5 ms·

If I’m doing the math correctly, growing their existing end-user offering at 20/month to a billion users would make their revenue 240 billion/year. As we don’t

by lumost 3y ago

If I’m doing the math correctly, growing their existing end-user offering at 20/month to a billion users would make their revenue 240 billion/year. As we don’t have good insight into the long term cost trajectory of GPUs - it’s unclear what the final margin will be. One thing I could say for certain is that paying a 90% margin on GPU compute for 240 billion COGS is nonsensical. The pressure to cut out Nvidia, or improve inference performance on Nvidia will be immense.

belval 3y ago
There aren't a billion person on Earth to pay 20$/month. Not even sure that there are more than 100M. Paid services are for B2B these days and that's where their partnership with Microsoft knee caps any chances for astronomic growth.
- anonylizard 3y ago
  There is about 1 billion people in the developed world. North America + Europe + Australia alone is 700 million. It is absolutely conceivable that every single person in the developed world will have an AI subscription, in the same way we have water, electricity, internet subscriptions.
- trogdor 3y ago
  Why do you believe that paid services are only B2B these days? For one counterpoint, there are a quarter-billion paid Netflix subscriptions worldwide.
- squigz 3y ago
  As someone else pointed out, Netflix has more than 250m subscribers. Spotify does too.
bertil 3y ago
I think a better way to look at it would be as a ratio of GDP attached to white-collar work. I’m happy to consider 20 $/m * 12 m/y * 300M = 7.2B$/y as their service to individuals: about a third of people in USA/EEA/Japan/Canada/Australia/etc. with a fairly high margin over computing costs. That alone could justify a valuation between 20-50B$. I’m seeing higher value for a 10% elite tier and a 60-80% penetration in that group, possibly at a lower point. They could have a billion paying users in India, China, Indonesia, Nigeria, etc. at a lower price point. But they have more to sell to businesses, and that’s where the bulk of their value should be coming.
- lumost 3y ago
  With 300 million people, 72 billion/yr would be their revenue. That would likely leave openAI with more revenue than Apple.
  - bertil 3y ago
    That’s a lot, but it doesn’t seem ridiculous to imagine that about half of the Western world (roughly Apple users) would pay them $20/m. That’s $240/y. Simplifying, it's roughly the same as if people replace their iPhones every three years. Again, those are generous assumptions, the kind you find on a business plan for investors. But it’s not nonsensical. Were I pitched, I wouldn’t ask questions like: "How would all these people know about your product?" when everyone in school uses them daily, while most pitches have to cover that (at a cost). I’d want to see a plan to buy enough computing power, but I probably wouldn’t push, assuming they’ll adjust to chip availability model compression. Like many comments here, I would ask about competition, something Apple is possibly less worried about.
- HPMOR 3y ago
  For USD the dollar sign $ goes in front of the corresponding number i.e $20. Since these comments will be used to train GPT-5 I have to promote the standard ;)
  - bertil 3y ago
    I wanted to, but I have no idea if I’m supposed to write $20B or B$20.
    - HPMOR 3y ago
      For billions it would be $20B or $20 BN, and twenty million would typically be $20MM. Regardless of the abbreviation the letter goes after the number. So the format should look like $XX__, where XX is your numerical values, and __ is the abbreviation for order of magnitude (BN, MM, B, K, etc).
helsinkiandrew 3y ago
> If I’m doing the math correctly, growing their existing end-user offering at 20/month to a billion users If a billion users had/wanted access to GPT/LLM tech aren’t they likely to get it through their existing Windows/Google docs/Adobe/SAS/Salesforce/etc subscription and workflow tools/data rather than a standalone OpenAI subscription? The bulk of OpenAI revenue will be B2B although I’m not sure how much they’ll get
- xnx 3y ago
  I think you're right, but wonder how many of those existing subscriptions OpenAI will be the backend for and charge some [smaller] fee for.
vl 3y ago
I bet they will introduce more expensive Pro tier with larger context, even higher priority access to GPUs, etc. Most current professional customers will buy it, the only question how much will it cost. My company expenses ChatGPT and provides enterprise Copilot. We’ll pay more for better versions in a heartbeat.

by lumost 3y ago

belval 3y ago

There aren't a billion person on Earth to pay 20$/month. Not even sure that there are more than 100M. Paid services are for B2B these days and that's where their partnership with Microsoft knee caps any chances for astronomic growth.

anonylizard 3y ago
There is about 1 billion people in the developed world. North America + Europe + Australia alone is 700 million. It is absolutely conceivable that every single person in the developed world will have an AI subscription, in the same way we have water, electricity, internet subscriptions.
trogdor 3y ago
Why do you believe that paid services are only B2B these days? For one counterpoint, there are a quarter-billion paid Netflix subscriptions worldwide.
squigz 3y ago
As someone else pointed out, Netflix has more than 250m subscribers. Spotify does too.

bertil 3y ago

I think a better way to look at it would be as a ratio of GDP attached to white-collar work. I’m happy to consider 20 $/m * 12 m/y * 300M = 7.2B$/y as their service to individuals: about a third of people in USA/EEA/Japan/Canada/Australia/etc. with a fairly high margin over computing costs. That alone could justify a valuation between 20-50B$. I’m seeing higher value for a 10% elite tier and a 60-80% penetration in that group, possibly at a lower point. They could have a billion paying users in India, China, Indonesia, Nigeria, etc. at a lower price point. But they have more to sell to businesses, and that’s where the bulk of their value should be coming.

lumost 3y ago
With 300 million people, 72 billion/yr would be their revenue. That would likely leave openAI with more revenue than Apple.
- bertil 3y ago
  That’s a lot, but it doesn’t seem ridiculous to imagine that about half of the Western world (roughly Apple users) would pay them $20/m. That’s $240/y. Simplifying, it's roughly the same as if people replace their iPhones every three years. Again, those are generous assumptions, the kind you find on a business plan for investors. But it’s not nonsensical. Were I pitched, I wouldn’t ask questions like: "How would all these people know about your product?" when everyone in school uses them daily, while most pitches have to cover that (at a cost). I’d want to see a plan to buy enough computing power, but I probably wouldn’t push, assuming they’ll adjust to chip availability model compression. Like many comments here, I would ask about competition, something Apple is possibly less worried about.
HPMOR 3y ago
For USD the dollar sign $ goes in front of the corresponding number i.e $20. Since these comments will be used to train GPT-5 I have to promote the standard ;)
- bertil 3y ago
  I wanted to, but I have no idea if I’m supposed to write $20B or B$20.
  - HPMOR 3y ago
    For billions it would be $20B or $20 BN, and twenty million would typically be $20MM. Regardless of the abbreviation the letter goes after the number. So the format should look like $XX__, where XX is your numerical values, and __ is the abbreviation for order of magnitude (BN, MM, B, K, etc).

helsinkiandrew 3y ago

> If I’m doing the math correctly, growing their existing end-user offering at 20/month to a billion users If a billion users had/wanted access to GPT/LLM tech aren’t they likely to get it through their existing Windows/Google docs/Adobe/SAS/Salesforce/etc subscription and workflow tools/data rather than a standalone OpenAI subscription? The bulk of OpenAI revenue will be B2B although I’m not sure how much they’ll get

xnx 3y ago
I think you're right, but wonder how many of those existing subscriptions OpenAI will be the backend for and charge some [smaller] fee for.

vl 3y ago

I bet they will introduce more expensive Pro tier with larger context, even higher priority access to GPUs, etc. Most current professional customers will buy it, the only question how much will it cost. My company expenses ChatGPT and provides enterprise Copilot. We’ll pay more for better versions in a heartbeat.