Profiting from Progress: The Billion-Dollar Winners in ChatGPT's AI Revolution

0:00Since ChatGPT launched, we know that it is operating at a pretty big loss. It's essentially letting hundreds of millions of users use it for completely free. And they do have a few monetization tactics, but right now they are losing a lot of money. And at the moment, they can justify it. They've taken over$10 billion from Microsoft to help them build out their platform. And they have a lot of new training data that they're getting from having all those users test their platform. But that being said, eventually they're going to have to monetize. And the whole generative AI revolution is going to have to monetize in some way or another.

0:35But, you know, not everyone can say exactly how that's going to happen. So on the podcast today, we're going to dive into what's going to happen to monetization in AI, who the players are, who benefits, and how this impacts industry as a whole. So it seems pretty logical that if AI can conduct a conversation and produce an image or a video or audio, that companies are going to figure out how to make money from that. but there's no guarantee and also you know a lot of this ai technology could become a money pit for early adopters if they don't play their cards right so i think in the short or kind of like the medium term the winners are likely going to be the owners of a lot of these ai models so you have microsoft open ai google's coming out with one soon um anthropic there's a lot of these other people that own the models and they pretty much can charge people to use them for experiments and for new applications and when you see pretty much every company coming out with a new ai tool that's built on these things there's going to be a lot of money in that but if those experiments that these apps are trying these companies are trying in applying this new ai in you know different commercial or consumer areas if they don't work out it's really up to the um it's up to the company that built that that's going to feel the biggest loss so in the meantime i think of the news around a lot of the projects like Chachi P and Bing is gonna quickly start to shift from you know like wow these things are absolutely incredible sci-fi breakthroughs to all of a sudden it's gonna get down to a pretty mundane or as Axios says a mundane nuance of B2B pricing so I think it really will come down to that soon because we're gonna have to see how profitable these things are we're gonna have to see what the profit margins are and eventually people are gonna have to start paying for the cost of these tools or they're going to have to monetize in one way or another they can't be running at such a loss for so long and I recently heard someone say they broke down the cost and that for a Google search every Google search is like 0.003 cents that is the cost that Google pays for a Google search and for a chat should be T request it's like 35 cents every time just in like a computational cost so this the pricing is gonna have to come down they're gonna have to figure something out and they're gonna have to monetize because they can't keep running at a loss forever so it's very interesting because with all of this happening Microsoft has announced some pretty big hikes in the price for outside developers to plug into their bing the their bing api pretty much and so a lot of people in the industry are actually expecting openai's pricing to jump up too because currently openai has some pretty decent pricing in if you're looking at their models like their davinci 3 model and other things they haven't come out with an api for their chat gpt yet but with bing bumping up the the cost it's going to be interesting to see what chat gpt and openai have to do as well so i think as part of its kind of massive deal that they have with openai microsoft is getting essentially just broad rights to commercialize OpenAI's tech in a lot of different ways, right?

3:46They're bundling it with their products, they're integrating it to Azure Cloud, they're putting it into their documents and into, you know, PowerPoint and Microsoft Word and all those other tools. And I think that the most advanced generative AI services today are costing a lot of money. So OpenAI and Microsoft and Bing are not spared from kind of that big cost. And I think that that means that, you know, this whole AI boom we're seeing right now inevitably is also going to create you know a ton of money for some of these big cloud computing providers you know we're talking about amazon aws microsoft azure and of course google cloud all of these people have also pretty smart i think microsoft and google in particular have been pretty good at investing in a lot of ai companies and pulling them under their umbrella of their cloud platforms and essentially stealing a lot of customers away from Amazon AWS which has reported some slowed growth recently which I wonder if it is due to kind of this area and you know Microsoft even going so far as to give OpenAI essentially a hundred million dollars to invest into AI startups and there's kind of one of those stipulations where those companies have to make sure that they're hosting and running all their computational power on Microsoft Azure.

