6 ms·

I can generate $20 billion in ARR this year too! I just need you to give me $100 billion and allow me to sell each of your dollars for 0.2 dollars.

bgirard 10mo ago
It's a fun trope to repeat but that's not what OpenAI is doing. I get a ton of value from ChatGPT and Codex from my subscription. As long as the inference is not done at a lost this analogy doesn't hold. They're not paying me to use it. They are generating output that is very valuable to me. Much more than my subscription cost. I've been able to help setup cross app automation for my partner's business, remodel my house, plan a trip of Japan and assist with the cultural barrier, vibe code apps, technical support and so much more.
- ReptileMan 10mo ago
  >. As long as the inference is not done at a lost this analogy doesn't hold. I think that there were some article here that claimed that even inference is done at loss - and talking about per subscriber. I think it was for their 200$ subscription. In a way we will be in a deal with it situation soon where they will just impose metered models and not subscription.
- mirthflat83 10mo ago
  Well, don't you think you're getting a ton of value because they're selling each of their dollars for 0.2 dollars?
- munk-a 10mo ago
  As a developer - ChatGPT doesn't hold a candle compared to claude for coding related tasks and under performs for arbitrary format document parsing[1]. It still has value and can handle a lot of tasks that would amaze someone in 2020 - but it is simply falling behind and spending much more doing so. 1. It actually under performs Claude, Gemini and even some of the Grok models for accuracy with our use case of parsing PDFs and other rather arbitrarily formatted files.
- rglullis 10mo ago
  > They're not paying me to use it. Of course they are. > As long as the inference is not done at a loss. If making money on inference alone was possible, there would be a dozen different smaller providers who'd be taking the open weights models and offering that as service. But it seems that every provider is anchored at $20/month, so you can bet that none of them can go any lower.
  - dragonwriter 10mo ago
    > If making money on inference alone was possible Maybe, but arguably a major reason you can't make money on inference right now is that the useful life of models is too short, so you can't amortize the development costs across much time because there is so much investment in the field that everyone is developing new models (shortening useful life in a competitive market) and everyone is simultaneously driving up the costs of inputs needed for developing models (increasing the costs that have to be amortized over the short useful life). Perversely, the AI bubble popping and resolving those issues may make profitability much easier for the survivors that have strong revenue streams.
  - FeepingCreature 10mo ago
    > If making money on inference alone was possible, there would be a dozen different smaller providers who'd be taking the open weights models and offering that as service. There are! Look through the provider list for some open model on https://openrouter.ai https://openrouter.ai . For instance, DeepSeek 3.1 has a dozen providers. It would not make any sense to offer those below cost because you have neither moat nor branding.
  - rprend 10mo ago
    They do make money on inference.
  - HDThoreaun 10mo ago
    The open models suck. AWS hosts them for less than closed models cost but no ones uses them, because they suck.
    - 10mo ago
- felixfurtak 10mo ago
  All of which you will be able to do with your bundled assistant in the not-to-distant future. OpenAI is a basket case: - Too expensive and inconvenient to compete with commoditized, bundled assistants (from Google/ Microsoft/Apple) - Too closed to compete with cheap, customizable open-source models - Too dependent on partners - Too late to establish its own platform lock-in It echoes what happened to: - Netscape (squeezed by Microsoft bundling + open protocols) - BlackBerry (squeezed by Apple ecosystem + open Android OS) - Dropbox (squeezed by iCloud, Google Drive, OneDrive + open tools like rclone) When you live between giants and open-source, your margin collapses from both sides.
  - deathhand 10mo ago
    So why does Salesforce still prosper? They are just a fancy database.
    - esafak 10mo ago
      If it was 'just' a database it would never have got off the ground. It is obviously not a database; there is an application around it.
    - felixfurtak 10mo ago
      Good question. Salesforce does well because they provide the application layer to the data. The WWW in the 1990s was an explosion of data. To the casual observer, the web-browser appeared to be the internet. But it wasn't and in itself could never make money (See Netscape). The internet was the data. The people who build the infrastructure for the WWW (Worldcom, Nortel, Cisco, etc.) found the whole enterprise to be an extremely loss-making activity. Many of them failed. Google succeeded because it provided an application layer of search that helped people to navigate the WWW and ultimately helped people make sense of it. It helped people to connect with businesses. Selling subtle advertising along the way is what made them successful. Facebook did the same with social media. It allowed people to connect with other people and monetized that. Over time, as they became more dominant, the advertising got less subtle and then the income really started to flow. Salesforce is similar in that it helps businesses connect with and do business with each other. They just use a subscription model, rather than advertising. This works because the businesses that use it can see a direct link to it and their profitability.
- steveBK123 10mo ago
  If the subscription cost 5x as much would you still pay and feel you are getting such a great value?
  - dosinga 10mo ago
    If there are no free alternatives, yes. 100 USD a month for ChatGPT seems great value
