most of that money went to paying a group of developers and some general overhead. Pretty reasonable business model.
With Gen-AI companies like this, they need $100M/yr as in this case just for cloud infrastructure, before you do anything unique with it. And before you even have some test results. Same infrastructure cost every other Gen-AI startup needs.
That puts you in a different risk category (more like space flight where you have to fly and blow up a few rockets before you can sell the first revenue flight). It also means you need to generate a lot more revenue quickly on a product that is mostly hype with some early adoption, but fewer success stories and power users that can’t live without it, willing to pay and keep costly subscriptions.
How many of you have and keep(!) $28/mo/user subscriptions for Gen-AI tools? And how many of you have to exist before you can collect $100M/yr in revenue (answer: 300K). And that’s just for one of them. 
Looks like in their case they could only find 1/10th of that. Oops.
Do that in an economic environment where money isn’t as cheap as it used to be. That’s an all hands on deck situation to make it to the end of the tunnel.
Reminds me a bit of the streaming wars. Lots of investment money, until someone asked some questions. I hear lots of stories and know people who are out of work, because there is suddenly less content being made. Like the TikTok video that was all over the web the other week from Hollywood producers driving for Ueber Eats.
Be prepared for a more Jenga games.
That’s why Gen AI is so fluid with developments every day. Everyone is racing to make the math work and be the stand-out success before the sky falls.
If anyone should be worried about their job, I think ours isn’t near the top of the list, or at least not on account of Gen-AI. Streaming wars, different story.
The second issue is cloud infrastructure. I’m a big fan of the cloud in general, as it’s a more efficient and elastic resource that allows companies and individuals access to what can power their business. It’s good for business overall.
But it has changed some behaviors. In the old days if you needed an extra server, you had a pretty clear idea of how much it cost to put in the rack. And once it was there, there weren’t any surprises in terms of additional bills.
The other principle that shows up here - flexibility usually comes at a cost. The same compute unit in the cloud costs more on the spot than your on-prem version. Done right you can come out ahead due to the flexibility in scaling up and down. But if you have a very steady demand curve, you’re paying for flexibility you don’t really need.
Cloud infrastructure pricing is complex. It’s easy to make costly operational mistakes, and hard to estimate the actual cost. That makes it hard for companies who are used to selling you software at a fixed price (like a Flame sub), and suddenly they have to bundle all the compute cost which used to be on the customer’s infrastructure bill before. We have seen companies that fail to make that transition well with ugly results. It’s easy to think - well it’s in the cloud, so it must be easy. Just magically. It ain’t magic, it’s the same stuff, just a elsewhere in the supply chain.