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This does all smell a bit like when WeWork was buying up seemingly every available office for rent. When it came time to actually pay for said offices… oops.

by JCM9 11mo ago

mike_d 11mo ago
> When it came time to actually pay for said offices… oops I was at WeWork around the time of its downfall. I have a lot of opinions about how that place was ran, but I can assure you pre-pandemic they were buying up every office space because they were filling them with tenants. Not paying for offices was a result of tenants not paying due to the pandemic.
- JCM9 11mo ago
  And these GPUs aren’t sitting idle either. Nobody is questioning that they “need” the compute, it’s the lack of a viable business model to pay for all this long term that has folks worried. That’s the same as what happened when WeWork was buying up office space pre-pandemic and then using handwavy nonsense like “Community Adjusted EBITDA” as part of the smoke and mirrors to pretend like there was an actual business there. The pandemic expedited the pain, but the business model was broken and folks called BS long before Covid hit.
  - treis 11mo ago
    >it’s the lack of a viable business model to pay for all this long term that has folks worried. They're going to sell ads at the moment people are looking to buy stuff. It's the single most viable business model we've ever seen.
    - jcranmer 11mo ago
      I know that "ads" is the popular assumption for how you're supposed to make money, but most sites don't really make all that much money with ads. Facebook and Google aren't rich from selling ads, they're rich from all of the ad infrastructure and quite frankly their ability to follow you around on the internet. Besides, how are ads on ChatGPT supposed to work? If some student is asking it to write their paper for them, is ChatGPT going to stop in the middle of it and go "Hey, you know what sounds good right now? A nice bowl of soup..." Although admittedly that would make for some hilarious proof of people using AI for things they shouldn't...
      - vlovich123 11mo ago
        People regularly ask ChatGPT for product recommendations of all kinds, explicit and implicit. ChatGPT will also probably be selling ad infrastructure to inject ads just like Google injects ads into search. They probably will pay out little to websites that include the “ChatGPT” widget to integrate ChatGPT with their site that also has ads. Right now the barriers are technical for injecting ads into AI responses.
        XorNot 11mo ago
        That directly tanks the entire value of AI though. As an advanced research engine, knowing it will reliably only recommend you sponsored products means it's worthless - and worse it will be primed to advocate for sponsored products. Then the whole thing becomes a scam engine, because check out what Facebook ads look like today.
        vlovich123 11mo ago
        That’s like claiming that “as an advanced search engine, knowing that Google promoted sponsored products and reranks its algorithms accordingly sometimes means it’s worthless” Regardless of if that’s true, it’s clearly still a huge business opportunity. And you point out Facebook ads are a scam yet they bring in $164B/year and growing. Regardless of value judgement, there’s clearly a lot of money to chase.
      - jonfw 11mo ago
        > ChatGPT going to stop in the middle of it and go "Hey, you know what sounds good right now? A nice bowl of soup..." Google/facebook do that today, because the content they're showing is created pre-ad, and the ads have to be injected after the fact. With AI- the content is being generated in the same place that the ads are being injected, which allows us to be much more subtle about it. How much do you think a car company would pay for to put special training weight on their marketing materials? I would guess big money
        candiddevmike 11mo ago
  - mike_d 11mo ago
    I was simply addressing the implication that WeWork was just buying up office space for fun and not paying for it.
- asah 11mo ago
  WeWork was taking on long term liability commitments and paying for them with short term revenue commitments. One bad thing and poof. Everybody in the commercial real estate market saw this coming. OpenAI maybe in the same situation, committed to spending $1.4T while enjoying a good revenue year this year but then One Bad Thing and poof.
- rchaud 11mo ago
  WW was able to fill those offices by charging well below market prices, because they were VC-funded so growth was more important than profitability. OpenAI is doing the same. 800m users, the vast majority of whom are free users who won't convert to paid.
  - winstonp 11mo ago
    won't? i doubt that. can't tell you the last time i paid $20/mo for any non-business sub, but i've paid for some combo of openai+claude for last year

This does all smell a bit like when WeWork was buying up seemingly every available office for rent. When it came time to actually pay for said offices… oops.

by JCM9 11mo ago

This does all smell a bit like when WeWork was buying up seemingly every available office for rent. When it came time to actually pay for said offices… oops.

mike_d 11mo ago

> When it came time to actually pay for said offices… oops I was at WeWork around the time of its downfall. I have a lot of opinions about how that place was ran, but I can assure you pre-pandemic they were buying up every office space because they were filling them with tenants. Not paying for offices was a result of tenants not paying due to the pandemic.

