They're selling a commodity product in a Red Queen's Race. OpenAI, Anthropic, and whatever others get spun up while the gold rush is on are each building costly models at a vast cost to try to get a bit ahead of each other. The economics of this are ugly. The business of building massive LLMs looks more like air transport than the dot com gold rush in the '90s. There will probably be much useful stuff in the wreckage when it's all over, but I've not seen much to inspire confidence that the useful stuff will include profitable companies. This looks like it has all the makings of another WeWork, only this time with an epochal AI winter as the aftermath.
It's unfathomable to me that any of these companies have any kind of moat.
People here like to slag on google for being late to the chatbot party, but they've been using ML the entire time and integrating it into various products for ages. I kind of wonder if the only reason they were "behind" was the lawyers were less brazen about the copyright situation.
I agree with the commodity take, and I personally bet on Google eating everybody else's lunch eventually, because there's a lot of other business behind them and they can afford to undercut competitors. They aren't a one trick pony.
this whole thing produced some useful tools, if nothing else. I'll be able to use a few of them to keep warm during the next AI winter -- much like every other AI winter.
did anything good come from wework?
> did anything good come from wework?
More coworking spaces.
>did anything good come from wework?
Adam and Rebekah Neumann got exposed for being the frauds that they are.
Tequila sales have increased
Maybe but if you read the article OpenAI went from 1.6 billion to 3 billion in one year and is projected to be at $11 billion at the end of 2025.
Commodities can be massive businesses with competitive moats. Oil is a commodity BP and Exxon do just fine financially speaking.
Oil is a special commodity in the sense that it's as important to civilization as water is to humans. It's also special in the other sense that we have geopolitical strife over who gets to extract it, sell it and to which market...
I don't see how a chatbot meets any of those criteria
$11 billion revenue in 2025, but how much in costs?
In 2024, they are projected to bring in $3.4 billion in revenue and lose $5 billion dollars.
They just had a massive fundraising round for $6.6 billion which at the current costs and growth is what, 6-8 months of spend?
If they bring in $11 billion in 2025, I expect them to lose at least $18 billion dollars. Good luck!
I imagine that OpenAI's operating revenue highly exceeds their operating costs. They spend virtually all their money on training and R&D salaries, not inference and operating salaries.
There are three likely outcomes:
1. AI plateaus. OpenAI slashes the R&D budget to become profitable with revenue in double digit billions and profit in single digit billions. Valuation likely similar to today's.
2. AI doesn't plateau. OpenAI makes a killing. (Hopefully metaphorically, not literally)
3. Scenario 1 or 2, but it's a company other than OpenAI that wins.
Bold of you to assume AI plateauing would be somehow intrinsically obvious to everyone, or even to the minds at OpenAI. Tunnel vision is common in tech, particularly when your salary (or funding) depends upon it.
Don’t agree. Inference costs have been in a race to the bottom for a while and it’s likely imo that OpenAI is gross profit negative on inference right now
Why do you think cost would expand linearly with revenue? That's typically not how technology companies work. Compute gets cheaper over time and R&D expenses eventually cap out.
We're in the "add billions in dollars of datacenters" and "spin up nuclear power plants" level of infrastructure needed for their growth, so if anything, I might be underestimating the costs if they grow as much as Sam claims they can.
Didn't Sam ask TSMC to spend $7 trillion on new fabs? By comparison, $18 billion/yr spend seems very small.
But OpenAIs R&D isnt going to level off until they reach AGI
How will they continue to operate into the future with those kinds of losses? More rounds of funding? Loans? Charge more? Most companies with losses that big would be bankrupt, e.g. GM in 2009.
The true believers seem to think the compute and energy requirements will drop by an order of magnitude in the near future
That didn’t go well for crypto.
Crypto (at least proof-of-work) is purposefully designed to have rising per-unit production cost.
>This looks like it has all the makings of another WeWork, only this time with an epochal AI winter as the aftermath.
I'm as cynical as it gets on this forum, as evidenced by my comment history.
But you're comparing these AI companies to WeWork? Really?
