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Comment by nl | Hacker News Reader

They have borrowed almost nothing.

Investment isn't debt.

The duopoly AI labs haven't technically borrowed much, but a metric ass-ton of money has been borrowed by various other entities in service of them as infrastructure proxies.

That's what is driving up the cost of debt and teetering some of these companies into junk status.

you can say coreweave

Investment isn’t debt, but investment and debt demand revenue in functionally identical ways, and OpenAI has taken an enormous amount of investment, so they are subject to broadly the same pressures as a hypothetical company that had borrowed lots, no?

> investment and debt demand revenue in functionally identical ways

No they don't.

A company has legal obligation to pay loans at the agreed rates.

There is legal obligation that defines rates of return beyond "acting in shareholder interest" (and OpenAI is a public benefit corporation so even this is reduced).

So all those hundreds of billions of dollars investors ploughed into OpenAI was just a gift was it? No expectation of a return of any kind? What if that investment money was originally borrowed by the investors?

If the money was borrowed it would have to be paid at an agreed rate.

Because it's an investment it is risk capital. They won't be happy if they don't get a return but their return is part ownership in the company, not a legal contract giving an income stream.

But OpenAI won’t have to pay them back regardless of how unhappy they are, because it’s not debt.

Right, but all those shareholders and investors will be putting pressure on the company make returns. Its only a matter of time before this pressure affects the boards decisions.

The difference between investment and debt is that debt has a senior claim and fixed returns. You can't be forced to sell from investments.

Isn't investment like a form of debt, or well obligation to make returns?

If VC provide you funds, there is an expectation of returns, otherwise the board would vote you out.

Yeah it's not a traditional loan from a bank, but it's not a 0% interest loan either.

> Isn't investment like a form of debt, or well obligation to make returns?

No.

> If VC provide you funds, there is an expectation of returns, otherwise the board would vote you out.

A person might get replaced as CEO but the company has no financial obligation to the investors.

A loan means the company does.

Legally they are dramatically different.

Exorbitant Cloud costs and spending 22 million to solve a 1 million dollar maths problem isn’t investment though.

Fake costs. The numbers reported are what they would have charged other companies for the tokens.

That’s 22 million of capacity foregone for a marketing stunt. Or they had more capacity than demand which seems odd for a product that’s allegedly in constant demand etc.

There just isn’t a sane way to look at this as “investment”

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