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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 Offic

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.

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.