On October 21, a brand new ticker opened to Nasdaq merchants: NBIS, a truncation of Nebius, a fledgling participant within the AI cloud infrastructure house.
Informal observers could possibly be forgiven for questioning the place this firm had come from, as there had been little in the best way of the same old fanfare that surrounds most startups’ journey to IPO — no roadshows; no horn tootin’; no confetti-laden ceremonies; nothing, not a peep. That’s as a result of Nebius is an uncommon beast: a public firm, however a startup in nearly each sense of the phrase.
Nebius has really been public for 13 years, floating in Could 2011 as Yandex N.V. — the Dutch holding firm of Russian web big Yandex (usually dubbed the “Google of Russia”). On the tail finish of 2021, Yandex N.V. hit a peak valuation of $31 billion, however within the wake of Russia’s invasion of Ukraine in early 2022, the whole lot modified. Nasdaq halted buying and selling in Yandex N.V. shares that February as a consequence of sanctions imposed on Russian-affiliated firms, and a yr later Nasdaq mentioned it might delist Yandex altogether. However Yandex efficiently appealed on the idea that it was restructuring — a course of that might take an extra 16 months to totally full.
A part of this included offloading all its Russian property, which was the place many of the actual enterprise worth lay. What remained underneath Yandex N.V.’s possession was a random assortment of infrastructure and enterprise items that simply occurred to be positioned outdoors of Russia. This divestment concluded in July, with Yandex N.V. altering its title to Nebius AI, an AI cloud platform replete with its personal Finnish information middle.
The brand new enterprise was to be spearheaded by Arkady Volozh (pictured above), the Russian Yandex co-founder and former CEO who was faraway from a European sanctions checklist in March after he publicly condemned Russia’s assault on Ukraine.
The core Nebius enterprise sells GPUs (graphical processing items) “as-a-service” to firms needing “compute” — that’s, processing energy and assets to hold out computational duties corresponding to operating algorithms and executing machine studying fashions. Final month, the firm debuted a holistic cloud computing platform designed for the “full machine studying lifecycle,” spanning information processing, coaching, fine-tuning, and inference.
With the restructuring full, and Volozh free to run the present from the corporate’s new HQ within the Netherlands, Nasdaq green-lighted Nebius to recommence buying and selling final month. The scenario was just about unprecedented, although: a public firm whose buying and selling was placed on pause, solely to renew practically three years later underneath a brand new title and completely completely different enterprise proposition?
In some ways, it might’ve made sense to have delisted and grown with non-public capital, the great old school startup means. However as Volozh defined to TechCrunch earlier this yr, constructing infrastructure is capital intensive, and the simplest and least expensive technique to entry capital in what’s at the moment one of many hottest areas in tech is through the general public markets. However there was by no means any certainty on how the general public markets would reply to this unusual new entity. No one actually knew what to anticipate.
A month in, and Nebius has loved a considerably tepid re-entry to public life; it’s considerably down on its $18 billion market cap earlier than buying and selling halted in February 2022, which was to be anticipated, and it has since yo-yoed between $3.5 billion and $4.75 billion, with some indicators that it’s beginning to settle.
“We couldn’t predict what would occur, it could possibly be $5 per share, or it could possibly be $50 per share — this has by no means occurred earlier than, no one actually is aware of how you can deal with it,” Volozh advised TechCrunch in an interview in London this month. “It’s nonetheless unstable, nevertheless it’s stabilizing, and the great factor is that it has stabilized above the price of the property, which signifies that the market believes we will construct a enterprise right here. How massive a enterprise, we’ll see.”
Nebius competes with all the same old hyperscaler cloud behemoths, although arguably its extra direct rivals are different different cloud startups corresponding to CoreWeave, which has raised a ton of money this yr. With CoreWeave within the midst of increasing from the U.S. into Europe, Nebius is transferring within the different path, asserting plans this week to increase its presence to the U.S. with a brand new GPU cluster in Kansas Metropolis (on the Missouri aspect) scheduled to go reside in early 2025. The corporate has additionally opened “buyer hubs” in San Francisco and Dallas, with plans for a 3rd in New York by the top of the yr.
However whereas the cloud infrastructure enterprise is its bread and butter (accounting for two-thirds of its income, as per its first earnings report final month), there’s a triumvirate of further companies underneath the Nebius Group umbrella. This consists of an autonomous car firm referred to as Avride, based mostly in Texas; a Swiss-based generative AI and LLM firm referred to as Toloka; and edtech platform TripleTen, positioned in Wyoming.