  - atonse 10mo ago
    I pay $100/month for Claude Max, and I've already said it, I would go up to $500 a month and wouldn't hesitate for a second. I'd probably start to hesitate for $1,000 maybe, only cuz I know I wouldn't be able to use it enough to maximize that value. But I might still suck it up and pay for it (I don't use it enough yet to need the $200/month but if I started hitting limits faster, I would upgrade), or at that point start looking for alternatives. It's worth that much to me in the time saved. But I'm a business owner, so I think the calculus might be quite different (since I can find ways to recoup those costs) from an individual, who pays out of their main income. I outlined examples of how I used CC/AI a couple months ago [1]. Since then I've used it even more, to help reduce our cloud bills. 1: https://news.ycombinator.com/item?id=45382337 https://news.ycombinator.com/item?id=45382337
    - viking123 10mo ago
      I mean Claude is good for business use-cases, other than that it's completely censored cuck garbage and the CEO is worse than the pope. With Grok you can actually roleplay without it wagging its finger at you. OH MY GOSH YOU SAID BOOB! Normies literally see no difference between GPT and Claude, just that Claude is much more expensive and CEO is even more of a dummie than Altman.
    - steveBK123 10mo ago
      Right I am sure some find it is worth 5-10x the cost. The challenge is that if the numbers are accurate they need 5-10x to break even on inference compute costs, before getting into training costs and all the other actual overhead of running a company like compensation. Will everyone be willing to pay 5-10x? Probably no. Will half of users pay 10-20x? Or a quarter pay 20x++? Or we end up with ads … which already seem to be in motion
- bloppe 10mo ago
  To be fair, I would get a ton of value out of someone selling dollars for 20 cents apiece. But ya, OAI is clearly making a ton of revenue. That doesn't mean it's a good business, though. Giving them a 20 year horizon, shareholders will be very upset unless the firm can deliver about a trillion in profit, not revenue, to justify the 100B (so far) in investment, and that would barely beat the long term s&p 500 average return. But Altman himself has said he'll need much more investment in the coming years. And even if OAI became profitable by jacking up prices and flooding gpt with ads, the underlying technology is so commodified, they'd never be able to achieve a high margin, assuming they can turn a profit at all.
  - littlestymaar 10mo ago
    I'd be a little bit more nuanced: I think there's something off with their plans right now: it's pretty clear at this point that they can't own the technological frontier, Google is just too close already and from a purely technological PoV they are much better suited to have the best tech in the medium term. (There's no moat and Google has way more data and compute available, and also tons of cash to burn without depending on external funding). But ChatGPT is an insane brand and for most (free) customers I don't think model capabilities (aka “intelligence”) are that important. So if they stopped training frontier models right now and focus on driving their costs low by optimizing their inference compute budget while serving ads, they can make a lot of money from their user base. But that would probably mean losing most of its paying customers over the long run (companies won't be buying mediocre token at a premium for long) and more importantly it would require abandoning the AGI bullshit narrative, which I'm not sure Altman is willing to do. (And even if he was, how to do that without collapsing from lack of liquidity due to investors feeling betrayed is an open question).
    - riffraff 10mo ago
      > But ChatGPT is an insane brand I mean, so was netscape.
      - littlestymaar 10mo ago
- tartoran 10mo ago
  There's no doubt you're getting a lot of value from OpenAI, I am too. And yes the subscription is a lot more value than what you pay for. That's because they're burning investor's money and it's not something that is sustainable. Once the money runs out they'll have to jack up prices and that's the moment of truth, we'll see what users are willing to pay for what. Google or another company may be able to provide all that much cheaper.
  - HDThoreaun 10mo ago
    Inference is profitable for openai as far as I can tell. They dont need to jack up prices much, what they really need is users who are paying/consuming ads. Theyre burning money on free tier users and data center expansion so they can serve more users.
    - NBJack 10mo ago
      This assumes your model is static and never needs to be improved or updated. Inference is cheap because the final model, despite its size, is ridiculously less resource intensive to use than it is to produce. ChatGPT in its latest form isn't bad by any means, but it is falling behind. And that requires significant overhead, both to train and to iterate on model architecture. It is often a variable cost as well.
      - HDThoreaun 10mo ago
        As long as revenue rises faster than training costs and inference remains profitable I dont think this is an issue. Eventually theyll be able to profitably amortize training across all the users.
        lokar 10mo ago
        Competition will erode how much they can charge for inference. This is all far from a sure thing.
        gbalduzzi 10mo ago
- jfb 10mo ago
  That the product is useful does not mean the supplier of the product has a good business; and of course, vice versa. OpenAI has a terrible business at the moment, and the question is, do they have a plausible path to a good one?
- PantaloonFlames 10mo ago
