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Comment by phillipcarter | Hacker News Reader

Wouldn't be a gary marcus post without congratulating himself for tweeting something that all but confirms a disaster that hasn't happened yet.

Anyways, OpenAI is not in profit-seeking mode, and there's no economic incentives to do so right now.

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> Anyways, OpenAI is not in profit-seeking mode, and there's no economic incentives to do so right now.

You disparaged the article, but then immediately agreed with its main point. The fact that there is no economic incentive for OpenAI to run sustainably is a problem. It means they will happily continue to spend trillions of investor, lender, and (soon) government money, most of which is being burned as waste heat radiating from GPUs, in pursuit of an AGI pipedream.

I didn’t agree with the article at all.

Not being in profit seeking mode is one thing. Being so far away from profit seeking mode that you need a government bailout is an entirely different thing.

According to this[0] podcast some captains of industry in SV consider that bubbles are good, actually. At least, that is the thesis of this[1] book published by Stripe Press. Not because they'll deliver returns for their investors, but because they drive innovation in the long run. But obviously, if they are perceived to have terrible ROI, they aren't getting over the line, which leads to a dilemma – how do we reach that moonshot without fooling a bunch of people and destroying the economy along the way?

All that said, anyone who spends a lot of time with AI knows the current direction of generative AI isn't really that moonshot. But the scale of compute that is being unlocked right now, along with technologies like photonics, might be what's key to AGI.

[0] https://shows.acast.com/the-david-mcwilliams-podcast/episode... [1] https://www.stripe.press/boom

they have 2-5 years... then we're gonna need to replace all those GPUs

If you show revenue, people will ask "How much?" And it will never be enough, but if you have no revenue, you can say you're pre-revenue. You're a potential pure play. It's not about how much you earn, it's about what you're worth. And who's worth the most? Companies that lose money.

Actually, companies that make a shitload of money are worth the most.

> And who's worth the most? Companies that lose money.

This is a fairly new phenomenon and we don't actually know if it works. It's entirely possible this exact mentality blows up the economy.

Yes, we know it works. Just ask the knowledgeable crowd over on r/wallstreetbets. They have the answer: just turn your phone upside down! Voila, line is going up again!

Huh? They have committed to about a trillion dollars in infrastructure build out they will need to pay for. How about instead of begging tax payers to back loans to pay for this, they actually produce some profit and pay for it themselves?

I feel like this question needs to be even louder because in the past they would just mumble something about “job creation,” but that’s undermined by the fact that they also tout AI as “job replacement” to investors and clients alike.

Is that why they just changed to become a for-profit company?

There's no ability for them to do so. They have a pathetic conversion rate and lose 3x as much money as they make.

No economic incentives to seek profit?

Yeah there certainly aren’t when you can sucker everyone else into paying for your money losing company and cash out in the secondary market.

Almost every Silicon Valley startup goes through a period where they seek growth, not profit and spend their investors money to maintain it.

Yes, at about 1% of this scale. OpenAI's obligations are not something they can just run to daddy VC to pay for; he can't afford it either

But what percentage of those startups are making such grand promises while taking in such unfathomable amounts of capital? The sheer scale of the investment per AI company, the massive tax incentives being given out by states and debt being taken on by energy companies promising massive increase in loads…I mean this is all without precedent. AI speculation is rapidly driving infrastructural changes at the state level across the country.

We know they can’t all be winners. But the price and ripple per failure (at least it seems to me) will be staggering. Am I off base here?

Sure, most of then lose millions of dollars, but uh, not trillions

800M WAU is a "losing company"?

The W is important there. If the DAUs were good, they'd report those. I do generally find that LLMs are a weekly thing at best in a chat bot form (the agentic stuff I use more often).

Weird thing to fixate about when the whole industry actually uses MAUs.

Even if all GPT users only logged in once a week (which I highly highly doubt), the question still stands.

800M WAU is a "losing company"?

If I operated a vending machine that spat out a dollar every time somebody pressed a button, I'd have just as many weekly users as I put dollar bills into it. You wouldn't call that a winning business despite the exceptionally high rate of 5-star reviews.

The more appropriate analogy is: you have a vending machine that dispenses a paper slip with your fortune on it everytime somebody presses a button. However you can only get one fortune told per day, but you can pay to get more in bulk.

Turns out people find these fortunes super useful, and many are actually paying real money to get more, and each vending machine is actually making money on this.

But now the vending machine industry has also figured out that bigger, more powerful machines produce tell better fortunes which draws in even more people.

So now the industry is investing heavily to build more, bigger vending machines. However, these machines need tons of expensive parts and power, and oh, we can't slow down because China, and so they are racing like crazy to build more.

Unfortunately, there is effectively only one company making a key part, and there's not enough power for all the machines being built, and so very expensive new infrastructure has to be built to meet the forecasted demand for all the fortunes in the world.

And this requires trillions in funding, which gets very expensive to borrow, and so the US government is being asked to provide loan guarantees, because who better would know what interest payments on trillions of debt look like?

It is a losing company if they aren't making money.

It's a losing company if they aren't making money and have no feasible path to do so.

It's a losing company if they aren't making money and have no feasible path to do so, considering amount of outstanding debts they already have and future debt they are planning to take.

> Weird thing to fixate about when the whole industry actually uses MAUs.

Are you kidding me? Like, both Google and Facebook tracked l7, l28 which is the number of days that a person/account logged in over the last 7 or 28 days. Fundamentally, that's the sign of a useful product, in that people keep coming back.

> 800M WAU is a "losing company"?

Not enough information to be sure. If their business model requires selling dollars for fifty cents, then maybe.

I don't doubt the utility of these products (sometimes), but I do doubt the business model behind OpenAI & Anthropic (the "pure" model providers).

Maybe, maybe not. The stat alone doesn't really dictate the answer - it just gives hope they'll be able to turn a profit one day (hopefully soon) without losing their position vs doubt of the same.

"money-losing"

“Money losing company” as in the company loses money, not “losing company” like their softball team got eliminated from the tournament

It definitely can be. If you have 800M MAU and no ways to make money, then you're a charity.

I can get 1 billion MAU if I just give out money or something. That's not impressive. Like, at all.

Yeah. No revenue. Nobody wants to hear about revenue! It's not about how much you make, it is about how much you're worth and who is worth the most? Companies that lose money.

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