No mention of "AGI" this time. Since we all knew it was a scam. But this is the most damning of them all:
> The OpenAI flywheel is simple. More compute drives more intelligent models. More intelligent models drive better products. Better products drive faster adoption, more revenue and more cashflow.
FTX had a "flywheel". It fell off. Being saddled with hundreds of billions of debt makes this situation ten times worse.
> The OpenAI flywheel is simple. More compute drives more intelligent models. More intelligent models drive better products. Better products drive faster adoption, more revenue and more cashflow. That gives us the ability to reinvest and deliver intelligence more efficiently to consumers, enterprises, and builders around the world.
-x-
In short, the musical chairs are still playing... Keep on walkin' round, y'all, till the music stops.
I'm old enough to remember when companies worth $1 billion were called "unicorns." Now we have a company raising 122 times that? Valued at nearly 1000 times that...?
At least they're throwing consumers a bone via the ARK deal. It's crazy how little AI exposure is available to anyone who isn't already wealthy and/or connected.
I can't help but think building an "everything" app is so.. both unbelievably ambitious, and a folly. I am not personally convinced that people want all the things that this super app purports to do.
I am from a generation that still sits behind a desktop computer when making "big purchases." I can't even buy a flight on my phone. I am so much less likely to want to have an AI agent do that for me.
Then the idea that daily consumption of these products will drive people to use them more at work... I have a very different life outside of work. My use of AI outside of work is exceedingly different to what I use it for at work.
I sometimes feel wildly out of touch. But sometimes I view this as the VR moment. To me there are some things that I think may always be preferable to do outside of that ecosystem. And for me, a lot of tasks that 'agents' enable are small enough or important enough that I want to do them myself.
I don't think I'll ever be comfortable allowing an agent to call me a taxi, or order food on my behalf. Because the convenience of asking for food isn't worth the chance it'll mess up, and opening an app and looking at a menu is simpler.
I also think we're coming to a moment where we can start identifying the markers of AI generated content on sight. And I think there's a growing animosity to it. I might be comfortable asking AI something, but when I am looking for or searching for other content, seeing AI content markers make me angry at this point.
To finish, I do just sort of straight up hate the idea that we're comparing this moment to the invention of electricity. It's on the face of it absurd.
> Within a year of launching ChatGPT, we reached $1B in revenue. By the end of 2024 we were generating $1B per quarter. We are now generating $2B in revenue per month.
They raised $122B.
122 / 12*2 = 5 years to get your money back (I simplify, I know revenue <> profit)
They are so big that almost no one can afford to acquire them. It is similar as someone would like to acquire MSFT or AAPL.
Revenue is on metric. Another important metric is gross margin.
OpenAI's gross margin is estimated at 33%[0]. They also have to pay Microsoft 20% of revenue.
So, for each $1 of revenue:
Revenue $1.00
COGS (inference) (0.67)
Microsoft (0.20)
Gross margin $0.13
That $0.13 must cover "everything else": R&D, payroll, etc., and ideally leave some profit on the table.
The problem for OpenAI (and other pure AI companies) is that inference is not like software that sells at marginal cost (build once, sell everywhere), but each token costs money. Inference gets cheaper, but newer models require more computing power and consume more tokens. So the gross margin does not improve over time.
Break-even in the future won't come from just growing API usage and subscriber base.
> The broad consumer reach of ChatGPT creates a powerful distribution channel into the workplace
They mention this line in different forms a couple of times in the article. It’s clear they’re pretty rattled about Anthropic’s momentum in enterprise, I wonder how confident they really are in this rationale.
This announcement completes the betrayal of their founding principles.
"Our goal is to advance digital intelligence in the way that is most likely to benefit humanity as a whole, unconstrained by a need to generate financial return."
- Not advancing digital intelligence
- While locking people into a superapp
- Because they are further constrained to generating financial returns
I'm not excusing Altman's many many lies, but it is worth noting how many algorithmic advances in the past 20 years were made with relatively little computing power. Think of things like xgboost (2016). A modest computer can run a pretty big dataset on CPU. When Tensorflow was launched in 2015, I played with it on an ancient laptop and it worked just fine. Then I upgraded to a mobile workstation and was still able to keep up with many SOTA models. Turns out LLMs are massively more power hungry than most earlier algorithms, even in NLP.
They have to focus on the distant future (where they are frankly unlikely to exist) because they are falling further and further behind in the immediate future.
Their latest desperate bid for relevance is a plugin for Claude Code that uses Codex as a second opinion. Please clap.
> Today, we closed our latest funding round with $122 billion in committed capital at a post money valuation of $852 billion.
A couple things that stand out to me about this is the use of the phrase "committed capital", which only sounds like a promise that could break from various circumstances, and the valuation of their funding keeps changing so it sounds like a max rather than the valuation every investor invested at.
isn't it weird that there is no attribution to a human here? i mean, eventually, they have to dropkick sama and install GPT itself as king, right? EOQ seems as good a time as any
feels like an insult to readers to try to pretend that their revenue per month is comparable to google or apples growth when the funding is absurdly different, not to mention inflation itself.
