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OpenAI predicted to generate over $1B
- candiddevmike 3y agoIs there any profit margin on that? Or is it the typical VC-backed selling dollars for quarters?
- viscanti 3y agoWe'd need to know acquisition costs and lifetime value (difficult to project with such a new product and with Google and Facebook coming up with potential competitors that might cause users to churn). The idea of looking at quarterly P&L and determining if a business is legit or not doesn't really make sense. Are they profitably buying growth (if acquisition costs are lower than LTV, you're buying future profits that don't show up on that quarterly statement) or just burning money? We'd also want to understand if there's any value to subsidizing things. Perhaps they're able to fine tune and improve based on what users are doing and that's helping them build a moat - or maybe there's no value there.
- svnt 3y agoBased on what we’ve seen acquisition costs are likely extremely low. This is an “if you build it they will come” situation and they built it. Lifetime value they don’t even know at this point — the best we could hope for is an early (and probably still seasonal) assessment of churn.
- viscanti 3y agoWell part of acquisition costs are giving out 3.5 for free hoping to convert people to paid ChatGPT. It's possible they're even subsidizing the paid ChatGPT for additional data (they believe it helps them improve their product and build a moat) and to convert people to Enterprise. For all we know, all their current revenue is considered acquisition costs for Enterprise use, where they might think the real money and profits are. I understand they probably don't have any solid idea on LTV yet. The point is that looking at quarterly numbers doesn't tell us if any VC backed company is lighting cash on fire or making smart investments.
- svnt 3y agoFair points.
- spaceman_2020 3y agoIf Uber could take 14 years to turn a profit, why can't OpenAI get a similarly long leash?
- outside1234 3y agoBecause we are all hopefully wiser now after that debacle
- ShrigmaMale 3y agothe scaling effects and deflationary nature of technology are much better-established than those of humans driving large, expensive cars.
- _ea1k 3y agoI tend to think that the real debacle is that people think it is a debacle whenever a business takes a long time to reach profitability. I bet a lot of great innovation has been held back by the focus on short term returns.
- HardlyCurious 3y agoYou didn't play monopoly much growing I guess. Winning in capitalism is all about securing position. From there, leveraging profits isnt hard.
- bugglebeetle 3y agoInterest rates.
- fooker 3y agoThey are not borrowing from a bank. Microsoft can fund them interest free as long as they want if there's a slim chance of OpenAI being useful to MS for one upping Google a few more times.
- candiddevmike 3y ago
- SeanAnderson 3y agoI certainly believe $1B rev (and am not surprised!), but what about P&L? :) Everyone knows their servers are running hot!
- newZWhoDis 3y agoI mean they’re getting like… (checks console) $40k/mo from me at this point… So I believe it.
- slig 3y agoCan you tell us what you're working on?
- pplonski86 3y agoI was playing with their API for half day for code generation and the cost was few dimes. I was writing package for making matplotlib plots. https://github.com/mljar/plotai https://github.com/mljar/plotai Are you building some public service that heavily relay on OpenAI API?
- birriel 3y agoThis is like 450M tokens/month, assuming GPT-4 32K, averaging I/O to $0.09/1k tokens.
- htrp 3y ago80mn MRR extrapolated out somehow becomes over a billion in Revenue
- Bjorkbat 3y agoI still remember some dork on Twitter claiming that a source within the company told him that they had already trained GPT-5. Mind you, this was back in April I think. Kind of reluctant at this point to believe anyone who spreads rumors about the inner machinations of OpenAI.
- olddustytrail 3y agoYou mean a whole 3 months ago? So they still might be working on it. Does anyone else remember when decades were a long time ago rather than months? Or am I just very old...
- ShrigmaMale 3y agothis is actually plausible, though. GPT-4 finished training in August 2022 and was released March 2023. OpenAI took a lot of time to test/secure/fine-tune/whatever. if they're looking for a roughly yearly release cadence then they might have just about finished training.