WeWork was a real estate company operating in a historically favourable environment (0% interest rates) pretending to be a tech company. They literally rented office space. What do they have in common?
I notice there's a new generation of "grey beard" programmers constantly talking about how "useless" AI is for programming, and they can do everything faster. Meanwhile, there are tons of us out there who are paying $20, $30, $50 per month and upwards for these tool as they are, and wouldn't want to go without. Ever. And we have no idea where it's going to go. Maybe you're missing something?
> Meanwhile, there are tons of us out there who are paying $20, $30, $50 per month and upwards for these tool as they are, and wouldn't want to go without.
I'm paying for Claude, which I find super helpful (although mostly for side-projecty stuff rather than dayjob). I'd definitely pay double what it costs today, particularly if I went back to shorter-term environments where I think it shines.
If you can't hook it up to your codebase/you write in a language where it's not great (it doesn't seem good at Elisp at all, at all) then I could see how people might not find the value.
Nonetheless, despite finding these tools useful, I too am sceptical about whether or not there's a valuable business there.
For context, I said this about Uber, WeWork and a bunch of other startups that never really monetised. Note that I also said that about Facebook, where I was completely wrong.
AI is a real threat to programming compensation. It's already kind of happening as junior dev work has become much harder to find (and consequently people will take jobs paying less), and senior devs are starting to lean on LLM's for basic code.
If you are paying attention, this is a pretty terrifying prospect if you are building a $200k+/yr life on the basis that SWE will pay like this forever. A machine is coming along that genuinely might be 80% of your skill set in a few years, makes it very difficult to negotiate generous packages with the remaining 20%.
I don’t think that software salaries are coming down yet as a result of Copilot/ChatGPT, they’ve come down because of overexpansion during COVID and a big rise in interest rates that makes raising funding and investment much more challenging for most technology companies and forces them to become profitable sooner rather than later (with some not able to make that transition and therefore failing).
> A machine is coming along that genuinely might be 80% of your skill set in a few years
Something similar happened when COBOL came out. Same with website builders. The big difference between most industries versus software is we aren't even close to satisfying the world's desire for software yet, so increases in productivity just gives us bigger leverage.
From a greybeard, I'll say this: This is nothing new. I don't see that this will disadvantage anybody other than those with a failure to adapt. This is about on par with IDEs that can stub out tests and method signatures on the scale of things to worry about.
I think we're misidentifying AI as the catalyst when it's more like the accepted excuse for diminishing compensation for software developers. Ownership wanted to drive down costs as salaries were getting out of control. This includes not just wages but work/life balance and other perks.
Personally I think its cyclical as software is such a key component of communication and automation - and so we'll see future growth periods but probably not to the same extent as the last decade where seemingly every undergrad was compelled to study Computer Science.
> A machine is coming along that genuinely might be 80% of your skill set in a few years
Is this supposed to be scary? This scenario is absolute stonks if you're a developer worth your salt. A machine makes me 5 times more productive, and I don't even have to commoditize my complement because they're taking care of that themselves?
This assumes companies have finite backlogs. AI will raise productivity, but to date no company has said 'our software is done, send all the programmers home.' Instead companies expand what they want from their software.
The rate of change could make the short term bumpy as companies try to play around with less dev work. Eventually though competition will push companies to raise their productivity to the new baseline (programmers + AI).
One thing that is a danger is if devs ignore what's happening in AI. I remember when Google first came out having to learn the art of querying Google to get what I was looking for. AI/LLMs looks to be the same - ignore learning how to leverage them at your own peril.
> our software is done, send all the programmers home
That does happen. Obviously no programmers employed at those companies to talk about it on HN though.
>'our software is done, send all the programmers home.'
(nodding my head in glum agreement to this comment)
These AI companies are playing the same game of selling $2 to earn $1.
I'm genuinely curious what makes the current crop of tools so compelling/productive to you personally? Been doing this for twenty years so I guess I'm a greybeard.
