And I say, good. We need new, smaller companies with different cultures in this space. We don't want these giant corporations to dominate and control everything.
we need new, smaller companies with different cultures in every space but won’t be getting any in any space, especially not in this one
OpenAI has 500B valuation, Anthropic has more than 60B.
So essentially a lifestyle business - but some people do think they have growth potential.
Feel free to not leave this out, it's a pet peeve of mine. Thank you for the moment of catharsis.
People are so careful when writing anonymous HN comments and so careless in choosing where to invest their own money and the money of funds of which they are the professional manager
If Google's market cap were $25 trillion, practically nobody would buy Google stock (and practically everyone who already held the stock would immediately sell) because most investors do not believe that Google can ever pay enough dividends or buy back enough stock to justify such a high valuation.
A company's market cap is a collective estimate of how much money the company will to return to investors in the future. When the company is publicly-traded in an open informational regime such as the US, this collective estimate is usually quite "accurate" in the sense that it is very difficult for any single analyst or single team of analysts to improve on the estimate.
An investor can make a big bet on a small company, yes, but the market cap of a company is more than just an indication of how much money has been bet on the company: it also mean that every investor (big or small) who still holds the stock believes that the expected amount of money that company will return to shareholders exceeds the market cap: if there were a holder of Google stock that did not believe that, he would convert the shares into treasury bills or cash in the bank.
Of course, a lot of money invested in Google was invested at a much lower price; if everyone sold all at once you'd have a hard time finding 2.5T of new money to buy all those shares. We could argue about if "not selling" is the same as "choosing again at the new price" every day... but... Google's not the interesting case here anyway.
For a young company in a hot industry like OpenAI total market cap is even less relevant since so much of the company simply isn't liquid anyway and the numbers come from far fewer instances of purchases than for an established public one.
It has never been in Amazon or Apple's DNA to chase a product that doesn't have clear revenue outcomes (as long as adoption lands). AI is no different.
IMO, it's the right decision for Amazon and wrong decision for Apple.
Apple, on the other hand, hasn’t even invested in any of the players.
Also, just yesterday, they appear to have raised $13B from actual investors, so it seems like they’re going to be fine.
https://www.anthropic.com/news/anthropic-raises-series-f-at-...
Their other problem is they value designers and product managers more than engineers (especially top tier AI engineers).
Both problems are basically the death knell of any hope for Apple to have good AI, but combined? It’s never gonna happen. Which is sad because Apple’s on-device hardware is quite good.
Or ‘why every large public company tends to suck the same ways in the US eventually’
Since financial engineering is in many ways more essential than the actual business. His best example was a chain hotel. In the majority of cases, a typical hotel is a tax vehicle that happens to rent rooms. So no wonder everything becomes a bank. :)
The franchisee typically pays 10% to 20% royalty to the franchisor (the aforementioned companies). Otherwise, they rent hotel rooms and pay staff to clean them and rent them again.
What is the tax play? That the hotel owner can 1031 into bigger and better hotels? Anyone who owns real estate can do that.
Hotel owner (aka franchisee) puts in capital in a specific way under license, gets help operating it, in exchange for the 10-20% licensing fee paid back to the main corporation.
In many cases, the owner/operator is nearly turnkey, and it’s an effective way of setting up a defacto managed business investment, almost like a LP. Many of the franchised hotels are actually owned/operated by LPs setup for the purpose.
Also in many of these cases, the franchiser provides contacts for financing, may directly facilitate/recruit Capital, and may even provide loans to the franchisee directly.
For most of these larger hotels, the actual act of renting out rooms, etc. is pretty much all automated/managed through the central system anyway, and the majority of the operating costs are structured in such a way as to minimize tax liability.
Is it clearer now?
> a typical hotel is a tax vehicle that happens to rent rooms.
>In many cases, the owner/operator is nearly turnkey,
What does this even mean? Hotels can be turnkey, which in industry terminology means that everything is working sufficiently well such that you can start renting rooms immediately. An owner/operator being turnkey makes no sense.
> setting up a defacto managed business investment
Also makes no sense.
>Also in many of these cases, the franchiser provides contacts for financing, may directly facilitate/recruit Capital, and may even provide loans to the franchisee directly.
Even if true, what does this have to do with taxes?
>For most of these larger hotels, the actual act of renting out rooms, etc. is pretty much all automated/managed through the central system anyway,
No, the actual out of renting out rooms involves housekeepers, maintenance staff, guest service agents, cooks, and management making sure rooms are clean and habitable. Reserving a hotel room is mostly automated, but even that requires a person to manage conflicts of reservations (e.g. unexpectedly needing to extend a stay causing overbooking, changing room types, room locations, etc.)
>and the majority of the operating costs are structured in such a way as to minimize tax liability.
Who doesn't structure their operating costs to minimize their tax liability? If you file married joint instead of married separate or head of household, are you "structuring" your operating costs as a way to minimize tax liability?
The question of how a hotel is used to gain an tax advantage that would otherwise be unavailable remains unanswered.
And how is a hotel a mix of different asset types?
What does GPs and LPs have anything to do with using a hotel to gain a special tax advantage that is not available to any other commercial real estate?
How stocks and bonds come into play is beyond me, unless I am being trolled.
