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Are there any precedents for a subscription service that went from 0 to $5 billion in revenue in two years? I also think, they are doing a ton of expensive R&D,
by lukeschlather 2y ago
Are there any precedents for a subscription service that went from 0 to $5 billion in revenue in two years? I also think, they are doing a ton of expensive R&D, but as far as I can tell that $5 billion in revenue is a profitable and sustainable business. It's not like they're selling compute below cost.
- Taek 2y agoUh, they are selling compute below cost. They are losing money on every subscription.
- snackernews 2y agoIt’s the complete lack of profitability all the way down, from the deep Azure discounts, to OpenAI’s training and inference costing more than it brings in, to all the OpenAI API wrapper apps losing money on OpenAI subscriptions to get some AI into their product. There’s nowhere in the chain that gets anywhere close to zero marginal costs. In any other industry, a business claiming success for selling $100 bills for $50 would be laughed out of the room.
- Analemma_ 2y agoThey went from 0 to $5 billion when they were the only game in town. But now the crown of "best model" changes hands every few weeks, from OpenAI to Anthropic to DeepSeek to Google, and that looks likely to be the case for the foreseeable future. People "in the know" have already stopped treating OpenAI as automatically the best, and this knowledge will diffuse to everyone else over time. Without the best model as a moat anymore, there's no reason to expect OpenAI's growth to continue on the trajectory it used to have.
- bobxmax 2y agoAgreed, though I think it's just going from a 1 horse to a 3 horse race
- lukeschlather 2y agoThis is actually a SaaS product that has good unit economics. I am skeptical of it, but it's not like Tesla or Uber where the unit economics to justify their valuation are simply impossible.