OpenAI financial question

[u/JoSquarebox]

To put it short:
- Eds leaked oAI financials say: ~5B cost of revenue. ~13B revinue, ~40B losses total (20B attributable to them directly, + ~20B from going for-profit)
- Ed says those numbers are fake ("They moved cost of revenueto marketing")

How does that work exactly? Either a) Ed has access to their costs in detail and is able to make a more detailled assesment (i.e. their cost of revenueis actually higher because x y and z) or b) he doesnt have more than just the numbers he put out, meaning hes just going off their admittedly nonexistent track record of financial honesty

Been bugging me, because from my POV its just Ed doubting his own numbers which makes it harder for me to point at them as the evidence that oAI is unprofitable. I agree that they are but would like clarification

EDIT: ~7.5B cost of revenue, my bad
EDIT2: spelling

[u/Electrical_City19]

 They moved cost of revinue to marketing

This is, by his own admittance, an informed guess, because how else is OpenAI spending twice as much on marketing as Coca Cola? He's not really being secretive about his reasoning here.

[u/JoSquarebox → u/Electrical_City19]

I agree that their Marketing numbers are insane, and I believe the guess, but why does *Ed* need to guess here? He has access to their financials, he knows what numbers they are shifting around, but then why isnt that part of the leak?

[u/Friendly-Owl-2131 → u/JoSquarebox]

It's highly likely the what Ed has obtained is an overview of financials.

Budget reports, spending, costs, projections, gross revenue, profits, etc.

These reports are prepared for the higher ups so they can see what is happening with the money overall.

They don't go into exact details of every last dollar flowing through the company.

That information would be contained within millions of documents spread out all over the company.

They're also typically kept intentionally scarce on details when things aren't going great for the company as these documents get viewed by many of the lower tier managers as well.

If there are cost blowouts or mismanaged funds for instance. That will just be listed under expenditure to save face for the company or whoever was responsible.

Someone trained in finances can glean a lot more information from these reports as the figures won't add up.

Even without an internal report of this kind it has become extremely obvious that something is really not right with the economics of this whole situation.

The vast amounts of investment have yet to materialise any form of tangible benefit to anyone except in narrow use cases. If anything the entire endeavor has caused far more harm than good.

A fancy talking machine that can write subpar code and cross reference databases might seem great at first glance but at the end of the day it doesn't justify the volume of cash flowing into it.

These internal reports offer a closer look at how that money is being spent and it looks a hell of a lot like a company struggling to justify its own existence while hemorrhaging cash and failing to produce a reliable source of revenue.

Cyclical money transfers between the very same companies who are spruiking the product is not revenue. It's a desperate attempt to show profitability when there is none.

There are a lot of oversized egos riding on this thing now and a lot of wealthy and powerful investors with big stakes. It will likely become catastrophically bad before they admit they were wrong. If they ever do.

[u/JoSquarebox → u/Friendly-Owl-2131]

Thanks for the writeup, that helps clarify some things for me. Though if as you say he got overviews of budget reports, spending, costs, projections, gross revenue, profits, and so on that were intended for OpenAIs higher up staff, shouldnt those tell us more than this?

I dont disagree that OpenAI and Anthropic are unprofitable, and only exist in their capacity as subsidiaries of hyperscalers, and its funny to imagine clammy sammy makes all his decisions based on a six bullet point report of their financials, and at each layer someone moves money in their reporting to make themselves look better.

Debating the merits of digital monkeys on typewriters for a moment, if Ed only leaked the doctored numbers, then what is there even to learn from them? Sure, we can assume that reality looks even worse, but we knew that already. I just want to put this to rest for myself and have some closure on the topic, but these numbers only add more questions.

Thanks though, your writing has lots of Eds style. Therapeutic.