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OpenAI is expecting $3.7 billion in revenue this year, and is going to lose $5 billion, according to this article: https://www.nytimes.com/2024/09/27/technology

OpenAI is expecting $3.7 billion in revenue this year, and is going to lose $5 billion, according to this article: https://www.nytimes.com/2024/09/27/technology/openai-chatgpt-investors-funding.html https://www.nytimes.com/2024/09/27/technology/openai-chatgpt... So they are currently printing 1 dollar bills at a cost of $2.35 each.

p1necone 2y ago
Losing money on every transaction, but making it up with scale!
- Mistletoe 2y ago
  Cosmo Kramer: It's a write-off for them. Jerry: How is it a write-off? Cosmo Kramer: They just write it off. Jerry: Write it off what? Cosmo Kramer: Jerry, all these big companies, they write off everything. Jerry: You don't even know what a write-off is. Cosmo Kramer: Do you? Jerry: No, I don't. Cosmo Kramer: But they do. And they're the ones writing it off.
qeternity 2y ago
Point to one single transformative invention that was accretive from day one. The ChatGPT moment isn't even two years old. I don't know for certain whether any of these investments are going to work out, but all of the current cash burn is forward looking. It may all come crashing down, but this is not the right analysis.
- mikeocool 2y ago
  This certainly the model that basically all VC funded tech companies use. Though OpenAI is notable, because I don’t think we’ve seen another company burn this much money this fast. Not a value statement on whether is this is right or wrong.
  - qeternity 2y ago
    This predates modern VC by centuries. Early trade routes which connected humanity across continents were highly speculative, requiring huge amounts of capital, and were only profitable years later.
    - Maxamillion96 2y ago
      That’s wrong. A single load of pepper was enough to pay for the successful voyage and multiple lost ships.
      - qeternity 2y ago
        Yes, that single load took years. It required huge amounts of speculative capital, years of fruitless exploration, and as you say, multiple failed expeditions before it succeeded. That is my point.
        pie420 2y ago
        each ship lost was maybe $10-20 million and years exploring were performed by a couple of ships operated by dozens of skilled workers with a very clear path to profitability and timeline (succesful journey to india/americas, and in under 2-3 years). That's orders of magnitude less than the thousands of employees and billions of dollars being deployed with no clear business model or profitability in sight.
        n_ary 2y ago
        if we adjust for the inflation from sailing age and today ... it actually looks same to me.
- Maxamillion96 2y ago
  all inventions are accretive from day one, in the majority of historical bubbles the speculation was built on top of already profitable technologies but there was always one or two firms that were profitable to begin with. Modern bubbles (AI, Metaverse,Crypto) are speculative from the word go, there isn’t a single company that’s profitable in those verticals.
treis 2y ago
That's not right. They're paying $2.35 to get a $1 per year revenue stream.
- ceejayoz 2y ago
  That's not right, either. They're paying $2.35 in hopes that the $1/year customer sticks around for more than a few months.
  - mcmcmc 2y ago
    That’s really not how CAC works. Not all of their costs are directly tied to revenue generation

p1necone 2y ago

Losing money on every transaction, but making it up with scale!

Mistletoe 2y ago
Cosmo Kramer: It's a write-off for them. Jerry: How is it a write-off? Cosmo Kramer: They just write it off. Jerry: Write it off what? Cosmo Kramer: Jerry, all these big companies, they write off everything. Jerry: You don't even know what a write-off is. Cosmo Kramer: Do you? Jerry: No, I don't. Cosmo Kramer: But they do. And they're the ones writing it off.

qeternity 2y ago

Point to one single transformative invention that was accretive from day one. The ChatGPT moment isn't even two years old. I don't know for certain whether any of these investments are going to work out, but all of the current cash burn is forward looking. It may all come crashing down, but this is not the right analysis.

mikeocool 2y ago
This certainly the model that basically all VC funded tech companies use. Though OpenAI is notable, because I don’t think we’ve seen another company burn this much money this fast. Not a value statement on whether is this is right or wrong.
- qeternity 2y ago
  This predates modern VC by centuries. Early trade routes which connected humanity across continents were highly speculative, requiring huge amounts of capital, and were only profitable years later.
  - Maxamillion96 2y ago
    That’s wrong. A single load of pepper was enough to pay for the successful voyage and multiple lost ships.
    - qeternity 2y ago
      Yes, that single load took years. It required huge amounts of speculative capital, years of fruitless exploration, and as you say, multiple failed expeditions before it succeeded. That is my point.
      - pie420 2y ago
        each ship lost was maybe $10-20 million and years exploring were performed by a couple of ships operated by dozens of skilled workers with a very clear path to profitability and timeline (succesful journey to india/americas, and in under 2-3 years). That's orders of magnitude less than the thousands of employees and billions of dollars being deployed with no clear business model or profitability in sight.
        n_ary 2y ago
        if we adjust for the inflation from sailing age and today ... it actually looks same to me.
Maxamillion96 2y ago
all inventions are accretive from day one, in the majority of historical bubbles the speculation was built on top of already profitable technologies but there was always one or two firms that were profitable to begin with. Modern bubbles (AI, Metaverse,Crypto) are speculative from the word go, there isn’t a single company that’s profitable in those verticals.

treis 2y ago

That's not right. They're paying $2.35 to get a $1 per year revenue stream.

ceejayoz 2y ago
That's not right, either. They're paying $2.35 in hopes that the $1/year customer sticks around for more than a few months.
- mcmcmc 2y ago
  That’s really not how CAC works. Not all of their costs are directly tied to revenue generation