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First Windsurf and now this. OpenAI is spending billions like there's nothing else to use this money for while being seemingly cash strapped for model training
by dudus 1y ago
First Windsurf and now this. OpenAI is spending billions like there's nothing else to use this money for while being seemingly cash strapped for model training since they already signaled more investment rounds would be needed to remain competitive. They're trying to become too big to fail before they have a moat which won't work well.
- mlnj 1y agoWhat else are they going to do with all that money? Raise billions and billions under the guise of AGI coming tomorrow and they just become a too big to fail company gobbling up any competition. You don't hear anyone touting AGI anymore do we?
- mattlondon 1y ago> You don't hear anyone touting AGI anymore do we? Apart from, y'know, DeepMind - remember those guys? The ones with the SOTA models at the top of the leaderboards? The ones who just launched Veo3 and blew everyone away? It feels like OpenAI has kinda jumped-the-shark at this stage. They don't seem to be especially competitive any more, and all the news coming out of them is tinkering at the edges or acquisitions that no-one really cares about. When are they going to start competing on actual AI again?
- kridsdale1 1y ago90s Netscape vibes
- WorldPeas 1y agoAt least Netscape's offering was actually continuously open (after 98 at least)
- mattlondon 1y agoI feel like history is repeating itself yes, but actually I was thinking more a out Google. Everyone was saying "oh man - Google had all this tech and they sat on it and just couldn't move forwards, then they blew their lead and OpenAI came a long and smoked them!"... Now it feels like it is OpenAI who are repeating that story, blowing their lead they got with the original ChatGPT while that upstart Google schools them in model development and vertical integration. Interesting times. Very interesting times. C'mon OpenAI, move the SOTA forward!
- mlnj 1y agoI meant from Open AI. After a lot of the drama and a ton of talent leaving all they seem to have left now is a pile of cash that they can spend eliminating competition. Meanwhile like others have rightly pointed out, talent at Google and even Mistral have been crushing it.
- zombiwoof 1y agoClearly foundation models don’t make money or a viable business on their own
- vonneumannstan 1y agoYou can say the same about any piece of software...
- hn_throwaway_99 1y agoExcept for those pieces of software like Google Search, MS Windows, Office, Adobe Photoshop, Intuit Quickbooks, etc. etc. etc.
- vonneumannstan 1y agoNo piece of software inherently makes money on its own... You have to monetize Google search by running ads, Windows by adding subscriptions, etc. Thats not tied specifically to the software that actually drives the value for a consumer
- gnopgnip 1y agoFrom the article 5 billion of the payment is equity in OpenAI. So they aren't spending cash
- alexey-salmin 1y agoThis still means 1.5B were paid in cash for a company from what I understood has neither clients nor even a product. Not exactly pocket money.
- brentm 1y agoAppears from the outside as a very expensive aquihire but if you're getting the guy who essentially created the iPhone it could be worth it.
- dbbk 1y agoBut they're not getting him. Jony isn't included in the deal.
- jermaustin1 1y agoHe has $5B reasons to help them though.
- brentm 1y agoThey are according to WSJ: > Jony Ive, a chief architect of the iPhone, and his design firm are taking over creative and design control at OpenAI, where they will develop consumer devices and other projects that will shape the future look and feel of AI. https://www.wsj.com/tech/ai/former-apple-design-guru-jony-ive-to-take-expansive-role-at-openai-5787f7da?mod=hp_lead_pos4 https://www.wsj.com/tech/ai/former-apple-design-guru-jony-iv...
- dbbk 1y agoThe Verge says otherwise > Ive won’t be joining OpenAI, and his design firm, LoveFrom, will continue to be independent, but they will “take over design for all of OpenAI, including its software,” in a deal valued at nearly $6.5 billion https://www.theverge.com/news/671838/openai-jony-ive-ai-hardware-apple https://www.theverge.com/news/671838/openai-jony-ive-ai-hard...
- RC_ITR 1y agoJust to stem pointless debates before they flame up - both these acquisitions appear to be primarily if not exclusively for stock. Sure, if you want to get into theoretical finance, OpenAI could have sold these new shares for cash, so technically there's no difference, but OpenAI is only spending opportunity cost cash, rather than fiat. OpenAI's fiat likely still goes to the things you'd expect, like training models and paying for inference.
- kridsdale1 1y agoStaff are not cheap either. 300k cash salary for most of them from what I hear. Plus 600 to 1M in funny money.
