1. They are starting to do it. Take a look at OpenAI's product portfolio, there's a galaxy of attempts at application.

2. Selling tokens via long running agents is the only thing that's provably working with respect to revenue growth.

3. They need revenue yesterday. Increases in borrowing rates means access to capital isn't what it was in the 10s. Their runway is much shorter than you would imagine.

4. Some of the decision makers at these companies believe AI will exhibit Jevons Paradox and that any decrease in price will result in induced demand.

5. The frontier models are still subject to the limitations of AI. They're not good at everything. Better to have someone else learn that on their dime rather than yours.

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fennecbutt 12 hours ago | parent | next [-]

3 is biggest point imo.

Openai haven't yet amortised their current investments into the space and nor have they stopped making new ones.

I'm sure they'd be totally capable of bringing 1k new biz online but that's even more debt, and even more uncertainty.

	▲	discordance an hour ago \| parent [-]
		To make point 3 happen fast, their army of Forward Deployed Engineers roam inside existing companies and build for the companies using the companies subscriptions.

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redanddead 13 hours ago | parent | prev | next [-]

>3. They need revenue yesterday. Increases in borrowing rates means access to capital isn't what it was in the 10s

This is a huge problem, why is it like this

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13 hours ago | parent | next [-]

[deleted]

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rsalus 13 hours ago | parent | prev | next [-]

they've borrowed so much they're directly competing with national governments in capital markets.

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nl 13 hours ago | parent | next [-]

OpenAI has hardly borrowed anything. They have a $4B revolving credit line but have hardly touched it. They haven't issued any bonds.

Investment isn't debt.

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MisterMunchkin 2 hours ago | parent | next [-]

They owe people hundreds of billions, possibly even over a trillion. They've just been very clever in how they've structured it, so on paper they have low debt.

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Tanjreeve 2 hours ago | parent [-]

I think there’s some crossed wires here with the wider data centre build outs. OpenAI have their own flavours of sketchy behaviour but I’m not aware of them solely being on the hook for those amounts short of some weird accounting of Microsoft cloud costs onto them or something.

	▲	estearum an hour ago \| parent [-]
		Don’t they have a fully committed preorder for like $500 billion in compute from Oracle starting in 2028? And Oracle is funding that buildout with junk debt?

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CoolestBeans 9 hours ago | parent | prev | next [-]

The rates environment directly dictates what capital is available to OpenAI and at what terms. When potential investors can get x% virtually guaranteed, then they are less willing to give cash for equity to OpenAI.

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bigyabai 12 hours ago | parent | prev [-]

> Investment isn't debt.

...yet.

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nojvek 11 hours ago | parent [-]

SoftBank is very leveraged with …… debt.

One of the biggest AI investors.

	▲	bigyabai 9 hours ago \| parent [-]
		With investors like Softbank, who needs competition?

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Tanjreeve 2 hours ago | parent | prev [-]

That’s mostly not the Frontier Labs. They’re definitely creating a lot of the demand but the people taking out those loans are Neoclouds and Big Tech (hence why Facebook + Google et al suddenly all have terrible cash flows after years of having more money than can be spent).

AnthropenAI are the ones driving a lot of that infrastructure spending when they’re such big consumers of compute but they’re not the ones feeling the brunt of the infra spending. Although those costs will bubble up to them indirectly eventually.

	▲	aenis an hour ago \| parent [-]
		Indirectly? They have contracted the capacity with the likes of Oracle, this is not 'debt' in accounting sense, but it is a financial commitment that will require either taking on debt, or getting more investors.

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rayiner 13 hours ago | parent | prev | next [-]

The 10s were totally fake due to ZIRP.

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georgemcbay 13 hours ago | parent | prev [-]

> why is it like this

In part it is like this because they've already borrowed so much.

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nl 13 hours ago | parent [-]

They have borrowed almost nothing.

Investment isn't debt.

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alt227 an hour ago | parent | next [-]

So all those hundreds of billions of dollars investors ploughed into OpenAI was just a gift was it? No expectation of a return of any kind? What if that investment money was originally borrowed by the investors?

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fwlr 5 hours ago | parent | prev | next [-]

Investment isn’t debt, but investment and debt demand revenue in functionally identical ways, and OpenAI has taken an enormous amount of investment, so they are subject to broadly the same pressures as a hypothetical company that had borrowed lots, no?

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timothyduong 13 hours ago | parent | prev | next [-]

Isn't investment like a form of debt, or well obligation to make returns?

If VC provide you funds, there is an expectation of returns, otherwise the board would vote you out.

Yeah it's not a traditional loan from a bank, but it's not a 0% interest loan either.

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Tanjreeve 2 hours ago | parent | prev | next [-]

Exorbitant Cloud costs and spending 22 million to solve a 1 million dollar maths problem isn’t investment though.

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georgemcbay 12 hours ago | parent | prev [-]

The duopoly AI labs haven't technically borrowed much, but a metric ass-ton of money has been borrowed by various other entities in service of them as infrastructure proxies.

That's what is driving up the cost of debt and teetering some of these companies into junk status.

	▲	redanddead 6 hours ago \| parent [-]
		you can say coreweave

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lconnell962 3 hours ago | parent | prev | next [-]

Some variation(s) of 5 is carrying a lot of weight. Need a person with an Idea. Need someone to refine their idea. Need someone to spend the time filtering through the slop to find the good bits. Much better to sell people on the idea of their dream being created while you sell them tokens to do that.

That all said, A person trusting the big AI companies with their golden goose idea seed leaves a lot of concerning openings down the road if that idea gets "leaked" out to others. Similar concern of mine with if the LLM outputs that made your idea happen to be reused by the big company if someone else asks similar enough questions or otherwise coaxes the AI to reveal what it did for you.

All this AI generation is gonna be a lead to a wild time for IP law.

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JacobAsmuth 13 hours ago | parent | prev [-]

Is 4 correct or incorrect? What data do we have so far in this regard?

	▲	ACCount39 2 hours ago \| parent [-]
		AI price-performance is improving rapidly. AI usage, whether in tokens used, in cash spent, or any of the above performance-adjusted, is curving upwards too. Causality is uncertain, but the "Jevons paradox" interpretation is certainly not contradicted by the available data. Anecdotes of per-employee AI spend rising, and multi-agent freerunning AI tasks becoming more common are also plentiful. Personally, I think that the "Jevons paradox" interpretation is basically correct. Humanity doesn't have a limited demand on intelligence - but humans are expensive, so it's supply-constrained. The cheaper intelligence gets, the more of it ends up used. As AI gets cheaper and more capable of substituting for human intelligence, usage will rise.