Comment by svara
3 days ago
> I don’t understand how a business model that makes money pops out on the other end.
What issues do you see?
I pay for ChatGPT and for cursor and to me that's money very well spent.
I imagine tools like cursor will become common for other text intensive industries, like law, soon.
Agreed that the hype can be over the top, but these are valuable productivity tools, so I have some trouble understanding where you're coming from.
I feel like the raw numbers kind of indicate that the amount of money spent on training, salary, and overhead doesn't add up. "We'll beat them in volume" keeps jumping out at me.
What you're paying for ChatGPT is not likely covering their expenses, let alone making up their massive R&D investment. People paid for Sprig and Munchery too, but those companies went out of business. Obviously what they developed wasn't nearly as significant as what OpenAI has developed, but the question is: where will their pricing land once they need to turn a profit? It may well end up in a place where it's not worth paying ChatGPT to do most of the things it would be transformative for at its current price.
[1]: https://www.fooddive.com/news/sprig-is-the-latest-meal-deliv...
[2]:https://techcrunch.com/2019/01/21/munchery-shuts-down/?gucco...
Looking at history, anything in its first few iterations costs insane and stay as luxury or is sold at massive loss. Once the research goes on for several years, the costs keep coming down first very slowly and then in avalanche . The question always remains to which one can continue “selling at a loss” long enough to last the point until the costs continue going down while people are used to paying standard price(see smartphones), or the product is so market dominant that competition does not have resources to compete and cost can be raised(see Netflix).
One very viable possibility is that the technology sticks around and does great things, but the first mover entities like OpenAI go out of business anyway because it's gotten cheaper to copy their work.
I paid money to Amazon for most of a decade before they had a profitable year.
You realize they had razor thing margins on purpose, right?
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Question is whether these companies are profitable off the services they're providing, or still being propped up by all the VC money pouring in.