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Cost of revenue is lower than revenue. That's good. R&D is the main contributor to losses here What is counted as R&D is completely arbitrary. These figures ar

Cost of revenue is lower than revenue. That's good. R&D is the main contributor to losses here What is counted as R&D is completely arbitrary. These figures are just playing accounting games to attempt to hide the massive ongoing costs. We’ll see a little better when they IPO and are forced to attempt to make money but I wouldn’t invest in this business.

simianwords 4mo ago
[flagged]
- JumpCrisscross 4mo ago
  Ed?
  - simianwords 4mo ago
    The guy who wrote the post we are discussing
    - JumpCrisscross 4mo ago
      Oh! What’s his reputation?
      - lelanthran 4mo ago
        > Oh! What’s his reputation? The people who are completely sold on the belief that AI providers are running at a profit believe him to be utterly, totally and completely wrong in every one of his predictions. The people who are completely sold on the belief that AI providers are running at a loss they can never recover from believe him to be utterly, totally and completely correct in every one of his predictions. The reality is that it's not his predictions that matter, but his data, which is almost always correct as of time of writing. If you ignore his opinions, the data presented on liabilities, spend, revenue, loans, commitments, etc across Coreweave, Stargate, Oracle and all of the usual AI companies is, as far as I can tell, correct. IOW, when it comes to his opinions, it's all about your priors. His data is good, though.
        disgruntledphd2 4mo ago
        > The reality is that it's not his predictions that matter, but his data, which is almost always correct as of time of writing. If you ignore his opinions, the data presented on liabilities, spend, revenue, loans, commitments, etc across Coreweave, Stargate, Oracle and all of the usual AI companies is, as far as I can tell, correct. Yeah, I think that he does well with sources and data. I also think that his editorialising can be off-putting for lots of people. I kinda enjoy it, but accept that I have niche tastes.
        simianwords 4mo ago
        > Yeah, I think that he does well with sources and data He's not even good at that, here's him not understanding what ARR means and fumbling a simple calculation and refusing to fix it. https://x.com/binarybits/status/2031392856401666362 https://x.com/binarybits/status/2031392856401666362 Not only not understanding ARR, he simply doesn't do data analysis properly - he misses some few months and days in his calculation to prop up his point. This is a mistake chatgpt would have caught. https://x.com/binarybits/status/2034377838883700953 https://x.com/binarybits/status/2034377838883700953
        disgruntledphd2 4mo ago
        > understanding what ARR means Can you share me the official meaning of ARR? Preferably on a GAAP basis. Should be no problem, right?
        simianwords 4mo ago
        ARR has no official GAAP definition, but is generally understood as the annualized value of a company's current recurring revenue base. This is something Ed clearly doesn't understand https://x.com/edzitron/status/2031124650474852382 https://x.com/edzitron/status/2031124650474852382 And you haven't addressed the fact that he doesn't do simple data calculations - see his blog https://www.wheresyoured.at/the-beginning-of-history https://www.wheresyoured.at/the-beginning-of-history
      - thepasch 4mo ago
        Up until this post, I thought he was someone with good financial insight, analytical chops, and business sense, stuck with an audience that thinks it's still 2023 and ChatGPT 3 is still the pinnacle of the technology, and that he therefore has to pander to in order to pay the bills. After this supposedly being the reveal for his bubble-bursting massive revelation that will send the industry flying and lead to journalists kicking in his door for interview requests and exposés, I think... well, not that anymore. I thought "the frontier labs are losing money" was rather universally understood, and this really isn't even as bad as the stuff that's publicly visible; the fact that they keep raising hundreds of billions of dollars that they'll one day supposedly be required to show returns on?
        disgruntledphd2 4mo ago
        > After this supposedly being the reveal for his bubble-bursting massive revelation that will send the industry flying and lead to journalists kicking in his door for interview requests and exposés I mean, the fact that lots of expenses are not scaling with revenue (sales and marketing 5xed versus revenue 3xing) and that the losses are very very large is important. More importantly, these are audited figures which haven't been seen before.
        thepasch 4mo ago
        Right, but this still isn't exactly new information. I don't think anyone was assuming that the labs are close to being profitable or that the losses wouldn't be rather large. The way this was announced was as if it was going to be a bombshell, but it just confirms what everyone (including the investors) was assuming anyway. Now if he had concrete numbers about whether inference at API pricing is profitable, that'd be a different thing (and it's what that hype bit was heavily implying since it's something he constantly keeps harping on, and rightfully so), but as it stands, nothing about these numbers says anything about whether this fundamentally has a road to profitability. It just says that this is a super high-risk high-reward investment, which isn't new information.
        simianwords 4mo ago
        Part of the losses are because of valuation increase and the real operating losses are much lower. https://www.ft.com/content/e15b0d7e-ff6b-4f16-ba7a-4068feddb828 https://www.ft.com/content/e15b0d7e-ff6b-4f16-ba7a-4068feddb... this uses the same sources and answers more honestly and Ed Zitron doesn't touch on this. > As OpenAI’s worth rose, the increased value of those investor rights created a roughly $30bn charge, added the person. The charge is not expected to recur following the restructuring, they said. > Stripping out the charge and other non-cash expenses, such as stock-based compensation of staff and computing credits from Microsoft, OpenAI’s losses were $8bn, according to the person. Whom would you trust? FT or Ed Zitron?
      - simianwords 4mo ago
        Poor but that doesn't stop innocent from taking his thesis seriously and leaning on to the doom scenario. What do you think of his reputation?

