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OpenAI raises $110B on $730B pre-money valuation

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Re: OpenAI raises $110B on $730B pre-money valuation

#271

Post by coliveira »

nelsonic wrote: post #253
bandrami wrote: post #233

Earlier quoted context omitted.

It's not "continue" buying as much as this is NVIDIA fronting the money for (most of) the hardware OpenAI has already ordered from them. It's like borrowing rent money from your drug dealer.

Great analogy. ;-) Doubt Jensen sees himself as a “dealer” but considering the vendor lock-in and margins, he pretty much is the Tony Montana of Ai Chips. It’s nuts that this type of financing is legal.

It's like credit cards loaning money to people who are unemployed and will default on payments. It's a risky business that is legal and can be very profitable, but may also be disastrous in the future.

Re: OpenAI raises $110B on $730B pre-money valuation

#273

Post by coliveira »

ChadNauseam wrote: post #220
_fat_santa wrote: post #95

IMO this looks largely like another circular investment. Amazon's investment is tied to OpenAI using AWS for their Frontier product and I assume Nvidia's conditions are that OpenAI continue buying hardware from them. Then there's SoftBank though given that those are the same guys that invested heavily in WeWork, I assume this is just very brash bullishness on their part. From my perspective, I hope that OpenAI surviv…

> On the one hand you can look at these companies investing and take it as a signal that there is something there (in OpenAI) that's worth investing in. On the other hand all these companies that are investing are basically getting that investment back through spending commitments and such and are just using OpenAI as a proxy for what is essentially buying more revenue for themselves. I don't understand how this is s…

The reason this doesn't make sense is that this is the math of monopoly creation! The government should be making sure companies don't go around throwing money at circular deals that will make them and their friends a fortune while cornering the market, but it seems that capitalism rules don't exist anymore in the US.

Re: OpenAI raises $110B on $730B pre-money valuation

#274

Post by johnbarron »

_fat_santa wrote: post #95

IMO this looks largely like another circular investment. Amazon's investment is tied to OpenAI using AWS for their Frontier product and I assume Nvidia's conditions are that OpenAI continue buying hardware from them. Then there's SoftBank though given that those are the same guys that invested heavily in WeWork, I assume this is just very brash bullishness on their part. From my perspective, I hope that OpenAI surviv…

Nvidia sells the picks, AWS rents the mine, OpenAI digs, and the money just loops around the table...

Re: OpenAI raises $110B on $730B pre-money valuation

#275

Post by hn_acc1 »

Dumblydorr wrote: post #247
advael wrote: post #124

Earlier quoted context omitted.

Those are the same thing. The whole point of saying "too big to fail" is to evoke the moment in the housing crash where governments largely threw most of their citizens under the bus by bailing out banks rather than homeowners for the banks' wildly irresponsible decisions. "Too big to fail" means the government steps in and bails you out, and that phrase became popular because for many it was the final nail in the co…

Would the current administration bail out OpenAI?

They would give OpenAI anything they want if they proclaim the current guy the bestest and biggliest president of all time, ever. (edit: I meant, if chatgpt were to consistently claim that the current guy is the greatest president ever)

Re: OpenAI raises $110B on $730B pre-money valuation

#276

Post by overfeed »

ChadNauseam wrote: post #220
_fat_santa wrote: post #95

IMO this looks largely like another circular investment. Amazon's investment is tied to OpenAI using AWS for their Frontier product and I assume Nvidia's conditions are that OpenAI continue buying hardware from them. Then there's SoftBank though given that those are the same guys that invested heavily in WeWork, I assume this is just very brash bullishness on their part. From my perspective, I hope that OpenAI surviv…

> On the one hand you can look at these companies investing and take it as a signal that there is something there (in OpenAI) that's worth investing in. On the other hand all these companies that are investing are basically getting that investment back through spending commitments and such and are just using OpenAI as a proxy for what is essentially buying more revenue for themselves. I don't understand how this is s…

> Isn't that basically the same as me giving you $80?

In your accounting, you can claim that you have an investment worth $100 and book $100 worth of revenue. You're juicing your sales numbers to impress shareholders - presumably, without your $100, the investee wouldn't have bought $100 worth of your product. The last thing your shareholders want to see are your sales numbers stop growing, or heaven forbid, start shrinking.

Nvidia is not the first company to "buy" sales of its own product via simple or convoluted incentive schemes. The scheme will work for a while until it doesn't.

Re: OpenAI raises $110B on $730B pre-money valuation

#277

Post by lotsofpulp »

Aperocky wrote: post #263
nelsonic wrote: post #253

Earlier quoted context omitted.

Great analogy. ;-) Doubt Jensen sees himself as a “dealer” but considering the vendor lock-in and margins, he pretty much is the Tony Montana of Ai Chips. It’s nuts that this type of financing is legal.

It is legal because Jensen isn't selling drugs, payday loans are legal too!

It’s legal because both sides have armies of lawyers and are voluntarily entering into contracts where each party gets consideration.

How someone can compare the above situation to a person getting a payday loan to put a roof over their head or food on their plate is beyond me.

The “it’s like ” is a tired trope.

Re: OpenAI raises $110B on $730B pre-money valuation

#279

Post by bjt »

asadotzler wrote: post #224
limagnolia wrote: post #206

Earlier quoted context omitted.

What source do you have the Gemini is profitable? Are you referring only to the chat app, or to Google'a AI Ventures division? Or including Google Cloud AI related revenue?

Not agreeing with the parent, but that hardly matters. Google has a real business, advertising, that brings in $400 billion a year and income around $150B. They can afford to throw away tens of billions every year while still remaining immensely profitable and quite solid as a business. OpenAI has no such income to spend so it's as the above comments reflect, entirely unsustainable while Google's spending on AI is a…

That's not saying that Gemini is profitable though.

Re: OpenAI raises $110B on $730B pre-money valuation

#280

Post by dangus »

max51 wrote: post #242
_fat_santa wrote: post #95

IMO this looks largely like another circular investment. Amazon's investment is tied to OpenAI using AWS for their Frontier product and I assume Nvidia's conditions are that OpenAI continue buying hardware from them. Then there's SoftBank though given that those are the same guys that invested heavily in WeWork, I assume this is just very brash bullishness on their part. From my perspective, I hope that OpenAI surviv…

The "circular investment" is mostly start up companies using their stocks instead of cash to pay for server hardware and cloud computing. There is a few extra steps in between that make things look weird and convoluted, but the end results is really just big companies giving hardware and getting shares of ai companies in exchange for it.

I think you’re just describing how it’s circular.

It’s like Toys R Us not having enough money to pay Mattel for Barbie dolls and telling Mattel they can have partial ownership of the company if they just supply them with some more toys.

But the problem is that Toys R Us is spending $15, 20, or maybe even $50 (who knows?) to sell a $10 toy.

Toys R Us continues selling toys faster and faster despite a lack of profit, making Mattel even more dependent on Toys R Us as a customer. It blows up the bubble where a more natural course of action would be for Toys R Us to go bankrupt or scale back ambitions earlier.

Because it’s circular like this, it lends toward bigger crashing and burning. If OpenAI fails, all these investors that are deeply integrated into their supply chains lose both their investment and customer.

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