But to summarize, zero evidence of how a hotel is a “tax vehicle”, nor any clarification on what a tax vehicle even is, nor why any other business wouldn’t be able to use the same strategy (if it even exists).
Do some basic reading so you can ask informed questions from the answers you have already been given, instead of insisting someone is an idiot when they point out you are not asking useful questions.
And frankly, no one owes you these answers.
As far as I understand, becoming a bank is inviting a ton of overhead with little profit potential.
Which is the core premise of a bank, even if the business doesn’t say ‘Bank’ on the side of the building.
That these two “inevitable endpoint things” would happen to be linguistically closely related was unlikely.
It's a fun image, but just as Facebook isn't becoming Apple, and Amazon won't become OpenAI, evolution phenomenons are more complex than "everything becomes X"
The two strategies for plants are to grow super tall to absorb the sun, or super wide (and small) to.... absorb the sun.
Tall needs wood or other 'strong' polymer to support height. Short and wide is perhaps weak from an individual level but far more efficient.
And trees and grass respectively have such genetic diversity that it's clear that none of these damn plants are of the same genetic line.
Trees, on the other hand, are a growth habit, exhibited by species in a wide variety of plant families, even grasses (e.g palm trees).
We are all addicted to growth - everyone is chasing the hockey stick curve which means a business that provides a stable business and grows modestly is seen as a failure in some parts
It was common in the post wwii era in America and its Asian allies like Korea with its chaebols and Japan with its somethings I can’t remember the name of. The Asian countries forms were normally based around a single family, we’ll need more time with the current US form to see if they are also dynastic
As a bonus you will have a very long vacation.
We, the tech, are literally a leftover of the once overwhelming engineering superiority of the west that will shrink in the next 5 years.
I argue it is both understandable (autonomy is a healthy thing) and also damages the culture at large.
Once a company gets big off its grand idea, there's little to no chance of it having another big winner, so buying one is best (and its cheaper too, you know it's a good idea, and you don't have to spend so much R&D on it.
You say this as if it's a coercive given, when you could just as easily say.. Nope, and continue to see how you compete with some agility. It might fail, but most of the big tech companies currently acquiring smaller companies themselves started small with acquisition offers being rejected along the way. Sure, there's selection bias at work there, but there are also many cases of smaller to mid-size companies that also said no to acquisition and still managed to find their successful niche.
Being acquired is not a given and neither is failure if you do compete in some way with the megacorps.
I see nothing about the current tech landscape that at all distinguishes it from previous landscapes in which smaller companies succeeded AND rejected acquisition.
It’s the same framing as calling offering someone a higher salary as “poaching” like we’re property being stolen by one lord from another.
Looking at you Steve Jobs and your anti poaching agreement
No matter who is funding that, they are going to be pushing hard for a return (ell, unless they like money going up in smoke)
Amazon is turning into a dinosaur like Cisco or IBM.
Once a use case and platform has stabilized, they'll provide it via AWS, at which poiny the SME market will eat it up.
Just the training. Training off of the internet! Filled with extremists, made up nuttery, biased bs, dogma, a large portion of the internet is stupids talking to stupids.
Just look at all the gibberish scientific papers!
If you want a hallucination prone dataset, just train on the Internet.
Over the next few years, we'll see training on encyclopedias and other data sources from pre-Internet. And we'll see it done on increasingly cheaper hardware.
This tiny branch of computer sciences is decades old, and hasn't even taken off yet. There's plenty of chance for new players.
We already train on these encyclopedias, we've trained models on massive percentages of entire published book content.
None of this will be helpful either, it will be outdated and won't have modern findings, understandings. Nor will it help me diagnose a Windows Server 2019 and a DHCP issue or similar.
Just taking a look at python. How often does the AI know it's python 2.7 vs 3? You may think all the headers say /usr/bin/python3, but they don't. And code snippets don't.
How many coders have read something, then realised it wasn't applicable to their version of the language? My point is, we need to train with certainty, not with random gibberish off the net. We need curated data, to a degree, and even SO isn't curated enough.
And of course, that's even with good data, just not categorized enough.
So one way is to create realms of trust. Some data trusted more deeply, others less so. And we need more categorization of data, and yes, that reduces model complexity and therefore some capabilities.
But we keep aiming for that complexity, without caring about where the data comes from.
And this is where I think smaller companies will come in. The big boys are focusing in brute force. We need subtle.
By whom? Certainly no one I work with. AWS has some sharp edges and frustrations but we couldn't do half of what we do without it.
(Though I'm pretty familiar with some of the concepts, I know some things to avoid (e.g., "push this button to set up a very expensive global enterprise scale observability platform of numerous complicated services, because you asked about a very simple turn-key syslog service"), and I'm expecting the occasional configuration headache (and, lately, configuration wizard bugs).)
For a new startup, I'd use AWS for all serving and hosting purposes by default, iff you have someone who can avoid pitfalls, and handle problems.
If you don't have such a technical person, maybe start off with managed Kubernetes service with high-level UI, at AWS or one of the other cloud providers, and try not to make too big a mess (which might slow you down, or take you down) before you can afford to hire specialists to make sure it keeps working for you.
News to me
It's the same as saying buying electricity from a network is worse than having your own generators.