Everyone is so pessimistic about bubble bursting and money are simply catches on fire in this AI race…

However, I remembered when Youtube was young. It was burning money every month on bandwidth.

After selling out to Google, it took another decade to turned profit. But it did. And it achieved its end game. As the winner, it took all of the video hosting market. And Google reaped the entirety of that win.

This AI race is playing out the same way. The winner has the ability to disrupt several FAANGs and FAANG neighbors (eg. Adobe). And that’s 1-2 trillion dollar market, combined.

Youtube is fascinating to me because it never made any sense. At the time they were starting bandwidth was expensive. How the hell did they pay the bills for that? And then every single rational piece of logic said they would be sued to oblivion due to copyright violations. Logically, Youtube should have been impossible, but here it is.

I often think about that when trying to evaluate forward looking tech. Even though 99% of the time logic like that proves to be correct, it's also true that most of the time the winners in a race did that exactly because they defined some piece of the standard framework of logic that everybody else played by. Uber is similar - they shouldn't exist, they basically broke the law in most countries they moved into, brazenly violated all kinds of barriers that kept taxi industry completely entrenched for decades. But now they are dominating in most of these countries.

Were there many competitors to YouTube though? I remember Vimeo (still around) and Google Video (replaced by YouTube), but not much else.

Between OpenAI, Anthropic, Google, Facebook, xai, Microsoft, Mistral, Alibaba, DeepSeek, z.ai, Falcon, and many others, AI feels a lot more competitive.

and yet it's still only ~10% of google's revenue.