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If I had what OpenAI has I could imagine how to make it profitable tomorrow, because I could do that is why they HAVE to make it free without an account, to pre

by neom 2y ago

If I had what OpenAI has I could imagine how to make it profitable tomorrow, because I could do that is why they HAVE to make it free without an account, to prevent anyone new from meaningfully entering the $0 to $20mth segment, If you look at their business strategy, it's top notch, anchor pricing on the $200, $20 sweet spot, probably costs them on average $5/mth to server the $20/mth customers, Take your $50m a year marketing budget and use it to buy servers, run a highly optimized "good enough" model that is basically just wikipedia in chatbot and you don't need to spend a dime on marketing if you don't want to, amazing top of funnel to the rest of your product line. They know what they are doing I suspect, they just need time to pull a platform together, and they have a long head start on that. Basically all of this reaction is to my mind, effectively presuming that "OpenAI" is a current gen chatbot? one would presume it's going to be a lot wider and deeper than that, and given what DeepSeek is pointing to, one with incredible unit economics over time.

Sebguer 2y ago
Every single thing you said here falls apart at 'it costs on average $5/mth to serve the $20/mth customers'.
- neom 2y ago
  Why? My wife has a ChatGPT $20/mth account, rarely uses now the novelty has warn off (I asked she said twice this month), the only reason she keeps paying for it is to retain the chat history. That's a tiny very rarely used docker container on a server somewhere. Maybe I'm thinking about this wrong, but I would just run this the same way we ran digitalocean, all the $5/mth accounts with no activity sit on a box configured for that, once it starts to do stuff it moves to a box with less VMs on it, etc, this is how subscription levels in cloud work, sure it cost us $100MM to get there, but now it just prints cash. If OpenAI decided to stop training models and focused on unit economics, I don't see how they couldn't get it to profitability quite quickly, even with all the competition.
  - ForOldHack 2y ago
    Chat history is a text file. She is paying $20/mo to host a text file. If you pasted that text file back into Whatever... then you would also retain the chat history. How economical.
  - doph 2y ago
    I just stopped paying for Plus and my history seems to be retained on the free tier.
  - Sebguer 2y ago
    You're totally right on the last point: if they stopped training models and fully focused on inference efficiency, then they could totally get to profitability (but presumably would be obsolete in the medium-term unless all progress stopped). But right now, inference is very expensive, and your wife's case is the exception not the rule.
- s1mplicissimus 2y ago
  would you mind elaborating why you think their assumption doesn't hold? I have a 6 year old, back then 400EUR (consumer price mind you) GPU that could happily serve 10 "normal" users. sure, we have to add other hardware too, like chassis, power supply, CPU, RAM, ssd etc. so lets 4x that. Now we're looking at 1600 investment + power cost. My setup comes down to 0.04 eur per hour of operations, so about ~30 bucks a month (mind you electricity is very likely cheaper wherever else you are). We also need maintenance and operations, eyeballing in large scale at ~2EUR/user/month. On a 3 year amortisation period we're looking at investment: 1600 monthly cost to operate: x * 3 + x 2 + 1600/36 monthly revenue: x 20 For x users = 10 monthly cost: 50 + 44.4 monthly revenue: 200 net month result: +105.6 net total result: +3801.6 i know i know thats a napkin calculation but if anything hardware cost will be lower for big providers, which would give them even more profits. just looks like a feasable business model to me. as long as you can sell those subscriptions
Etheryte 2y ago
I mean, they haven't prevented that at all though? There's plenty of very good competition in the $0 space, they're far from the only one.
- neom 2y ago
  Preventing a $10MM venture funded startup getting a foothold, there will be plenty of chatbots that come and go, the point is OpenAI seems to have a much bigger platform to unfold with the LLM just being at the center of it. Basically competing with ChatGPT and competing with OpenAI are not the same thing.
- dlivingston 2y ago
  DeepSeek, Claude, Gemini, and Grok have free tiers (along with whatever models you spin up locally of course). Are there any other free offerings I'm missing?
ForOldHack 2y ago
Wikipedia in chatbot? That was a poor idea, a poorer thing to do, and a plain stupid thing to even begin to brag about. Why would you want your chatbot trained by wikiNA*Is? Your "chatbot' now is of the factual opinion that every single accusation against everyone is true, despite compelling and factual evidence to the contrary, and that the German Social Democratic Party were liberators. If you think that strategy is top notch, training your Chatbot with bottom tier data... you are going towards a cliff at an accelerated rate: https://www.wired.com/story/one-womans-mission-to-rewrite-nazi-history-wikipedia/ https://www.wired.com/story/one-womans-mission-to-rewrite-na...

