ChatGPT (AI)

[charltjr]

It did take them 17 years to be profitable, most of these companies are less than 5 years old.

That’s fair, but the amounts involved here are crazy. Musk largely funded Tesla himself in the early days, and they IPO’d after seven years. Total investment into Tesla from private equity and raising shares across it’s entire history is less than Anthropic burnt in VC cash in 2025 alone, and Anthropic has raised a further $45bn in VC funding in 2026.

The problem for me is that they have no obvious path to profit. Compute isn’t getting cheaper, their models are getting more complex and consuming more compute, they exist only because huge amounts of cash are constantly pumped into them. Sooner or later, investors need a return.

The big question is will enough businesses pay to use their products when they start having to pay a sensible market rate that allows for some profit, and that’s looking doubtful.

 

[botfch]

That’s fair, but the amounts involved here are crazy. Musk largely funded Tesla himself in the early days, and they IPO’d after seven years. Total investment into Tesla from private equity and raising shares across it’s entire history is less than Anthropic burnt in VC cash in 2025 alone, and Anthropic has raised a further $45bn in VC funding in 2026.

The problem for me is that they have no obvious path to profit. Compute isn’t getting cheaper, their models are getting more complex and consuming more compute, they exist only because huge amounts of cash are constantly pumped into them. Sooner or later, investors need a return.

The big question is will enough businesses pay to use their products when they start having to pay a sensible market rate that allows for some profit, and that’s looking doubtful.

I mean sure but the upside is massive for the 2 or 3 companies that come out on top.

Once we get to a place where you have to be using ai to compete as business they’ll be able to turn the screws and jack up the price.

Look at VMware they jacked up the price 800%+ and a lot of businesses have had no choice but the pay it.

 

[Ray Gin]

Musk vs Altman atm, init?

 

[charltjr]

I mean sure but the upside is massive for the 2 or 3 companies that come out on top.

Once we get to a place where you have to be using ai to compete as business they’ll be able to turn the screws and jack up the price.

Look at VMware they jacked up the price 800%+ and a lot of businesses have had no choice but the pay it.

That’s what they’ve been betting on, absolutely. That was my take too, that when the bubble pops and most of them fail then just like in the dotcom boom you’ll still have an Amazon and an eBay who come out on top and become the money making machines.

The problem is that it’s starting to look like the issue is that they can‘t get a functional enough product at a low enough price. When they try to raise prices, usage drops significantly. That’s a killer blow because they have absolutely enormous fixed costs and it makes their burn rate even worse.

They are massively constrained on compute resource for future growth too, and it’s not exactly the work of a minute to throw up a data centre and get it populated.

Investing in the AI boom is starting to stretch some of the biggest funds in the world. Softbank are massively exposed for example. It’s a question of can they sustain the burn rate for long enough and it’s starting to look ugly.

 

[massiveCoRbyn]

I understand the investments, as it could be a massive money saver for businesses, and therefore a massive earner for the companies behind it. The impact it could have on the world is on a similar scale to the steam engine, probably more. That said, it could also implode, so it's a big gamble. I suspect @charltjr is right in that there could be some major casualties, but a few will come out of it as absolute behemoths. And of course, just like Amazon, they'll find new ways to f**k people in the name of profit/convenience.

 

[Steve]

It did take them 17 years to be profitable, most of these companies are less than 5 years old.

Musk’s got SpaceX (xAI Grok & starlink) as well as Tesla (optimus) $$$$$$$$$$$

 

[ChrisR]

Spacex also potentially buying Cursor for $60bil….

SpaceX secures option to buy AI startup Cursor for $60bn or partner for $10bn

Cursor is a Silicon Valley startup using AI to automate coding as Elon Musk’s firm seeks foothold in the AI market

www.theguardian.com

 

[charltjr]

Spacex also potentially buying Cursor for $60bil….

SpaceX secures option to buy AI startup Cursor for $60bn or partner for $10bn

Cursor is a Silicon Valley startup using AI to automate coding as Elon Musk’s firm seeks foothold in the AI market

www.theguardian.com

This is where it gets all the murkier for me - Cursor runs on top of Anthropic’s models. Anthropic can’t make money, and Cursor somehow have to add enough value that people won’t stop using it when Anthropic hike their prices.

So many AI startups are using Anthropic or OpenAI models and building their own frameworks around them. That means the whole sector relies on the pricing model of a couple of big players who can’t make any money at the moment.

The business model at the moment seems to be to get AI workflows so embedded into businesses that when the inevitable price rises happen it can’t easily be unpicked. It’ll be interesting to see if the sector can actually pull off the bait and switch before running out of money.

 

[ChrisR]

The business model at the moment seems to be to get AI workflows so embedded into businesses that when the inevitable price rises happen it can’t easily be unpicked.

Which is the way in general now with SaaS/consumption based products, when selling them the aim is to get things as embedded and part of the general business processes as possible so that it makes it hard to just switch that 'thing' off.