"There are some trade-offs like gross margins. Many of these companies have negative gross margins. Not all revenue is created equal, but nevertheless, the adoption is astounding." - Talia Goldberg
I understand the Uber playbook comparisons, but AI COGS are very different. Additionally, Uber made a conscious decision to have negative margins from heavy price subsidies to dominate the market and then raise prices; it was a choice.
I don't think most of these hypergrowth AI companies have the luxury of simply raising prices, because if their competitors don't raise at the same time, people will switch (everyone is building the same stuff). If you can't raise prices, you've built a commodity.
2 things need to happen: they need to somehow figure out a way to decrease inference costs AND create workflow lock-ins. Even if you raise prices, you can still be margin-negative if you donβt fix COGS (something Uber didnβt face)
If you can't do both, you're stuck as a perpetual pass-through to model providers.
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TBPN (@tbpn) on X
.@taliagold explains the concept of 'supernovas' in the AI industry.
"The supernovas are out-of-nowhere growth stories that are mind-blowing. AI c...
