alt Hacker NewsThe fact that people here are looking at these numbers and saying "this is fine" is absolutely bonkers.
Basically, it's a company that's not sustainable for two separate reasons. The first one is that they have an extremely high overhead. SG&A of 55% is really bad. The seconds reason is that their R&D costs are truly astronomical. They could probably cut those costs to some extent, but they're not going to cut them to nothing. They're already losing ground to Anthropic even with this much R&D.
To put it differently, even if OpenAI cut its R&D and inference costs by half, they would still be leaking money like a sieve.
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> SG&A
= SG&A stands for Selling, General, and Administrative expenses
Not here to entirely disagree its bonkers, but Tesla lost about 6b until 2022 when it got profitable and has since returned a healthy multiple of its prior losses as profits.
They're not really losing ground to Anthropic. 5.5 was a bit better than 4.8. Fable was good, and was a jump over 4.8, but only incremental over 5.5.
Anthropic is also likely losing money, right?
Petitioning the corrupt head of state to force Anthropic out of business seems to be part of the business model.
Yeah insane that people think it'll be okay in the long run but wondering how much different the financial status of other such company would be? Not much I guess.
These companies are clearly calling things that are R&D that aren't R&D.
If you're building a model that lasts a few months before it's no longer the most current one, and maybe a year before it's completely unusable by anybody, then that should just be COGS.
Doing that, however, would betray the real problem with this business model.
You're over inflating the S which is expected to increase as now they are "going to market" G&A is within expectations.
Revenue is still growing faster than costs and gross margins have continued to improve.
The real question is when they can start spending less on R&D and still compete.
> They're already losing ground to Anthropic even with this much R&D.
Do we know how bad/good misAnthropic is doing financially?
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This is the venture model now though. Spend until profitable. Uber did it. It seems OpenAI could do it as well given we seem to be in a 2 horse race for foundation models and having capital to get better pushes them further ahead.
Gemini is number 3 in this race