I've always found the time-consuming part of this job to be understanding the context of the change rather than making the change itself. Essentially, trying to understand the existing code and business requirements and how they all fit together. I can definitely see the potential for AI to help make this easier but I haven't found the current tooling to be any good at this.
AI is a polarising. And the danger with such things is once you’ve made up your mind, it’s hard to look at things from the other side regardless of whether you are for or against it. And arguments supporting either POV starts to look like shilling.
> AI is a polarising.
I'd rather argue that every hyped topic is polarizing, and your argument can be adjusted to basically every hugely hyped topic.
What they have in common is that they're selling a (now) commodity product for margins that will be driven further down over time as other companies catch up and the huge leaps stop happening. With WeWork it was other old-guard real-estate managers realizing they can do what WeWork does for cheaper.
Comparing to airlines was fine, but you take issue with a comparison to real-estate? WeWork was also beloved by their customers and had leadership who were a bit off the rails.
The fact that switching models is changing one string in AWS bedrock means that nobody is going to be able to charge a significant premium.
WOW. These figures put the OpenAI valuation in perspective.
OpenAI: $3.6B revenue - people paying $2.7B for personal subscription (growth rate of 285% per year) - rest is AI
This would mean the latest OpenAI valuation of $156B is a P/E of about 43. For a company growing 285% per year ... that actually doesn't sound horrible. In fact, that's pretty good.
P/E is based on the net income, and they aren't even profitable yet.
Also, isn't Microsoft getting paid back 75% of the profits first, up to their investment, so $13 billion and then 49% for another ~100 billion?
> Also, isn't Microsoft getting paid back 75% of the profits first, up to their investment, so $13 billion and then 49% for another ~100 billion?
That is roughly true, but also only matters if Microsoft can influence OpenAI policy and chooses violence^1 (taking profit over investment in technology). Otherwise I would expect OpenAI to keep investing all of their income into more AI. Meanwhile OpenAI is hellbent on reaching effective AGI / pushing towards singularity, as long as they keep making progress and having cheap access to capital profitability is not required. So my personal conclusion is to invest in people selling AI shovels because the madness will continue.
Note 1: in my humble opinion Microsoft choosing violence is highly unlikely with Nadella in change.
As others said, E is for Earnings but it's kind of understandable for it to be negative and use the Revenue metric as they are spending huge amount on R&D.
IMHO the bigger risk is the "AI" ending up not doing that much after all or their R&D not paying off(which is a risk, their SORA is nowhere to be found when Chinese AI companies are having its alternative in production. Maybe OpenAI isn't that far ahead and it's the language barrier that gives that impression? I don't know I don't speak Chinese but things are happening outside of the Anglosphere).
Yeah the latest Pika model is mindblowing. Out of this world (though surprisingly creepy ad!).
https://x.com/pika_labs/status/1841143349576941863
Where's Sora?
[dead]
AI not doing much is a massive underdog, galaxy massive
> "AI" ending up not doing that much after all or *their R&D not paying off*
Emphasis added.
You spend money on R&D.
The expectation: You make money.
The AI company reality: The value of your propitiatory models drops to LITERALLY ZERO after they are superseded by a new generation of models, or worse, open inference models.
The risk isn't that the models don't work.
The risk is that it increasingly appears that the 'moat' these companies have is only as good as the amount of money they continue to pour into it. and when the moat is gone, so is the company.
I can also run a business where I create a moat by pouring money into it (remember MoviePass?), eg. literally paying people to use your service; but usually you have to have some kind plan that does not involve magical fairies (eg. AGI) in at the very least your pitch deck, to convince people you have a plan which goes from scale -> mega profit.
I would use factory automation as the analogy, it’s actually a direct analogy
P/E is based on profit, aren't you conflating earnings and revenue? As their earnings are negative, so would be their P/E ratio.
It’s kind of hard to really calculate the P/E for OpenAI as there are more factors in it than usual. Companies like Microsoft and Nvidia likely don’t care too much about their returns considering huge parts of their investments go directly back into their own companies through sales. It’s fairly easy to invest 10B into a company which will then spend almost all of that money on your Azure services. Meanwhile giving your own co-pilot AI products able competition to avoid antitrust lawsuits.
