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OpenAI is a systemic risk to the tech industry

123 点作者 elorant27 天前

22 条评论

xivzgrev27 天前
To me it&#x27;s a red flag when a company takes on Softbank funding. I worked at a portfolio company earlier in my career.<p>Their MO is to offer lots of money at inflated valuation vs domestic investors. This is compelling for founders - lots of money to grow, for less dilution.<p>That said, there&#x27;s very little value Softbank adds other than the money. No connections, no advice, and it&#x27;s generally not a helpful long term partnership. They also don&#x27;t seem to conduct the level of scrutiny that other investors do, because they have so much cash and want to muscle into hot deals. And possibly also because founders wouldn&#x27;t want to deal with their scrutiny vs domestic options.<p>Ultimately you take the money when you are greedy or don&#x27;t have other good options. And neither is a good signal.<p>I think Sam is driving as aggressively as he can, given AI seems like a winner takes all type market. Domestic investors are balking at the exponential increase in needed investment amounts given economic uncertainty and lack of justified return. Meanwhile Softbank has been catching up and has been dying to get in on OpenAI. So here&#x27;s the opportunity.<p>Maybe this works out and OpenAI is going to land this. But more likely, OpenAI is acting like the music is running out soon and they&#x27;re throwing a hail mary. And Softbank&#x27;s limited partners are going to be left holding the bag.
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jcranmer27 天前
This is a rather tediously long article. The summary as I see it:<p>1. OpenAI hemorrhages money (on the order of $10&#x27;s of billions a year).<p>1a. A subargument that this hemorrhaging is rather fundamental--OpenAI isn&#x27;t anywhere close to breaking even on operational costs, and it seems that OpenAI is getting sweetheart deals on compute that aren&#x27;t going to last very long.<p>2. There&#x27;s very few entities capable of maintaining the pipeline of money that OpenAI desperately needs.<p>3. Most of those (this article claims) are unwilling to stump for the cash.<p>4. OpenAI&#x27;s capital expenditures (this article claims) are a major (if not existential) source of revenue for its suppliers, so if OpenAI implodes, it presents a risk to many other tech companies as well via the network of suppliers.<p>The problem with this article is that, as much as I might be inclined to agree with it based on my priors, I just don&#x27;t see any actual plausible way that OpenAI implodes spectacularly like that. If the funding dries up, the most likely scenario to me is that OpenAI undergoes a crunch mode where it tries to eke out an operational profit while begging everybody else (including probably the government) to finance capital expenditures at a reduced rate. Instead of a big bang like Lehman Brothers was, it instead would look a lot more like a longer, slower decline where the tech industry underperforms the market rather than explosively driving it.
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xnx27 天前
I&#x27;ve liked some of Ed&#x27;s previous writing, but this is a craaaazy statement: &quot;The Future of Generative AI Rests On OpenAI&quot;.<p>OpenAI is an over-hyped, over-priced, and under-performing AI company. Fortunately, the underlying LLM&#x2F;transformer technology is real and valuable and not at all dependent on OpenAI. It would be good to deflate some of the hype around OpenAI and other non-viable companies.
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wrasee27 天前
As an aside:<p>&gt; Before we go any further: I hate to ask you to do this, but I need your help — I&#x27;m up for this year&#x27;s Webbys for the best business podcast award. I know it&#x27;s a pain in the ass, but can you sign up and vote for Better Offline? I have never won an award in my life, so help me win this one.<p>What does it mean to canvas people to vote for you without any suggestion that you have - actually listened to the podcast?<p>Goes as far as to undermine the award if there&#x27;s a suggestion you&#x27;ve received votes from people just because you were good at marketing people to vote for you. Seems to confuse savvy business practice with that of an award for merit.
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ohgr27 天前
I’d be more interested in user retention. Every AI product I’ve seen (from the investment side) does not speak of this. I have seen some data though that suggests user retention is short (3mo avg). People try it, find it’s not that useful or even harmful after the initial experimentation and dump it.<p>Gotta keep hype to keep MRR up though even if it’s from different people. They will run out of interest and new users soon. Going to be a big fall.<p>Models will stagnate on this funding crush and the promises will be gone in a puff of smoke. And everyone will have to unfuck their dependency on it for upselling their existing crap to end users.
