Wasn't it always seen as a "winner takes all" business?
There is no "all", that's the point. There is no pot of gold at the end of the AI rainbow.
Most tech revolutions end up making a fair bit of money for successful businesses.
70% of AI revenue comes from OpenAI and Anthropic [video]
61–70 of 102 posts
Re: 70% of AI revenue comes from OpenAI and Anthropic [video]
#62Wasn't it always seen as a "winner takes all" business?
> Wasn't it always seen as a "winner takes all" business? No. It was always a pyramid scheme marketed as a "winner takes all" business. But there's no winning. The only winners are those who cash out before it collapses. This is literally Web3 2.0.
AI isn't Web3.
Re: 70% of AI revenue comes from OpenAI and Anthropic [video]
#63Earlier quoted context omitted.
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…
Microsoft owns a significant minority stake in the LLC to my understanding.
Re: 70% of AI revenue comes from OpenAI and Anthropic [video]
#64Earlier quoted context omitted.
> Wasn't it always seen as a "winner takes all" business? No. It was always a pyramid scheme marketed as a "winner takes all" business. But there's no winning. The only winners are those who cash out before it collapses. This is literally Web3 2.0.
AI isn't Web3.
It is the same business model, just at a grander scale. There is no sustainable growth business underneath it, only vibes and hype, and the "future promise" of some miraculous breakthrough. It's becoming clearer by the minute that no such miracle is forthcoming.
[edit] one small difference from web3 is that AI does seem to be at least marginally useful in some narrow verticals (devtools, infosec). That's pretty inconsequential, though. Those verticals can't supply the capital needed to sustain the industry. So on a macro scale that isn't relevant.
When the dust settles I hope we end up in a place where we no longer accept lies and grift as pitchdecks and product briefs. If you have a technology, you demonstrate it, and only after a successful demonstration do you expect funding. We don't need to throw money at vaporware anymore, that's proven itself to be idiotic behavior over and over again.
Re: 70% of AI revenue comes from OpenAI and Anthropic [video]
#65Earlier quoted context omitted.
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?
Here's the logic since it's not that hard.
Say Parent Co. controls Subsidiary LLC and owns 60% of it. Minority Corp. owns the other 40%. Subsidiary LLC loses $10 billion.
Consolidation accounting requires Parent Co. to report the full $10 billion loss, as if it owned all of Subsidiary LLC, which it doesn't. Then, on the next line, it attributes the portion belonging to the other owner (Minority Corp.). There are two lines and one loss. Nothing is removed and nothing hidden. This is the definition of disclosure, not obfuscation.
Note that the trigger for applying this is actually control, not ownership interest. My understanding is that OpenAI Foundation controls the public benefit corporation with 26%. And for an LLC, the loss split isn't automatically pro-rata by ownership. It follows the profit-sharing terms in the operating agreement, which is why the there's a Hypothetical Liquidation at Book Value method. Under an old capped-profit waterfall, nobody can verify the exact figure without looking at the operating agreement.
"I can't verify the split" is a very different statement than "it's unclear what this means."
Your "why" question: the reason it works this way is that consolidated statements are meant to show the business as an operating whole because that's what a controlling parent actually runs. You can't operate 60% of a data center or sign 60% of a compute contract. Every line (be it revenue, expenses, assets, etc.) comes in at 100% for that reason. The noncontrolling interest line then answers the separate question of how much of that whole belongs to the parent's own shareholders. One statement answers two questions (what does this enterprise look like versus how much of it is ours).
As for your "who" question, the answer is simple: the other equity holders. Again, OpenAI doesn't own 100% of the entity. My understanding is that Microsoft is one of the other equity holders.
Re: 70% of AI revenue comes from OpenAI and Anthropic [video]
#66Earlier quoted context omitted.
The general concern (from him and others) is that the cloud providers are making extremely large capex commitments (borrowing, going cashflow negative) to satisfy demand from a small number of customers who may not be able to pay them.
> to satisfy demand from a small number of customers who may not be able to pay them Because a lot of isn't real demand, e.g. given away for free or very very cheap.
Like DeepSeek's?
Re: 70% of AI revenue comes from OpenAI and Anthropic [video]
#67You can like the character or not, but there is a trend I’m following ( heavily vested in NVIDIA, so tongue in cheek when I say this ) that might be highly align with Zitron. Looking at the moves from NVIDIA ( Groq )and AMD ( Taalas ) which are pure inference plays. I believe this shows that the impetus to train a better-bigger model might be coming to a level of maturity that might merit a serious threat to the fron…
I’m not a heavy user, but use them routinely to do dumb translations and refactors etc. For my money the models are mostly indistinguishable at achieving long term objectives. Every time a new one drops I’m a part of a number of communities that go insane trying to “max” on it, waiting for resets etc. I just don’t get it, and if it turns out my view it rational, then it seems like training new models will become a thing of the past at some point. It’s just not economical other than for maxing hype.
Re: 70% of AI revenue comes from OpenAI and Anthropic [video]
#68Earlier quoted context omitted.
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
Anyone who remotely pays attention to AI would know who DeepSeek is, given the shockwave it sent in early 2025, impacting the tech stocks. News was full of "Kimi moment" recently too.
Re: 70% of AI revenue comes from OpenAI and Anthropic [video]
#69Ed 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…
So the core of your comment is...."the bubble has not burst yet, therefore there is no unsustainable bubble" ?
Re: 70% of AI revenue comes from OpenAI and Anthropic [video]
#70Earlier quoted context omitted.
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
Anyone who remotely pays attention to AI would know who DeepSeek is, given the shockwave it sent in early 2025, impacting the tech stocks. News was full of "Kimi moment" recently too.
Sure but a few weeks of coverage is nothing compared to OpenAI and Anthropic. Claude and ChatGPT are household names you can mention to your parents, it’s not the case (yet) for the Chinese models