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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

#381

Post by insane_dreamer »

tptacek wrote: post #158
nwiswell wrote: post #106

Earlier quoted context omitted.

> if they don't make the numbers make sense soon then I don't see things ending well for OpenAI. This is pretty much obvious just from the valuations. The wild bull case where they invent a revolutionary superintelligence would clearly value them in the trillions, so the fact that they're presently valued an order of magnitude less implies that it is viewed as an unlikely scenario (and reasonably so, in my opinion).

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.

> which feels increasingly plausible.

not really; ChatGPT may have the brand name but there are other offerings that are just as good and which can be incorporated into existing apps that have a captive userbase (Apple, Google, Meta). Why should I switch to another app when I can do genAI within the apps that I'm already using.

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

#382

Post by insane_dreamer »

scarface_74 wrote: post #321
tptacek wrote: post #158

Earlier quoted context omitted.

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.

Besides name recognition, what’s special about OpenAI at this point? I was prototyping some ideas with ChatGPT that I wanted to integrate into a MVP. It basically involved converting a users query into a well categorized JSON object for processing downstream. I took the same prompt verbatim and used it with an Amazon Bedrock hosted Anthropic model. It worked just as well. I’m sure there will be plenty of “good enough…

> Besides name recognition, what’s special about OpenAI at this point?

nothing

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

#383

Post by vitorgrs »

fnordpiglet wrote: post #336
airstrike wrote: post #278

Earlier quoted context omitted.

> OpenAI isn’t offering a free product I encourage you to visit https://chatgpt.com in incognito mode.

That’s demoware.

That's like saying Youtube isn't free because there's a subscription...

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

#384

Post by lumost »

thehappypm wrote: post #260
choilive wrote: post #174

Earlier quoted context omitted.

Every cafe, airport, school I've been to has people using ChatGPT or its competitors. Its obviously valuable for almost anyone. Just like how people cant imagine life before smartphones, people wont be able to imagine life before LLMs became ubiquitous. Its everywhere.

True, but there isn’t really a moat for text LLMs. Llama is open source, Gemini is basically free.

define "moat", Open source search engines and competitive scraping strategies were built in the early 2000s. The Google search moat has always been that they were better for 5-6 years - and then they were the default.

Once they were the default option, they merely had to be the "same" as other options. If someone were to make a 1:1 clone of google with ~5% fewer ads - I do not believe they would break get a substantial market share of web search traffic (see bing).

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

#385

Post by NoGravitas »

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…

Valued at $157B, and losing $5B a year. What a price-earnings ratio.

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

#386

Post by jt2190 »

tptacek wrote: post #246
paxys wrote: post #232

Earlier quoted context omitted.

Google is a digital advertising company. OpenAI hasn't even entered the ads business. In the absolute best case they can take over a large chunk of Google's search market share, sure, but that still doesn't make it anything similar to Google in terms of finances. How do they start making the queries profitable? What do they do when their competitors (Claude, Gemini, Llama, Mistral, Grok and several others) undercut t…

This subthread is full of people explaining why they don't believe OpenAI could successfully match Google's financial performance. Sure. I'm not investing either. My point isn't that they're going to be successful, it's that there are plausible stories for their success that don't involve science fiction.

People don’t seem to understand that investment portfolios are personal, that just because an investment doesn’t make sense for their portfolio doesn’t mean that it doesn’t make sense for anyone’s. Allocating a tiny fraction of a portfolio to high risk/high reward investments is a sound practice. When those portfolios are, say, large pension funds, the total sum to invest can be hundreds of millions.

Dissenters should consider that their might be short plays, that if what they think is true they could make some money.

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

#387

Post by tim333 »

NoGravitas wrote: post #385
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…

Valued at $157B, and losing $5B a year. What a price-earnings ratio.

With all new tech you've got to value them on expected future earnings really.

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

#388

Post by impulser_ »

tptacek wrote: post #191
azinman2 wrote: post #171

Earlier quoted context omitted.

In 2023 Google had $307.39B in revenue and $24B in profit last quarter (suggesting ~100B in profit this year). Meanwhile OpenAI is losing money and making no where near these sums.

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.

FB financials were incredibly good at their IPO.

Revenue - 3,711 - 88% YoY growth.

Net Income - 1,000

Cash - 3,908

Tell me how those are bad?

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

#389

Post by impulser_ »

fhdsgbbcaA wrote: post #217
azinman2 wrote: post #171

Earlier quoted context omitted.

In 2023 Google had $307.39B in revenue and $24B in profit last quarter (suggesting ~100B in profit this year). Meanwhile OpenAI is losing money and making no where near these sums.

Google has also magnificently shit the bed with Gemini; their ads business is getting raked over the coals in court; they are a twice convicted monopolist; and are driving away top talent in droves. It reminds me of the old joke: Heard about the guy who fell off a skyscraper? On his way down past each floor, he kept saying to reassure himself: So far so good... so far so good... so far so good.

People have been talking about the downfall of Google and FB/Meta for years now and yet every single year both of them still grow, still print money, and run the most used products in the world by far.

Google's generative ai models probably are used more in a day than the rest combined. Google is a highly profitable business that still has never not grown YoY in its nearly 3 decade history.

In you mind you might think Google is going down, but in reality they have only been going up for nearly 3 decades now.

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

#390

Post by mrbungie »

mise_en_place wrote: post #370
ywvcbk wrote: post #351

Earlier quoted context omitted.

> the stuff to be shoveled They are spending a lot on shovels but it’s not clear that there is that much “stuff” (consumer demand) to be shoveled. VC money can only take you so far, you still need to have an actual way of making money. LLMs might effectively replace Google but they are already a commodity. It’s really not clear what moat OpenAI can build when there are already a bunch of proprietary/open models that…

The moat is a first-party integration with Windows, a third-party integration with iOS, and first-mover advantage. The discount rate still isn't very high; ~5% is the risk-free rate. 157 billion is a reasonable valuation.

Integrations are not OAI's moat as those are primarily UX developments that are kept by Apple/MSFT. Right now, and if they want, they can change some lines of code to get up and running with another provider, like Anthropic or whatever.

Only moat OAI has right now is advanced audio mode / real-time audio API, plus arguably o1 and the new eval tools shown the other day as those are essentially vertical integrations.

And maybe, like you said, first-mover advantage. But is not that clear, as even Anthropic got ahead in the race for a while with Claude 3.5 Sonnet.

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