Drive time
Avride descends from the worldwide division of Yandex’s self-driving unit, which spun out of a three way partnership with Uber in 2020. Whereas Alphabet’s Waymo is now main the best way within the burgeoning robotaxi realm, just lately securing a $45 billion valuation, Yandex was an early trailblazer in Russia, with Volozh noting that the corporate had been on the cusp of beating Waymo to launch the primary totally autonomous automobiles on public roads, earlier than the warfare put the kibosh on plans.
“They [Yandex] have been set to launch the primary taxis on public roads with no one on the wheel, in an actual metropolis (Moscow), a number of months earlier than Waymo launched in San Francisco,” Volozh mentioned. “Journalists have been invited to an enormous occasion in March, ’22, however that launch by no means occurred. Folks needed to pack all their issues and go in a matter of weeks.”
The workforce that had been engaged on Yandex’s autonomous car mission transitioned over to Avride, a brand new model it launched final yr, ultimately transferring to Austin through Tel Aviv.
“This is identical 250 individuals,” Volozh added.
Final month, Avride introduced a major multiyear partnership with Uber, which noticed Avride’s sidewalk meals supply robots land on Uber Eats beginning in Austin, although the partnership may also carry Avride’s self-driving automobiles to the Uber platform later (Uber has signed different related offers, together with with Google’s sibling firm Waymo).
Whereas Yandex had sufficiently deep pockets to fund autonomous car initiatives, Nebius doesn’t — it has a pair billion {dollars} within the financial institution from its Russian divestment, and it’s laser-focused on constructing its cloud infrastructure enterprise. And because of this Volozh says that Avride might want to discover further companions in the long run.
“They’ve sufficient finances for this yr and subsequent yr,” Volozh mentioned. “We’re financing them, however they should use this time to search out new companions, as a result of it’s very capital intensive to construct fleets. It wants actual funding.”
Apparent companions would possibly embody automobile producers, nevertheless it could possibly be any entity that’s prepared to take a position billions, with Volozh including that it might be prepared to surrender management in Avride if wanted.
Toloka, in the meantime, is a platform that makes a speciality of information labeling and high quality management for big language fashions (LLMs) and associated AI programs — it’s very like Scale AI, which was most just lately valued at greater than $13 billion. Toloka has clear synergies with Nebius’s core infrastructure enterprise, however the clients aren’t the identical. Nebius works largely with generative AI startups searching for compute, whereas Toloka works with larger firms corresponding to Amazon and Hugging Face that wish to enhance their LLMs.
Each Toloka and Avride may ultimately comply with an identical path to that of ClickHouse, creators of the eponymous open supply database administration system that spun out of Yandex in 2021. Whereas the business ClickHouse entity secured big-name backers corresponding to Index Ventures, Benchmark Capital, and Coatue, Nebius has retained a minority stake.
“ClickHouse turned very talked-about, and we have been approached by funding funds to create a enterprise across the open supply mission. Now they’ve revenues, they usually’re rising,” Volozh mentioned.
TripleTen, alternatively, is one thing of an outlier within the Nebius group of companies, in that it’s just about a direct-to-consumer product that gives on-line coding bootcamps for these wishing to transition into the expertise sector. One thought Nebius is dabbling with is to place itself as a supplier of a “full stack of companies” to AI firms, from information facilities and GPU infrastructure, to training. And this highlights the scenario that Nebius has discovered itself in: It’s drawing strains between the completely different entities it has been left with, and attempting to make all of it make sense.
For now, TripleTen is breaking even, and Volozh acknowledges that it’s not going to be the massive income driver that its infrastructure enterprise is — nevertheless it has the potential to supply significant earnings and can stay a part of the Nebius Group.
“Nebius is a billion-dollar scale enterprise,” Volozh mentioned. “TripleTen — it’s a pleasant mannequin, nevertheless it’s possibly a tens or hundreds-of-millions of {dollars} enterprise. It’s not a billion-dollar enterprise.”
Parallel compute
As for the core Nebius AI cloud enterprise, the corporate already has its totally owned information middle facility in Finland, with plans to triple its capability to 75 megawatts. In tandem, the corporate is constructing out further websites at co-location services, a transfer designed to not solely enhance its capability, but in addition to scale back latency by bringing the processing nearer to its clients. Along with the Kansas location introduced this week, Nebius had already unveiled a brand new GPU cluster in Paris that goes on-line this month.
Additional down the road, Nebius plans to construct extra of its personal information facilities, each in Europe and the U.S., however given the time it takes, it’s faster to plug the hole with co-location services, which is why it’s forging forward with a hybrid method.
“It’s extra environment friendly if we construct it ourselves, however to construct means a yr and a half or two years — it’s an extended course of, and we will’t wait,” Volozh mentioned. “That’s why we’ve these co-locations in Paris and Kansas Metropolis.”
