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The last OpenAI valuation I read about was 157 billion. I am struggling to understand what justifies this. To me, it feels like OpenAI is at best few months ahe

by shihab 2y ago

The last OpenAI valuation I read about was 157 billion. I am struggling to understand what justifies this. To me, it feels like OpenAI is at best few months ahead of competitors in some areas. But even if I am underestimating the advantage, it's few years instead of few months, why does it matter? It's not like AI companies are going to enjoy the first-mover advantage internet giants had over the competition.

throwpoaster 2y ago
157 billion implies about a 1% chance at dominating a 1.5 trillion market. Seems reasonable.
- asqueella 2y ago
  10%, no?
  - throwpoaster 2y ago
    No, there’s a risk term I’m skipping over.
- airstrike 2y ago
  that's 10% and who's to say that market is worth 1.5 trillion to begin with
  - cloverich 2y ago
    Market cap of apple, google, facebook.
    - tantalor 2y ago
      Market cap and market size are totally different measures
  - throwpoaster 2y ago
    There’s a risk term I’m not including and the comparable is the size of the American economy ($27 trillion). So take the entire economy and ask the question: what does AI not impact? Net that out and assume there’s pricing efficiencies, then build in a risk buffer. 1.5t to 15t seems right.
benreesman 2y ago
Us skeptics believe that valuation prices in some form of regulatory capture or other non-market factor. The non-skeptical interpretation is that it's a threshold function, a flat-out race with an unambiguous finish line. If someone actually hit self-improving AGI first there's an argument that no one would ever catch up.
- com2kid 2y ago
  There are some really good books about wars between cultures that have AGI and it always comes down to math - whoever can get their hands on more compute faster wins.
  - api 2y ago
    This is also a strong argument for immigration, particularly high-skill immigration. In the absence of synthetic AGI whoever imports the most human AGI wins.
    - Jensson 2y ago
      Which suggests that total AGI compute doesn't matter that much, as India isn't the world leader the amount of human compute they posses would suggest then. What matters is how you use the AGI, not how much you have, with wrong or bad or limiting regulations it will not lead anywhere.
datadrivenangel 2y ago
It's justified if AGI is possible. If AGI is possible, then the entire human economy stops making sense as far as money goes, and 'owning' part of OpenAI gives you power. That is of course, assuming AGI is possible and exponential, and that marketshare goes to a single entity instead of a set of entities. Lots of big assumptions. Seems like we're heading towards a slow-lackluster singularity though.
- deleted 2y ago
  [deleted]
- philipkglass 2y ago
  If AGI is possible, then the entire human economy stops making sense as far as money goes, and 'owning' part of OpenAI gives you power. That's if AGI is possible and not easily replicated. If AGI can be copied and/or re-developed like other software then the value of owning OpenAI stock is more like owning stock in copper producers or other commodity sector companies. (It might even be a poorer investment. Even AGI can't create copper atoms, so owners of real physical resources could be in a better position in a post-human-labor world.)
  - whatshisface 2y ago
    This belief comes from confusing the singularity (every atom on Earth is converted into a giant image of Sam Altman) with AGI (a store employee navigates a confrontation with an unruly customer, then goes home and wins at Super Mario).
    - fullstackchris 2y ago
      Exactly. I continually fail to see how "the entire human economy ends" overnight with another human like agent out there - especially if its confined to a server in the first place - it can't even "go home" :)
    - baobabKoodaa 2y ago
      If I recall correctly, these terms were used more or less interchangeably for a few decades, until 2020 or so, when OpenAI started making actual progress towards AGI, and it was clear that the type of AGI that could be imagined at that point, would not be of the type that would produce singularity.
criddell 2y ago
> what justifies this People are buying shares at $x because they believe they will be able to sell them for more later. I don’t think there’s a whole to more to it than that.
ec109685 2y ago
OpenAI is becoming synonymous with consumer AI. It has potential of disrupting Google’s cash cow, which explains at least a chunk of the valuation. OpenAI predicts more revenue from ChatGPT than api access through 2029. It’s the old Netflix / HBO trope of which can become the other first: hbo figure out streaming or Netflix figure out original programming. I bet Google will figure this out and thus OpenAI won’t disrupt as much as people think it will.
- CRConrad 2y ago
  > It’s the old Netflix / HBO trope of which can become the other first: hbo figure out streaming or Netflix figure out original programming. Tangential: So how is that race going, has either taken a commanding lead? (Or, hey, is it over already; has either of them won and the other lost? (Yeah, guess if I'm very well-infomed on that industry or not...))