  You are mostly missing the point. You’re saying you get value out of what OpenAI is offering you. Thats not at issue here. The question is, does OpenAI get value out of the exchange? You touched on it ever so briefly: “as long as inference is not done at a loss”. That is it, isn’t it? Or more generally, As long as OpenAI is making money . But they are not. There’s the rub. It’s not only about whether you think giving them your money is a good exchange. It needs to be a good exchange for both sides, for the business to be viable.
- cush 10mo ago
  > I get a ton of value from ChatGPT and Codex from my subscription I think that’s what they’re saying. OpenAI is selling you a $1 product for $0.2 Tokens are too cheap right now and nobody is working on a path to dial up the cost
  - esafak 10mo ago
    Predictions are supposedly profitable but not enough to amortize everything else. I don't see how they would justify their investments even if predictions cost them nothing.
- csomar 10mo ago
  That's not the parent point though? His point is that if the models are not largely available, and then are better competitors; then what's the point of ChatGPT? Maybe you decide to stick with ChatGPT for whatever reason, but people will move to cheaper and better alternatives.
- hansmayer 10mo ago
  > It's a fun trope to repeat but that's not what OpenAI is doing. This is literally what OpenAI is doing. They are bleeding cash, i.e. spending more than they earn. How useful it is to you is not relevant in the context of the sustainability. You know what is also super useful to some people? Private yachts and jets. It does not mean they are good for the society as a whole. But even leaving out the hollistic view for a moment - their business model is not sustainable unless they manage to convince the politics to declare them national infrastructure or something like that, and have taxpayers continue to finance them, which is what they already probed for in the last months. Out of interest, why would you want ChatGPT plan your trip to Japan? Isn't planning it yourself a part of the excitement?
- mrwrong 10mo ago
  > I've been able to help setup cross app automation for my partner's business, remodel my house, plan a trip of Japan and assist with the cultural barrier, vibe code apps, technical support and so much more. you could have done all of this without a chatbot.
  - aprilthird2021 10mo ago
    Yeah. Imagine if anyone listed all the stuff Google helped them do. It would seem pretty similar. Maybe only vibe code an app is not in there
- bambax 10mo ago
  The parent isn't arguing you're not getting a good value out of the product. It says that users' contributions don't cover production costs, which may or may not be true but doesn't have much to do with how much value they get from it.
- protimewaster 10mo ago
  But why will this continue to be true in the future if OpenAI models aren't as good as alternative models?
postflopclarity 10mo ago
very clever! I hadn't seen anybody make this point before in any of these threads /s obviously the nature of OpenAIs revenue is very different than selling $1 for $0.2 because their customers are buying an actual service, not anything with resale value or obviously fungible for $
- runako 10mo ago
  FWIW the selling $1 for $0.2 is widely applied to any business that is selling goods below cost. For example: free shipping at Amazon does not have resale value and is not obviously fungible, but everyone understands they are eating a cost that otherwise would be borne by their customers. The suggestion is that OpenAI is doing similar, though it is harder to tease out because their books are opaque.
  - djmips 10mo ago
    Can you explain why Amazon eats the cost of shipping? Are they like the "First CityWide Change Bank"? How do they make money? Answer: Volume.
    - runako 10mo ago
      They don't eat all of it anymore, even for Prime members. To the extent they do, it's largely to reduce friction for what is still a purchase that will generally take longer to arrive than going to the store. Plus, it's a nice perk that makes you feel like you're getting a deal. As for profits, I haven't looked recently, but IIRC profits are mostly: 1. AWS 2. Prime membership fees The latter drives loyalty and therefore volume and predictability, which allows Amazon to e.g. operate their own mini-UPS in the quest to make money on most parcels. They also rolled back free shipping on everything over the years and use it more surgically and with minimum order sizes.
- array_key_first 10mo ago
  They're not selling a service, they're selling access to a service. You can access a more or less equivalent service from multiple companies. The value of an LLM isn't an LLM. That's entirely 100% fungible. The value is exclusively what it produces. If other people can produce the same thing, your LLM value approaches 0.
signatoremo 10mo ago
Can you? What are you selling? Who are you and why should I believe in you? What would I get in return?
- stavros 10mo ago
  He can. He's selling dollars. He's a person who sells dollars for fewer dollars. You'd get dollars.
bibimsz 10mo ago
!
School-Cotton 10mo ago
This analogy only really works for companies whose gross margin is negative, which as far as I know isn’t the case for OpenAI (though I could be wrong). It’s an especially good analogy if there is no plausible path to positive gross margin (e.g. the old MoviePass) which I think is even less likely to be true for OpenAI.
- techblueberry 10mo ago
  Why is it that I feel like your confidence in OpenAI's path to profitability exceeds Sam Altman's?
  - School-Cotton 10mo ago
    I'm not confident at all. I didn't say "there is definitely a path". I said the existence of such a path is plausible. I'm sure Sam Altman believes that too, or he'd have changed jobs ages ago.
eli_gottlieb 10mo ago
We should perhaps say profit when we are talking about revenue - cost and revenue when we only mean the first term in the subtraction.
m3kw9 10mo ago
You sell dollar 1 penny, they sell it for more like 70. Different skill level
s3p 10mo ago
Exactly, so you can't generate a cent of revenue. OpenAI got millions of people to buy a $20/mo subscription. You couldn't.

