Comment by abathologist
7 days ago
One clever ingredient in OpenAI's secret sauce is billions of dollars of losses. About $5 billion dollars lost in 2024. https://www.cnbc.com/2024/09/27/openai-sees-5-billion-loss-t...
7 days ago
One clever ingredient in OpenAI's secret sauce is billions of dollars of losses. About $5 billion dollars lost in 2024. https://www.cnbc.com/2024/09/27/openai-sees-5-billion-loss-t...
That's all different now with agentic which was not really a big thing until the end of 2024. before they were doing 1 request, now they're doing hundreds for a given task. the reason oai/azure win over locally run models is the parallelization that you can do with a thinking agent. simultaneous processing of multiple steps.
Due to batching, inference is profitable, very profitable.
Yet undoubtedly they are making what is declared a loss.
But is it really a loss?
If you buy an asset, is that automatically a loss? or is it an investment?
By "running at a loss" one can build a huge dataset, to stay in the running.
How batched can it really be though if every request is personalised to the user with Memory?
Imagine pipelineing lots of infra-scale GPU's, naive inference would need all previous tokens to be shifted "left" or from the append-head to the end-of-memory "tail", which would require a huge amount of data flow for the whole KV cache etc. Instead of calling GPU 1 the end-of-memory and GPU N the append-head, you keep the data static and let the role rotate like a circular buffer. So now for each new token inference round, the previous rounds end-of-memory GPU becomes the new append-head GPU. The highest bandwidth is keeping data static.
You hit the nail on the head. Just gotta add the up to $10 billion investment from Microsoft to cover pretraining, R&D, and inference. Then, they still lost billions.
One can serve a lot if models if allowed to burn through over a billion dollars with no profit requirement. Classic, VC-style, growth-focused capitalism with an unusual, business structure.
With infinite resources, you can serve infinite users. Until it's gone.
they would be break-even if all they did was serve existing models and got rid of everything related to R&D
Have they considered replacing their engineers with AI?
An AI lab with no R&D. Truly a hacker news moment
The unspoken context there is that the inference isn't the thing causing the losses.
8 replies →
I think you maybe have misunderstood the parent (or maybe I did?). They're saying you can't compare an individual's cost to run a model against OpenAI's cost to run it + R&D. Individuals aren't paying for R&D, and that's where most of the cost is.
Would you have any numbers to back it up ?
they are not the only player so getting rid of R&D would be suicide
It is now 3 years in where I was told AI will replace engineers in 6 month. How come all the AI companies have not replaced engineers?