OpenAI completes deal that values the company at $80B | Hacker News Reader

OpenAI completes deal that values the company at $80B

nytimes.com

57 pointsminimaxir46 comments

AI Hype. Same applies to NVidia(40x sales valuation! The pickaxe seller).

Their technology can be easily replicated given enough time, just look at open source LLMs already beating GPT3. Google, Claude and others showing their strengths, already par to GPT-4 and even better in some scenarios.

Training is expensive, but it isn't expensive up to what they are valued at.

It's good because that capital likely made a few folks rich enough that they can consider pursuing their own companies, I'm curious about this.

I find it hard to believe the current products OpenAI offers will have good revenue streams given to how competition is catching up, low pricing power and how specialized deep learning typically beats LLMs or most of the things they offer.

I had even higher expectations when I saw this beginning, hoping that AI Startups would be able to do things that were previously not scalable with LLMs or OpenAI APIs, but haven't been able to see much here.

The biggest winner on this play was clearly Microsoft, that managed to create a new product line, both with Github Copilot and Copilot to sell to businesses.

If NVIDIA could be easily replicated, Intel would have done it.

Given enough time they will and won't be able to get 70%+ margins for their hardware.

There are multiple initiatives to eat their lunch which is based on Cuda.Their advantage isn't even in hardware, but rather how they've invested years and years in having integrated software + hardware solution for AI.

“Given enough time” assumes competition will catch up while leader stays idle.

If leader is still innovating at a pace greater than any competition, then competition will never catch up.

This is assuming everything continues in the same direction the dominating company is innovating in though right?

Maybe AI is here forever, maybe there are different approaches that will blindside them?

ATM as far as as datacenter GPUs good the price/performance is the only metric that counts (power costs are almost insignificant relative to how much a H100/etc. costs).

So Intel only needs to come up with something relative cheap that's good enough (it can easily use > 4 times more power to perform the same task) to force Nvidia to cut their insane margins.

Your idea of "easy" is stupid. Possible yes easy , no. And all that money they spend to catchup just to find Nvidia used that time to RD the next step. At this level it's a patent game. Also at this level the companies literally employ the best in their field. The best out of 8 billion. Replicating talent is impossible.

There’s many hot takes like this, most of which ignore the bottlenecks in the supply chain.

With what Google are doing with Gemini, OpenAI are in danger of losing the LLM crown. I think they'll still have a solid brand, but perhaps not the best at anything. The competition in AI is too ferocious.

But the first mover advantage they had will likely have very long-term benefits.

I tried the latest and greatest Gemini. In a few tasks I gave it, it did well but was clearly beaten by ChatGPT 4 (in some cases 3.5). It's still 1-2 years behind.

Was that 1.5 Pro?

No. I don't think even the paid Gemini available now is behind ChatGPT4 for the things I use them for. People will be rooting for Google to lose this race but I think it's wishful thinking they were always too well positioned not to catch up and they've already done it IMO.

Whatever they lack in ability to make products is trumped by their infra + how game changing this stuff is so they were never going to just drop it even if it was just for internal use

> I find it hard to believe the current products OpenAI offers will have good revenue streams given to how competition is catching up

I have a hard time believing LLM products have good revenue streams at all, regardless of who’s making it. I still don’t use ChatGPT for anything. I think the developer world is obsessed with how well it generates code, but even that I don’t get the sense is worth $80B. I don’t find that feature to be extraordinarily useful, but I guess there are some codebases where it is? I don’t see the value-add applications outside of that. It’s not a search engine despite much hand-wringing about that. The whole document summarization / “style assistant” thing is a neat trick that might come in handy a few times a year. Chatbot girlfriends? Always money in porn I guess. Customer assistance bots? Annoying screen-waster. Writing internal emails? If you’re using it for that I’m sorry for you. Will anyone pay a standalone subscription fee for these in the long run or are they just flashy features to bake into existing products?

Maybe it’s because my knee-jerk response to hype of any kind is to apply extra doubt / scrutiny, idk.

AI comp is starting to form a 4th mode in the popular “trimodal” comp (https://blog.pragmaticengineer.com/software-engineering-sala...)

Have friends (not at OpenAI) that have been offered $1m+ yearly (these are not academic superstars either, solid staff engineers) to leave their startups and join Big Tech orgs.

Good for them and good for the people of OpenAI, their revenue growth has proven me wrong and is really exciting for the future of productivity.

It will all evaporate the day we get a better demo from someone else. The game has become capital/market capture before that event happens.

This is the colonization mentality of the west in over drive, only today capital/hype is used instead of armies. It will fail just faster than the colonies fell.

The Hype engineering mega machine doesnt understand effiency is a double edged sword. Getting over efficient in one dimension (hype/market capture) weakens the machine in other dimensions.

https://archive.is/LdWw1

The actual reason why Kaparthy (and you'll see some other early employees) begin to consider leaving as they have already vested their shares and have taken profits during the hype.

Karpathy’s last stint was like a year.

You get new options to prevent exactly this issue right?

Not prevent. Many people get out of the hamster wheel eventually.

initial grant often out-trumps any refreshes you get if the company has gone through growth period.

He already left a few days ago - said so on Twitter.

it's worth the least it will ever be worth starting now

Could be the peak!

Only chance that’ll happen is if AI is banned

> The actual reason

It is a possible reason. Unlikely, since employees on the level of Karpathy already don't have to work for money.

Hype, vesting, or comments like yours, are background noise for these people.

That feels low

Any idea who invested this round? Microsoft cant aquire more than 49% because regulators are on their ass looking at their relationship, right?

Headline says Thrive Capital. Which maybe got the money from Microsoft Cayman Islands IV Inc.

I call it OpenLIE. It's not open, not at all. Or call it GNU/OpenLIE, if you want to be pedantic.

The janitor probably also backing up the truck

After seeing Sora, I feel like they should add another 0 to that number.

I believe that is not how it works. I'll guess that the Investors did not even saw those demo, neither are they regular users of OpenAI's products.

Every investor I know or talk to is a very, very, very regular user of OpenAI's products - probably to a fault.

likely a different class of investor.

Their brains must be scrambled like eggs from all the endless lies and hallucinations they're having to decipher

Likely those fundraising talks and numbers were already agreed upon and closed a while before they showed off Sora.

$50M/employee. Looks like a record. Can also be a sign how AI increases productivity and value of an employee.

Nvidia has 26,000 employees and is worth 1.8 trillion which puts it at 69 million/employee.

I bet most employees get a slight fraction of that 69 million.

Imagine what having more millionaires would do for the world and the economy ? Such a silly system we’ve created.

Why would someone buy a company at a huge premium if that premium provides each employee financial freedom to leave, thus destroying the value of the company upon purchase?

We’re all disappointed with the inequities in reality on some level, but what would you suggest otherwise?

Do you at least recognize that a buyer would likely pay significantly less for a company if paying more meant employees (its most valuable asset) could just walk up and leave?

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