OpenAI completes deal that values company at $157B • Hacker News Board

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

#121

Post by [deleted] » Wed, Oct 02, 2024, 9:39 PM UTC

xvector wrote: post #116

flunhat wrote: post #102

Earlier quoted context omitted.

> 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!)

Meh, what I've seen is that we continually move the goalposts for AGI, and even GTP-3.5 would have been considered AGI by our standards from just 5 years ago. But if I can't convince you, maybe Norvig can: https://www.noemamag.com/artificial-general-intelligence-is-...

[deleted]

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

#122

Post by paxys » Wed, Oct 02, 2024, 9:40 PM UTC

itsoktocry wrote: post #108

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…

> The have a product people love and practically incalculable upside potential

I'm willing to bet that if you swapped out GPT with Claude, Gemini or Llama under the hood 95% of their users wouldn't even notice. LLMs are fast becoming a commodity. The differentiating factor is simply how many latest NVIDIA GPUs the company owns.

And even otherwise, people loving a product isn't what makes a company successful. People loved WeWork as well. Ultimately what matters is the quarterly financial statement. OpenAI is burning an incredible amount of money on training newer models and serving every query, and that's not changing anytime soon.

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

#123

Post by changing1999 » Wed, Oct 02, 2024, 9:40 PM UTC

bryanlarsen wrote: post #63

Workaccount2 wrote: post #21

Earlier quoted context omitted.

>You'll need it! If they can IPO, they will easily hit a $1.5T valuation. All Altman would have to do is follow what Elon did with Tesla. Lots of massive promises marinated in trending hype that tickles the hearts of dumb money. No need to deliver, just keep promising. He is already doing it.

If OpenAI hits $100B in revenue, $15B in profit with a 50% CAGR they will likely be worth even more than Tesla was at those numbers. Tesla has really dropped off on its 50% CAGR number so now it is worth half that.

It took around 20 years for Amazon to get to $15B profit, and over 10 years for Meta/FB. Both had very clear paths to profit: sales and ads. OpenAI did not yet demonstrate how they will be able to consistently monetize their models. And if you consider how quickly similar quality free models are released today, it's definitely raising questions.

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

#124

Post by qeternity » Wed, Oct 02, 2024, 9:41 PM UTC

deisteve wrote: post #44

$157B marketcap means they need to 20x their current revenue of roughly 400 million dollars by next year... But the revenue has flatlined and you can't raise your existing users cost by 20x... It truly is a mystery as to how anybody throwing other peoples money hopes to get it back from OpenAI

I'm not justifying anything here but I think their revenues are expected to triple next year...now that doesn't mean they will of course. But why do you say they've flatlined?

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

#125

Post by Retric » Wed, Oct 02, 2024, 9:41 PM UTC

lxgr wrote: post #98

giarc wrote: post #79

Earlier quoted context omitted.

How old is that though? They seem to be making revenue pretty well now, so I suspect this might be quite old?

Revenue isn't profit. They're burning money at an impressive rate: https://www.nytimes.com/2024/09/27/technology/openai-chatgpt... I wouldn't even be surprised if they were losing money on paying ChatGPT users on inference compute alone, and that isn't even factoring in the development of new models. There was an interesting article here (can't find the link unfortunately) that was arguing that model training costs s…

Training costs scale to infinite users making them a perfect moat even if they need to keep updating it. Success would be 10-100x current users at which point training costs at the current scale just don’t matter.

Really their biggest risk is total compute costs falling too quickly or poor management.

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

#126

Post by bpodgursky » Wed, Oct 02, 2024, 9:43 PM UTC

nwiswell wrote: post #106

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).

It actually represents the scenario where they invent a revolutionary superintelligence that doesn't kill the VCs investing in the firm, and allows them enough control to take profit. In the top range ASI capacity outcomes, the sand god does not return trillions to the VCs.

This actually represents only the narrow "aligned" range of AI outcomes, so it makes sense it's a small one.

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

#127

Post by TZubiri » Wed, Oct 02, 2024, 9:43 PM UTC

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…

Same thing was said of Netflix, of Uber, etc...

Venture capital loses money to win marketshare, tale as old as time

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

#128

Post by tboyd47 » Wed, Oct 02, 2024, 9:44 PM UTC

nwiswell wrote: post #106

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).

That assumes that the revolutionary superintelligence is willing to give away its economic value by the trillions. (Revolutionary superintelligences are known to be supergenerous too)

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

#129

Post by s1artibartfast » Wed, Oct 02, 2024, 9:47 PM UTC

itsoktocry wrote: post #108

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…

I seems like not ending well is the vast majority of outcomes. They dont have a profitable product or business today.

It seems that me most likely outcome is that they have one replaceable product against many and few options to get return commensurate with valuation.

My guess is that investors are are making a calculated bet. 90% chance the company become irrelevant, 10% chance it has a major breakthrough and somehow throws up a moat to prevent everyone else from doing the same.

That said, I have no clue what confidential information they are showing to investors. For all we know, they are being shown super human intelligence behind closed doors.

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

#130

Post by seanhunter » Wed, Oct 02, 2024, 9:48 PM UTC

bpodgursky wrote: post #126

nwiswell wrote: post #106

Earlier quoted context omitted.

> 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).

It actually represents the scenario where they invent a revolutionary superintelligence that doesn't kill the VCs investing in the firm, and allows them enough control to take profit. In the top range ASI capacity outcomes, the sand god does not return trillions to the VCs. This actually represents only the narrow "aligned" range of AI outcomes, so it makes sense it's a small one.

Judging by the ones I have met, the VCs probably believe that any kind of superintelligence would by definition be something that would like them and be like them. If it wasn’t on their side they would take it as incontrovertible proof that it wasn’t a superintelligence.