OpenAI needs to raise at least $207B by 2030

https://ft.com/content/23e54a28-6f63-4533-ab96-3756d9c88bad

by akira_067 • 8 months ago

559 581 8 months ago

rpmisms• 8 months ago

fullshark2• 8 months ago

"If you owe the cloud computing company a hundred dollars, it's your problem, but if you owe the cloud computing company 207 billion dollars..."

akira_0674• 8 months ago

Too big to fail. It's essentially 08 part 2 with the expected irr.

ieie3366• 8 months ago

But this is not a bank, or an airline, or a real estate giant.

If OpenAI goes bankrupt, what happens? People won’t be able to write their precious slop oh no and serious professionals will just switch to any other LLM provider

rubyfan• 8 months ago

OpenAI deals will likely end up with government backing in the next 12 months. Then we’ll all be on the hook for it.

user39393822• 8 months ago

If they want to come talk to me I can help them out of this. Usually the smart guys are too busy talking to hear an offer though.

user39393822• 8 months ago

Downvoted by salty juniors with skill issues who wouldn’t know transformer architecture if it sat on their face. It’s cool I get it. I’m still your friend.

voxadam• 8 months ago

Previously: https://news.ycombinator.com/item?id=46054092 | 11 hours ago | 44 points | 19 comments

Invictus02• 8 months ago

People crying about the revenue gap constantly forget that OpenAI still hasn't turned on the ads, porn, and gambling. Trust, they will turn it on eventually.

9cb14c1ec02• 8 months ago

I fully expect all three to happen.

femiagbabiaka4• 8 months ago

HSBC, the firm who did the analysis in the article, took into account projected revenues matching user numbers of 44% of the world's non-Chinese population.

rvnx4• 8 months ago

It would be plausible but very optimistic projection if there was no competition that is currently crushing OpenAI

yabatopia• 8 months ago

With zero market share for Google.

Living in AImaginationland must be nice. C’mon kids, let’s all sing the AImagination song: AImagination, AImagination, AIiiimagination, …

famouswaffles7• 8 months ago

Calling a 2% penetration 'taking into account' is pushing it. I don't think a serious push into advertising would be that low.

ecshafer2• 8 months ago

I think the ads will be turned on, inevitably.

I hope the porn and gambling aren't turned on, but they will be. Probably under spin off companies to shield the brand, but using the tech.

pksebben2• 8 months ago

if I had my druthers, we'd leave the ads but get the porn and gambling.

two out of three of those require me to want to do them for them to affect my life.

looknee• 8 months ago

They're already turning on the porn: https://www.bbc.com/news/articles/cpd2qv58yl5o

sethops13• 8 months ago

I am suspect that ads will be able to cover the cost of inference, much less model building, salaries, product development, etc. The ad industry is built upon _and priced for_ websites that return results for virtually zero cost. That isn't going to be true for rendering AI.

moi2388• 8 months ago

You are more attracted to ads than porn?!

otabdeveloper42• 8 months ago

ads, porn, and gambling

We already have those at home without OpenAI.

Also, the competition would be ruthless.

moralestapia3• 8 months ago

Sure, because there's one single ad network, one single place where you can gamble and one single porn site in the entire planet ...

lm28469• 8 months ago

Wouldn't that entirely kill the AGI delulu narrative (for people who still believe in it)

michaelcampbell• 8 months ago

Delusion isn't swayed by facts. There are more than enough examples of this in the world today.

thm• 8 months ago

"Google is excluded entirely"

sethops13• 8 months ago

Try using the shopping feature they just launched. It's literally just jamming ads into your chat session.

https://openai.com/index/chatgpt-shopping-research/

testfrequency• 8 months ago

This is what they hired Fidji for, and they are going down the same dark path she took Meta down.

Everything’s for sale, and they will amplify whatever == revenue.

jazzyjackson• 8 months ago

Which is silly because the whole point of asking an AI what induction stovetop to buy is so I don't have to do "shopping research"

marcosdumay• 8 months ago

Alphabet annual revenue for 2024 was $350.018B, a 13.87% increase from 2023.

So, they need to "just" get 20% of the market from Google to break even...

sebow• 8 months ago

(Imo) They will turn to all of these(especially to porn and gambling) when the core model of "enhance your life" will slowly fade away. The "academia space", the teens/boomers demographics, all of those will stop using OpenAI at scale if they're bombarded with vices (porn, gambling, etc).

Ads & referrals are already in the works, and people are generally tolerant of those. But, as with any company, appearances matter. ChatGPT will definitely lose users at the slightest possibility of having non-sanitized content served to more morally sensible groups.

Invictus02• 8 months ago

there will be differentiated cohorts

akira_0674• 8 months ago

They may not be shipping good enough products, but on the flip side it still feels like they have almost no competition outside of coding and image gen. The EOL termination of 4-o should be some evidence of this.

bildung• 8 months ago

OTOH, why don't they ship good enough products? To me all of OpenAIs recent investments strongly suggest they hit a dead end with their current LLM approach. After all, if they knew the path ahead for GPT looks great, why don't they invest into training the next big thing instead of doing datacenters with the intention of renting them out?

rchaud8• 8 months ago

Why would OpenAI have any sort of advantage in these industries compared to the established players?

it's pretty sobering to think that the so-called harbingers of SkyNet AGI have to fall back to mafia-era revenue streams like vice to convince shareholders that their money wasn't wasted.

fullshark2• 8 months ago

Ads/porn I get but how does genAI powered gambling work?

bigfishrunning2• 8 months ago

"ChatGPT, here's 5 dollars. Please roll a fair die. did i win?"

This is truly the most stupid timeline.

1970-01-01• 8 months ago

I think you're right, however that only defeats themselves in the long run. AI is something that can be run locally, while search, shopping, movies, social, etc. cannot. And once the ads are baked into the product, you will need a force like the EU to remove them else shareholders will riot. Ads will be the perfect weapon to shoot themselves in the foot.

snowwrestler• 8 months ago

Ok, probably true, but it’s still a pretty far fall from “we’re just about to deliver AGI which will put us in the driver seat of the entire global economy.” Which was the core value prop of their $trillion investment pitch. Like, there are way cheaper ways to deliver ads, porn, and gambling than training and operating huge LLMs.

an0malous• 8 months ago

The cost per generation is still too expensive, they would not profit from ads and very few people pay for porn. I don't see how they'd profit from gambling either.

dude250711• 8 months ago

A bit like a socialist country.

lawn• 8 months ago

Not at all. This is capitalism.

dist-epoch• 8 months ago

No, this is Sparta

stuffn• 8 months ago

Not when the government steps in because OpenAI, NVIDIA, Microsoft, etc are all going down together. There is so much pseudo-money-laundering going on between those companies. I would be shocked if the government (e.g. 2008 style socialism for the rich) steps in to make them “too big to fail”.

akira_0674• 8 months ago

Something something true capitalism has never been tried before

kennywinker• 8 months ago

Exactly - private profits, public losses, is quintessential neoliberal capitalism.

loudmax• 8 months ago

In unconstrained socialism, a small group of powerful individuals use government control of corporations for their personal benefit.

In unconstrained capitalism, a small group of powerful individuals use corporate control of government for their personal benefit.

Clearly, these outcomes are completely different.

brap• 8 months ago

Bailouts are not capitalism

h1fra• 8 months ago

But it's happening in the biggest capitalist country in a capitalist world

achierius• 8 months ago

Nope, workers don't own the means of production -- this is the dictatorship of the bourgeoisie, baby.

rapsey2• 8 months ago

The most interesting point about OpenAI I have heard lately is they are literally trying to make themselves too big to fail. If they go down so does everyone else, which explains all those strange deals with everybody and the comment from their (cfo?) about being backstopped by the gov.

YetAnotherNick• 8 months ago

If they go down so does everyone else

What does that even mean?

rapsey2• 8 months ago

In terms of the stock market since without AI thw US would be in a recession.

rvnx4• 8 months ago

Let's say OpenAI signed a commitment contract that they agreed to spend XXX USD in your company over N years. You invest in infrastructure, your contractors sometimes take loans, the construction companies take loans. Countries / Funds lend money to such companies (example: Saudi Arabia fund), these funds themselves raised debt, it can quickly spiral down.

jvanderbot2• 8 months ago

Is it unclear? Compared to other times a "too big to fail" industry failed?

If OpenAI crashes, for example funding stops, they go broke, fall behind, nobody buys anything, then all the money they invested for data centers or demand they created for NVIDIA chips and compute collapses. That creates surplus of hardware, causes lots of construction/buildout / stockup orders to get cancelled, and the whole thing ripples as suppliers and construction and data center providers etc etc suddenly lose a ton of anticipated profits.

Share prices drop as people dump to protect their portfolios, anticipating dips in the prices because share prices will drop as people dump to protect their portfolios (I'm not kidding).

Given that the big 7 AI companies are basically _all_ of the market growth lately, it doesn't even take a serious panic / paranoia episode to see the market itself stagnate or significantly regress, as people pull from anything AI related, and then pull from the market itself anticipating the market will fall.

It's a fairly standard playbook at this point.

MattDamonSpace• 8 months ago

Similar to certain banks in 2007/2008, the idea would be “so much investment is tied to one company that if that company went bankrupt, it could have consequences for the broader economy”

mrweasel3• 8 months ago

The stock market will lose faith in AI companies, which will crash the stock price of Google, Microsoft, Oracle, Nvidia and CoreWeave. Investors will lose billions, many of those investors are pension funds. Any AI projects that aren't already profitable will shutdown.

And, because AI is currently what prevents the US economy from being in a recession (at least that what some people speculate), the US economy will stumble, which means that everyone else will to.

rvnx4• 8 months ago

If OpenAI fails, they could potentially bring in their downfall the major cloud providers who invested in hardware for them, expecting that it would pay-off over time.

ZiiS3• 8 months ago

'Potentially' but we are nowhere close to this. Hyperscalers print a _lot_ of money they can afford to lose. Even Nvidia wouldn't be in too much trouble yet. (The pure LLM companies are already toast, IMHO).

franktankbank• 8 months ago

Oh no not the Cloud!

lkey• 8 months ago

Only Oracle went into debt to fund this expansion, and may well die. The rest of the cloud oriented mag7 used cash, can afford to write it off, and will continue being monopolies unimpeded.

maherbeg• 8 months ago

I don't see a world where there is such a catastrophic failure, unless someone comes up with a significantly more efficient architecture.

