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This is wrong. First mover advantage is strong. This is why OpenAI is much bigger than Mixtral despite what you said. First mover advantage acquired and keeps

This is wrong. First mover advantage is strong. This is why OpenAI is much bigger than Mixtral despite what you said. First mover advantage acquired and keeps subscribers. No one really cares if you matched GPT4o one year later. OpenAI has had a full year to optimize the model, build tools around the model, and used the model to generate better data for their next generation foundational model.

jaynate 2y ago
They also burnt a hell of a lot more cash. That’s a disadvantage.
itissid 2y ago
OpenAI does not have a business model that is cashflow positive at this point and/or a product that gives them a significant leg up in the same moat sense Office/Teams might give to Microsoft.
- aurareturn 2y ago
  Companies in the mobile era took a decade or more to become profitable. For example, Uber and Airbnb. Why do you expect OpenAI to become profitable after 3 years of chatgpt?
  - meiraleal 2y ago
    Nobody expects it but what we know for sure is that they have burnt billions of dollars. If other startups can get there spending millions, the fact is that openai won't ever be profitable. And more important (for us), let the hiring frenzy start again :)
    - aurareturn 2y ago
      They have a ton of revenue and high gross margins. They burn billions because they need to keep training ever better models until the market slows and competition consolidates.
      - fairity 2y ago
        The counter argument is that they won't be able to sustain those gross margins when the market matures because they don't have an effective moat. In this world, R&D costs and gross margin/revenue are inextricably correlated.
        aurareturn 2y ago
        When the market matures, there will be fewer competitors so they won’t need to sustain the level of investment. The market always consolidates when it matures. Every time. The market always consolidates into 2-3 big players. Often a duopoly. OpenAI is trying to be one of the two or three companies left standing.
  - physicsguy 2y ago
    Interest rates have an effect too, Uber and Airbnb were starting in a much more fundraising friendly time.
    - Der_Einzige 2y ago
      High interest rates are supposed to force the remaining businesses out there to be profitable, so in theory, the startups of today should be far faster to profitability or they burn out.
      - physicsguy 2y ago
        True, but it makes it much more difficult to get started in the first place.
dplgk 2y ago
What is OpenAI's first-mover moat? I switched to Claude with absolutely no friction or moat-jumping.
- xxpor 2y ago
  What is Google's first mover moat? I switched to Bing/DuckDuckGo with absolutely no friction or moat jumping. Brands are incredibly powerful when talking about consumer goods.
  - bpt3 2y ago
    Google's moat was significantly better results than the competition for about 2 decades. Your analogy is valid at this time, but proves the GP's point, not yours.
    - fairity 2y ago
      I think it's worth double clicking here. Why did Google have significantly better search results for a long time? 1) There was a data flywheel effect, wherein Google was able to improve search results by analyzing the vast amount of user activity on its site. 2) There were real economies of scale in managing the cost of data centers and servers 3) Their advertising business model benefited from network effects, wherein advertisers don't want to bother giving money to a search engine with a much smaller user base. This profitability funded R&D that competitors couldn't match. There are probably more that I'm missing, but I think the primary takeaway is that Google's scale, in and of itself, led to a better product. Can the same be said for OpenAI? I can't think of any strong economies of scale or network effects for them, but maybe I'm missing something. Put another way, how does OpenAI's product or business model get significantly better as more people use their service?
      - aurareturn 2y ago
        They have more data on what people want from models? Their SOTA models can generate better synthetic data for the next training run - leading to a flywheel effect?
lxgr 2y ago
> First mover advantage acquired and keeps subscribers. Does it? As a chat-based (Claude Pro, ChatGPT Plus etc.) user, LLMs have zero stickiness to me right now, and the APIs hardly can be called moats either.
- distances 2y ago
  If it's for mass consumer market then it does matter. Ask any non-technical person around you. High chance is that they know ChatGPT but can't name a single other AI model or service. Gemini, just a distant maybe. Claude, definitely not -- I'm positive I'm hard pressed to find anyone in my technical friends who knows about Claude.
  - xmodem 2y ago
    They probably know CoPilot as the thing Microsoft is trying to shove down their throat...

