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How OpenAI uses complex and circular deals to fuel its multibillion-dollar rise
121–130 of 428 posts
Re: How OpenAI uses complex and circular deals to fuel its multibillion-dollar rise
#122Earlier quoted context omitted.
There’s one key difference in my opinion: pre-.com deals were buying revenue with equity and nothing else. It was growth for growth’s sake. All that scale delivered mostly nothing. OpenAI applies the same strategy, but they’re using their equity to buy compute that is critical to improving their core technology. It’s circular, but more like a flywheel and less like a merry-go-round. I have some faith it could go anot…
I think that, at best, that description boils down to Nvidia, Oracle, etc inventing fake wealth to build something and OpenAI building their own fake wealth by getting to use that new compute effectively for free. There are physical products involved, but the situation otherwise feels very similar to ads prior to dotcom.
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.
Re: How OpenAI uses complex and circular deals to fuel its multibillion-dollar rise
#123Earlier quoted context omitted.
Yup. Not just Nvidia. Just look at the quarterly results reported by Amazon, Google, Meta, Microsoft and Apple. Each one is reporting revenues never before seen in history. If you make 100 Billion a quarter you have to spend it on something. These guys are running hyper optimized cash extraction mega machines. There is no comparison to previous bubbles, cause so no such companies ever existed in the past.
Odd how they are simultaneously having large layoffs even as reporting record revenues. The question is where the profits are.
The layoffs at Amazon and Microsoft are not due to lack of profits. They’re massively profitable right now.
https://www.macrotrends.net/stocks/charts/MSFT/microsoft/ebi...
https://www.macrotrends.net/stocks/charts/AMZN/amazon/ebitda
Re: How OpenAI uses complex and circular deals to fuel its multibillion-dollar rise
#124Given 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.
Why is ML knowledge "in the engineers" while chip manufacturing apparently sits in the company/hardware/something else than the engineers/humans?
Chip designs have strong IP protections.
AI models do not. Sure you can't just copy the exact floating point values without permission. But with enough capital you can train a model just as good, as the training and inference techniques are well known.
Re: How OpenAI uses complex and circular deals to fuel its multibillion-dollar rise
#125This 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…
Sometimes additional context can take the same action that looks harmless in a vacuum and turn it into a bad idea or even a crime!
Then it would be great to have that context that shows criminality. Because that's an extraordinary claim you're suggesting, which is going to require actual evidence.
As for "bad ideas", businesses make tons of decisions every day that turn out to be good or bad in hindsight. So again, more specifics are needed here.
So what exactly are you suggesting? What context do you think the NYT chose to omit, and why would they omit it if it was meaningful?
Re: How OpenAI uses complex and circular deals to fuel its multibillion-dollar rise
#126These kinds of deals were very much a la mode just prior to the .com crash. Companies would buy advertising, then the websites and ad agencies would buy their services and they'd spend it again on advertising. The end result is immense revenues without profits.
There’s one key difference in my opinion: pre-.com deals were buying revenue with equity and nothing else. It was growth for growth’s sake. All that scale delivered mostly nothing. OpenAI applies the same strategy, but they’re using their equity to buy compute that is critical to improving their core technology. It’s circular, but more like a flywheel and less like a merry-go-round. I have some faith it could go anot…
Yes, this time is different, trust big bro sama.
Re: How OpenAI uses complex and circular deals to fuel its multibillion-dollar rise
#127Earlier quoted context omitted.
Your conclusion about training being the cost factor that will eventually align with profitability in the inference phases relies on training new models not being an endless arms race.
If the inference is profitable and training new models is actually an endless arms race that's actually the best outcome for nvidia specifically.
Only in the short term.
Re: How OpenAI uses complex and circular deals to fuel its multibillion-dollar rise
#128These kinds of deals were very much a la mode just prior to the .com crash. Companies would buy advertising, then the websites and ad agencies would buy their services and they'd spend it again on advertising. The end result is immense revenues without profits.
There’s one key difference in my opinion: pre-.com deals were buying revenue with equity and nothing else. It was growth for growth’s sake. All that scale delivered mostly nothing. OpenAI applies the same strategy, but they’re using their equity to buy compute that is critical to improving their core technology. It’s circular, but more like a flywheel and less like a merry-go-round. I have some faith it could go anot…
[deleted]
Re: How OpenAI uses complex and circular deals to fuel its multibillion-dollar rise
#129These kinds of deals were very much a la mode just prior to the .com crash. Companies would buy advertising, then the websites and ad agencies would buy their services and they'd spend it again on advertising. The end result is immense revenues without profits.
There’s one key difference in my opinion: pre-.com deals were buying revenue with equity and nothing else. It was growth for growth’s sake. All that scale delivered mostly nothing. OpenAI applies the same strategy, but they’re using their equity to buy compute that is critical to improving their core technology. It’s circular, but more like a flywheel and less like a merry-go-round. I have some faith it could go anot…
> critical to improving their core technology
It is at the very least highly debatable how much their core technology is improving from generation to generation despite the ballooning costs.
Re: How OpenAI uses complex and circular deals to fuel its multibillion-dollar rise
#130Earlier quoted context omitted.
First-order: because of the capex and lead times. If you grab a bunch of world-class ML folks and put them in a room together, they're going to be able to start producing world-class work together. If you grab a bunch of world-class chip designers in the same scenario but don't have world-class fabs for them to use, they're not going to be able to ship competitive designs.
> If you grab a bunch of world-class chip designers in the same scenario but don't have world-class fabs for them to use, they're not going to be able to ship competitive designs. But why such an unfair comparison? Instead of comparing "skilled people with hardware VS skilled people without hardware", why not compare it to "a bunch of world-class ML folks" without any computers to do the work, how could they produce…
Much easier and cheaper to source computers than a fab.