bgirard 10mo ago

It's a fun trope to repeat but that's not what OpenAI is doing. I get a ton of value from ChatGPT and Codex from my subscription. As long as the inference is not done at a lost this analogy doesn't hold. They're not paying me to use it. They are generating output that is very valuable to me. Much more than my subscription cost. I've been able to help setup cross app automation for my partner's business, remodel my house, plan a trip of Japan and assist with the cultural barrier, vibe code apps, technical support and so much more.

ReptileMan 10mo ago
>. As long as the inference is not done at a lost this analogy doesn't hold. I think that there were some article here that claimed that even inference is done at loss - and talking about per subscriber. I think it was for their 200$ subscription. In a way we will be in a deal with it situation soon where they will just impose metered models and not subscription.
mirthflat83 10mo ago
Well, don't you think you're getting a ton of value because they're selling each of their dollars for 0.2 dollars?
munk-a 10mo ago
As a developer - ChatGPT doesn't hold a candle compared to claude for coding related tasks and under performs for arbitrary format document parsing[1]. It still has value and can handle a lot of tasks that would amaze someone in 2020 - but it is simply falling behind and spending much more doing so. 1. It actually under performs Claude, Gemini and even some of the Grok models for accuracy with our use case of parsing PDFs and other rather arbitrarily formatted files.
rglullis 10mo ago
> They're not paying me to use it. Of course they are. > As long as the inference is not done at a loss. If making money on inference alone was possible, there would be a dozen different smaller providers who'd be taking the open weights models and offering that as service. But it seems that every provider is anchored at $20/month, so you can bet that none of them can go any lower.
- dragonwriter 10mo ago
  > If making money on inference alone was possible Maybe, but arguably a major reason you can't make money on inference right now is that the useful life of models is too short, so you can't amortize the development costs across much time because there is so much investment in the field that everyone is developing new models (shortening useful life in a competitive market) and everyone is simultaneously driving up the costs of inputs needed for developing models (increasing the costs that have to be amortized over the short useful life). Perversely, the AI bubble popping and resolving those issues may make profitability much easier for the survivors that have strong revenue streams.
- FeepingCreature 10mo ago
  > If making money on inference alone was possible, there would be a dozen different smaller providers who'd be taking the open weights models and offering that as service. There are! Look through the provider list for some open model on https://openrouter.ai https://openrouter.ai . For instance, DeepSeek 3.1 has a dozen providers. It would not make any sense to offer those below cost because you have neither moat nor branding.
- rprend 10mo ago
  They do make money on inference.
- HDThoreaun 10mo ago
  The open models suck. AWS hosts them for less than closed models cost but no ones uses them, because they suck.
  - 10mo ago
felixfurtak 10mo ago
All of which you will be able to do with your bundled assistant in the not-to-distant future. OpenAI is a basket case: - Too expensive and inconvenient to compete with commoditized, bundled assistants (from Google/ Microsoft/Apple) - Too closed to compete with cheap, customizable open-source models - Too dependent on partners - Too late to establish its own platform lock-in It echoes what happened to: - Netscape (squeezed by Microsoft bundling + open protocols) - BlackBerry (squeezed by Apple ecosystem + open Android OS) - Dropbox (squeezed by iCloud, Google Drive, OneDrive + open tools like rclone) When you live between giants and open-source, your margin collapses from both sides.
- deathhand 10mo ago
  So why does Salesforce still prosper? They are just a fancy database.
  - esafak 10mo ago
    If it was 'just' a database it would never have got off the ground. It is obviously not a database; there is an application around it.
  - felixfurtak 10mo ago
