Comment by SeanAnderson 20 hours ago
I dunno. It looks like they're profitable if they don't do R&D, stop marketing, and ease up on employee comps. That's not the worst place to be. Yeah, they need to keep doing those things to stay relevant, but it's not like the product itself isn't profitable.
Yes... but there were concerns previously that inference was so costly that the subscriptions/API billing weren't covering basic operating expenses. That's clearly not the case. People are willing to pay them enough that they can afford to run the models. That's a really positive sign.
I can see why you'd make that analogy, but that wasn't quite what I was trying to say. I just meant that not all expenses are created equal.
Plenty of companies have high burn rates due to high R&D costs. It can make them look unprofitable on paper, but it's a tactic used to scale quicker, get economies of scale, higher leverage in negotiating, etc. It's not a requirement that they invest in R&D indefinitely. In contrast, if a company is paying a heavy amount of interest on loans (think: WeWork), it's not nearly as practical for them to cut away at their spending to find profitability.
Apologies for the snark.
I don't think they can stop the 3 things you mentioned though.
- Stopping R&D means their top engineers and scientists will go elsewhere
- Stopping marketing means they will slowly lose market share. I don't care for marketing personally but I can appreciate its importance in a corporation
- Stopping/reducing compensation will also make them lose people
The costs are an inherent part of the company. It can't exist without it. Sure, they can adjust some levers a little bit here and there, but not too much or it all comes crumbling down.
So they're profitable if they put themselves at a disadvantage against Google, Meta, etc.?