Modal Labs raises $87M Series B led by Lux Capital to scale serverless AI infrastructure

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But well up next we have Eric the CEO of Modal Labs. He's in the reream waiting room coming in to the TBP and Ultradome. Welcome to the show. How are you doing? What's happening? Hey, how's it going? It's great to It's great. Uh great to finally have you. Yeah.

would you mind uh kicking us off with an introduction on yourself and the company? Yeah. Yeah.

So, so we build infrastructure for AI and so basically if you think about a lot of sort of traditional AI or sort of traditional infrastructure, you know, things like Kubernetes and Docker and things like that, uh really doesn't work well for all these new AI applications, you know, all whether that's, you know, generative media or like large language models or things like that.

So, we basically built a whole new software layer that makes it a lot easier for developers to build applications on top of that. Where does that sit in the stack?

like are you trying to be the software layer at Stargate at like these massive massive uh data centers uh or or is there a different customer archetype that you can actually deliver value for at like a smaller scale? What how does the market actually bifrocate? Yeah, so we focus on slightly smaller companies.

Initially we saw a lot of PMF with with startups. Uh but in the last year or so we've seen a lot of traction also with later stage companies you know public companies and enterprise companies. What's the pricing model Stargate level? Yeah. Yeah. What's the pricing model for something like this?

So it's all usage based uh which means you know sort of traditional basically like a traditional cloud vendor um like we charge per GPU hour essentially. Sure. Sure. And then do you offer uh like abstraction layers on top of this?

Do you want to build a platform at some point or uh are you you are you happy vending it into another cloud partner that uh where the customer might not even be aware of you? How do you how do you sit in the market over the long term?

No, we we we offer a very fat layer of like all these software abstraction that that focus on engineers uh writing code. We we consider ourselves a a high code platform, right?

So it's meant for engineers who who want to write code and you know they they they need a better infrastructure that maybe traditional tools could offer them in terms of scaling up and down working with GPUs working with capacity all over the world. Sure. And they want to write code.

What are the uh I mean have you what's the biggest like nightmare story from uh misconfigured infrastructure or like the the problem you're solving? Have you seen just like millions of dollars go up in smoke? Uh is it pretty rare? like what what's the shape of failure in the AI? What are the stakes right now?

I don't know if I can recall anything. Okay. Uh we're pretty good at like catching I mean in a couple of cases customers I don't mean with your software. Yeah. More like company you know people coming to you having had issues in the past configuring this stuff on their own.

I I would say like the biggest thing right now is just like people wasting a lot of money on GPUs, especially I think a year or two ago like there was like this like kind of hyped up like scarcity of like you got to get like a thousand GPUs.

So So a lot of companies went out and made massive reservations and now they're sitting on them and like they're underutilized, right? So they're like, you know, what can I do with these? Yeah. Is there is there value for those folks just to like sell it back as spot instances for someone else?

like what what are companies actually doing when they wind up G a little bit too GPU rich?

I I I know there's a couple of other companies I think it's like Thrill is one it's not like a space we're like super focused on like we we kind of think that model is kind of broken like the idea that companies go out and make big reservation.

We think companies should just pay for is exactly what they use and so that's something Modal does really well is we scale up and down and you only pay for the time the GPUs are actually running. Yeah. Um and Yep. Yeah. What's your view on the the GPU war? Uh Nvidia is obviously dominant.

AMD has been in the the the year of the comeback. Uh they're taking feedback from George Hots. They're listening to Dylan Patel. Uh what are uh what does the race look like? There's also a lot of AS6 companies. There's Broadcom's doing stuff. Uh what does the shape of the industry look like in the next couple of years?

Uh where are you kind of uh where are you partnering up and like uh investing for the long term? So I I think in the next couple years it's going to be all Nvidia. Like our customers only want Nvidia. Nvidia is like such a massive advantage in terms of the software ecosystem.

But I I think look a couple years beyond that like that's when it starts to get more hazy. I'm personally quite bullish on TPUs for instance like Google's product but of course also AMD like you mentioned and other players. Yeah. Um are there uh Yeah.

I are are there other um like anything that you're looking at in terms of like uh abstracting away some of CUDA's advantages? It just feels like we're in this era of vibe coding. You should be able to take you know some sort of model and like just port it, but that doesn't seem to be working.

Um but people are certainly they have a lot of economic incentive to do that. Are you bullish on on any of that kind of like breaking the CUDA lock in? I Yes. It's funny because people are like CUDA is like a moat.

Like it's it's such an amazing but like I don't know like for anyone who's like actually tried to write CUDA it like sucks. It's like very hard to work with. So I I I don't know why like it's been so hard for AMD or or for other providers to like build a better software layer because CUDA is very hard to use. Yeah.

Um so yeah, give it a couple years. Like I would hope that there's better ways to to write these kernels. Yeah. I just remember the story of like Facebook was written in all PHP. They wanted to move to C++. They didn't want to re have everyone rewrite everything. So they just wrote a compiler that compiled PHP.

Yeah, that's it. Right. And so it's like couldn't you couldn't we get to a world where you're just writing once and then compiling for any different GPU? Like create a new abstraction layer. I don't know how the economic incentives play out. I haven't really dug into it, but it's an interesting industry.

Yeah, it it comes down sort of what modular is trying to do in a way. Okay. Yeah, it comes down to be low, right? Sorry. Yeah, I was just saying it's it's hard to be like extremely bullish on coding agents and also believe that CUDA has this like long-term hyper durable, you know, mode.

There does seem to be some cognitive dissonance there, right? Like they both can't be true, but it's like why can't I run a 30hour claude code prompt at some point or claude code in the year 2030 and and just like you know rewrite this for AMD, don't make mistakes and it just doesn't.

I would I would hope that's how it plays out, but who knows? We I mean we might be years away. I genuinely like I've always uh enjoyed enjoyed your takes uh and would love to have you back on sometime when we have more time. But congrats on on the fund raise. John, did you want to do the honor? Oh, absolutely. Yeah.

Give us the details. Uh what what's fun? 7 billion uh million 87 billion 87 million series B. Yeah. So So Lux is leading existing investors putting in a bunch of money to Yeah. We're super pumped. Great stuff, Eric. Thank you uh for joining and uh have a great rest of your day. Talk soon. Have a great rest of your day.

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