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Comment by bloppe | Hacker News Reader

At this point I think even the most bearish have to concede that LLM's are an amazing tool. But OpenAI was never supposed to be about creating tools. They're supposed to create something that can completely take over entire projects for you, not just something that can help you work on the projects faster. If they can't pull that off in the next year or two, they're gonna seriously struggle to raise the next 10B they'll need to keep the lights on.

Of course LLMs aren't going anywhere, but I do not envy Sam Altman right now.

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At this point it’s quite likely that they could pivot and just be the chatgpt company. I’ve found chatgpt-4o with web search and plugins to be more useful than o1 for most tasks.

It’s possible we’re nearing the end of the LLM race, but I doubt that’s the end of the AI story this decade, or OpenAI.

Ya I think they probably will, but "the chatgpt company" is not worth 157B. It might not even be worth 1B.

Id be hard pressed to come up with a valuation under 30B based on the publicly known finances. OpenAI is certainly crushing the metrics of other highly valued startups like snowflake and databricks.

The cash burn and claim of imminent agi is where the valuation trouble could be.

We’ve barely seen the first wave of companies being built of their APIs too. The billions being put in thousands of startups will take around 5yrs to hit full scale.

It has replaced ~50% of my Google searches.

Yes but it also hasn't been attacked by ads yet. Google doesn't suck for lack of search results, it sucks because of ads.

Imagine asking chatgpt to tell you about slopes in Colorado, and the first five answers are about how awesome North Face is and how you can order from them. You probably wouldn't use it as much.

Local models are GOOD as well, and easy to use (ollama + open web ui). OpenAI has to perform a huge trick in order to stay relevant.

Does ChatGPT need ads, I feel as though people are willing to pay for the service much more than people are willing to pay for a Google search.

Yes but remember we’re in a tech bubble and the average person still doesn’t know what ChatGPT is.

Not worth 1B ? Come on man. I see them improving the tool enough for most people willing to pay 50$ a month for a subscription. And for most companies to be willing to pay 300$ per employee. It's perhaps not there yet but I'm sure they'll reach this amount of value for their offering. It remains to be seen what competition will do to the prices though.

The market of people willing to pay $50 a month for OAI vs $0/month for one of the open source LLAMA variants is not large enough to justify their current valuation, imo

I'm not that familiar with the open source ones - how good are they in comparison?

It doesn't really matter how much people are willing to pay. It matters how much margin the market will allow you to charge. OpenAI may be a bit better than most competitors most of the time (IMO they keep getting leap-frogged by Anthropic et al. though), but if your customers can get 90% of the value for 50% less, they will bail. There is no moat. Margins will be razor thin. That's not a 1B+ company.

I think the difference between 90% and 95% is huge. As a coder, if the LLM is wrong 10% of the time that's pretty bad, I can't really trust it. If it's wrong 5% of the time, still not great but much better - I'd pay much more for that kind of reliability improvement.

Depends on the competition of course. They need an edge to stop me going to the bald guy and running it there.

I keep thinking about that Idris Elba Microsoft ad about AI about how much AI can help my business, and how both true and untrue that as is, and how much distance there is between the now and the possible promised of AI, and I imagine this is what keeps Altman up at night.

Tesla is still valued high, despite FSD did not came, despite being promised. So OpenAI would get away with delivering ChatGPT5, if it is better than the competition.

Tesla is profitable and they have a big technological moat. OpenAI is in a very competitive industry and they burn ~5B a year.

I believe the car industry is somewhat competive as well and they needed allmost 10 years to become profitable.

Sure, but if you want to compete with Tesla, you need many billions in funding and 10+ years to catch up. If you want to compete with OpenAI, you need maybe half a billion (easy to raise in the current climate; many have done so) and mb a few months to catch up.

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