People said the exact same thing about (numbers from memory, might be off):
- when Google paid $1 bil for YouTube
- when Facebook paid $1 bil for Instagram
- when Facebook paid $1 bil for WhatsApp
The same thing - these 3 companies make no money, and have no path to making money, and that the price paid was crazy and decoupled from any economics.
Yet now, in hindsight, they look like brilliant business decisions.
https://en.wikipedia.org/wiki/Survivorship_bias?wprov=sfti1
You listed only acquisitions that paid off and not the many, many more that didn't though.
I am not even clear how Whatsapp "paid off" for Facebook in any sense other than them being able to nip a potential competitor in the bud. I use Whatsapp but do not see a single advert there nor do I pay a single penny for it, and I suspect my situation is pretty typical. Presumably some people see ads or pay for some services but I've not, and I don't imagine there's that much money to be made in being the #1 platform for sharing "Good Morning" GIFs
While many people thought Facebook/Google paid too much for these companies, you're making an apples-to-oranges comparison. That part about there being "no path to making money" is wrong - online advertising was a huge industry and only getting stronger and while YT/Insta/Whatsapp may have struggled as standalone companies it was clear they'd unlock an enormous amount of value as part of a bigger company that already had a strong foothold in advertising online.
It is not clear who, other than maybe someone like Microsoft, could actually acquire companies like OpenAI or Anthropic. They are orders of magnitude larger than the companies you mentioned in terms of what they are "worth" (haha) and even how much money they need just to keep the lights on, let alone turn any kind of profit.
Not to mention the logical fallacy at the core of your point - people said "the exact same[sic] thing" about YouTube, Instagram and Whatsapp ... therefore, what, it necessarily means these companies are the same? You realise that many of us talked like this about "the blockchain", and "the Metaverse" and about those stupid ape JPEGS and we were absolutely correct to do so.
> Not to mention the logical fallacy at the core of your point
Yes, it's a logical fallacy. Another one is saying "I don't see any viable business model, therefore there is no viable business model".
Blast from the past:
> YouTube is a content paradise though. There's tons of value there and you can sell ads against it or even charge for premium services.
> Where's the money in Instagram? The content is practically worthless and their only real value is in their userbase. Even though I use the Instagram client, most of the time I see photos, they come through Twitter. So that also reinforces for me that any value is in the users and not the actual content, which is mostly crap.
> I'm more convinced that we're in a 2nd bubble now more than ever.
https://news.ycombinator.com/item?id=3818037
Another one:
> Does anyone else think this valuation is insane? It's like $300/registered user. The company doesn't have a business model. No way the handful of employees are worth $1B. My mind is blown.
https://news.ycombinator.com/item?id=3817930
It sounds like you're really into this and I hope for all of our sakes that you are correct to be all hyped up about AI. Because if you're not and that this is a horrific bubble that is going to burst then we're all in big trouble
yeah, and Zuckerberg said that everyone on planet Earth will buy his VR helmet, and renamed his whole company after a stupid game which i don't think even exists anymore. Being a contrarian doesn't mean you are right, and sometimes seemingly stupid money-losing things turn out... stupid.
There’s no comparison to what’s going on now vs those examples. Not even remotely similar.
> that for all the usefulness on the tech there is no clearly viable path that financially supports everything that’s going on
you lack imagination, human workers are paid globally over $10 trillion dollars.
They were even saying this about Uber just a couple years ago. Now Uber makes $15b a year
Uber are doing something entirely different though - they took a market which was proven to exist, created a product which worked then spent a decade being horribly unprofitable until they were the dominant player in that market. And even at their very worst they weren't losing as much money as OpenAI are. There's far too much hand-waving and dismissive "ah it'll be ok because Uber exist" going on among those who have bought into the AI hype cycle
We don't really know how much money Google sunk into YouTube before it became (presumably) profitable. It might have actually not been strongly coupled to economics.
Also they attempted their own competitor before buying YouTube, called Google Video. It never got very popular.