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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

#161

Post by azinman2 »

hintymad wrote: post #154
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 thei…

Given their scale and direct investments from Microsoft, what makes you think this is any cheaper? They’ll be getting stuff at or near cost from azure, and Azure already exists and with huge scale to amortize all of the investments across more than just OpenAI, including volume discounts (and preference) from nvidia.

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

#162

Post by the_real_cher »

hintymad wrote: post #154
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 thei…

Are there enough gpus available at the scale that they need them?

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

#163

Post by lxgr »

JamesBarney wrote: post #132
lxgr wrote: post #98

Earlier quoted context omitted.

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…

> I wouldn't even be surprised if they were losing money on paying ChatGPT users on inference compute alone I'd be surprised it that was the case. How many tokens is the average user going through? I'd be surprised if the avg user even hit a 1m tokens much less 20m.

With o1? A lot.

Even for regular old 4o: You’re comparing to their API rates here, which might or might not cover their compute cost.

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

#164

Post by dartos »

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.

The hardware required is the same, just in different amounts.

It’s less (gross) expensive for inference, since it takes less time, but the cost of that time (per second) is the same as training.

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

#165

Post by brotchie »

lupire wrote: post #3

Does OpenAI have a moat?

No.

The race is, can OpenAI innovate on product fast enough to get folks to switch their muscle memory workflows to something new?

It doesn't matter how good the model is, if folks aren't habituated to using it.

At the moment, my muscle memory to go to Claude, since it seems to do better at answering engineering questions.

The competition really is between FAANG and OpenAI, can OpenAI accumulate users faster than Apple, Google, Meta, etc layer in AI-based features onto their existing distribution surfaces.

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

#166

Post by 0cf8612b2e1e »

philipkglass wrote: post #135
0cf8612b2e1e wrote: post #60

Earlier quoted context omitted.

In the Star Trek/Culture/Commonwealth equally distributed, benevolent AI, sure. In the I’ve-got-mine reality, I assume only the select few can speak with the AI and use it to control the serfs.

There's no future where OpenAI makes everyone else a "serf" though. In 1948 certain Americans imagined that the US could rule the Earth because it got the atomic bomb first, and they naively imagined that other countries would take a generation to catch up. In reality the USSR had its own atomic bomb by 1949. That's what the competition with OpenAI looks like to me. There are at least three other American companies w…

I am not thinking some better LLM, but a genuine AI capable of original thought. Vastly superior capabilities to a human. A super intelligence which could silently sabotage competitor systems preventing the key breakthrough to make their own AI. One which could manipulate markets, hack every system, design Terminator robots, etc

Fanciful, yes, but that is the AI fantasy.

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

#167

Post by danpalmer »

m3kw9 wrote: post #48
lupire wrote: post #3

Does OpenAI have a moat?

In fact they do, it’s called servers, GPUs, scale. You need them to train new models and to serve them. They also have speed and in AI speed is a non traditional moat. They got crazy connections too because of Sam. All of that together becomes a moat that someone just can’t do a “Facebook clone” on OpenAI

OpenAI is dependent on Microsoft for GPUs, who are in turn dependent on Nvidia for GPUs. It’s nearly the least moat-y version of this out there.

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

#168

Post by KoolKat23 »

asukumar wrote: post #131
throwup238 wrote: post #14

> The new fund-raising round, led by the investment firm Thrive Capital, values OpenAI at $157 billion, according to two people with knowledge of the deal. Microsoft, the chipmaker Nvidia, the tech conglomerate SoftBank, the United Arab Emirates investment firm MGX and others are also putting money into OpenAI. Yeah, that bodes well. Led by Jared Kushner's brother's VC firm with the UAE's sovereign wealth fund and So…

Thrive is one of the 10 most respected firms in venture capital. They work super hard and have a track record to prove it. Nobody who knows what they’re talking about would consider them dumb money. https://www.newcomer.co/p/sequoia-founders-fund-usv-elad-gil

Softbank is the one I'd worry about

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

#170

Post by hintymad »

azinman2 wrote: post #161
hintymad wrote: post #154

Earlier quoted context omitted.

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 thei…

Given their scale and direct investments from Microsoft, what makes you think this is any cheaper? They’ll be getting stuff at or near cost from azure, and Azure already exists and with huge scale to amortize all of the investments across more than just OpenAI, including volume discounts (and preference) from nvidia.

I assumed that Microsoft gave them discount and credits as investment, but the cost by itself is like any other big customer can get.
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