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You are confusing Capex and revenue. The predictions were predictions of revenue. Circular financing of AI projects does not create revenue for OpenAI, Anthr

You are confusing Capex and revenue. The predictions were predictions of revenue. Circular financing of AI projects does not create revenue for OpenAI, Anthropic, Meta, or Google. Only Nvidia benefits from it. Predicting revenue growth will stall and it does not was wrong.

reticulates 15d ago
Circular financing absolutely creates revenue. A startup raises $50 million from OpenAI and Anthropic to finance API calls to OpenAI and Anthropic that they are using at a loss who in turn spend that money on compute with Microsoft and Google who in turn invest in Anthropic and OpenAI who then invest the startup using the startup’s revenue to value it… the cycle repeats. There are multi-billion dollar valued startups invested in by OpenAI and Anthropic with hundreds of millions in ARR that are spending 90% of their revenue with Anthropic and OpenAI. Situational Awareness, the fund that recently imploded, invested tens of billions into AI companies using their holdings in Anthropic to help finance the investments… This could all work out fine in the long term, we’re all just speculating at this point, but the circular financing is absolutely making it to revenue because capital invested into startups is used to fund growth which is achieved by subsidizing costs incurred with OpenAI and Anthropic.
- chrisco255 15d ago
  The vast majority of startups are not funded by OpenAI or Anthropic. They are not a significant source of venture capital. Meanwhile, OpenAI is pulling in $40B+ per year and Anthropic $65B+ per year. You are mixing up valuations with liquid cash and you're also making sweeping statements about how those startups are spending their cash. A majority of a raise is not spent on AI compute. Situational Awareness blew up because they used leverage to invest, and leverage is a great way to blow up any fund even if they were directionally correct about AI.
  - reticulates 15d ago
    You’re applying pre-AI investing to a post-AI world. Yes, a decade ago, a startup raised money and spent 90% of it on people. The people built software which had incredible margins. Build it and then print money for ever more. That’s not the case any more, these startups no longer have incredible margins, they’re not collecting $100/m per user and banking $99 of it. They’re collecting $1000 and sending $999 of it to Anthropic and OpenAI. Revenue numbers are vastly inflated compared to pre-AI but these startups aren’t keeping the money. Profits are worse than ever before. Startups with 30 employees that reach $100m ARR in 6 months are not banking $90m or $80m or… they’re just passing that money straight through to OpenAI and Anthropic. If startups aren’t just funnelling all their funds raised straight through to OpenAI and Anthropic, where is this combined $100bn in revenue coming from? Who is paying for it? My spend on software certainly hasn’t gone up in a post-AI world. My company is spending less on software now. OpenAI have stopped being so reckless with their cash investments which is why they appear to have slowed down but they’re still investing millions in huge numbers of startups through token allowances. They invest $2 million in every YC startup (or did a few months ago). There’s an entire market of reselling these tokens! https://mlq.ai/news/openai-and-anthropic-pour-up-to-800m-a-year-in-free-credits-into-yc-startups/ https://mlq.ai/news/openai-and-anthropic-pour-up-to-800m-a-y... Hell, I’ll go one step further and bet they book these credits being spent as revenue.
    - saberience 15d ago
      This is so completely wrong and deluded I’m not sure where to start. I work with AI startups and scale ups on a regular basis as well as plenty of more old school companies, all of whom are spending money on AI models, because they are getting insane value from them. This idea of the revenue for OAI and Anthropic coming from “circular financing” is just bizarre wishful thinking coming from AI doomers with zero financial literacy. The revenue numbers reported by AI companies (not just OAI and Anthropic) isn’t being driven by Nvidia at all, in fact, the numbers wouldn’t add up if you thought that was the case. The revenue being brought in by AI companies is far, far higher than the sum of any investments from Nvidia. The AI doomers just can’t handle the idea that AI is actually incredibly valuable and every company is using it and increasing their use of it every month. And yes, I see this every day in my job and with every company I work with.

reticulates 15d ago

Circular financing absolutely creates revenue. A startup raises $50 million from OpenAI and Anthropic to finance API calls to OpenAI and Anthropic that they are using at a loss who in turn spend that money on compute with Microsoft and Google who in turn invest in Anthropic and OpenAI who then invest the startup using the startup’s revenue to value it… the cycle repeats. There are multi-billion dollar valued startups invested in by OpenAI and Anthropic with hundreds of millions in ARR that are spending 90% of their revenue with Anthropic and OpenAI. Situational Awareness, the fund that recently imploded, invested tens of billions into AI companies using their holdings in Anthropic to help finance the investments… This could all work out fine in the long term, we’re all just speculating at this point, but the circular financing is absolutely making it to revenue because capital invested into startups is used to fund growth which is achieved by subsidizing costs incurred with OpenAI and Anthropic.

chrisco255 15d ago
The vast majority of startups are not funded by OpenAI or Anthropic. They are not a significant source of venture capital. Meanwhile, OpenAI is pulling in $40B+ per year and Anthropic $65B+ per year. You are mixing up valuations with liquid cash and you're also making sweeping statements about how those startups are spending their cash. A majority of a raise is not spent on AI compute. Situational Awareness blew up because they used leverage to invest, and leverage is a great way to blow up any fund even if they were directionally correct about AI.
- reticulates 15d ago
  You’re applying pre-AI investing to a post-AI world. Yes, a decade ago, a startup raised money and spent 90% of it on people. The people built software which had incredible margins. Build it and then print money for ever more. That’s not the case any more, these startups no longer have incredible margins, they’re not collecting $100/m per user and banking $99 of it. They’re collecting $1000 and sending $999 of it to Anthropic and OpenAI. Revenue numbers are vastly inflated compared to pre-AI but these startups aren’t keeping the money. Profits are worse than ever before. Startups with 30 employees that reach $100m ARR in 6 months are not banking $90m or $80m or… they’re just passing that money straight through to OpenAI and Anthropic. If startups aren’t just funnelling all their funds raised straight through to OpenAI and Anthropic, where is this combined $100bn in revenue coming from? Who is paying for it? My spend on software certainly hasn’t gone up in a post-AI world. My company is spending less on software now. OpenAI have stopped being so reckless with their cash investments which is why they appear to have slowed down but they’re still investing millions in huge numbers of startups through token allowances. They invest $2 million in every YC startup (or did a few months ago). There’s an entire market of reselling these tokens! https://mlq.ai/news/openai-and-anthropic-pour-up-to-800m-a-year-in-free-credits-into-yc-startups/ https://mlq.ai/news/openai-and-anthropic-pour-up-to-800m-a-y... Hell, I’ll go one step further and bet they book these credits being spent as revenue.
  - saberience 15d ago
    This is so completely wrong and deluded I’m not sure where to start. I work with AI startups and scale ups on a regular basis as well as plenty of more old school companies, all of whom are spending money on AI models, because they are getting insane value from them. This idea of the revenue for OAI and Anthropic coming from “circular financing” is just bizarre wishful thinking coming from AI doomers with zero financial literacy. The revenue numbers reported by AI companies (not just OAI and Anthropic) isn’t being driven by Nvidia at all, in fact, the numbers wouldn’t add up if you thought that was the case. The revenue being brought in by AI companies is far, far higher than the sum of any investments from Nvidia. The AI doomers just can’t handle the idea that AI is actually incredibly valuable and every company is using it and increasing their use of it every month. And yes, I see this every day in my job and with every company I work with.