- belter 1y agoThe AI hype seems driven more by stock valuations than genuine productivity gains. Developers now spend excessive time crafting prompts and managing AI generated pull requests :-) tasks that a simple email to a junior coder could have handled efficiently. We need a study that shows the lost productivity. When CEOs aggressively promote such tech solutions, it signals we're deep into bubble territory: “If you go forward 24 months from now, or some amount of time — I can’t exactly predict where it is — it’s possible that most developers are not coding.” - Matt Garman – CEO of Amazon Web Services (AWS) - June 2024 "There will be no programmers in five years" - Stability AI CEO Emad Mostaque - 2023 “I’d say maybe 20%, 30% of the code that is inside of our repos today and some of our projects are probably all written by software.” - Satya Nadella – CEO of Microsoft - April 2025 “Coding is dead.” - Jensen Huang CEO, NVIDIA - Feb 2024 "This is the year (2025) that AI becomes better than humans at programming for ever..." - OpenAI's CPO Kevin Weil - March 2025 “Probably in 2025, we at Meta are going to have an AI that can effectively function as a mid-level engineer that can write code." - Mark Zuckerberg - Jan 2025 "90% of code will be written by AI in the next 3 months" - Dario Amodei - Anthropic CEO - March 2025
- the_arun 1y agoApart from developer productivity, have we seen anything made 1000x better using GenAI?
- fakedang 1y agoDon't forget their Abilene chip factory.
- apples_oranges 1y agoAnd nobody on this forum uses his brain to find out what’s going on ..
- rcarmo 1y agoWell, Windsurf is no longer worth what they paid for it. Let's see how the rest goes.
- Jackson__ 1y agoThey've already claimed that there will be no "GPT-5" LLM, and that instead what they want to call "GPT-5" is a fusion of their various models like 4o, dalle, their video model, etc. That in and of itself is a move that makes it quite clear to me they've hit a wall on the intelligence side. Add these purchases, and it seems like they are extremely desperate.
- mmaunder 1y agoModels are getting smaller, faster, cheaper to make, reflecting on their own output, adding modes and running in more places. But they’re not getting much smarter because they can only be as smart as us and each other, because that’s where their training comes from. OpenAI is strongest in a world where models cost billions to train. A world filled with cheap open source models is their worst nightmare. This is what’s happening. So they have to pivot into being a product company and away from being a model company.
- deleted 1y ago[deleted]
- yakbarber 1y agoThat's always been the case and was obvious to many from the start. It really wont be that long until we see some ~GPT4 llm embedded locally in a chip on the next iPhone release...
- petra 1y agoBut llms are relatively rarely used, and on the other hand, perf/latency is important to ux, and perf is variable(simple question, complex question, visual work). Those demand are better fullfiled at the cloud.
- lukan 1y agoAre you aware, what hardware is currently needed to run GPT4? Something bigger than a smartphone usually. So small mobile optimized LLMs will come, or are rather already there - but if they would manage to make the big GPT4 modell run on an iPhone, that would be a pretty big thing in itself, way larger than GPT5.
- no_wizard 1y agoI have a gut feeling alot of this is going to go negative for OpenAI. I simply don't see what they're going to produce in a reasonable amount of time that justifies hardware, for example. I'm open to being wrong, very open, but I need to see evidence. Hard evidence.
- butifnot0701 1y agoWasnt this all stock deal tho?
- magicink81 1y agoOne explanation: The models will not be a moat, but the products can be. More specifically "sticky" products / killer apps like ChatGPT, and whatever forthcoming products this acquisition of Jony Ive's company may lead to. Windsurf acquisition may be explained in part by the same logic of owning a strong and sticky product, as well as a good source of data for training.
- sagarkamat 1y agoMeh, all stock deal. They are not spending any raised cash on this.
- eviks 1y agoIn what way can the be too big to fail? Who will be forced to bail them out and why?
- killerstorm 1y agoIt doesn't look like they're cash-strapped, more like they want to raise stakes. To play in the same league as Google and Microsoft you have to be big. So they need to increase enterprise value to be taken seriously. That's what investors expect them to do. The only other option is to close it down, as OpenAI would quickly become obsolete if they can no longer produce frontier models. As for the moat, it's not something you can just conjure, right? Perhaps the whole point of these acquisition is to create a moat, but only time will tell if that worked.