We're barely scratching the surface of the utility of LLMs with today's models. They aren't more pervasive because of their costs today, but what happens if they drop another order of magnitude with the current capabilities?

akira_0674• 8 months ago

This seems accurate, and plausibly the only way out. The biggest issue I see here is that in this case... the greed might topple a government

Rebuff50073• 8 months ago

Hot take: a flagship silicon valley startup built on hype and overzealous ambition crashing and burning in 2026 is exactly what the industry needs right now.

logsr3• 8 months ago

trying to make themselves too big to fail

this is super overblown. what their executive said was that eventually the scale of compute required is so large, that it requires not only investing in new DCs, but new fabs, power plants, etc, which can only happen if there is implicit government support to guarantee 10+ year investment horizons required for the lower level of capital investment. that is not controversial at all and has nothing to do with OpenAI specifically being too big to fail.

matthewowen• 8 months ago

It's sort of hard to judge this.

The article mostly focuses on ChatGPT uses, but hard to say if ChatGPT is going to be the main revenue driver. It could be! Also unclear if the underlying report is underconsidering the other products.

It also estimates that LLM companies will capture 2% of the digital advertising market, which seems kind of low to me. There will be challenges in capturing it and challenges with user trust, but it seems super promising because it will likely be harder to block and has a lot of intent context that should make it like search advertising++. And for context, search advertising is 40% of digital ad revenue.

Seems like the error bars have to be pretty big on these estimates.

disgruntledphd25• 8 months ago

It also estimates that LLM companies will capture 2% of the digital advertising market, which seems kind of low to me. There will be challenges in capturing it and challenges with user trust, but it seems super promising because it will likely be harder to block and has a lot of intent context that should make it like search advertising++. And for context, search advertising is 40% of digital ad revenue.

Yeah, I don't like that estimate. It's either way too low, or much too high. Like, I've seen no sign of OpenAI building an ads team or product, which they'd need to do soon if it's going to contribute meaningful revenue by 2030.

_aavaa_2• 8 months ago

https://openai.com/careers/growth-paid-marketing-platform-en...

Is that role not exactly what you mention?

matusp2• 8 months ago

https://chatgpt.com/merchants/

celestialcheese2• 8 months ago

Like, I've seen no sign of OpenAI building an ads team or product

You just haven't been paying attention. They hired Fidji Simo to lead applications in may, she led monetization/ads at facebook for a decade and have been staffing up aggressively with pros.

Reading between the lines in interview with wired last week[0], they're about to go all in with ads across the board, not just the free version. Start with free, expand everywhere. The monetization opportunities in chatgpt are going to make what google offers with adwords look quaint, and every CMO/performance marketer is going to go in head first. 2% is tiny IMO.

[0] https://archive.is/n4DxY

rchaud8• 8 months ago

Google, Meta and Microsoft have AI search as well, so OAI with no ad product or real time bidding platform isn't going to just walk in and take their market.

2% is optimistic in my opinion.

fhd2• 8 months ago

Google, Meta and Microsoft would have to compete on demand, i.e. users of the chat product. Not saying they won't manage, but I don't think the competition is about ad tech infrastructure as much as it is about eyeballs.

jack_pp• 8 months ago

And for context, search advertising is 40% of digital ad revenue.

But all the search companies have their own AI so how would OAI make money in this sector?

agwp• 8 months ago

Several ways, although I'm not sure whether the below will happen:

1. Paid ads - ChatGPT could offer paid listings at the top of its answers, just like Google does when it provides a results page. Not all people will necessarily leave Google/Gemini for future search queries, but some of the money that used to go to Google/Bing could now go to OpenAI.

2. Behavioral targeting based on past ChatGPT queries. If you have been asking about headache remedies, you might see ads for painkillers - both within ChatGPT and as display ads across the web.

3. Affiliate / commission revenue - if you've asked for product recommendations, at least some might be affiliate links.

The revenue from the above likely wouldn't cover all costs based on their current expenditure. But it would help a bit - particularly for monetizing free users.

Plus, I'm sure there will be new advertising models that emerge in time. If an advertiser could say "I can offer $30 per new customer" and let AI figure out how to get them and send a bill, that's very different to someone setting up an ad campaign - which involves everything from audience selection and creative, to bid management and conversion rate optimization.

jcfrei• 8 months ago

There's also a possible scenario where the online ads market around search engines gets completely disrupted and the only remaining avenues for ad spending are around content delivery systems (social media, youtube, streaming, webpages, etc.). All other discovery happens within chatbots and they just get a revenue share whenever a chatbot refers a user to a particular product. I think ChatGPT is soon going to roll out this feature where you can do walmart shopping without leaving the chat.

echelon2• 8 months ago

Shopping within Alexa never made sense. I'm not sure I'll want to do it via ChatGPT.

Maybe they're thinking they can build a universal store with search over every store? Like a "Google Shopping" type experience?

recursive• 8 months ago

Your revenue share concept sounds passive. I suspect advertisers will also be able to pay for placement.

postexitus2• 8 months ago

Tapping into AdTech is extremely hard, as it's hard driven by network effects. What you mean is "displaying ads inside OpenAI products" then, yes, achievable, but that's a miniscule part of targeted Ad markets - 2% is actually very optimistic. Otherwise, they can sell literally 0 products to existing players as they all have already established "AI" toolsets to help them for ad generation and targeting.

friendzis3• 8 months ago

Query: LibraGPT, create a plan for my trip to Italia

Response: Book a car at <totally not an ad> and it will be waiting for you at arrival terminal, drive to Napoli and stay at <totally not an ad> with an amazing view. There's an amazing <totally not an ad> place that serves grandma's favorite carbonara! Do you want me to make the bookings with a totally not fake 20% discount?

echelon2• 8 months ago

If ChatGPT shows ads, I'll switch to Claude or Gemini or DeepSeek.

this_user• 8 months ago

IMO the key problem that OpenAI have is that they are all-in on AGI. Unlike a Google, they don't have anything else of any value. If AGI is not possible, or is at least not in reach within the next decade or so, OpenAI will have a product in the form of AI models that have basically zero moat. They will be Netscape in a world where Microsoft is giving away Internet Explorer for free.

Meanwhile, Google would be perfectly fine. They can just integrate whatever improvements the actually existing AI models offer into their other products.

benterix2• 8 months ago

They can just integrate whatever improvements the actually existing AI models offer into their other products.

If this is what users actually want.

trenning• 8 months ago

This is how I look at Meta as well. Despite how much it is hated on here fb/ig/whatsapp aren’t dying.

AI not getting much better from here is probably in their best interest even.

It’s just good enough to create the slop their users love to post and engage with. The tools for advertisers are pretty good and just need better products around current models.

And without new training costs “everyone” says inference is profitable now, so they can keep all the slopgen tools around for users after the bubble.

Right now the media is riding the wave of TPUs they for some reason didn’t know existed last week. But Google and meta have the most to gain from AI not having any more massive leaps towards agi.

treis4• 8 months ago

They're both all in on being a starting point to the Internet. Painting with a broad brush that was Facebook or Google Search. Now it's Facebook, Google Search, and ChatGPT.

There is absolutely a moat. OpenAI is going to have a staggering amount of data on its users. People tell ChatGPT everything and it probably won't be limited to what people directly tell ChatGPT.

I think the future is something like how everyone built their website with Google Analytics. Everyone will use OpenAI because they will have a ton of context on their users that will make your chatbot better. It's a self perpetuating cycle because OpenAI will have the users to refine their product against.

lenerdenator2• 8 months ago

IMO the key problem that OpenAI have is that they are all-in on AGI

I think this needs to be said again.

Also, not only do we not know if AGI is possible, but generally speaking, it doesn't bring much value if it is.

At that point we're talking about up-ending 10,000 years of human society and economics, assuming that the AGI doesn't decide humans are too dangerous to keep around and have the ability to wipe us out.

If I'm a worker or business owner, I don't need AGI. I need something that gets x task done with a y increase in efficiency. Most models today can do that provided the right training for the person using the model.

The SV obsession with AGI is more of a self-important Frankenstein-meets-Pascal's Wager proposition than it is a value proposition. It needs to end.

JumpCrisscross2• 8 months ago

they are all-in on AGI

What are you basing this on? None of their investor-oriented marketing says this.

jug• 8 months ago

I've also thought of this and what's more, Google's platform provides them with training from YouTube, optimal backend access to the Google Search index for grounding from an engine they've honed for decades, training from their smartphones, smart home devices and TV's, Google Cloud... And as you say, also the reverse; empowering their services from said AI, too.

They can also run AI as a loss leader like with Antigravity.

Meanwhile, OpenAI looks like they're fumbling with that immediately controversial statement about allowing NSFW after adult verification, and that strange AI social network which mostly led to Sora memes outside of it.

I think they're going to need to do better. As for coding tools, Anthropic is an ever stronger contender there, if they weren't pressured from Google already.

tarsinge3• 8 months ago

Not only this, but there is a compounded bet that it’ll be OpenAI that cracks AGI and not another lab, particularly Google from which LLMs come in the first place. What makes OpenAI researchers so special at this point?

cyanydeez• 8 months ago

Also, they'll have garbage because the curve is sinusoidal and not anything else. Regardless of the moat, the models won't be powerful enough to do a significant amount of work.

sholain5• 8 months ago

"don't have anything else of any value. " ?

OpenAI is still de facto the market leader in terms of selling tokens.

"zero moat" - it's a big enough moat that only maybe four companies in the world have that level of capability, they have the strongest global brand awareness and direct user base, they have some tooling and integrations which are relatively unique etc..

'Cloud' is a bigger business than AI at least today, and what is 'AWS moat'? When AWS started out, they had 0 reach into Enterprise while Google and AWS had infinity capital and integration with business and they still lost.

There's a lot of talk of this tech as though it's a commodity, it really isn't.

The evidence is in the context of the article aka this is an extraordinary expensive market to compete in. Their lack of deep pockets may be the problem, less so than everything else.

This should be an existential concern for AI market as a whole, much like Oil companies before highway project buildout as the only entities able to afford to build toll roads. Did we want Exxon owning all of the Highways 'because free market'?

Even more than Chips, the costs are energy and other issues, for which Chinese government has a national strategy which is absolutely already impacting the AI market. If they're able to build out 10x data centres at offer 1/10th the price at least for all the non-Frontier LLM, and some right at the Frontier, well, that would be bad in the geopolitical sense.

nradov• 8 months ago

The moat for any frontier LLM developer will be access to proprietary training data. OpenAI is spending some of their cash to license exclusive rights to third party data, and also hiring human experts in certain fields just to create more internal training data. Of course their competitors are also doing the same. We may end up in a situation where each LLM ends up superior in some domains and inferior in others depending on access to high quality training data.

tpurves• 8 months ago

Thanks for calling this out. Here is a better comparison. Before Google was founded, the market for online search advertising was negligible. But the global market for all advertising media spend was on the order of 400B (NYT 1998). Today, Google's advertising revenue is around 260B / year or about 60% of the entire global advertising spend circa 1998.

