Comment by brindleth
6 hours ago
Whenever I read these kind of articles about AI financials, I'm reminded of identical screeds I read about Uber a few years ago. They were angrily insistent that Uber was a scam company run by criminals and charlatans and could never, ever become profitable or make money for its investors. It was a house of cards that would come crashing down sooner or later, and take everyone's money with it. Now it's 2026. Uber still exists, has revenues of $50bn and is apparently a highly profitable business. I don't know if the original investors have made their money back yet, but Uber certainly hasn't collapsed.
Maybe AI is different. Certainly, the level scale of investment is on a different order of magnitude. But I'm wary of believing anything about the financial impossibility of AI being sustainable when I've seen such similarly confident arguments proved wrong in the past.
Funny thing, the uber's investor results from last year only mentions "profit" once, in a motivating paragraph where they say they will be great.
But it's famous for having collapsed after their IPO. It took 4 years to get back at the same nominal valuation (not inflation corrected), and after all the 2020s inflation it is still at 2x the initial price.
Uber used the classic triple-E philosophy of Microsoft and entered a market that was ripe for disruption -- many cities lacked reliable taxi service entirely, others were cartels that fixed prices. They undercut prices to an extreme degree, subsidized fares, and when it either drove local taxi companies out of business and spurred widespread adoption as the default, it had a captive market and duopoly with Lyft which allowed them to raise fares without losing any market share whatsoever.
It's a pretty classic business strategy, and not directly comparable to any of the AI companies. There's a reason people compare the current situation to the dotcom era and not Uber. Also, don't take Uber as an example of a slam-dunk VC success story and leave it at that -- plenty of dumb ideas get pitched and funded and go bankrupt for every Uber.
Yeah, people forget the risk to Uber was real in the early days. If municipalities had enforced their taxi laws, the company would have died and all those millions invested would have been lost (or pivoted into something else).
It was only because Uber successfully bulldozed over all regulations that it was able to succeed ... and that was hard to predict before it happened.
Absolutely. Even these days, Uber really only has one or two viable competitors. With any 3rd one in a far distant 3rd. Meanwhile, swapping which AI I’m using is as easy as clicking a dropdown. Hardly comparable to a physical car ride.
I mean, do you really want to compare AI to the "do crimes hard and fast enough we become a monopoly before anyone can properly respond" model.