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OpenAI is too cheap to beat

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Re: OpenAI is too cheap to beat

#121

Post by kcorbitt »

Eh, OpenAI is too cheap to beat at their own game.

But there are a ton of use-cases where a 1 to 7B parameter fine-tuned model will be faster, cheaper and easier to deploy than a prompted or fine-tuned GPT-3.5-sized model.

In fact, it might be a strong statement but I'd argue that most current use-cases for (non-fine-tuned) GPT-3.5 fit in that bucket.

(Disclaimer: currently building https://openpipe.ai; making it trivial for product engineers to replace OpenAI prompts with their own fine-tuned models.)

Re: OpenAI is too cheap to beat

#122

Post by spacebanana7 »

jaredklewis wrote: post #116
Bukhmanizer wrote: post #103

Earlier quoted context omitted.

The bleeding obvious is that OpenAI is doing what most tech companies for the last 20 years have done. Offer the product for dirt cheap to kill off competition, then extract as much value from your users as possible by either mining data or hiking the price. I don’t understand how people are surprised by this anymore. So yeah, it’s the best option right now, when the company is burning through cash, but they’re plann…

> Offer the product for dirt cheap to kill off competition, then extract as much value from your users as possible by either mining data or hiking the price. Genuine question, what are some examples of companies in that "hiking the price" camp? I can think of tons of tech companies that sold or sell stuff at a loss for growth, but struggling to find examples where the companies then are able to turn dominant market s…

The Google Maps API price hike of 2018 [1] is a relevant example.

[1] https://kobedigital.com/google-maps-api-changes

Re: OpenAI is too cheap to beat

#123

Post by beezlebroxxxxxx »

jaredklewis wrote: post #116
Bukhmanizer wrote: post #103

Earlier quoted context omitted.

The bleeding obvious is that OpenAI is doing what most tech companies for the last 20 years have done. Offer the product for dirt cheap to kill off competition, then extract as much value from your users as possible by either mining data or hiking the price. I don’t understand how people are surprised by this anymore. So yeah, it’s the best option right now, when the company is burning through cash, but they’re plann…

> Offer the product for dirt cheap to kill off competition, then extract as much value from your users as possible by either mining data or hiking the price. Genuine question, what are some examples of companies in that "hiking the price" camp? I can think of tons of tech companies that sold or sell stuff at a loss for growth, but struggling to find examples where the companies then are able to turn dominant market s…

Uber is probably the biggest pure example. When I was in uni when they first spread, Uber's entire business model was flood the market with hilariously low prices and steep discounts. People overnight started using them like crazy. They were practically giving away their product. Now, they're as expensive, if not sometimes more expensive, than any other taxi or ridesharing service in my area.

One thing I'll add is that it's not always that this ends with higher prices in an absolute sense, but that the tech company is able to essentially cut the knees out of their competitors until they're a shell of their former selves. Then when the prices go "up", they're in a way a return to the "norm", only they have a larger and dominant market share because of their crazy pricing in the early stages.

Re: OpenAI is too cheap to beat

#124

Post by mikpanko »

jaredklewis wrote: post #116
Bukhmanizer wrote: post #103

Earlier quoted context omitted.

The bleeding obvious is that OpenAI is doing what most tech companies for the last 20 years have done. Offer the product for dirt cheap to kill off competition, then extract as much value from your users as possible by either mining data or hiking the price. I don’t understand how people are surprised by this anymore. So yeah, it’s the best option right now, when the company is burning through cash, but they’re plann…

> Offer the product for dirt cheap to kill off competition, then extract as much value from your users as possible by either mining data or hiking the price. Genuine question, what are some examples of companies in that "hiking the price" camp? I can think of tons of tech companies that sold or sell stuff at a loss for growth, but struggling to find examples where the companies then are able to turn dominant market s…

- Uber/Lyft increased prices significantly (and partially transition it into longer wait times) since they got into profitability mode

- Google is showing more and more ads over time to power high revenue growth YoY

- Unity has just tried to increase its prices

Re: OpenAI is too cheap to beat

#125

Post by hendersoon »

blackoil wrote: post #119
appplication wrote: post #106

The premise of this is flawed. OpenAI is cheap because of has to be right now. They need to establish market dominance quickly, before competitors slide in. The winner of this horse race is not going to be the company with the best performing AI, it’s going to be the one who does the best job at creating an outstanding UX, ubiquitously presence, entrenching users, and building competitive moats that are not feature d…

This point is discussed in the article. Title is not for Google/Meta, they'll invest all the billions that they have to. It is for the consumers of these models, is there even a point to train your own or experiment with OSS!

