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This is a rather tediously long article. The summary as I see it: 1. OpenAI hemorrhages money (on the order of $10's of billions a year). 1a. A subargument th

This is a rather tediously long article. The summary as I see it: 1. OpenAI hemorrhages money (on the order of $10's of billions a year). 1a. A subargument that this hemorrhaging is rather fundamental--OpenAI isn't anywhere close to breaking even on operational costs, and it seems that OpenAI is getting sweetheart deals on compute that aren't going to last very long. 2. There's very few entities capable of maintaining the pipeline of money that OpenAI desperately needs. 3. Most of those (this article claims) are unwilling to stump for the cash. 4. OpenAI's capital expenditures (this article claims) are a major (if not existential) source of revenue for its suppliers, so if OpenAI implodes, it presents a risk to many other tech companies as well via the network of suppliers. The problem with this article is that, as much as I might be inclined to agree with it based on my priors, I just don't see any actual plausible way that OpenAI implodes spectacularly like that. If the funding dries up, the most likely scenario to me is that OpenAI undergoes a crunch mode where it tries to eke out an operational profit while begging everybody else (including probably the government) to finance capital expenditures at a reduced rate. Instead of a big bang like Lehman Brothers was, it instead would look a lot more like a longer, slower decline where the tech industry underperforms the market rather than explosively driving it.

zhivota 2y ago
Also, didn't Deepseek demonstrate that enormous compute is not a pre-requisite? All these analyses completely ignore the possibility of a breakthrough in the technology that drives costs down by orders of magnitude.
- light_hue_1 2y ago
  That's not at all what DeepSeek showed. It showed that a single training run of a particular model could be done with a massive amount of compute, but not so massive that only OpenAI/Google/etc. can do it. Definitely not you nor I, or a university, or a mid-tier company. In any case, that's small potatoes here. OpenAI spends most of its money not on training, but on inference. Inference is still way too expensive. Even if inference got cheaper that's not great for OpenAI. It means that other people will launch a similar chat experience for fewer dollars. Fundamentally, OpenAI needs a moat. And it has nothing.
  - cle 2y ago
    It has a long list of content partnerships. And by far the highest user base, which means lots of unique training data. If it can succeed in spamming the open Internet enough to crowd out competition through costs and bot filters, it'll have a pretty good data moat.
    - light_hue_1 2y ago
      It has nothing. The userbase is for an undifferentiated swappable product. Its data hoard is nothing special compared to any of the other players (Google, Meta, etc.). And you can see this play out. If it had anything and its data was so good it would be significantly ahead of the competition. Instead everyone is pretty much at the same place moving at the same speed.
      - cle 2y ago
        It’s too early to call winners. It definitely has more than “nothing” though.
dbbk 2y ago
Google has the best model right now and, crucially, a profitable business to float it. I don't see how OpenAI possibly outlasts them at this.
- dughnut 2y ago
  What is the model? That the US government launders them money through “ad revenue” for unlawful surveillance? OpenAI is probably already getting dark money for AI products of dubious worth.
light_hue_1 2y ago
Sometimes having more evidence that's weaker, weakens the entire argument. Who cares that Oracle might lose $1B? or $10B? Oracle has $17B cash on hand. Who cares if an entity that NVIDIA gets 6% of its revenue from collapses? Nvidia had over 100% revenue growth YoY. That's literally a few days of growth. The assertion that OpenAI is the generative AI industry is absurd. There are plenty of other players. There are plenty of other applications. OpenAI's biggest problem is that it's not the generative AI industry, it's just another player. One that has nothing unique to offer.

zhivota 2y ago

Also, didn't Deepseek demonstrate that enormous compute is not a pre-requisite? All these analyses completely ignore the possibility of a breakthrough in the technology that drives costs down by orders of magnitude.

light_hue_1 2y ago
That's not at all what DeepSeek showed. It showed that a single training run of a particular model could be done with a massive amount of compute, but not so massive that only OpenAI/Google/etc. can do it. Definitely not you nor I, or a university, or a mid-tier company. In any case, that's small potatoes here. OpenAI spends most of its money not on training, but on inference. Inference is still way too expensive. Even if inference got cheaper that's not great for OpenAI. It means that other people will launch a similar chat experience for fewer dollars. Fundamentally, OpenAI needs a moat. And it has nothing.
- cle 2y ago
  It has a long list of content partnerships. And by far the highest user base, which means lots of unique training data. If it can succeed in spamming the open Internet enough to crowd out competition through costs and bot filters, it'll have a pretty good data moat.
  - light_hue_1 2y ago
    It has nothing. The userbase is for an undifferentiated swappable product. Its data hoard is nothing special compared to any of the other players (Google, Meta, etc.). And you can see this play out. If it had anything and its data was so good it would be significantly ahead of the competition. Instead everyone is pretty much at the same place moving at the same speed.
    - cle 2y ago
      It’s too early to call winners. It definitely has more than “nothing” though.

dbbk 2y ago

Google has the best model right now and, crucially, a profitable business to float it. I don't see how OpenAI possibly outlasts them at this.

dughnut 2y ago
What is the model? That the US government launders them money through “ad revenue” for unlawful surveillance? OpenAI is probably already getting dark money for AI products of dubious worth.

light_hue_1 2y ago

Sometimes having more evidence that's weaker, weakens the entire argument. Who cares that Oracle might lose $1B? or $10B? Oracle has $17B cash on hand. Who cares if an entity that NVIDIA gets 6% of its revenue from collapses? Nvidia had over 100% revenue growth YoY. That's literally a few days of growth. The assertion that OpenAI is the generative AI industry is absurd. There are plenty of other players. There are plenty of other applications. OpenAI's biggest problem is that it's not the generative AI industry, it's just another player. One that has nothing unique to offer.