I am very much onboard with AI within my workflow. I just don't really see a future where openai/anthropic are the absolute front runners for devs though. Maybe OpenAI does just have the better vision by targeting the general public instead, and just competing to become the next google before google can just stay google?
What is their next step to ensure local models never overtake them? If i could use opus 4.6 as a local model isntead and wrap it in someone else's cli tool, i 100% do it today. are the future model's gonna be so far beyond in capability that this sounds foolish? the top models are more than enough to keep up with my own features before i can think of more... so how do they stretch further than that?
A side note i keep thinking about, how impossible is a world where open source base models are collectively trained similar to a proof of work style pool, and then smaller companies simply spin off their own finishing touches or whatever based on that base model? am i thinking of thinks too simplistically? is this not a possibility?
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[ 5.0 ms ] story [ 61.1 ms ] threadI am so sick of AI writing.
> The OpenAI flywheel is simple. More compute drives more intelligent models. More intelligent models drive better products. Better products drive faster adoption, more revenue and more cashflow.
FTX had a "flywheel". It fell off. Being saddled with hundreds of billions of debt makes this situation ten times worse.
-x-
In short, the musical chairs are still playing... Keep on walkin' round, y'all, till the music stops.
/s
At least they're throwing consumers a bone via the ARK deal. It's crazy how little AI exposure is available to anyone who isn't already wealthy and/or connected.
I am from a generation that still sits behind a desktop computer when making "big purchases." I can't even buy a flight on my phone. I am so much less likely to want to have an AI agent do that for me.
Then the idea that daily consumption of these products will drive people to use them more at work... I have a very different life outside of work. My use of AI outside of work is exceedingly different to what I use it for at work.
I sometimes feel wildly out of touch. But sometimes I view this as the VR moment. To me there are some things that I think may always be preferable to do outside of that ecosystem. And for me, a lot of tasks that 'agents' enable are small enough or important enough that I want to do them myself.
I don't think I'll ever be comfortable allowing an agent to call me a taxi, or order food on my behalf. Because the convenience of asking for food isn't worth the chance it'll mess up, and opening an app and looking at a menu is simpler.
I also think we're coming to a moment where we can start identifying the markers of AI generated content on sight. And I think there's a growing animosity to it. I might be comfortable asking AI something, but when I am looking for or searching for other content, seeing AI content markers make me angry at this point.
To finish, I do just sort of straight up hate the idea that we're comparing this moment to the invention of electricity. It's on the face of it absurd.
I don't let another human do that! When we as a group order lunch, I always want to input mine directly or at least double check the order.
They raised $122B.
122 / 12*2 = 5 years to get your money back (I simplify, I know revenue <> profit)
They are so big that almost no one can afford to acquire them. It is similar as someone would like to acquire MSFT or AAPL.
WCGW?
Revenue $1.00
COGS (inference) (0.67)
Microsoft (0.20)
Gross margin $0.13
That $0.13 must cover "everything else": R&D, payroll, etc., and ideally leave some profit on the table.
The problem for OpenAI (and other pure AI companies) is that inference is not like software that sells at marginal cost (build once, sell everywhere), but each token costs money. Inference gets cheaper, but newer models require more computing power and consume more tokens. So the gross margin does not improve over time.
Break-even in the future won't come from just growing API usage and subscriber base.
[0] https://sacra.com/c/openai/
They mention this line in different forms a couple of times in the article. It’s clear they’re pretty rattled about Anthropic’s momentum in enterprise, I wonder how confident they really are in this rationale.
"Our goal is to advance digital intelligence in the way that is most likely to benefit humanity as a whole, unconstrained by a need to generate financial return."
Their latest desperate bid for relevance is a plugin for Claude Code that uses Codex as a second opinion. Please clap.
A couple things that stand out to me about this is the use of the phrase "committed capital", which only sounds like a promise that could break from various circumstances, and the valuation of their funding keeps changing so it sounds like a max rather than the valuation every investor invested at.
Edit: Why did this go from their press release to a news story?
iykyk
What??
Doesn't really strike me as the kind of statement that comes out of a company that can sustain a ~$1T market cap...
I am very much onboard with AI within my workflow. I just don't really see a future where openai/anthropic are the absolute front runners for devs though. Maybe OpenAI does just have the better vision by targeting the general public instead, and just competing to become the next google before google can just stay google?
What is their next step to ensure local models never overtake them? If i could use opus 4.6 as a local model isntead and wrap it in someone else's cli tool, i 100% do it today. are the future model's gonna be so far beyond in capability that this sounds foolish? the top models are more than enough to keep up with my own features before i can think of more... so how do they stretch further than that?
A side note i keep thinking about, how impossible is a world where open source base models are collectively trained similar to a proof of work style pool, and then smaller companies simply spin off their own finishing touches or whatever based on that base model? am i thinking of thinks too simplistically? is this not a possibility?