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Dotcom bubble was a bubble because there were no users. The reasoning was along the lines of 20% of all shoe sales in 2010 will be online. Company x has started to sell shoes online so in 10 years they will make billions. They had no sales and no where close to amazon's supply chain.
Chatgpt has millions of daily users. This is more akin to the boom of companies created when the world got smart phones. Those companies made money.
But, notably, openai isn't profitable.
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That really isn’t true. Plenty of dotcom companies like Yahoo had huge numbers of users; Yahoo had 400 million registered users at the peak in 2000 with 60 million monthly users (double the previous year’s figure). Many other dotcom companies had large user numbers too.
And if you look at the non-dotcom companies that still saw huge stock price crashes after the bust, many were businesses with big revenue, like Microsoft ($23bn in revenue in 2000, down 70%+ during the crash, didn’t recover until 2016) and Intel ($34bn in revenue in 2000, down 80%+ during the crash, didn’t recover until 2020). Both Intel and Microsoft were also extremely profitable during this period, contrary to boosters who say all tech stocks at this time lost money or whatever.
The bizarre myth that dotcom was all money into worthless internet businesses with 10 users and inflated traffic figures on zero revenue is peddled by exactly the same people trying to claim that “this time is different”.
It's even worse than that, because at least Yahoo and Microsoft had viable business plans and are still around years later. ChatGTP and other AI-only companies are more similar to Pets.com than the boosters want to realize. The news stories about the site's downfall always focused on the amount they spent on advertising, but they were selling the stuff they bought for less than what they paid for it, plus free shipping, in a bid to corner the market. ChatGTP is even worse because 97% of the users aren't paying anything, there is no advertising on the platform (and banner ads aren't going to cut it), and the 3% who do pay are likely power users who get more than their money's worth. So it's like if Pets.com gave 97% of their stuff away for free, sold the remaining 3% at a discount, and justified it by assuming that online shopping would be revolutionary and everyone would buy everything online. They were essentially right, they just went about it the wrong way to keep the spigot flowing. Add in spending large sums on infrastructure (i.e. warehouses vs. data centers) and the parallels are all too clear.
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The analogy would be an online shoe seller who spends investor capital to sell shoes at half to themselves, in the hope of cornering the market. Presumably, they would have an impressive revenue (if only because every shoe store starts buying from them).
Per WP, OpenAI has a revenue of 3.7G$ per year, and net losses of 5G$ per year, but their plan is to start burning through money much faster than that, for 2029 their goal is 115G$.
In my mind, this level of investment can only be worth it if they reach a game-changer threshold which far dwarfs anything AI has done so far. If their 2029 investment only yields net profits of 10G$/a, that will be their doom, because then it takes them them a decade just to recoup costs. And they will not have a decade before other models inevitably catch up to them (unless they burn through even more money).
Either they built an LLM which can do anything which an IQ 160 human can do, or they go bust.
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