[fnordpiglet]

Google also offered a free product. OpenAI isn’t offering a free product but a subscription product plus metered API product amongst other. Their economics are structurally better than googles assuming they can keep growing their captured market share. Their outrageous costs are also opportunities to optimize costs, including massive amounts of R&D, etc. They don’t need to be profitable now - in fact as bezos demonstrated with Amazon for many years, profit is an indication you’ve run out of uses for capital to grow.

[airstrike]

> OpenAI isn’t offering a free product

I encourage you to visit https://chatgpt.com in incognito mode.

[fnordpiglet]

That’s demoware.

[vitorgrs]

That's like saying Youtube isn't free because there's a subscription...

[fnordpiglet]

It’s like saying just because there’s a free offering the product isn’t free. Anyone who has ever built a shareware or demoware product understand the free offering is a funnel to the paid offering and doesn’t exist as an independent part but as an advertisement for the paid product.

[vitorgrs]

Yes, but still a free product. Unless you say that in the future the product won't have a free offering anymore, it's a free product.

[fnordpiglet]

That’s literally not how people in the business of creating product strategies classify things.

[buzzerbetrayed]

No it isn’t. Free tier of YouTube make money from ads. Free tier of ChatGPT is just a funnel for the paid tier. It’s a marketing cost.

[vitorgrs]

Don't you think they will put ads on ChatGPT?

There are several ways to monetize a product (they already make some use of it).

[ywvcbk]

> Their economics are structurally better than googles assuming

Are they? I would guess that the cost per query for Google, even back then was insignificant compared to how must OpenAI is spending on GPU compute for every prompt. Are they even breaking even on the $20 subscriptions?

During their growth phase Google could make nothing from most of their users and still have very high gross margins.

OpenAI not only has to attract enough new users but to also ensure that they are bringing more revenue than they cost. Which isn’t really a problem Google or FB ever faced.

Of course presumably more optimized models and faster hardware might solve that longterm. However consumers expectations will likely keep increasing as well and OpenAI has a bunch of competitors willing to undercut them (e.g. they have to keep continuously spending enough money to stay ahead of “open/free” models and then there is Google who would probably prefer to cannibalize their search business themselves than let someone else do it).

> in fact as bezos demonstrated with Amazon for many years, profit is an indication you’ve run out of uses for capital to grow.

Was Amazon primarily funding that growth using their own revenue or cash from external investors? Because that makes a massive difference which makes both cases hardly comparable (Uber might be a better example).