Totally normal. Just keep throwing stupid amounts of money at it so it can find a way to undercut some existing business structure by operating at a loss until that business is dead and then enshittify. Profit! /s
valued at $157 billion
Isn’t profitable
Pick one.
Is a private company that can say it’s worth whatever they want it doesn’t make it true. Only public companies have to have the bare minimum of transparency
I think you misunderstand what valued at means.
They’re not mutually exclusive. The Hope Diamond is valued at around $300 million, but it doesn’t make any profit.
The Hope Diamond isn’t a business.
Neither is “AI” apparently.
Ha, you could say its a Hope Unicorn
Profitable means your revenue is higher than your expenses. Valuation is whatever someone is willing to buy your business for (i.e. what they think the company could earn in the future). They are completely separate concepts, and a highly profitable company could have a low valuation while an unprofitable company can have a high valuation based purely on the future potential of the company.
That’s how every single company targeting consumer market in the web started. No profit for many years. Majority because of scale of the market. Facebook started making profit after 2012 so for 8 years they were burning money figuring out where to sell their soul to. Now the scale and risk for OpenAI is way bigger, because they have not sold their users fully or we don’t know if they sold it and for exchange for what. It would be funny if they at some point alter their privacy policy and turn out to sell people’s chats to advertising agencies. They might also go bankrupt or turned out to be a scam that hires thousands of people to answer questions.
Capitalism doesn’t sell performance. It sell ‘potential’ and ‘perceived gains’.
I sell my dates on my potential wealth and potential penis size. People need to get on the capitalism grindset.
And women sell dates on their potential to do that thing that was discussed but then try to backtrack by pretending they thought it was a joke and didn’t even bring a banana.
“Both my cock and my investment portfolio are well positioned to overperform both ongoing quarterly and year over year growth as compared to standard cocks and investment portfolios, should volatility continue to remain close to historical averages.”
Breakdown of how this doesn't actually mean anything, because I'm autistic:
This doesn’t actually mean anything.
“Well positioned to do X” just means ‘could happen’.
It doesn’t actually promise any outsized gains at all, it ascribes no likelihood to this scenario, it does not quantify anything, at all, and it even conditions the potential hypothetical gains on a the vaguely defined condition of volatility remaining ‘close’ to ‘historical averages’, again totally unquantified.
This would be dubious to expect to continue in perpetuity and without deviation, because both for the market and for people’s interpersonal lives, the extremely normal pattern is that volatilty remains within ‘normal’ bounds for a while, but will also predictably have short but highly intense bursts from time to time.
So these entirely predictable volatility bursts break the condition.
… But to someone with less knowledge of or experience with both markets and relationships, it seems good that something is well positioned to exceed standard growth, it seems reasonable that things will stay close to historical averages, so the ‘vibe’ takeaway is positive, and the mentioned (potential but utterly without basis) outsized growth was both in the short term and enduring year over year!
Even though the actual content of what was said is literally nothing beyond jargon laden flim flam that has no ultimate literal meaning, nor legal liability.
Hey, give credit where it’s due.
Some people work quite hard to make sure their jargon laden flim flam has no ultimate literal meaning nor legal liability.
“I have a great venture Idea for you Susan. What if, and hear me out, what if my penis was at least average size! I already have an investor lined up in the bedroom, you’d be crazy to pass on this opportunity”
It’s what we in the biz would refer to as a “grower”, which is in contrast to a “shower”.
If you’re gonna sell dates you better be a grower! Dates don’t just grow themselves!
Spotify hasn’t made a profit at all since its inception afaik.
No way with their user base being so massive they are net loss. Can’t be true
Spotify on Tuesday said it anticipates reaching profitability for the full year in 2024, which would mark the company’s first full profitable year since it launched 18 years ago.
https://www.axios.com/2024/11/13/spotify-projects-first-full-year-of-profitability-ever
Wild. You would think they would have restructured somehow rather than banking on investor money in hopes that doesn’t dry up and to be net loss for 18 years just goes to show there is too much dumb money in the system at play.
Labels take %70 of royalties, leaving Spotify %30. Also they dropped a lot of momey into podcasts. https://www.businessofapps.com/data/spotify-statistics/
That is absolutely wild. These really aren’t businesses if they aren’t profitable and sustainable cash flow wise. When the money dries up your screwed. Hard times define the company not the peaks.
Yeah, but not for shitty companies. I’m down to invest in a mom and pop if it helps get it off the ground. Fuck pump and dumps, and people who inflate bubbles.
People always act like “how can company A be a thing when it isn’t profitable”. It isn’t about if company A is profitable. It’s about whether CEO A is making money. As long as that can happen and, you know, others at the top, company A is right on track.