by shihab 2y ago

throwpoaster 2y ago

157 billion implies about a 1% chance at dominating a 1.5 trillion market. Seems reasonable.

asqueella 2y ago
10%, no?
- throwpoaster 2y ago
  No, there’s a risk term I’m skipping over.
airstrike 2y ago
that's 10% and who's to say that market is worth 1.5 trillion to begin with
- cloverich 2y ago
  Market cap of apple, google, facebook.
  - tantalor 2y ago
    Market cap and market size are totally different measures
- throwpoaster 2y ago
  There’s a risk term I’m not including and the comparable is the size of the American economy ($27 trillion). So take the entire economy and ask the question: what does AI not impact? Net that out and assume there’s pricing efficiencies, then build in a risk buffer. 1.5t to 15t seems right.

benreesman 2y ago

Us skeptics believe that valuation prices in some form of regulatory capture or other non-market factor. The non-skeptical interpretation is that it's a threshold function, a flat-out race with an unambiguous finish line. If someone actually hit self-improving AGI first there's an argument that no one would ever catch up.

com2kid 2y ago
There are some really good books about wars between cultures that have AGI and it always comes down to math - whoever can get their hands on more compute faster wins.
- api 2y ago
  This is also a strong argument for immigration, particularly high-skill immigration. In the absence of synthetic AGI whoever imports the most human AGI wins.
  - Jensson 2y ago
    Which suggests that total AGI compute doesn't matter that much, as India isn't the world leader the amount of human compute they posses would suggest then. What matters is how you use the AGI, not how much you have, with wrong or bad or limiting regulations it will not lead anywhere.

datadrivenangel 2y ago

It's justified if AGI is possible. If AGI is possible, then the entire human economy stops making sense as far as money goes, and 'owning' part of OpenAI gives you power. That is of course, assuming AGI is possible and exponential, and that marketshare goes to a single entity instead of a set of entities. Lots of big assumptions. Seems like we're heading towards a slow-lackluster singularity though.

deleted 2y ago
[deleted]
philipkglass 2y ago
If AGI is possible, then the entire human economy stops making sense as far as money goes, and 'owning' part of OpenAI gives you power. That's if AGI is possible and not easily replicated. If AGI can be copied and/or re-developed like other software then the value of owning OpenAI stock is more like owning stock in copper producers or other commodity sector companies. (It might even be a poorer investment. Even AGI can't create copper atoms, so owners of real physical resources could be in a better position in a post-human-labor world.)
- whatshisface 2y ago
  This belief comes from confusing the singularity (every atom on Earth is converted into a giant image of Sam Altman) with AGI (a store employee navigates a confrontation with an unruly customer, then goes home and wins at Super Mario).
  - fullstackchris 2y ago
    Exactly. I continually fail to see how "the entire human economy ends" overnight with another human like agent out there - especially if its confined to a server in the first place - it can't even "go home" :)
  - baobabKoodaa 2y ago
    If I recall correctly, these terms were used more or less interchangeably for a few decades, until 2020 or so, when OpenAI started making actual progress towards AGI, and it was clear that the type of AGI that could be imagined at that point, would not be of the type that would produce singularity.

criddell 2y ago

> what justifies this People are buying shares at $x because they believe they will be able to sell them for more later. I don’t think there’s a whole to more to it than that.

ec109685 2y ago

OpenAI is becoming synonymous with consumer AI. It has potential of disrupting Google’s cash cow, which explains at least a chunk of the valuation. OpenAI predicts more revenue from ChatGPT than api access through 2029. It’s the old Netflix / HBO trope of which can become the other first: hbo figure out streaming or Netflix figure out original programming. I bet Google will figure this out and thus OpenAI won’t disrupt as much as people think it will.

CRConrad 2y ago
> It’s the old Netflix / HBO trope of which can become the other first: hbo figure out streaming or Netflix figure out original programming. Tangential: So how is that race going, has either taken a commanding lead? (Or, hey, is it over already; has either of them won and the other lost? (Yeah, guess if I'm very well-infomed on that industry or not...))