    Good question. Salesforce does well because they provide the application layer to the data. The WWW in the 1990s was an explosion of data. To the casual observer, the web-browser appeared to be the internet. But it wasn't and in itself could never make money (See Netscape). The internet was the data. The people who build the infrastructure for the WWW (Worldcom, Nortel, Cisco, etc.) found the whole enterprise to be an extremely loss-making activity. Many of them failed. Google succeeded because it provided an application layer of search that helped people to navigate the WWW and ultimately helped people make sense of it. It helped people to connect with businesses. Selling subtle advertising along the way is what made them successful. Facebook did the same with social media. It allowed people to connect with other people and monetized that. Over time, as they became more dominant, the advertising got less subtle and then the income really started to flow. Salesforce is similar in that it helps businesses connect with and do business with each other. They just use a subscription model, rather than advertising. This works because the businesses that use it can see a direct link to it and their profitability.
steveBK123 10mo ago
If the subscription cost 5x as much would you still pay and feel you are getting such a great value?
- dosinga 10mo ago
  If there are no free alternatives, yes. 100 USD a month for ChatGPT seems great value
- atonse 10mo ago
  I pay $100/month for Claude Max, and I've already said it, I would go up to $500 a month and wouldn't hesitate for a second. I'd probably start to hesitate for $1,000 maybe, only cuz I know I wouldn't be able to use it enough to maximize that value. But I might still suck it up and pay for it (I don't use it enough yet to need the $200/month but if I started hitting limits faster, I would upgrade), or at that point start looking for alternatives. It's worth that much to me in the time saved. But I'm a business owner, so I think the calculus might be quite different (since I can find ways to recoup those costs) from an individual, who pays out of their main income. I outlined examples of how I used CC/AI a couple months ago [1]. Since then I've used it even more, to help reduce our cloud bills. 1: https://news.ycombinator.com/item?id=45382337 https://news.ycombinator.com/item?id=45382337
  - viking123 10mo ago
    I mean Claude is good for business use-cases, other than that it's completely censored cuck garbage and the CEO is worse than the pope. With Grok you can actually roleplay without it wagging its finger at you. OH MY GOSH YOU SAID BOOB! Normies literally see no difference between GPT and Claude, just that Claude is much more expensive and CEO is even more of a dummie than Altman.
  - steveBK123 10mo ago
    Right I am sure some find it is worth 5-10x the cost. The challenge is that if the numbers are accurate they need 5-10x to break even on inference compute costs, before getting into training costs and all the other actual overhead of running a company like compensation. Will everyone be willing to pay 5-10x? Probably no. Will half of users pay 10-20x? Or a quarter pay 20x++? Or we end up with ads … which already seem to be in motion
bloppe 10mo ago
To be fair, I would get a ton of value out of someone selling dollars for 20 cents apiece. But ya, OAI is clearly making a ton of revenue. That doesn't mean it's a good business, though. Giving them a 20 year horizon, shareholders will be very upset unless the firm can deliver about a trillion in profit, not revenue, to justify the 100B (so far) in investment, and that would barely beat the long term s&p 500 average return. But Altman himself has said he'll need much more investment in the coming years. And even if OAI became profitable by jacking up prices and flooding gpt with ads, the underlying technology is so commodified, they'd never be able to achieve a high margin, assuming they can turn a profit at all.
- littlestymaar 10mo ago
  I'd be a little bit more nuanced: I think there's something off with their plans right now: it's pretty clear at this point that they can't own the technological frontier, Google is just too close already and from a purely technological PoV they are much better suited to have the best tech in the medium term. (There's no moat and Google has way more data and compute available, and also tons of cash to burn without depending on external funding). But ChatGPT is an insane brand and for most (free) customers I don't think model capabilities (aka “intelligence”) are that important. So if they stopped training frontier models right now and focus on driving their costs low by optimizing their inference compute budget while serving ads, they can make a lot of money from their user base. But that would probably mean losing most of its paying customers over the long run (companies won't be buying mediocre token at a premium for long) and more importantly it would require abandoning the AGI bullshit narrative, which I'm not sure Altman is willing to do. (And even if he was, how to do that without collapsing from lack of liquidity due to investors feeling betrayed is an open question).
  - riffraff 10mo ago
    > But ChatGPT is an insane brand I mean, so was netscape.
