Will OpenAI run out of money?

Day 207 / 366

The above tweet seems so strange when OpenAI and LLMs have been the single biggest thing in tech over the past 2 years. Not only that, OpenAI has consistently outperformed its competitors in each and every field. Why are they losing money at such an alarming rate?

Firstly let’s put the 5 billion dollars in perspective. Last year, OpenAI lost 500 million dollars. While it's a lot, we must also remember that not long ago it had received funding of 10 billion dollars from Microsoft. So even at that burn rate, it would have a runway of 20 years!

But things will start to change if it loses 5 billion dollars in a year. That money is going to run out fast, and it might soon have to raise more.

Training and running LLM’s is really costly. Even though OpenAI charges people to use most of their products, it's still not enough to break even. In the past, at least the data they used was obtained for free from the internet. However, websites like Twitter, Reddit, and StackOverflow has now made it tougher and costlier to get their data.

OpenAI’s CEO Sam Altman has said in the past that they have no problem with burning as much money as needed in order to reach AGI. That is a big gamble, which may fail miserably if it turns out that LLMs are not capable of reaching AGI.