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70% of AI revenue comes from OpenAI and Anthropic [video]

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Re: 70% of AI revenue comes from OpenAI and Anthropic [video]

#51

Post by nr378 »

Driver4732 wrote: post #38
ElProlactin wrote: post #30

Earlier quoted context omitted.

Sure. Here's an example: https://www.wheresyoured.at/exclusive-openai-financials/ Zitron wrote: > Additional factors – including interest income and interest expense – left it with a net loss of $8.84 billion. It then marked $3.74 billion of losses as “net loss attributable to noncontrolling members capital,” leaving the net loss attributable to the company as $5.09 billion. > It’s unclear what this means, nor how Op…

But how does that detract from the overall point that Open AI is losing billions of dollars? If there's an insatiable demand for AI compute, where's the profit?

High growth companies often have significant negative cashflow during the early high growth era, followed by positive cashflow in the years later down the line.

This phenomenon is known as the J-curve[1], and Uber is a good example of how this can turn out absolutely fine. To some extent, the entire Venture Capital industry exists to finance precisely this dynamic!

Nb. I'm not suggesting OpenAI is fairly valued, or that they will definitely become profitable, but "OpenAI is losing billions of dollars" doesn't really mean anything in and of itself.

[1] https://www.uark.vc/blog/breaking-down-the-j-curve-the-journ... (many other similar such articles exist)

Re: 70% of AI revenue comes from OpenAI and Anthropic [video]

#52

Post by nr378 »

Reviving1514 wrote: post #18
reilly3000 wrote: post #12

I think this whole premise is ignoring the point that most decently sized companies want to and eventually will be running their own LLM workloads. Currently use cases are limited by scope and imagination, and predominantly focused on cost efficiency. Once a use case becomes a top line revenue driver budgets will become essentially only limited by ROI. There are some inference workloads that are unacceptable to send…

TIL about GPU databases. I did a bit if research but only found this one: https://github.com/bakks/virginian What are the advantages of a GPU database?

[dead]

Re: 70% of AI revenue comes from OpenAI and Anthropic [video]

#53

Post by beepbooptheory »

ElProlactin wrote: post #47
beepbooptheory wrote: post #39

Earlier quoted context omitted.

Maybe I am little confused here but what you just described here doesn't sound great either? What smaller entities who OpenAI is parent to lost 3.74 billion dollars? Or maybe just can you point to some primary sources about this? I am not too bright about this stuff.. I guess I always thought it was usually about having more money than when you started? Or at least about having a story of how you will have more money…

You can look up ASC 810-10-45. OpenAI isn't a single company. I haven't followed all the details with its structure change/recapitalization, but it's (I believe) a parent sitting on top of an LLC that outside investors like Microsoft hold a large minority stake in. The rules say that the parent has to report 100% of the LLC's revenue and expenses as if it owned everything and then, at the end, back out the share of t…

OK interesting. Who specifically are these other subsidiaries that clearly account for this loss though? I get it's just a trueism for those in the know like you, but it's pretty fascinating for me at least! Like is there one example company we can point to here? Even if there were like 20 subsidiaries and the combined loss was 3 billion, that would feel noteworthy on its own?

Like to be absolutely honest, this point ends up just sounding more alarmist than the claim you took issue with originally. But perhaps I am just misunderstanding.

Re: 70% of AI revenue comes from OpenAI and Anthropic [video]

#54

Post by matthewdgreen »

ElProlactin wrote: post #30
dgellow wrote: post #25

Earlier quoted context omitted.

Mind sharing more details?

Sure. Here's an example: https://www.wheresyoured.at/exclusive-openai-financials/ Zitron wrote: > Additional factors – including interest income and interest expense – left it with a net loss of $8.84 billion. It then marked $3.74 billion of losses as “net loss attributable to noncontrolling members capital,” leaving the net loss attributable to the company as $5.09 billion. > It’s unclear what this means, nor how Op…

[flagged]

Re: 70% of AI revenue comes from OpenAI and Anthropic [video]

#55

Post by dgellow »

nr378 wrote: post #51
Driver4732 wrote: post #38

Earlier quoted context omitted.

