| ▲ | laweijfmvo 12 hours ago |
| why does the article used words like burn and incinerate, implying that OpenAI is somehow making money disappear or something? They’re spending it; someone is profiting here, even if it’s not OpenAI. Is it all Nvidia? |
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| ▲ | zaphar 12 hours ago | parent | next [-] |
| Because that's normal language idioms in financial analysis reporting? |
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| ▲ | popalchemist 12 hours ago | parent | prev | next [-] |
| Because typically one expect a return on investment with that level of spending. Not only have they run at a loss for years, their spending is expected to increase, with no path to profitability in sight. |
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| ▲ | bdangubic 12 hours ago | parent [-] | | not that I disagree but would it be fair to say though that we have seen this before where it turned out OK? say Uber? Amazon? | | |
| ▲ | jcranmer 12 hours ago | parent | next [-] | | IIRC, current estimates are that OpenAI is losing as much money a year as Uber or Amazon lost in their entire lifetime of unprofitability. Also, both Uber and Amazon spent their unprofitable years having a clear roadmap to profitability. OpenAI's roadmap to profitability is "???" | | |
| ▲ | bdangubic 11 hours ago | parent [-] | | I have lived through Amazon’s rags to riches and there was never a clear plan to profitability. Vast majority of people were questioning sanity of anyone investing in Amazon. I am not saying OpenAI is Amazon but am saying I have seen this before where masses are going “oh business is bad, losses are huge, where is path to profitability…” | | |
| ▲ | esafak 7 hours ago | parent [-] | | Your recollection is hazy. Bezos chose not to be profitable in order to grow the company, and reap greater rewards in the future. https://www.youtube.com/shorts/wjLs22dNOCE | | |
| ▲ | tptacek 4 hours ago | parent [-] | | I don't know either way but every company does this, it's not saying anything meaningful to say that a new company is taking an "investment year" or two or ten. I do know that in the late aughts, people were writing stories about how Amazon was a charity run on behalf of the American consumer by the finance industry. |
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| ▲ | oh_my_goodness 12 hours ago | parent | prev | next [-] | | To become the next Uber, do I just need to run huge losses? | | |
| ▲ | bdangubic 11 hours ago | parent [-] | | I wouldn’t but path to success can clearly come from running 10-digit losses for a loooong time, no? | | |
| ▲ | oh_my_goodness 11 hours ago | parent [-] | | I think you're saying that just running up huge losses is sufficient to create a successful company? But that you personally wouldn't want to run up huge losses? Not sure. | | |
| ▲ | bdangubic 8 hours ago | parent [-] | | nah, I am saying that many (super) successful businesses ran in red financially for a very long time. I would not run a business that way but I am also (fortunately) not a CEO of a multibillion dollar company |
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| ▲ | toxic72 12 hours ago | parent | prev [-] | | To my knowledge Amazon never debt financed their ops like this | | |
| ▲ | oh_my_goodness 12 hours ago | parent | next [-] | | Amazon did borrow money, for a long time. | |
| ▲ | dylan604 11 hours ago | parent | prev [-] | | Where did their financing come from then? | | |
| ▲ | samx18 9 hours ago | parent [-] | | They had a cash-cow called AWS to keep the retail business afloat | | |
| ▲ | dylan604 6 hours ago | parent | next [-] | | Somebody must not be old enough to remember Amazon before AWS. Maybe you also don’t remember that Amazon started selling books before becoming the world’s largest fencing for selling stolen merch. They used to be the butt of many jokes for losing so much money for so many years while they expanded warehouses. | |
| ▲ | bdangubic 7 hours ago | parent | prev [-] | | not right away |
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| ▲ | lexicality 12 hours ago | parent | prev | next [-] |
| I suspect most of it is going to utilities for power, water and racking. That being said, if I was Sam Altman I'd also be stocking up on yachts, mansions and gold plated toilets while the books are still private. If there's $10bn a year in outgoings no one's going to notice a million here and there. |
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| ▲ | slashdave 11 hours ago | parent [-] | | How many gold toilets do you need? I mean, I don't even own one. | | |
| ▲ | lexicality 11 hours ago | parent [-] | | Tragically I don't make CEO money so I also don't have one but I presume you'd want to have at least one per mansion and another one in the office. Maybe a separate one for special occasions. |
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| ▲ | simonw 12 hours ago | parent | prev | next [-] |
| Your burn is the money you spend that exceeds the money you earn, see also "burn rate". |
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| ▲ | wat10000 12 hours ago | parent | prev | next [-] |
| “Burn rate” is a standard financial term for how much money a startup is losing. If you have $1 cash on hand and a burn rate of $2 a year, then you have six months before you either need to get profitable, raise more money, or shut down. |
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| ▲ | nutjob2 11 hours ago | parent | prev [-] |
| > They’re spending it That's what the words mean in this context. |