Isn’t it a private company? They could say it’s worth infinity trillion dollars…
No, not quite. They’re funded by venture capitalists, who put money into investment rounds on the understanding (speculative gamble?) that the company will have a given future value. The last funding round was $6.6bn on the basis that the company will be worth $157bn when it is floated on the stock market. Ed Zitron has quite a good analysis on his page, and also why their business is a complete pile of shite:
They still aren’t required to go through SEC regulations and can make up some PR nonsense evaluation.
They can say what they want, but investors won’t invest if the ask is too high. These valuations are based on purchase of a given percent of shares, so you take the amount raised and divide by the percent sold and you get a valuation (a little more complicated than that, but that’s the gist).
Gotta keep in mind, profit can always be distorted based on how much employees are getting paid.
Someone is making money. In fact, a lot of people are.
It shouldn’t be, but it is. 20 years ago, in the far-off year of 2005, a lot of tech companies more or less followed the same path, where it took decades for them to actually be profitable, if they were at all.
YouTube ran at a deficit for something close to 15 years. AI companies are likely following this trend, and running mostly on investment money, rather than being self-sufficient.
I don’t know about now, but Amazon ran a deficit for pretty much its entire existence. Amazon is a bit different though since it was part of an R&D strategy and they could’ve stepped off the gas at almost any point and been profitable.
That’s a long established myth. Amazon started out in 94, and became profitable in like 10 years. Most of their hardcore R&D is self-financed cause they generate just that much free cash.
Right. They spend their free cash (and sometimes more) on R&D and infrastructure, which by definition means they’re unprofitable. Profit is what’s left after expenses, so if you have nothing left, you’re unprofitable.
Thanks for clarifying that profit is calculated using a subtraction, but you’re missing the core of my comment. Amazon self-finance their R&D and STILL make a fuck load of profit. They made like 30B$ of free cash last year alone. In the last 15 years they’ve made >100B$ in overall profit and only been in the red twice.
They’re not just profitable they’re an insane money printing machine that doesn’t show any sign of slowing down.
They’re a money printing machine, but they’re usually unprofitable because they spend it all.
If you made $1M/year and spent $1M/year, your household would be less profitable than one that made $100k and spent $90k. That’s what profit means, it’s the amount you keep after all expenses are paid (assets - liabilities). It’s obviously more complex since there are other measures (e.g. EBIT), but that’s generally how profitability is calculated.
Their R&D tends to go to things that will make more money, so it’s not wasted, but it’s only profit if they don’t spend it.
Oh thanks for clarifying in even more excruciating details how a subtraction works that is really helpful.
Why would you repeat the lie that they’re “usually unprofitable” when the information is publically available in a million places on the internet ? In 2023 Amazon made :
- 575B$ in sales
- If you remove costs of goods that’s 270B$ in gross profit
- If you remove operating expenses (including R&D) that’s 30B$ in net income
Amazon is factually not “usually unprofitable”, they have in fact made profit (as in money which actually goes into your pocket after discounting all expenses) every year for the last 15 years except in 2022 and some tiny losses in 2014 and 2012.
The company started in 1994, posted it’s first profitable year in 2001, and had little or no profit through 2014. So for the first 20 years or 2/3 of the entire history of the company, they were unprofitable or barely profitable.
That’s my point, Amazon has historically been hugely unprofitable, so looking only at profit doesn’t tell the full story.
OpenAI was founded ~9 years ago, which isn’t all that different from the timeline for Amazon. They are in very different markets (ironically more similar now with AWS getting huge), with Amazon starting as a logistics company and OpenAI being a pure tech company, so the financials of both will look quite different.
Pretty sure youtube still runs on deficit. Storage costs alone would probably bankrupt some small countries.
People don’t realise how much the storage and bandwidth costs are for a site as big as YouTube, and it keeps going up due to the huge number of videos being uploaded. People think that Google are making huge amounts of money from YouTube. In reality, they’re not breaking even and rely on other, profitable business units (like their Workspace and cloud services) to subsidize it.
There’s no way the ads fully cover the cost, and more and more people are blocking ads. Advertisers don’t pay for blocked ads, and YouTubers don’t make any ad money from your views if you use an ad blocker. (this is the main reason YouTubers say they make less money from ads than they used to - ad blockers)
I guess the cost is worth it to Google just to entrench themselves and their products even further into the lives of most people.
Yeah it’s part of their overall strategy to be seen as a core part of the internet / the web. Same as Yahoo in the 90s and early 2000s.
The more people that use their free services, the more appealing they are to advertisers compared to competing ad platforms (broader reach), and the more paid subscribers they get.
Products like Visual Studio, some Jetbrains IDEs, VMware ESXi, and a lot of SaaS products, are (or used to be) free for individuals or for open source usage for a similar reason - people get familiar with them at home, and end up recommending them and buying them at work. A few individuals liking the product can result in large companies signing paid contracts for tens of thousands of users.