But how does that detract from the overall point that Open AI is losing billions of dollars? If there's an insatiable demand for AI compute, where's the profit?

High growth companies often have significant negative cashflow during the early high growth era, followed by positive cashflow in the years later down the line. This phenomenon is known as the J-curve[1], and Uber is a good example of how this can turn out absolutely fine. To some extent, the entire Venture Capital industry exists to finance precisely this dynamic! Nb. I'm not suggesting OpenAI is fairly valued, or t…

> High growth companies often have significant negative cashflow during the early high growth era, followed by positive cashflow in the years later down the line.

Uber is the antithesis of OpenAI, it’s not a good example. Uber was burning money on acquiring customers. OpenAI is burning money to provide their service (and the R&D they need to continue to have valuable models). They cannot just stop and turn profitable like Uber. The money they burn isn’t invested, it won’t yield a multiple of revenue in the future. It’s consumed for compute and that’s it loo

Re: 70% of AI revenue comes from OpenAI and Anthropic [video]

#56

Post by grey-area »

ElProlactin wrote: post #48
grey-area wrote: post #46

Earlier quoted context omitted.

Can you explain which partly owned subsidiaries lost $3.74 billion and why it is legitimate to exclude that from their losses in a non-handwavy fashion? Your condemnation leaves me none the wiser and this does matter. This can of course be used to distort the financial picture and this is a significant amount, almost 50% of losses. Is this from the ‘non-profit’ which used to be OpenAI or something else? Smells like c…

I explained this is a different comment. This is basic consolidation accounting per ASC 810-10-45. https://dart.deloitte.com/USDART/home/codification/broad-tra... I get that not everyone is an accountant or has had to become educated in accounting matters as part of their work, but you really shouldn't say "smells like creative accounting to me" if you don't have a basic understanding of the subject. This is like the…

You have avoided answering the question.

The accounting mechanics are uninteresting, lots of normal accounting rules are abused for nefarious purposes (see Enron et al). What is interesting is why this was done.

Which subsidiary owns the loss and why?

Re: 70% of AI revenue comes from OpenAI and Anthropic [video]

#57

Post by jatins »

Ed wrote a post back in 2024 where he claimed OpenAI would fail in 2 years if they didn’t do the, seemingly impossible at that time, things like raising more money than any company before etc.

And OpenAI did all of that and is still alive today. Would be good to know this context because if you are out there boldly making doomer predictions month after month then you should also rate your previous ones.

Because one day Ed will be right and he’ll go around and take a victory lap while ignoring he has basically not been right before.

Re: 70% of AI revenue comes from OpenAI and Anthropic [video]

#58

Post by scarmig »

jatins wrote: post #57

Ed wrote a post back in 2024 where he claimed OpenAI would fail in 2 years if they didn’t do the, seemingly impossible at that time, things like raising more money than any company before etc. And OpenAI did all of that and is still alive today. Would be good to know this context because if you are out there boldly making doomer predictions month after month then you should also rate your previous ones. Because one d…

> Because one day Ed will be right

Bold prediction.

Re: 70% of AI revenue comes from OpenAI and Anthropic [video]

#59

Post by dgellow »

doctorpangloss wrote: post #44
dgellow wrote: post #24

Earlier quoted context omitted.

They are pressured by open models to reduce prices, not increase

Why do people continue to use them despite the existence of so many open weights models? This is "priced in." Short of stealing the checkpoints straight from the servers, it's unlikely to change.

I think it’s mostly a marketing, branding thing. Most people haven’t heard of the Chinese AI companies and models, but everybody heard of OpenAI and Anthropic. The US companies have sales team, a constant media presence. It’s just a question of time for open models to gain market shares.

Just look at how OpenAI has lost market share over the past year

Re: 70% of AI revenue comes from OpenAI and Anthropic [video]

#60

Post by wodenokoto »

jatins wrote: post #57

Ed wrote a post back in 2024 where he claimed OpenAI would fail in 2 years if they didn’t do the, seemingly impossible at that time, things like raising more money than any company before etc. And OpenAI did all of that and is still alive today. Would be good to know this context because if you are out there boldly making doomer predictions month after month then you should also rate your previous ones. Because one d…

Sounds like his prediction in 2024 was spot on.
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