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Ninjak805127 天前
Props to the author for the well-researched original article.<p>I disagree with the conclusion. In the current environment, OpenAI can raise money as if were water pouring from a faucet. If SoftBank can&#x27;t meet its agreements then there are 50 others waiting to take their place. In the current environment, OpenAI&#x27;s revenue and capital requirements are not meaningful given their ability to raise.<p>The environment can change quickly, look at early year 2000 vs late year 2000 funding for .com for example - money went from on-faucet to you&#x27;re-not-getting-a-dime in a few months. So if the funding environment for AI suddenly shifts, yes, OpenAI is cooked, but so is the entire AI industrial complex, from the smallest barely-billion-dollar startup all the way up to Nvidia.<p>My conclusion is that OpenAI is not a systemic risk, it&#x27;s not going to fall or take down a large portion of the tech industry on its own, it will fall if investors sour on the entire AI industry for some reason.
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GMoromisato27 天前
Here&#x27;s some quick math, which I wish the article had made more prominent:<p>If there are 500 million active users and OpenAI is burning $40 billion per year, then at most, each user costs $80 per year or $6.67 per month. That&#x27;s the upper limit because there are development costs, so the actual operating cost per user is probably half that (maybe $3 per month).<p>Thus even assuming they don&#x27;t come up with new revenue models, the $20 per month Plus plan is profitable.<p>Moreover, since there are 20 million Plus subscribers, each subscriber is currently subsidizing 24 other users. If they can get the ratio down to 1:6 (each Plus subscriber subsidizing 6 free users), the math would work out and OpenAI would be profitable (at least operationally).<p>And that&#x27;s assuming that they don&#x27;t unlock the huge enterprise business models that, IMO, are going to be the real drivers of revenue.<p>The whole article is predicated on OpenAI being unable to find profit, but with the article&#x27;s own number, it doesn&#x27;t seem hard to convince investors that profit will be there.<p>[The usual caveats apply: I&#x27;m just a random idiot and not a financial analyst. Also, I&#x27;m bad at mathing, so please correct me if I&#x27;m wrong.]
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returnInfinity27 天前
Ed Zitron is a permanent Open AI bear. Every few months he publishes a bear case.<p>Brad Gerstner from Altimeter capital makes a bull case, you need to listen to him as well.<p>Then make up your own thesis about OpenAI, LLMs and AI.
saltysalt27 天前
Great article! It is hard to see an ROI on OpenAI at this stage, or indeed a sustainable business model based on revenue rather than investment.
tim33326 天前
A lot depends on where you think AI will go. Zitron is obviously skeptical and calls the AI 2027 article &quot;a truly offensive piece of fan fiction.&quot; That article starts:<p>&gt;We predict that the impact of superhuman AI over the next decade will be enormous, exceeding that of the Industrial Revolution.<p>And if that happens investing a lot will make sense. If not I guess OpenAI will have to scale back and drop much of its free service. Or maybe go bust. I&#x27;m not sure it&#x27;s as doom and gloom as Zitron makes out. Maybe a bit of an over allocation of capital to OpenAI and LLMs but things will go on. Even if OpenAI folds Google and others will probably do fine.<p>(HN on AI 2027 - generally skeptical - <a href="https:&#x2F;&#x2F;news.ycombinator.com&#x2F;item?id=43571851">https:&#x2F;&#x2F;news.ycombinator.com&#x2F;item?id=43571851</a>)<p>I figure the reality is somewhere between Zitron&#x27;s skepticism and AI 2027&#x27;s over optimism.
lukeschlather27 天前
Are there any precedents for a subscription service that went from 0 to $5 billion in revenue in two years? I also think, they are doing a ton of expensive R&amp;D, but as far as I can tell that $5 billion in revenue is a profitable and sustainable business. It&#x27;s not like they&#x27;re selling compute below cost.
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cs70227 天前
The title is an exaggeration.<p>OpenAI is a systemic risk only to current tech valuations and to the near-term availability of fresh capital for new AI infrastructure.<p>Whatever happens to OpenAI -- and to valuations, and to the availability of capital -- in the short run, technology will continue to progress, in fits and starts, as always.