If you think of openAI like a new google, as in a new category-defining primary channel for consumers to search and discover products. Well, 2% does seem pretty low.

beowulfey• 8 months ago

But that occurred with a new form of media that people now use in more of their time than back before Google. It implies AI is growth in time spent. I think the trend is more likely that AI will replace other media.

tonyedgecombe• 8 months ago

Today, Google's advertising revenue is around 260B / year or about 60% of the entire global advertising spend circa 1998.

Or about 30% of the global advertising spend circa 2024.

I wonder if there is an upper bound on what portion of the economy can be advertising. At some point it must become saturated. People can only consume so much marketing.

Keyframe• 8 months ago

i hate to be that guy, but.. before google was around, it was the first wave of commercial internet - for all of what five years? Online search was a thing, in-fact it was THE thing across many vendors and all relied on advertising revenue. Revenue on the internet which was ramping up still for dotcom era in those few years. Google's ad revenue vs 98 global ad spend revenue - is that inflation adjusted? Global markets development since then, internet economy expansion, even sheer number of people alive.. completely different worlds.

What might stand from comparison is google introduced a good product people wanted to use and innovative approach to marketing at the time which was unobtrusive. Product drive the traffic. It was quite a bit before Google figured it all out though.

pbreit• 8 months ago

FT is really losing it. Used to be reliable with quality takes. Now mostly following in line with the spectating takers.

KaiserPro8• 8 months ago

In what sense? They are asking the questions that investment managers would be asking, like: "where the fuck is your revenue going to come from"

and "200 billion, when your revenue is 12, is the market you are targeting actually big enough to support that"

almostkindatech2• 8 months ago

It's FT Alphaville, which means it's only supposed to be a blog-style comment on the HSBC report

NewsaHackO2• 8 months ago

It is to the point of yellow journalism. They know that the "OpenAI is going to go belly up in a week!" take is going to be popular with AI skeptics, which includes a large number of HN viewers. This thread shot up to the top of the front page almost immediately. All of that adds to the chances of roping in more subscribers.

_trampeltier• 8 months ago

FT (like all media) does not sell news, they sell ads.

techblueberry3• 8 months ago

Seems like ad targeting might be a tough sell here though, it’d basically have to be “trust me bro”. Like - I want to advertise coca-cola when people ask about terraforming deserts? I think I wouldn’t be either surprised by amazing success or terrifying failure.

Perplexity actually did search with references linked to websites they could relate in a graph and even that only made them like $27k.

I think the problem is on Facebook and Google you can build an actual graph because content is a thing (a url, video link etc). It will be much harder to I think convert my philosophical musings into active insights.

ml-anon4• 8 months ago

So few people understand how advertising on the internet works and that is I guess why Google and Meta basically print money.

Even here the idea that it’s as simple as “just sell ads” is utterly laughable and yet it’s literally the mechanism by which most of the internet operates.

observationist2• 8 months ago

You have to take into consideration the source. FT is part of the Anthropic circle of media outlets and financial ties. It benefits them to create a draft of support to OpenAI competition, primarily Anthropic, but they(FT) also have deep ties to Google and the adtech regime.

They benefit from slowing and attacking OpenAI because there's no clear purpose for these centralized media platforms except as feeds for AI, and even then, social media and independents are higher quality sources and filters. Independents are often making more money doing their own journalism directly than the 9 to 5 office drones the big outlets are running. Print media has been on the decline for almost 3 decades now, and AI is just the latest asteroid impact, so they're desperate to stay relevant and profitable.

They're not dead yet, and they're using lawsuits and backroom deals to insert themselves into the ecosystem wherever they can.

This stuff boils down to heavily biased industry propaganda, subtly propping up their allies, overtly bashing and degrading their opponents. Maybe this will be the decade the old media institutions finally wither up and die. New media already captures more than 90% of the available attention in the market. There will be one last feeding frenzy as they bilk the boomers as hard as possible, but boomers are on their last hurrah, and they'll be the last generation for whom TV ads are meaningfully relevant.

Newspapers, broadcast TV, and radio are dead, long live the media. I, for one, welcome our new AI overlords.

borski2• 8 months ago

All of which is great theory without any kind of evidence? Whereas the evidence pretty clearly shows OpenAI is losing tons of money and the revenue is not on track to recover it?

roadside_picnic2• 8 months ago

It also estimates that LLM companies will capture 2% of the digital advertising market, which seems kind of low to me.

I'm not super bullish on "AI" in general (despite, or maybe because of working in this space the last few years), but strongly agree that the advertising revenue that LLM providers will capture can be potentially huge.

Even if LLMs never deliver on their big technical promises, I know so many casual users of LLMs that basically have replaced their own thought process with "AI". But this is an insane opportunity for marketing/advertising that stands to be a much of a sea change in the space as Google was (if not more so).

People trust LLMs with tons of personal information, and then also trust it to advise them. Give this behavior a few more years to continue to normalize and product recommendations from AI will be as trusted as those from a close friends. This is the holy grail of marketing.

I was having dinner with some friends and one asked "Why doesn't Claude link to Amazon when recommending a book? Couldn't they make a ton in affiliate links?" My response was that I suspect Anthropic would rather pass on that easy revenue to build trust so that one day they can recommend and sell the book to you.

And, because everything about LLMs is closed and private, I suspect we won't even know when this is happening. There's a world where you ask an LLM for a recipe, it provides all the ingredients for your meal from paid sponsors, then schedules to have them delivered to your door bypassing Amazon all together.

All of this can be achieved with just adding layers on to what AI already is today.

Avicebron• 8 months ago

What in the dystopia?

The "holy grail" of the AI business model is to build a feeling of trust and security with their product and then turn around to try and gouge you on hemmorrhoid cream and the like?

We really need to stop the worship of mustache twirling exploitation

torginus3• 8 months ago

In my experience LLMs suck at (product) recommendations - I was looking for books with certain themes, asked ChatGPT 5, the answer was vague, generic and didn't fit the bill. At another time I writing an essay and was looking for famous figures to cite as examples of an archetype, and ChatGPT's answers were barely related.

In both cases, LLMs gave me examples that were generally famous, but very tangentially related to the subject at hand (at times, ChatGPT was reaching or straight up made up stuff).

I don't know why it has this bias, but it certainly does.

idontwantthis• 8 months ago

It also estimates that LLM companies will capture 2% of the digital advertising market, which seems kind of low to me.

This cannot all be about advertising. They are selling a global paradigm shift not a fraction of low conversion rate eyeballs. If they start claiming advertising is a big part of their revenue stream then we will know that AI has reached a dead end.

baxtr• 8 months ago

I mean seriously, if they offered ChatGPT for free but with ads I bet many would use that.

There is your multi-bn $ revenue stream.

nextaccountic• 8 months ago

it will likely be harder to block

Maybe users will employ LLMs to block ads? There's a problem in that local LLMs are less powerful and so would have a hard time blocking stealth ads crafted from a more powerful LLM, and would also add latency (remote LLMs add latency too, but the user may not want to pay double for that)

everdrive• 8 months ago

Do we have a model for how advertising with LLMs will work?

darkwizard422• 8 months ago

Is there any link directly to the report? I am unable to find any in this article or a number of others which seem to just copy the same information here.

I think beyond the number of crazy assumptions (no Google taking market share in the consumer market?? only 2% of digital advertising expected to be captured by OpenAI?) it is hard to nail down which levers could move which might make this funding hole disappear.

NewsaHackO2• 8 months ago

No, and there never will be. The second you ask anyone for hard numbers about OpenAI’s (or any AI’s) unprofitability, everyone evaporates (which is weird considering how quantitative the HN crowd tries to be, compared to, say, reddit). Everything is just “professional opinions” on economics by tech bro bloggers.

darkwizard422• 8 months ago

I'm not looking for OpenAI numbers, I'm looking for the HSBC report which would contain more numbers regarding how they did their estimates.

aurareturn15• 8 months ago

  The team also assumes LLM companies will capture 2 per cent of the digital advertising market in revenue, from slightly more than zero currently.

This seems quite low. Meta has 3.5 billion users and projected ~$200b revenue in 2025. ChatGPT is at ~1 billion so far. By 2030, let's just stay ChatGPT reaches 2 billion years or 57% of Meta's current users. I'd like to think that OpenAI's digital ad revenue should reach 10% by 2030 an then accelerate from there. In my opinion, the data that ChatGPT has on a user is better than the inferred user data from Instagram/FB usage. I think ChatGPT can build a better advertisement profile of each user than Meta can which can lead to better ad targeting. Further more, I think ChatGPT can really create a novel advertisement platform such as learning about sponsored products directly via chat. I'm already asking ChatGPT about potential products and services everyday like medicine, travel, gadgets, etc.

I think people are severely underestimating ChatGPT as a way to make money other than subscriptions. I also think people are underestimating the branding power ChatGPT has already. All my friends have ChatGPT on their phone. None of them except me has Gemini or Claude app.

This doesn't account for OpenAI's other ambitions such as Sora app.

Hey Sam Altman or OpenAI employee, if you are reading this, I think you should buy the North American version of TikTok if the opportunity presents itself. The future of short videos will be heavily AI generated/assisted. Combine Tiktok's audience with your Sora tools and ChatGPT data and you got yourself a true Instagram competitor immediately. If the $14b sales price of US Tiktok is real, that's an absolute bargain in the grand scheme of things.

l2silver• 8 months ago

I wonder if meta is a poor comparison for advertising because they're users tend to spend more time on their products doom scrolling, as opposed to something like google, where you get your answer right away and move on.

aurareturn15• 8 months ago

ChatGPT is a hybrid between Google and Meta. People use it for product and service search and research. People also use it as a companion - especially young people.

It's becoming social as well: https://openai.com/index/group-chats-in-chatgpt/

gtirloni• 8 months ago

Meta has 3.5 billion users and projected ~$200b revenue in 2025.

Meta has WhatsApp, Instagram, and Facebook to account for that.

OpenAI has ChatGPT (not a social platform).

It seems to me you're comparing apples and oranges here.

k_kelly• 8 months ago

Google makes over a billion of its ad Revenue from search. Intent works.

But I think Open AI is not a slam dunk for Ads. Gemini and AI mode will compete for the same budget, and Google's Ad machine is polished.

I think eventually you will buy Ads for Open AI in Google's marketing platforms, just like most people buy bing ads in Google.

aurareturn15• 8 months ago

  OpenAI has ChatGPT (not a social platform).

You didn't state reasons why not being a social platform matters here.

Anyways, check this out: https://openai.com/index/group-chats-in-chatgpt/

  It seems to me you're comparing apples and oranges here.

I don't think so. 1 billion users and a clear intention to deliver ads with an immense amount of data on users. That's a clear threat to both Meta and Google.

PS. That's why Meta and Google are all in on AI. OpenAI is an existential threat to both in my humble opinion.

