OpenAI needs to raise at least $207B by 2030
ft.com
ft.com
- 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.
- 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
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
Meanwhile, Google would be perfectly fine. They can just integrate whatever improvements the actually existing AI models offer into their other products.
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.
What are you basing this on? None of their investor-oriented marketing says this.
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.
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.
If this is what users actually want.
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.
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.
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.
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
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.
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.
Is that role not exactly what you mention?
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
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.
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.
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.
Maybe they're thinking they can build a universal store with search over every store? Like a "Google Shopping" type experience?
2% is optimistic in my opinion.
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?
But all the search companies have their own AI so how would OAI make money in this sector?
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.
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.
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)
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.
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.
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.
There is your multi-bn $ revenue stream.
and "200 billion, when your revenue is 12, is the market you are targeting actually big enough to support that"
The team also assumes LLM companies will capture 2 per cent of the digital advertising market in revenue, from slightly more than zero currently.
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.
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.
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.
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.
OpenAI has ChatGPT (not a social platform).
Anyways, check this out: https://openai.com/index/group-chats-in-chatgpt/
It seems to me you're comparing apples and oranges here.
PS. That's why Meta and Google are all in on AI. OpenAI is an existential threat to both in my humble opinion.
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.
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.
Then they will have a social platform that they will continue to use to mine AI training data from + a source of ad revenue.
It's becoming social as well: https://openai.com/index/group-chats-in-chatgpt/
Do they use Google docs/sheets? Or even Google Search anywhere? Then they have Gemini integrated in some way
I will have whatever you're smoking. If a social media platform literally proves the dead internet theory, it's not making any money.
Low effort input. Low effort consumption. What a depressing vision of the suture. This is why I don't use social media.
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.
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.
How long did Apple keep going up following the smartphone revolution?
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.
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.
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.
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
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
Hideous idea as it is, I fully expect they break even in 2026.
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.
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.
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.
If they had some direct feed of quality product information it could be interesting. But who would trust that to be impartial?
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.
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.
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?
https://www.theverge.com/news/819431/google-shopping-ai-gemi...
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.
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.
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.
OpenAI has multiple competitors, who all build their LLMs for less money.
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_...
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.
The trend is going the opposite way, intelligence too cheap to meter according to @sama.
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.
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.
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.
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.
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.
Seriously though, massive recession is on the horizon, no one is going to be spending squat.
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.
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.
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?
What does that even mean?
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.
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.
"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"
Everything’s for sale, and they will amplify whatever == revenue.
So, they need to "just" get 20% of the market from Google to break even...
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.
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.
two out of three of those require me to want to do them for them to affect my life.
Living in AImaginationland must be nice. C’mon kids, let’s all sing the AImagination song: AImagination, AImagination, AIiiimagination, …
We already have those at home without OpenAI.
Also, the competition would be ruthless.
This is truly the most stupid timeline.
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.
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.
It potentially looks like Google and OpenAI will take this new market.
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
AI credits will likely replace current money anyway
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.
If ChatGPT is delivering that, they should have no problem raising money.
And with near every level of hardware getting some kind of AI acceleration a lof of the uses might even be local
1. Make AGI
2. ???
3. Infinite profit!
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
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.
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.
They are spending more money than they are bringing in. This means they are losing money.
Right now I use a Chinese vibe code plan, really good value.
Meanwhile ungodly amounts of money are being used so some boomer can generate a AI video of a baby riding a puppy.
If their business isn't sustainable they should go bankrupt, and close shop.
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".
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)
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).
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.
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.
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.