It boggles the mind what OpenAI could possibly do with all this money.
Turn electricity into heat.
Not to forget buy really expensive sand...
OpenAI raises $8.3B at $300B valuation
131–140 of 294 posts
Re: OpenAI raises $8.3B at $300B valuation
#132Earlier quoted context omitted.
Firstly, the $200/m plan is at a loss, they'll make a profit on PAYG tokens, not plans. Secondly, this is looking very risky: they are at the bottom of the value chain and eventually they'll be running on razor thin margins like all actors who are at the bottom of the value chain. Anything they can offer is doable by their competitors (in Google's case, they can even do it cheaper due to ow ing the vertical which Ope…
Maybe the better analogy for LLM businesses isn’t SaaS but more like power generation. If AI really becomes that ubiquitous then OpenAI capturing that value is no less ridiculous than ComEd capturing the value of every application of electric power.
What OpenAI has is the know-how in developing new models and training them efficiently. That's a kind of value they can provide even in a world where open-sourced local models are in common use.
Re: OpenAI raises $8.3B at $300B valuation
#133Re: OpenAI raises $8.3B at $300B valuation
#134Earlier quoted context omitted.
They’re going to sell to the military, that’s why they hired the former NSA director into their board. The current state of AI is a perfect mass surveillance technology.
> The current state of AI is a perfect mass surveillance technology. How? Are you just going to ask the LLM about who is doing the crime? OpenAI is not an "AI company", it's an "LLM company".
You ask it to do the things that human analysts already currently do with the vast amounts of text, image, and video data they collect but at an unprecedented scale. You can extract what people are talking about, identify people, weapons, or objects in images, extract addresses, license plate numbers, or other identifying references. It can probably even detect when people are using coded language that won’t trigger explicit keywords.
OpenAI is an AI company, it’s literally in the name. Even currently they use more than LLMs, they use other transformers and related technology in the field of AI.
Re: OpenAI raises $8.3B at $300B valuation
#135Earlier quoted context omitted.
Firstly, the $200/m plan is at a loss, they'll make a profit on PAYG tokens, not plans. Secondly, this is looking very risky: they are at the bottom of the value chain and eventually they'll be running on razor thin margins like all actors who are at the bottom of the value chain. Anything they can offer is doable by their competitors (in Google's case, they can even do it cheaper due to ow ing the vertical which Ope…
The real revenue opportunity for OpenAI is advertising. More than 25% of Americans use ChatGPT instead of Google, and OpenAI has already announced partnership with Shopify to directly list products. But for now they are focused on market share. Google does not really own the complete AI stack, NVDA is extracting a lot of the value there. Google has two other impediments to doing what ChatGPT does. Googles entire busi…
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Re: OpenAI raises $8.3B at $300B valuation
#136So OpenAI is running at a $13B ARR, meaning this is a ~23X valuation. I don't have a good read on margin. But this would imply massive growth assumptions which I struggle a bit to understand where they come from. (1) New customers new to AI or migrations from Claude/Perplexity/Google: The overwhelming majority of people already know about the offerings, leaving most new people to come from residual people who identif…
Tech people and their friends are like 1% of the population. Go out on the the street of Anytown in any western country, and people know "ChatGPT". A friend of mine is a teacher, and told me that at a recent school board meeting there was discussion about implementing AI into the learning curriculum. And to the board, "AI" and "ChatGPT" were used interchangeably. There was no discussion of other providers or models,…
> because "AI" is "ChatGPT".
People still call it "Kleenex" when they're using any old facial tissue. They may still call it "ChatGPT" when it's coming from Google.
Re: OpenAI raises $8.3B at $300B valuation
#137Earlier quoted context omitted.
> get everyone on the planet to subscribe to their $200/month plan Not necessarily. Google is valued 7x that and most people don't pay them anything. They just make ridiculous money from ads for insurance and loans. Meanwhile, ChatGPT is the #1 app and the #5 website, which should really worry google (and it does by all accounts).
Yes, and they have a monopoly on the ad market. Whereas a SOTA LLM can be used to bootstrap an almost-as-good LLM. The gap is shrinking between SOTA models and there's now fierce competition. Moreover, ads are a very high ROI business. The profit margins on SOTA LLM offerings are razor thin or negative.
> they have a monopoly on the ad market
Only if you look narrowly at search ads, but really they compete with Meta, Tiktok and X for ad spend. And the quality of the LLMs is beside the point, just like search engine quality. ChatGPT has a near monopoly on 'AI' mindshare, with the general public.
Re: OpenAI raises $8.3B at $300B valuation
#138Earlier quoted context omitted.
Maybe the better analogy for LLM businesses isn’t SaaS but more like power generation. If AI really becomes that ubiquitous then OpenAI capturing that value is no less ridiculous than ComEd capturing the value of every application of electric power.
What OpenAI has is the know-how in developing new models and training them efficiently. That's a kind of value they can provide even in a world where open-sourced local models are in common use.
Sure but so do like a dozen other companies. Given that models bump past each other every few months, I haven’t seen anything that says they have any kind of competitive advatange.
Re: OpenAI raises $8.3B at $300B valuation
#139How much do investors make on average on VC? I mean, OpenAI is hardly a startup. But VC money can't be a one way street forever. So either: - VC invests on the whole sensibly and makes a return that justifies 10-15 year lock-in - VC has somehow changed and is now unsustainable, it is a one way cash flow and it will blow up like MBS did - VC sustainably delivers mediocre returns and gets some money in, some money out,…
> make on average This completely misses the boat on venture capital, which is almost by definition the riskiest of all risky bets. Any smart LP throwing $X into a fund has a portfolio valued, at the very least, at 100 if not 1000 times X. It is simply the way to expose the high-risk portion of the portfolio to that level of risk at the size of the investment needed. Being high-risk, probably it will return nothing.…
It is the average that matters in the end. How much new money flows into VC per year? Some number of $1e9 - hundreds perhaps? What happens to it?
If its all a folly and the money is burnt, it cannot last. But otherwise, these VCs investing at what looks like crazy valuations can't all be idiots.
Re: OpenAI raises $8.3B at $300B valuation
#140Given their current product offerings, I really don't see a way they could ever justify a $300B valuation unless they get everyone on the planet to subscribe to their $200/month plan. I'm calling it now: investors are gonna get burned hard on this one. Cause right now all they have is "well we are working on superintelligence" and to that I say "great, then what?". Even if they do make that breakthrough I don't see h…
> Given their current product offerings, I really don't see a way they could ever justify a $300B valuation unless they get everyone on the planet to subscribe to their $200/month plan.
the strongest opportunity is to compete with google on search queries, and make money from ads (200B annual revenue)