Distilled models like SDXL Lightning, hyped for real-time demos, failed to gain user retention. The assumption they'd be used for 'drafting' proved wrong, as users consistently prefer waiting for the highest possible quality output, making speed secondary to final results.

While consumer AI tolerates some inaccuracy, enterprise systems like customer service chatbots require near-perfect reliability. Teams get frustrated because out-of-the-box RAG templates don't meet this high bar. Achieving business-acceptable accuracy requires deep, iterative engineering, not just a vanilla implementation.

For specialized, high-stakes tasks like insurance underwriting, enterprises will favor smaller, on-prem models fine-tuned on proprietary data. These models can be faster, more accurate, and more secure than general-purpose frontier models, creating a lasting market for custom AI solutions.

The perception of LORAs as a lesser fine-tuning method is a marketing problem. Technically, for task-specific customization, they provide massive operational upside at inference time by allowing multiplexing on a single GPU and enabling per-token pricing models, a benefit often overlooked.

The primary driver for fine-tuning isn't cost but necessity. When applications like real-time voice demand low latency, developers are forced to use smaller models. These models often lack quality for specific tasks, making fine-tuning a necessary step to achieve production-level performance.

Basic supervised fine-tuning (SFT) only adjusts a model's style. The real unlock for enterprises is reinforcement fine-tuning (RFT), which leverages proprietary datasets to create state-of-the-art models for specific, high-value tasks, moving beyond mere 'tone improvements.'

For consumer products like ChatGPT, models are already good enough for common queries. However, for complex enterprise tasks like coding, performance is far from solved. This gives model providers a durable path to sustained revenue growth through continued quality improvements aimed at professionals.

While prompt optimization is theoretically appealing, OpenPipe's team evaluated methods like JEPA and found they provided only minor boosts. Their RL fine-tuning methods delivered vastly superior results (96% vs 56% on a benchmark), suggesting weight updates still trump prompt engineering for complex tasks.

The most fundamental challenge in AI today is not scale or architecture, but the fact that models generalize dramatically worse than humans. Solving this sample efficiency and robustness problem is the true key to unlocking the next level of AI capabilities and real-world impact.