It's not hard to calculate P/E.
You divide the price by earnings.
OpenAI has negative earnings.
It doesn't have a P/E.
> OpenAI has negative earnings.
And how do you know that?
Article says:
> they are expected to lose about $5B this year on about $3.7B of revenue
It’s more than $5bln. That’s their adjusted loss which excludes stock based comp. Real loss is probably 8-10
That's price to sales, not price to earnings. OpenAI's price to earnings, strictly speaking, is negative since it loses money. For comparison, Amazon's price to sales ratio is around 3.
How much of the "people willing to pay" market has already been exploited? I cannot see 285% growth continuing for more than a year or two more, at most, even with huge step-ups in quality.
When you pay for ChatGPT, you’re not just buying a model, you’re buying the UX wrapper around a series of models, and that wrapper has been improving at a very rapid clip making it more accessible to a wider audience.
Example: a week ago the natural conversation feature sucked. Now it doesn’t. That’s huge for creating a D0 positive engagement.
The question is, how many people are willing to pay for it, when there are free alternatives available. There are only ~1M developers in the US, who are perhaps the main market, and developer market for AI is changing rapidly, with the current best solution being Cursor + Sonnet 3.5, or Cursor Pro where you don't even need to bring your own Sonnet API key.
As AI gets more tightly integrated into IDEs, and office suites, then stand-alone products like ChatGPT become less relevant, and the underlying provider more of a replaceable commodity. Would anyone really notice or care if Github CoPilot switched overnight to use a Microsoft/Anthropic/Meta model rather than an OpenAI one ?!
D0?
The "E" in P/E isn't revenue.
That being said, $3.6B is quite a lot of revenue, considering it's mostly from a $20/mo subscription model.
There must be some other big whales in that category. Hard to believe they have 150 million paid subscribers
But a revenue of $3.6B is peanuts compared to a company valuation of $156B.
you can't argue the valuation like that
the only way the valuation is put "in perspective" is if you estimate that we gonna have a race of heavy investments now to get to a point where the models are "good enough" and you no longer need to invest in training new ones, at which point you switch from running a immensely unprofitable business to a immensely profitable one.
the issue is that nobody knows when that will be the case (if ever) and it currently looks like whoever player is best equipped with capital to fund that race will have a winner takes all future ahead so you just place all your chips and hope for the best
Your math is a bit off. As per the article, estimated earnings for 2024 are about -5 billion, so P/E should be around -30. This is actually fairly typical for hot startups like WeWork.
So 75% of the revenue is from subscriptions? Where are the enterprise users? Are they in Microsoft’s revenue through Azure?
A lot of people are claiming that OpenAI has no moat, but so far they are clearly the market leader, and "chatgpt" has become an everyday word for LLMs, similarly to how "google" became an everyday word for search 20 years ago.
Why is Google still printing money on Search 20 years later? Surely at this point the know-how to build a search engine at scale is out there. It is a 2-sided marketplace, first they captured people's habits, then advertiser dollars. It could be that in the end LLM usage will also be ad-driven, in which case this will be captured by OpenAI most likely, similar to the Google case.
Another case. Why is Outlook the market leader for corporate email, even though email protocols are open standards, and there is no shortage of open source alternatives, etc. The reason is bundling of course and various other IT considerations, such as trainig/certs/control/security. Imo we don't really know yet how the LLM space will play out, what will enable (or not) OpenAI to win beyond the first years.
Of course there _were_ cases when the moat wasn't there, or was quickly disappeared, eg. Netscape's business melted away as soon as Microsoft bundled Internet Explorer with Windows.
Personally I think OpenAI still has a good 10x growth ahead (eg. 100M paid users for ChatGPT at the $20/mo-ish pricepoint) if they just maintain the current lead on the rest of the pack, and probably the API income can similarly be scaled up. At the slow-moving Retail company I work at, all the execs have been talking about AI for the last 2 years, but we still don't have a single AI feature in production in any of our apps, so we're not yet contributing to OpenAI revenues. But we will soon, as will 1000s of other slow-moving BigCos.