    - littlestymaar 10mo ago
tartoran 10mo ago
There's no doubt you're getting a lot of value from OpenAI, I am too. And yes the subscription is a lot more value than what you pay for. That's because they're burning investor's money and it's not something that is sustainable. Once the money runs out they'll have to jack up prices and that's the moment of truth, we'll see what users are willing to pay for what. Google or another company may be able to provide all that much cheaper.
- HDThoreaun 10mo ago
  Inference is profitable for openai as far as I can tell. They dont need to jack up prices much, what they really need is users who are paying/consuming ads. Theyre burning money on free tier users and data center expansion so they can serve more users.
  - NBJack 10mo ago
    This assumes your model is static and never needs to be improved or updated. Inference is cheap because the final model, despite its size, is ridiculously less resource intensive to use than it is to produce. ChatGPT in its latest form isn't bad by any means, but it is falling behind. And that requires significant overhead, both to train and to iterate on model architecture. It is often a variable cost as well.
    - HDThoreaun 10mo ago
      As long as revenue rises faster than training costs and inference remains profitable I dont think this is an issue. Eventually theyll be able to profitably amortize training across all the users.
      - lokar 10mo ago
        Competition will erode how much they can charge for inference. This is all far from a sure thing.
      - gbalduzzi 10mo ago
jfb 10mo ago
That the product is useful does not mean the supplier of the product has a good business; and of course, vice versa. OpenAI has a terrible business at the moment, and the question is, do they have a plausible path to a good one?
PantaloonFlames 10mo ago
You are mostly missing the point. You’re saying you get value out of what OpenAI is offering you. Thats not at issue here. The question is, does OpenAI get value out of the exchange? You touched on it ever so briefly: “as long as inference is not done at a loss”. That is it, isn’t it? Or more generally, As long as OpenAI is making money . But they are not. There’s the rub. It’s not only about whether you think giving them your money is a good exchange. It needs to be a good exchange for both sides, for the business to be viable.
cush 10mo ago
> I get a ton of value from ChatGPT and Codex from my subscription I think that’s what they’re saying. OpenAI is selling you a $1 product for $0.2 Tokens are too cheap right now and nobody is working on a path to dial up the cost
- esafak 10mo ago
  Predictions are supposedly profitable but not enough to amortize everything else. I don't see how they would justify their investments even if predictions cost them nothing.
csomar 10mo ago
That's not the parent point though? His point is that if the models are not largely available, and then are better competitors; then what's the point of ChatGPT? Maybe you decide to stick with ChatGPT for whatever reason, but people will move to cheaper and better alternatives.
hansmayer 10mo ago
> It's a fun trope to repeat but that's not what OpenAI is doing. This is literally what OpenAI is doing. They are bleeding cash, i.e. spending more than they earn. How useful it is to you is not relevant in the context of the sustainability. You know what is also super useful to some people? Private yachts and jets. It does not mean they are good for the society as a whole. But even leaving out the hollistic view for a moment - their business model is not sustainable unless they manage to convince the politics to declare them national infrastructure or something like that, and have taxpayers continue to finance them, which is what they already probed for in the last months. Out of interest, why would you want ChatGPT plan your trip to Japan? Isn't planning it yourself a part of the excitement?
mrwrong 10mo ago
> I've been able to help setup cross app automation for my partner's business, remodel my house, plan a trip of Japan and assist with the cultural barrier, vibe code apps, technical support and so much more. you could have done all of this without a chatbot.
- aprilthird2021 10mo ago
  Yeah. Imagine if anyone listed all the stuff Google helped them do. It would seem pretty similar. Maybe only vibe code an app is not in there
bambax 10mo ago
The parent isn't arguing you're not getting a good value out of the product. It says that users' contributions don't cover production costs, which may or may not be true but doesn't have much to do with how much value they get from it.
protimewaster 10mo ago
But why will this continue to be true in the future if OpenAI models aren't as good as alternative models?

