[zymhan]

To be honest, I think "vendor financing" is still a very risky premise.

Vendors may be positioned to know how a customer is doing, but they're also incentivized to overestimate how well a customer is going to perform.

GE Capital (edit: and GMCA) is a great example of how seemingly reasonable vendor financing can cause the lender serious problems.

[skybrian]

The risks are different, but there's no getting around that the value of any investment is based on future cash flows and that's speculating about the future.

To the extent that Google and Anthropic are competing for AI business, Google is somewhat hedged against Anthropic winning market share. They still get data center revenue and they own equity, so that’s a consolation prize.

On the other hand, it’s increasing Google’s investment in AI, in general.

[throwaway2037]

    > To be honest, I think "vendor financing" is still a very risky premise.

Are you aware that all heavy industry in all highly developed nations make extensive use of vendor financing to sell their products? Siemens is a perfect example of a well-run, stable, industrial giant. They offer vendor financing for large purchases. Same for the "heavies" (Mitsubishi, Kawasaki, IHI, Hyundai, Doosan, Hanjin) in Japan and Korea.

If anyone is interested to learn about the damage that the financialisation of General Electric (USA) brought upon itself, you can ask ChatGPT to tell you the story. It is too long to repeat here.

Here is a sample prompt that I used to remind myself:

    > I am interested in the history of General Electric and the trouble that their financing units brought in the early to mid 2000s. Can you tell me more?

[HappMacDonald]

Are we replacing "Let me google that for you" with "Here is a prompt to feed ChatGPT" now?

Edit: I am not asking whether ChatGPT is better than Google Search, I am asking after the standard dodge of citing one's sources.

[throwaway2037]

Fair point/question. For many of my HN responses, I first ask ChatGPT for a bit of information about the topic. For the case of GE Cap's wrecking of parent GE with excessive financialisation, I could only loosely remember the details from the 2000s. It is a long time ago! That prompt that I shared gave a reply that was 100s of words. Too much for copy/pasta, and too hard for me to summarise briefly. Instead, I decided to share the prompt. It is not my intention to dodge sources. Plus, the newest versions of ChatGPT is pretty good about sharing sources. (Of course, the quality of sources can be debatable.) In short, it was not my intention to be snarky by sharing my ChatGPT prompt.

EDIT ---- Also, the OP was so brief about GE Cap, I realised that most readers under 30 (maybe 35) will have almost no knowledge or memory of that economic history. I wanted to offer an "intellectual carrot" (ChatGPT prompt) for anyone wishing to learn more. ----

What bothered me most about the original post was the person was putting all vendor financing in the same "bad" bucket. I disagree. I would characterise GE Cap as an infamous example! They were the worst of the worst in a generation (25 years). Most vendor financing is very boring and is used to buy big heavy things with very long operational lives. If the buyer goes bankrupt, it is (relatively) easy to repossess the big heavy thing and sell it again (probably with vendor financing again!).

[HappMacDonald]

Well, at the very least one thing I would caution against in "prompt sharing as a way to lead people to information" is that a chat bot is far less deterministic than even a traditional web search (let alone a link to a static source): any other user putting in the prompt won't get the same explanation you got, and thanks to hallucination they may get a wildly different answer or a case where this time around the bot wound up misunderstanding what was asked.

[jona-f]

Yes, cause google has been giving crap results long before chatgpt was a thing and it only got worse. Before ai it was "let me google that on reddit for you".

[chiffaa]

Very tangentially related comment, but I remember seeing a post on a local Facebook clone with a prompt to throw at Claude to "make a custom YouTube downloader for MacOS", so the general "Here is a prompt to feed an LLM" is somewhat real for some, apparently

[OJFord]

It's a good use case really – it'll tell it differently according to what it knows about your background, if you 'just Google it' you'll get the same maybe-appropriate results as anyone else.

[2ndorderthought]

Google search has gone way down hill after they nerfed it and then did nothing to prevent the flood of AI slop seo websites. So unfortunately, instead of sharing links everyone now gets sent to the inefficient text generator that hallucinates nonsense and will color the average summary of a topic by whoever trained it and your most recent chat history instead.

[datavirtue]

I haven't run a Google search in two years. Your comment just made me realize that. Doing a Google search is like trying to watch cable after being on YouTube for years.

[2ndorderthought]

I use different search engines than Google. They have similar issues, but some are better at ignoring the slop.

I just cannot justify the environmental impact and surveillance of using LLMs for everything. I prefer to summarize recent information myself. LLMs are not particularly good at it.

Funny thing about the cable analogy. Ever since all streaming providers have started cranking up prices and still forcing users to see hundreds of ads my family has been buying second hand dvds. So we have regressed from streaming to right after cable. I know one family that went back to cable, they do still watch YouTubes here and there but they got sick of it.

[exoverito]

Yes.

[paganel]

> Are you aware that all heavy industry in all highly developed nations make extensive use of vendor financing to sell their products?

The OP did mention GE Capital, the motherload of all heavy industry vendor financing. And of massaging the accounting books in order to increase shareholder value in the short term, also.

