4 ms·

Is there any profit margin on that? Or is it the typical VC-backed selling dollars for quarters?

viscanti 3y ago
We'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 ago
  Based 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 ago
    Well 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 ago
      Fair points.
spaceman_2020 3y ago
If Uber could take 14 years to turn a profit, why can't OpenAI get a similarly long leash?
- outside1234 3y ago
  Because we are all hopefully wiser now after that debacle
  - ShrigmaMale 3y ago
    the scaling effects and deflationary nature of technology are much better-established than those of humans driving large, expensive cars.
  - _ea1k 3y ago
    I 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 ago
    You didn't play monopoly much growing I guess. Winning in capitalism is all about securing position. From there, leveraging profits isnt hard.
- bugglebeetle 3y ago
  Interest rates.
  - fooker 3y ago
    They 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

We'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 ago
Based 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 ago
  Well 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 ago
    Fair points.

spaceman_2020 3y ago

If Uber could take 14 years to turn a profit, why can't OpenAI get a similarly long leash?

outside1234 3y ago
Because we are all hopefully wiser now after that debacle
- ShrigmaMale 3y ago
  the scaling effects and deflationary nature of technology are much better-established than those of humans driving large, expensive cars.
- _ea1k 3y ago
  I 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 ago
  You didn't play monopoly much growing I guess. Winning in capitalism is all about securing position. From there, leveraging profits isnt hard.
bugglebeetle 3y ago
Interest rates.
- fooker 3y ago
  They 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