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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

#331

Post by HDThoreaun »

koolba wrote: post #107
trollbridge wrote: post #79

Earlier quoted context omitted.

Right. As far as I can tell, OpenAI, Grok, etc sell me tokens at a loss. But I am having a hard time figuring out how to turn tokens into money (i.e. increased productivity). I can justify $40-$200 per developer per month on tokens but not more than that.

There’s about 5M software devs in the US so even at $1000/year/person spend, that’s only $5B of revenue to go around. Theres plenty of other uses cases but focusing on pure tech usage, it’s hard to see how the net present value of that equates to multiple trillions of dollars across the ecosystem.

> Theres plenty of other uses cases

This is where the money is. Anthropic just released claude for excel. If it replaces half of the spreadsheet pushers in the country theyre looking at massive revenue. They just started with coding because theres so much training data and the employees know a lot about coding

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

#332

Post by WOTERMEON »

forgetfulness wrote: post #41
jacquesm wrote: post #17

These kinds of deals were very much a la mode just prior to the .com crash. Companies would buy advertising, then the websites and ad agencies would buy their services and they'd spend it again on advertising. The end result is immense revenues without profits.

Circular investments were also a compounding factor in the Japanese asset price bubble. The practice was known as “zaitech” > zaitech - financial engineering > In 1984, Japan’s Ministry of Finance permitted companies to operate special accounts for their shareholdings, known as tokkin accounts. These accounts allowed companies to trade securities without paying capital gains tax on their profits. > At the same time,…

And I guess no one of the people who were doing that paid but the community paid the price for this scam ?

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

#333

Post by saulpw »

whimsicalism wrote: post #274
saulpw wrote: post #269

Earlier quoted context omitted.

Yeah, like IBM and Intel and GE and GM are shining examples of how effectively the private sector runs companies. Maybe large enterprises are by their nature inefficient. Maybe productivity isn't the best metric for a utility. We could, for instance, prioritize resiliency, longevity, accessibility, and environmental concerns.

Even those problematic companies exemplify the difference: when enterprises are mismanaged and fail, capital is reallocated away from them.

The US government just allocated $10b towards Intel, and bailed out GM in the past. So what you said is clearly not the case. Now we have publicly-funded private management that is failing. At least if they were publicly owned and managed outright, they wouldn't be gutted by executives prioritizing quarterly profits.

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

#334

Post by jimbokun »

SoftTalker wrote: post #187
jimbokun wrote: post #139

Earlier quoted context omitted.

We desperately need a technological solution to be able to somehow "sign" images and videos as being real and not generated or manipulated by AI. I have no idea how such a thing would work.

It won't work, because most people do not understand what a digital signature is and they will just say that has been faked as well.

Journalists will know how to check it in high profile cases.

And annoyed and suspicious techies can use it to check other people's content and report them as fake.

Yeah, there are a lot of dumb people who want to be deceived. But would be good for the rest of us to have some tools.

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

#335

Post by Spooky23 »

afavour wrote: post #120
Spooky23 wrote: post #9

Earlier quoted context omitted.

It’s probably hard to do that in a news context because the real rationales are pretty tight. Depending on your POV OpenAI and the surrounding AI hype machine is at the extremes either the dawn of a new era, or a metastasized financial cancer that’s going to implode the economy. Reality lies in the middle, and nobody really knows how the story is going to end. In my personal opinion, “financial innovation” (see: the…

> Depending on your POV OpenAI and the surrounding AI hype machine is at the extremes either the dawn of a new era Eh, in a way they're not mutually exclusive. Look back at the dot com crash: it was all about things like online shopping, which we absolutely take for granted and use every day in 2025. Same for the video game crash in the 80s. They are both an overhyped bubble and and the dawn of a new era.

Exactly. I think the difference is that we've developed a cadre of people are think 24x7 about capturing value in a way that makes dotcom era moguls look naive.

AI is a powerful and compelling technology, full stop. The sausage making process where the entire financial economy is pivoting around it is a different matter, and can only end in disaster.

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

#336

Post by whimsicalism »

saulpw wrote: post #333
whimsicalism wrote: post #274

Earlier quoted context omitted.

Even those problematic companies exemplify the difference: when enterprises are mismanaged and fail, capital is reallocated away from them.

The US government just allocated $10b towards Intel, and bailed out GM in the past. So what you said is clearly not the case. Now we have publicly-funded private management that is failing. At least if they were publicly owned and managed outright, they wouldn't be gutted by executives prioritizing quarterly profits.

Executives should prioritize producing things people are willing to pay money for cheaply. If there is a bias towards short-termism, that is a governance problem that should be addressed.

I agree that the US taking stakes or picking winners is bad, I don't think it follows that nationalization is the solution.

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

#337

Post by sleight42 »

Lord-Jobo wrote: post #329
moogly wrote: post #326

Earlier quoted context omitted.

> Nvidia has too much cash because of massive profits and has nowhere to reinvest them internally. Here's an idea: they could make actual GPUs used for games affordable again, and not have Jensen Huang lie on stage about their performance to justify their astronomical prices. Sure, companies might want to buy them for ML/AI and crash the market again but I'm sure a company of their caliber could solve that if they _r…

I also just don’t understand, as someone with no business experience, how they aren’t just pouring all of that money into enhancing their production capacity. That’s very clearly their bottleneck here. Yes, I’m certain they are spending an astronomical amount on that already, but why not more? Surely paying more money for construction of more facilities still nets gain even if you run into diminishing returns? Instea…

Hedging their bets against a potential sudden downturn in consumption of their product, e.g., an AI bubble exploding? If they invest heavily in production capacity only to find that there is not commensurate consumption, then they'll have lost badly.

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

#338

Post by overfeed »

7thpower wrote: post #198
kyruzic wrote: post #136

Earlier quoted context omitted.

The funds in USD were recovered because bitcoins value is 5x higher than it was when he got arrested.

And a set of fundamentally sound investments, including Anthropic iirc.

This is painting a target around the arrow. AFAIK, they had so much money to throw around for a spray and pray, similar to VC firms

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

#339

Post by MangoToupe »

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…

I'm just confused why people think token-based computing is going to be in such demand in the future. It's such a tiny slice of problems worth solving.

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

#340

Post by thorncorona »

MangoToupe wrote: post #339
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…

I'm just confused why people think token-based computing is going to be in such demand in the future. It's such a tiny slice of problems worth solving.

It's like how every big co these days is ML. It will transition to LLMs as well.

Just give it a few years.

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