- Bjorkbat 3y agoSo am I to believe some tech figure on Twitter with a large following who has an unnamed source? Or Sam Altman, who himself has said that no work whatsoever has been done nor will be done on GPT-5 in response to the rampant speculation this single tweet created?
- binarymax 3y agoCan’t remember the source, but I read that their daily server burn is something like $700k. If their monthly revenue is 80M then that’s a pretty nice piece of profit.
- danpalmer 3y agoThe server burn will have likely scaled significantly as traffic scaled. There's not much in the way of economies of scale here, you just need to rent/buy all the hardware.
- PartiallyTyped 3y agoThe cost scaling coefficient is likely < 1 as the increase probably allows them to pack better for inference and reduce their costs.
- danpalmer 3y agoGiven their scale I assume they basically got the best performance out of this packing a year ago or more. This sort of improvement has quickly diminishing returns. 1m DAU to 100m DAUs probably doesn't do a huge amount to this. On the other hand, given the hype, I'd expect that their free usage has grown much faster than their paid usage, at least for ChatGPT. I suspect their costs have therefore gone up faster than their revenue. API revenue might be the counter to that, there isn't free API usage (that I'm aware of?) so all that increase in usage is likely beneficial. Taking a step back though, it's uncommon for this sort of tech company to suddenly jump to profitability in the space of a year. AI is big, but so were many trends before it. Sam Altman is also experienced here, likely a good fit for CEO, but he comes from the SV VC world, he's not going to be optimising for early profitability because that's not the way he thinks or what he cares about. OpenAI could raise a ton of cash on good terms so why bother optimising for profitability and stifling growth.
- JeremyNT 3y agoWho actually pays that bill? Since MS owns half of openai, and openai is using MS compute...
- llm_nerd 3y agoOpenAI's investor pitch a year ago was that they would make $1B in revenue in 2024, so it seems they are exactly on track. Not sure what the shatters bit is about, especially given that the submission strangely validates it by comparing with 2021 revenue.
- strangattractor 3y agoI guess they left out the part about it costing $4 billion dollars to achieve it:) (FYI: I made up that number for dramatic effect)
- PartiallyTyped 3y agoI mean, if their inference costs are 700k per day, we are at approx 256M per annum. Which puts that part of the operational cost maybe 1/8th of revenue. So where did the other 4bn go?
- brigadier132 3y agoTraining and salaries
- strangattractor 3y agoHey - For the record - I just made that number up.
- agnosticmantis 3y ago> … The Information reported, citing an internal source. Luckily the projection is from an unbiased and reputable source that can be held responsible later.
- deleted 3y ago[deleted]
- input_sh 3y agoOriginal article, but I don't know how to pass its paywall: https://www.theinformation.com/articles/openai-passes-1-billion-revenue-pace-as-big-companies-boost-ai-spending https://www.theinformation.com/articles/openai-passes-1-bill...
- artninja1988 3y agoWhich one is it now? OpenAI spends one gazillion a day on inference and will go bankrupt in 2 weeks or it's making billions
- pram 3y agoWhy not both?
- input_sh 3y agoPerhaps read past the headline to discover some awesome new details, like that it's talking about revenue, not profit?
- blharr 3y agoThat is also literally in the headline
- samspenc 3y agoI think comment OP was referring to the viral news piece that came out just a few weeks ago that stated that OpenAI's expenses were $700K a day and it would go bankrupt by 2024. https://www.wionews.com/science/openai-may-go-bankrupt-by-end-of-2024-costs-700k-to-operate-chatgpt-daily-report-625016 https://www.wionews.com/science/openai-may-go-bankrupt-by-en...
- williamstein 3y agoThis might not age well: "OpenAI likely to go bankrupt by the end of 2024: Report" [1] [1] https://www.livemint.com/ai/artificial-intelligence/openai-likely-to-go-bankrupt-by-the-end-of-2024-report-11691815279479.html https://www.livemint.com/ai/artificial-intelligence/openai-l...
- swyx 3y agoi hate wrapper articles like this that dont add any value apart from picking the most bombastic headline. original The Information source: https://www.theinformation.com/articles/openai-passes-1-billion-revenue-pace-as-big-companies-boost-ai-spending?rc=wk5xyr https://www.theinformation.com/articles/openai-passes-1-bill...
