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Comment by marcosdumay | Hacker News Reader

So... 50% operational costs and about $100 spent on sales for each paying customer.

If they manage to keep those customers for several years without more sales, that bit looks like a normal "high-touch" business.

They shouldn't look like a "high-touch" business, but their unitary numbers look way better than I expected. They just need to grow some 10 times to star making a profit... Maybe 100 to cover the opportunity cost of their capital.

It's just a matter of finding 5 billion people willing to pay US prices :)

But it is still better than I expected.

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The win for something like OpenAI isn't getting a ton of customers to pay $10-100/mo.

It's getting businesses to pay $2k/mo or more per professional employee, like a lot of Anthropic customers.

Anthropic is ahead of them there, but that is how they win.

> Anthropic is ahead of them there, but that is how they win.

Isn't Anthropic currently killing that market though? I've been hearing about a lot of businesses pulling back after having experienced the reality.

Wouldn't the real story be to get government contracts? Those are more immune to public fickleness and market competition and usually have truly ludicrous margins.

If they're the only ones who ̶a̶r̶e̶ ̶w̶i̶l̶l̶i̶n̶g̶ ̶t̶o̶ ̶b̶e̶ ̶t̶h̶e̶ ̶e̶n̶g̶i̶n̶e̶ ̶f̶o̶r̶ ̶a̶u̶t̶o̶n̶o̶m̶o̶u̶s̶ ̶k̶i̶l̶l̶b̶o̶t̶s̶ can draw a reciprocation dingle-arm to reduce soinosoidal repleneration, then "I'm sure the government will buy it" [0]

[0] https://youtu.be/Ac7G7xOG2Ag?t=89

> just a matter of finding 5 billion people willing to pay US prices

This is how you know ads are inevitable. YouTube is probably a good indicator of how BigLabs will operate for free users.

I'd be cool with that. YouTube premium is one of the best value subscriptions I have. Steering people toward paying instead of ads-by-default is a net good imo

I think we can all understand the ways in which embedded advertisement in LLMs will be fundamentally different than view-based advertisement.

Maybe this will fly in the US, but I don’t think it will in the EU and other places, with regard to laws making covert advertising illegal.

There’s also the difficulty of proving to the advertising clients that the advertising actually takes place (and how much of it), if it is covert.

the AI providers will experiment with sustainable ad models and users will demand transparency and responsibility. An equilibrium will be reached, I'm sure.

The AI providers will experiment on their users, and keep going until they lose users

It'll be like Facebook; they're not losing money but it's awful to use

You do realize that adblockers work, right?

My coworker is already seeing ads while using ChatGPT

What kind of ads would you expect to see? "Hey, you're asking a lot of questions about Postgres lately. Have you considered moving to Oracle?"

Some people aren’t?

What is the mental model folks have that “just do ads” is easy, like only two companies have figured out how to make money from ads and I imagine they won’t take the competition lying down.

Yes, their numbers can even work out into a sustainable business with ads only.

They just have to become the world dominant LLM provider by a large margin, and become a high-value ad provider with world scale.

I mean... They just have to repeat a Google. That would make them sustainable and a reasonable value for the investment.

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