OPENAI IS LOSING $20 BILLION A YEAR. SO WHO PAYS?

OpenAI loses $20 billion a year. Its fix? Offer the US government 5%.
The AI bubble, ChatGPT's new ads, and the leaked financials nobody at OpenAI wanted you to see.

Adam explains the entire AI economy using a sandwich that costs $40 to make and sells for $2, which is somehow also OpenAI's actual business model. 

Jack works out that the endgame is a taxpayer bailout, a financial strategy previously reserved for banks and British water companies. 

Meanwhile Meta and SpaceX are quietly selling shovels to the gold rush and edging towards the exit. The UK, being years behind in the AI race, may accidentally be the only winner.

Chapters:
00:00 The $40 sandwich problem
00:45 Why OpenAI offered Washington 5%
01:31 The leaked financials
04:07 The worst business pitch ever made
06:50 ChatGPT is showing you ads now
08:50 Too big to fail? Bailouts and shovel sellers
11:07 Replacing ourselves with AI

#OpenAI #AIBubble #ChatGPT

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Transcript

0:00

So it looks like the US government is going to take a stake or has been offered a stake in OpenAI. There's a lot of stuff going on with Meta and their excess AI compute power, and, and I think it's a good time for us to just sit and talk about what's going on in the AI world at the moment, 'cause there seems to be a few rumblings going on. I know there's some market movement as well. What goes up must come down. So yeah, this, uh, government stake is… What's that about? Is that a, a, a clever move? Is it a way of getting on side so that the government don't nerf their products for four weeks like they do with Anthropic? Is- Uh, I- … I mean, what's the what's the track here? Trump bought some shares? I think more than likely. Um, but yeah, it seems there's got to be a reason for it. And I mean, if you have a company, and you can get the government to kind of have a, an in- investment in it, not-- even though they would get this for free, I believe, but it's still… It becomes kind of like a, a part government asset, I guess. And so the government isn't gonna want to, I don't know, do anything that's gonna harm that value. Or maybe it's like- Hmm … a token offering like, "Oh, we, we give this to you, maybe you'd be lenient with us, uh, as you weren't with Anthropic." I don't know. Yeah. Is it like almost nationalization? It's the first wave of a move towards the stateless communism that we're gonna go into. It's like, let's give the- It sounds pretty nice. Yeah. Let's give the, the US government five… Let's nationalize AI. Forget the trains. Fuck the trains. Right? Can, can you imagine how much debt we'd be in? I mean, it's, it's just crazy the, the way that everything's running at the moment. So I mean, if we look at OpenAI's leaked financials, so 13.07 billion in revenue sounds pretty good, but 34 billion total costs and expenses. So that's like a 29.92 operating loss. And they had really bizarre things in this as well. They had like 5 billion for marketing and advertising. I've never seen an OpenAI ad. And so I don't know where this was, but I guess that's beside the point. But it's still like operating at a $20 billion loss. That's insane. Yeah. No, their overdraft's looking much worse than mine. That makes me feel loads better. Yeah. I wish, I wish I could have had some of those 5 billion marketing spend. But do, do you know what? So I, I've, I've been watching the World Cup on UK television, and they, they do put adverts on for like, "Hey, you wanna keep up with the, keep up with the football?" And it's like ChatGPT adverts. So, so I think- Oh, right. Okay … there are advertisements in the West, it's just we're out of the loop, so we don't really know what's going on, you know? Oh, yeah. It could well be. We're out here suffering in tropical paradise for the team. Yeah. Sucks, doesn't it? But anyway . Yeah, it does. But yeah, I mean, they're operating their businesses in such a strange way. So I've heard different estimates. So they say if you're running Claude on the $200 a month deal, and you were using it to like the maximum potential, then you'd be using around 4 or $5,000 worth of compute. I've heard with OpenAI, uh, doing the same thing, you could be using up to $14,000 worth of compute. But I, it's just, it's such a bizarre way to, to run a, a business. I mean, imagine if I come to you and I say, "Okay, uh, I, I've got a business. Uh, you as a shrewd investor, uh, let's try it. Would you like to invest in my business?" Oh, I'd love it. Yeah. Can I- How much can I put in? How much do you need? As much as you like. Um- Cool. Why not? Any more questions? Could do $10 billion, I guess. Yeah. Why not? Why not? I get it back. I mean, I'm, I'm only running a, a sandwich shop. I, I don't need potentially that, that much. Um- All right, 1 billion. But no, imagine if it was like that and I go, "Okay, I'm running this sandwich shop. I make the best sandwiches in the world." You go, "Okay, that sounds like a good thing to invest in." And you go, "Uh, so are your sandwiches expensive?" And I go, "It's $2 a sandwich." "So the best sandwiches in the world, really cheap. How much does it cost you to make a sandwich?" "Uh, $40." You know?"Ah, okay.""So, so how do you keep this running?" It's like, "Oh, well, I just get people like yourself to invest, and then I, I borrow money, and then we, we just keep, we keep racking it up. Um, we, we made $300,000 profit last year, but we, we spent 2.75 million." Um- "And what's the end game with this?" You… They're sort of… It would be like saying, "Okay, but eventually we'll be the only sandwich shop, and then also the prices are gonna come down." And you go, "Like the prices of making a sandwich will come down." But then even if those prices come down by half, and it only costs you $20 to make a sandwich, you've still got to 10X the $2 cost that you're charging now. So, and, and that's being really generous, and there's no way that the compute's gonna come down to, to half. And there's no way that people are gonna pay 10X or more what they currently pay when they can go to one of the Chinese models and get it virtually for free or really cheap. Yeah. I, I think they're gambling on one thing and strategizing on another. So they're gambling on compute getting cheaper and more efficient, and AI pro- probably helping