OpenAI Is A Bad Business
We recorded 27 claims from this post. 27 can’t be checked. 14 more are held. Read the post at its source.
Claims from this post (27)
In the order they appear in the post. Each quotation is the speaker’s words in this post. A label such as “Supported” or “Can’t be checked” is the claim’s current assessment; its page has the evidence and the reasons.
Assessment: Can’t be checkedSaid
Forecast
“In any case, OpenAI will likely prevail and raise this round from a cadre of investors that will have to invest a minimum of $250 million to put money behind a company that has never turned a profit, that has no path to profitability, and has yet to create a truly meaningful product outside of Sam Altman's marketing expertise.”
Our reading: OpenAI will likely succeed in raising its current funding round.
No horizon
Assessment: Can’t be checkedSaid
Rhetoric
“This round is a farce — a group delusion, one borne of one man's uncanny ability to convince clueless idiots that he has some unique insight”
Our reading: OpenAI's funding round is a farce and a group delusion driven by Sam Altman's persuasiveness.
No horizon
Assessment: Can’t be checkedSaid
Forecast
“in simpler terms, that OpenAI will likely raise $6.5 billion in funding, and then have to do so again in short order, likely in perpetuity.”
Our reading: OpenAI will likely raise $6.5 billion and then have to raise again soon, likely indefinitely.
No horizon
Assessment: Can’t be checkedSaid
Rhetoric
“yet the company says that it expects to make $11.6 billion in 2025 and $100 billion by 2029, a statement so egregious that I am surprised it's not some kind of financial crime to say it out loud.”
Our reading: OpenAI's projections of $11.6B revenue in 2025 and $100B by 2029 are egregiously unrealistic.
No horizon
Assessment: Can’t be checkedSaid
Causal claim
“As I've said before, I believe there's also a subprime AI crisis brewing because OpenAI's API services — which lets people integrate its various models into external products — is currently priced at a loss, and increasing prices will likely make this product unsustainable for many businesses currently relying on these discounted rates.”
Our reading: OpenAI's API is priced at a loss, and raising prices will likely make it unsustainable for many dependent businesses, creating a subprime AI crisis.
No horizon
Qualifier: if prices increase
Assessment: Can’t be checkedSaid
Forecast
“However, OpenAI's costs are likely to increase, because (as the New York Times notes) if this company grows by 300%, it's very likely that the free user base of ChatGPT increases along with it, burdening the company with more costs.”
Our reading: OpenAI's costs are likely to increase because, if the company grows by 300%, it is very likely that ChatGPT's free user base grows with it and adds costs.
No horizon
Qualifier: if the company grows by 300%
Assessment: Can’t be checkedSaid
Recommendation or value judgment
“OpenAI has not had anything truly important since the launch of GPT-3.5, and its recent o-1 model has not been particularly impressive.”
Our reading: OpenAI has not had anything truly important since the launch of GPT-3.5, and its o1 model has not been particularly impressive.
No horizon
Assessment: Can’t be checkedSaid
Observation
“OpenAI's cloud business — meaning other companies connecting their services to OpenAI's API — is remarkably small, to the point that it suggests there's weaknesses in the generative AI industry writ large.”
Our reading: OpenAI's API business is remarkably small, suggesting weakness across the generative AI industry.
No horizon
Assessment: Can’t be checkedSaid
Recommendation or value judgment
“As a result of these numbers, I have major concerns about the viability of OpenAI's business, and the generative AI market at large.”
Our reading: Because of these API revenue numbers, he has major concerns about the viability of OpenAI's business and of the generative AI market at large.
No horizon
Assessment: Can’t be checkedSaid
Recommendation or value judgment
“That is, to be frank, extremely bad. These are estimates, but even if they were doubled, these would not be particularly exciting numbers.”
Our reading: The estimated roughly $300 million a year OpenAI makes from business users is extremely bad, and even doubled would not be particularly exciting.
No horizon
Qualifier: these are estimates
Assessment: Can’t be checkedSaid
Recommendation or value judgment
“While 10 million paying subscribers might seem like a lot, "ChatGPT" is effectively to generative AI what "Google" is to search. Ten million people paying for this is table stakes.”
Our reading: Because ChatGPT is to generative AI what Google is to search, ten million paying subscribers is table stakes.
No horizon
Assessment: Can’t be checkedSaid
Recommendation or value judgment
“Paying for ChatGPT Plus doesn't dramatically change the product, nor does it offer a particularly-compelling new use case for anyone other than power users.”
Our reading: Paying for ChatGPT Plus doesn't dramatically change the product, nor does it offer a particularly compelling new use case for anyone other than power users.
No horizon
Qualifier: other than power users (applies to compelling use cases)
Assessment: Can’t be checkedSaid
Recommendation or value judgment
“As a company, OpenAI is flat-out terrible at product.”
Our reading: As a company, OpenAI is flat-out terrible at product.
No horizon
Assessment: Can’t be checkedSaid
Causal claim
“I'd also argue that those willing to pay for a "Plus" subscription are more likely to use the platform way, way more than free users, which in turn may (as one Redditor hypothesized regarding Anthropic's "Claude Pro" subscription) lose it the revenue on said premium subscriber.”
