How OpenAI uses complex and circular deals to fuel its multibillion-dollar rise
151–160 of 428 posts
Re: How OpenAI uses complex and circular deals to fuel its multibillion-dollar rise
#152Earlier 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…
> they’re using their equity to buy compute that is critical to improving their core technology But we know that growth in the models is not exponential, its much closer to logarithmic. So they spend =equity to get >results. The ad spend was a merry go round, this is a flywheel where the turning grinds its gears until its a smooth burr. The math of the rising stock prices only begins to make sense if there is a possi…
OpenAI invests heavily into integration with other products. If model development stalls they just need to be not worse than other stalled models while taking advantage of brand recognition and momentum to stay ahead in other areas.
In that sense it makes sense to keep spending billions even f model development is nearing diminishing return - it forces competition to do the same and in that game victory belongs to the guy with deeper pockets.
Investors know that, too. A lot of startup business is a popularity contents - number one is more attractive for the sheer fact of being number one. If you’re a very rational investor and don’t believe in the product you still have to play this game because others are playing it, making it true. The vortex will not stop unless limited partners start pushing back.
Re: How OpenAI uses complex and circular deals to fuel its multibillion-dollar rise
#153Earlier quoted context omitted.
It's incredible how Tesla used to lose a few hundred million a year and analysis shows would freak out claiming they'd never be profitable. Now Rivian can lose 5 billion a year and I don't hear anything about it, and OpenAI can lose 11 billion in a quarter and Microsoft still backs them. I do think this is going to be a deeply profitable industry, but this feels a little like the WeWork CEO flying couches to offices…
The winner takes it all, so it is reasonable to bet big to be the one.
The one what? What is the secret sauce that will distinguish one LLM from another? Is it patentable? What's going to prevent all of the free LLMs from winning the prize? An AI crash seems inevitable.
Re: How OpenAI uses complex and circular deals to fuel its multibillion-dollar rise
#154Will Sam Altman's fall be as legendary as Sam Bankman-Fried's?
Most of the funds lost to SBF were recovered. And CPZ has a pardon. Crypto has evaporated about $2 trillion in assets since then.
I don't understand why you think it's OK to flagrantly violate financial laws for consumer protection, just because the bet got lucky?
Re: How OpenAI uses complex and circular deals to fuel its multibillion-dollar rise
#155Earlier quoted context omitted.
I remember the same argument being used before the 2008 crash. Point is that all of this companies need to start making real profits and pretty damn big ones, otherwise all of this will collapse. Problem is that unless Altman has some super-intelligent super-AI hidden in his closet, it is very unlikely that it will. And whose gonna take the bill when it falls? Let me guess… Where have I seen this before…?
That's fine, but that's a separate conversation. Maybe this is a bubble, maybe it isn't. My point is that the way it's all being financed is just regular financing. This article is trying to present the way it's being funded as novel, as "complex and circular", when it's not. This is how funding and investment works 365 days a year in all sectors. Nothing about the funding arrangements is a bubble indicator. So this…
I don’t know financial world well enough to say whether that’s here nor there, but can you give me examples from other companies or sectors where a company X funds the company Y with tens to hundreds of billions that the company Y uses to buy a service from the company X.
Furthermore, yes it might be business as usual but so is fraud and god knows what else in this particular political era. In order to strengthen your argument you have to not only show that the phenomenon is not only common, but good for the overall economy.
Re: How OpenAI uses complex and circular deals to fuel its multibillion-dollar rise
#156Earlier quoted context omitted.
It's incredible how Tesla used to lose a few hundred million a year and analysis shows would freak out claiming they'd never be profitable. Now Rivian can lose 5 billion a year and I don't hear anything about it, and OpenAI can lose 11 billion in a quarter and Microsoft still backs them. I do think this is going to be a deeply profitable industry, but this feels a little like the WeWork CEO flying couches to offices…
The winner takes it all, so it is reasonable to bet big to be the one.
Do you have any reasoning to support the notion that this market is winner takes all?
Re: How OpenAI uses complex and circular deals to fuel its multibillion-dollar rise
#157Everyone loves to compare AI with the dot com bubble. My question is, were there any policies put in place after the dot com bubble to mitigate a similar crash? Or did we learn nothing?
Re: How OpenAI uses complex and circular deals to fuel its multibillion-dollar rise
#158Earlier quoted context omitted.
It's incredible how Tesla used to lose a few hundred million a year and analysis shows would freak out claiming they'd never be profitable. Now Rivian can lose 5 billion a year and I don't hear anything about it, and OpenAI can lose 11 billion in a quarter and Microsoft still backs them. I do think this is going to be a deeply profitable industry, but this feels a little like the WeWork CEO flying couches to offices…
The winner takes it all, so it is reasonable to bet big to be the one.
Does the winner take it all?
I agree this is a reasonable bet though but for different reason, I believe this is a large scale exploitation where money is systematically siphoned away from workers and into billionaires via e.g. hedgefunds, bailouts, dividend payouts, underpay, wagetheft, etc. And the more they blow out this bubble the more money they can exploit out from workers. As such it is not really a bet, but rather the cost of business. Profits are guaranteed as long as workers are willing to work for yours.
Re: How OpenAI uses complex and circular deals to fuel its multibillion-dollar rise
#159Earlier quoted context omitted.
> There’s one key difference in my opinion The other difference (besides Sam's deal making ability) is, willing investors: Nvidia's stock rally leaves it with a LOT of room to fund big bets right now . While in Oracle's case, they probably see GenAI as a way to go big in the Enterprise Cloud business.
> Nvidia's stock rally leaves it with a LOT of room to fund big bets right now And then what happens if the stock collapses?
Hence the emphasis on right now.
Re: How OpenAI uses complex and circular deals to fuel its multibillion-dollar rise
#160Earlier quoted context omitted.
It's incredible how Tesla used to lose a few hundred million a year and analysis shows would freak out claiming they'd never be profitable. Now Rivian can lose 5 billion a year and I don't hear anything about it, and OpenAI can lose 11 billion in a quarter and Microsoft still backs them. I do think this is going to be a deeply profitable industry, but this feels a little like the WeWork CEO flying couches to offices…
The winner takes it all, so it is reasonable to bet big to be the one.
I don't really believe that, and I thought it was interesting on Meta's earnings call that Zuck (or the COO) said that it seems unlikely at this point that a single company will dominate every use of LLMs/image models, and that we should expect to see specialization going forward.