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It's cheap because everything OpenAI does is subsidized by investors' money. Until that stupid money flows all good! Then either they'll go the way of WeWork,

It's cheap because everything OpenAI does is subsidized by investors' money. Until that stupid money flows all good! Then either they'll go the way of WeWork, or enshittification will happen to make it possible for them to make the books work. I don't see any other option. Unless Softbank decides it has some 150 Billion to squander on buying them off. There's a lot of head-in-the-sand behavior going on around OpenAI fundamentals and I don't understand exactly why it's not more in the open yet.

ImprobableTruth 2y ago
If you compare with e.g. Deepseek and other hosters, you'll find that OpenAI is actually almost certainly charging very high margins (Deepseek has an 80% profit margin and they're 10x cheaper than openai). The training/R&D might make OpenAI burn VC cash, but this isn't comparable with companies like WeWork whose products actively burn cash
- camillomiller 2y ago
  They said themselves that even inference is losing them money tho, or did I get that wrong?
  - ImprobableTruth 2y ago
    On their subscriptions, specifically the pro subscription, because it's a flatrate to their most expensive model. The API prices are all much more expensive. It's unclear whether they're losing money on the normal subscriptions, but if so, probably not by much. Though it's definitely closer to what you described, subsidizing it to gain 'mindshare' or whatever.
    - yousif_123123 2y ago
      Well I think there's many cheaper models in terms of bang for buck currently per token and intelligence than gpt4o. Other than OpenAI having very high rate limits and throughout available without a contract done with sales, I don't see much reason to use it currently instead of sonnet 3.5 or 3.7, or Google's Flash 2.0 Perhaps their training cost and their current inference cost is higher, but what you get as a customer is a more expensive product for what it is, IMO.
    - Szpadel 2y ago
      they for sure lose money on some months for some customers, but I expect globally most of subscriptions (including mine that I recently cancelled) would be much better of to migrate to API everyone that o know that have/had subscription didn't used it very extensively, and that is how it's still profitable in general I suspect that it's the same for copilot, especially the business variant, while they definitely lose money on my account, believe that when looking on our whole company subscription I wouldn't be surprised that it's even 30% of what we pay
  - deleted 2y ago
    [deleted]
ashvardanian 2y ago
To be fair, ElevenLabs has raised of the order of $300M of VC money as well.
BoorishBears 2y ago
That's not true. ElevenLabs margins are insane and their largest advantage is high quality audio data.

ImprobableTruth 2y ago

If you compare with e.g. Deepseek and other hosters, you'll find that OpenAI is actually almost certainly charging very high margins (Deepseek has an 80% profit margin and they're 10x cheaper than openai). The training/R&D might make OpenAI burn VC cash, but this isn't comparable with companies like WeWork whose products actively burn cash

camillomiller 2y ago
They said themselves that even inference is losing them money tho, or did I get that wrong?
- ImprobableTruth 2y ago
  On their subscriptions, specifically the pro subscription, because it's a flatrate to their most expensive model. The API prices are all much more expensive. It's unclear whether they're losing money on the normal subscriptions, but if so, probably not by much. Though it's definitely closer to what you described, subsidizing it to gain 'mindshare' or whatever.
  - yousif_123123 2y ago
    Well I think there's many cheaper models in terms of bang for buck currently per token and intelligence than gpt4o. Other than OpenAI having very high rate limits and throughout available without a contract done with sales, I don't see much reason to use it currently instead of sonnet 3.5 or 3.7, or Google's Flash 2.0 Perhaps their training cost and their current inference cost is higher, but what you get as a customer is a more expensive product for what it is, IMO.
  - Szpadel 2y ago
    they for sure lose money on some months for some customers, but I expect globally most of subscriptions (including mine that I recently cancelled) would be much better of to migrate to API everyone that o know that have/had subscription didn't used it very extensively, and that is how it's still profitable in general I suspect that it's the same for copilot, especially the business variant, while they definitely lose money on my account, believe that when looking on our whole company subscription I wouldn't be surprised that it's even 30% of what we pay
- deleted 2y ago
  [deleted]

ashvardanian 2y ago

To be fair, ElevenLabs has raised of the order of $300M of VC money as well.

BoorishBears 2y ago

That's not true. ElevenLabs margins are insane and their largest advantage is high quality audio data.