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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

#151

Post by zeusk »

s1artibartfast wrote: post #129
itsoktocry wrote: post #108

Earlier quoted context omitted.

> 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 someho…

> 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.

If that were the case, I wonder why Apple passed on this investment.

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

#152

Post by beAbU »

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,…

/All Gifts, Bestowed/ by Gayou is a great read that explores this topic.

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

#153

Post by rightbyte »

TZubiri wrote: post #127
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

Neither had Zuckerberg giving free hikes and movies to people.

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

#154

Post by hintymad »

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…

Most of the loss comes from hefty cost of inference, right? OAI runs on Azure, so everything is expensive at their scale: the data, the compute, and GPU instances, and storage, and etc.

I'd venture to guess that they will start building their own data centers with their own inference infra to cut the cost by potentially 75% -- i.e., the gross markup of a public cloud service. Given their cost structure, building their own infra seems cheap.

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

#155

Post by signatoremo »

paxys wrote: post #122
itsoktocry wrote: post #108

Earlier quoted context omitted.

> 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…

> 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

You can say exactly the same about Google and Bing (or any other search engines), yet Google search is still dominant. Execution, market perception, brand recognition, momentum are also important factors, not to mention talent and funding.

Not everyone who wants to invest, can invest in this round. You may bet the investors are wrong, but they put money where their mouth is. Microsoft participate, even though they already invested $13b.

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

#156

Post by rightbyte »

lukev wrote: post #136
semanticist wrote: post #120

Earlier quoted context omitted.

I don't think it really matters how much people love their product if every person using it costs them money. I'm sure people would love a company that sold US$10 bills for 25c, but it's not exactly a sustainable venture. Will people love ChatGPT et al just as much if OpenAI have to charge what it costs them to buy and run all the GPUs? Maybe, but it's absolutely not certain. If they "went defunct" tomorrow then the…

Model training is what costs so much. I would expect OpenAI makes a profit on inference services.

Running models locally brings my beefy rig to the knees for about half a minute for each querry for smaller models. Answering querries has to be expensive too?

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

#158

Post by tptacek »

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).

You don't need science fiction to find the bull case for OpenAI. You just have to think it stands to be the "next" Google, which feels increasingly plausible. Google's current market capitalization is in the trillions.

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

#159

Post by KoolKat23 »

ToValueFunfetti wrote: post #144
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

They made 300 million revenue last month, apparently up 17x from last year[1]. To get a P/E ratio of 20, assuming (falsely) that their spending holds constant, they'd need ~4x more revenue [1] https://www.nbcnews.com/business/business-news/openai-closes...

For a P/E ratio of 20 they'd need to generate earnings (not revenue) of $7.85 billion, earnings are revenue less all costs.

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

#160

Post by jiggawatts »

stoperaticless wrote: post #140
jiggawatts wrote: post #92

Earlier quoted context omitted.

The problem with all such criticisms is that there is an implicit assumption that humans can be trusted.

I know human limitations. I don’t know AGI limtations. Most humans can not lie all the time. Their true intentions do come out from time to time. AGI might not have that problem - AGI might hide its true intentions for hundreds of years.

Have you… met humans?
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