The Market for Making AI Better

Many AI investors are betting that the biggest AI models will win—that scale and compute beat everything else. But recent research and market moves suggest otherwise. Alex Duffy, who runs a company that uses games to make AI models better, explains what he’s seeing from inside this market—and why the data your company already has might be worth more than you think.—Kate Lee

My friend recently received a strange email. The sender, someone at a large data provider for AI labs, wanted to know if my friend could share data on things like the number of Dropbox files his company had stored or the number of tickets it had processed on Zendesk. Compensation, commensurate with the data, was promised.

He showed me the email, curious. To me, the founder of a company that sells data and environments to AI companies to help them train models better, this was just another sign of the robust market forming for making AI better.

Reddit, Shutterstock, and News Corp are making hundreds of millions a year licensing their high-quality data to companies training AI, and those contracts are growing about 20 percent annually, according to their quarterly filings. News Corp’s CEO put it bluntly: “We’re essentially an input company [for AI].”

Academic publishers, documentary archives, game studios, and companies sitting on years of enterprise data have all been courted for the seeds of intelligence needed to train the next generation of models. Mercor, which provides data to AI labs for training, became one of the fastest-growing companies in history before losing four terabytes of data to hackers last week. Competitors Turing, Handshake, and SID.ai are scrambling to fill the gap, reaching out to founders and anyone with access to buy operational data, similar to the request my friend received.

While some experts have speculated that general models will win out in performance over specialized models—that scale and compute will beat curation—the success of these companies shows that the market is making a more nuanced bet.

A small model trained on fewer than 2,000 examples from real lawyers, bankers, and consultants recently beat all but the best frontier models on corporate legal work, at a fraction of the price, since they used an open-source model and now only face the cost of running it.