It's a bit tough to simultaneously say they aren't growing fast enough and then criticize their margins because there was too much demand, "And the cost side makes the bet even harder to stomach. OpenAI’s adjusted gross margin— revenue minus inference costs—fell from a 46% target to just 33% last year because higher-than-expected demand forced them to buy pricey last-minute compute.."
My take would be they are trying to do too many things. They don't need the best model. They need the one that keeps consumers coming back every day and that they want to shop on and let Claude deal with the other stuff. I don't think they'll admit that until they absolutely have to though. Will it be too late? Who knows?
Loved today's issue! The openai analysis is super helpful to understand how "ambitious" they are. Keep up the good work Evan.
Thought you may be interested in what I wrote about inventing our way out of the Slopocalypse - https://open.substack.com/pub/optimistictech/p/we-need-to-invent-our-way-out-of?r=y2n2m&utm_medium=ios
It's a bit tough to simultaneously say they aren't growing fast enough and then criticize their margins because there was too much demand, "And the cost side makes the bet even harder to stomach. OpenAI’s adjusted gross margin— revenue minus inference costs—fell from a 46% target to just 33% last year because higher-than-expected demand forced them to buy pricey last-minute compute.."
My take would be they are trying to do too many things. They don't need the best model. They need the one that keeps consumers coming back every day and that they want to shop on and let Claude deal with the other stuff. I don't think they'll admit that until they absolutely have to though. Will it be too late? Who knows?