LLM subscriptions are such a scam. You’re paying up front $20 to use an LLM when you could just be paying fractions of a penny per use. Majority of users probably do not get their moneys worth by racking up $20 worth of tokens in a month.
I’d really like to see as “pay as you go” gateway for popular LLMs. As Bezos said: “your margin is my opportunity.”
I think the most consumer friendly options would be a pay as you go model or a pay for tiers of use (e.g., $X for 500 queries, $XX for 1000 queries, etc.).
However they really are banking on the idea that people pay a bunch up front and use it fairly minimally. This allows them to make profit on the subscribers to pay for queries by free users. I have no idea where the pricing model will go in the future but it wouldn’t surprise me if pricing models become the primary method for fighting for market share as opposed to the AI’s actual ability.
"Futuresearch estimates that their API business actually has ~50% gross margins, and that most of the losses come from operating costs (R&D, etc) and their ChatGPT business, which gives basically unlimited usage for ~$20/month."
I would have assumed there's more profit in the subscriptions than the API. $20 is roughly 2 million output tokens a month through the API. Given the 50% margin they claim, each user would have to be generating 3-4 million output tokens a month for OpenAI to be at a loss. Is that likely? Seems like a lot of words to me.
> Seems like a lot of words to me.
Pretty easy when you start having it search websites, documents, code references etc. Before caching, lots of people used up $20 in a day or 2.
I'm skeptical of this analysis simply because it doesn't appear to include any revenue from the Microsoft deal. Many corporate customers are using the Azure ChatGPT service rather than OpenAI's API directly. There has to be some accounting for that.
What makes you think OpenAI makes any money on people using Microsoft's technology (i.e. Microsoft owns all OpenAI IP up to AGI) running on Microsoft's servers in Microsoft's cloud?
I'd be astonished if Sama didn't negotiate royalties. Microsoft is even using OpenAI's trademarks for the service.
What revenue from the Microsoft deal?
Google's AdWords business is worth about 10X that of Open AI ($1.5T) and does $250B of revenue. P/S of about 6X. If everyone stops googling and starts talking to ChatGPT instead, and GPU costs continue to fall such that ad-supported ChatGPT becomes feasible, it's not unreasonable to assume that Open AI can grow revenues by 100X from here.
Which assumes that Google will stand still, instead of cannibalizing its own business model.
Hot take is that until we get level 5, we are in a similar place as automotive where humans are pretty bad at sustained supervision and are biologically lazy.
Employers will see too much delegation to flawed models - codebases will swell with ai-slop that eventually seizes the business. Skills will atrophy. Internal comms will be similarly impacted, with flooding of generic memos and strategy docs from people pretending to work dripping with that RLHF sheen.
2.7b / 240 = 11.25m paid users. Feel like they’re just scratching the surface of potential users.
Or another way to look at it, is that everyone and their mother has heard of them, and in 2 years they've only convinced that many people to pony up cash. Plus they have a massive churn problem with people quitting premium after 1-3 months.
> Plus they have a massive churn problem with people quitting premium after 1-3 months.
Because, tbf, the free version is really good. I feel like a lot of AI companies are in the stage where they're still trying to gain massive marketshare and convince people of it's value. The real test is going to be when they pull the plug to force people to transition to premium.
Pure anecdata, of course, but my impression so far was the opposite (same as with Gemini): The free version is so bad for me (gpt4o) that I really doubt the paid version can get meaningfully better.
* Text generation is really bad if said text is more niche than typical SEO stuff like "give me 300 words about soccer balls". Anything academic is usually wrong (i.e. full of hallucinations) or lacks/hallucinates proper sources. If I have to check everything anyway I can just use a search engine.
* Image generation is really bad if you don't just want deviantart-like content. Just yesterday I tried generating ideas for visualisations of a few topics (with quite a view different prompt approaches) and they almost all were unusable.
It is good add summing up longform content, though, but then again so am I - and I have to read it anyway to confirm there are no hallucinations...