KaiserPro8• 8 months ago

It seems to me you're comparing apples and oranges here.

apart from those oranges have ~100bn a year to spend on rnd and still make a profit, where as openai doesn't

So yes, it is apples to oranges. but its reality.

edm0nd• 8 months ago

I think the play here for OpenAI is they will eventually acquire reddit and that will be their first intro into a social platform.

Then they will have a social platform that they will continue to use to mine AI training data from + a source of ad revenue.

arionmiles• 8 months ago

I think you should buy the North American version of TikTok if the opportunity presents itself. The future of short videos will be heavily AI generated/assisted.

I will have whatever you're smoking. If a social media platform literally proves the dead internet theory, it's not making any money.

csomar• 8 months ago

I actually believe we are speed running into this. I have seen way too many people watching AI generated videos and scrolling through them.

MisterTea• 8 months ago

short videos will be heavily AI generated/assisted.

Low effort input. Low effort consumption. What a depressing vision of the suture. This is why I don't use social media.

mbesto7• 8 months ago

Meta has 3.5 billion users and projected ~$200b revenue in 2025

Meta makes about $200B on ads, Google makes about $235B on ads. Advertising is roughly 1.5% of the total GDP of the US and hasn't changed in 20+ years. So what you have is a big ass pie with a few players fighting for it that barely grows every year.

OpenAI has to somehow:

1. Compete directly with Google Gemini and Meta's Llama for a piece of users pie with a product that has very little differentiator (functionality and technically speaking).

2. Have to prove to advertisers that their single dollar ad purchase on OpenAI is categorically worth more than any other channel.

3. Have enough forward capital to continue purchasing capital-intense hardware purchases.

4. Having enough capital to weather any potential economic headwinds.

I know where my bet is.

roflyear• 8 months ago

They have to compete against entities who really know what they are doing.

aurareturn15• 8 months ago

OpenAI has branding power, a clear product focused mindset, focused attention, and moves faster than Google and Meta. Nearly 1 billion users in 3 years is no joke.

We're on Hacker News. Y Combinator literally teaches their companies that they can beat incumbents using focus and speed.

My bet is on OpenAI. When they IPO, I can easily see them with $1 trillion in valuation and raise the a record amount of money in an IPO.

If Meta and Google don't see OpenAI and LLMs as an existential threat, they wouldn't invest so much. I think AI has that potential to completely disrupt Google and Meta because it fundamentally changes the way people behave. It's a paradigm shift. It isn't just playing the same game.

naveen99• 8 months ago

What about money spent on software developers, other knowledge work… AI could take 10-20% of spending on humans… that would be a few trillion per year.

mkup• 8 months ago

I can reset my advertisement profile by creating a new account on ChatGPT, for Meta platforms (Facebook, Instagram and WhatsApp) this is not the case.

ugh123• 8 months ago

None of them except me has Gemini or Claude app.

Do they use Google docs/sheets? Or even Google Search anywhere? Then they have Gemini integrated in some way

JohnMakin• 8 months ago

people hate ai content. if you dont believe me go into the comment sections of basically any IG reel these days. Plus, nothing locks these videos/reels into a single platform. I’ve seen so many sora videos on IG and I’ve yet to (and dont want to) use sora.

sigmar• 8 months ago

People hit like and then comment "ai"... I think they love being mad at ai or aren't mad enough to stop hitting like. (Just today I saw a viral video on IG of a monkey on the side of a mountain path jumping onto a man's umbrella and getting taken away by the wind)

aurareturn15• 8 months ago

They also love it. I see pure AI videos go viral all the time.

ZiiS3• 8 months ago

Raising $207B is plausible vs the dozens of Nuclear Power plants they also need.

Lalabadie• 8 months ago

Yeah, that's the "so it can continue to lose money" part.

yehat• 8 months ago

No, they can use the ideas from The Matrix for power delivery.

ZiiS3• 8 months ago

Whilst the rest of that documentary is spot on; the human battery ideas were overly optimistic.

ripped_britches• 8 months ago

I heard this about Amazon for 20 years

nasmorn• 8 months ago

Amazon raised like 10million. People complained about lack of dividends but that was at least money earned

zerosizedweasle3• 8 months ago

Amazon wasn't committing to larger spending in one year than the US defense budget.

silveraxe93• 8 months ago

2025 US defense budget is $849.8 billion[1].

Had a look and:

In total, OpenAI aims to invest approximately $1.4 trillion in computing infrastructure – encompassing Google Cloud, Nvidia chips, and data center expansions.

Huh yeah fair. That's more than the yearly defense budget. Absurd. Though I'm sure it's not _yearly_

- [1] https://en.wikipedia.org/wiki/Military_budget_of_the_United_...

bpt3• 8 months ago

To add to the valid counterpoints in the existing replies, Amazon was cash flow positive for most of those 20 years, so they were investing their own money back into things that could generate even more revenue (and profit!) for the company.

OpenAI is still losing money much faster than it can make it and is planning to accelerate those losses indefinitely.

I think the most likely outcome is that it turns into something like Uber, where they continue to lose money waiting for a major technological leap (truly unassisted and reliable AI in this case, fully self-driving cars in the case of Uber) and then pivot a bit to a largely unnecessary and poorly executed business model that people reluctantly use for the most part (with some eager advocates) but makes some money.

Rebuff50073• 8 months ago

Amazon had a product on day 1... particularly one that was unique and made a lot of sense for the moment it was introduced.

jandrese• 8 months ago

Selling books online was certainly profitable, but I'm not sure about unique. Amazon's big success is that they had no particular ties to any existing publisher so they didn't have the corporate headwinds of "this will kill our brick and mortar stores and their distribution systems!".

coffeebeqn3• 8 months ago

OpenAI doesn’t have a product? Have we existed in the same reality for the last 3 years? Something something fastest grown user base in the history of tech

reducesuffering• 8 months ago

People still said this about Uber as of last year, few realizing that they're generating $10B in profit a year now

mrweasel3• 8 months ago

Uber is also more or less a monopoly in many place. They took over the taxi industry and now drivers make less money than before.

OpenAI has multiple competitors, who all build their LLMs for less money.

mandevil• 8 months ago

You misunderstand the Amazon story. Amazon did two pre-IPO funding rounds: <1m angel round and an 8m Series A led by Kleiner Perkins. That's it. In contrast, OAI has raised almost 60 billion in 10 funding rounds, and if you RtFA you can see the estimates are they have to raise hundreds of billions more.

For the IPO itself Amazon sold 3 million shares at $18, for a raise of 54m (from the IPO alone they had enough cash to pay off every investor up to that point). In July 2001, in the heart of the dotcom crash, they raised 100m by selling equity to undisclosed investors, and of course they have been using shares as part of their compensation packages for a very long time, but that's about it for Amazon's entire equity raises.

They did raise 15b in a bond issuance a few weeks ago, their first bonds issued since 2022, with the money going to several things but mostly AI. However, since bond payoffs are very different from selling equity this is a very different play from what OAI is doing. Amazon will never pay more than a fixed amount for that money, capped upside to the bond-holders.

The reason this is different is that Amazon has largely run either a small profit or a small loss, quarter after quarter, because they take their profits and instead of recording it, putting it in a bank, or dividend-ing it to shareholders they put it into building datacenters and warehouses and software and the like. But because of that enormous cash generation they have only rarely tapped outside investors, either in bonds or equity markets. OAI is not generating near enough cash to fund their operations, so they have been selling equity in absolutely enormous quantities- they have already raised more cash pre-IPO than any company in history and outside estimates like this one from HSBC call for them to blow past the amount they've already raised. This is fundamentally very very different.

aika_london• 8 months ago

How to read FT for free

mikestew• 8 months ago

https://news.ycombinator.com/item?id=46058125

almostkindatech2• 8 months ago

If you sign-up for a free account you can read FT Alphaville, which is the blog-style section of the FT containing articles like this one

fragmede5• 8 months ago

I'll tell you for $45/month.

bill33892• 8 months ago

It is not losing money, the whole industry haven't figured out how to generate revenue yet. it is the starting phase of LLM like we experienced in .com bubble. Is it a bubble at this point? Yes. Can it generate revenue in the future? Yes. Will openAI survive in this bubble? Maybe.

SalmoShalazar• 8 months ago

It is quite literally losing money at an unsustainable rate. They need a path to profitability otherwise this is a massive boondoggle for all of the investors

Mistletoe2• 8 months ago

Unfortunately “all of the investors” is in reality the whole world’s markets due to the disgusting top heavy nature of the SP500 currently.

I have been talking to AI a lot about what portfolios will survive that crash. :)

bill33892• 8 months ago

we are still at early age. think it as human, the early age is burning money. when grow older, the ability of making money increases.

Compared with .com bubble. most .com dies, and the one who survived are GOOGLE, AMAZON, Tencent etc.

mcbuilder• 8 months ago

Yeah, financial bubble != useless technology. Maybe coding agents do cost $50 per month in the long term, but I might just pay that for entertainment and personal stuff. Like, I don't even try to vibe code my job, but in the evenings having a cool slop generator is good times.

Right now I use a Chinese vibe code plan, really good value.

Rebuff50073• 8 months ago

You seem to be complicating your thinking here.

They are spending more money than they are bringing in. This means they are losing money.

tantalor5• 8 months ago

as ubiquitous and useful as Microsoft 365

What is this saying? Is this sarcastic?

I don't know anybody with a Microsoft 365 subscription.

I suppose the cloud storage is nice, but you can do much better; Google gives you double that for the same price ($99/yr).

zerosizedweasle3• 8 months ago

Businesses, a lot of people have it through work.

hdjrudni3• 8 months ago

I suppose the cloud storage is nice, but you can do much better; Google gives you double that for the same price ($99/yr).

Nuh uh. I get 6TB of OneDrive for $100/yr*. Granted, it's across 6 accounts.

For $100, I get 2TB of Google One.

Edit: OK, so they upped it to $130/yr.

fragmede5• 8 months ago

I don't know anybody with a Microsoft 365 subscription

I don’t either, but the lesson to be learned is that you live in a bubble. Microsoft makes many millions of dollars a year off of those subscriptions. Just because the bubble of people you interact with doesn’t mean that those people don’t exist.

OK no that was a lie. I know one person that has a Microsoft 365 subscription. I hate it when he sends me word or outlook document links or whatever the hell. Just use Google docs, dude.

fodkodrasz• 8 months ago

Hi. Now you know one person.

Also: Google One gives you 2 TB, MS 365 Family gives 6x1TB for roughly the same price (for a total of 6 seats). The packages differ in multiple ways, being different fit for different use cases.

Also note: I'm using Google docs at work, and while Word for one example has too many features, Google docs is lacking even on the basics like document styling (think custom paragraph styles), it is painfully inadequate for business use, lot of work is wasted on working its limitations around.

