p.enthalabs

Ask HN: If the models are so good, why doesn't OpenAI just start 100 companies?

678 points · 205 visible top comments · 2026-10-22 21:03:55 UTC

news.ycombinator.com · Read Story HN original

Title is a bit of an exaggeration but the question is more: if the frontier models are so good, why even sell them as your primary money maker?

Couldn't OpenAI or Anthropic make a lot more money by just starting companies themselves that leverage the models and building their own products?

Is selling tokens really the best strategy?

Especially with commodification and prices declining wouldn't that indicate there is more money to be made on the application-side of the models rather than the utility side

Comments

digitaltrees · 2026-10-22 21:06:18 UTC
They are doing that. That is why they have moved into the app layer. They are counting on software being replaced with agentic super apps. The only reason they aren’t starting actual service companies is that those still require human boots on the ground. But they are pushing their way into consulting (they bought my friends consulting firm)
Rodmine · 2026-10-22 21:18:29 UTC
During a gold rush, sell shovels. They are investing heavily in in-house custom silicon, which is the shovel end of things. They could open more jewellery chains, but that is a very different kind of operation and it is in their interest to let others compete for that and use their resources on the shovel side of things.
CoolestBeans · 2026-10-22 21:21:52 UTC
1. They are starting to do it. Take a look at OpenAI's product portfolio, there's a galaxy of attempts at application.

2. Selling tokens via long running agents is the only thing that's provably working with respect to revenue growth.

3. They need revenue yesterday. Increases in borrowing rates means access to capital isn't what it was in the 10s. Their runway is much shorter than you would imagine.

4. Some of the decision makers at these companies believe AI will exhibit Jevons Paradox and that any decrease in price will result in induced demand.

5. The frontier models are still subject to the limitations of AI. They're not good at everything. Better to have someone else learn that on their dime rather than yours.

JacobAsmuth · 2026-10-22 21:51:37 UTC
Is 4 correct or incorrect? What data do we have so far in this regard?
ACCount39 · 2026-10-23 09:09:44 UTC
AI price-performance is improving rapidly. AI usage, whether in tokens used, in cash spent, or any of the above performance-adjusted, is curving upwards too.

Causality is uncertain, but the "Jevons paradox" interpretation is certainly not contradicted by the available data. Anecdotes of per-employee AI spend rising, and multi-agent freerunning AI tasks becoming more common are also plentiful.

Personally, I think that the "Jevons paradox" interpretation is basically correct. Humanity doesn't have a limited demand on intelligence - but humans are expensive, so it's supply-constrained. The cheaper intelligence gets, the more of it ends up used. As AI gets cheaper and more capable of substituting for human intelligence, usage will rise.

CoolestBeans · 2026-10-23 23:03:20 UTC
Unknown. AI usage went up exponentially this year but a lot of that was driven by access to frontier and near-frontier models and a shift to agents. Does that constitute a decrease in prices because $ per unit of intelligence (whatever that could mean) has gone down? Maybe.

One issue is that token usage and revenue seem to be decoupling in real time. For Jevons paradox to be true, prices need to be going down but total spend on AI has to be going up. That's technically true right now but total usage is going way up while total spend is going up slightly. Another problem is that we may be witnessing the end of "tokenmaxxing" with Anthropic's revenue growth decelerating and OpenRouter's token volume plateauing. Two points of data do not make evidence but the possibility that AI usage is an S curve rather than exponential is live.

JacobAsmuth · 2026-10-24 17:38:45 UTC
See these kinds of comments bother me because it seems like you haven't actually looked at the data. It reads "very informed" but actually is essentially contentless. It's the same reason I didn't like reading AI output before tool-calling/web search became a thing.
Ohentis · 2026-10-25 03:08:38 UTC
It isn't actually Jevon's Paradox, but nearly all products behave that way (law of demand). There are exceptions of course, but it would be surprising for it not to apply here imo.
redanddead · 2026-10-22 22:00:51 UTC
>3. They need revenue yesterday. Increases in borrowing rates means access to capital isn't what it was in the 10s

This is a huge problem, why is it like this

georgemcbay · 2026-10-22 22:13:33 UTC
> why is it like this

In part it is like this because they've already borrowed so much.

nl · 2026-10-22 22:31:06 UTC
They have borrowed almost nothing.

