Comment by sigmoid10
5 hours ago
It all depends on the actual numbers. Consider this simplified example: If you are offered a deal that requires you to lay down 10 billion today and it has a 5% chance to pay out 150 billion tomorrow, your accountants will tell you not to take this deal because your expected return is -2.5 billion. But if you can offset 3 billion in cost to the tax payer, your expected return suddenly becomes $500 million, making it a good deal that you should take every time.
I get that this example is simplified, but doesn’t the maths here change drastically when the 5% changes by even a few percentage points? The error bars on Openais chance of succes are obviously huge, so why would this be attractive to accountants?
That's why you have armies of accountants rating stuff like this all day long. I'm sure they could show you a highly detailed risk analysis. You also don't count on any specific deal working, you count on the overall statistics being in your favour. That's literally how venture capital works.
(I think) I get how venture capital works, my point is that the bullish story for openAI has them literally restructuring the global economy. It seems strange to me that people are making bets with relatively slim profit margins (an average of 500m on a 10b investment in your example) on such volatile and unpredictable events.
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This applies to any spending Microsoft does. What does it have to do with OpenAI?
Also, classifying business expenses as "cost to the tax payer" seems less than useful, unless you are a proponent of simply taxing gross receipts. Which has its merits, but then the discussion is about taxing gross receipts versus income with at least some deductible expenses, not anything to do with OpenAI.
If your accountants suggest that you take a single 5% chance deal, they probably skipped maths and statistics and you should fire them.
It's the dumb as rocks MBAs that will go head first into the 5% chance deal.
I guess the reasoning assumes that you have multiple eggs in your basket. A 95% chance of failure is bad if you're pinning the whole business on it, but if you have a variety of 5% chance deals, then it can make sense to pursue them, which is basically what venture capitalists do.
Venture capitalists never take on a single deal. The same way you shouldn't put all your life savings into one stock, even if it has a 90% chance of working out. That's not how any of this stuff works.