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Comment by paxys | Hacker News Reader

OpenAI is growing revenues from ~0 in 2022 to $300M in 2023 to $1B in 2024. That sounds like a product to me.

It is currently April 2023. “~0 in 2022” is the only part of that that seems credible. I not convinced of OpenAI’s rosy predictions of future explosive growth.

The fact that Microsoft is baking GPT into all of their products guarantees explosive growth.

ChatGPT is also one of the fastest growing consumer products in history by number of users. At $20 a month for plus, it could be a significant revenue stream.

Then add all the companies like Duolingo and Snapchat that are using GPT as well.

If you don’t see this as explosive growth, then I don’t know what to tell you.

> The fact that Microsoft is baking GPT into all of their products guarantees explosive growth.

Why?

Because Microsoft is the largest software company in the world. Their products are in wide use by virtually all businesses and schools in the country. Judging by the popularity of ChatGPT, these features will be very popular and heavily used.

"Hopes to grow" revenues. Current estimates put hardware costs alone at $700k/day, so even if they hit $300M in 2023 that won't make them profitable. This isn't even counting the people costs and other operation costs required to run a company.

edit: order of magnitude was wrong on costs per day.

And yet, $300M is only 1.25M subscribers at the current $20/mo rate. If we say that they need a $1B / year to be comfortably profitable, that's ~4.2M subscribers. A good rule of thumb is that you can hope to convert about 10% of your free user base to paid; one random source says they have 100M monthly active users - which at 10% conversion, is $2.4B / year. I think they'll be fine.

10% is insanely high conversion for B2C freemium. It’s closer to 1% for most products.

Does GPT-4 look like 'most products'?

You are talking about a revolutionary product that literally dominates mindshare from consumers to students to CEOs to governments. Its a pure monopoly that has insanely wide utility and instantly obvious value proposition.

Do you know anything about B2C freemium products? 10% conversion over 10s-100s of millions of users is literally insane.

It doesn't matter how revolutionary GPT-4 is, people's willingness to pay for anything is generally very low. ChatGPT premium is also a very expensive subscription for a consumer product!

People are willing to pay $10k a year for college, very high conversion rate. People are willing to pay for tutoring, at rate that's probably about 10% of student base, despite its very high costs ($50/h, not $20/m)

At the very minimum, I can already see every university and high school student paying for GPT-4. Its a way way way more powerful essay writer and personal tutor than GPT3.5, that alone is incentive to upgrade. For only $20 a month.

Know what GPT-4 currently is insanely capacity limited. So far, the limitation is not on the demand side, but the supply side.

Getting 100 million users in 3 months with 0 marketing or network effects already annihilates existing records, getting 10% conversion is nothing special.

You could have saved yourself and everyone else the time by instead writing “I have no idea what I’m talking about and I don’t understand constraints”.

https://twitter.com/visakanv/status/1113154447050334208

The cheating sites I see on the first page of Google seem to charge around $10-$30/page. GPT is cheaper, but lower quality. I don't think the market for tens of dollars cheaper but shittier quality than buyessayfriend.com is anywhere near every highschool and college student.

Look what happened to image generators, no one talks about Dall-e or whatever that was.

How much money will they spend servicing requests for those 4.2M subscribers?

Do you have the order of magnitude right at $700/day? That's not much at all.

It's not 2024 yet, and 2023 just started.

Revenues mean nothing if your expenses outpace them. What's the net profit?

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