JCM9 11mo ago
And these GPUs aren’t sitting idle either. Nobody is questioning that they “need” the compute, it’s the lack of a viable business model to pay for all this long term that has folks worried. That’s the same as what happened when WeWork was buying up office space pre-pandemic and then using handwavy nonsense like “Community Adjusted EBITDA” as part of the smoke and mirrors to pretend like there was an actual business there. The pandemic expedited the pain, but the business model was broken and folks called BS long before Covid hit.
- treis 11mo ago
  >it’s the lack of a viable business model to pay for all this long term that has folks worried. They're going to sell ads at the moment people are looking to buy stuff. It's the single most viable business model we've ever seen.
  - jcranmer 11mo ago
    I know that "ads" is the popular assumption for how you're supposed to make money, but most sites don't really make all that much money with ads. Facebook and Google aren't rich from selling ads, they're rich from all of the ad infrastructure and quite frankly their ability to follow you around on the internet. Besides, how are ads on ChatGPT supposed to work? If some student is asking it to write their paper for them, is ChatGPT going to stop in the middle of it and go "Hey, you know what sounds good right now? A nice bowl of soup..." Although admittedly that would make for some hilarious proof of people using AI for things they shouldn't...
    - vlovich123 11mo ago
      People regularly ask ChatGPT for product recommendations of all kinds, explicit and implicit. ChatGPT will also probably be selling ad infrastructure to inject ads just like Google injects ads into search. They probably will pay out little to websites that include the “ChatGPT” widget to integrate ChatGPT with their site that also has ads. Right now the barriers are technical for injecting ads into AI responses.
      - XorNot 11mo ago
        That directly tanks the entire value of AI though. As an advanced research engine, knowing it will reliably only recommend you sponsored products means it's worthless - and worse it will be primed to advocate for sponsored products. Then the whole thing becomes a scam engine, because check out what Facebook ads look like today.
        vlovich123 11mo ago
        That’s like claiming that “as an advanced search engine, knowing that Google promoted sponsored products and reranks its algorithms accordingly sometimes means it’s worthless” Regardless of if that’s true, it’s clearly still a huge business opportunity. And you point out Facebook ads are a scam yet they bring in $164B/year and growing. Regardless of value judgement, there’s clearly a lot of money to chase.
    - jonfw 11mo ago
      > ChatGPT going to stop in the middle of it and go "Hey, you know what sounds good right now? A nice bowl of soup..." Google/facebook do that today, because the content they're showing is created pre-ad, and the ads have to be injected after the fact. With AI- the content is being generated in the same place that the ads are being injected, which allows us to be much more subtle about it. How much do you think a car company would pay for to put special training weight on their marketing materials? I would guess big money
      - candiddevmike 11mo ago
- mike_d 11mo ago
  I was simply addressing the implication that WeWork was just buying up office space for fun and not paying for it.
asah 11mo ago
WeWork was taking on long term liability commitments and paying for them with short term revenue commitments. One bad thing and poof. Everybody in the commercial real estate market saw this coming. OpenAI maybe in the same situation, committed to spending $1.4T while enjoying a good revenue year this year but then One Bad Thing and poof.
rchaud 11mo ago
WW was able to fill those offices by charging well below market prices, because they were VC-funded so growth was more important than profitability. OpenAI is doing the same. 800m users, the vast majority of whom are free users who won't convert to paid.
- winstonp 11mo ago
  won't? i doubt that. can't tell you the last time i paid $20/mo for any non-business sub, but i've paid for some combo of openai+claude for last year