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I am reminded of the Uncomfortable Amazon Truths ( https://news.ycombinator.com/item?id=20980025 https://news.ycombinator.com/item?id=20980025 ) by Corey Quinn.

by shagie 1y ago

I am reminded of the Uncomfortable Amazon Truths ( https://news.ycombinator.com/item?id=20980025 https://news.ycombinator.com/item?id=20980025 ) by Corey Quinn. While they're protected now, https://news.ycombinator.com/item?id=20980557 https://news.ycombinator.com/item?id=20980557 quotes the one I recall... - Nobody has figured out how to make money from AI/ML other than by selling you a pile of compute and storage for your AI/ML misadventures. https://threadreaderapp.com/thread/1173367909369802752.html https://threadreaderapp.com/thread/1173367909369802752.html maintains the entire chain of tweets.

chillee 1y ago
Clearly not true anymore given OpenAI and Anthropic's revenue growth.
- shagie 1y ago
  Revenue... yes. Profit is still an open question. https://www.cnbc.com/2025/08/08/chatgpt-gpt-5-openai-altman-loss.html https://www.cnbc.com/2025/08/08/chatgpt-gpt-5-openai-altman-... > Last year, OpenAI expected about $5 billion in losses on $3.7 billion in revenue. OpenAI’s annual recurring revenue is now on track to pass $20 billion this year, but the company is still losing money. > “As long as we’re on this very distinct curve of the model getting better and better, I think the rational thing to do is to just be willing to run the loss for quite a while,” Altman told CNBC’s “Squawk Box” in an interview Friday following the release of GPT-5. Selling compute for less than it cost you will have as much revenue as you want to pay for.
  - jquery 1y ago
    >Revenue... yes. Profit is still an open question. could have said the same thing about most FAANG companies at one point or another.
    - jcranmer 1y ago
      If I have the numbers right, OpenAI will burn more money this year alone than all of those prior companies did in their entire profitless phase of existence.
    - janalsncm 1y ago
      The problem for OpenAI and the difference with other FAANGs is that they don’t own the internet. Other companies are able to replicate their product, which prevents them from fully realizing profits. Google doesn’t have this problem. They only run Google ads in their search results. Same thing for Facebook.
  - chillee 1y ago
    Their gross profits are very high even though they're not making operating profit.
  - soared 1y ago
    Anthropic founder described it as: if each model were a company, they be hugely profitable. It looks bad since when the model you trained in 2024 is generating net positive revenue, you’re also training a more expensive model for 2025 that won’t generate revenue until then. So currently, they’re always burning more cash than they’re bringing in, under the expectation that every model will increase revenue even more. Who knows how long that lasts, but it’s working so far. Paraphrase is from the podcast he was in with the stripe founder, cheeky pints I think
    - janalsncm 1y ago
      Which is not a good comparison because the LLMs are products not companies. If they are companies, they are competing against each other for revenue. If I switch from Gemini Pro to Opus, that is good for Anthropic. If I switch from Opus 4 to 4.1, that’s not as good for Anthropic. Sad that these CEOs can get away with this level of sophistry.
janalsncm 1y ago
> Nobody has figured out how to make money from AI/ML This is clearly not true. Google Ads? Every recommender system? Waymo self-driving? Uber routing algorithms? If you swapped out ML for LLMs I would largely agree.
- QuinnyPig 1y ago
  I do want to point out that I wrote this in 2019. It was a vastly different landscape, and AWS did a terrible job of promoting the ML value proposition.
  - shagie 1y ago
    I would love to see a retrospective on the AWS uncomfortable truths as a blog post and how they've held out over the past couple years. 2019 was a different time - though I suspect that your statement about making money (as in profit) rather than just revenue (reselling compute for less than you bought it) would hold true for most companies.
    - QuinnyPig 1y ago
      That’s an awesome idea. Let me get after it.
      - shagie 1y ago
        One of the debates I have with devops types is if OCI (Oracle Cloud Infrastructure) is a worse name than ICP (IBM Cloud Private). And would this be admitting defeat to the powers of Terrible Orange Website to get you to write more? As a side, in 2019 about a week after your tweets I was at a training session for Rancher which worked a reference to one of them into a joke.
        QuinnyPig 1y ago
        I’m always amazed by how far my humor seemed to spread in those days.

