4 ms·

Could someone explain why these routers are so valuable and pulling acquisitions in the billions?

• atleastoptimal 2mo ago
  Distribution is a big moat and value-add.
  • frabcus 2mo ago
    So much so that right now GPT-5.6 Sol tokens are half price from OpenRouter compared to OpenAI directly. Which I guess means enough people are using OpenRouter, that OpenAI are more concerned about getting those users to switch (from, presumably, Anthropic) than they are about encouraging OpenRouter to exist and long term reduce margins for them by competition / lack of lock-in.
• dcchambers 2mo ago
  Tokens are just a type of currency. Stripe is a middleman for currency. Using something like OpenRouter (or any of the AI Gateways) is better than tying yourself to one LLM provider that can rug pull on pricing or change models in a way you don't like. The value is in the network effect I think. OpenRouter is popular and has a good head start over anything Stripe could build internally.
  • dgellow 2mo ago
    Tokens are not a currency, tokens aren’t fungible and cannot be traded
    • victorbjorklund 2mo ago
      A dollar bill and a euro coin isn’t fungible either.
      • osculum 2mo ago
        ? In general, it is, unless it has some collector value, for example.
        • victorbjorklund 2mo ago
          No it is not. Can they be used to solve similar issues? Sure. But value isn’t the same and they are not identical. Just like a token.
    • 13hours 2mo ago
      Yet
      • dgellow 2mo ago
        Tokens are minted then consumed. You cannot trade them, by definition. What would it even mean to trade a token? You can maybe trade a voucher that allows you to then redeem it for some token generation (aka compute), but the tokens themselves don’t make sense to be tradeable. And because they aren’t fungible you cannot swap a token for another one, that’s just not what LLMs are
        • pests 2mo ago
          I think you are reading too much into the "fungible" term. No one is talking about trading tokens. The idea being that getting your tokens from Provider A is no different than Provider B, especially if they both offer the same model. You can change one value in a request to openrouter and suddenly be hitting a different provider but offering the same tokens, because they offer the same model and the same settings.
          • adwn 2mo ago
            > The idea being that getting your tokens from Provider A is no different than Provider B, especially if they both offer the same model. You're describing a commodity. However, the commodity isn't the tokens, but the compute capacity, i.e., serving a model. And compute capacity isn't a currency — at least not, until you can acquire compute capacity from one party and exchange it with another party. dgellow is absolutely right: tokens aren't a currency, nor can you trade them, nor are they fungible. The original claim that "tokens are just a type of currency" [1] makes no sense. [1] https://news.ycombinator.com/item?id=49364984 https://news.ycombinator.com/item?id=49364984
    • topato 2mo ago
      Isn’t this what Venice.AI is essentially trying to do?
    • polotics 2mo ago
      to a certain extent, openrouter did manage to turn tokens into a currency. The fungibility is there, as much as you don't care so much if you're getting your token from novita or some other player, these become fungible.
      • dgellow 2mo ago
        They aren’t trading tokens, they are a market for compute. The difference matters quite a lot. What you have in openrouter is the ability to exchange money for compute at the vendor of your choice. We are basically back to 2020 trying to get people to understand that an NFT is NOT the underlying asset it abstractly represents…
        • pests 2mo ago
          > The difference matters quite a lot. Please go on as I do not get your point.
          • dgellow 2mo ago
            You spend $100 to get tokens from Claude. Then go to your friend and tell them you are willing to sell the tokens you got for $50, it’s a bargain! They look at you, tell you that makes absolutely no sense, and why the fuck would they want to buy your tokens, ie something that only makes sense in your very specific prompting context. Tokens don’t have an inherent value and have no other properties that would make they tradeable. Another way to think about it: a company that spends $1M on tokens is burning that money hoping they will be able to recoup by generating a better product. If it would be tradeable, they could spend $1M to generate tokens, produce absolutely no product, and just resell all those tokens to get their money back. That’s obviously nonsense, that’s not at all what tokens are. And they cannot transform the tokens they got into compute, you need to consume hardware and energy to mint tokens, you cannot convert tokens into hardware
  • Taikhoom10 2mo ago
    Yeah, I mean, it looks like a network effect, but anybody can aggregate the models; rather, it is the switching costs in the logs and work, and the cost savings, etc.