with figuring some of that out and how that can be done. I think that's a huge gamble and a huge risk, right? And then on the other side, they're, they're just doing the thing that they know is human nature. So they're making it so we get so reliant upon AI and using it in our daily lives, and Google, and all of this stuff and, um, and then they can start jacking the price up on the compute, the usage, all of this kind of stuff. As well as they're starting to do adver- advertisements. So now there's a thing in ChatGPT called ChatGPT Ads. Oh, that's personalized. And it will actually recommend… Yeah, it will actually recommend companies to you based on the queries you're asking, which ethically is, like, questionable. But yeah, I have a good friend who is running ads on there, and someone was asking questions about the service that he offers, and ChatGPT said, "Ah, you should go and talk to this person about this service- Hmm because they're perfect." So you can imagine how much better those adverts are gonna convert. Yeah. So that could be a really big thing. But it's still gonna be-- They're gonna have to go some to get back to 30 billion- … worth of gap, you know? It, it's just, it's such insane amounts of money. Um, and the figures that we have now, they're for, like, last year. Imagine what this year's gonna be. It, it's gonna be bigger. And then at the same time, uh, you've had, like, OpenAI and Anthropic filing to go public. Um, I think OpenAI said they're gonna delay it for a little bit, but that's like another, like, money-raising round. I don't know. I, I just think they must be… Surely they've gotta start running out of money at some point, and I, I don't think there's gonna be a huge amount of people that are gonna want to put into it because it's just like my, my sandwich shop thing. It, it's just where's the return gonna come from and, and when? And how long can you- Government bailout. Well, yeah. I mean, does, does that make OpenAI worthy of a government bailout? Because all of these companies as well, they're all the top companies in the US stock market right now, all of them. So either those or of, uh, like Nvidia and people like that, it's all AI related. And so are they like too big to fail? Will they need government bailouts? Will we be like, well, not us, but people in the US, will they be bailing out Sam Altman from taxpayer funds eventually? I, I don't know. And then suddenly, because the UK's so far behind in the AI race of everybody, we're the real winners. Could be. But I'm sure we'll find some way to fuck that up as well. But yeah, it's, I, I, I think again, the, the, the companies like we mentioned at the beginning, you know, Meta is looking to sell their excess compute. SpaceX is running and, and re- is renting compute to Anthropic at, at 1.25 billion per month, and that runs until at least May 2029. I know they're doing things it- with like outer space stuff as well with Anthropic. So are they gonna be the real winners? Are they almost like the shovel sellers in the gold rush? You know, the people that sell the things that are around the area.'Cause loads of people were going to find gold, very few actually made money from that. But the people selling the equipment that you needed to find, to prospect, right, for gold, they made shitloads of money and it's, it's usually the way. So I wonder if that's- Yeah … the smarter move and, and maybe these companies will be the real winner and, you know, Lord only knows that Elon Musk is n- not, not rich enough. Maybe he's gonna be the world's first quillionaire or if that's the next thing. I don't even, I don't even know where it goes. Quadrillionaire. Quadrillionaire. That's actually- Quillionaire sounds better though, doesn't it? But It sounds fancy. It does in so many ways. Um, but yeah, I, I would agree and I think possibly, uh, Meta and xAI, they're, they're sensing how there's absolutely no money for them to be made in this, or not for a very long time. And so they may as well sell the shovels. Maybe they're kind of getting out of the race more or less, and just sensing that this, this constant thing of just throwing more and more money into something and getting nothing back is not the best business move on their part. And, uh, just like the, the beginning of the internet, we-- I think everyone can tell that AI is gonna massively change the world and it's a super important technology. But just like the internet, I think we have to have that, that initial boom and then that absolute crash, like pets.com or whatever else. Um- And it, it, yeah, and it sort of, uh, becomes the new Ask Jeeves. Although I think Ask Jeeves still exists, and it's, you know, a high quality search engine, and if they wanna sponsor us, we are available and open to, uh- to sponsorship. I was just thinking there, just, like, one of my wild ideas about AI, we should make a temporally scripted AI channel where it's, like, an avatar version of you and me just, you know, and, and see if they get more subscribers than us. I think they probably will. Just making a likeness of, uh, you and I on a separate channel. Yeah. Well, we'll- Which, yeah, could be way more popular. Although the, the sad thing is that YouTube often takes down, uh, AI related stuff or just won't let it be monetized, you know, if it's all- Yeah … AI generated, which I don't know, I wish we'd just maybe do, like, a, a separate section or category on YouTube, 'cause I w- by now you could make really, really good AI generated content. Just let people know what it is, and let people- Yes … make money if they want to. Some of the history stuff's amazing, and it's also scandalous when, that in Vietnam there's people doing, like, their daily life stuff, and because they don't speak English, they're using an AI voice to do the English narration of, like, what they're doing. And a lot of them have been demonetized as well. But anyway, that's definitely a topic- Hmm … for, for another- Yeah, interesting … day. Yeah. So guys, if you've enjoyed this one, tell us what you think about AI. Is it gonna make loads of money? Is it gonna pay people back? Or is it going to be a massive crash where they have to be bailed out and, you know, the whole thing goes down the shitter? We will see you in the next one. Adam- … on that positive note. It's a pleasure as always. See you next time everybody.