Investment isn't debt.

timothyduong · 2026-10-22 22:41:30 UTC
Isn't investment like a form of debt, or well obligation to make returns?

If VC provide you funds, there is an expectation of returns, otherwise the board would vote you out.

Yeah it's not a traditional loan from a bank, but it's not a 0% interest loan either.

nl · 2026-10-23 12:10:49 UTC
> Isn't investment like a form of debt, or well obligation to make returns?

No.

> If VC provide you funds, there is an expectation of returns, otherwise the board would vote you out.

A person might get replaced as CEO but the company has no financial obligation to the investors.

A loan means the company does.

Legally they are dramatically different.

georgemcbay · 2026-10-22 22:49:12 UTC
The duopoly AI labs haven't technically borrowed much, but a metric ass-ton of money has been borrowed by various other entities in service of them as infrastructure proxies.

That's what is driving up the cost of debt and teetering some of these companies into junk status.

redanddead · 2026-10-23 05:34:50 UTC
you can say coreweave
fwlr · 2026-10-23 06:21:07 UTC
Investment isn’t debt, but investment and debt demand revenue in functionally identical ways, and OpenAI has taken an enormous amount of investment, so they are subject to broadly the same pressures as a hypothetical company that had borrowed lots, no?
nl · 2026-10-23 12:27:20 UTC
> investment and debt demand revenue in functionally identical ways

No they don't.

A company has legal obligation to pay loans at the agreed rates.

There is legal obligation that defines rates of return beyond "acting in shareholder interest" (and OpenAI is a public benefit corporation so even this is reduced).

Tanjreeve · 2026-10-23 09:25:46 UTC
Exorbitant Cloud costs and spending 22 million to solve a 1 million dollar maths problem isn’t investment though.
fn-mote · 2026-10-23 11:41:49 UTC
Fake costs. The numbers reported are what they would have charged other companies for the tokens.
Tanjreeve · 2026-10-23 17:29:19 UTC
That’s 22 million of capacity foregone for a marketing stunt. Or they had more capacity than demand which seems odd for a product that’s allegedly in constant demand etc.

There just isn’t a sane way to look at this as “investment”

alt227 · 2026-10-23 10:09:13 UTC
So all those hundreds of billions of dollars investors ploughed into OpenAI was just a gift was it? No expectation of a return of any kind? What if that investment money was originally borrowed by the investors?
nl · 2026-10-23 12:29:27 UTC
If the money was borrowed it would have to be paid at an agreed rate.

Because it's an investment it is risk capital. They won't be happy if they don't get a return but their return is part ownership in the company, not a legal contract giving an income stream.

demibabs · 2026-10-23 16:06:32 UTC
But OpenAI won’t have to pay them back regardless of how unhappy they are, because it’s not debt.
alt227 · 2026-10-24 09:02:12 UTC
Right, but all those shareholders and investors will be putting pressure on the company make returns. Its only a matter of time before this pressure affects the boards decisions.
cortesoft · 2026-10-23 20:32:07 UTC
The difference between investment and debt is that debt has a senior claim and fixed returns. You can't be forced to sell from investments.
rsalus · 2026-10-22 22:22:49 UTC
they've borrowed so much they're directly competing with national governments in capital markets.
nl · 2026-10-22 22:29:58 UTC
OpenAI has hardly borrowed anything. They have a $4B revolving credit line but have hardly touched it. They haven't issued any bonds.

Investment isn't debt.

bigyabai · 2026-10-22 22:56:24 UTC
> Investment isn't debt.

...yet.

nojvek · 2026-10-23 00:32:54 UTC
SoftBank is very leveraged with …… debt.

