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OpenAI completes deal that values company at $157B

nytimes.com

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Re: OpenAI completes deal that values company at $157B

#101

Post by petesergeant »

m3kw9 wrote: post #48
lupire wrote: post #3

Does OpenAI have a moat?

In fact they do, it’s called servers, GPUs, scale. You need them to train new models and to serve them. They also have speed and in AI speed is a non traditional moat. They got crazy connections too because of Sam. All of that together becomes a moat that someone just can’t do a “Facebook clone” on OpenAI

I’m building several commercial projects with LLMs at the moment. 4o mini has been sufficient, and is also super cheap. I don’t need better reasoning at this point, I just need commodification, and so I’ll be using it for each product right up to the point that it gets cheaper to move up the hosting chain a little with Llama, at which point I won’t be giving any money to them.

They’ve built a great product, the price is good, but it’s entirely unclear to me that they’re continue to offer special sauce here compared to the competition.

Re: OpenAI completes deal that values company at $157B

#102

Post by flunhat »

xvector wrote: post #97
benterix wrote: post #64

Earlier quoted context omitted.

There are so many things wrong in this statement (starting with "immediately"). Let's assume they built a system they claim is AGI. Let's assume its energy consumption is smaller than that of a small country. Let's assume that we can verify it's AGI. Let's assume its intelligence is higher than average human. That's many "ifs" and I omitted quite a few. Now, the question is: would you trust it? As a human, a manager,…

If anyone in the thread has used o1 or the real-time voice tools, it's pretty clear AGI is here already, so we are really talking about ASI. You have no option but to trust an ASI as it is all-powerful by definition. If you don't trust ASI, your only option is to prevent it from existing to begin with. Edit: please note that AGI ≠ "human intelligence," just a general intelligence (that may exceed humans in some areas…

> please note that AGI ≠ "human intelligence," just a general intelligence (that may exceed humans in some areas and fall behind in others.)

By this definition a calculator would be an AGI. (Behold -- a man!)

Re: OpenAI completes deal that values company at $157B

#103

Post by petesergeant »

moralestapia wrote: post #41
lupire wrote: post #3

Does OpenAI have a moat?

It does. "ChatGPT", GPT, "OpenAI", etc... are strong brands associated with it. Edit: You can downvote me all you want, I have plenty of karma to spare. This is OpenAI's strongest moat, whether people like it or not.

Nobody cares, though, really. My experience is that clients are only passingly interested in what LLM powers the projects they need and entirely interested in the deployed cost and how well the end product works.

Re: OpenAI completes deal that values company at $157B

#104

Post by padjo »

_1 wrote: post #69
kredd wrote: post #67

Earlier quoted context omitted.

For every Theranos and WeWork, there’s Uber, Coinbase, AirBnb. I know they didn’t raise as much as OpenAI, but it wasn’t insignificant amount of money burning before they became profitable with large market caps. It’s very strange times we’re living in.

Have any of those become profitable?

Uber made a 1.1 billion profit last year.

Re: OpenAI completes deal that values company at $157B

#105

Post by paxys »

lumost wrote: post #42
cs702 wrote: post #22

Earlier quoted context omitted.

My understanding is that the company is burning $0.5+ to $1+ billion each month. I'd say that's very high risk.

That is also much lower than Uber at its peak.

Uber's spending was directly attributed to growth. They were launching in new countries, new cities, new markets every day, and that required burning through an immense amount of money. Of course that growth didn't need to last forever, and once the service was fairly established everywhere the spending stopped.

OpenAI on the other hand has to spend billions to train every new iteration of their model and still loses money on every query you make. They can't scale their way out of the problem – scaling will only make it worse. They are counting on (1) the price of GPUs to come down in the near term or (2) the development of AGI, and neither of these may realistically happen.

