OpenAI has #5 traffic levels globally. Their product-market fit is undeniable. The question is monetization.

Their cost to serve each request is roughly 3 orders of magnitude higher than conventional web sites.

While it is clear people see value in the product, we only know they see value at today’s subsidized prices. It is possible that inference prices will continue their rapid decline. Or it is possible that OAI will need to raise prices and consumers will be willing to pay more for the value.

▲ pclmulqdq 11 hours ago | parent | next [-]

It's easy to get product-market fit when you give away dollars for the price of pennies.

▲ PeterHolzwarth 11 hours ago | parent [-]

Yes, but that is the standard methodology for startups in their boost phase. Burn vast piles of cash to acquire users, then find out at the end if a profitable business can be made of it.

▲ EA-3167 10 hours ago | parent | next [-]

It’s also the standard methodology for a number of scams.

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mjamesaustin 6 hours ago | parent [-]

Scams are our entire economy now. Do whatever you can to own a market, then squeeze your customers miserably once you have their loyalty. Cash out, kick the smoking remains of the company to the curb, use your payout to buy into another company, and repeat.

	▲	lotsofpulp 44 minutes ago \| parent [-]
		Kind of like paying more and more to Social Security and Medicare and getting less and less. And the backstop on asset prices at the expense of the currency's purchasing power.

▲ Analemma_ 9 hours ago | parent | prev [-]

Most startups have big upfront capital costs and big customer acquisition costs, but small or zero marginal costs and COGS, and eventually the capital costs can slow down. That's why spending big and burning money to get a big customer base is the standard startup methodology. But OpenAI doesn't have tiny COGS: inference is expensive as fuck. And they can't stop capex spending on training because they'll be immediately lapped by the other frontier labs.

The reason people are so skeptical is that OpenAI is applying the standard startup justification for big spending to a business model where it doesn't seem to apply.

▲ famouswaffles 9 hours ago | parent [-]

>But OpenAI doesn't have tiny COGS: inference is expensive as fuck.

No, inference is really cheap today, and people saying otherwise simply have no idea what they are talking about. Inference is not expensive.

▲ cherryteastain 2 hours ago | parent [-]

Clearly not cheap enough.

> Even at $200 a month for ChatGPT Pro, the service is struggling to turn a profit, OpenAI CEO Sam Altman lamented on the platform formerly known as Twitter Sunday. "Insane thing: We are currently losing money on OpenAI Pro subscriptions!" he wrote in a post. The problem? Well according to @Sama, "people use it much more than we expected."

https://www.theregister.com/2025/01/06/altman_gpt_profits/

	▲	aurareturn an hour ago \| parent [-]
		So just raise the price or decrease the cost per token internally. Altman also said 4 months ago: `Most of what we're building out at this point is the inference [...] We're profitable on inference. If we didn't pay for training, we'd be a very profitable company.` https://simonwillison.net/2025/Aug/17/sam-altman/

▲ robkop 10 hours ago | parent | prev | next [-]

Does that cost to serve multiple stay the same when conventional sites are forced to shovel ai into each request? e.g. the new google search

▲ doctorpangloss 10 hours ago | parent | prev [-]

it's a simple problem really. what is actually scarce?

a spot on the iOS home screen? yes.

infrastructure to serve LLM requests? no.

good LLM answers? no.

the economist can't tell the difference between scarcity and real scarcity.

it is extremely rare to buy a spot on the iOS home screen, and the price for that is only going up - think of the trend of values of tiktok, whatsapp and instagram. that's actually scarce.

that is what openai "owns." you're right, #5 app. you look at someone's home screen, and the things on it are owned by 8 companies, 7 of which are the 7 biggest public companies in the world, and the 8th is openai.

whereas infrastructure does in fact get cheaper. so does energy. they make numerous mistakes - you can't forecast retail prices Azure is "charging" openai for inference. but also, NVIDIA participates in a cartel. GPUs aren't actually scarce, you don't actually need the highest process nodes at TSMC, etc. etc. the law can break up cartels, and people can steal semiconductor process knowledge.

but nobody can just go and "create" more spots on the iOS home screen. do you see?

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somewhereoutth 9 hours ago | parent [-]

depends if they can monetize that spot. So either ads or subscription. It is as yet unclear whether ads/subscription can generate sufficient revenue to cover costs and return a profit. Perhaps 'enough ads' will be too much for users to bear, perhaps 'enough subscription' will be too much for users to afford.

	▲	doctorpangloss 5 hours ago \| parent [-]
		right now google pays apple almost $30b a year to be default search in safari. google only has one icon on the home screen (YouTube). just originating google searches could be worth tens of billions. so i don't know. there are a bajillion ways to monetize.