One of the biggest AI investors.

bigyabai · 2026-10-23 02:29:54 UTC
With investors like Softbank, who needs competition?
jacquesm · 2026-10-23 13:11:28 UTC
SoftBank has a terrible track record with respect to the success rate of their investments.
mbesto · 2026-10-23 13:53:42 UTC
This is objectively not true. Alibaba, DoorDash, ARM, Slack, etc. were all SoftBank deals. Alibaba alone is considered one of the highest ROI's in the history of investing.

Does SoftBank have some absolute blunders on large bets? Totally. Do they make some super weird billion dollar bets? Absolutely. Can you scrutinize them for making some terribly and laughably large bets go to complete zero returns? Sure. But this would be like saying Michael Jordan had a "bad track record" for scoring points because he had games playing for the Wizards where he had like 5 or 10 pts in a game.

jacquesm · 2026-10-23 14:26:38 UTC
Michael Jordan has skill.

When you can throw billions around for investments then on balance you will make a lot of money because you can take a lot of risk. But it does not say anything about any particular investment and if you look at the ratio of good bets to bad bets then SoftBank is terrible. That does not mean they won't make money or that they won't be able to keep doing this. Capital - especially at this level - begets more capital.

mbesto · 2026-10-23 14:52:52 UTC
> When you can throw billions around for investments then on balance you will make a lot of money because you can take a lot of risk.

How does this explain a $20M bet on Alibaba that netted $60B?

> if you look at the ratio of good bets to bad bets then SoftBank is terrible.

So does a16z, Sequioa, etc...

This is venture investing 101 - they have power law returns. Don't let your survivorship bias cloud your vision.

bigyabai · 2026-10-23 17:23:37 UTC
> How does this explain a $20M bet on Alibaba that netted $60B?

It's a 26-year-old investment. The advisors who suggested it are long gone from SoftBank, and the stake in Alibaba was sold to provide liquidity for bagholder investments like WeWork.

SoftBank was lucky, and now their luck is gone. Son had an investment in Nvidia that would have been worth $100+ billion, but sold it in 2019 for only $3.6 billion. Uber is struggling, Arm is a laughingstock of a business, their stake in OpenAI is comically overleveraged, and Softbank Vision Fund is one of the most heavily ridiculed and mocked international VC funds anywhere in the world.

We have to move past a decades-old bet, SoftBank's current state is not reminiscent of their prior investments.

mbesto · 2026-10-23 23:29:28 UTC
> The advisors who suggested it are long gone from SoftBank

You mean Masayoshi Son, the founder and CEO of SoftBank? lol wut.

https://economictimes.indiatimes.com/news/international/us/s...

> Softbank Vision Fund is one of the most heavily ridiculed and mocked international VC funds anywhere in the world.

Y'all need to stop reading TechCrunch headlines.

CoolestBeans · 2026-10-23 02:02:49 UTC
The rates environment directly dictates what capital is available to OpenAI and at what terms. When potential investors can get x% virtually guaranteed, then they are less willing to give cash for equity to OpenAI.
MisterMunchkin · 2026-10-23 09:08:47 UTC
They owe people hundreds of billions, possibly even over a trillion. They've just been very clever in how they've structured it, so on paper they have low debt.
Tanjreeve · 2026-10-23 09:24:07 UTC
I think there’s some crossed wires here with the wider data centre build outs. OpenAI have their own flavours of sketchy behaviour but I’m not aware of them solely being on the hook for those amounts short of some weird accounting of Microsoft cloud costs onto them or something.
estearum · 2026-10-23 09:59:07 UTC
Don’t they have a fully committed preorder for like $500 billion in compute from Oracle starting in 2028? And Oracle is funding that buildout with junk debt?
chiph · 2026-10-23 11:38:37 UTC
Oracle is the one with the debt. OpenAI has an order/contract (promise) to someone else.

