14 ms·

OpenAI Burns the Boats

37 points by whoami_nr 1y ago

ru552 1y ago
This explains why Anthropic cut OpenAI off of their models just before GPT-5 was released.
impure 1y ago
I don’t think that saying means what you think it does. Also I have not seen any evidence that OpenAI is pivoting to advertising. And even if they did I’m doubtful that advertising would pay the bills. This is one of the reasons Google did not originally pursue LLMs despite having the technology.
- jsnell 1y ago
  The unit economics of inference are incredibly good. To be profitable, OpenAI would need to be 1/10th as good as Meta or Google are at monetizing via ads.
frizlab 1y ago
Very interesting article But why on earth would you not use proper case for your words? ai is difficult to read as everybody else on the planet uses AI! Even the sentences feel weird without their uppercase at their beginning. (At least the final sentence dots were there…)
deleted 1y ago
[deleted]
guywithahat 1y ago
I mean if Anthropic is really stealing market share from OpenAI in the enterprise space, as this article suggests they are, then what OpenAI is doing makes total sense. They should price competitively to get companies hooked on OpenAI early to build market share. I don't think OpenAI is burning boats because I don't think their position is dire
g42gregory 1y ago
I don't know where the author gets his information. The GPT-5 is not on par with Claude Opus. It's still cheaper than Sonnet, but certainly not by 10x. Sonnet, arguably, is still better than GPT-5, although not by much and not in all circumstances. I read analysis that GPT-5 is better at debugging (super important) and following exact instructions (many people don't quite know what they are asking for anyway, so this could be counter-productive in many cases). So no, OpenAI did not burn the boats... (Ok, this is for coding only. I have no information on other uses.)
- shallmn 1y ago
  "I don't know where the author gets his information." Same place that told them parking was free at Disney?
  - singron 1y ago
    Yeah parking is $30/day at the theme parks: https://disneyworld.disney.go.com/guest-services/parking/ https://disneyworld.disney.go.com/guest-services/parking/
    - deleted 1y ago
      [deleted]
- Hemospectrum 1y ago
  The citation is right there in the article: > source: i made it up
  - g42gregory 1y ago
    Nice. I seem to have missed this particular citation. :-)
SilverElfin 1y ago
The lack of capitalization is not only making this hard to read, but it makes the author seem like they don’t really value their own words. If they don’t care, why would I care as a reader? Also burning the boats means committing to something, without a way to get out of it. The article doesn’t seem to be about that.
- deleted 1y ago
  [deleted]
- DerSaidin 1y ago
  I think the "burning the boats" action is releasing very low API pricing. Once consumers see the lower price they would balk if it was raised back up enough to provide some margin on inference. So the article is saying OpenAI won't have a way to switch back to profit from inferences.
bgwalter 1y ago
Where does the statement that "inference is profitable" come from? Several sources say they are burning cash, I'll quote the most reputable one: https://www.ft.com/content/3c8cf028-e49f-4ac3-8d95-6f6178cf2aac https://www.ft.com/content/3c8cf028-e49f-4ac3-8d95-6f6178cf2... (Jul 25 2025) "Despite their rapid growth, neither Anthropic or OpenAI is close to being profitable, with both burning cash to pay for the huge amount of computing power needed to train their models. They also face increasing financial demands in a fierce war for talent which has been accelerated by Meta chief Mark Zuckerberg offering top researchers packages of $100mn in recent months."
starchild3001 1y ago
The reality is that cloud and AI model serving has become a race to the bottom. Top models are increasingly similar in capabilities, so price, not features, has become the main differentiator. OpenAI’s key move was to put its thinking capability behind a router, making it automatic and optional. This allows the system to use more expensive reasoning only when needed, reducing average serving costs. They're clearly doing the right thing -- the router approach, in principle, will lower their costs while maintaining roughly the same quality. Of all things, this benefits OpenAI's bottomline. It isn't necessarily an attack on Antropic or Google Gemini. It's just inference costs slowly becoming "too cheap to meter", while user experience vastly improving thanks to reduced latency for easier-to-answer prompts. It's a win for OpenAI (lower cost). It's a win for chatgpt users (lower latency and better model for the free tier). And stronger competition for anyone else, which eventually benefits everyone. FYI, you can get a glimpse of the current AI-model market share here: https://openrouter.ai/rankings?view=week https://openrouter.ai/rankings?view=week
adrianbooth17 1y ago
Had to give up on this due to lack of capitalization. How f**ing hard is it to format this properly? Why is "small caps" becoming a stylistic choice
- pjjpo 1y ago
  Presumably either deference or satire in writing an article about OpenAI using Sam's writing style. Personally it makes Sam seem like one of the least intelligent business leaders, but maybe not hip enough to get it.

