Comment by atleastoptimal
1 day ago
Its very simple, xAI needs money to win the AI race, so best option is to attach to Elon’s moneybank (spacex) to get cash without dilution
1 day ago
Its very simple, xAI needs money to win the AI race, so best option is to attach to Elon’s moneybank (spacex) to get cash without dilution
Remember how he argued for Tesla’s Solarcity acquisition because solar roofs?
Data centers in space are the same kind of justification imo.
Solar roofs are much more practical to be honest.
Putting solar roofs on a building? For a car company?
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> win the AI race
I keep seeing that term, but if it does not mean "AI arms race" or "AI surveillance race", what does it mean?
Those are the only explanations that I have found, and neither is any race that I would like to see anyone win.
Big tech businesses are convinced that there must be some profitable business model for AI, and are undeterred by the fact that none has yet been found. They want to be the first to get there, raking in that sweet sweet money (even though there's no evidence yet that there is money to be made here). It's industry-wide FOMO, nothing more.
Typically in capitalism, if there is any profit, the race is towards zero profit. The alternative is a race to bankrupt all competitors at enormous cost in order to jack up prices and recoup the losses as a monopoly (or duopoly, or some other stable arrangement). I assume the latter is the goal, but that means burning through like 50%+ of american gdp growth just to be undercut by china.
Imo I would be extremely angry if I owned any spacex equity. At least nvidia might be selling to china in the short term... what's the upside for spacex?
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People keep saying this but it's simply untrue. AI inference is profitable. Openai and Anthropic have 40-60% gross margins. If they stopped training and building out future capacity they would already be raking in cash.
They're losing money now because they're making massive bets on future capacity needs. If those bets are wrong, they're going to be in very big trouble when demand levels off lower than expected. But that's not the same as demand being zero.
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It will be genuinely interesting to see what happens first, the discovery of such a model, or the bubble bursting.
A significant number of AI companies and investors are hoping to build a machine god. This is batshit insane, but I suppose it might be possible. Which wouldn't make it any more sane.
But when they say, "Win the AI race," they mean, "Build the machine god first." Make of this what you will.
On the edge of my seat waiting to see what hits us first, a massive economic collapse when the hype runs out, or the Torment Nexus.
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It’s a graft to keep people distracted and allow for positioning as we fall off the end of the fossil energy boom.
It’s a framing device to justify the money, the idea being the first company (to what?) will own the market.
Being too far ahead for competitors to catch up, similar to how google won browsers, amazon won distribution, etc
I’m not certain spacex is generating much cash right now ?
Starship development is consuming billions. F9 & Starlink are probably profitable ?
I’d say this is more shifting of the future burden of xAI to one of his companies he knows will be a hit stonk when it goes public, where enthusiasm is unlikely to be dampened by another massive cash drain on the books.
> xAI needs money to win the AI race
Off on a tangent here but I'd love for anyone to seriously explain how they believe the "AI race" is economically winnable in any meaningful way.
Like what is the believed inflection point that changes us from the current situation (where all of the state-of-the-art models are roughly equal if you squint, and the open models are only like one release cycle behind) to one where someone achieves a clear advantage that won't be reproduced by everyone else in the "race" virtually immediately.
Like any other mega-scaler, theyre just playing Money Chicken.
Everyone is spending crazy amounts of money in the hopes that the competition will tap out because they can't afford it anymore.
Then they can cool down on their spending and increase prices to a sustainable level because they have an effective monopoly.
Money Chicken is the best term I've seen for this!
I _think_ the idea is that the first one to hit self improving AGI will, in a short period of time, pull _so_ far ahead that competition will quickly die out, no longer having any chance to compete economically.
At the same time, it'd give the country controlling it so much economic, political and military power that it becomes impossible to challenge.
I find that all to be a bit of a stretch, but I think that's roughly what people talking about "the AI race" have in mind.
> Off on a tangent here but I'd love for anyone to seriously explain how they believe the "AI race" is economically winnable in any meaningful way.
Because the first company to have a full functioning AGI will most likely be the most valuable in the world. So it is worth all the effort to be the first.
> Because the first company to have a full functioning AGI will most likely be the most valuable in the world.
This may be what they are going for, but there are two effectively religious beliefs with this line of thinking, IMO.
The first is that LLMs lead to AGI.
The second is that even if the first did turn out to be true that they wouldn't all stumble into AGI at the same time, which given how relatively lockstep all of the models have been for the past couple of years seems far more likely to me than any single company having a breakthrough the others don't immediately reproduce.
They ultimately want to own everyone's business processes, is my guess. You can only jack up the subscription prices on coding models and chatbots by so much, as everyone has already noted... but if OpenAI runs your "smart" CRM and ERP flows, they can really tighten the screws.
If you have the greatest coding agent under your thumb, eventually you orient it toward eating everything else instead of letting everybody else use your agent to build software & make money. Go forward ten years, it's highly likely GPT, Gemini, maybe Claude - they'll have consumed a very large amount of the software ecosystem. Why should MS Office exist at all as a separate piece of software? The various pieces of Office will be trivial for the GPT (etc) of ten years out to fully recreate & maintain internally for OpenAI. There's no scenario where they don't do what the platforms always do: eat the ecosystem, anything they can. If a platform can consume a thing that touches it, it will.
Office? Dead. Box? Dead. DropBox? Dead. And so on. They'll move on anything that touches users (from productivity software to storage). You're not going to pay $20-$30 for GPT and then pay for DropBox too, OpenAI will just do an Amazon Prime maneuver and stack more onto what you get to try to kill everyone else.
Google of course has a huge lead on this move already with their various prominent apps.
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That may be the plan, but this is also a great way for GDPR's maximum fine, based on global revenue, to bite on SpaceX's much higher revenue. And without any real room for argument.