Our reading: Paying ChatGPT Plus users likely use the service far more than free users, which may make OpenAI lose money on them.
No horizon
Assessment: Can’t be checkedSaid
Recommendation or value judgment
“You see, ChatGPT Plus is not a great business.”
Our reading: ChatGPT Plus is not a great business.
No horizon
Assessment: Can’t be checkedSaid
Observation
“This heavily-suggests that generative AI, as a technology, doesn’t necessarily have a product-market fit.”
Our reading: Generative AI may lack product-market fit.
No horizon
Assessment: Can’t be checkedSaid
Observation
“If OpenAI — which dominates with, I’d wager, at least a 30% market share — is only making $1 billion a year from selling access to its models, and at this stage in the massively-inflated hype bubble, there may not even be $10 billion of annual revenue from companies integrating generative AI into their products.”
Our reading: If OpenAI, which he wagers has at least a 30% market share, makes only $1 billion a year from model access, there may not even be $10 billion of annual revenue from companies integrating generative AI.
No horizon
Qualifier: if OpenAI has at least a 30% share (his wager) and makes only $1 billion a year from model access
Assessment: Can’t be checkedSaid
Conditional forecast
“If that’s the case, then OpenAI has to raise prices. Also, Microsoft has to raise prices. And that will likely spook those who have gotten used to these subsidized prices — which I discussed in The Subprime AI Crisis a few weeks ago — and they’ll start to disentangle themselves from generative AI.”
Our reading: If OpenAI is underpricing to scale, OpenAI and Microsoft will have to raise prices, which will likely drive customers away from generative AI.
No horizon
Only if: if OpenAI is deliberately underpricing its models to scale
Assessment: Can’t be checkedSaid
Forecast
“After all, Anthropic is facing exactly the same problem, and is on course to lose $2.7 billion in 2024 on $800 million in revenue, which makes me think the likelihood of this being a quick fix is extremely low.”
Our reading: Because Anthropic faces the same problem and is on course to lose $2.7 billion in 2024 on $800 million in revenue, he thinks the likelihood of a quick fix for OpenAI's costs is extremely low.
No horizon
Assessment: Can’t be checkedSaid
Observation
“This suggests a fundamental weakness in the revenue model behind GPT, as well as a fundamental weakness in the generative artificial intelligence market writ large.”
Our reading: OpenAI's thin API business indicates fundamental weakness in GPT's revenue model and the generative AI market.
No horizon
Assessment: Can’t be checkedSaid
Assessment: Can’t be checkedSaid
Forecast
“At this point, it’s hard to see how OpenAI survives.”
Our reading: It is hard to see how OpenAI survives.
No horizon
Assessment: Can’t be checkedSaid
Rhetoric
“These aren’t the actions of a company that’s on the forefront of anything — they’re desperate moves made by desperate people burning the candle at both ends.”
Our reading: OpenAI's rushing of products like o1 is not the action of a company at the forefront but desperate moves by desperate people burning the candle at both ends.
No horizon
Assessment: Can’t be checkedSaid
Rhetoric
“OpenAI is a disaster in the making, and behind it sits a potentially bigger, nastier disaster — a lack of any real strength in the generative AI market.”
Our reading: OpenAI is a disaster in the making, and the generative AI market lacks real strength.
No horizon
Assessment: Can’t be checkedSaid
Forecast
“I believe the upcoming earnings from Microsoft and Google will further dampen excitement around generative AI, which in turn will reduce the likelihood that developers will integrate GPT further into their products, while also likely depressing market interest in ChatGPT writ large.”
Our reading: He believes upcoming Microsoft and Google earnings will further dampen excitement about generative AI, reducing the likelihood that developers integrate GPT further and likely depressing market interest in ChatGPT.
No horizon
Qualifier: I believe
Assessment: Can’t be checkedSaid
Recommendation or value judgment
“This is a company lost, bleeding money with every interaction with the customer, flogging software that’s at best kind-of useful and at worst actively harmful.”
Our reading: OpenAI is a company lost, bleeding money with every customer interaction and selling software that is at best kind of useful and at worst actively harmful.
No horizon
Assessment: Can’t be checkedSaid
Rhetoric
“If I’m right, we’re watching venture capitalists and companies like Microsoft burn tens of billions of dollars to power the next generation of products that nobody gives a shit about.”
Our reading: If he is right, VCs and Microsoft are burning tens of billions on generative AI products nobody cares about.
No horizon
Qualifier: if he is right
Held from this post (14)
These records did not pass every check, so nothing about them is published. Held is not a finding.
- The criteria are ambiguous. Our reading, not assessed: Once OpenAI has raised its current round of $6.5 billion to $7 billion, it will have to raise another round of at least the same size by July 2025, if not sooner.
- The two reviews read the claim differently
- The two reviews read the claim differently
- The two reviews reached different assessments. Our reading, not assessed: OpenAI has never turned a profit, has no path to profitability, and has yet to create a truly meaningful product outside of Sam Altman's marketing expertise.
- The two reviews read the claim differently
- The two reviews read the claim differently
- The two reviews read the claim differently
- The two reviews read the claim differently
- The two reviews read the claim differently
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- The two reviews read the claim differently
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- The two reviews read the claim differently
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