Fuck no it should never be normal. Its against true business. If there wasn’t so much money in the system then a business would have to actually run like a real business.
removing the cost of R&D I would assume its profitable right? Once the model is trained running it takes significantly less computing. OpenAI has a fuck ton of customers so I would assume they are making back the cost of running their model API.
Edit: on further inspection this is covered in the article
thanks and holy shit thats a lot of revenue
I don’t think so
With these kinds of models you can’t ever stop training them, otherwise you reach a point where the data becomes dated and thus the model is dated.
Think world events. Say another bird flu became a pandemic. The model can only know about that if it’s trained on those events.
There are systems (Rag) that can answer questions based on additional content, but that would only work on a subset of problems/situations.
Oh true i did not consider that they require constant training to stay up to date.
Yes and it should be worse. OpenAI should be forced to take on the cost of compensating every copyright holder it exploited. If that means OpenAI doesn’t exist I’m absolutely okay with that.
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.
Same goes for Tesla, it’s severely over bloated even if it’s bubble has shrunk a bit.
These sort of bubbles should be stopped by the government but why stop that if the politicians themselves are the ones having pumped millions into these bubbles?
First you gotta make a law prohibiting politicians from having stocks, then watch how fast this problem gets resolved
Why should they be stopped by the government? That assumes the stock market should be logical and predictable but why should that be true? It’s all speculation, just a step above gambling, and people should be allowed to.
Tesla is a great example. Its stock has never been at an expected level for their revenue or profit. It’s all speculation about their potential to disrupt the car market (which they have), and predictions like 50% growth per year. Even now, self-driving and artificial intelligence seem a bit far fetched to most of us, but if they happen will be very disruptive.
But yes , politicians should have required ethics standards, including banning insider training. The rest of us have to: how does it make sense for our leaders to have lower ethical standards than everyone else?
Why should they be stopped by the government?
Maybe, but hopefully the existing controls will prevent that from happening again …. Unless overzealous attempts at “reducing regulations” break those. There were quite a few factors around the Great Depression but consider controls like:
- “circuit breakers”, automatically halt trading when a stock or the overall market drops too quickly
- “qualified investors” are criteria you must meet for the riskiest investments, basically that you can handle the loss
- bank requirements for capital, risk, so less likely to collapse
- bank rescues - Lemmy likes to complain about rescuing banks instead of people, but bank collapses during a crisis are what can push the crash off the deep end
Also the overall size and complexity of the modern investment industry should make it much less likely for any one type of investment to drive a general crash.
- “qualified investors” are criteria you must meet for the riskiest investments, basically that you can handle the loss
I’m surprised you’re not calling that a government overreach considering your previous comment.
Do you think the current government controls are working and shouldn’t be changed at all?
We haven’t had a real depression in 100 years, so something is working. Sure, we have recessions periodically and some are worse than others, but as long as it’s relatively limited.
I think that a lot of regulations were put in place for a reason. Whether they work for that reason or not, it would be better to understand the reason before blindly removing regulations
None of them have come close to the severity of the Great Depression. We’ll never control all instabilities, the important part is limiting their severity
Yes, I’ve been affected by several of these. I’ve gotten laid off during downturns. I’ve been affected by high interest rates. I’ve been affected by unattainable housing. But at least it wasn’t worse
And yet this is a place where centrism is the goal.
- We know that trying to tightly control economies does not work. At all. We shouldnt even try.
- We also know that corporate-anarchy serves only robber barons. That’s not acceptable.
So yes, the best answer is to give the market freedom but not complete freedom. To let it do its ups and downs … within limits. To combine the strengths of capitalism with the guardrails of a guided market. Where the capitalist driven market does not serve society, it’s a failure to guide the market so capitalism fulfills desirable goals
It should be forced to be logical and predictable because Capitalists have made it so the stock market is the only way to really save for retirement.
Our society and economy shouldn’t be a fun game for the whales to win at the expense of the rest of us.
people should be allowed to
uh no they shouldn’t
As a major investor into Open AI future, I’d gladly exchange all my non-existing stakes for a blowjob by fugly Sam Altman. It wouldn’t turn into any profits, but for some time, he’d have something in his mouth that isn’t a lie or a sketchy promo. I believe, some on Open AI board would even pay me to keep him silent.
You know when you’re playing a game and you think this is kinda dumb sure my gun now does 100 more damage but the baddies have 100 more health so really nothing has changed? But it still makes you feel better because well, it’s 100 more.
I think that’s how these valuations work.
The history of the Internet and computers in general is full of investors willing to take seemingly insane chances on overvalued speculative ventures.
Private equity is so pumped full of cash that they basically have nothing better to do with it.
if you’re mad at this, don’t look at how much xai is worth.
ai is basically just a pump and dump for rich people before the bubble bursts
I’m really excited about your explanation how a pump and dump is going to work when openAI is not even publicly traded. So who’s gonna pump and dump what exactly?
How is it pump and dump? These companies aren’t publicly traded.
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.
It’s a “pure play”
I should fucking hope OpenAI isn’t profitable.
Finance bros who run wall street are all idiots, so they designed a system where no matter how stupid they are, they’re always right. If you get a bunch of finance bros in a room and give a really good sales pitch, your valuation can triple despite nothing real actually happening.
In the case of AI, even the foremost experts are uncertain about how useful AI is. Qualified people disagree and no AI based tool has really proved itself to be robust, but it is amazing at fooling people who are either dumb or willfully ignorant, so it’s like crack cocaine to anyone who works on Wall Street.
There are multiple multiple useful implementations. They might not be ethical and cost people jobs but there are loads of smaller projects in use. We use it to analyse pictures of completed work to ensure it is to standard, has been working great and passed all audits.
Are you talking about machine inspection? Cause that’s been around for decades. Why is that impacted by AI? You usually want the opposite of ai, a traceable way of verifying a part was made right every time.
Possibly? Its how things are installed in the field, if it as spec or not. We trained it on thousands of examples of right and wrong and now its reliable
Do you work at Boeing?
Because that would certainly explain some things.
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.
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
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.
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.