simianwords 4mo ago

[flagged]

JumpCrisscross 4mo ago
Ed?
- simianwords 4mo ago
  The guy who wrote the post we are discussing
  - JumpCrisscross 4mo ago
    Oh! What’s his reputation?
    - lelanthran 4mo ago
      > Oh! What’s his reputation? The people who are completely sold on the belief that AI providers are running at a profit believe him to be utterly, totally and completely wrong in every one of his predictions. The people who are completely sold on the belief that AI providers are running at a loss they can never recover from believe him to be utterly, totally and completely correct in every one of his predictions. The reality is that it's not his predictions that matter, but his data, which is almost always correct as of time of writing. If you ignore his opinions, the data presented on liabilities, spend, revenue, loans, commitments, etc across Coreweave, Stargate, Oracle and all of the usual AI companies is, as far as I can tell, correct. IOW, when it comes to his opinions, it's all about your priors. His data is good, though.
      - disgruntledphd2 4mo ago
        > The reality is that it's not his predictions that matter, but his data, which is almost always correct as of time of writing. If you ignore his opinions, the data presented on liabilities, spend, revenue, loans, commitments, etc across Coreweave, Stargate, Oracle and all of the usual AI companies is, as far as I can tell, correct. Yeah, I think that he does well with sources and data. I also think that his editorialising can be off-putting for lots of people. I kinda enjoy it, but accept that I have niche tastes.
        simianwords 4mo ago
        > Yeah, I think that he does well with sources and data He's not even good at that, here's him not understanding what ARR means and fumbling a simple calculation and refusing to fix it. https://x.com/binarybits/status/2031392856401666362 https://x.com/binarybits/status/2031392856401666362 Not only not understanding ARR, he simply doesn't do data analysis properly - he misses some few months and days in his calculation to prop up his point. This is a mistake chatgpt would have caught. https://x.com/binarybits/status/2034377838883700953 https://x.com/binarybits/status/2034377838883700953
        disgruntledphd2 4mo ago
        > understanding what ARR means Can you share me the official meaning of ARR? Preferably on a GAAP basis. Should be no problem, right?
        simianwords 4mo ago
        ARR has no official GAAP definition, but is generally understood as the annualized value of a company's current recurring revenue base. This is something Ed clearly doesn't understand https://x.com/edzitron/status/2031124650474852382 https://x.com/edzitron/status/2031124650474852382 And you haven't addressed the fact that he doesn't do simple data calculations - see his blog https://www.wheresyoured.at/the-beginning-of-history https://www.wheresyoured.at/the-beginning-of-history
    - thepasch 4mo ago
      Up until this post, I thought he was someone with good financial insight, analytical chops, and business sense, stuck with an audience that thinks it's still 2023 and ChatGPT 3 is still the pinnacle of the technology, and that he therefore has to pander to in order to pay the bills. After this supposedly being the reveal for his bubble-bursting massive revelation that will send the industry flying and lead to journalists kicking in his door for interview requests and exposés, I think... well, not that anymore. I thought "the frontier labs are losing money" was rather universally understood, and this really isn't even as bad as the stuff that's publicly visible; the fact that they keep raising hundreds of billions of dollars that they'll one day supposedly be required to show returns on?
      - disgruntledphd2 4mo ago
        > After this supposedly being the reveal for his bubble-bursting massive revelation that will send the industry flying and lead to journalists kicking in his door for interview requests and exposés I mean, the fact that lots of expenses are not scaling with revenue (sales and marketing 5xed versus revenue 3xing) and that the losses are very very large is important. More importantly, these are audited figures which haven't been seen before.
        thepasch 4mo ago
        Right, but this still isn't exactly new information. I don't think anyone was assuming that the labs are close to being profitable or that the losses wouldn't be rather large. The way this was announced was as if it was going to be a bombshell, but it just confirms what everyone (including the investors) was assuming anyway. Now if he had concrete numbers about whether inference at API pricing is profitable, that'd be a different thing (and it's what that hype bit was heavily implying since it's something he constantly keeps harping on, and rightfully so), but as it stands, nothing about these numbers says anything about whether this fundamentally has a road to profitability. It just says that this is a super high-risk high-reward investment, which isn't new information.
        simianwords 4mo ago
        Part of the losses are because of valuation increase and the real operating losses are much lower. https://www.ft.com/content/e15b0d7e-ff6b-4f16-ba7a-4068feddb828 https://www.ft.com/content/e15b0d7e-ff6b-4f16-ba7a-4068feddb... this uses the same sources and answers more honestly and Ed Zitron doesn't touch on this. > As OpenAI’s worth rose, the increased value of those investor rights created a roughly $30bn charge, added the person. The charge is not expected to recur following the restructuring, they said. > Stripping out the charge and other non-cash expenses, such as stock-based compensation of staff and computing credits from Microsoft, OpenAI’s losses were $8bn, according to the person. Whom would you trust? FT or Ed Zitron?
    - simianwords 4mo ago
      Poor but that doesn't stop innocent from taking his thesis seriously and leaning on to the doom scenario. What do you think of his reputation?