Presumably there are penalties if OpenAI were to cancel that order (I am confident that Oracle's army of lawyers made sure to include that). That's the unmovable rock on OpenAI's books, not the data center.

fn-mote · 2026-10-23 11:38:45 UTC
> junk debt

Not a useful term, here.

AIUI, the building is funded by making the people who order it part owners in the new data center company. Not sure and I don’t care enough to find out; clarification welcome.

nl · 2026-10-23 12:30:54 UTC
"On paper low debt" actually means.... low debt.
s1artibartfast · 2026-10-24 14:56:24 UTC
Source?
rsalus · 2026-10-23 18:26:25 UTC
but the investment is increasingly _fueled_ by debt, regardless if OpenAI is the direct borrower. just look at the bond market. you think we'd be seeing these rates if corporate bonds weren't directly competing with government-issued bonds?
Tanjreeve · 2026-10-23 09:21:31 UTC
That’s mostly not the Frontier Labs. They’re definitely creating a lot of the demand but the people taking out those loans are Neoclouds and Big Tech (hence why Facebook + Google et al suddenly all have terrible cash flows after years of having more money than can be spent).

AnthropenAI are the ones driving a lot of that infrastructure spending when they’re such big consumers of compute but they’re not the ones feeling the brunt of the infra spending. Although those costs will bubble up to them indirectly eventually.

aenis · 2026-10-23 10:17:30 UTC
Indirectly? They have contracted the capacity with the likes of Oracle, this is not 'debt' in accounting sense, but it is a financial commitment that will require either taking on debt, or getting more investors.
mike_hearn · 2026-10-23 14:24:14 UTC
But those clouds are taking out debts because they have 'hard' spending commitments from OpenAI and Anthropic, which start the day the clusters are energized (supposedly).

So in effect the debt is backed by OpenAI/Ant's future revenue stream.

rayiner · 2026-10-22 22:34:22 UTC
The 10s were totally fake due to ZIRP.
fennecbutt · 2026-10-22 23:33:20 UTC
3 is biggest point imo.

Openai haven't yet amortised their current investments into the space and nor have they stopped making new ones.

I'm sure they'd be totally capable of bringing 1k new biz online but that's even more debt, and even more uncertainty.

discordance · 2026-10-23 10:06:25 UTC
To make point 3 happen fast, their army of Forward Deployed Engineers roam inside existing companies and build for the companies using the companies subscriptions.
le-mark · 2026-10-23 11:29:52 UTC
Is this a thing? Where can we learn more?
fn-mote · 2026-10-23 11:36:20 UTC
I believe the point is that every software engineer using AI is one of those “Forward Deployed Engineers”.

Although the point would be equally valid if they were OpenAI consultants. (Imagine paying twice for the help: once for the consultant and once for the tokens.)

saidnooneever · 2026-10-23 12:57:33 UTC
Forward deployed engineers is a role at these companies actually openAI and misanthropic. to fix the shit their products cause at their clients.
discordance · 2026-10-25 08:43:12 UTC
Google, Microsoft, Amazon, Palantir and others have had FDE roles for years as well. G/M/A called them something else (customer engineering, solutions engineering, frontier engineering etc etc) but have recently realigned and started calling them FDE too
dgellow · 2026-10-23 13:38:09 UTC
Yes it is a thing. You can read about it in their job portal or when you’re going through the interview process. It’s an actual role
saidnooneever · 2026-10-23 12:56:45 UTC
this point is not bad. i imagine this is the most viable option for them since those engineers build experience and knowledge. but they only build softwates.
lconnell962 · 2026-10-23 07:56:38 UTC
Some variation(s) of 5 is carrying a lot of weight. Need a person with an Idea. Need someone to refine their idea. Need someone to spend the time filtering through the slop to find the good bits. Much better to sell people on the idea of their dream being created while you sell them tokens to do that.

That all said, A person trusting the big AI companies with their golden goose idea seed leaves a lot of concerning openings down the road if that idea gets "leaked" out to others. Similar concern of mine with if the LLM outputs that made your idea happen to be reused by the big company if someone else asks similar enough questions or otherwise coaxes the AI to reveal what it did for you.