Obviously many people use it for coding (which appears to be the low hanging fruit because code is so heavily formalized), but I can imagine that market is almost saturated by now.
They have a 180 million users who are contributing no net revenue but are probably costing them significant amounts.
The math comes down to the fact that they raised enough money to stay in business until they have to raise even more money.
And a 180 mil users might seem like a lot in two years, but with the free media coverage they have... even if their free to premium conversion rate is pretty dismal, the "have you heard about them" to "active free user" rate is also very bad!
It’s only got easier to run models locally though, if performance continues to improve on smaller models, something like running ollama locally might be ‘good enough’ for a lot of people.
Wonder what the value in training data is of those millions of users.
It's the "open hand" model that every tech start-up follows.
1. Be extremely generous to customers. Give away incredible tech at bargain basement prices. Pamper your employees with extraordinary benefits. Everyone from all angles loves your business.
2. People integrate your product into their lives. They become dependent on it because the value is so good. They tell everyone else in their lives about it. (2.5 IPO. This is where you make an exit, where those people who "love" your product that everyone else loves want to get in on the investment. Retail runs to buy up your shares. Also could be an acquisition.)
3. Close the hand. Competition has been ruined and people are addicted. Now it's time to raise prices and lower product quality. Initial investors are already out, so retail will carry the blame for the enshitification of your product.
That’s just for ChatGPT, a single product
[]
I know, my point is that they have a platform and can develop more products in the future. 11mio paying users is for a single product right now - ChatGPT
Most of the people I know just use the free version. So there's room to both differentiate/improve the paid version and increase the price.
But this is not their main business model.
Interesting splits. I, too, find that the bulk of the money I give OpenAI is for ChatGPT+, and the bulk of the money I give Anthropic is for Sonnet API access. This month I spent more with Anthropic actually. Although, to be fair, I’d like to give OpenAI money for gpto-preview API access, I just don’t have the option.
This is such an interesting new industry —- so many comments here about race to the bottom / commodification, and I tend to think that way too, but in practice, I’m very very often like “Meh, ChatGPT is bad at this, I’ll ask Claude”, or vice-versa. We may actually be entering a world where we have different personalities and strengths in very large frontier models. I don’t think it’s easy to confidently predict where all this goes.
Is there any way to invest in companies related to it?
I think that the best way is still to do so indirectly by buying NVDA
That's assuming future growth isnt already priced in, which is pretty unlikely at that point in time, no?
I think when it comes to NVDA, a slow DCA strategy makes sense
Every investment is sort of like that, you betting it’s more than what’s priced in(current price set by market)
You can bet on second order companies.
Thomson Reuters, Intuit, Palantir, Teledoc, Twilio, ServiceNow, Axon, WPP. All stand to benefit from sophisticated language and vision processing.
Focus on the data centers, and the inputs into them (the really boring ones).
That's a good point - the biggest thing to invest in might be power generation
If you're asking this in a public forum you're not going to find any alpha.
I mean, start at step 1: can you name 10 companies related to it?
> If you're asking this in a public forum you're not going to find any alpha.
I disagree, based on my experience
This kind of analysis misses the fact that they will find other ways to monetize. Given that almost every other major tech company makes billions from ads (not subscriptions or API usage), it seems reasonable to price this into their valuation.
>ChatGPT is by far the dominant prosumer product
Some people prefer to delude themselves in order to not admit this.
Just yesterday [1], I argued ChatGPT was a strong brand just to be downvoted to the bottom. Lol. Imagine being so blatantly wrong at something you are supposedly a specialist at.
Turns out it's only a 3BnUSD / year brand, two years after its inception. Also, who is "Claude"? [2].
In terms of tech, nothing even comes close to "GPT-4o mini" for the same price/performance.
OpenAI will continue to dominate the market for the next decade, at least.
1: https://news.ycombinator.com/item?id=41723208
2: https://trends.google.com/trends/explore?date=now%201-d&geo=...