Re: OpenAI completes deal that values company at $157B

#106

Post by nwiswell »

paxys wrote: post #100

$6.6B raise. The company loses $5B per year. So all this money literally gives them just an extra ~year and change of runway. I know the AI hype is sky high at the moment (hence the crazy valuation), but if they don't make the numbers make sense soon then I don't see things ending well for OpenAI. Another interesting part: > Under the terms of the new investment round, OpenAI has two years to transform into a for-pro…

> if they don't make the numbers make sense soon then I don't see things ending well for OpenAI.

This is pretty much obvious just from the valuations.

The wild bull case where they invent a revolutionary superintelligence would clearly value them in the trillions, so the fact that they're presently valued an order of magnitude less implies that it is viewed as an unlikely scenario (and reasonably so, in my opinion).

Re: OpenAI completes deal that values company at $157B

#107

Post by changing1999 »

mattmaroon wrote: post #80
cs702 wrote: post #4

Given the high risk, investors likely want a shot of earning at least a 10x return. $157 billion x 10 = $1.57 trillion, greater than META's current market capitalization. Greater returns would require even more aggressive assumptions. For example, a 30x return would require OpenAI to become the world's most valuable company by a large margin. All I can say to the investors, with the best of hopes, is: Good luck! You'…

If they accomplish AGI first, they will be the world’s most valuable company, by far. If they fall short of AGI there are still many ways a more limited but still quite useful AI might make them worth far more than Meta. I don’t know how to handicap the odds of them doing either of these at all, but they would seem to have the best chance at it of anyone right now.

Aren't they proving the opposite of your proposed alternative already? A limited AI is not making them money and since every new model becomes obsolete within a year, they can't just stop and enjoy the benefits of the current model.

Re: OpenAI completes deal that values company at $157B

#108

Post by itsoktocry »

paxys wrote: post #100

$6.6B raise. The company loses $5B per year. So all this money literally gives them just an extra ~year and change of runway. I know the AI hype is sky high at the moment (hence the crazy valuation), but if they don't make the numbers make sense soon then I don't see things ending well for OpenAI. Another interesting part: > Under the terms of the new investment round, OpenAI has two years to transform into a for-pro…

>I don't see things ending well for OpenAI.

I mean, what exactly do you see happening? The have a product people love and practically incalculable upside potential. They may or may not end up the winners, but I see no scenario in which it "doesn't end well". It's already "well", even if the company went defunct tomorrow.

>that clause with that timeline seems a bit risky.

I'm 99% certain that OpenAI drove the terms of this investment round, they weren't out there hat in hand begging. Debt is just another way to finance a company, cant really say it's better or worse.

Re: OpenAI completes deal that values company at $157B

#109

Post by paxys »

fullstackchris wrote: post #62
janandonly wrote: post #5

ChatGPT is valued $157BN? What discount rate do you use on a cash burning non-profit?

Ask the same to Tesla which has a 700B+ valuation, earlier over 1T. Like it or not, company valuations are about stories, not facts.

Tesla made $12.4B in profit last year. You can argue that the company is overvalued, sure, but there's no case to be made that it isn't a very viable and successful business. OpenAI meanwhile is banking on the fact that it will invent AGI soon and the AGI will figure out how to stop losing money on every query.

Re: OpenAI completes deal that values company at $157B

#110

Post by BarryMilo »

benterix wrote: post #64
hn_throwaway_99 wrote: post #46

Earlier quoted context omitted.

The funny thing about that statement is that if it actually does become true, all of those VCs (and Altman himself), whose job is ostensibly to find the optimal uses for capital, would immediately become obsolete. Heck, the whole idea that capitalism could just continue along in its current form if true AGI existed is pretty laughable.

There are so many things wrong in this statement (starting with "immediately"). Let's assume they built a system they claim is AGI. Let's assume its energy consumption is smaller than that of a small country. Let's assume that we can verify it's AGI. Let's assume its intelligence is higher than average human. That's many "ifs" and I omitted quite a few. Now, the question is: would you trust it? As a human, a manager,…

Would you settle for a few days of testing in perfect conditions? Just kidding, companies don't care!
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