jaynate 2y ago

They also burnt a hell of a lot more cash. That’s a disadvantage.

itissid 2y ago

OpenAI does not have a business model that is cashflow positive at this point and/or a product that gives them a significant leg up in the same moat sense Office/Teams might give to Microsoft.

aurareturn 2y ago
Companies in the mobile era took a decade or more to become profitable. For example, Uber and Airbnb. Why do you expect OpenAI to become profitable after 3 years of chatgpt?
- meiraleal 2y ago
  Nobody expects it but what we know for sure is that they have burnt billions of dollars. If other startups can get there spending millions, the fact is that openai won't ever be profitable. And more important (for us), let the hiring frenzy start again :)
  - aurareturn 2y ago
    They have a ton of revenue and high gross margins. They burn billions because they need to keep training ever better models until the market slows and competition consolidates.
    - fairity 2y ago
      The counter argument is that they won't be able to sustain those gross margins when the market matures because they don't have an effective moat. In this world, R&D costs and gross margin/revenue are inextricably correlated.
      - aurareturn 2y ago
        When the market matures, there will be fewer competitors so they won’t need to sustain the level of investment. The market always consolidates when it matures. Every time. The market always consolidates into 2-3 big players. Often a duopoly. OpenAI is trying to be one of the two or three companies left standing.
- physicsguy 2y ago
  Interest rates have an effect too, Uber and Airbnb were starting in a much more fundraising friendly time.
  - Der_Einzige 2y ago
    High interest rates are supposed to force the remaining businesses out there to be profitable, so in theory, the startups of today should be far faster to profitability or they burn out.
    - physicsguy 2y ago
      True, but it makes it much more difficult to get started in the first place.

dplgk 2y ago

What is OpenAI's first-mover moat? I switched to Claude with absolutely no friction or moat-jumping.

xxpor 2y ago
What is Google's first mover moat? I switched to Bing/DuckDuckGo with absolutely no friction or moat jumping. Brands are incredibly powerful when talking about consumer goods.
- bpt3 2y ago
  Google's moat was significantly better results than the competition for about 2 decades. Your analogy is valid at this time, but proves the GP's point, not yours.
  - fairity 2y ago
    I think it's worth double clicking here. Why did Google have significantly better search results for a long time? 1) There was a data flywheel effect, wherein Google was able to improve search results by analyzing the vast amount of user activity on its site. 2) There were real economies of scale in managing the cost of data centers and servers 3) Their advertising business model benefited from network effects, wherein advertisers don't want to bother giving money to a search engine with a much smaller user base. This profitability funded R&D that competitors couldn't match. There are probably more that I'm missing, but I think the primary takeaway is that Google's scale, in and of itself, led to a better product. Can the same be said for OpenAI? I can't think of any strong economies of scale or network effects for them, but maybe I'm missing something. Put another way, how does OpenAI's product or business model get significantly better as more people use their service?
    - aurareturn 2y ago
      They have more data on what people want from models? Their SOTA models can generate better synthetic data for the next training run - leading to a flywheel effect?

lxgr 2y ago

> First mover advantage acquired and keeps subscribers. Does it? As a chat-based (Claude Pro, ChatGPT Plus etc.) user, LLMs have zero stickiness to me right now, and the APIs hardly can be called moats either.

distances 2y ago
If it's for mass consumer market then it does matter. Ask any non-technical person around you. High chance is that they know ChatGPT but can't name a single other AI model or service. Gemini, just a distant maybe. Claude, definitely not -- I'm positive I'm hard pressed to find anyone in my technical friends who knows about Claude.
- xmodem 2y ago
  They probably know CoPilot as the thing Microsoft is trying to shove down their throat...