37 points by whoami_nr 1y ago

This explains why Anthropic cut OpenAI off of their models just before GPT-5 was released.

I don’t think that saying means what you think it does. Also I have not seen any evidence that OpenAI is pivoting to advertising. And even if they did I’m doubtful that advertising would pay the bills. This is one of the reasons Google did not originally pursue LLMs despite having the technology.

jsnell 1y ago
The unit economics of inference are incredibly good. To be profitable, OpenAI would need to be 1/10th as good as Meta or Google are at monetizing via ads.

frizlab 1y ago

Very interesting article But why on earth would you not use proper case for your words? ai is difficult to read as everybody else on the planet uses AI! Even the sentences feel weird without their uppercase at their beginning. (At least the final sentence dots were there…)

deleted 1y ago

[deleted]

guywithahat 1y ago

I mean if Anthropic is really stealing market share from OpenAI in the enterprise space, as this article suggests they are, then what OpenAI is doing makes total sense. They should price competitively to get companies hooked on OpenAI early to build market share. I don't think OpenAI is burning boats because I don't think their position is dire

g42gregory 1y ago

I don't know where the author gets his information. The GPT-5 is not on par with Claude Opus. It's still cheaper than Sonnet, but certainly not by 10x. Sonnet, arguably, is still better than GPT-5, although not by much and not in all circumstances. I read analysis that GPT-5 is better at debugging (super important) and following exact instructions (many people don't quite know what they are asking for anyway, so this could be counter-productive in many cases). So no, OpenAI did not burn the boats... (Ok, this is for coding only. I have no information on other uses.)

shallmn 1y ago
"I don't know where the author gets his information." Same place that told them parking was free at Disney?
- singron 1y ago
  Yeah parking is $30/day at the theme parks: https://disneyworld.disney.go.com/guest-services/parking/ https://disneyworld.disney.go.com/guest-services/parking/
  - deleted 1y ago
    [deleted]
Hemospectrum 1y ago
The citation is right there in the article: > source: i made it up
- g42gregory 1y ago
  Nice. I seem to have missed this particular citation. :-)

SilverElfin 1y ago

The lack of capitalization is not only making this hard to read, but it makes the author seem like they don’t really value their own words. If they don’t care, why would I care as a reader? Also burning the boats means committing to something, without a way to get out of it. The article doesn’t seem to be about that.

deleted 1y ago
[deleted]
DerSaidin 1y ago
I think the "burning the boats" action is releasing very low API pricing. Once consumers see the lower price they would balk if it was raised back up enough to provide some margin on inference. So the article is saying OpenAI won't have a way to switch back to profit from inferences.

bgwalter 1y ago

Where does the statement that "inference is profitable" come from? Several sources say they are burning cash, I'll quote the most reputable one: https://www.ft.com/content/3c8cf028-e49f-4ac3-8d95-6f6178cf2aac https://www.ft.com/content/3c8cf028-e49f-4ac3-8d95-6f6178cf2... (Jul 25 2025) "Despite their rapid growth, neither Anthropic or OpenAI is close to being profitable, with both burning cash to pay for the huge amount of computing power needed to train their models. They also face increasing financial demands in a fierce war for talent which has been accelerated by Meta chief Mark Zuckerberg offering top researchers packages of $100mn in recent months."

starchild3001 1y ago

The reality is that cloud and AI model serving has become a race to the bottom. Top models are increasingly similar in capabilities, so price, not features, has become the main differentiator. OpenAI’s key move was to put its thinking capability behind a router, making it automatic and optional. This allows the system to use more expensive reasoning only when needed, reducing average serving costs. They're clearly doing the right thing -- the router approach, in principle, will lower their costs while maintaining roughly the same quality. Of all things, this benefits OpenAI's bottomline. It isn't necessarily an attack on Antropic or Google Gemini. It's just inference costs slowly becoming "too cheap to meter", while user experience vastly improving thanks to reduced latency for easier-to-answer prompts. It's a win for OpenAI (lower cost). It's a win for chatgpt users (lower latency and better model for the free tier). And stronger competition for anyone else, which eventually benefits everyone. FYI, you can get a glimpse of the current AI-model market share here: https://openrouter.ai/rankings?view=week https://openrouter.ai/rankings?view=week

adrianbooth17 1y ago

Had to give up on this due to lack of capitalization. How f**ing hard is it to format this properly? Why is "small caps" becoming a stylistic choice

pjjpo 1y ago
Presumably either deference or satire in writing an article about OpenAI using Sam's writing style. Personally it makes Sam seem like one of the least intelligent business leaders, but maybe not hip enough to get it.