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I am curious to see how this compares against where Amazon was in 2000. I think Amazon had similar issues and were operating at massive losses until circa 2005i

I am curious to see how this compares against where Amazon was in 2000. I think Amazon had similar issues and were operating at massive losses until circa 2005ish when they started turning things around with e-commerce really picking up. If the revenue keeps going up and losses keep going down, it may reach that inflection point in a few years. For that to happen, the cost of AI datacenter have to go down massively.

pavlov 1y ago
Amazon's loss in 2000 was 6% of sales. OpenAI's loss in 2025 is 314% of sales. https://s2.q4cdn.com/299287126/files/doc_financials/annual/00ar.pdf https://s2.q4cdn.com/299287126/files/doc_financials/annual/0... "Ouch. It’s been a brutal year for many in the capital markets and certainly for Amazon.com shareholders. As of this writing, our shares are down more than 80% from when I wrote you last year. Nevertheless, by almost any measure, Amazon.com the company is in a stronger position now than at any time in its past. "We served 20 million customers in 2000, up from 14 million in 1999. "• Sales grew to $2.76 billion in 2000 from $1.64 billion in 1999. "• Pro forma operating loss shrank to 6% of sales in Q4 2000, from 26% of sales in Q4 1999. "• Pro forma operating loss in the U.S. shrank to 2% of sales in Q4 2000, from 24% of sales in Q4 1999."
JCM9 1y ago
Fundamentally different business models. Amazon had huge capital investments that got less painful as it scaled. Amazon also focuses on cash flow vs profit. Even early on it generated a lot of cash, it just reinvested that back into the business which meant it made a “loss” on paper. OpenAI is very different. Their “capital” expense depreciation (model development) has a really ugly depreciation curve. It’s not like building a fulfillment network that you can use for decades. That’s not sustainable for much longer. They’re simply burning cash like there’s no tomorrow. Thats only being kept afloat by the AI bubble hype, which looks very close to bursting. Absent a quick change, this will get really ugly.
- Analemma_ 1y ago
  Not to mention nobody bothered chasing Amazon-- by the time potential competitors like Walmart realized what was up, it was way too late and Amazon had a 15-year head start. OpenAI had a head start with models for a bit, but now their models are basically as good (maybe a little better, maybe a little worse) than the ones from Anthropic and Google, so they can't stay still for a second. Not to mention switching costs are minimal: you just can't have much of a moat around a product which is fundamentally a "function (prompt: String): String", it can always be abstracted away, commoditized, and swapped out for a competitor.
  - robertjpayne 1y ago
    This right here. AI has no moat and none of these companies has a product that isn't easily replaced by another provider. Unless one of these companies really produces a leapfrog product or model that can't be replicated within a short timeframe I don't see how this changes. Most of OpenAI's users are freeloaders and if they turn off the free plan they're just going to divert those users to Google.
    - aurareturn 1y ago
      AI has no moat - yet here I'm been paying for ChatGPT Plus since the very start.
      - OGEnthusiast 1y ago
        The real test of a moat is pricing power - would you still stick with OpenAI if they increased the Plus subscription to $40/mo?
        aurareturn 1y ago
        Most likely, yes. I don’t see any viable alternatives. And if they increase to $40, I assume others must as well due to similar unit economics.
  - 1y ago
crystal_revenge 1y ago
> Amazon had similar issues and were operating at massive losses until circa 2005ish when they started turning things around with e-commerce really picking up. Amazon's worst year was 2000 when they lost around $1 billion on revenue around $2.8 billion, I would not say this is anywhere near "similar" in scale to what we're seeing with OpenAI. Amazon was losing 0.5x revenue, OpenAI 3x. Not to mention that most of the OpenAI infrastructure spend has a very short life span. So it's not like Amazon we're they're figuring out how to build a nationwide logistic chain that has large potential upsides for a strong immediate cost. > If the revenue keeps going up and losses keep going down That would require better than "dogshit" unit economics [0] 0. https://pluralistic.net/2025/09/27/econopocalypse/#subprime-intelligence https://pluralistic.net/2025/09/27/econopocalypse/#subprime-...

