3 ms·

Sad and pathetic if true. How unsustainable is their capital structure, exactly? Worse than I naively suspected, I suppose?

by juped 2y ago

jamesy0ung 2y ago
OpenAI is a financial black hole, burning cash faster than it can raise it, with a business model built on hype and a product (ChatGPT) that's easily commoditized. Their revenue projections are delusional, and the core API business is surprisingly weak, suggesting the entire generative AI market might be overblown. https://www.wheresyoured.at/oai-business/ https://www.wheresyoured.at/oai-business/
- acchow 2y ago
  We're in the early days, like back when Uber offered $2.50 rides anywhere in San Francisco. They burned through tons of cash for years but had $9.8bn net income last year.
  - namaria 2y ago
    Would uber then drop you off in a random address sometimes? Or, maybe worse, would someone be able to make your uber drop you off at their place by sending the driver an sms before you even started the ride?
  - fairestvalue 2y ago
    Uber and Lyft are literally the textbook examples of (local) network effects. OpenAI is not.
  - rs186 2y ago
    At least I trust Uber enough that I use it anywhere I don't get to drive my own car. And I have never been in an accident so far. I don't trust ChatGPT enough to copy its output and be done with my work. Sometimes I spend more time prompting + revising the response than writing it myself from scratch. It's like Uber is so bad that it is faster to walk than getting matched to a driver who very slowly drives to the destination. And yet you get into a car crash during your trip. I doubt Uber would still be in business today.
- juped 2y ago
  I don't care too much about revenues and expenses exactly, but about the sustainability of their capital structure. "Big tranches of convertible debt within a couple years of converting" does sound like a bad sign.
- InkCanon 2y ago
  It seems that way but I think it's quite possible in tech for things to rapidly change. E.g. if OpenAI starts quantising all their models, which can maybe reduce their compute costs by 80%, it would be profitable, but make some number of customers leave. Certain other headwinds like decreasing cost of cost per teraflop helps them. Like Uber I suspect their business model is simply to capex until all their enemies are dead, then jack up prices.

Sad and pathetic if true. How unsustainable is their capital structure, exactly? Worse than I naively suspected, I suppose?

by juped 2y ago

Sad and pathetic if true. How unsustainable is their capital structure, exactly? Worse than I naively suspected, I suppose?

jamesy0ung 2y ago

OpenAI is a financial black hole, burning cash faster than it can raise it, with a business model built on hype and a product (ChatGPT) that's easily commoditized. Their revenue projections are delusional, and the core API business is surprisingly weak, suggesting the entire generative AI market might be overblown. https://www.wheresyoured.at/oai-business/ https://www.wheresyoured.at/oai-business/

acchow 2y ago
We're in the early days, like back when Uber offered $2.50 rides anywhere in San Francisco. They burned through tons of cash for years but had $9.8bn net income last year.
- namaria 2y ago
  Would uber then drop you off in a random address sometimes? Or, maybe worse, would someone be able to make your uber drop you off at their place by sending the driver an sms before you even started the ride?
- fairestvalue 2y ago
  Uber and Lyft are literally the textbook examples of (local) network effects. OpenAI is not.
- rs186 2y ago
  At least I trust Uber enough that I use it anywhere I don't get to drive my own car. And I have never been in an accident so far. I don't trust ChatGPT enough to copy its output and be done with my work. Sometimes I spend more time prompting + revising the response than writing it myself from scratch. It's like Uber is so bad that it is faster to walk than getting matched to a driver who very slowly drives to the destination. And yet you get into a car crash during your trip. I doubt Uber would still be in business today.
juped 2y ago
I don't care too much about revenues and expenses exactly, but about the sustainability of their capital structure. "Big tranches of convertible debt within a couple years of converting" does sound like a bad sign.
InkCanon 2y ago
It seems that way but I think it's quite possible in tech for things to rapidly change. E.g. if OpenAI starts quantising all their models, which can maybe reduce their compute costs by 80%, it would be profitable, but make some number of customers leave. Certain other headwinds like decreasing cost of cost per teraflop helps them. Like Uber I suspect their business model is simply to capex until all their enemies are dead, then jack up prices.