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jmull27 天前
Some interesting stuff in the article, but it doesn&#x27;t substantiate its headline conclusion.<p>Not anywhere close, IMO.<p>E.g., I&#x27;m sure Oracle doesn&#x27;t want to lose $1B on a datacenter, but that&#x27;s a bruise, not a catastrophic loss to them. I&#x27;m sure NVIDIA likes all the OpenAI revenue, but we&#x27;re talking about how steeply the slope of their revenue line goes up. (They will inevitably face the problem where the line no longer shoots straight up, and a faltering OpenAI could make that happen sooner, but OpenAI itself isn&#x27;t a life-or-death problem for them.)
tdesilva26 天前
As with many startups (especially ones with high burn rates) OpenAI is risky. It could take down SoftBank and its data center vendors. 6% of nvidia’s revenue is not that concerning, as I’m sure they can find other buyers for those GPUs. But I really don’t buy the argument that OpenAI is the gen AI industry. If they ceased to exist tomorrow, the tech&#x2F;genAI industry would just trundle along. At this point the tech is quite commodotize.
Havoc27 天前
It seems improbable to me that sam doesn&#x27;t have a plan lined up for this.<p>Also not so sure about systemic risk. Sure there would be a panic &amp; scramble but realistically all the frontier models are reasonably close to each other these days. It&#x27;s not like there is no substitute at all &amp; market will rebalance pretty fast
energy12327 天前
It&#x27;s unclear how OpenAI intends to quadruple its revenue? They just doubled their active user count in only a few weeks and their Pro subscription was a new offering as of January. I&#x27;d be surprised if their revenue wasn&#x27;t at least four times larger by the end of this year.
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zhivota27 天前
This guy is verging on a crank at this point, every article I&#x27;ve read from him is just spewing FUD about OpenAI, and AI in general.<p>Just click his name at the top of the article and read the titles. With someone like this, even with tons of cited numbers you have to be very, very careful. The conclusions are motivated, and it would take enormous amounts of time to vet what he&#x27;s saying, because even though the numbers may be correct, it&#x27;s what he didn&#x27;t report that may actually matter.
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moralestapia27 天前
While TFA is pretty much a rant and heavily biased towards OpenAI losing, it&#x27;s quite comprehensive and very well researched, props to the author.<p>There&#x27;s one sentence that stuck out for me:<p><i>&quot;as previously discussed, ChatGPT is the only Large Language Model company with any meaningful userbase&quot;</i><p>I kind of &quot;felt&quot; this was true but never saw the numbers, I followed the link [1], and found this jewel:<p><i>&quot;Anthropic&#x27;s Claude: Two million (!) monthly active users on the Claude app, 8.2 million unique monthly visitors to claude.ai.&quot;</i><p>My only reaction is ... HAHAHAHAHAHAHAHAHAHA!<p>I wish I could short that crappy company.<p>1: <a href="https:&#x2F;&#x2F;www.wheresyoured.at&#x2F;wheres-the-money&#x2F;" rel="nofollow">https:&#x2F;&#x2F;www.wheresyoured.at&#x2F;wheres-the-money&#x2F;</a>
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FrankWilhoit27 天前
Major premise: We need a miracle. Minor premise: OpenAI would be a miracle. Conclusion: OpenAI is what we need.
dsjoerg27 天前
If you want:<p>- Hype deflation<p>- Less VC froth<p>- Fewer bullshit startups<p>- More investment in real tech, not magic-show LLM demos<p>- Open-source and decentralization to win<p>Then OpenAI collapsing would be a net positive in the long run.
blotfaba26 天前
Show us on the doll&#x27;s ATM&#x27;s number pad how much money Zuck paid you to write this
vonneumannstan27 天前
People really don&#x27;t get it. The Frontier Labs&#x27; ability to make money right now is irrelevant. If you build the first AGI you win capitalism. That&#x27;s what is at stake here. That&#x27;s potentially worth Trillions&#x2F;Quadrillions(infinite?) money. Everything else is noise.
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