They aren’t in terms of profitability, but they are in terms of future revenue. If most early adopters start self-hosting models then a lot of future products will be build outside of OpenAI’s ecosystem. Then corporations will also start searching how to self-host models because privacy is the primary concern for AI’s adoption. And we already have models like Llama3 400B that is close to ChatGPT.

Have you paid much attention to the local model world?

They all tout OpenAI compatible APIs because OAI was the first mover. No real threat for incompatibility with OAI.

Plus these LLMs don’t have any kind of interface moat. It’s text in and text out.

Just because Ollama and friends copied the API doesn't mean that they're not competitive. They've all done this just the same as others copying the S3 API - ease of integration and lower barrier to entry during a switching event, should one arise.

> Plus these LLMs don't have any kind of interface moat.

The interface really has very little influence. Nobody in the enterprise world cares about the ChatGPT interface because they're all building features into their own products. The UI for ChatGPT has been copied ad nauseam - so if anyone really wanted something to look and feel the same it's already out there. Chat and visual modals are already there, so I'm curious how you think ChatGPT has an "interface moat"?

> Local private models are not a threat to openai.

There are lots of threats to AI. One of them being local models. Because if the OpenAI approach is to continue at their burn rate and hope that they will be the one and only I think they're very wrong. Small, targeted models provide for many more use cases than a bloated, expensive, generalized model. I would gather long term OpenAI either becomes a replacement for Google search or they, ultimately, fail. When I look around me I don't see many great implementations of any of this - mostly because many of them look and feel like bolt-ons to a foundational model that tries to do something slightly product specific. But even in those cases the confidence with which I'd put in these products today is of relatively low quality.

My argument was, because ollama and friends use the exact same interface as openai, tools built on top of them are compatible with OpenAI’s products and thus those tools don’t pull users away from OpenAI, so the local model world isn’t something OpenAI is worried about.

There is no interface moat. No reason for a happy openai user to ever leave openai, because they can enjoy all the local model tools with GPT.

Who cares about the interface? Not everyone is interested in conversational tasks. Corporations in particular need LLMs to process their data. A restful API is more than enough.

By interface, I meant API. (The “I” in API)

I should’ve been more clear.