ChicagoDave• 8 months ago

TechCrunch: Anthropic is projecting positive cash flow by 2028, while OpenAI is expecting sizable losses, with cash burn reaching $14 billion in 2026

pjmlp3• 8 months ago

What about the usual capitalism point of view?

If their business isn't sustainable they should go bankrupt, and close shop.

Joel_Mckay• 8 months ago

Except the 7 firms make up >30% of all market growth, and move more capital than entire countries. Yes, they are hemorrhaging cash with every new customer, and burdening taxpayers by eating community electrical and water infrastructure.

In terms of business, it is not sustainable:

https://www.youtube.com/watch?v=t-8TDOFqkQA

The hype-cycle is nothing new =3

"Memoirs of extraordinary popular delusions and the madness of crowds" (Charles Mackay, 1852)

https://www.gutenberg.org/files/24518/24518-h/24518-h.htm

rchaud8• 8 months ago

Capitalism makes more sense if it's thought about purely in terms of individual self interest as supposed to something that leads to an efficient market on aggregate.

The CEOs making big calls across the economy have already negotiated golden parachutes in the event of their failure.

The financiers and lawyers getting a chunk of each bond deal they close have every incentive to raise more than what's actually needed. Investment funds flush with ZIRP dollars have every incentive to plow it back into investments to show that "the money is at work".

pjmlp3• 8 months ago

Yeah self interest is how we end with world we have today at the edge of destruction through various mechanisms.

dgb232• 8 months ago

Boom and bust hype cycles have always been a feature of capitalism, especially for advanced technology. Perhaps the only way to know the limit is to overshoot.

pjmlp3• 8 months ago

And then take the whole economy with it when blows up.

paxys• 8 months ago

TL;DR - financial analysts look at current charts and project them foward by 5 years and go "wow the numbers look bad".

Sure OpenAI may well be bleeding money into the 2030s, or may even go bust completely depending on how pessimistic you are, but the analysis completely skips:

- They are building their own data centers, and will be less reliant on renting compute from Microsoft and Amazon over time.

- Once the AI bubble has subsided costs for GPU purchases and rentals will decrease significantly. Plus there will be more advancements and competition in the space (e.g. Google TPUs) and Nvidia will no longer be able to name their own price.

- We will write more efficient software for training and inference.

- Once user growth is tapped out OpenAI will no longer need to have the overly generous free tier that they do today. And if they decide to turn up the advertising faucet these users could bring in a ton more revenue than in the projection. Thinking that every AI company combined will capture only 2% of the total digital advertising market is ridiculous. AI apps are already challenging social media for scrolling time.

Basically, the entire space is evolving so rapidly that it's pointless to make a projection with the assumption that the landscape isn't going to change from here on.

logsr3• 8 months ago

I think you are right that the entire analysis is flawed. The Amazon and Microsoft "rental" deals have inflated price tags because of the circular financial arrangements between them and OpenAI, and because those future revenue streams can be used notionally to finance CapEx. All of the Stargate DC build is being done through for-profit SPVs, so the financials are murky, but building the infra gives them collateral for debt, and they are going to lease the compute to the highest bidder, so there is a whole scheme for getting out of the non-profit box, creating a self-perpetuating loop of borrowing to build, using what they build as collateral for more borrowing, raising additional revenue and hedging by leasing compute to 3rd parties, and then using the for-profit SPVs to cross-subsidize OpenAI proper. That plan has enormous risks of its own (can the leadership team of OpenAI effectively build a competitor in the hyperscale compute space?) but whatever happens, it won't just be straight line scaling their current deals with existing hyperscalers.

raincole2• 8 months ago

ChatGPT just launched "shopping research."[0]

Hideous idea as it is, I fully expect they break even in 2026.

[0] https://openai.com/index/chatgpt-shopping-research/

5424582• 8 months ago

Honestly, this is huge for people like me who tend to over-research and over-think the hell out of product choices. "Find me a top-fill warm-mist humidifier that looks nice, is competitively priced against similar products, and is available from a retailer in $city_name. Now watch for it to go on sale and lmk."

If they can figure out how to get the right kickbacks/referrals without compromising user trust and really nail the search and aggregation of data this could be a real money-maker.

chneu• 8 months ago

Trusting AI with your shopping is very short sighted.

Lol what a terrible idea. Why not just hand every decision you'll ever make to AI?

Nobody needs critical thinking or anything. Just have AI do it so you save $3 and 4 minutes.

GuinansEyebrows2• 8 months ago

If they can figure out how to get the right kickbacks/referrals without compromising user trust

i'm trying to envision a situation in which the former doesn't cancel out the latter but i'm having a pretty hard time doing that. it seems inevitable that these LLM services will just become another way to deliver advertised content to users.

squigz• 8 months ago

If they can figure out how to get the right kickbacks/referrals without compromising user trust and really nail the search and aggregation of data this could be a real money-maker.

As another commenter points out, "not compromising user trust" seems at odds with "money-maker" in the long-term. Surely Google and other large tech companies have demonstrated that to you at this point? I don't understand why so many people think OpenAI or any of them will be any different?

phatfish3• 8 months ago

For this to be useful they need up to date information, so it just Googles shit and reads Reddit comments. I just don't see how that is likely to be any better than Googling shit and reading Reddit comments yourself.

If they had some direct feed of quality product information it could be interesting. But who would trust that to be impartial?

AlexandrB• 8 months ago

If they can figure out how to get the right kickbacks/referrals without compromising user trust

This is a complete contradiction. Once there's money involved in the recommendation you can no longer trust the recommendation. At a minimum any kind of referral means that there's strong incentive to get you to buy something instead of telling you "there are no good options that meet your criteria". But the logical next step for this kind of system is companies paying money to tilt the recommendation in their favour. Would OpenAI leave that money on the table? I can't imagine they would.

leoh2• 8 months ago

Meh. Google has something better cooking.

https://www.theverge.com/news/819431/google-shopping-ai-gemi...

tarsinge3• 8 months ago

Google is already integrating this directly in search https://blog.google/products/shopping/agentic-checkout-holid...

nightshift1• 8 months ago

I tried it yesterday by comparing the specs of a few low-budget desktops for my father. It worked well and saved me a lot of time and the hassle of comparing multiple tabs on a PC.

I am a bit worried about the feature where it calls the shops for inventory checking. That's the whole point of having a website. Now we are going to have expensive AI that calls other AI answering machines and no value will be added. Meanwhile, it will become even more difficult to talk to a human when necessary.

adidoit• 8 months ago

LLMs have high utility for coding. The PMF is so strong that even with just coding i feel they will see an ARPU expansion beyond conservative assumptions.

There are adjacancies in white collar work like financial analysis that they will go after. All these will capture high ARPU usage.

Consumer is not their only path to revenue but it is probably the easiest to model. The enterprise play to automate and accelerate some white collar workers is a clear target not reflected here.

zerosizedweasle3• 8 months ago

They've committed to spend an amount equal to the entire US defense budget just in October.

skizm• 8 months ago

I think you mean the US WAR budget! /s

Culonavirus• 8 months ago

I swear on the crap I just pulled out of my ass that I'll spend 100 quadrillion dollars. Imaginary ones of course. Now pump my stock.

Seriously though, massive recession is on the horizon, no one is going to be spending squat.

serendipityAI• 8 months ago

but with coding, the users are mercenary and will instantly switch to a model that is better. Less sticky compared to the consumer product

guizadillas2• 8 months ago

They can get all the enterprise contracts they want but I don't think it will be enough

tehjoker2• 8 months ago

You already can't trust llm output. How will you trust it when its actively steering you based on profit motive?

ragazzina• 8 months ago

Do you trust the result of your Google searches?

guizadillas2• 8 months ago

Who does?

tehjoker2• 8 months ago

Not really but it would be nice if we could have high quality non manipulative information :/

chimineycricket• 8 months ago

Yes, in the sense that Google is not hallucinating search results or making up products when searching for it.

mise_en_place• 8 months ago

The reason for this is that leverage is extremely expensive and punished in the current macro regime. OpenAI will lose money faster if they scale up. That's because the Fed can capitulate all it wants, but real interest rates and real yields won't move. The market is saying "pay me".

Aeroi• 8 months ago

Google earned $264.59 billion in ad revenue in 2024 alone. OpenAI can figure it out.

rchaud8• 8 months ago

And all Google did was develop the world's most popular search engine, email host, web browser, ad network, video streaming site, mobile operating system and cloud office suite and deliver profits for 20 straight years.

osn9363739• 8 months ago

OpenAI will just get their AI to make it happen.

austin-cheney• 8 months ago

The top two comments mention that capturing, at minimum, 2% of the digital advertising market seems low. I disagree. I see that as an enormous hill to climb.

The LLMs will create new content, but they aren't creating new business channels in the advertising industry. As an example even once Google achieved search domination they still didn't have this. They had purchase a lot of things to make that happen like Urchin, Adscape, DoubleClick, YouTube, and a lot more.

anshumankmr2• 8 months ago

I have two words: 1) government contracts 2) ad dollars

setnone• 8 months ago

The third might be 'AI Device'

anshumankmr2• 8 months ago

What I am reading makes it sound similar to the Humane Pin but with Jony Ive's design

Aldipower• 8 months ago

That are 4 words. ;-) Other then that yes, goverment contracts, meaning offloading the costs to the regular people. I think the US goes all in with AI, trying to get world dominant and controlling the market. But I think this is a mistake and the US will get into trouble with this.

captainkrtek• 8 months ago

It's so sad how much money leaders will effortlessly pump into something like this, when we still have existential threats of climate change, incurable diseases, poverty, housing, and so on.

Meanwhile ungodly amounts of money are being used so some boomer can generate a AI video of a baby riding a puppy.

jillesvangurp3• 8 months ago

I think they are missing a few very significant revenue sources that likely going to grow beyond just simple enterprise user accounts for Chat GPT.

I'll call out two of them.

Image, video, and other content generation is going to become more important and companies will be spending on that. We've seen some impressive improvements there. IMHO near term a lot of that stuff might start showing up in advertising and news content, the whole media industry is going to be a massive consumer of this stuff. And there's going to be a lot of competition for the really high quality models that can be run at scale. Five years until 2030 is a lot of time for some pretty serious improvements to land.

Another area that the article skips over is agentic tools. Those are showing a lot of promise right now. Agentic coding tools are just the tip of the iceberg here. A lot of these tools are going to be using APIs. So API revenue is a source of revenue. There are applications across the entire IT industry. SAAS, legacy software, productivity tools, etc.

