Generative AI: Databricks to Acquire MosaicML for $1.3B

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San Francisco-based data and AI startup Databricks today announced a $1.3 billion deal to acquire generative AI platform MosaicML, whose large language models (MPT-7B and MPT-30B) have more than 3.3 million downloads. The goal of the acquisition: reduce the time and cost of large language model training for generative AI, the companies said.

Databricks, which reported more than $1 billion in 2022 revenue, said its Lakehouse Platform combined with MosaicML’s technology “will offer customers a simple, fast way to retain control, security and ownership over their valuable data without high costs.” According to MosaicML, automatic optimization of model training provides 2x-7x faster training compared to standard approaches. “Combined with near linear scaling of resources, multi-billion-parameter models can be trained in hours, not days,” Databricks said. “With Databricks and MosaicML, training and using LLMs will cost thousands of dollars, not millions.”

The companies said that once the transaction closes, which is expected during Databricks’ second quarter ending July 31, the entire MosaicML team is expected to join Databricks.

MosaicML, which also is locted in San Francisco, launched in 2021, has 62 employees and has raised $64 million in investment capital, according to a story in The Wall Street Journal, which also reported that MosaicML will be offered as a stand-alone service belonging to Databricks.

Databricks, founded in 2013, has a private-market valuation of $38 billion, following a $1.6 billion investment round two years ago, according to the Journal. Investors include Morgan Stanley’s Counterpoint Global, Andreessen Horowitz, Baillie Gifford, UC Investments and ClearBridge Investments.

The Journal reported that market research company PitchBook Data estimates the global generative AI market will total $43 billion in 2023 and then grow to just under $100 billion by 2026 a CAGR of more than 30 percent. Meanwhile, genAI attracted nearly $13 billion from investors from January through May of this year, up from $5 billion for all of 2022, according to PitchBook.

The goal of the acquisition is to offer more targeted and less expensive generative AI implementations for companies. The Journal article quotes Larry Pickett, chief information and digital officer of biopharma services company Syneos Health, “who said the current cost of training a model on specialized health data is estimated at $1 million to $2 million. Those kinds of ‘domain-specific’ models can be more useful for companies than ChatGPT, because they have more industry terminology and know-how, analysts say. But Pickett expects that Syneos Health can spend significantly less than that by using smaller, pre-trained models, ‘as opposed to building on top of the entire corpus of data that OpenAI has.’ Some of those models are already available in open-source libraries like those offered by machine-learning startup Hugging Face, he said.

But others knowledgeable in AI and machine learning  “say that the computing and synthesis power of large language models like the one powering ChatGPT trumps smaller models, which have powerful, but ultimately limited capabilities in a specific area,” according to the Journal.

In today’s announcement, Databricks said, “MosaicML’s platform will be supported, scaled, and integrated over time to offer customers a seamless unified platform where they can build, own and secure their generative AI models. Databricks and MosaicML will give customers greater choice in building their own models, training models with their own unique data, and creating differentiating IP for their businesses.”

“Every organization should be able to benefit from the AI revolution with more control over how their data is used. Databricks and MosaicML have an incredible opportunity to democratize AI and make the Lakehouse the best place to build generative AI and LLMs,” said Ali Ghodsi, co-founder and CEO, Databricks. “Databricks and MosaicML’s shared vision, rooted in transparency and a history of open source contributions, will deliver value to our customers as they navigate the biggest computing revolution of our time.”

“At MosaicML, we believe in a world where everyone is empowered to build and train their own models, imbued with their own opinions and viewpoints — and joining forces with Databricks will help us make that belief a reality,” said Naveen Rao, co-founder and CEO, MosaicML. “We started MosaicML to solve the hard engineering and research problems necessary to make large scale training more accessible to everyone. With the recent generative AI wave, this mission has taken center stage. Together with Databricks, we will tip the scales in the favor of many — and we’ll do it as kindred spirits: researchers turned entrepreneurs sharing a similar mission. We look forward to continuing this journey together with the AI community.”