postflopclarity 10mo ago

very clever! I hadn't seen anybody make this point before in any of these threads /s obviously the nature of OpenAIs revenue is very different than selling $1 for $0.2 because their customers are buying an actual service, not anything with resale value or obviously fungible for $

runako 10mo ago
FWIW the selling $1 for $0.2 is widely applied to any business that is selling goods below cost. For example: free shipping at Amazon does not have resale value and is not obviously fungible, but everyone understands they are eating a cost that otherwise would be borne by their customers. The suggestion is that OpenAI is doing similar, though it is harder to tease out because their books are opaque.
- djmips 10mo ago
  Can you explain why Amazon eats the cost of shipping? Are they like the "First CityWide Change Bank"? How do they make money? Answer: Volume.
  - runako 10mo ago
    They don't eat all of it anymore, even for Prime members. To the extent they do, it's largely to reduce friction for what is still a purchase that will generally take longer to arrive than going to the store. Plus, it's a nice perk that makes you feel like you're getting a deal. As for profits, I haven't looked recently, but IIRC profits are mostly: 1. AWS 2. Prime membership fees The latter drives loyalty and therefore volume and predictability, which allows Amazon to e.g. operate their own mini-UPS in the quest to make money on most parcels. They also rolled back free shipping on everything over the years and use it more surgically and with minimum order sizes.
array_key_first 10mo ago
They're not selling a service, they're selling access to a service. You can access a more or less equivalent service from multiple companies. The value of an LLM isn't an LLM. That's entirely 100% fungible. The value is exclusively what it produces. If other people can produce the same thing, your LLM value approaches 0.

signatoremo 10mo ago

Can you? What are you selling? Who are you and why should I believe in you? What would I get in return?

stavros 10mo ago
He can. He's selling dollars. He's a person who sells dollars for fewer dollars. You'd get dollars.

bibimsz 10mo ago

School-Cotton 10mo ago

This analogy only really works for companies whose gross margin is negative, which as far as I know isn’t the case for OpenAI (though I could be wrong). It’s an especially good analogy if there is no plausible path to positive gross margin (e.g. the old MoviePass) which I think is even less likely to be true for OpenAI.

techblueberry 10mo ago
Why is it that I feel like your confidence in OpenAI's path to profitability exceeds Sam Altman's?
- School-Cotton 10mo ago
  I'm not confident at all. I didn't say "there is definitely a path". I said the existence of such a path is plausible. I'm sure Sam Altman believes that too, or he'd have changed jobs ages ago.

eli_gottlieb 10mo ago

We should perhaps say profit when we are talking about revenue - cost and revenue when we only mean the first term in the subtraction.

m3kw9 10mo ago

You sell dollar 1 penny, they sell it for more like 70. Different skill level

s3p 10mo ago

Exactly, so you can't generate a cent of revenue. OpenAI got millions of people to buy a $20/mo subscription. You couldn't.