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This is the venture model now though. Spend until profitable. Uber did it. It seems OpenAI could do it as well given we seem to be in a 2 horse race for foundat

• hadlock 4mo ago
  Before Uber did it, Amazon had been doing it for almost two decades. It's nothing new. There is a difference between 1 billion and 20 billion in losses, though. Amazon in, I forget, 2014? Ran a profitable quarter with I think $1 in profits, simply to prove they were in control of their finances, and "we can stop any time we want". Sam gets a lot of shade, but he's been around the YC block once or twice, I suspect whatever risk they're taking on is at least somewhat measured.
  • skeeter2020 4mo ago
    Amazon structured their entire operation to look like this but as you indicated, could have switched to a porfit-making, dividen-paying company more than a decade ago, that just wasn't their strategy. The same can not be said for OpenAI. Even if they slashed their R&D, their marketing and sales costs are extremely high for a tech company. On paper they look more like a utility and those are not worth double-digit multiples; they compete with t-bills and GICs
    • hadlock 4mo ago
      Looking at the fact that third parties are making a profit offering XYZ third party open models on OpenRouter, it stands to reason that OpenAI could turn off their R&D, marketing, hype jedi, legal departments and just sell GPT9.999 and turn a profit. Again like in the Amazon analogy, I don't think they're done growing, and unfortunately, I think they've positioned themselves (perhaps intentionally) as too big to fail, and need to continue growth at all costs. I'm glad I'm not OAI's CFO sounds like a stressful job trying to justify/account for whatever Sam says to the board, or whatever the board demands. Sam hasn't said hardly anything since about February so I'm guessing the CFO simply bends to the will of the board these days. But that's speculation.
      • deleted 4mo ago
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      • chongli 4mo ago
        it stands to reason that OpenAI could turn off their R&D, marketing, hype jedi, legal departments and just sell GPT9.999 and turn a profit. That rests on 2 assumptions: 1) That inference on OpenAI's frontier models is actually cost competitive with open models. Their high SG&A suggests otherwise. 2) That slashing R&D won't lead to a marketshare collapse when everyone (remaining) moves to Anthropic to get on their frontier models. All evidence suggests otherwise again, with Anthropic already exerting enormous competitive pressure on OpenAI's marketshare. I think OpenAI is in a terribly tenuous position: they're getting squeezed from Anthropic (on the high end) and open models on the low end. A lot of companies in a lot of industries suffered this fate. Getting stuck in the middle is not a good thing!
        • hadlock 4mo ago
          It wouldn't surprise me if they have an unadvertised model router. Like, it's extremely clear you're chatting with a lobotomized model if you use voice mode in their app. Wild speculation here but I'm reasonably confident that as a $20/mo user I am not getting the same level of max thinking model that my enterprise account gets for the same question, despite both being labeled as the same model. Nowhere in their literature does it say $20/mo users get the exact same model/thinking effort, either
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  • Grombobulous 4mo ago
    I’m not sure Sam is actually well-regarded around the YC block? Didn’t he lie about being the chairman of the board of YC? That’s what it says on his Wikipedia page. Let’s not forget the whole fiasco where he was already almost fired from OpenAI. His business track record is basically one failed location-based social media company. I think it’s starting to become clear that OpenAI is going to be the first casualty of the AI race, and I think these undisciplined operations are a big part of the reason. A major tell is how Apple Intelligence is seemingly steering away from OpenAI and is embracing Google instead. Anthropic has the most useful B2B tooling and found their product niche, and they have the model leads in that niche. xAI gets financially shielded by being a part of a gigantic financial instrument and the Elon Musk reality distortion field. Cursor has a similar product market fit as Anthropic and gets to consolidate with xAI. Google and Microsoft get to use AI within their highly profitable ecosystems. Apple gets to mostly sit out but act as one of the biggest toll booths for everyone else.
  • BarryMilo 4mo ago
    You've seen Sam Altman's interviews, yet you still think him a competent man? I think he's rather the embodiment of the death of meritocracy as an idea.
• lokar 4mo ago
  Uber did not need this much money to cross the finish line, and faced less competition.
  • id00 4mo ago
    More importanly they have moat
    • ofjcihen 4mo ago
      This. The fact that no one seems to understand that Anth and OAI don’t have a moat is beyond me.
      • fragmede 4mo ago
        Or they do. If their moat is so weak, where's Grok and Gemini in this race?
        • Gigachad 4mo ago
          Gemini is fairly well used in business, anyone using the Google office suite uses Gemini. Grok is only used when you want to sexually harass people on Twitter.
      • lokar 4mo ago
        They are working on the moat: corruption.
    • deleted 4mo ago
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• coherentpony 4mo ago
  Uber’s situation was different, though. The reason Uber were bleeding money is because they purposefully made all their rides cheap to undercut the taxi businesses. People used Uber because it was cheaper than renting a taxi. Now you can’t really find taxis anywhere, even at airports it’s a lot more difficult than it used to be. Once the taxi business was disrupted enough, Uber’s pricing skyrocketed and customers had basically no other options for competition on pricing. OpenAI basically created a new market. There is no AI chatbot incumbent to disrupt and swallow.
  • pastel8739 4mo ago
    People use AI because it is cheaper than paying humans to think. Soon you won’t really be able to find human thinkers.
    • tartoran 4mo ago
      Some humans will need to interpret the thinking and apply it somewhere and take some responsibility for those decisions. If you think AI can do all that end to end it’s a different question but we’re nowhere near that right now.
      • pastel8739 4mo ago
        Definitely, I’m not saying that AI can entirely replace humans. But AI is definitely replacing parts of many jobs. If AI companies raise their rates to be profitable, and it turns out that paying for profitable AI is not worth it vs paying for humans, that might be a sticky situation.
        • ThunderSizzle 4mo ago
          There will always be a competitor that can undercut the inference market. There is no "moat" given that you can self host decently capable LLM agents like Qwen3.6 on not super expensive hardware, like an AMD R9700, and still get competitive speeds to most cloud interfaces. If you can self host it that easily, any Joe can scale it out much like shared web hosting, and shared web hosting or even dedicated rented boxes has always been cheaper than the big cloud providers. I don't think OpenAI or Anthropic can reasonable compete in the long term if they can't achieve "AGI", and they won't, no matter what shareholders desire.
• sfifs 4mo ago
  The problem here is that open weight models are already good enough for a majority of process automation and intelligence tasks and that is where a good chunk of efficiency corporate dollars are. So there's an ever shrinking slice of inference that will hit the frontier models and inference is where the insane margins are. Now to be fair, Claude co-work and Claude code/Codex do seem magical today and these potentially will continue to be high margin/leverage plays. Frontier models are also likely to push towards decision making - so we'll have to see how it shakes out but the bottom end is already commoditized and it is getting bigger and bigger.