Yes 207B is a lot of money. And there's no guarantee that OpenAI comes out on top "winning" all these markets of course and we can argue about how big these markets will be. But OpenAI does have a good starting position and some street credibility here. It's a big bet on revenue and potential here. But so is betting against all that and dismissing things. And there's a lot of middle ground here.

olelele• 8 months ago

This sounds very similar to the Tesla stock value hype train. It’s all a gamble on the promise of tech that isn’t quite there yet.

qwertox2• 8 months ago

What I don't understand is how Elon will ever compete with Chinese humanoid robot pricing and output. He's known for not caring about privacy, so there's no real difference between buying a Tesla one or a Chinese one. Both will look and listen into your home and transfer as much data as possible to their true owners.

He congratulates Jeff Bezos for New Glenn, and rightly so, but he's absolutely silent about the Chinese robots. One has to admit that they're already ahead of the US. This comes from a German who well recognizes how far behind Germany is in comparison to the US, in regards to any digital technology.

wiether• 8 months ago

IMHO near term a lot of that stuff might start showing up in advertising and news content, the whole media industry is going to be a massive consumer of this stuff.

One of the candidate for mayor of New York ran a whole AI video ad campaign.

Half of the real estate listings have AI remodeled pictures.

Probably a quarter of the printed ads I see each day are AI generated.

It will only increase, but it's already here.

wahnfrieden4• 8 months ago

Real estate agents only use AI because it's cheaper than paying $70 CAD per image for human-made images. There's a cap on how valuable the AI generated images are.

KaiserPro8• 8 months ago

Image, video, and other content generation is going to become more important and companies will be spending on that. We've seen some impressive improvements there.

They are assuming that people _want_ automated content enough to pay for it.

Like at the moment its great because its essentially free, but paying >200billion?

Are we assuming that we can automate the equivalent of instagram, netflix/disney and whatsapp and make advertising revenue?

I think the unmentioned pivot is into robotics, which seems to have actual tangible value (ie automation of things that are hard to do now)

but still 200billion in r&d

LogicFailsMe2• 8 months ago

I would assume that generative AI will be able to make endless hours of personalized reality TV content that will hit a surprisingly large demographic. And then it can use recommendation algorithms to distribute that reality TV AI slop to all the people that might or might not want it in order to turn it profitable. Evidence: all the god-awful foreign reality TV on Netflix currently.

It's a bit harder to replace Disney at this point, but give it 20 years. I'm bullish on AI slop on par with The Apple Dumpling Gang or Herbie Goes to Monte Carlo within a decade or so. Evidence: The rapid evolution of AI generated video in the past few years extrapolated into the future.

Hamuko4• 8 months ago

Yeah, I have a hard time believing that there’s a massive demand for AI-generated videos and images. Like, why would the news industry want to generate images and videos with AI? It’s not news. The advertising industry maybe, but even then it’s probably not your top brands that go full in on it. If you see that all of Apple’s adverts are generated with AI, it’ll probably lower your brand perception.

We already put more importance on handmade goods vs. factory-made, even if the latter is cheaper and better quality. I have my doubts about humanity collectively embracing content generated from prompts by black boxes.

giva• 8 months ago

Actually, I sense a mounting "AI fatigue". Angry comments under AI contents. Social media accounts that proclaim to be "AI Free". I was thinking today that the killer app for AI could be a filter that automatically exclude all AI content.

barbazoo• 8 months ago

They are assuming that people _want_ automated content enough to pay for it.

I’m assuming gen ai will supplement so instead of ten artists producing content you’ll have three orchestrating and correcting but the output will be indistinguishable from what it was before. Just now the margin is much higher.

I never think of direct to consumer sales in this context.

vl2• 8 months ago

Everything professionally produced you currently see uses a lot of CGI, and you can’t even tell.

Essentially what they are doing is cheaper, more accessible CGI. And in the same way at it is now, you are not going to be able to tell it was used in expensive productions and will be able to see it in the cheap productions.

array_key_first8• 8 months ago

Right, the main reason media has value is because of scarcity. Generated media is almost worthless because there's seemingly infinite piles of it.

If a painting costs $20 bucks, and you can generate 1 million paintings, that doesn't mean you just made $20 million dollars. It means paintings no longer cost $20 bucks.

jillesvangurp3• 8 months ago

They are assuming that people _want_ automated content enough to pay for it.

People love money. That's not an assumption but established fact. Producing content manually is expensive.

You are way too emotional about this. Ads are a proven business model. We have AI models producing some pretty slick video and images now that are more or less publication ready quality. For next to nothing. The media industry not saving cost when they can is unlikely in my view.

Robotics is indeed another angle that OpenAI might do something with. I'd say that adds to my argument. That's a potentially really big market as well. But I don't consider OpenAI to be clearly leading that one. There are at least half a dozen companies active producing humanoid robots. But undeniably those might be a lot more useful with AI that understands and can interpret visual imagery.

Like at the moment its great because its essentially free, but paying 200billion?

OpenAI needs to about 20-30x their current revenue over the next five years. A tall order. But these are large markets. It's not impossible. And when the financial times is ignoring major revenue sources it needs calling out.

rzerowan• 8 months ago

The main thread through the case laid out has a fundamental flaw "assumes a spherical cow in a vaccuum" . There are cheaper/faster more open competitors out there doing as much as OAI and getting integrated in real product pipelines across the planet.

Its not a Blueray vs HD-DVD situation (winner takes all and competition dies on the vine) or early Google vs Yahoo Search i would posit its more like bitkeeper vs git - and will probably eveolve into a git/hg/bazaar type situation. Costs will only keep dropping and the easiest/cost effective options will get faster uptake in the backend dev world where it matters.If im integrating a LLM and the whole field can kinda do the equivalent capex/opex will push the decision.

aprilthird20212• 8 months ago

But there's fierce competition since no moat. How will generated images and videos avoid being a stock photo situation?

jillesvangurp3• 8 months ago

The moat is the infrastructure needed to run this at "Google" scale for the entire planet. So far only OpenAI and Google have managed to pull that together. It's just really hard to raise the hundreds of billions you'd need for that.

techblueberry3• 8 months ago

I think actually selling media is going to be tough. 1: you have to beat the current price point so people will use it, 2: it can’t be too cheap or you can’t make money. That mad market price point makes it hard to get right. The more content the fewer eyeballs, meaning the less value, meaning people willing to pay less. If it makes making movies a lot cheaper, then there’s a lot less money to be made.

The thing about tech is it has to scale to meet tech valuations, and there’s a reason instagram basically gives content creation tools away for free.

conscion• 8 months ago

These are all commodity use-cases though. Google, Meta, and Anthropic already all have competing products of equivalent quality and customer pricing is being driven down aggressively.

paulddraper• 8 months ago

This is why consensus will never produce innovation.

OpenAI has many plausible monetization avenues. (Whether it will execute on them -- a fair question. But acting like they just don't exist is low IQ.)

Take ONE example: online shopping.

Online shopping is $6-7 trillion per year, growing 7% annually.

Suppose ChatGPT captures 10% of that with a 5% fee. (Marketplaces like Amazon and Walmart charge 15%. Ebay is 5%.) That's $200B over five years.

bofadeez• 8 months ago

Meanwhile Google does not have to raise money and they're profitable whether AI works or not.

fpauser2• 8 months ago

AI is/will be the mother of all bubbles.

yk• 8 months ago

It's really hard for start ups to compete for VC money: "Hello Mr. VC I'm going to burn your money for buzzword" just no longer works, first openAi has an industrial buzz word generator, second their money burning plan scales much better than my money burning plan.

smallmancontrov2• 8 months ago

Yeah but they aren't a diversified portfolio of money burning plans and that's the real secret to responsible investing. I think Warren Buffet said that.

0xbadcafebee3• 8 months ago

I just realized that other industries are way larger than AI. Assuming they capture the entire advertising market, only $390 Billion was spent in the US last year. Compare that to health care, where 4.3 Trillion was spent in the US last year, or commercial banking's revenue of 1.5 Trillion, commercial real estate's 1.5 Trillion, gasoline stations' 1.10 Trillion, etc. What's amazing is, despite the fact that AI isn't making much money, is taking on considerable debt, and isn't even assured to be all that useful, one third of the stock market is now just AI crap. The economy is going to collapse because of a small, brand-new industry. This... shouldn't be possible.

nprateem• 8 months ago

I know right it's like people are buying future value rather than based on current revenues or something.

How long did Apple keep going up following the smartphone revolution?

Glemkloksdjf2• 8 months ago

Build a system which can read MRI images, now AI took over the whole MRI Analysis sector.

Let AI diagnose the avg cold, now AI took over the household / local doctor for 90% of cases.

Use AI for support, now AI took over the call-center business.

AI can already code. It might not be perfect, it might not be always good but NO ONE assumed that 2025 some matrix multiplication can mimick another human being so well that you can write with it and it will produce working code at all.

thats the hype, thats the market of ai.

And in parallel we get robotic too. Only possible because of this AI thing. Because robotic with ML is so much better than whatever we had before. Now you can talk to a robot, the robot can move, the robot can plan actions. All of these robots use some type of ML in the background. Segment Anything is possible because of AI.

Thats the reason why this 'AI crap' is so hyped.

freejazz2• 8 months ago

I don't understand why people think that AI "being able to code" has any bearing on anything else that humans do

henry2023• 8 months ago

Why is there a shortage of radiologists today if image categorization was solved 15 years ago?

Have you ever talked to AI Support?

It’s easy to name a random industry and assume you’ll automate it with a few clicks. It’s harder to actually do it.

cma2• 8 months ago

Stock market isn't the economy. If wages are largely stock comp at high valuation they get clawed back in a crash. Infrastructure spend is massive but at 70-80% margins for nvidia real cost to economy is cut by that much, aside from the datacenter and power build out which is definitely a big portion.

It could unwind cleanly as long as we don't let it infect the banking system too much, which it has started somewhat doing with more debt financed deals instead of equity financed and probably book values making it into bank balance sheets.

Truck driver wages are $180-280 billion annually and seems like something that will get replaced and should justify $1 trillion of the spend or more, economically. I think Tesla for instance only spends single digit billions in R&D most years though, so the spending may not be going to where the most immediate solid/lasting economic impacts will come from. I'm not sure what Waymo's spend is.

0xbadcafebee3• 8 months ago

I don't know about those other things, but driverless trucking isn't going to happen within the next 50 years at least. Besides all the logistical challenges and risks to businesses throughout the supply chain, you're talking about 3.6 million American truck-driver jobs. There is little else that politicians love more than saving jobs, especially blue collar, and that's a helluva lot of jobs. To put it in perspective, the TSA is basically a jobs program that costs 12 billion to employ only 58,000 people who don't do anything useful. Politicians'll do whatever it takes to keep those 3.6 million jobs. Add on the fact that truckers can and do organize, and it doesn't take many of them to shut down shipping and transportation. The trucking industry is also reticent to upgrade or spend more money; they won't even invest in electric trucks with drivers. And there's a wide variety of trucks out there with complex routes that won't be mapped, so only a few major highways will be covered, meaning you still need a driver. There will be pilot programs but that's it.

lysecret• 8 months ago

Now compare on free cash flow

zahlman• 8 months ago

This... shouldn't be possible.

