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How OpenAI uses complex and circular deals to fuel its multibillion-dollar rise

nytimes.com

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Re: How OpenAI uses complex and circular deals to fuel its multibillion-dollar rise

#311

Post by boringg »

jgalt212 wrote: post #295
boringg wrote: post #290

Earlier quoted context omitted.

Real question -- how else is OpenAI supposed to fund itself? It has capital requirements that the most moneyed business companies can't provide. So it has to come up with ways to get access to money while de-risking the terms. Not saying the circularity works but I don't know how else you raise at their scale. This money is well beyond VC capability. Either this lets them build to net positive without dying from pain…

If you can only continue to fund a venture using scam-like structures, then maybe it's time to re-evaluate what the goals and value prop of the unfundable venture is.

I don't think you understand how ventures are funded.

Re: How OpenAI uses complex and circular deals to fuel its multibillion-dollar rise

#312

Post by boringg »

cush wrote: post #306
ASinclair wrote: post #297

Earlier quoted context omitted.

They could try selling their services above cost.

It's highway robbery how cheap tokens are right now. Enjoy the free lunch while it lasts

Exactly - its like every VC company in the history of VC subsidized costs for growth. Once those tentacles have latched beware the exit costs though!

Re: How OpenAI uses complex and circular deals to fuel its multibillion-dollar rise

#313

Post by programjames »

whimsicalism wrote: post #228
skeeter2020 wrote: post #189

>> figure out how to innovate on the financial model Does it feel rather Orwellian that the original geeks now seem to be the same people who - forget about claiming technological innovation of as their own - completely discount it and apparently the important thing is now the creativity in funding an enterprise? We don't hear about the breakthroughs from the technologists, but the funding announcements from th inves…

this is all a function of the media reporting, the change in ‘nerd culture’ has been vastly overreported. these companies are staffed by spectrum-y nerds that we are being desperately propagandized into thinking are actually frat ‘bros’.

No, they aren't. Locally, the person with the most esoteric knowledge is probably a weird nerd. It's mostly an accident that they chose to invest time in things typically associated with smarts. But globally, the best wizards got there by making it their profession. So maybe at your middling university, the people who could land a job at a frontier lab were nerdy wannabe frats, but at decent universities like MIT or Tsinghua, they're usually just better in every aspect of their lives. E.g. MIT has "math olympiad fraternities" all the cool kids join.

Re: How OpenAI uses complex and circular deals to fuel its multibillion-dollar rise

#314

Post by tigershark »

pols45 wrote: post #65
vmg12 wrote: post #37

Here is a charitable perspective on what's happening: - Nvidia has too much cash because of massive profits and has nowhere to reinvest them internally. - Nvidia instead invests in other companies that use their gpus by providing them deals that must be spent on nvidia products. - This accelerates the growth of these companies, drives further lock in to nvidia's platform, and gives nvidia an equity stake in these com…

Yup. Not just Nvidia. Just look at the quarterly results reported by Amazon, Google, Meta, Microsoft and Apple. Each one is reporting revenues never before seen in history. If you make 100 Billion a quarter you have to spend it on something. These guys are running hyper optimized cash extraction mega machines. There is no comparison to previous bubbles, cause so no such companies ever existed in the past.

How much more was worth USD at the beginning of the year?

Re: How OpenAI uses complex and circular deals to fuel its multibillion-dollar rise

#315

Post by embedding-shape »

noosphr wrote: post #301
embedding-shape wrote: post #280

Earlier quoted context omitted.

> We do. > It's just that startups don't go after the frontier models but niche spaces But both of "New SOTA models every month" and "Startups don't go for SOTA" cannot be true at the same time. Either we get new SOTA models from new groups every month (not true today at least) or we don't, maybe because the labs are focusing on non-SOTA instead.

State of the art doesn't mean frontier.

I've always taken that term literally, basically "top of the top". If you're not getting the best responses from that LLM, then it's not "top of the top" anymore, regardless of size.

Then something could be "SOTA in it's class" I suppose, but personally that's less interesting and also not what the parent commentator claimed, which was basically "anyone with money can get SOTA models up and running".

Edit: Wikipedia seems to agree with me too:

> The state of the art (SOTA or SotA, sometimes cutting edge, leading edge, or bleeding edge) refers to the highest level of general development, as of a device, technique, or scientific field achieved at a particular time

I haven't heard of anyone using SOTA to not mean "at the front of the pack", but maybe people outside of ML use the word differently.

