Will Sam Altman's fall be as legendary as Sam Bankman-Fried's?
Hopefully moreso
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How OpenAI uses complex and circular deals to fuel its multibillion-dollar rise
231–240 of 428 posts
Re: How OpenAI uses complex and circular deals to fuel its multibillion-dollar rise
#232Earlier quoted context omitted.
The same way the stock market invents a trillion dollars of fake wealth on a strong up day? That's capital markets working as intended. It's not necessarily doomed to end in a fiery crash, although corrections along the way are a natural part of the process. It seems very bubbly to me, but not dotcom level bubbly. Not yet anyway. Maybe we're in 1998 right now.
I sell you a cat for $1B and you sell me a dog for $1B and now we’re both billionaires! Whether the capital markets “want” that or not it’s still silly.
If we’re both willing to pay that in a free market economy, then we both leave the deal happy.
Things are worth what people are willing to pay for them. And that can change over time.
Sentiment matters more than fundamental value in the short term.
Long term, on a timescale of a decade or more, it’s different.
Re: How OpenAI uses complex and circular deals to fuel its multibillion-dollar rise
#233Related https://www.theregister.com/2025/10/29/microsoft_earnings_q1... Microsoft seemingly just revealed that OpenAI lost $11.5B last quarter
It's incredible how Tesla used to lose a few hundred million a year and analysis shows would freak out claiming they'd never be profitable. Now Rivian can lose 5 billion a year and I don't hear anything about it, and OpenAI can lose 11 billion in a quarter and Microsoft still backs them. I do think this is going to be a deeply profitable industry, but this feels a little like the WeWork CEO flying couches to offices…
Rivian lost something like $5B in 2024, but they're on track to only lose $2.25B in 2025. That trend line is clear. In 2026 they release a much lower cost model, and a lot of that loss has been development of that model. They probably won't achieve profitability in 2026, but if they get their loss down to $1B in 2026, in 2027 we'll likely see them go net positive.
Re: How OpenAI uses complex and circular deals to fuel its multibillion-dollar rise
#234Given that AI is a national security matter now, I'd expect the U.S.A to step in and rescue certain companies in the event of a crash. However, I'd give higher chances to NVIDIA than OpenAI. Weights are easily transferrable and the expertise is in the engineers, but ability to continue making advanced chips is not as easily transferred.
If they're too-important-to-fail they're too important not to be broken up or nationalised.
I’m curious if those of you calling for nationalization have worked for the government or a state-owned enterprise like Amtrak. People should witness the effects of long-term public sector ownership on productivity and effectiveness in a workplace.
Re: How OpenAI uses complex and circular deals to fuel its multibillion-dollar rise
#235Earlier quoted context omitted.
The same way the stock market invents a trillion dollars of fake wealth on a strong up day? That's capital markets working as intended. It's not necessarily doomed to end in a fiery crash, although corrections along the way are a natural part of the process. It seems very bubbly to me, but not dotcom level bubbly. Not yet anyway. Maybe we're in 1998 right now.
> It seems very bubbly to me, but not dotcom level bubbly. Not? Money is thrown after people without really looking at the details, just trying to get in on the hype train? That's exactly how the dotcom bubble felt like.
Nvidia has a trailing PE of 50. Cisco was 200 At the height of the dotcom bubble.
Nowhere near that level. There’s real demand and real revenue this time.
It won’t grow as fast as investors expect, which makes it a bubble if I’m right about that. But not comparable to the dotcom bubble. Not yet anyway.
Re: How OpenAI uses complex and circular deals to fuel its multibillion-dollar rise
#236Earlier quoted context omitted.
Read up a bit on the effort needed to get a fab going, and the yield rates. While engineers are crucial in the setup, the fab itself is not as 'fungible' as the employees involved. I can spin up a strong ML team through hiring in probably 6-12 months with the right funding. Building a chip fab and getting it to a sensible yield would take 3-5 years, significantly more funding, strong supply lines, etc.
> I can spin up a strong ML team through hiring in probably 6-12 months with the right funding Not sure what to call this except "HN hubris" or something. There are hundreds of companies who thought (and still think) the exact same thing, and even after 24 months or more of "the right funding" they still haven't delivered the results. I think you're misunderstanding how difficult all of this is, if you think it's mer…
There’s a lot in LLM training that is pretty commodity at this point. The difficulty is in data - and a large part of why it has gotten more challenging is simply that some of the best sources of data have locked down against scraping post-2022 and it is less permissible to use copyrighted data than the “move fast and break things” pre-2023 era.
