I am also curious how you'd rank the performance of something like "https://w00dn.github.io/papergrapher/"
I was always wondering if we would progress faster in many ML/AI stuff if big companies exchanged data they collected (raw data). Take self driving stuff for example, dozens of companies spending tons of resources just to collect the data (that is btw public - streets, other vehicles, publicly exposed objects, people...). Imagine if they all exchanged raw data, we would be years faster in development and they would actually focus on things that matter (actual ML/AI models)...
but OpenAI is not open
It's a bit like the "PATRIOT" Act that isnt patriotic.
Figma is a really strong business. You can show spreadsheets and charts to make a pretty convincing case that it'll make a lot of money. It's not terribly risky.
OpenAI is really strong tech without much product market fit. It's got a ton of mindshare, but that's about it. Buying them is making a big bet that you can somehow turn that into a big business.
So one is a low-risk, medium-reward buy, and the other is a high-risk, high-reward buy. Even if OpenAI ultimately changes the world a lot more, its expected value now is close(ish) to Figma's.
I wouldn't say that. There are a lot of companies making money on it already, there's definitely a market for it. They just aren't monetizing. It's more like how "growth startups" acquired users at a loss before turning on the monetization engine.
They are kind of like a Stripe or Twilio in that sense (in their current form)
None.
A super-fast growing company like Slack took 5 years to reach $200M in annual revenue.
Jasper.AI is growing quicker than that. $45M in annual revenue last year, targeting $75M next year.
I haven't paid a ton of attention, but my impression was that it's "sell our tech via an API." This relies on other companies building things that make a lot of money on top of that API. I know some are, but I'm not aware of any particularly successful ones yet.
Maybe someone will find a killer application for this that solve an expensive problem for someone. In that case, yeah, OpenAI will make bank. Or maybe the best you'll see is a bunch of small fries selling fun toys and OpenAI will never really take off in terms of actual revenue. Or maybe, by the time someone finds killer applications for OpenAI's tech, the tech will already be available from other providers (like GPT-Neo or StableDiffusion).
That's the YouTube argument. "Yeah, everyone uses it but it's not like they're able to make money", stated about a company that's iterating its products faster than viable competition can react. In this case regarding one of a few actors in the world that can plausibly access the computing resources required to build on the bleeding edge.
They've made something people want; they'll be successful.
A counterexample might be Twitter. It's something that lots of people want (judging by its usage), but it's really struggled to turn that into a business.
Whether OpenAI is the next Youtube or the next Twitter remains to be seen.
(Note that they just about break even every year. That's a sign they can control costs, but the lack of revenue growth points to the fact that - as everyone who has used it will tell you - their ad platform is terrible).
I suspect that any service that crosses some threshold of users will almost certainly monetize it profitably.
Seeing that most rumors are that YouTube still isn’t profitable, that may not be the argument you think it is.
Google has only released revenue numbers: Roughly $15B in 2020[1]. Costs are difficult to judge, but in terms of infrastructure they are probably somewhat comparable to Netflix.
For 2020, Netflix had roughly $24B revenue and spent $1.8B on "technology and development" (which is where their infrastructure costs are)[2].
Unless you think Google is much less efficient than Netflix (which uses AWS for a lot of their tech[3]) then it's difficult to see how YouTube could not be profitable. Even if YouTube costs 3 times as much at Netflix to run (I don't see how) Google still has $10B revenue to pay creators for, and they control both how much they pay creators and how much they charge advertisers.
[1] https://www.theverge.com/2020/2/3/21121207/youtube-google-al...
[2] https://ir.netflix.net/financials/financial-statements/defau...
[3] https://s22.q4cdn.com/959853165/files/doc_financials/2021/q4...
Netflix pays once for content and it owns it. It’s a fixed cost. YouTube content creator costs scales with popularity
Netflix commissions shows, and they have to have hits to drive subscriptions.
Youtube pays a percentage of the ads shown on each channel, which scales directly with the popularity. As the channel becomes more popular the creator gets paid more, but Google makes more money because the advertisers pay by views too.
Netflix doesn't have that property.
Basically:
- 55% of Ad revenue goes to creators
- 7% of revenue on storage and data center costs (based on Google's 2019 annual report that reported how they depreciate their data center assets).
On top of that there are operating expenses, so operating profit margin is 3-18% (this is assuming their op-ex is much higher - almost twice - Netflix, but comparable to Facebook.)
YT has far higher storage costs, their content caches way worse and they have to pay for all the tech involved with Content ID, commenting, search over a much larger index, a slick upload/edit experience, ad handling, ad targeting, handling highly heterogenous content etc. This is an org that had to design their own ASICs to keep up with transcoding demand, it's just not in the same galaxy as Netflix in this regard.
That said, YouTube may still be profitable. I doubt even Google knows. When I worked there a long time ago execs were routinely asked about whether particular products were profitable and the answers made clear that they usually had no idea. Too much shared infrastructure that can't be clearly accounted to any one product, and many products justified with hard to measure things like making web search better.
People are already building a ton of products on top of LLMs - (Jasper AI, Copilot-related tools, etc.)
I would guess that OpenAI has infra, compute, and operational processes that blow these startups out of the water.
If an interested buyer wanted to monetize, I think they could do so fairly quickly and profitably.
It'd be interesting to see what kind of locked in ecosystem OpenAI can build.
Microsoft has invested in OpenAI and has a deal with them, Google has their own algos, Meta has their own algos. Who would acquire OpenAI and why would they pay so much? It seems like it would mostly be an acquihire and maybe getting ahead by 1-2yrs.
Is that really worth >$30B, especially given that interest rates are no longer 0%?
I also don't think your point about big tech firms having all the data makes sense. The transformer architecture that GPT is based on has been around since 2017. How did OpenAI create and scale GPT if they didn't have the data?
I think OpenAI is going to try and be the go-to platform for new AI companies rather than looking for an acquisition.
Figma is only worth that much because of Adobe's incompetence.
Companies in the same space as OpenAI are much more capable.
This reminds me of the Stripe hype squad screaming over-valuations of $100BN+ which we will once again see for OpenAI and I can see a long term valuation of just $80BN. That is it. Anything higher is a signal of complete over-valuation and disregarding of the competitors especially the open-source ones which indeed compete against OpenAI's so-called 'first mover advantage'.
All of this is even before talking about the competition, open-source models catching up and AI safety and regulations that will threaten AI. But at this point, the only thing that can ruin OpenAI's plans is a better clone of itself but with an open source model, released for free and not under restrictive paywalls.
That is truly 'Open AI', not some company pretending to be 'open' but is in fact essentially a Microsoft AI division. Might as well call it ClosedAI.
OpenAI has done some amazing RnD, but it is the big tech firms have all the data. Acquisition by a company like Microsoft is probably the most likely thing that will happen.
Sidenote: If a basic multiplayer vector graphics editor like Figma is worth 20 Billion, OpenAI can get a much higher price IMO!