Re: How OpenAI uses complex and circular deals to fuel its multibillion-dollar rise

#316

Post by teiferer »

slashdev wrote: post #257
_heimdall wrote: post #248

Earlier quoted context omitted.

We shouldn't judge whether an indicator is stable or okay only by looking to see if its the highest historical value. PE ratios of 50 make no sense, there is no justification for such a ratio. At best we can ignore the ratio and say PE ratios are only useful in certain situations and this isn't one of them. Imagine if we applied similar logic to other potential concerns. Is a genocide of 500,000 people okay because o…

I’m not asking if it makes sense, I’m simply pointing out that by that measure this is much less extreme than 2000. As I stated, I think we’re in a bubble, so valuations won’t make much sense. If you have a better measure, share it. I trust data more than your or my feelings on the matter.

Unless you have evidence that this measure of yours is a reliable predictor of how big a bubble is, it's on par with my gut feeling.

Re: How OpenAI uses complex and circular deals to fuel its multibillion-dollar rise

#317

Post by upboundspiral »

schmidtleonard wrote: post #214
0xbadcafebee wrote: post #165

Earlier quoted context omitted.

Eventually when ChatGPT replaces Google Search, they will run ads, and so have that whole revenue stream. Still isn't enough money to buy the trillions worth of infrastructure they want, but it might be enough to keep the lights on.

That's an insightful point! Making insightful points like that one is taxing on the brain, you should consider an electolyte drink like Brawndo™ (it's got what plants crave) to keep yourself sharp! Ugh I hate it so much, but you're right, it's coming.

One thing I've been contemplating lately is that from a business perspective, when your competitors expand their revenue avenues (generally through ads) you have three options: copy them to catch up, do nothing and perish, and lobby the government for increased consumer protections.

I've started to wonder why we see so few companies do this. It's always "evil company lobbying to harm the its customers and the nation." Companies are made up of people, and for myself, if I was at a company I would be pushing to lobby on behalf of consumers to be able to keep a moral center and sleep at night. I am strongly for making money, but there are certain things I am not willing to do for it.

Targeted advertising is one of these things that I believe deserves to fully die. I have nothing against general analytics, nor gathering data about trends etc, but stalking every single person on the internet 24/7 is something people are put in jail for if they do it in person.

Re: How OpenAI uses complex and circular deals to fuel its multibillion-dollar rise

#318

Post by overfeed »

whimsicalism wrote: post #234
philipwhiuk wrote: post #48

Earlier quoted context omitted.

If they're too-important-to-fail they're too important not to be broken up or nationalised.

I’m curious if those of you calling for nationalization have worked for the government or a state-owned enterprise like Amtrak. People should witness the effects of long-term public sector ownership on productivity and effectiveness in a workplace.

The USPS does more for its workers and customers than FedEx. There are addresses FedEx won't service due to "inefficiencies", hand over packages to the USPS for delivery.

Re: How OpenAI uses complex and circular deals to fuel its multibillion-dollar rise

#319

Post by _aavaa_ »

treis wrote: post #302
_aavaa_ wrote: post #282

Earlier quoted context omitted.

Why is their product not palm? Or windows mobile?

It's not windows mobile because OpenAI was first and is the clear leader in the market. Windows mobile was late to the party and missed their window. Palm is closer but it's a different world. It's established that Internet advertising companies are worth trillions. It's only in retrospect that what Palm could have been is obvious. Barring something very unexpected OpenAI is coming out on top. They're prepaying for a…

Windows mobile by the time it looked like the iPhone was late to the party. But windows had been releasing a mobile os for a long time before that. Microsoft was first, they just didn’t make as good of a product as Apple despite their money.

OpenAI is also first, but it is absolutely not a given that they are the Apple in this situation. Microsoft too had money to bury the competition, they even staged a fake funeral when they shipped windows phone 7.

> Barring something very unexpected

Like the release of an iPhone?

Re: How OpenAI uses complex and circular deals to fuel its multibillion-dollar rise

#320

Post by will4274 »

philipwhiuk wrote: post #48
SubiculumCode wrote: post #29

Given that AI is a national security matter now, I'd expect the U.S.A to step in and rescue certain companies in the event of a crash. However, I'd give higher chances to NVIDIA than OpenAI. Weights are easily transferrable and the expertise is in the engineers, but ability to continue making advanced chips is not as easily transferred.

If they're too-important-to-fail they're too important not to be broken up or nationalised.

Fwiw, this is a facile argument. You make no attenpt to demonstrate that after major reorganization (breakup / nationalization) that the firm will continue to have the desirable attributes (innovation, efficincy, ability to build) that made them too important to fail.
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