All this AI generation is gonna be a lead to a wild time for IP law.

le-mark · 2026-10-23 11:38:12 UTC
This framing is a bit off; or from an entrepreneurial perspective which isn’t applicable to the automation of the overall economy. How economists model automation is task replacement. Work consists of tasks some core some ancillary. Ai is clearly more suited to text and command line tools making coding an ideal task for ai. Other text oriented tasks follow; math, law, etc. implementing systems to move tasks toward ai and eventually robots will take time. Similar to how it took time to build out roads and gas stations and cars to utilize oil and gasoline.
harvey9 · 2026-10-23 11:58:24 UTC
I think it was from an entrepreneur perspective on purpose. Can something almost entirely built on AI compete with a human business? AI isn't going to do car repairs but it might handle the things you listed.
physicsguy · 2026-10-23 11:57:23 UTC
On 1) though, they're an inch deep and a mile wide.
dh2022 · 2026-10-23 13:05:12 UTC
Well, when they solve all these unsolved math problems they are not 1 inch deep in math....
jimbokun · 2026-10-23 19:10:01 UTC
Wouldn't you start that way, too?
jollyllama · 2026-10-23 12:58:28 UTC
> Their runway is much shorter than you would imagine.

If they don't make it, there will be plenty of time to mine through their dataset for business ideas to sell to other people as they liquidate. Think of the Spirit Airlines dataset that was just sold.

paxy · 2026-10-22 21:32:25 UTC
Because running 1 business is easier than running 100 businesses. It takes a lot more than writing good software for a company to be successful.
devin · 2026-10-22 21:43:57 UTC
You can just restate the question then to say: If the models are so good, why can't they run a business?
paxy · 2026-10-22 21:45:08 UTC
What does "so good" mean? AI models are very good at doing [a set of things]. Autonomously running a large, complex business is not one of them.
argee · 2026-10-22 21:57:45 UTC
This is just a form of "if you're so smart, why aren't you rich?", isn't it?
ares623 · 2026-10-23 11:04:21 UTC
$2T valuation good for a start
shagie · 2026-10-23 22:17:29 UTC
Hypothetically... they write a new Salesforce for themselves.

... and then Salesforce hits them with any number of patent claims. https://insights.greyb.com/salesforce-patents/

One could argue if software patents are good or bad... they're still a fact of "those patents exist and protect functionality." If you're trying to copy the functionality feature for feature, you're likely to step on one.

... and then Salesforce layers get to find out how deep your pockets go for willful infringement.

gofreddygo · 2026-10-22 21:41:57 UTC
reframed question - if their shovels are so good why dont they dig gold and sell gold themselves.
stingraycharles · 2026-10-22 21:44:44 UTC
I thought NVidia was the one selling shovels here, not OpenAI.
besterman23 · 2026-10-22 21:51:28 UTC
This fits, if NVidia fully believed in the LLMs/AGI future, why would they waste their super valuable GPUs by selling them? Why not just make your own LLM with the advantage of being one of the few major compute providers?
tayo42 · 2026-10-22 22:31:14 UTC
There's some kind of skill needed in an organization to make those llms. Openai and anthropic were able too. The other llm creators, not really. There's no guarantee that Nvidia would be another leader and not end up like meta or xai's attempt
besterman23 · 2026-10-22 23:54:24 UTC
Deepseek claims to be making $38/gpu/hr on deepseek 4.1 flash, and I would say that’s probably marginally close to the frontier, so they don’t have to be as good as OpenAI/Anthropic. Even at half that revenue, NVidia makes back the cost of a b200 cluster in roughly half a year. (19*8*24*5*52 = 948,480)

It’s estimated NVidia sold 4.5-5.2 million gpus in 2025 with total revenue numbers at about $130b.