OpenAI's weird contract with Microsoft, whereby Microsoft has rights to their IP/artifacts up until OpenAI's board unilaterally declares they have achieved "AGI" (meaning whatever they choose it to mean), may come back to haunt them.
Microsoft is living with the possibility of OpenAI cutting them off at any time of their choosing, as well as not being in control of a technology which is becoming increasingly important, and they are feeling it. Microsoft is trying to build their own SOTA model internally, and there is every reason to expect they will succeed - they have the GPUs, money, desire, paranoia and talent required to do it, and as we have seen from many players there is no moat.
So, what happens to OpenAI when (not if), Microsoft end their relationship? How do OpenAI sell their product, other than directly, to what extent does it cut them off from enterprise customers, can they financially handle building their own $100B datacenters if they are forced to?
Pretty sure that deal is out, seeing as they did away with their "non-profit" overseeing their weird-capped-profit stuff. No-one but their lawyers probably knows for sure, tho...
>Microsoft is living with the possibility of OpenAI cutting them off at any time of their choosing
There is a partnership that benefits both parties, and the legal agreement is most certainly more complicated than you're describing.
No doubt, but nonetheless MSFT is trying to replace them as fast as possible.
>So, what happens to OpenAI when (not if), Microsoft end their relationship?
I don't know, but @sama should know (and most likely he does).
I'm not his fan. But am a fan of reality and that's what it is.
It's also not like "some guy" suddenly has to build $100B datacenters and whoops that's an issue. This is a 150BnUSD company, with millions of users and a brand that's recognized worldwide, they have plenty of options to choose from.
> It's also not like "some guy" suddenly has to build $100B datacenters and whoops that's an issue.
I'm sure they could raise $100B if/when they need to, as long as the growth/scaling story stays intact, but $100B is still a lot. They just raised $6B, which alongside a similar amount raised by x.ai is largest raise by a startup afaik. Buying 100K GPUs atm would be a challenge too, due to supply.
In the meantime, per Dwarkesh interview with SemiAnalysis.com Dylan, Microsoft is in process of fiber-connecting multiple datacenters to make a massive meta-cluster, and this is what OpenAI would lose access to if the relationship with Microsoft sours. Amazon (partnered with Anthropic) and Meta, even x.ai, already have massive clusters, so OpenAI could find themselves temporarily in the GPU-poor club if they upset Microsoft after Microsoft make them expendable (or maybe at that point, it's "will" rather than "could").
You seem more focused in being "right" about votes (in this comment, in the other comment, in your profile comment...) than actually engaging the conversations themselves. [1] is about whether they have a strong moat, that's orthogonal to whether those people thought ChatGPT was the dominant product.
I'd agree being the current best, having a lot of revenue, and being the popular origin of generic terms like "GPT" are indeed great examples of being dominant though. Having "a strong moat" means having reasons 5 other companies won't be able to do the same thing in the next 5-10 years and overtake them. History has shown, plenty of times, just being the big brand OG player at the start doesn't provide a big moat in and of itself. If that were the case you'd be talking about how some other company like Google is the dominant player in all things AI right now.
If you assume that the costs of inference would continue to decrease while they would be able to get billion people hooked on 42 per dollar plan..
That’s $0.5 trillion revenue rate
With 3.6B people in the workforce I'd argue there isn't a billion people in need of a computer, not to mention an ai subscription plan. I'm of course assuming most subscriptions for ai are work related.
I use free AI tools and will never pay for it. There are many people like this.
I pay more for a faster PC and a bigger screen.
I also pay for better AI. My - and probably your time - and the time saved by using superior tooling, is worth far more than the meagre few dollars spent each month on some subscription.
You're stepping over dollars to pick up dimes.
Indeed, there is a massive gap between free and $1/month. Personally I outright refuse to buy anything digital involving monthly payments (except where there is no alternative like domain names, etc.)
Additionally, I pay for Anthropic's products and will not consider OpenAI offerings. There are many people like this.
Oh, just a billion? Why not 100 billion while we're at it?
Because there's only 6-7Bn people in the planet?
Come on, man.
You are not thinking intergallactially.