5 ms·

How old is that though? They seem to be making revenue pretty well now, so I suspect this might be quite old?

by giarc 2y ago

lxgr 2y ago
Revenue isn't profit. They're burning money at an impressive rate: https://www.nytimes.com/2024/09/27/technology/openai-chatgpt-investors-funding.html https://www.nytimes.com/2024/09/27/technology/openai-chatgpt... I wouldn't even be surprised if they were losing money on paying ChatGPT users on inference compute alone, and that isn't even factoring in the development of new models. There was an interesting article here (can't find the link unfortunately) that was arguing that model training costs should be accounted for as operating costs, not investments, since last year's model is essentially a total write-off, and to stay competitive, an AI company needs to continue training newer frontier models essentially continuously.
- Retric 2y ago
  Training costs scale to infinite users making them a perfect moat even if they need to keep updating it. Success would be 10-100x current users at which point training costs at the current scale just don’t matter. Really their biggest risk is total compute costs falling too quickly or poor management.
  - lxgr 2y ago
    The potential user base seems quite finite to me, even under most optimistic assumptions.
    - Retric 2y ago
      Not everyone is going to pay 20$/month, but an optimistic trajectory is they largely replace search engines while acting as a back end for a huge number of companies. I don’t think it’s very likely, but think of it like an auction. In a room with 100 people 99 of them should think the winner overpaid. In general most people should feel a given startup was overvalued and only looking back will some of these deals look like a good investment.
  - ac29 2y ago
    WSJ reported today that ChatGPT has 250M weekly users. 10x that would be nearly the the majority of internet users. 100x that would be significantly more than the population of Earth.
    - Retric 2y ago
      Someone can be a direct user, be on some companies corporate account, and an indirect user via 3rd parties using OpenAI on their backend. As long as we’re talking independent revenue streams it’s worth counting separately from an investment standpoint.
- JamesBarney 2y ago
  > I wouldn't even be surprised if they were losing money on paying ChatGPT users on inference compute alone I'd be surprised it that was the case. How many tokens is the average user going through? I'd be surprised if the avg user even hit a 1m tokens much less 20m.
  - lxgr 2y ago
    With o1? A lot. Even for regular old 4o: You’re comparing to their API rates here, which might or might not cover their compute cost.
  - MacsHeadroom 2y ago
    o1 is about $2-$4 per message over the API. I'm probably costing OpenAI less than 24hrs after my subscription renewal each month. Voice mode is around $0.25 per minute via API. I don't use that much, but 3 minutes ago per day would already exceed the cost of a ChatGPT Plus subscription by quite a bit.
    - vintagedave 2y ago
      > o1 is about $2-$4 per message over the API I’m not sure I understand this, sorry. I see GPT-4o at $3.75 per million input tokens and $10 per million output tokens, on OpenAI’s pricing page. That’s expensive and I can’t see how they can run Copilot on the standard API pricing. But, it makes a message (one interaction?) lower cost than $4 to me. How many tokens are in a typical message for you?
- Mistletoe 2y ago
  Thought of this way makes AI companies remarkably similar to Bitcoin mining companies which always just barely stay ahead of the difficulty increases and often fail.
- thedailymail 2y ago
  I think this might be the article you mentioned https://benn.substack.com/p/do-ai-companies-work https://benn.substack.com/p/do-ai-companies-work
  - lxgr 2y ago
    That was it, thank you!
deleted 2y ago
[deleted]

How old is that though? They seem to be making revenue pretty well now, so I suspect this might be quite old?

by giarc 2y ago

How old is that though? They seem to be making revenue pretty well now, so I suspect this might be quite old?

lxgr 2y ago

Revenue isn't profit. They're burning money at an impressive rate: https://www.nytimes.com/2024/09/27/technology/openai-chatgpt-investors-funding.html https://www.nytimes.com/2024/09/27/technology/openai-chatgpt... I wouldn't even be surprised if they were losing money on paying ChatGPT users on inference compute alone, and that isn't even factoring in the development of new models. There was an interesting article here (can't find the link unfortunately) that was arguing that model training costs should be accounted for as operating costs, not investments, since last year's model is essentially a total write-off, and to stay competitive, an AI company needs to continue training newer frontier models essentially continuously.

Retric 2y ago
Training costs scale to infinite users making them a perfect moat even if they need to keep updating it. Success would be 10-100x current users at which point training costs at the current scale just don’t matter. Really their biggest risk is total compute costs falling too quickly or poor management.
- lxgr 2y ago
  The potential user base seems quite finite to me, even under most optimistic assumptions.
  - Retric 2y ago
    Not everyone is going to pay 20$/month, but an optimistic trajectory is they largely replace search engines while acting as a back end for a huge number of companies. I don’t think it’s very likely, but think of it like an auction. In a room with 100 people 99 of them should think the winner overpaid. In general most people should feel a given startup was overvalued and only looking back will some of these deals look like a good investment.
- ac29 2y ago
  WSJ reported today that ChatGPT has 250M weekly users. 10x that would be nearly the the majority of internet users. 100x that would be significantly more than the population of Earth.
  - Retric 2y ago
    Someone can be a direct user, be on some companies corporate account, and an indirect user via 3rd parties using OpenAI on their backend. As long as we’re talking independent revenue streams it’s worth counting separately from an investment standpoint.
JamesBarney 2y ago
> I wouldn't even be surprised if they were losing money on paying ChatGPT users on inference compute alone I'd be surprised it that was the case. How many tokens is the average user going through? I'd be surprised if the avg user even hit a 1m tokens much less 20m.
- lxgr 2y ago
  With o1? A lot. Even for regular old 4o: You’re comparing to their API rates here, which might or might not cover their compute cost.
- MacsHeadroom 2y ago
  o1 is about $2-$4 per message over the API. I'm probably costing OpenAI less than 24hrs after my subscription renewal each month. Voice mode is around $0.25 per minute via API. I don't use that much, but 3 minutes ago per day would already exceed the cost of a ChatGPT Plus subscription by quite a bit.
  - vintagedave 2y ago
    > o1 is about $2-$4 per message over the API I’m not sure I understand this, sorry. I see GPT-4o at $3.75 per million input tokens and $10 per million output tokens, on OpenAI’s pricing page. That’s expensive and I can’t see how they can run Copilot on the standard API pricing. But, it makes a message (one interaction?) lower cost than $4 to me. How many tokens are in a typical message for you?
Mistletoe 2y ago
Thought of this way makes AI companies remarkably similar to Bitcoin mining companies which always just barely stay ahead of the difficulty increases and often fail.
thedailymail 2y ago
I think this might be the article you mentioned https://benn.substack.com/p/do-ai-companies-work https://benn.substack.com/p/do-ai-companies-work
- lxgr 2y ago
  That was it, thank you!

deleted 2y ago

[deleted]