- minimaxir 3y agoHacker News as The Information has a banned domain due to its paywall: https://news.ycombinator.com/from?site=theinformation.com https://news.ycombinator.com/from?site=theinformation.com Submitting from a secondary source is a workaround to the issue.
- swyx 3y agohmm didnt know that. thanks. seems strange not to give credit to the people that did the hard work of breaking the news, and incentivizes grifty wrapper articles like the semianalysis GPT4 one where a twitter grifter just straight up recycled the paid content and put it out for free (and had the audacity to chargeback his credit card lol)
- aestetix 3y agoDo they have a plan to pay royalties for all the copyrighted materials they obviously ingested into their system?
- cosmojg 3y agoProbably not, given that model training is considered Fair Use under US copyright law.
- littlestymaar 3y agoIt's not. Maybe it will be, but at the moment there's no clear characterization: it could be fair use, or the biggest copyright infringement in history. Courts will tell, unless the legislators take a step before that.
- kkielhofner 3y agoNot a lawyer - just a guy in this space who also has a lifelong passion for hip-hop/rap/pop. This case is relevant[0]. I think there is a pretty strong argument that just about anything these models spit out is what the music industry would call a "sample" or "remix" that requires clearance and royalties. The Gaye case provided kicked it up a notch - winning damages for the "feel" of a song. [0] - https://ethicsunwrapped.utexas.edu/case-study/blurred-lines-copyright https://ethicsunwrapped.utexas.edu/case-study/blurred-lines-...
- tensor 3y agoThe music industry thinks every sound is a remix at this point, it's pretty bad example of where we want to go with copyright and ip if you ask me. Most artists get jack shit, every single thing is considered a remix or sample, and the majority go to the few at the top. If you simply hum a tune you make up on the spot a music industry lawyer would probably declare you owe them money.
- kkielhofner 3y agoYou may be right and I don't like it either but what matters is they win court cases.
- strangattractor 3y agoTheir real issue is can they defend their position? I would say not likely. Google has a web scraping infrastructure in place and invented the technology. Facebook also has the capability. M$ will likely try to buy them or partner long enough to develop the tech and be a competitor. This isn't the car industry where it literally takes industry leaders years to figure out that electric cars are really a thing. I think Google is the likely winner since this will definitely enhance search and be a service to sell to large multinationals.
- outside1234 3y agoI am with you. It is not hard to imagine that either 1) Google (et al) swoops in with a massively superior model and cost structure or 2) Facebook (et al) commoditizes this space with an open source model like Llama 2 that brings this down to essentially barely break-even infrastructure hosting. In any case, it does look like Microsoft is going to eat the $10B.
- itake 3y agoI don't understand where Amazon is in this game. They are the biggest cloud provider. Azure is offering first class pretrained ml model hosting (content moderation, OCR, OpenAI, etc.). Google has vector search SCANN library and hosted vector db offerings. AWS is nowhere to be seen.
- jedberg 3y agohttps://aws.amazon.com/bedrock/ https://aws.amazon.com/bedrock/ https://aws.amazon.com/bedrock/titan/ https://aws.amazon.com/bedrock/titan/ I'd expect a bunch of announcements at re:invent in November as well. They often hold off on big stuff for re:invent.
- itake 3y agoYeah, I guess. I feel like google and FB have been releasing interesting ML models every month now. I’m skeptical Amazon can be like apple and drop everything at once. I find many of their announcements are lost in their own noise.
- outside1234 3y agoI mean can't anyone produce $1B in revenue by selling something for $10 that costs $100? Isn't the hard part doing this profitably? Spun another way, doesn't this revenue level imply they are burning cash like crazy and might soon go bankrupt?
- rossdavidh 3y agoYes.
- amanj41 3y agoDepending on how much of their usage is driven by the free public ChatGPT version, I wouldn't be surprised if they could close the loss gap if they switched to paid only. I believe enough people are hooked on it that any one of them would be willing to fork out a few bucks a month.
