Zos_Kia

For the level of investment in and hype around this company? Yes, those enterprise sales are abysmal

I don’t see the connection. How are enterprise sales specifically relevant here ? Are enterprise customers known for jumping on top of early stage products where you’re from ? Cause where i’m from they’re known for being the last ones to board.

They have demonstrated zero ability at actually “hyperscale”.

How would you define hyperscale ? They have one of the biggest GPU fleets around and are likely serving trillions of tokens monthly. That falls well within the range of my personal definition.

They have no path to getting those costs down. Their conversion rate from free to paid users is atrocious, and they’re already raising prices on their plans which is only going to worsen those conversion rates

That’s just stuff you say. Atrocious (in your opinion), no path to getting those costs down (in your opinion). Alright, we get it, that’s not a company you’d invest in, but then again your investment thesis seems pretty conservative. If a company has to make billions of enterprise sales in its 2nd year, and have double digits conversion early on, then there’s not that many successful companies you would have invested in. You certainly wouldn’t have put a dime in Uber at 48B valuation 7 years ago - well those who did made a nice return on their investment.

Is it possible that they could be successful? Yes. But a lottery ticket would probably be a sounder investment.

Isn’t that the definition of VC-backed startups ? The alternative would be to build a time machine, travel back to the 18th century, and invest in the British textile industry. Sadly they don’t make this kind of predictible, risk-free and quickly profitable enterprises nowadays.

Absolutely oozing confidence there

Oh i won’t be the one to contradict you here. Sama is one sleazy motherfucker, that’s just written on his face. Sadly it doesn’t preclude him from building a historical hyperscaler with OpenAI.

Because they spend $2.35 billion in operating costs for every $1 billion in revenue

This is entirely true but also completely normal for a hyperscaler in its first years. At this stage demonstrating a huge demand and your capacity to capture a lot of it is much more important than profitability. You don’t exactly bootstrap a company at this level of CapEx.

Their revenue is still growing at a staggering rate, showing no signs of slowing down, and enterprise sales are pretty respectable. I don’t know that i’d call 3/4 of a billion in enterprise sales abysmal for a startup in its 2nd year. YMMV i guess.

Sure there is some uncertainty about their model but that’s what VC backing is for, right ? They’re not building tin can factories with known and predictable business trends, and being valued at 40x your yearly revenue (not profit !) is pretty banal for a successful early stage Deep Tech. We may personally think it’s bullshit and choose not to invest in it but it’s still far from outrageous and very far from the definition of a bubble.

I don’t think it’s just Lemmy, i had similar conversations on Reddit. People don’t realize that the companies they claim are over-valued actually have very strong business fundamentals. That’s why in articles like OP’s they will never mention any names or figures. I guess it’s very convincing for outsiders but it doesn’t stand any amount of scrutiny.

If you take OpenAI for example, they went from 0 to 3.6B$ annual revenue in just two fucking years. How is that not worth a boatload of money ? Even Uber didn’t have that kind of growth and they burned a LOT more cash than OpenAI is burning right now.

As for the “AI quantum computing blockchain reeeee” projects… well they have a very hard time raising money right now and when they do, it’s at pretty modest valuations. The market is not as dumb as it is portrayed.

To have a bubble you need companies with no clear path to monetization, being over-valued to an extreme degree. This leaves me wondering : what company specifically ? Are they talking about nVidia ? OpenAI ? MidJourney ? Or the slew of LLM-powered SaaS products that have started appearing ? How exactly are we defining “over-valuation” here ? Are we talking about the tech industry as a whole ?

We often invite the comparison to the DotCom bubble but that’s apples to oranges. You had companies making social networks for dogs or similar bullshit, valued in the billions and getting a ticker at the stock market before making a single dime. Or companies with outlandish promises such as delivering to any home in the US, in <1 hour, for a low price, and building warehouses by the hundreds before having a storefront. What would be the 2024 equivalent ? If a bubble is about to deflate then there should be dozens of comparable examples.