Comment by red_green_yell
16 hours ago
If SAP sold $1 bills for $0.50, they too could rapidly outpace Anthro/OAI's growth. And when sane minds ask about profits or a defensive moat, the response is "but look at our revenue bro".
16 hours ago
If SAP sold $1 bills for $0.50, they too could rapidly outpace Anthro/OAI's growth. And when sane minds ask about profits or a defensive moat, the response is "but look at our revenue bro".
The same exact thing was endlessly claimed about Uber. They were guaranteed to die. They were selling rides for less than they cost. Uber was a commodity app anybody could MVP in a weekend.
Market captured. Whoops.
Uber now: $55b in sales, $6.7b in op income. They won.
And to be clear, OpenAI can easily permanently subsidize a fake low cost for their LLMs if they get off their asses and attach a monster ad network to GPT already. They're years behind where they should have already been with ads, the easy money made it so they didn't have to think about it. If they miscalculate the timing on switching over from easy money (market) to ads (also easy money) it could certainly kill them.
OpenAI can knock out a lot of competition by building the largest ad network, then undercutting the cost that consumers see. The margins in ads make that possible. Google already knows how that works, they're doing the same thing right now.
I'd rather have the OpenAI + consumer base + ads position, than being Anthropic. China is a far, far larger threat to Anthropic over time. OpenAI is building a service business more comparable to what Google does. Chinese models don't actually threaten either OpenAI or Google insofar as their positions are user capture based, whereas constantly improving Chinese models are a never-ending threat to Anthropic.
> The same exact thing was endlessly claimed about Uber. They were guaranteed to die. They were selling rides for less than they cost.
Lots of companies have used this strategy. And many of them have indeed died. Uber filled a void left by bad public transportation and a lackluster cab system. The higher prices (so they can turn a profit) are still worth it to some.
> OpenAI can knock out a lot of competition by building the largest ad network, then undercutting the cost that consumers see. The margins in ads make that possible. Google already knows how that works, they're doing the same thing right now.
And you think OpenAI can compete here? If LLM's end up being yet another ad funded platform, I have a hard time believing Anthropic or OpenAI will outperform Google here. Maybe if one of them strike a deal with Apple, or get bought by them. Otherwise, ads are Google's bread & butter. And, they own Android.
The main difference between Uber and other parties that tried was Uber's willingness to break the law. They then made it stick because of money.