• wyre 2mo ago
  OpenRouter allows you to have 1 API key to access hundreds of models across dozens of providers. Can’t explain the valuation since everything in this space is rationally overvalued, but I don’t think OpenRouters valuation is that surprising, all things considered.
  • emdash 2mo ago
    I use it because it makes A/B testing different models really easy
• millicentricism 2mo ago
  It’s a marketplace with a markup on every token they sell. And I’d rather go to this shop, than sign up individually at the 70+ different providers they broker access to - even if it comes with a price.
• qrios 2mo ago
  Contend of the LLM calls.
• drob518 2mo ago
  I don’t understand it, but good for OpenRouter. Personally, I think OpenRouter’s value is somewhat perishable. In the early AI market where there are a jillion models and anew one every week, it’s great to be able to try them all without having to create accounts and keys for each one. OpenRouter, which I use, makes this easy for developers to do. Add some cost controls and other “management” knobs and it works great. But the market is not going to be this frothy forever. As things settle down and commoditize, the value of switching on a dime diminishes as people lock into their favorite models. And with the OpenAI and Anthropic APIs being defacto standards for how to talk to models, it’s easy enough to switch to another model every so often, as long as you aren’t doing it multiple times per week. The other alternative is that OpenRouter stays in the mix but its pricing gets ground down and down. If it’s (nearly) free and still adds some value, fine. But that doesn’t justify $7B. So, yea, I don’t get it from Stripe’s perspective.
  • Majromax 2mo ago
    > As things settle down and commoditize, the value of switching on a dime diminishes as people lock into their favorite models I can imagine just the opposite outcome from the same scenario: as people settle into their favorite but commoditized models, competition for marginal inference cost will take over. A company like OpenRouter that promises the cheapest tokens by the minute becomes essential on the low-cost margin. I think that OpenRouter and equivalents get pushed out of the market only if the froth calms down (as you posit) and winning models stay proprietary, perhaps with their own unique API surfaces.
    • drob518 2mo ago
      > A company like OpenRouter that promises the cheapest tokens by the minute becomes essential on the low-cost margin. Okay, I can see that, but if their value is just cost optimization, their ability to mark up the tokens becomes increasingly difficult as well. Or, people will build a router themselves to avoid paying the markup, possibly with reduced features, but someone will open source it. Heck, Claude or GPT can probably one-shot it these days. Either way, I think the whole OpenRouter model is going to struggle unless the market stays frothy.
• znnajdla 2mo ago
  Read Ben Thompson to understand aggregation theory. Many of the largest internet companies, like Google and Amazon, are simply aggregators. OpenRouter is an aggregator of AI tooling. Stripe itself was just a convenience layer on top of merchant gateways (another aggregator). OpenRouter is so big they can negotiate special contracts with OpenAI for special rates.
  • Netherlands007 2mo ago
    [dead]
• apitman 2mo ago
  It's Netflix before the unbundling happened
  • maciejgryka 2mo ago
    Ha that’s a really interesting comparison! I guess the difference is that OR directly sends revenue to model providers, so maybe they’re more likely to continue working together? But I can totally see it go the other way once a provider feels confident enough their users won’t switch away. At that point the OpenRouter tax, however small, will be a problem to solve.
• Rebelgecko 2mo ago
  They're selling shovels during a gold rush with a 5% markup
• croes 2mo ago
  They get all your prompts, the LLMs companies only some
• tancop 2mo ago
  You can save money and get higher uptime. Without it using a cheap provider for open models would be risky because they might go down a lot, but routers can detect that and instantly switch to a different provider. They basically take away all your exposure. The other thing is convenience and centralized security from using one gateway to access everything. It's a lot better than having to deal with N accounts with separate limits and monitoring. And giving your payment details to one company instead of 20 is obviously safer. Investors like them because the pricing is inherently usage based so there's zero risk of clients using more tokens than what they paid for. Guaranteed profit as long as they can keep a modest amount of customers.
