Groq
There is an active debate about Nvidia's competitive moat. Some say there's a prevailing perception of a 'safe' choice when investing billions in a technology, in which the return is still uncertain.
Many say it's Nvidia's software, particularly CUDA, which the company began developing decades before the AI boom. CUDA allows users to get the most out of graphics processing units.
Competitors have attempted to make comparable systems, but without Nvidia's headstart, it has been tough to get developers to learn, try, and ultimately improve their systems.
Groq, however, is an Nvidia competitor that focused early on the segment of AI computing that requires less need for directly programming chips, and investors are intrigued. The 8-year-old AI chip startup was valued at $2.8 billion at its $640 million Series D round in August.
Though at least one investor has called companies like Groq 'insane' for attempting to dent Nvidia's estimated 90% market share, the startup has been building its technology exactly for the opportunity that is coming in 2025, Mark Heaps, Groq's "chief tech evangelist" said.
"What we decided to do was take all of our compute, make it available via a cloud instance, and we gave it away to the world for free," Heaps said. Internally, the team called the strategy, "unleashing the beast". Groq's free tier caps users at a ceiling marked by requests per day or tokens per minute.
Heaps, CEO and ex-Googler Jonathan Ross, and a relatively lean team have spent 2023 and 2024 recruiting developers to try Groq's tech. Through hackathons and contests, the company makes a promise — try the hardware via Groq's cloud platform for free, and break through walls you've hit with others.
Groq offers some of the fastest inference out there, according to rankings on Artificialanalysis.ai, which measures cost and latency for companies that allow users to buy access to specific models by the token — or output.
Inference is a type of computing that produces the answers to queries asked of large language models. Training, the more energy-intensive type of computing, is what gives the models the ability to answer. So far, the hardware used for those two tasks has been different.
Heaps and several of his Nvidia-challenging cohorts at companies like Cerebras and SambaNova Systems said that speed is a competitive advantage.
After the inference service was available for free, developers came out of the woodwork, he said, with projects that couldn't be successful on slower chips. With more speed, developers can send one request through multiple models and use another model to choose the best response — all in the time it would usually take to fulfill just one request.
Roughly 652,000 developers are now using Groq API keys, Heaps said.
Heaps expects speed to hook developers on Groq. But its novel plan for programming its chips gives the company a unique approach to the most crucial element within Nvidia's "moat."
"Everybody, once they deployed models, was gonna need faster inference at a lower cost, and so that's what we focused on," Heaps said.
So where's the CUDA equivalent? It's all in-house.
"We actually have more than 1800 models built into our compiler. We use no kernels, and we don't need people to use CUDA libraries. So because of that, people can just start working with a model that's built-in," Heaps said.
Training, he said, requires more customization at the chip level. In inference, Groq's task is to choose the right models to offer customers and ensure they run as fast as possible.
"What you're seeing with this massive swell of developers who are building AI applications — they don't want to program at the chip level," he added.
The strategy comes with some level of risk. Groq is unlikely to accumulate a stable of developers who continuously troubleshoot and improve its base software like CUDA has. Its offering may be more like a restaurant menu than a grocery store. But this also means the barrier to entry for Groq users is the same as any other cloud provider and potentially lower than that of other chips.
Though Groq started out as a company with a novel chip design, today, of the company's roughly 300 employees, 60% are software engineers, Heaps said.
"For us right now, there is a billions and billions of dollars industry emerging, that we can go capture a big share of market in, while at the same time, we continue to mature the compiler," he said.
Despite being realistic about the near-term, Groq has lofty ambitions, which board CEO Jonathan Ross has described as "providing half the world's inference." Ross also says the goal is to cast a net over the globe — to be achieved via joint ventures. Saudi Arabia is on the way. Canada and Latin America are in the works.
Earlier this year, Ross told BI the company also has a goal to ship 108,000 of its language processing units or LPUs by the first quarter of next year — and 2 million chips by the end of 2025, most of which will be made available through its cloud.
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