by shagie 1y ago

chillee 1y ago

Clearly not true anymore given OpenAI and Anthropic's revenue growth.

shagie 1y ago
Revenue... yes. Profit is still an open question. https://www.cnbc.com/2025/08/08/chatgpt-gpt-5-openai-altman-loss.html https://www.cnbc.com/2025/08/08/chatgpt-gpt-5-openai-altman-... > Last year, OpenAI expected about $5 billion in losses on $3.7 billion in revenue. OpenAI’s annual recurring revenue is now on track to pass $20 billion this year, but the company is still losing money. > “As long as we’re on this very distinct curve of the model getting better and better, I think the rational thing to do is to just be willing to run the loss for quite a while,” Altman told CNBC’s “Squawk Box” in an interview Friday following the release of GPT-5. Selling compute for less than it cost you will have as much revenue as you want to pay for.
- jquery 1y ago
  >Revenue... yes. Profit is still an open question. could have said the same thing about most FAANG companies at one point or another.
  - jcranmer 1y ago
    If I have the numbers right, OpenAI will burn more money this year alone than all of those prior companies did in their entire profitless phase of existence.
  - janalsncm 1y ago
    The problem for OpenAI and the difference with other FAANGs is that they don’t own the internet. Other companies are able to replicate their product, which prevents them from fully realizing profits. Google doesn’t have this problem. They only run Google ads in their search results. Same thing for Facebook.
- chillee 1y ago
  Their gross profits are very high even though they're not making operating profit.
- soared 1y ago
  Anthropic founder described it as: if each model were a company, they be hugely profitable. It looks bad since when the model you trained in 2024 is generating net positive revenue, you’re also training a more expensive model for 2025 that won’t generate revenue until then. So currently, they’re always burning more cash than they’re bringing in, under the expectation that every model will increase revenue even more. Who knows how long that lasts, but it’s working so far. Paraphrase is from the podcast he was in with the stripe founder, cheeky pints I think
  - janalsncm 1y ago
    Which is not a good comparison because the LLMs are products not companies. If they are companies, they are competing against each other for revenue. If I switch from Gemini Pro to Opus, that is good for Anthropic. If I switch from Opus 4 to 4.1, that’s not as good for Anthropic. Sad that these CEOs can get away with this level of sophistry.

janalsncm 1y ago

> Nobody has figured out how to make money from AI/ML This is clearly not true. Google Ads? Every recommender system? Waymo self-driving? Uber routing algorithms? If you swapped out ML for LLMs I would largely agree.

QuinnyPig 1y ago
I do want to point out that I wrote this in 2019. It was a vastly different landscape, and AWS did a terrible job of promoting the ML value proposition.
- shagie 1y ago
  I would love to see a retrospective on the AWS uncomfortable truths as a blog post and how they've held out over the past couple years. 2019 was a different time - though I suspect that your statement about making money (as in profit) rather than just revenue (reselling compute for less than you bought it) would hold true for most companies.
  - QuinnyPig 1y ago
    That’s an awesome idea. Let me get after it.
    - shagie 1y ago
      One of the debates I have with devops types is if OCI (Oracle Cloud Infrastructure) is a worse name than ICP (IBM Cloud Private). And would this be admitting defeat to the powers of Terrible Orange Website to get you to write more? As a side, in 2019 about a week after your tweets I was at a training session for Rancher which worked a reference to one of them into a joke.
      - QuinnyPig 1y ago
        I’m always amazed by how far my humor seemed to spread in those days.