What they really destroyed was the idea that OpenAI would be able to charge $200/month for their ChatGPT Pro subscription which includes o1. That was always ridiculous IMO. The Free tier and $20/month Plus tier along with their API business (minus any future plan to charge a ridiculous amount for API access to o1) will be fine.

> The Free tier and $20/month Plus tier along with their API business (minus any future plan to charge a ridiculous amount for API access to o1) will be fine.

Do the unit economics make this sustainable?

If only there were a way to make the models more efficient. Oh wait.

But doesn’t Deepseek’s innovation apply only to training, not inference?

Actually no! If we take their paper at face value, the crucial innovation to get a strong model with efficiency is their much reduced KV cache and their MoE approach: - where a standard model needs to store two large vectors for each token at inference time (and load/store those over and over from memory) deepseek v3/R1 only stores one smaller vector C that is a „compression“ from which the large k,v vectors can be decoded on the fly. - They use a fairly standard Mixture of Expert (MoE) approach, which works well in training with their tricks, but whose inference time advantages are immediate and equal to all other MoE techniques, which is to say that from ~85% of the 600B+ params that are inside the MoE layers, the model at each token inference step will only pick a small fraction to use. This reduces FLOPs and memory io by a large factor in comparison to a so-called dense model where all weights are used for every token (cf Llama 3 405B)

Reducing R&D expense also reduces breakeven price.

The two podcasters who do the Acquired podcast spoke to Ballmer about some of Microsoft’s failed initiatives and acquisitions. He told them that at the end of the day “it’s only money”.

All of the BigTech companies have enough cash flow from profitable lines of business to make speculative bets.

It must be EZ mode to be a big tech executive, you somehow have all the power to make every decision while also having the ability to never take the fault for these decisions.

I would much rather have a company with a culture that isn’t afraid to take calculated risks and not be afraid of repercussions when they take risk as long as it doesn’t cause consumer harm.

"Not doing consumer harm" is carrying a lot of weight there.

Either way what you describe is perfectly achievable for the workers, but at some point management needs to own up to their failures and getting rewarded because the board is also made up of executives at other big tech companies is a perverse incentive to never actually improve.

How did Microsoft’s losing bets do consumer harm?

I mean forcing copilot everywhere I don't want it (nowhere) while jacking up prices to justify it and using Windows 11 to serve ads is harmful to me. There's also you know... the anticompetitive company that thinks buying new sectors is healthy.

Today, Microsoft’s revenue mostly comes from Office and Azure. All except PowerPoint were written and designed by MS.

What does that have to do with what I'm saying? Today Copilot is being shoved in services I don't want which they are then in turn using to justify cost increases.

How is that not consumer harm?

Hopefully in the future the FTC will break up Microsoft, forcing them to split Azure, Office, and Windows. They clearly can't be trusted with all 3.

Since the time when companies en masse stopped paying stock dividends, the value has become highly speculative. In the absence of dividend payments, the stock pricing mechanism is not essentially different from Solana or Ethereum "price" discovery.

I don't disagree that price discovery is harder, but I can with more certainty give an honest valuation of CLF or DOW vs OpenAI's "who knows what money will look like after we succeed, you should view your investment as a donation" nonsense. Speculation is inevitable when forward looking, but there is a difference between error bars and various projections vs unicorns.

Due diligence never goes out of style.

> when companies en masse stopped paying stock dividends

Do you mean cash dividends [1]?

Also, the premise is false. Dividend yields have roughly tracked interest rates [2]. (The difference is a dirty component of the equity risk premium [3].)

[1] https://www.investopedia.com/ask/answers/05/stockcashdividen...

[2] https://www.multpl.com/s-p-500-dividend-yield/table/by-year

[3] https://www.investopedia.com/investing/calculating-equity-ri...

I changed the typo, thanks. Chash dividends. This analysis does not negate common sense: when a company does not pay cash dividends, owning its stock is purely speculative, like owning Solana. When it does, you get cash dividends funded by the company's tangible revenue, proportional to your number of shares.