5:07So these there's going to be some pretty massive profits for these big cloud providers. But so I think there's kind of two sides of the coin, there's that side, but I also think that it means that the days of you know, us all being able to head over to chat GPT and use it for free are pretty, are probably numbered. And I would love to say it's going to be there forever. But I think that eventually open AI is going to have to start recouping some of their costs that they're they're losing, as it is a pretty expensive experiment, They're currently doing giving that away for free. And I think a move in the direction we're seeing is, you know, with the partnership between OpenAI and Bain, which they allow Bain Consulting, they announced this like last week.

5:46And I think this is one of the signs that they're really starting to get into the monetization of all of this. And so I think that, you know, companies are really planning early development experiments in what, you know, they would say is the next generation of customer service or creative development or you know a bunch of different areas so a lot of companies are planning on how they can use chat chubut how they can use ai in their company and i think bain is counting on that by you know partnering with open ai and getting that integrated into all of their customers and one of their first customers that is kind of taking advantage of this bain consulting open ai partnership is actually coca-cola so apparently they have you know quote-unquote engaged with that partnership and it's going to be interesting to see how they start rolling that in but in addition to that we're seeing a lot of other platforms integrate this kind of same the same tech notion which is a is a pretty popular information organizer i currently use it in my companies it's a really good collaboration service and in any case notion began offering something they called notion ai which is essentially a $10 a user per month fee where you can get it to integrate all these different AI services.

6:59It has like an autocompleter, a summarizer, it has brainstorming tools. And so I think that Notion and a lot of other companies that have similar rollouts of products are kind of increasing or kind of proving a lot of skeptics right in their argument that when they say that, you know, they're like, well, a lot of this AI is just a feature that you add to an existing product. It's not necessarily its own product per se. And so I think that's a pretty interesting concept. Obviously, ChatGPT is an incredible product and people are using it as a standalone product. But on the other hand, most companies now are not just going to be chat AI bots.

7:39They're mostly going to be taking the tech and what that has and integrating it into their companies. So it's going to be interesting to see how that plays out. And in, you know, as we kind of extend that to other companies, especially in the search arena, where I think AI powered chat is already, you know, in a pretty wide testing area, you know, we see Bing moving in with their, you know, Bing chatbot thing. And then you have Google, which is, you know, has its whole ad business, which is going to be pretty directly impacted, whether, which is probably going to be negatively impacted. And I think what's interesting is that integrating advertising with AI chat might actually be more difficult and perhaps not difficult, but it might be pretty unappealing.

8:27right so like if bing has um ads all of a sudden in their ai responses it might just not be as it might not seem as clean or legitimate or um i don't know it just unappealing is is the word i think of if you were using chat gpt and there was ads integrated into every single response it i don't know if it would seem quite as uh you know clear of information so it's going to be interesting to see if they're able to do that because i think you even have examples of this a precedent with like Amazon Alexa has yet to come up with a really good way of mixing ads in to just giving you information. And so I think that Bing is going to have the same problem.

9:06Google is going to have the same problem. I think there's, you know, you.com, which is a pretty much the same kind of startup, and it's going to have something similar to that. So I think that when we look at it from a macro perspective, the AI, everything that's happening in AI really is following kind of the same trajectory as a lot of previous tech explosions. When the web, you know, came around 30 years ago, the first profits really flowed not to online stores and websites and stuff, but really to internet service providers. Those were the first people that really benefited and profited. And I think that we're going to see the same thing where the people that are really making the money at the beginning of this are probably going to be a lot of these AI models.

9:53You have Anthropic, you have Google, you have Microsoft, you have OpenAI. And I think that those are going to be some of the biggest beneficiaries of this whole AI boom. And then beyond that, we're going to see a lot of startups and a lot of early adopters, a lot of experimenters coming on with new products. And whether it's going to, it's kind of left to be seen because all of them are paying for all of that compute straight back to the whoever's providing the AI model and it's guaranteed to make money and so it's going to be you know to be determined if those new companies are able to really scale and make money or if they will pop like a bubble so it's going to be interesting to watch the space