And it would give a competitor a foothold to build a competing ad business
Tech companies were in that boat in the late 90s as well.
The dot com bust deflated it somewhat, but somehow the industry got right back to it within a couple of years.
pretty typical with tech companies, people get too optimistic sometimes
It’s typical for tech companies to organize as nonprofits and then restructure because they are losing cash?
Not sure if I’m misunderstanding you or what part you think is typical
It’s typical for tech companies to reorganize because they are losing cash, yes.
People want to jump on the bandwagon and assume they know everything about new technology.
It’s really easy to take advantage of these laymen with things like traveling to mars or… building underground highways of tubes so people can use transportation like those bank chutes.
I hope one day, we as a species can recognize these patterns so that we may take steps to break them.
We don’t need some “big new tech” to solve the world’s problems. We need to turn around and help out our fellow man who has less than us. We have the tools, just not the desire.
It’s a cultural problem.
I should fucking hope OpenAI isn’t profitable.
So now we are actually to the point where we can ask if a corporation or more widely anything at all has any value if it makes no profit.
There are people in the world who by luck of birth or circumstance have amassed obscene wealth and they after the fact are trying to convince everyone that profit is the only thing of value. These are the real public enemies.
This is the post-scarcity shift. This is how it happens.
We need to take, by force, those who have too much and give it to those who have too little.
They will be kicking and screaming. That means we’re doing something right, because they are not our allies.
Altman has since said the company is losing money on its $200-per-month Pro subscriptions, which offer limitless access to its most recent model, OpenAI o1, and to its video generator, Sora AI. “People use it much more than we expected,” he wrote in a post on X.
It’s ridiculous. More people use the product, so they’re losing money? What. That’s the complete opposite of what a business is.
Not to mention the environmental damage they’ve been doing for close to no positive results.
I almost shat myself in half when I saw how much water is needed for cooling for every prompt
needed? no, water cooling was a choice
Used was probably a better term there.
Why is the water consumed? Can it not be cooled and recirculated?
Easier to dump the hot water and get new cold water.
It’s not more people using the product, it’s the limited population who are paying $200/month use it way more than they thought they would. So the costs per person paying that are going way over $200/month. Basically, they made the mistake of setting a fuck off price that was too low and a bunch of people did the math and took them up on the offer.
If the product costs that much to run, and most users aren’t abusing their access, it’s possible the product isn’t profitable at any price that enough users are willing to pay.
This is dumb. Moore’s law may be mostly dead, but chips are still progressing at an absurd pace. In 6 years you’ll be able to run the o1 model on a raspberry Pi with no internet access.
lmaoooo
Maybe, but i never mentioned years into the future. Of course technology will improve. The hardware will get better and more effcient, and the algorithms and techniques will improve.
But as it stands now, i still think what i said is true. We obviously don’t have exact numbers, so i can only speculate.
Having lots of memory is a big part of inference, so I was going to reply to you that prices of memory stopped going down at a similar historical rate, but i found this, which is interesting
https://ourworldindata.org/grapher/historical-cost-of-computer-memory-and-storage?time=2020..latest
The cost when down by about 0.1x from 2000 to 2010. 2010-2020 it was only about 0.23x. 2020-2023 shows roughly another halving of the price, which is still a pretty good rate.
The available memory is still only one part. The speed of the memory and the compute connected to it also plays a big part in how these current systems work.
There’s absolutely no doubt that lower-end models are going to keep improving and that inference will keep getting cheaper. It won’t be on a Raspberry but my money’s with you. In 6 years you’ll be able to buy some cheap-ish specialized hardware to run open models on and they’re gonna be at least as capable as today’s frontier models while burning a fraction of the energy.
In fact i wouldn’t be surprised if frontier models were somehow overtaken by vastly cheaper models in the long run. The whole “trillion parameter count” paradigm feels very hacky and ripe for radical simplification. And wouldn’t it be hilarious ? All those suckers spending billions building a moat only to see it swept under their feet.
Nvidias latest gen looks to be 30% faster after 2 years of development with about the same power usage increase. So no reduction in Joules per GOP, just a speed increase.
In 6 years they might go 2x the speed of today but need double the watts (to deliver the same energy in half the time).
Because the people that innovate do not care for business and are not good at it, but everything in this world we created has to be sold so there is always this initial mismatch before the business graduate vultures, who innovate nothing descend on it, beg control and then go way too far in the opposite direction. At that late point the only innovation will be a slightly more rounded set of icons on the website.
A company can have value without making profit. It can own assets. It has value in its staff.
Now should it have a valuation like OpenAI? Fuck no!
Chat GPT= Email Grammar Check.
No.
Aka why not to have headlines in the form of a question.
AKA Betteridge’s law of headlines.