• Digory 2mo ago
  On acquisition pricing: Why smarter AI models could drive up compute prices 10x (at least temporarily). [0] This seems mind blowing, but the big boys seem to be behaving as if it's directionally true. If compute is constrained and expensive, OpenRouter is what you'll use to get around the constraints at individual providers. [0] https://x.com/dwarkesh_sp/status/2084333160075055122?s=20 https://x.com/dwarkesh_sp/status/2084333160075055122?s=20
• collingreen 2mo ago
  It's a simple marketplace and they control a ton of the demand side who trust them to find the best price and providers that work. The value is huge to users - one place, multiple models, providers bid for the traffic and the user doesn't have to think about anything. The value they hold hostage against providers is gargantuan - nice model there it'd be a real shame if none of our users used it. I don't see how stripe adds any value here (and I've had such terrible experience with stripe automatically breaking my stuff I am worried I can't trust openrouter now) but I can see stripe wanting to be in the middle of any two people giving each other money on the internet and this is squarely (lol) that.
• mihaaly 2mo ago
  PE is desperately competing other PE to get into the promise of some AI thingy NOW? Just guessing. The frenzy around popular, good already, and successful services with the corporate crap flowing from this acquisition announcement too is appalling. The "what's best for you, the user" heavy emphasis when this would be inherently evident in any honest service forecasts the opposite. Some highlights from one of my agents asked for a no bullshit evaluation: "By buying OpenRouter, they own the routing layer that decides which model gets called and at what price." "Stripe wants to be the economic infrastructure for AI — meaning they want to be the toll booth and the traffic cop for the entire AI economy." "... insider market intelligence that OpenAI, Anthropic, and Google don't fully have. Stripe would now have it." "The $7B+ price is absurd on any financial metric, but this isn't a financial acquisition — it's a strategic positioning play to own the platform layer of the next computing paradigm." "140x revenue multiple: At ~$50M revenue, this is not a financial valuation. It's a strategic land grab — buying the chokepoint before someone else does." I do not feel a particularly strong smell of 'best for the user' here for some reason... More like the usual 'how do we squeeze out more for our PE folks from this' kind of scent.
  • slopinthebag 2mo ago
    Are you seriously posting an LLM generated “analysis” of financial event.
    • mihaaly 2mo ago
      You small be trying LLM's once. They can do a lot for you, man. People use it in real life now! (It was more like quoting a point of view of some source, named, btw. As you can clearly see. You have my thoughts there too. In case you missed those.)
• sensanaty 2mo ago
  If you stick "AI" anywhere in your product pitch you get to stick a few extra zeroes on your valuation that has been pulled from your ass which you then sell to feckless VCs looking to swallow the world before the bubble pops
• Shakahs 2mo ago
  Frontier model providers (Anthropic et al.) gate new accounts to impractically low rate limits and spending caps until clients unlock higher limits with cumulative usage, make equivalent cash deposits up front, or talk to a Sales department to work out some other arrangement. They are handicapped by the postpaid billing model. It's an administrative burden to sign up very every model provider, and there are many independent inference providers now that serve only open source models. OpenRouter provides a useful service by allowing easy prepaid model access with much higher rate limits, and they also aggregate different model providers to route queries by price, latency, etc.
• ifwinterco 2mo ago
  The art of good business is being a good middleman
• Flamkuchlo 2mo ago
  I don't think they are. Just because some Higher Ups in Stripe bought this, doesn't mean its that valuable. It can easily be, that Stripe can just afford it and think that they are part of the big boys and thats just what companies cost today. It could be that Stripe really really like the brand name and all the positive notion of it. It could be that Stripe doesn't want to build this from scratch in a timefrime of 1 year or 2 because Stripe might be too corporate to be able to do startup stuff. Stripe has quite a high motivation to leverage agents thoguh because they are preparing for Agents which will buy through stripe. They already provide the SKU backend and support the agent payment stuff.