The story of Mistral is really the story of three co-founders. We were, I think, maybe a little bored in the big tech companies we were working with. In 2023, we realized that this was very—well, we knew that it was a very important technology before, but we realized that market concentration was occurring.
In some way, do you feel that there's too much concentration when it comes to technology creation in the United States?
The problem of market concentration is that it gives excessive leverage to your suppliers if you're a business that is buying digital services. So our customers are at a disadvantage because some of their suppliers are coming to them and telling them, 'Look, your data is hosted by us. It's going to be more expensive for you.' The amount of leverage that is being used to actually build faster is large. And so leverage is good, but leverage at some point breaks. We are not going to be in a world where this is a 70% gross margin business as the world that we've lived in the last 15 years. AI being an infrastructure business, you should run it as an infrastructure business. On the access to capital, it has never been a problem for us. I think the inflection point is making sure that the people that are building companies are building companies here and not building companies from other places.
Good morning, Arthur. Thank you so much for speaking to the Economic Times. It's a real pleasure. Let me begin by asking you—you're here for the India AI summit, right? We've seen a lot of action over the last few days. Today is the last concluding day of the summit. What have been the key takeaways? You were there at the PM's plenary session yesterday.
Prime Minister Modi made a very interesting point on artificial intelligence being a technology that needs to be brought to everyone, which is something we truly believe in. And he made a very interesting point on self-reliance. He mentioned that this was too important a technology for them to depend on others. And so what that meant is that local infrastructure—there should be Indian local infrastructure, there should be Indian models, there should be Indian applications, and so on. The entire stack—there needs to be a technology that is controlled by local businesses.
And so that's a point which truly resonates with what we have been building at Mistral. It's a company that we started three years ago, and we've built the entire full stack offering on artificial intelligence in a way where we can enable self-reliance in every country and for every business. And so I made very similar points in the keynote I gave a few hours after. The first thing was if you want such a technology to be decentralized, you need to bet on open source, which is something we've done and something we've led the way for the last three years, releasing open source models and then building our business model on top of that. And in that respect, I believe that—and we're seeing that in all of the conversations we have—of a strong alignment between what we propose and what Europe's stance is on the matter of artificial intelligence and what the Indian stance is on the matter of artificial intelligence. So that's what I can say about the summit. We were pretty much the only European being represented, and we're very happy to be there because, as you could tell, the US was heavily represented as well.
Right. Right. Right. In fact, that sparks my next question. In some way, do you feel that there's too much concentration when it comes to technology creation in the United States? And as a European company, do you feel that that puts you at a little bit of a disadvantage in some ways?
That puts our customers at a disadvantage. The problem of market concentration is that it gives excessive leverage to your suppliers if you're a business that is buying digital services. So our customers are at a disadvantage because some of their suppliers are coming to them and telling them, 'Look, your data is hosted by us. It's going to be more expensive for you.' And tomorrow, the problem is that it's not only the data which is going to be hosted by us, it's going to be the processes and the digital workers that are going to be operated by them. So it gives them immense leverage and immense control. And it's a control that can be used for geopolitical reasons as a way of pressuring the states. It's also a control that can be used to just increase the economic imbalance. And so at Mistral, I guess, does it put us at a disadvantage? I don't think so. It actually puts us at an advantage because suddenly our customers and all of the enterprise market and all of the states are realizing that the market concentration is currently too high and it needs to be reduced. And we happen to have made and designed an offering, a software stack that can be deployed anywhere—on-prem, on-air deployments, that can be deployed on private clouds, models that are open source and can be downloaded for free and deployed for free. And that business proposition is actually a way to increase the leverage of our customers against their suppliers that are promoting a centralized AI deployment. So we work on reducing the dependency to digital services across the globe to a handful of providers.
Right. I think when I talk to some of the companies in India, they have a similar experience, right? Because it's the same issue of the imbalance that you spoke about. What is it that India can learn from the approach that you are promoting?
I guess one thing—I don't think we have anything to teach India, I should say. And obviously, a lot of our researchers are actually from India, and we have much more to learn from India than we have to teach it. But the first thing is, I think our bet on open source has proven to be the right bet. We were the first to actually release open source models, and we've seen a lot of other labs in the world actually follow that. We've seen Indian labs actually use our models to make them better at certain Indian languages. And so that bet on open source is the way to reduce the leverage that a handful of providers have today. So that's the first thing. I'd say the second thing is local infrastructure. So betting on local infrastructure, building infrastructure oneself, is something that we are doing in Europe because our customers ask for it. They ask for more decoupling from their current digital service providers. We see India doing it. We see that a lot of investment is being made on the infrastructure not only to serve US providers but also to serve and to be operated by Indian providers. And there, we can be a partner to these constructions because we can bring some bricks of the software that can be then deployed on such local infrastructure. So really, the two things that I would say have been successful for us are betting on open source, building our own infrastructure, and the third thing is also going all the way to the creation of value for enterprises.
Right. Right. Talking about India, talk to me a little bit about your own expectations out of the India market. How does it fit into your global strategy? What are your expectations from the Indian market from a creation and adoption point of view of your models, of your offerings?
So India is a new market for us, and we are starting to hire here locally, people on the commercial side at the moment. We think it's a huge market in the consumer space. It's a huge market. We're not a consumer company, but we work with a lot of consumer-facing companies, and so we can help them scale their AI systems. We are very strong at making small models that are specifically made for a purpose, and small models have a lower footprint, which means that they are less expensive to serve, which means that down the line the end users can access it for a lower amount of money. And so making AI cheap and making AI affordable is something that we can really help businesses with. And so we're looking at partnering more closely there. The fact that we can bring a software stack on top of local infrastructure means that we are actively looking at partnering with local infrastructure providers that are building sovereign cloud, something that we do across the globe, partnering with sovereign cloud providers. And then finally, we are very eager to work with two areas. One is startups which are using our open source models, and the other sector where I believe there is some convergence is defense. We work heavily with the defense sector in Europe, and AI is a very critical part to defense systems. And because we can provide things that are fully deployable and where we can disappear as a provider, which means that the turn-on, turn-off button is within our customers' hands, it means that the defense systems we actually enable are true defense systems that are fully independent.
Talking a little bit about the data center play, there's so much compute that is getting invested by players like OpenAI and Google, right? So do you feel that that is something that Mistral also needs to significantly expand on? Or is that going to be like a big advantage or a big lever on which the success of companies in the near future will depend? And how are you thinking about it?
