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Comment by lumost | Hacker News Reader

OpenAI has a reasonable path to reduce their costs by 10-100x over the next 5 years if they stop improving the models. That would make them an extremely profitable company with their only real risk being “local ai”. However customers have wanted their data in the cloud for years, local inference would likely just mean 0 cost tokens for OpenAI.

The challenge is the rest of the industry funding dead companies with billions of dollars on the off chance they replicate OpenAI’s success.

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I don't see how this works though. OpenAI doesn't exist in a vacuum, it has competitors, and the first company to stop improving their model will get obliterated by the others. It seems like they are doomed to keep retraining right up until the VC funding runs out, at which point they go bankrupt.

Some other company, that doesn't have a giant pile of debt will then pick up the pieces and make some money though. Once we dig out of the resulting market crash.

The winner takes all thesis would be that like TSMC, the capex of competing in this field keeps growing until only one vendor can both raise sufficient capital to compete and effectively execute with that capital. OpenAI doesn't need to be the first to stop raising money and go profitable, they need to be the last vendor to go profits first.

It's not impossible that the crash will hit all companies at the same time and they might all stop training.

The problem is OAI has very firece competition - folks who are willing to absorb losses to put them out of business.

Uber and Amazon are really bad examples. Who was Amazons competition? Nobody. By the time anyone woke up and took them seriously it was too late.

Uber only had to contend with Lyft and a few other less funded firms. Less funded being a really important thing to consider. Not to mention the easy access to immense amounts of funding Uber had.

The problem is that their competitor is Google and they are much better at most of the things that OpenAI needs to be good at.

OpenAI is trying to launch a hardware product with Jony Ive, an ads company, a AI slop-native version of TikTok and several other "businesses". They look well on their way to turning into a Yahoo! than a Cisco or VMWare.

Yeah they are all over the place and this should be a huge red flag.

Some marginal investors know this but they are okay because the music is still playing - but when they think its time to leave the bubble will pop.

People seem to forget that its not about whether or not its actually a bubble, its really about when will certain people who set these stock prices for valuations, decide its time to exit and take their profit.

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