How much do markets value Open AI?

post by Xodarap · 2023-05-14T19:28:38.686Z · LW · GW · 5 comments

5 comments

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comment by Dave Orr (dave-orr) · 2023-05-14T19:44:44.673Z · LW(p) · GW(p)

I'm not sure multiple of revenue is meaningful right now. Nobody is investing in OAI because of their current business. Also there are tons of investments at infinite multiples once you realize that many companies get investments with no revenue.

Replies from: Xodarap
↑ comment by Xodarap · 2023-05-14T20:35:57.392Z · LW(p) · GW(p)
  1. Yep, revenue multiples are a heuristic for expectations of future growth, which is what I care about
  2. This is true, but I'm not aware of any investments on $0 revenue at the $10B scale. Would love to hear of counterexamples if you know of any![1]
  1. ^

    Instagram is the closest I can think of, but that was ~20x smaller and an acquisition, not an investment

Replies from: dave-orr
↑ comment by Dave Orr (dave-orr) · 2023-05-15T02:48:05.206Z · LW(p) · GW(p)

Anthropic reportedly got a $4B valuation on negligible revenue. Cohere is reportedly asking for a $6B valuation on maybe a few $M in revenue.

AI startups are getting pretty absurd valuations based on I'm not sure what, but I don't think it's ARR.

Replies from: Xodarap
↑ comment by Xodarap · 2023-05-15T13:24:52.585Z · LW(p) · GW(p)

Thanks! I mentioned anthropic in the post, but would similarly find it interesting if someone did a write up about cohere. It could be that OAI is not representative for reasons I don't understand.

comment by gwern · 2023-05-15T21:38:23.064Z · LW(p) · GW(p)

Not modeling the cap seems like a fatal flaw here that should be up front and center. That means that arbitrarily large payoffs are truncated to $0 as far as the market is concerned. At best, the pricing can only reflect a mixture of opinion about the probability of successes and payoffs below the cap and gives you some idea of something like a percentile estimate of OA success...