A Scale AI exec said AI foundational labs are like movie studios - they make big franchise investments that quickly become irrelevant

""My hottest take is I think the right way to think about foundation labs is that they're like movie studios," he said. "What I mean by that is they invest a ton of money in blockbusters that have a relatively short time span to pay them back." Scharfstein heads Scale AI's enterprise applications business, which builds and deploys generative AI solutions for other companies."

""Much like "The Avengers," companies like OpenAI are also building franchises with GPTs that are built off the previous models, he said. "It's just very similar. You're able to turn that franchise maybe into a video game and then maybe it is more like software," he said. "But actually right now the model companies look more like a content studio than they do like a software company.""

AI foundational companies resemble movie studios that invest heavily in blockbuster models with short time spans to recoup costs. These companies build franchises of models and GPTs that extend prior models and can be repackaged into derivative products like games or applications. The current business model favors content-style investment cycles rather than typical software recurring-revenue models. Scale AI builds and deploys generative AI solutions for enterprises using models from OpenAI and other frontier labs. Scale AI also operates a data-annotation business that supports major technology clients and received a $14.3 billion investment from Meta in June.

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