OpenAI has a negative 122% operating margin and growth of usage has stopped. https://www.theinformation.com/articles/openai-held-1-billion-revenue-lead-anthropic-first-quarter
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So, you’re saying it’s good news: their losses are not going to keep increasing?
@david_chisnall @GossiTheDog is that good news? 😏
Well, from their perspective.
@GossiTheDog -122% is actually better than I expect. I'm wondering how many "large line items" are being excluded. Does it include some things that are core to the business?
@scottmichaud
IIRC they are excluding the cost of training.
So this is just the cost of inference...
@dirkhh @GossiTheDog I hear training is frequently excluded in a lot of their numbers, but I don't know which ones. (And, of course, that is silly because their entire point is compressed human knowledge, so they're going to need to continually compress human knowledge.)
@scottmichaud @dirkhh @GossiTheDog These companies are classifying training as CapEx instead of what it actually is, OpEx. Ed Zitron talks about this a lot. He thinks once the AI-only companies go public (OpenAI and Anthropic), their stocks will crash because they won't be able to get away with their accounting tricks as easily. I'm personally not sure. Investors and execs seem to be going through a sort of AI psychosis, and these companies are in bed with politicians and regulators.
@scottmichaud
Also, of course, is the actual cost of obtaining training data. Because "stealing all the data in the world" isn't really valid accounting in most systems I'm aware of.
@shtrom @GossiTheDog It would be absolutely amazing if the bubble popped before they even IPOed.
@Azuaron Yeah! Though that would be no mean feat. IPO is when the VCs make their money back from retail investors and finally get to pull out. I suspect they'll sunk-cost until then 😒 @GossiTheDog
IPOs won’t be when all of the shares go on the market. The early investors may add theirs to the pile, but usually they won’t sell all of them early because doing so would crash the stock price. The goal when you’re running a scam company is to IPO at a decent price that goes up a bit, then sell your shares slowly, at just below the quantity that there are buyers for, which keeps pushing the price up until you’ve offloaded them.
It’s easier to cook the books for one filing than to do so over a series, so you want to do this quite quickly before it’s obvious that the company’s fundamentals are terrible.
All of that said, sometimes companies crash when they IPO. Release the shares and watch the price plummet. If this happens, the early investors need to either dump their stock and get something back, or hold it in the hope that it will recover. That can be the thing that precipitates a bubble bursting.
The last time petrostate despots & oil oligarchs laundered their cash via Deutsche Bank, private equity, & the housing market.
This time they're laundering their cash through US tech.
In any other situation, the C-suite would be swiftly turfed out, but Zuckerberg is still in charge at Meta, despite losing $77 billion on the Metaverse.
In the AI situation, the same insane losses & the same retention of money-losing executives. Odd.
Circular Finance Fraud.