1. Quite a lot of companies are not publicly traded, and therefore are not reflected in the stock market. AI companies have an incentive to be publicly traded because it's all venture-capital stuff.

2. Technology in general is always going to be over-weight anyway because these are companies that tend towards "growth" (re-investing profits into future expansion, offering to buy back stocks at a higher price as a means of compensating investors, etc.) rather than "value" (compensating investors by paying out an explicit cash dividend on shares). This tends to push their P/E multiples higher.

3. Publicly traded companies, and thus stocks, generally are valued based on speculation about future cash flows, not according to current holdings.

4. The companies that you have to add up in order to come to a figure like "one third of the stock market", are doing a lot of things outside of AI. People still play video games, and they still do GPU-accelerated data analysis with conventional techniques. People still want their computer to include an operating system, and still use their social media to talk to accounts that they know are operated by people they know in real life.

5. The term "AI" is now used as if it exclusively referred to LLMs, but other AI systems have existed for a long time and have been actually accomplishing real things in the economy.

The economy is going to collapse

There are a great many people out there who have predicted a hundred or so out of the last seven recessions. You don't know this, and there are many reasons to doubt it.

Suppose some anti-AI deity snaps its fingers tomorrow and every LLM simply spontaneously ceases to function. It's not as if we've lost the knowledge of how to do things without LLMs. It's not as if the things we created without LLMs disappear, or anything else. We at worst, at a very conservative, scare-mongering estimate revert to that level; and things were pretty tolerable at that level. And technologies that are not LLMs have also advanced since the release of ChatGPT.

redox99• 8 months ago

AI market is all the jobs that could be replaced by AI in the future. People paying 20USD/month for ChatGPT is a drop in the bucket.

Razengan• 8 months ago

Yeah this is ridiculous when you consider all the dorps who quail "Fix the existing problems of the world first!!!" when things like space exploration and other scientific endeavors without an immediate benefit are discussed. Where are they now?

fpauser2• 8 months ago

Can we just stop putting the "I" behind the "A"? Thanks.

AndrewKemendo• 8 months ago

They aren’t going to get new equity funding they are going to go public so they can start issuing bonds.

luxuryballs• 8 months ago

“We’re gonna need more fuel for this fire!”

lvl1552• 8 months ago

I don’t think LLM leader is going to come out of this AI race on top. OpenAI is like Yahoo! in my view. They were there in the beginning and led by default. Someone somewhere will be the Google of this era. It won’t be LLM but the next step. Leaps and bounds better than LLM. I also think we won’t use even 1/100th of the energy needs projected right now.

kilroy1232• 8 months ago

I agree. Or someone who combines a lot of tough to build tech right at the perfect time.

logsr3• 8 months ago

Google may very well be the Google of this era. They have demonstrated the ability to maintain parity on the engineering side, they have a long running advantage on OpEx with TPU, they have the most data, and the most trusted brand.

AI collapses the value of IP across the board, because AI trends towards being the only IP, which means that the marketplace will be defined by operational efficiency, ability to build and run systems at massive global scale, access to capital, and government connections, so Microsoft, Amazon, and Google probably stay on top.

lvl1552• 8 months ago

They barely caught up after leaking talent for the past 4-5 years. I am not drinking the koolaid. A lot of talented people are going back home to China. I am 99% the next Google will come out of Asia.

jasondigitized• 8 months ago

Google will be the Google of this era. They just got a slow start but the flywheel they already have in place is now spinning in their advantage.

ec109685• 8 months ago

That’s 207b / 8b people / 4 years / 365 days or 1.17 cents a person.

If ChatGPT is delivering that, they should have no problem raising money.

PunchyHamster2• 8 months ago

That if competition doesn't under-cut you and you convert at least part of the free users in the process.

And with near every level of hardware getting some kind of AI acceleration a lof of the uses might even be local

mr_00ff002• 8 months ago

I don’t know if this is ridiculous, but I’m curious if access to LLMs will one day be priced like the Bloomberg Terminal or something. Where access for one user is like 20,000 dollars. Maybe less than that, but like 5k per person.

Seems crazy by most software standards, but when Bloomberg became a software only program (they stopped selling physical terminals) and people were shocked when they paid almost nothing for excel but then so much for the second tool they needed as traders.

Yet it still is priced so high and people pay.

ronsor• 8 months ago

The difference is that Bloomberg Terminals were always expensive, and so people expected to pay. LLMs are basically free (subsidized) at this point, and people are very sensitive to large price increases.

mr_00ff002• 8 months ago

Sure and I’m sure there would be a huge shock, but simple economics would dictate that if that’s the true equilibrium of price for LLMs to be economical, then it would have to get to the price eventually

WhyOhWhyQ6• 8 months ago

I think there could be a few directions. Consumer level LLM usage will become free. Corporate-grade LLM use will cost a lot of money. Maybe the highest grade LLM use will be regulated and only done through government labs.

techblueberry3• 8 months ago

What’s a high grade LLM though in such a competitive environment? And if China releases more high grade open source models, that pricing model is f8cked.

One interesting thing I heard someone say about LLM’s is this could be a people’s innovation, basically something so low margin it actually provides more value to “the people” than billionaires.

moralestapia3• 8 months ago

There's good quality LLMs you can run for free today, so no.

The trend is going the opposite way, intelligence too cheap to meter according to @sama.

razingeden• 8 months ago

that $18,000-$24,000 bloomberg terminal had a 300bps modem

it took longer to generate a page of content or get a complete answer than a free LLM takes on an i5 CPU.

(ex: llamaGPTJ for linux CLI)

its missing live market data and news but incorporating that with something akin to openrouter would be trivial.

383toast• 8 months ago

chinese open source models disagree with you

aurareturn15• 8 months ago

They're not going to open source forever. Industry will consolidate. The Chinese winners will stop open sourcing their best models in the future.

throw_m239339• 8 months ago

It's my understanding that even the paid version ChatGPT is highly subsidized so yeah, the prices will have to be raised quite substantially to meet profitability.

nrhrjrjrjtntbt• 8 months ago

Simple.

1. Is it worth 20k to anyone? Well depends on the advantage but maybe yes. People are dropping 200-1000 a month already as ordinary devs.

2. Is there competition? Yes lots. To get to 20k one model provider needs a real killer edge that no one else can keep up. Or alternatively constraints push prices up (like memory!) but then that is not margin anymore.

kilroy1232• 8 months ago

I think that's exactly what will happen but with robots.

A robot the cooks, cleans, and talks to you.

Many won't afford it so they'll maybe rent one by the day or for X number of hours.

ayaros• 8 months ago

I'm sure they'll have no issues raising the funds. If they run into trouble, they can always ask ChatGPT for advice.

smileson2• 8 months ago

This should be a easy barrier for OpenAI, cgpt has only been public for 3 or so years and they are already close to mediating most of the global economy and human decision making

AI credits will likely replace current money anyway

sethops13• 8 months ago

I hope this is sarcasm

saguntum• 8 months ago

For context, this is close to all venture capital spending in the US in 2024 ($215B): https://nvca.org/press_releases/nvca-releases-2025-yearbook-...

andy_ppp• 8 months ago

Chill out everyone, all we will need to do is ask the AGI how to make money on the investment!

1. Make AGI

2. ???

3. Infinite profit!

venturecruelty2• 8 months ago

You need to ask it to invent a time machine first so you can go back in time to build the AGI first, naturally.

venturecruelty2• 8 months ago

How many $20 per month subscriptions will that take?

tim3332• 8 months ago

172 million. Or so.

fragmede5• 8 months ago

if you make them $200/month subscriptions, that's only 17 million subscriptions. Or so.

mbrumlow• 8 months ago

Please let me invest…

mvkel• 8 months ago

This seems... completely reasonable?

liamconnell6• 8 months ago

Unfortunately for OpenAI, they are not positioned to capture value from any of the "big margin" use cases that they highlight as key to their future. I think all of these are pretty unrealistic for them:

- Revenue sharing from drug discovery (called out by OpenAI CFO): Why would a pharma company give away the upside to a commoditized intelligence layer? Why would OpenAI have a more compelling story than Google Deep Mind, which has serious accolades in this space?

- Media generation for ads and other content: For ads, OpenAI is facing off against Google, Meta and Amazon, all of which have existing relationships with advertisers. For the foreseeable future, AI content will be a major discount product compared to humans. OpenAI will not get to charge $1M for an ad like a production company does. So the TAM of ad production (~$50B) shrinks below $1B because AI deflates prices so much.

- Other agent use cases: OpenAI doesnt have a surface to build these on. Google has chrome, Microsoft has office, Apple has OS's. The other use cases like coding will be a low-margin competition between model providers until some of them throw in the towel. The players with the best cash position win - and thats not OAI.

I think the place that they could win is retail (also called out by OAI CFO). They made deals with Etsy and other small retailers. I was fixing my guitar the other day and would have instantly bought the tools it had suggested that I would need. The problem is that they have to win against Amazon here, and there is zero chance of a partnership for obvious reasons.

ivan_gammel3• 8 months ago

Other agent use cases: OpenAI doesnt have a surface to build these on. Google has chrome

ChatGPT app is their Chrome. Large consumer base using chat on daily basis can expand to prosumer and to enterprise. They build an emotional connection to their customers that has the vibe of iPhone.

liamconnell6• 8 months ago

Yes but its not relevant to the agent use cases (which are mostly about interacting with external systems). So agents built by Microsoft (Copilot) can natively interact with Office files in Sharepoint, and the Sharepoint product team can build to enable this in special ways. OpenAI has to use the APIs and deal with rate limits, speed issues and other limitations.

vb-8448• 8 months ago

At some point, I'd expect the following pattern to emerge:

- random user: hey chatgpt, I need a new mechanical keyboard, buy me one - openai will get money for mechanical keyboard vendors to be on top of gpt's agent list

the ad business will shift from trying to hack google to hack gpt

jimkleiber• 8 months ago

It's already shifting. I know someone who used to do SEO and is now marketing how to get in llm results.

javier2• 8 months ago

I am already using claude to help me shopping. It can be so hard to find the actual specifications of a product. Amazon is filled with nonsense information, and its nearly impossible to compare different variants of things like monitors, tvs, cpus and other technical things that clearly are made with certain specifications in mind.

liamconnell6• 8 months ago

Yes that's what I meant. But Amazon will fight for its life to stop this. So OpenAI will have to go to other retailers, which don't have the same product catalogue size as Amazon. Best case scenario: Target or Walmart. But there is a reason that OpenAI announced deals with Etsy and Shopify rather than those.

