Comment by mgh95
Comment by mgh95 7 hours ago
And friendster at one point had over 100m users. A gross margin (and more importantly, positive cash flow) business is more important than users. This data is not a good indicator of either.
Comment by mgh95 7 hours ago
And friendster at one point had over 100m users. A gross margin (and more importantly, positive cash flow) business is more important than users. This data is not a good indicator of either.
In 2024 (when customer mix was more favorable) they lost 5B on 10 in forward looking ARR.
They aren't pulling an Amazon snd balancing cash flow with costs. They're just incinerating money for a low value userbase. Even at FB arpu the economics are still very poor.
>In 2024 (when customer mix was more favorable)
Okay, so still hundreds of millions of users
>They aren't pulling an Amazon snd balancing cash flow with costs.
Nobody said they were. I said having hundreds of millions of completely free users would suck the profitability of any business, and that the remedy would be simple, should the need for it arise.
>They're just incinerating money for a low value userbase.
If you don't see how implementing ads in a system designed for having natural conversations to users whose most common queries are for “Practical Guidance” and “Seeking Information” could be incredibly valuable then you have no foresight and I don't know what to tell you.
>Even at FB arpu the economics are still very poor.
No they aren't and I honestly have no idea what you're talking about. Inference is cheap and has been for some time.
I don't think you realize the issue. They aren't monetizing their SaaS product satisfactorily -- hence the Amazon cash flow imbalance statement. This indicates they must find new markets to survive. Despite this, however, they are gaining only in poorer markets, limiting the monetizability of a high cost product.
Implementing adds is a hail-mary. It puts them in a knife fight with google which will likely result in a race to the bottom which OpenAI cannot sustain and win.
FB global ARPU is about 50 USD. At 700M customers, they do 35B in revenue annually. This compares to a publicly stated expected cost of approximately 150B in computing alone over the next 5 years (see: https://fortune.com/2025/09/06/openai-spending-outlook-115-b...). This leaves a profit of 5B per year, with 90B expected r&d costs. Even if OpenAI develops a product and fires all employees, you are looking at a ROIC of about 18 years.
Fundamentally, OpenAI does not have the unit economics of a traditional SaaS. "Hundreds of millions of users" is hundreds of millions of people consuming expenses and not generating sufficient revenue to justify the line of business as a going concern. This, coupled with declining enterprise AI adoption (https://www.apolloacademy.com/ai-adoption-rate-trending-down...) paints an ugly picture.
Yeah but the problem then becomes you are in a knife fight with google. Welcome to margin compression on already thin margins and high capex. Its not a like they buy commodity hardware that is cheap, or have the depth of talent like Google to do ASICs + DC management.
Once OpenAI turns to ads, I think it's an indicator they are out of ideas.
No one ever paid for social media, or were expected to in the future.
They have literally hundreds of millions of users that are completely free. Not google search or facebook free, but free free, and only suffer a few billion in losses. Inference is cheap and their unit economics is fine. There is literally no business that would be making profit under those constraints. If they need to make profit, they can implement ads and that will be that.