SingleStore CEO Raj Verma likens generative AI to be in its infancy, comparing it to the early days of cell phones and how far that consumer technology has come: "It looked like a brick. It was probably the size of my hand and had a battery time of less than an hour. So that's where we are in the ultimate landscape of generative AI."

Verma, who is the author of Time Is Now: A Journey to Demystifying AI, sits down with Yahoo Finance Live to discuss the trajectory of tech startups today and how leading figures in the space envision for the use of this technology.

"I think both of the parties [Elon Musk and OpenAI CEO Sam Altman] are trying to hopefully accomplish the same thing that there is a democratization of AI and AI is not the privilege of the few," Verma explains.

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

Editor's note: This article was written by Luke Carberry Mogan.

Video Transcript

- Raj, you mentioned-- to your point, there's a lot of upstarts. A lot of start-ups focusing on various parts of AI. Do you expect a wave of consolidation over the next 18 months as some of the bigger players in the tech space flush with cash start to pick out which companies could be the ultimate winners and are willing to buy them?

RAJ VERMA: I don't think there's going to be a consolidation in the generative AI market in the next 18 months or so. Is there going to be a consolidation in the next three years? Probably. I do think that people are going to go have at it in the generative AI space. Understand, it's also evolving. It's only-- it's in its infancy. It's two years into this entire generative AI boom.

And I'll ask you to reflect back. When the cell phone was invented, what did the mobile phone look like in its second year? It looked like a brick it was probably the size of my hand and had a battery time of less than an hour. So that's where we are in the ultimate landscape of generative AI.

So I think consolidation, it's too early for consolidation. I do think that there'll be a lot of money and a lot of research that's going to go into generative AI. I think we'll all benefit from it. But I think consolidation is a little more than 18 months away, Brian.

- And the companies that are starting up now or that are still fairly fledgling, just to go back to the sort of funding question and Silicon Valley Bank and bank servicing question, do you find the behavior has changed in the Valley in that company? I mean, even though there is a version of SVB that still exists, companies maybe are being-- maybe have learned some lessons. Maybe you're not banking, you know, everything in one place, for example. Have you seen that kind of change?

RAJ VERMA: Oh, 100%. I don't know-- I mean, [INAUDIBLE] all CEOs of private start-ups. And most of us hang out occasionally at least, if not more frequently. And we were saying that one of the biggest lessons that we learned from this-- I mean, single Soviet-- SingleStore was just fortunate that we had multiple banks because we were flush with cash.

So we didn't want to put all our eggs in one basket. And that's why I happened to sleep a little better than most other CEOs on that weekend about a year ago. However, I don't know of any start-up founder which does not have an alternative bank. So doesn't have at least two, if not three banks that they bank with now and have optionality.

So that's probably one of the biggest learnings that we CEOs had out of the SVB crisis and also to understand that SVB was a very good line of credit provider, so as to speak. There is no dearth of credit in the market right now. And companies are able to raise debt-- I mean, reasonable companies are able to raise debt. So I don't see a paucity of capital, both credit and equity capital.

Credit is that one-time ARR ratio. Whereas equity, there are more discerning investors now than they were about 20 months, 24 months ago, Julie and Brian.

- Well, hopefully, that makes for a more healthy ecosystem. I wanted to switch back to AI here. As we mentioned, you're coming out with a book next month on demystifying AI. And I'm hoping you can help me demystify or clarify a current debate that is going on that's highlighted by two prominent individuals-- Elon Musk and Sam Altman, on whether generative AI, in particular, should be on a so-called open system or closed system. I'm just wondering, as you watch that play out, what you think the answer is.

RAJ VERMA: I do think that the answer is somewhere in the middle. I think both of the parties are trying to hopefully accomplish the same thing that there is a democratization of AI and AI is not the privilege of the few. So from that concept, whether it's open or closed, I do think that I agree with the democratization of AI.

Now what does democratization of I mean? That everyone should have access to AI platforms. At what cost and what optionality they should have is up for debate. I do think that at the end of the day for AI platform to survive, it has to have the ability to be monetized.

And I don't know how open platforms, which are not-- have some layer of closed source in it, can be monetized effectively over a period of time. And if it cannot be, then, you know, there isn't a business model. They-- exactly what we were talking about. And also if it is a completely open business model, how do you prevent that from not landing up in the hands of the people we do not want it to land up in?

So that's a huge debate. And I do think that the survival for AI platform would have to be having a layer of closed source in it. However, I do think that certain level of democratization by making it available to the masses is required. So as I said, the answer is somewhere in between, Julie.

- All right, Raj. Great to catch up with you. Really appreciate it. And I'm sure our conversation will continue on this topic of AI. It's not going anywhere. Raj Verma, appreciate it.

RAJ VERMA: Thank you very much.