by neom 2y ago

Sebguer 2y ago

Every single thing you said here falls apart at 'it costs on average $5/mth to serve the $20/mth customers'.

neom 2y ago
Why? My wife has a ChatGPT $20/mth account, rarely uses now the novelty has warn off (I asked she said twice this month), the only reason she keeps paying for it is to retain the chat history. That's a tiny very rarely used docker container on a server somewhere. Maybe I'm thinking about this wrong, but I would just run this the same way we ran digitalocean, all the $5/mth accounts with no activity sit on a box configured for that, once it starts to do stuff it moves to a box with less VMs on it, etc, this is how subscription levels in cloud work, sure it cost us $100MM to get there, but now it just prints cash. If OpenAI decided to stop training models and focused on unit economics, I don't see how they couldn't get it to profitability quite quickly, even with all the competition.
- ForOldHack 2y ago
  Chat history is a text file. She is paying $20/mo to host a text file. If you pasted that text file back into Whatever... then you would also retain the chat history. How economical.
- doph 2y ago
  I just stopped paying for Plus and my history seems to be retained on the free tier.
- Sebguer 2y ago
  You're totally right on the last point: if they stopped training models and fully focused on inference efficiency, then they could totally get to profitability (but presumably would be obsolete in the medium-term unless all progress stopped). But right now, inference is very expensive, and your wife's case is the exception not the rule.
s1mplicissimus 2y ago
would you mind elaborating why you think their assumption doesn't hold? I have a 6 year old, back then 400EUR (consumer price mind you) GPU that could happily serve 10 "normal" users. sure, we have to add other hardware too, like chassis, power supply, CPU, RAM, ssd etc. so lets 4x that. Now we're looking at 1600 investment + power cost. My setup comes down to 0.04 eur per hour of operations, so about ~30 bucks a month (mind you electricity is very likely cheaper wherever else you are). We also need maintenance and operations, eyeballing in large scale at ~2EUR/user/month. On a 3 year amortisation period we're looking at investment: 1600 monthly cost to operate: x * 3 + x 2 + 1600/36 monthly revenue: x 20 For x users = 10 monthly cost: 50 + 44.4 monthly revenue: 200 net month result: +105.6 net total result: +3801.6 i know i know thats a napkin calculation but if anything hardware cost will be lower for big providers, which would give them even more profits. just looks like a feasable business model to me. as long as you can sell those subscriptions

Etheryte 2y ago

I mean, they haven't prevented that at all though? There's plenty of very good competition in the $0 space, they're far from the only one.

neom 2y ago
Preventing a $10MM venture funded startup getting a foothold, there will be plenty of chatbots that come and go, the point is OpenAI seems to have a much bigger platform to unfold with the LLM just being at the center of it. Basically competing with ChatGPT and competing with OpenAI are not the same thing.
dlivingston 2y ago
DeepSeek, Claude, Gemini, and Grok have free tiers (along with whatever models you spin up locally of course). Are there any other free offerings I'm missing?

ForOldHack 2y ago

Wikipedia in chatbot? That was a poor idea, a poorer thing to do, and a plain stupid thing to even begin to brag about. Why would you want your chatbot trained by wikiNA*Is? Your "chatbot' now is of the factual opinion that every single accusation against everyone is true, despite compelling and factual evidence to the contrary, and that the German Social Democratic Party were liberators. If you think that strategy is top notch, training your Chatbot with bottom tier data... you are going towards a cliff at an accelerated rate: https://www.wired.com/story/one-womans-mission-to-rewrite-nazi-history-wikipedia/ https://www.wired.com/story/one-womans-mission-to-rewrite-na...