Sure, open models often require much less hardware than chatGPT3.5 and offer ballpark (and constantly improving) performance and accuracy. ChatGPT3.5 scores 85 in ARC and the huggingface leaderboard is up to 77.

If you need chatGPT4-quality responses they aren't close yet, but it'll happen.

Re: OpenAI is too cheap to beat

#126

Post by monocasa »

shaburn wrote: post #118
appplication wrote: post #106

The premise of this is flawed. OpenAI is cheap because of has to be right now. They need to establish market dominance quickly, before competitors slide in. The winner of this horse race is not going to be the company with the best performing AI, it’s going to be the one who does the best job at creating an outstanding UX, ubiquitously presence, entrenching users, and building competitive moats that are not feature d…

Your Uber/AirBnB/Wework all have physical base units with ascending costs due to inflation and theoretical economies of scale. AI models have some GPU constraints but could easily reach a state where the cost to opperate falls and becomes relatively trivial with almost no lowerbound, for most use cases. You are correct there is a race for marketshare. The crux in this case will be keeping it. Easy come, easy go. Mode…

Probably why Altman has been talking so much about how dangerous it is and how regulations are needed. No natural moat, so building a regulatory one.

Re: OpenAI is too cheap to beat

#127

Post by dboreham »

jaredklewis wrote: post #116
Bukhmanizer wrote: post #103

Earlier quoted context omitted.

The bleeding obvious is that OpenAI is doing what most tech companies for the last 20 years have done. Offer the product for dirt cheap to kill off competition, then extract as much value from your users as possible by either mining data or hiking the price. I don’t understand how people are surprised by this anymore. So yeah, it’s the best option right now, when the company is burning through cash, but they’re plann…

> Offer the product for dirt cheap to kill off competition, then extract as much value from your users as possible by either mining data or hiking the price. Genuine question, what are some examples of companies in that "hiking the price" camp? I can think of tons of tech companies that sold or sell stuff at a loss for growth, but struggling to find examples where the companies then are able to turn dominant market s…

VMWare, Docker.

Re: OpenAI is too cheap to beat

#128

Post by nine_k »

kevlened wrote: post #108
nine_k wrote: post #64

Earlier quoted context omitted.

One small caveat: OpenAI gets to see all your prompts, and all the responses. Sometimes this can be unacceptable. Law,, medicine, finance, all of them would prefer a self-hosted, private GPT.

Their data retention policy on their APIs is 30 days, and it's not used for training [0]. In addition, qualifying use cases (likely the ones you mentioned) qualify for zero data retention for most endpoints. [0] - https://platform.openai.com/docs/models/how-we-use-your-data

In sensitive cases you do not think about the normal policy, you think about the worst case. You just can't afford a leak. Your local installation may be much better protected than a public service, by technology and by policy.

Re: OpenAI is too cheap to beat

#129

Post by zarzavat »

Bukhmanizer wrote: post #103
serjester wrote: post #55

I think this is under appreciated. I run a "talk-to-your-files" website with 5ish K MRR and a pretty generous free tier. My OpenAI costs have not exceeded $200 / mo. People talk about using smaller, cheaper models but unless you have strong data security requirements you're burdening yourself with serious maintenance work and using objectively worse models to save pennies. This doesn't even consider OpenAI continuous…

The bleeding obvious is that OpenAI is doing what most tech companies for the last 20 years have done. Offer the product for dirt cheap to kill off competition, then extract as much value from your users as possible by either mining data or hiking the price. I don’t understand how people are surprised by this anymore. So yeah, it’s the best option right now, when the company is burning through cash, but they’re plann…

OpenAI doesn’t own transformers, they didn’t even invent them. They just have the best one at this particular time. They have no moat.

At some point, someone else will make a competitive model, if it’s Facebook then it might even be open source, and the industry will see price competition downwards.

Re: OpenAI is too cheap to beat

#130

Post by robertlagrant »

tmpz22 wrote: post #74
SkyMarshal wrote: post #15

I think OpenAI may eventually have to go upmarket, as basic "good enough" AI becomes increasingly viable and cheap/free on consumer level devices, supplied by FOSS models and apps. Apple may be leading the way here, with Apple Silicon prioritizing AI processing and built into all their devices. These capabilities are free (or at least don't require an extra sub), and just used to sell more hardware. OpenAI is clearly…

> I think OpenAI may eventually have to go upmarket Let me introduce you to the VC business model. Get comical amounts of money. Charge peanuts for an initial product. Build a moat once you trap enough businesses inside it. Jack up prices.

OpenAI'd better hope no one else does it too, if that's all it takes.
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