5 ms·

Can’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

Can’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 ago
The 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 ago
  The cost scaling coefficient is likely < 1 as the increase probably allows them to pack better for inference and reduce their costs.
  - danpalmer 3y ago
    Given 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 ago
  Who actually pays that bill? Since MS owns half of openai, and openai is using MS compute...
  - danpalmer 3y ago
    I don't think MS owns anywhere near half of OpenAI. Most likely though, OpenAI pays. Some of that would be with money MS gave them originally, but that's kinda the point of the MS investment, they do it based on OpenAI funnelling some of that back into MS.

Can’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 ago

The 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 ago
The cost scaling coefficient is likely < 1 as the increase probably allows them to pack better for inference and reduce their costs.
- danpalmer 3y ago
  Given 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 ago
Who actually pays that bill? Since MS owns half of openai, and openai is using MS compute...
- danpalmer 3y ago
  I don't think MS owns anywhere near half of OpenAI. Most likely though, OpenAI pays. Some of that would be with money MS gave them originally, but that's kinda the point of the MS investment, they do it based on OpenAI funnelling some of that back into MS.