SVIC Facebook Q&A Discussion:
ChatGPT at $29 Billion Valuation
Question for the group:
*This question was asked to the community last January 7, 2023:
The Wall Street Journal article: “ChatGPT Creator Is Talking to Investors About Selling Shares at $29 Billion Valuation” Tender offer at that valuation would make OpenAI one of the most valuable U.S. startups
I’ll give them props for being a huge, new transformational technology. And working with MSFT to create a search engine that could actually threaten Google. But $29B is a steep valuation of this can be replicated by the completion. What do y’all think?
Answer #1: Pricey to me as well
“It seems pricey to me as well.” —SVIC Member
Answer #2: If they get more adoption, the valuation can be more justified
“To be fair, they have many applications for Wall-E (generative arts) and Chat GPT. I think if they get more adoption, the valuation can be more justified.” —SVIC Member
Answer #3: Smart move
“Good timing of the hype cycle. Smart move.” —SVIC Member
Answer #4: If this is not 100X more overpriced…
“If this thing is not 100X more overpriced, why they need help from media to tell everyone they are threatening Google’s business when they cannot?” —SVIC Member
Answer #5: First thing I need is some sunglasses
“So if I want to raise $29G, first thing I need is some sunglasses.” —SVIC Member
Answer #6: The problem is their business model
“Say that Google finally releases a competitive model. Why is $29B a steep valuation in that case?
Because Google’s would be cheaper faster and/or better? Not a strong case. For how long until OpenAI fires back with a competitive version. The foundation level requires a ton of compute and thus financial investment—Google and Amazon are the only possible competitors. But right now they are not shipping product. Cohere is not cutting it.
They have no competition. They executed Zero to One.
Clearly, GPT-3 and DALL-E2 are “good enough” for some things. Mainly they spark optimism that the next iteration will really knock things out of the park. But the problem is their business model. As compute gets cheaper over time and their margins grow and recoup their R&D, so does “good enough” get within reach to replicate by less resourced OSS teams and startups.
So I don’t think Warren Buffett would touch the company with a ten foot pole.
It’s worth $29B because if they can keep it up, they’ll be worth $1T. In some ways $29B is cheap.
But if they don’t keep the pace, it could be worth much less. So you end up at 29.” —SVIC Member
Answer #7: It will probably end up with more serious users as an API
“ChatGPT is similar to LaMDA AI, is it not? Google has had that for many years. Not released publicly probably because it can mislead and show wrong answers just like ChatGPT.
Google can still fumble the execution though. ChatGPT will probably end up with more serious users as an API than Google’s tech.” —SVIC Member
Answer #8: …but what it can become
“You’re not buying what it is, but what it can become.” —SVIC Member
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