Just last year, Inflection AI was at the peak of startup excitement, presenting best-in-class AI models it claimed could surpass those of OpenAI, Meta, and Google. But now, as revealed by its new CEO to TechCrunch, the startup has shifted its focus. Microsoft hired the previous CEO, Mustafa Suleyman, to manage its AI business and acquired most of Inflection's staff and technology for $650 million. Since then, Inflection has been making significant changes. It started limiting usage on its consumer AI chatbot, Pi, and pivoted more towards enterprise customers. On Tuesday, it announced the acquisition of three AI startups in the past two months to enhance its offerings for global enterprises. The company also remains open to licensing AI models from its former competitors in the future. The Federal Trade Commission is investigating Microsoft's partial acqui-hire to assess potential competition issues. According to Inflection's new CEO, Sean White, who took over after the deal, the startup is no longer competing in building the next-generation AI models but still holds its ground in the enterprise front. "I am not going to, and don't feel the need to, compete with a company that is trying to build the next 100,000-GPU system," said White in an interview with TechCrunch, referring to the well-funded companies like Microsoft that can build frontier AI models. He clarified that while they can't compete in making the next-generation model, they are still competing with them in the enterprise space. "Our solution and tools are designed to meet the enterprise needs," he added. White believes today's AI models are sufficient for most enterprise needs and is skeptical about test-time compute scaling being the next generation of AI models. He thinks AI labs have cleverly rebranded high latency as "thinking" to make consumers feel better. Instead of focusing on the cutting edge of AI research, Inflection is now aiming to offer practical AI tools for enterprises. It announced the acquisition of Jelled.AI, which uses AI to manage employee inboxes, and BoostKPI, which offers AI data analytics tools. Last month, it acquired Boundaryless, an automation consulting firm in Europe to expand its overseas presence. White says Inflection is still using its own models but is open to using other models in the future. One of Inflection's value propositions is that its AI can run on-premise, unlike those from leading AI labs that need to be run in the cloud, which is appealing to enterprises concerned about data security. These acquisitions have strengthened Inflection's talent and product portfolio. However, it will face tough competition on the enterprise AI front. Salesforce has been investing heavily in AI agents, and Meta recently launched a new business AI unit. Startups like Anthropic and Cohere are also continuously building products for business customers. But Inflection believes it is better positioned to compete in the enterprise space rather than competing with frontier AI labs to make more capable models.