With this terrible math in mind, they could produce half of that and make substantially more money, basically an infinite money glitch.

antonvs · 2026-10-23 16:52:42 UTC
That Deepseek number doesn’t account for any costs, though. That’s the biggest barrier to the infinite money glitch - it relies on zero cost LLM creation and operation.
besterman23 · 2026-10-23 18:48:13 UTC
Sure, but the dumb math winds up around $70b more a year in revenue per year with half their gpu output. Like it is actually kind of an absurd number if it’s true. They’re leaving essentially $30-40k on the board with each gpu they sell.

Unless it costs more than that figure to make a near frontier model and serve it, I can’t see how it wouldn’t be a slam dunk after a two or three year period.

They would even have extensive leg up in providing the most efficient inference on their own hardware.

This is all sort of in jest, but my point is, if the gold is real and all it takes is the shovels and money to hire people to use them, then it’s a big question as to why the shovel maker isn’t capitalizing.

stingraycharles · 2026-10-22 23:01:26 UTC
Yeah, but I also don't think it's that deep. E.g., by the same line of thinking, TSMC should be doing what Nvidia / Apple / AMD are doing, and ASML what TSMC is doing.

NVidia is good at making the shovels, and sticks to that.

besterman23 · 2026-10-22 23:12:12 UTC
It’s not, but for fun I think that depends on if you see the models as just another technology or as a “country of geniuses in a datacenter”. The former means NVidia believes LLMs are fundamentally limited, and if that’s the case OpenAi and Anthropic are basically screwed as their core products become commodities.
imtringued · 2026-10-23 07:35:16 UTC
Nvidia already does that, their models just aren't competitive.

Google is doing it successfully to the point where they only let you rent their shovels and never let you buy them.

besterman23 · 2026-10-23 13:41:11 UTC
What’s interesting about Google is, they don’t seem to care to be the best LLM either, and merely maintain comparability to the leading LLMs as they see fit. I think they realize their best position is to serve an LLM as a complement to their search function, and if people want a more LLM heavy experience they can have that as an alternative.
nemo44x · 2026-10-23 10:43:52 UTC
It’s shovels all the way down. Nvidea is selling shovels to frontier model labs who are selling shovels to AI companies who are selling shovels to actual businesses who have nicer power point presentations, a lot more dashboards, and some inference driven workflows.
magarnicle · 2026-10-22 22:25:02 UTC
Gold is much more fungible than a business. 100 different businesses are much more unique than 100 different gold nuggets.

The counter-argument is that the models might make business ideas just as fungible as anything else.

altcognito · 2026-10-22 21:53:05 UTC
There was/is a youtube commericial I think that gave away the game to some extent with regards to this. It was selling some platform to create apps. Everybody in the office rejoicing because they were all creating apps. Inevitably, like three people in the office make the same app.

I've experienced the same thing in real life a couple of times over.

I think Einstein's quote "A new type of thinking is essential if mankind is to survive and move toward higher levels." is apt. Apps will solve a bunch of problems, but if anyone can create those apps, there will be no market for them. I don't have the answers, but long term, it probably doesn't lie in selling apps. We've only just started.

At my regular job, we're just catching up on all the internal work we had. I think there is a real crunch in trying to figure out how to build moats and things that are hard to replicate that are sellable.

Maybe it will be the physical. Probably most of the moat will be made up of network effects and capital intensive processes. If I had the answer I'd probably be working on it right now.

TheOtherHobbes · 2026-10-23 10:11:16 UTC
It's common knowledge that ideas are worthless and only execution matters.

That was somewhat true when execution was time-consuming and expensive.

But original ideas are very far from worthless. They're very rare, because understanding domains and relationships at a deep level is a rare skill.

Meanwhile AI makes execution much cheaper and easier than it used to be.

dude250711 · 2026-10-22 21:56:08 UTC
Why don't they simply run a quantitative hedge fund on the side?
ex-aws-dude · 2026-10-22 22:26:25 UTC
I mean it sounds stupid but I think its a fair question if you can spend 15 million and solve a millennium prize problem, what happens if you take the same resources and just aim the cannon at making money?