Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

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

nytimes.com

Post reply on HN
Print view View original

381–390 of 428 posts

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

#381

Post by alonmower »

DenisM wrote: post #171
delis-thumbs-7e wrote: post #131

Earlier quoted context omitted.

As much ChatGPT says I’m basically a genius for asking it a good Vegan cake recipes, I don’t think that is providing it any data it doesn’t already have that makes it anyway better. Also at this point the massive increases in data and computing power seem to bring ever decreasing improvements (and sometimes just decline), so it seems we are simply hitting a limit this kind of architecture can achieve no matter what y…

ChatGPT chat logs contain massive amount of data teased out of people’s brains. But much of it is lore, biases, misconceptions, memes. There are nuggets of gold in there but it’s not at all clear if there’s a good way to extract them, and until then chat logs will make things worse, not better. I’m thinking they eventually figure out who is the source of good data for a given domain, maybe. Even if that is solved, mo…

The necessity of higher quality data from vetted experts is why Mercor just raised at 10B

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

#382

Post by JohnnyMarcone »

alangibson wrote: post #323
vineyardmike wrote: post #307

Earlier quoted context omitted.

Because they’re not that wildly unprofitable. Yes, obviously the companies spend a ton of money on training, but several have said that each model is independently “profitable” - the income from selling access to the model has overcome the costs of training it. It’s just that revenues haven’t overcome the cost of training the next one , which gets bigger every time.

> the income from selling access to the model has overcome the costs of training it. Citation needed. This is completely untrue AFAIK. They've claimed that inference is profitable, but not that they are making a profit when training costs are included.

I've also seen Open AI and Anthropic say it's pretty close at least. I'll try to follow up with a source.

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

#383

Post by _heimdall »

slashdev wrote: post #232
staticautomatic wrote: post #143

Earlier quoted context omitted.

I sell you a cat for $1B and you sell me a dog for $1B and now we’re both billionaires! Whether the capital markets “want” that or not it’s still silly.

If we’re both willing to pay that in a free market economy, then we both leave the deal happy. Things are worth what people are willing to pay for them. And that can change over time. Sentiment matters more than fundamental value in the short term. Long term, on a timescale of a decade or more, it’s different.

Both parties would need the $1B prior to the transaction for it to even potentially be meaningful, and still they just traded a cat for a dog and only paid each other on paper.

That ultimately wouldn't be a big deal if the paper valuation from the trade didn't matter. As it stands, though, both parties could log it as both revenue and expenses, and being public companies their valuation, and debt they can borrow against it, is based in part on revenue numbers. If the number was meaningless who cares, but the numbers aren't meaningless and at such a scale they can impact the entire economy.

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

#384

Post by _heimdall »

fireflash38 wrote: post #285
slashdev wrote: post #232

Earlier quoted context omitted.

If we’re both willing to pay that in a free market economy, then we both leave the deal happy. Things are worth what people are willing to pay for them. And that can change over time. Sentiment matters more than fundamental value in the short term. Long term, on a timescale of a decade or more, it’s different.

Is that not fraud?

Yes, it is fraud round tripping is fraud, whether the government is willing to prosecute it or not.

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

#385

Post by tqian »

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…

If models are profitable once trained, isn't it weird that chatgpt and Claude have $200 tiers that still have usage limits?

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

#386

Post by mikewarot »

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…

>This is all dependent on token economics being or becoming profitable

What is the actual value of a token? If it were generated by a human expert in a given field? This should set an upper limit for now.

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

#387

Post by [deleted] »

senordevnyc wrote: post #380
Eisenstein wrote: post #379

Earlier quoted context omitted.

Underestimating compounding and secondary effects, especially while rationalizing the abandonment of their core market and capability is one of the most famous ways that big companies provide evidence of their downward spiral. I can feel the MBA energy from here.

Can you name any companies that suffered by switching focus away from one market where they dominate in order to also dominate a market that is 10x the size of the first market already, and growing faster?

[deleted]

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

#388

Post by Eisenstein »

senordevnyc wrote: post #380
Eisenstein wrote: post #379

Earlier quoted context omitted.

Underestimating compounding and secondary effects, especially while rationalizing the abandonment of their core market and capability is one of the most famous ways that big companies provide evidence of their downward spiral. I can feel the MBA energy from here.

Can you name any companies that suffered by switching focus away from one market where they dominate in order to also dominate a market that is 10x the size of the first market already, and growing faster?

Every specific situation is different, but the pattern I mentioned is easy to find. Here are three examples: RCA, GE, HP.

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

#389

Post by creer »

moogly wrote: post #372
HDThoreaun wrote: post #328

Earlier quoted context omitted.

Why would they want to do that? The only sector that matter to nvidia is datacenter, its where 90%+ of their profits are. Making their consumer sector even less profitable just seems like a waste of time

How about positive mindshare? Regular people not growing up absolutely hating nvidia's guts and only begrudgingly buying their products. Also ensuring that a pretty big industry won't die from becoming too expensive. Plus, diversification is good for when the bubble inevitably bursts. But that's long-term thinking and we can't have that. People give Huang credit for having had a long-term vision on AI, but it feels l…

> How about positive mindshare?

Does anyone who can afford an nvidia card actually buy something else? Yes some people hate nvidia, but it's not like they have a hard time selling cards.

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

#390

Post by creer »

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…

> - Nvidia also benefits from growth due to the equity they own.

aka this might be nvidia's next pivot. Contrary to gaming cards, the AI GPUs are productive assets. If nvidia feels that they will be very productive, then it makes sense that they invest broadly in the companies that are likely to make these profits. To share in the rewards while selling more GPUs.

Post reply on HN