As you mentioned, multiple no name chinese companies have done it and published many of their results. There is a commodity recipe for dense transformer training. The difference between Chinese and US is that they have less data restrictions.
I think people overindex on the Meta example. It’s hard to fully understand why Meta/llama have failed as hard as they have - but they are an outlier case. Microsoft AI only just started their efforts in earnest and are already beating Meta shockingly.
Re: How OpenAI uses complex and circular deals to fuel its multibillion-dollar rise
#237Earlier quoted context omitted.
It's incredible how Tesla used to lose a few hundred million a year and analysis shows would freak out claiming they'd never be profitable. Now Rivian can lose 5 billion a year and I don't hear anything about it, and OpenAI can lose 11 billion in a quarter and Microsoft still backs them. I do think this is going to be a deeply profitable industry, but this feels a little like the WeWork CEO flying couches to offices…
> like the WeWork CEO flying couches to offices in private jets I found there was more than just couches on the WeWork private jets: https://www.inverse.com/input/tech/weworks-adam-neumann-got-...
How this guy is not in jail is beyond me.
Re: How OpenAI uses complex and circular deals to fuel its multibillion-dollar rise
#238Earlier quoted context omitted.
The same way the stock market invents a trillion dollars of fake wealth on a strong up day? That's capital markets working as intended. It's not necessarily doomed to end in a fiery crash, although corrections along the way are a natural part of the process. It seems very bubbly to me, but not dotcom level bubbly. Not yet anyway. Maybe we're in 1998 right now.
I think it's worse. The US market feels like a casino to me right now and grift is at an all time high. We're not getting good economic data, it's super unpredictable, and private equity is a disaster waiting to happen IMO. For sure there are smart people able to make money on the gamble, but it's not my jam. I don't tend to benefit from my predictions as things always take longer to unfold than I think they will, bu…
More money is lost by bears fighting a bull market, than in actual bear market crashes.
I’ve made that mistake already.
I’m nervous about the economic data and the sky high valuations, but I’ll invest with the trend until the trend changes.
Re: How OpenAI uses complex and circular deals to fuel its multibillion-dollar rise
#239This is such a strange article -- there's nothing particularly unusual going on here. The first example basically stands in for all of them -- Microsoft invests $13B in OpenAI, and OpenAI spends $13B on Azure. This is literally just OpenAI purchasing Microsoft cloud usage with OpenAI's stock rather than its cash . There is nothing unusual, illicit, or deceptive about this. This is entirely normal. You can finance you…
Circularly passing around tens to hundreds of billions of dollars for things which don't exist and may never exist to fund a technology that hasn't A. lived up to the hype they've marketed and B. proven any strategy to breakeven is fundamentally not that much different than the way in which Enron strategically boasted their revenue numbers by passing the money between shell corporations that their CFO created.
The main difference of course being that these are actual companies as opposed to just entities intently designed to inflate the apparent financials. While it seems like that difference means this situation is perfectly fine as compared with the fraudulent case of Enron, the net effect is still the same; these companies are posting crazy quarter over quarter revenue growth, sending their stock prices to crazy highs and P/E multiples, while the insiders are cashing out to the tunes of hundreds of millions of dollars.
I don't really see how exactly you're trying to make the argument that it may or may not be a bubble, it objectively meets the definition of a bubble in the traditional economic sense (when an asset's market price surges significantly above its intrinsic value, driven by speculative behavior rather than fundamental factors). These companies are massively overvalued on the speculative value of AI, despite AI having not yet shown much economic viability for actual profit (not just revenue).
Worse yet, it's not just one company with inflated numbers, it's pretty much the entire top end of the market. To compare it to the dot com bubble wouldn't be a stretch, it'd basically be apples to apples as far as I see it.
Re: How OpenAI uses complex and circular deals to fuel its multibillion-dollar rise
#240Earlier quoted context omitted.
>infinite number of options between two outcomes so the odds are overwhelmingly in the favor that the truth lies somewhere in between This is totally fallacious.
It isn't. "AI is a bubble" and "AI is going to replace all human jobs" is, essentially, the two extremes I'm seeing. AI replacing some jobs (even if partially) and the bubble-ness of the boom are both things that exist on a line between two points. Both can be partially true and exist anywhere on the line between true and false. No jobs replaced All jobs replaced Bubble crashes the economy and we all end up dead in a…
I agree there is a large continuum of possibilities, but that does not mean that something in the middle is more likely, that is the fallacious step in the reasoning.