pavlov 1y ago

Amazon's loss in 2000 was 6% of sales. OpenAI's loss in 2025 is 314% of sales. https://s2.q4cdn.com/299287126/files/doc_financials/annual/00ar.pdf https://s2.q4cdn.com/299287126/files/doc_financials/annual/0... "Ouch. It’s been a brutal year for many in the capital markets and certainly for Amazon.com shareholders. As of this writing, our shares are down more than 80% from when I wrote you last year. Nevertheless, by almost any measure, Amazon.com the company is in a stronger position now than at any time in its past. "We served 20 million customers in 2000, up from 14 million in 1999. "• Sales grew to $2.76 billion in 2000 from $1.64 billion in 1999. "• Pro forma operating loss shrank to 6% of sales in Q4 2000, from 26% of sales in Q4 1999. "• Pro forma operating loss in the U.S. shrank to 2% of sales in Q4 2000, from 24% of sales in Q4 1999."

JCM9 1y ago

Fundamentally different business models. Amazon had huge capital investments that got less painful as it scaled. Amazon also focuses on cash flow vs profit. Even early on it generated a lot of cash, it just reinvested that back into the business which meant it made a “loss” on paper. OpenAI is very different. Their “capital” expense depreciation (model development) has a really ugly depreciation curve. It’s not like building a fulfillment network that you can use for decades. That’s not sustainable for much longer. They’re simply burning cash like there’s no tomorrow. Thats only being kept afloat by the AI bubble hype, which looks very close to bursting. Absent a quick change, this will get really ugly.

Analemma_ 1y ago
Not to mention nobody bothered chasing Amazon-- by the time potential competitors like Walmart realized what was up, it was way too late and Amazon had a 15-year head start. OpenAI had a head start with models for a bit, but now their models are basically as good (maybe a little better, maybe a little worse) than the ones from Anthropic and Google, so they can't stay still for a second. Not to mention switching costs are minimal: you just can't have much of a moat around a product which is fundamentally a "function (prompt: String): String", it can always be abstracted away, commoditized, and swapped out for a competitor.
- robertjpayne 1y ago
  This right here. AI has no moat and none of these companies has a product that isn't easily replaced by another provider. Unless one of these companies really produces a leapfrog product or model that can't be replicated within a short timeframe I don't see how this changes. Most of OpenAI's users are freeloaders and if they turn off the free plan they're just going to divert those users to Google.
  - aurareturn 1y ago
    AI has no moat - yet here I'm been paying for ChatGPT Plus since the very start.
    - OGEnthusiast 1y ago
      The real test of a moat is pricing power - would you still stick with OpenAI if they increased the Plus subscription to $40/mo?
      - aurareturn 1y ago
        Most likely, yes. I don’t see any viable alternatives. And if they increase to $40, I assume others must as well due to similar unit economics.
- 1y ago

crystal_revenge 1y ago

> Amazon had similar issues and were operating at massive losses until circa 2005ish when they started turning things around with e-commerce really picking up. Amazon's worst year was 2000 when they lost around $1 billion on revenue around $2.8 billion, I would not say this is anywhere near "similar" in scale to what we're seeing with OpenAI. Amazon was losing 0.5x revenue, OpenAI 3x. Not to mention that most of the OpenAI infrastructure spend has a very short life span. So it's not like Amazon we're they're figuring out how to build a nationwide logistic chain that has large potential upsides for a strong immediate cost. > If the revenue keeps going up and losses keep going down That would require better than "dogshit" unit economics [0] 0. https://pluralistic.net/2025/09/27/econopocalypse/#subprime-intelligence https://pluralistic.net/2025/09/27/econopocalypse/#subprime-...