- TillE 3y agoAs in every other online service market, that's a really hard sell if your competitors (eg, Bard) remain free. I think giant companies won't mind burning cash for at least a few years while they figure this stuff out.
- rvz 3y ago> Isn't the hard part doing this profitably? Correct.
- huijzer 3y agoThree months ago, I already predicted similar numbers for what they pay Microsoft: https://news.ycombinator.com/item?id=36288058#36291960 https://news.ycombinator.com/item?id=36288058#36291960 based on public information from Similarweb. This new prediction shatters nothing.
- tpmx 3y agoSpeaking of: In the past few weeks it feels like GitHub's/OpenAI's/Microsoft's Copilot has gotten dramatically more powerful - like it's including a larger code context when doing the suggestions. Does this resonate with other people's experiences? (Could be random based on what I've happened to work on lately though.)
- rmaccloy 3y agoYes, they expanded the context window, announced two days ago: https://github.blog/changelog/2023-08-28-github-copilot-august-28th-update/ https://github.blog/changelog/2023-08-28-github-copilot-augu... I'm sure they incrementally rolled this out so it's possible you are in a cohort that got this change earlier.
- tpmx 3y agoThanks! "We’ve officially rolled out the 8k context window for all code completion requests!" It's odd that they don't lead with that.
- 6510 3y agoWhy would they only accept credit cards? Stripe can do IDEAL just fine. Getting a card just for this service is a waste of money.
- fooker 3y agoIt costs a lot less to reverse or cancel credit card transactions. Also all sorts of insurances and financial products are just available for credit card transactions. Unless you are a bank or something similar, it makes complete sense to just support credit cards.
- 6510 3y agoiDEAL transactions are final. We are really spoiled in the Netherlands with such a simple system. If you want your money back you write to the merchant. If you rent a server to do some calculations (hallucinations) for you you would have to prove the digital product was not what you've ordered. You are free to give refunds when you like of course.
- simion314 3y agoOpenAI seem not to want my money. Like Google,Amazon, Microsoft they do not accept PayPal not sure why because other giant/big companies like Steam and Netflix accept it. I am curious what is the difference , not wanting money bad enough to implement this? Btw I do not want a debate about PayPal or other payments method,I am aware of the issues with PayPal and I am just a due with a few bucks in there that I could have spent on GPT4 to test it but I could not.
- sharmajai 3y agoWhat're the issues with PayPal that you're aware of?
- simion314 3y agoThey have a big commission for transactions in some countries , and some people ended up with their account blocked and having no wayu to get their money out. I am just a user, not a merchant so I am not sure what the issues would be from that side of the transactions, I personally avoid keeping too much money in PayPal just in case they somehow block my account for some bullshit reason. Edit: I would prefer not to go off topic, unless is related with why some big companies refuse to use PayPal and others do use it. As an example I could not buy audio books from amazon so my money went to a different company that accepted PayPal.
- tensor 3y agoIf a company implements paypal then people who only have paypal might pay them money that they otherwise wouldn't. However, people who might have otherwise payed via another means may also now use paypal. If paypal has higher fees this could well result in less money in revenue. Also, maintaining each payment gateway has an implementation and maintenance cost. Add it all up, and assuming that the number of potential customers like you that only have paypal is small, and it's easy to see why companies may choose not to implement it.
- simion314 3y ago
- maerF0x0 3y agoIf one wanted to invest in OpenAI or companies leveraging their technologies, what would HN recommend?
- binarymax 3y agoBuy MSFT? They have a good investment in OpenAI and their involvement may bring growth in their stock.
- kornhole 3y agoBecause MS owns half the company, you could invest there but would also be investing in the rest of their product lines. If you are an accredited investor, Microventures and perhaps some others allow investment in pre-IPO shares.
- joedevon 3y agoYou can't invest in a non-profit. j/k
- MangoCoffee 3y agosame as invest in SpaceX. you invest in a company that have investment in SpaceX for example buy Google stock.
