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Comment by svnt | Hacker News Reader

Not having read the terms in any detail, I will say this: it can be very easy to not report profits for a very long time.

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The point was not that the profits are long tailed but rather if openai thought there were massive future profits and the potential to become a google killer then they wouldn’t give away half of their company today for $10B.

But how do you know that they didn't predict that it is only by having a $10 billion that they _can_ become the next google killer, because of the initial cost outlay, and the inevitable fight back from google (which would then require a warchest, of which i'm sure this 10 billion is a part of)?

Plenty of people have already said "Google is dead" in certain terms.

If somebody needs ten billion dollars in additional work and investment to make that a reality, how certain can they be?

OpenAI has 375 employees (according to Google). At 300,000 a head thats 110M per year in compensation. Let's say that their compute costs are enormous and go to 200M in expenses per year. 10B is fifty years of expenses. So if they need 10B in investment it becomes obvious that they believe that they have to change something about their business in a fundamental way. Maybe that is going to be enough, but if it is so certain it becomes hard to believe that they'd need this kind of investment.

A couple things. I think the google killer thing is kind of funny in a few senses:

OpenAI talks mostly about trying to help change humanity, not about winning at business. Their mission is still "advance AI safely for humanity". It's not even obvious they care about winning at business. We seem to be putting that on them.

In that sense, i'm not actually sure they care whether they beat Google or not. I mean that honestly. If they care about the stated goal, it would not matter whether they do it or Google does it. I'm not suggesting they don't want to win at all, but it doesn't seem like that is what is driving them except to the degree they need money to get somewhere?

If they really succeed at most of their mission, killing Google might be a side-effect, it might not, but it would just be collateral damage either way.

Beyond that, I don't disagree, i actually agree with you. My point on that front is basically: "Everyone thinks this will be cheap and easy very soon, and change the world very quickly".

I believe (and suspect OpenAI believes) it will be very expensive upfront, very hard to get resources in the short term, and change the world slower as a result

To me, the fact that MSFT invested on these terms doesn’t mean that the financials are shaky, it means that there’s a huge first mover advantage as well as a huge start up cost. OpenAI could make their money back or they could get taken out back by Google if they’re bottlenecked by cash.

OpenAI is projected to make 200m in 2023 and 1bn in revenue in 2024. If they can (roughly) keep this YoY growth rate, they will become a money printer in 3–5 years.

OK. So then microsoft still takes their $10B back and owns half of the company.

That's the best case scenario. Worst case is that they get nothing back and own nothing. (Based on the quick summary of the deal above; I don't know more than what's here.)

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