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I dunno. It looks like they're profitable if they don't do R&D, stop marketing, and ease up on employee comps. That's not the worst place to be. Yeah, they need

I dunno. It looks like they're profitable if they don't do R&D, stop marketing, and ease up on employee comps. That's not the worst place to be. Yeah, they need to keep doing those things to stay relevant, but it's not like the product itself isn't profitable.

ares623 1y ago
So if they stop doing what got them there they’ll be profitable? If I stop buying grocery and paying electricity bills I can finish up my mortgage in no time.
- SeanAnderson 1y ago
  I can see why you'd make that analogy, but that wasn't quite what I was trying to say. I just meant that not all expenses are created equal. Plenty of companies have high burn rates due to high R&D costs. It can make them look unprofitable on paper, but it's a tactic used to scale quicker, get economies of scale, higher leverage in negotiating, etc. It's not a requirement that they invest in R&D indefinitely. In contrast, if a company is paying a heavy amount of interest on loans (think: WeWork), it's not nearly as practical for them to cut away at their spending to find profitability.
  - ares623 1y ago
    Apologies for the snark. I don't think they can stop the 3 things you mentioned though. - Stopping R&D means their top engineers and scientists will go elsewhere - Stopping marketing means they will slowly lose market share. I don't care for marketing personally but I can appreciate its importance in a corporation - Stopping/reducing compensation will also make them lose people The costs are an inherent part of the company. It can't exist without it. Sure, they can adjust some levers a little bit here and there, but not too much or it all comes crumbling down.
    - rhetocj23 1y ago
      Its always a relief to read posts like these on here amid the noise.
jplusequalt 1y ago
So they're profitable if they put themselves at a disadvantage against Google, Meta, etc.?
- SeanAnderson 1y ago
  Yes... but there were concerns previously that inference was so costly that the subscriptions/API billing weren't covering basic operating expenses. That's clearly not the case. People are willing to pay them enough that they can afford to run the models. That's a really positive sign.
  - Ianjit 1y ago
    Free user inference is probably accounted for in Sales and Marketing. Adjusted COGS.

ares623 1y ago

So if they stop doing what got them there they’ll be profitable? If I stop buying grocery and paying electricity bills I can finish up my mortgage in no time.

SeanAnderson 1y ago
I can see why you'd make that analogy, but that wasn't quite what I was trying to say. I just meant that not all expenses are created equal. Plenty of companies have high burn rates due to high R&D costs. It can make them look unprofitable on paper, but it's a tactic used to scale quicker, get economies of scale, higher leverage in negotiating, etc. It's not a requirement that they invest in R&D indefinitely. In contrast, if a company is paying a heavy amount of interest on loans (think: WeWork), it's not nearly as practical for them to cut away at their spending to find profitability.
- ares623 1y ago
  Apologies for the snark. I don't think they can stop the 3 things you mentioned though. - Stopping R&D means their top engineers and scientists will go elsewhere - Stopping marketing means they will slowly lose market share. I don't care for marketing personally but I can appreciate its importance in a corporation - Stopping/reducing compensation will also make them lose people The costs are an inherent part of the company. It can't exist without it. Sure, they can adjust some levers a little bit here and there, but not too much or it all comes crumbling down.
  - rhetocj23 1y ago
    Its always a relief to read posts like these on here amid the noise.

jplusequalt 1y ago

So they're profitable if they put themselves at a disadvantage against Google, Meta, etc.?

SeanAnderson 1y ago
Yes... but there were concerns previously that inference was so costly that the subscriptions/API billing weren't covering basic operating expenses. That's clearly not the case. People are willing to pay them enough that they can afford to run the models. That's a really positive sign.
- Ianjit 1y ago
  Free user inference is probably accounted for in Sales and Marketing. Adjusted COGS.