And OpenAI doesn't have as much product insight as the retailers so they have to rely on the retailer to choose which is the "best" mechanical keyboard for this person. And at that point, pretty much all of the shopping value is being provided by the retailer rather than ChatGPT, so why would they get much money?

There's a market for this but its not going to be trivial for OpenAI to win it. And it probably wont be a cashflow monster like AdWords or Amazon.

rco87867• 8 months ago

This is it.

Their real moonshot should be search and ads. They're already taking big chunks from Google, they're just not monetizing at all (yet).

I already use chatgpt constantly for product research.

Analemma_2• 8 months ago

This was Amazon's huge bet on Alexa: that if you made a frictionless way to buy products by saying "computer, buy me [thing]", then people would use it and then you could sell favored placement on it.

It was a total failure. I know lots of people-- both technical and non-technical-- who have Alexa devices, and not one of them has ever bought anything with it. You can read various comments from Amazon insiders confirming that the rate of buying things with Alexa was close to zero. And why not? It's the shittiest possible way to shop, like buying a lottery ticket except where the RNG is knowingly gamed. This is why Amazon is writing off Alexa entirely.

I've commented to this effect before, but "what if people could shop sight unseen" is a PM fantasy, not a thing anybody actually wants. LLMs might be useful for helping with research and comparison shopping, but the "one-click [or one-prompt] buying" workflow is not gonna happen.

kristo• 8 months ago

At that point why would I use ChatGPT if it’s just getting paid to show me stuff?

____tom____• 8 months ago

and then, to make money, they'd have to stop giving the correct answer, just like search engines

notatoad• 8 months ago

this was supposed to be the business model for alexa. amazon had all the pieces - they had the product listings, marketplace, ordering infrastructure, the smart speaker in your home always listening to you, and they built exactly that product.

it hasn't exactly taken off, and i don't think OpenAI has addressed any of the problems that prevented amazon's version from being a success. and that was without taking advertiser money to choose which product to sell you, amazon was happy to just make a sale. if the product choices the AI shopping assistant makes are driven by advertiser dollars instead of product quality, i really don't expect consumers to accept it.

brazukadev• 8 months ago

That would be the optimal scenario for openai but even this one I'm not really expecting to happen anymore. OpenAI failed.

kristianc• 8 months ago

Which is likely why they won't try. Trying to raise that much money from 20 large individual customers would be suicidal. At the scale they're talking about, you need billions of "customers".

Trying to embed themsleves into every enterprise workflow and taking a cut from it seems much more likely than them trying to invent the next killer app. ChatGPT is just the marketing arm which keeps them front of mind.

jstummbillig• 8 months ago

- Revenue sharing from drug discovery (called out by OpenAI CFO): Why would a pharma company give away the upside to a commoditized intelligence layer? Why would OpenAI have a more compelling story than Google Deep Mind, which has serious accolades in this space?

I am not sure I follow. They "give it away", because they have to. They have to pay any of the model companies. What do DeepMind's accolades matter if it's commoditized, as you propose?

AI resources will remain scarce for the foreseeable future: I have to literally wait multiple Minutes to get an answer for semi-hard coding problems. The current demand is the delta between this, and the few milliseconds that it could take if supply was there. I suspect the tension will grow. Why would there not be multiple companies positioned to capture value? Assuming that any of them can turn demand into profit, that seems to be the most likely story right now.

mattmanser• 8 months ago

His point is AI's already getting commodified. So OpenAI won't get a portion of the profits or revenue sharing, it'll be a simple transaction. They simply pay for compute time.

It's like pretending sulphuric acid manufacturers would get the right to demand a portion of drug company profits.

jabberwhookie• 8 months ago

Big pharma might choose to pay full cost to get reasonable speed. To get to a partnership that looks a lot like tenant farming you would need a model that is actually 100X better at drug discovery than any other model, Why would that be OpenAI instead of deepmind? Not that either is likely worth much premium.

Generally, I think only penny stock pharma cares at all to deal with IP with any kind of baggage instead of having already forgotten it in the backlog.

liamconnell6• 8 months ago

The CFO isn't talking about selling tokens to pharma companies. There's no money in that. She proposed revenue sharing. In this scenario, OpenAI's AI service helps discover drug candidates, and shares the IP ownership of the candidate (which is basically a risky bet that it will get through clinical trials and be profitable). Biotech is a complicated market filled with smart people and great negotiators - they dont give away IP ownership without a lot of thought.

If OpenAI wants anything more valuable than selling tokens, they will need to offer something valuable and differentiated. Right now they are not differentiated in the space at all. Look up "OpenAI Biotech" - anything that they've built themselves?

If any company will have a new product that biotech companies will pay top dollar for, its Google. Deepmind has been in biology (proteins) for almost a decade and they it has subsidiaries like Isomorphic Labs that are bringing products to market.

9cb14c1ec02• 8 months ago

OpenAI doesnt have a surface to build these on

Correct. They certainly could. An OpenAI alternative to g suite and MS Office would be a good start (integrated with the chatgpt mobile and web presence), but would also be a huge engineering effort.

holden_nelson2• 8 months ago

OpenAI is facing off against Google, Meta and Amazon, all of which have existing relationships with advertisers.

I will point out that these companies have existing relationships with advertisers because they have massive, sticky userbases and advanced targeting tools. The average consumer is absolutely using ChatGPT for personal use, and maybe Copilot at work if applicable. And they're using Google's AI by proxy when they perform searches.

If OpenAI were to roll out advertising tooling, I have no doubt advertisers would flock there to try it out.

Additionally, the other thing I think OpenAI leads in is Product. Google is amazing at creating technologies and awful at creating products. I think OpenAI can be positioned to win based off of that alone.

aylmao2• 8 months ago

Additionally, the other thing I think OpenAI leads in is Product. Google is amazing at creating technologies and awful at creating products. I think OpenAI can be positioned to win based off of that alone.

I agree that Google isn't great at creating products anymore, but I'm not sure that OpenAI is. We've seen relatively simple products by them (a chat app, a short-form video app, various web interfaces) but we haven't seen anything as complex as some of Google's bigger products (Gmail, Docs, Maps, etc).

If OpenAI hits jackpot with a "simple" product, it could be easily replicated by a bigger company in the way Meta quickly copied Stories from Snapchat or TikTok to make Reels. It's already happened with Chat; the LLM is hard to compete against but the actual product, a web/app chat interface, was quickly copied by other companies with LLMs.

OpenAI would need to make something very complex and hard to copy to give it a solid head start they could really build a moat around— something like Google Maps, which took Apple years to replicate (and other companies won't even try to) or the iPhone, which was years ahead at launch. I just don't think we've seen OpenAI prove it has the capacity to build a product like that yet.

autoexec• 8 months ago

. The average consumer is absolutely using ChatGPT for personal use

In my experience the "average consumer" isn't doing anything with ChatGPT except maybe play with it for a little bit before getting bored. They actively avoid AI when the apps and products they use try to shove it down their throats and they search the internet and ask their tech savvy family members for ways to disable AI in their stuff when they see it nag at them about using it.

Inevitably, AI ends up being used by people in some ways (like the AI reply at the top of every google search) but almost never because the average consumer asked for that or wanted it. It's a toy when they want to use it, and annoying when they don't but are forced to.

chickenegg3• 8 months ago

I know plenty of SaaS companies that are paying tens of thousands of dollars every month for LLM optimization & AI visibility. Lots of marketing agencies that have been working hard on delivering paid ads & search engine optimizing are floating in a river of cash now because all these companies are panicking. So, yeah, fully agree that if OpenAI rolls out a halfway decent advertising option, advertisers will throw money at them.

danpalmer2• 8 months ago

Why would a pharma company give away the upside to a commoditized intelligence layer?

Why would a commoditized intelligence company give away the upside to a commoditized silicon company?

It still amazes me that Nvidia is worth so much, they're just one slice of the value chain, from mining, through chip fabrication, through to chip IP, through to technology stack, training, inference, and product integration.

I understand the reasons why, it's mostly lock in with CUDA and isn't really about unique chips, and I think the market sentiment on this is changing, but still it's crazy to me.

skeuomorphism• 8 months ago

207 billion to fund sam altmans greatest con on the world. Will it also be treated as "too big to fail", and be bailed out in the future, when it inevitably fails to deliver?

atleastoptimal• 8 months ago

What is inevitably going to happen

1. AI becomes better, causes more fear, public uproar, arms race between China/US

2. AI becomes a government project, big labs merge, major push into AI for manipulation, logistics, weapons development/control

3. ????

4. Utopia or destruction

mvdtnz• 8 months ago

Why was the original title changed? It had the correct title on HN a couple of hours ago.

wg0• 8 months ago

It is very simple. Let's forget other domains and talk about software industry alone.

If they capture it fully that would only mean that OpenAI gets a portion of the engineering spend (because it is supposed to save on engineering salaries) which is a portion of the total spend which is almost always less than the total revenue.

Now estimate the total revenue of all software companies combined in the world and look at their engineering spend and a faction of that is what OpenAI can have in best case scenario.

So... Bubble.

whoamii• 8 months ago

So, tree fiddy before inflation

burnerRhodov2• 8 months ago

I feel like OpenAI could flip on the ad switch and make $20B a quarter like google... so this number isn't too crazy to me?

scoofy• 8 months ago

Oh, I like the part where they're supposed to be a not-for-profit... I guess I'm honestly a bit happy they aren't profiting.

chasing0entropy• 8 months ago

Human thought is more than just general intelligence (AGI), but the ability to conceptualize data beyond linear symbolic representations and to combine the schema / metadata from multiple contextual inputs with memory, to output unique concepts in both alphanumeric and other conceptualized manners.

An LLM, in addition to being unable to ever obtain true AGI because of the linear and singular representation of concepts and data, cannot combine multiple schemas or metadata from multiple contexts with its own training and reinforcement data.

That means it cannot truly remember and correct its mistakes. A mistake is more than the observation and correction, it is applying global changes to both your metadata and schema of the event and surrounding data.

LLMs as an AI solution is a dead end.

nr378• 8 months ago

I suspect that the asymptotic price of consumer facing LLMs will be 0, much like Search - although just like Search, monetisation potential from ads will be high (perhaps even higher given the ability to truly integrate ads into the result itself using LLMs).

It potentially looks like Google and OpenAI will take this new market.

1vuio0pswjnm7• 8 months ago

Original HN title: (80 chars)

"OpenAI needs to raise at least $207bn by 2030 so it can continue to lose money"

Full title: (95 chars)

"OpenAI needs to raise at least $207bn by 2030 so it can continue to lose money, HSBC estimates"

lupire• 8 months ago

The false precision of "207" tells me all I need to know.

ImHereToVote• 8 months ago

That's nothing. I need to raise at least one trillion.

nooraiadmin• 8 months ago

ads on chatgpt

OpenAI needs to raise at least $207B by 2030

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