201–210 of 443 posts
$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…
Someone has to pay for the hardware and electricity.
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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.
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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
Someone certainly can "Facebook clone" OpenAI. Google, Meta and Apple all are more well capitalized than OpenAI, operate at a larger scale and are actively training and publishing their own models.
Given the high risk, investors likely want a shot of earning at least a 10x return. $157 billion x 10 = $1.57 trillion, greater than META's current market capitalization. Greater returns would require even more aggressive assumptions. For example, a 30x return would require OpenAI to become the world's most valuable company by a large margin. All I can say to the investors, with the best of hopes, is: Good luck! You'…
This is a company at a $4 bill annual run rate. In times gone by this would be a public company already. It's just an investment in a company with almost 2000 employees, revenue, products, brand etc. It's not an early stage VC investment, they aren't looking for a 10x. The legal and compliance regime + depth of private capital + fear of reported vol in the US has made private investing the new public investing.
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Facebook got all the way to an IPO with business fundamentals so bad that after the IPO, Paul Graham wrote a letter to all the then-current YC companies warning them that the Facebook stink was going to foul the whole VC market in the following years. Meta is now worth something like 1.4T.
Facebook made it out by committing click fraud against advertisers on a massive scale, which I don't see as a viable path for sama (even ignoring any legal concerns) considering that openAI isn't a platform company.
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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.
You're kind of selling investing in Google instead, given that they're one of OpenAI's competitors.
$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…
> 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…