Cohere says rivals are building Bugatti sports cars, ‘We make F150s’

Cohere President Martin Kon says a lot of the hot artificial intelligence startups on the market today are building the equivalent of fancy sports cars. His product, he says, is more like a heavy-duty truck.

“If you’re looking for vehicles for your field technical service department, and I take you for a test drive in a Bugatti, you’re going to be impressed by how fast and how well it performs,” Kon told CNBC in an interview. However, he said, the price coupled with the space limitations and lack of a trunk will be a problem.

“What you actually need is a fleet of F-150 pickup trucks,” Kon said. “We make F-150s.”

Founded by ex-Google AI researchers and backed by Nvidia, Cohere is betting on generative AI for the enterprise rather than on consumer chatbots, which have been the talk of the tech industry since OpenAI released ChatGPT in late 2022.

In June, Cohere raised $270 million at a $2.2 billion valuation, with Salesforce and Oracle participating in the funding round. Company executives have attended AI forums at the White House. And Cohere is reportedly in talks to raise up to $1 billion in additional capital.

“We don’t comment on rumors,” Kon told CNBC. “But someone once told me startups are always raising.” 

The generative AI field has exploded over the past year, with a record $29.1 billion invested across nearly 700 deals in 2023, a more than 260% increase in deal value from a year earlier, according to PitchBook. It’s become the buzziest phrase on corporate earnings calls quarter after quarter, and some form of the technology is automating tasks in just about every industry, from financial services and biomedical research to logistics, online travel and utilities.

Although Cohere is often mentioned alongside AI heavyweights like OpenAI, Anthropic, Google and Microsoft, the startup’s focus on enterprise-only chatbots has set it apart.

Competitors offer AI products for both consumers and businesses. OpenAI, for instance, launched ChatGPT Enterprise in August, and Anthropic opened up consumer access to its formerly business-only Claude chatbot in July.

Kon, who’s also the company’s operating chief, said that by staying focused just on the enterprise, Cohere is able to run efficiently and keep costs under control even amid a chip shortage, rising costs for graphics processing units (GPUs) and ever-changing licensing fees for AI models. 

“I’ve rarely seen, in my career, many companies that can successfully be…