[simianwords]

SV playbook has been to make sustainable businesses. Uber makes profits, so do Google, Amazon and other big tech.

> LLMs are amazing but I'm not sure they justify the astronomical training capex, other than as a stepping stone.

They can just... stop training today and quickly recuperate the costs because inference is mostly profitable.

[rich_sasha]

All these businesses looked incredibly unsustainable for a long time. Uber was a cash shredder. Amazon didn't turn a profit for years, IIRC. They became profitable essentially by becoming quasi-monopolies.

Indeed, LLM companies likely turn operating profits, but I'm not sure that alone justifies their valuations. It's one thing to make money, it's another to make a return for investors.

And sure, valuations are growing faster than you can blink. Time will show if this in turn is justifiable or a bubble.

[filoleg]

Cannot speak for the rest, but the whole “Amazon didn’t turn a profit for years” (as an argument about their profitability now coming solely through quasi-monololy routes) is incredibly misleading and bordering on disingenuous.

Since before AWS was even a thing, Amazon was already turning up great revenue and could’ve easily just stopped expanding and investing into the company growth, and they would be profitable easily. Instead, Amazon decided to reinvest all their potential profits into growth/expansion (with the favorable tax treatment on top) at the expense of keeping the cash profits. At any given point, Amazon could’ve stopped reinvesting all potential profits into their growth, and they would be instantly profitable.

This is not the same as Uber, which ran their core service operations at a net loss (and was only cheap due to their investors eating the difference and hoping that Uber will eventually figure out how to not lose money on operating their core service).

[rich_sasha]

Ok, we can debate on Uber, but your take on Amazon is very similar to today's LLM providers. They too are making good revenue on their product, but put so much cash into growth that they at least appear to be running at a loss.

[filoleg]

Yup, fully agreed with your take on Amazon being similar to today's LLM providers.

Today's LLM providers have the same choice as Amazon had back then. They could just stop advancing/expanding, and instead try harnessing that profit. They choose not to, they instead bet on fast expansion/advancement, and it makes total sense to me (especially as the competition rn between all those LLM providers seems to be very heated, as opposed to what Amazon dealt with at the time).

Uber is different, though. There was no point at which they could just call it a day and go "alright, we are fully self-sufficient, and we can just start collecting profits from our services as soon as tomorrow." Expansion or not, unless I am missing something, Uber wasn't in a position where they were profitable (and just chose to forego profits in favor of spending the money on expanding). To be clear, they indeed spent money on expanding, I am just questioning the part about their expansion being done using the funds that could've otherwise made the difference between them being profitable and not.