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Comment by stogot | Hacker News Reader

The fact it was reported and Altman didn’t deny it shows how ludicrous and wild his thinking is

It might be a $100B company on paper but that’s propped up by Microsoft investment. It’s hemoragging money still isn’t it?

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SOTA AI companies are modern airlines. They're selling a capital intensive commodity that has little meaningful differentiation once you pass a certain threshold. Customers just want the lowest price available.

Wow fascinating comparison. Who makes all the money in the airline industry?

Lobbyists?

During the post-2001 crash in airline passenger demand US airlines lost more money in that one slump than all profits from all US airlines, combined, from the Wright Brothers to September 11th 2001.

That was why you had such rapid consolidation, as America West became US Airways became American, United bought Continental, and Delta bought Northwest, to remove so much competition that they could be profitable again.

Wow, do you have a source for this?

https://transtats.bts.gov/Data_Elements_Financial.aspx shows 2001-2005 net income losses were 57 billion dollars, then a brief profitability in 2006-7 but the losses of 2008 and 2009 wiped that all out again (in net income terms).

I read that thing about the integral of all profits back to the Wright Brothers back around in 2010, and I can't find a good source on aviation profitability in the 1970's right now.

Airlines themselves are perfectly fine. It's relatively hard to break into as a disruptor, but the employees of the established players are mostly well-paid. The executives are even better-paid. The investors can earn steady, predictable, positive returns as long as the stock is reasonably priced and doesn't make assumptions about impossible levels of future growth. Airlines are not super-profitable, but with sufficient volume, you don't need high margins, and they're at least profitable as long as we don't have 9/11 or Covid happening.

I'm not personally knowledgeable about this or anything, so look into it yourself, but just picking a random really big one, United Airlines, it looks like they consistently beat the S&P 500 for most of the past 20 years, until Covid, and the past four years since then have been pretty bad.

They are profitable regardless in the face of 9/11 and COVID because we will bail them out.

What they don't seem to be able to weather is significant changes in the structure of pension obligations, and dramatic fatal crashes.

There is also an impending shift into electric short-haul flights that is going to cause some changes to the business model, with whoever can't adapt exiting those markets.

Oil companies? Airports? Servicing companies? Frequent flier and credit card programs tied to the airlines?

Altman did deny it.

https://www.fierceelectronics.com/electronics/openai-ceo-alt...

It doesn't seem like a denial to me, more of a deflection. From that article:

> He added the number is not known, adding that the $7 trillion came from a report with an anonymous source. “You can always find some anonymous source to say something, I guess,” he added.

Yesthat’s a deflection not a denial

Perhaps, but he did say "I never said like we're raising $7 trillion"

Yes, they're apparently not expecting to turn a profit until 2029, with their losses peaking at $14 billion in 2026. Their recent $6.6 billion funding round would barely buy them 6 months of runway at that peak.

https://www.theinformation.com/articles/openai-projections-i...

$100B is crazy, no one would buy OpenAI for $100B.

Why not? My ChatGPT to google usage is easily 10 to 1 at this point. How long will it be until everyone is basically doing the same thing as I am?

IMO this is because Google is kind of shit now, because of ChatGPT and LLM spam in general. It's hard to find information on Google that isn't shallow attention thievery. I mean, finding a recipe that doesn't start with "the year is 1974. I was just born" is near impossible these days.

Google seo spam predates LLM's.

Right, but it's undeniable that LLM's are a core part, if not the most important part, of modern SEO spam. Particularly because they're much harder to spot.

That would only be meaningful if ChatGPT made as much money as Google did per query (as is, I believe they lose money on each, so they can hardly make it up in volume).

They could throw an ad platform on it in 5 minutes if they wanted to.

LOL

It took Google 15 years to build an ad empire.

And they still have trouble filling ad slots on YouTube.

You think ChatGPT is just going to "turn on" $100B in online ad spending overnight?

That's not how it works.

Why do you think it would take so long to throw an ad system on ChatGPT?

Personally, if I could buy OpenAI stock at 100B market cap right now, I would back up the truck.

adding ads is easy, adding ads that work is not.

Google can easily monetize a search for "dentist in $city" where your intent is to spend money, OpenAI would have to monetize "sum up this email" where money is not involved at all.

If you have enough eyeballs on your pixels you can make money on ads. They are just deliberately choosing not to do it (Altman has made statements to this effect).

> If you have enough eyeballs on your pixels you can make money on ads.

sure, but Google makes _way_ more money than X or Reddit or Pornhub, not all eye gazes are the same.

Which would slow down user uptake, I imagine.

I don't think it's fair. There many $100B+ companies with less IP, and much less access to talent. I don't even see people lining up to work for Apple or dreaming to work for Google anymore.

Perhaps Microsoft, so they can push the losses to the shareholders of Microsoft instead of their own balance sheet.

Microsoft only gave them an exorbitant price because they were paying in Azure credits for GPUs. That's something like a 50% discount for Microsoft compared to giving them cash, and it also incentivizes OpenAI to continue using their stuff after the credits are burned through.

I’ve heard Microsoft customers got burned by this. GPU availability and inference workloads is prioritized for OpenAI

They would have, 1.5 years back. Now there are other players in town.

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