[throwaway2037]

    > motherload of all heavy industry vendor financing

I doubt they are bigger than other national "heavy industry" champions from East Asia and Western/Central Europe. Without checking, I would guess that the global leaders are Boeing and Airbus.

[paganel]

Back in the day GE (including GE Capital) was, on paper at least, the largest company in the world when it comes to market cap, my memory is fuzzy but I’d say that happened just after the Dot Com crash and going into the Great Recession. Greater than a heavy industry company like Samsung, yes. Again, this was in a big part as a result of GE Capital doing very scammy things, but for a good few years Jack Welch was regarded like an actually business guru.

[zymhan]

Its odd that don't care enough to at least confirm your arguments are right.

I'd suggest learning more about this subject instead of assuming you already know enough.

[Spooky23]

GE Capital was a different creature, riding the line of fraud in some ways. They misapplied accounting rules and had to write down or capitalize over $20B for long term care insurance.

[zymhan]

That's what brought them down, but that could bring down anyone. My point is that vendor financing turns non-finance companies into finance companies, and brings along a huge can of worms.

[Spooky23]

That’s fair. You become vulnerable to a guy like Jack Welch.

The vendor financing stuff I saw (as a junior / intern at a supplier) in those days was a reflection of that culture. They’d lease capital equipment through GE Capital, and pack it with other stuff to the limit of their accountants appetite for risk. (You can usually roll 20% of the value into services or peripheral stuff) I remember one deal where we had to run around and buy office supplies and tools with a corporate card. I did 4 Honda Civic of laser toner.

GE was reporting their own capital equipment and office supplies as revenue on the Capital side. :) But that is penny ante stuff in terms of what they did.

The AI stuff is a shady variation of that, but likely far worse as we’ve fired all of the watchers.

[throwaway2037]

I don't know the full the history of this story, but I honestly wonder if type of scandal is still possible in the United States. After Enron and Worldcomm, the US introduced Sarbanes-Oxley reporting regulations. Additionally, after the Global Financial Crisis of 2008/2009, there was a dramatic increase in regulations for banks (of all kinds) and insurance companies.

[HappMacDonald]

.. yet today we have Kalshi, Polymarket, et al.

[lotsofpulp]

Those are private gambling businesses akin to a casino, not publicly listed businesses subject to the aforementioned regulations.

[HappMacDonald]

GP said: > there was a dramatic increase in regulations for banks (of all kinds)

and if I can deposit funds, make "investments" (gambling or not.. to me most stock investments are gambling anyway since they pay out in dividends based on quarterly profits) and withdraw money, that is at it's core a bank.

However, in these and many other cases they are now effectively unregulated ones. Partly because the executive branch responsible for said regulations have their hands in the pie.

[lotsofpulp]

>and if I can deposit funds, make "investments", and withdraw money, that is at it's core a bank.

Not according to pretty much all countries. When a depositor is making investments, that is called a brokerage, not a bank. But these gambling websites are not making investments either.

Also, with the transition to digital currency, banks don't really have the same purpose anymore of storing and guaranteeing people's access to their money, now that money is entries in a digital ledger and there is no risk of losing the money (outside of political risks where someone edits the database). They have been obviated, but the system persists.

>most stock investments are gambling anyway since they pay out in dividends based on quarterly profits

This is not true, publicly listed companies' boards regularly choose to vary dividend amounts based on longer term cash flow, and you will be sorely disappointed if you are expecting dividends to land in your account as a function of quarterly profits.

And how do you expect a business to work if it did not vary dividends? No business knows the future, and dividends are the same as owners paying themselves a profit, so if owners do not know how much profit there will be in the future, how can dividends be a "known" quantity? They have to be based on profits, they literally are the owners distributing the profit amongst themselves

Any venture in life is gambling, just like people exploring the oceans and traversing continents without knowing what was ahead of them was gambling. But that is a different type of gambling than risking money with no effect on the outcome such as on the aforementioned gambling websites and casinos.

[Spooky23]

lol yes.

The POTUS kids are players in Polymarket and Kalshi, and are running crypto grifts.

The SEC fired most of their investigators, hasn’t appointed members to key boards, and cancelled most of their contracts with FINRA. (Which has laid off a ton of people) Nobody is watching.

So there’s an open season for normal corporate bullshit, and if you’re personally committing felonies attributable to you, you make sure you do it in Florida, and pay a vig to the library fund for a pardon.

We’ll have a fun run, then everything starts exploding in mid 2027-2029.

[cowsandmilk]

GE Capital was not just vendor financing and its serious problems were not due to vendor financing. I don’t think it is a great example in any way.

[everly]

$40 billion is about a quarter’s worth of profits for Google. They make that much every 3 months, what’s the risk

[throwaway2037]

Hat tip. Great point. To quote J Paul Getty: "If you owe the bank $100, that's your problem. If you owe the bank $100 million, that's the bank's problem." In this case, yes, the investment is large, but not bankrupting for Google if it goes wrong.

[to11mtm]

Assuming you mean GMAC, their biggest losses were not so much a result of vendor financing as branching into the real estate market.