- hollerith 3y agoOpenAI is less good as an investment than their revenue curve would suggest because the US government is likely to cap the size of future training runs (to reduce AI extinction risk) and there are plenty of open-source offerings suitable for the work of fine tuning and otherwise exploiting the economic potential of models of the size of GPT-4, so it is hard to see how OpenAI would be able to construct much of a moat by which to protect their prospective future profit margins. The idea that AI research must be regulated to prevent harms, including human extinction, is ridiculed on this site and in Silicon Valley, but policy is decided by representatives for the entire US voting population, not just the technologists of Silicon Valley, and polls show widespread skepticism in the broader population about the wisdom of continuing to create ever more capable AIs. Also, the people lobbying for a cap are disciplined, smart and well-funded. Companies that focus on applying the models we have now will probably do OK (e.g., Google's using something analogous to GPT-4 to improve their Search service except that unlike GPT-4, Google's model can cite its sources) but OpenAI is not doing that: their focus is to increase capabilities trusting that it will become clear in the future how to use those increased capabilities to produce economic value, but that plan doesn't work very well if the government imposes a limit on the increase of capabilities. Don't say I didn't try to warn you. ADDED. The leader of OpenAI says that it cost OpenAI roughly 100 million dollars to provide the computing resources necessary to create GPT-4. Once that "foundational model" model was created, it could be run (deployed) on much humbler hardware; some open-source competitors to GPT-4 for example can run on a beefy Macbook. Naturally there is no practical way to stop people from running a model once it has been released to the public, so regulation will target the "training runs" such as the aforementioned training run that produced GPT-4. The point is that there are many ways to "fine tune" a basic model to increase its economic value. GPT-4 by itself for example is useless as a search engine, but Microsoft fine-tuned it to produce something (Bing Chat, a.k.a., Sydney) that has some hope of becoming a popular search engine. You probably want to restrict your AI investments to companies good at this fine-tuning process.
- deleted 3y ago[deleted]
- nimbius 3y agounsurprising as AI is the hot trend for 2023, despite the confounding reality that most if not all "AI" has largely been a parlour trick that writes sentences similarly to humans sometimes. before AI it was cloud. im starting to think now that theres nothing left to sell, we just invest in memes and ideas and form a tacit communal agreement that the outcome is what we want.
- slashdev 3y agoI work with AI daily in the form of Github Copilot and ChatGPT. It's not a parlour trick, it's become an indispensable tool. I feel handicapped when my internet goes down and I don't get Copilot suggestions as I type. I've been programming for over 20 years, and this is the biggest single productivity jump I've experienced in my career.
- nickthegreek 3y agoI don’t find your LLM takedown that convincing, but AI is more then text. I imagine you also find the music generation, text to speech, speech to text, language translations, image generation and video creation to also be parlor tricks?
- aklemm 3y agoConsidering the speed at which search results have been turned to trash, I'm not surprised they generated a lot revenue off that feat.
- mensetmanusman 3y agoThe ability to replace Siri with chatGPT would 10x the usefulness of my phone. If Apple is ever smart enough to add this feature - can’t wait!
- great_psy 3y agoI think they are going to. But In Apple fashion, it will probably be pretty limited ability to start with. Maybe will only allow certain strict actions to be performed on the phone. I don’t think you’d want more anyway. It’s not like you’ll want it to output Python code. For that you can use an app that specializes and has the UI for that task. I have a hard time believing chatGPT would x10 your phone unless the UI of Siri would also change
- wrsh07 3y agoFwiw, I use the ChatGPT app I record voice memos (it generates a transcript using whisper) At the end of the memo I can: * Ask it to summarize the memo into bullet points * Answer a specific question It's incredibly valuable and I've already used it more than Siri
- l72 3y agoIf Siri would just respond to me at the same volume level, that would make her 10x more useful to me. Sometimes I whisper a reminder and she SHOUTS it back to everyone...
- kats 3y agoGood for OpenAI. They took a lot of this fantastic machine learning research and made a really useful service that a lot of people like. Really glad that ChatGPT is a thing and hope they have more success.