If they can’t make it a profitable business at this scale, means they’re asking for $40B to keep subsidizing the appearance of a successful company.
Like if Uber asked for $40B to keep selling rides for less than they pay the driver.
this post was submitted on 25 Jul 2025
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I legitimately don't understand money at this scale. Especially not in this context particularly, the context being "rich men investing in parlour-trick technology that most sane people recognise as off-putting and largely useless and yet somehow, presumably, keeps giving them a return on their investment".
Where does the return come from? Where does the money go? Who has this much money? Who needs more when they have so much? Why aren't they just enjoying a thoroughly lavish midlife crisis instead?? Haven't they got hair plugs to pay for?? Why can't they invest in something cool, if they simply must invest?? Were the men who are investing in this nonsense ever children with human hearts and heads full of dreams? Do they not have passions that they'd like to share with the world? Are they simply joyless bean-counters that continue to live day after day just for the sake of knowing that they're gaining more uncountable digital money?
Sorry, I think I got off-track there. This whole thing is distasteful.
Bunch of rich men bought a parlor trick.
For them to make money, either the trick has to start paying off, or they need to convince more rich men to buy in at an even higher price, so they can say the investment has grown.
This is like Dutch tulip dealers hyping up their next auction.
Ah! I forgot about the bigger fool of it all, true. I guess it's all just bluster and marketing then. God, what a nightmare.
The return comes from more future promises filled with ever increasing hot air. OpenAI is especially bad for this — In 2024, they spend $9 billion to make $5 billion. They're losing money each year, but they drum up venture capital investment by saying "invest more money because some day we'll be profitable". Then they build larger, more complex GPT models to continue fuelling the hype machine, even though those models cost even more to run. But as long as OpenAI and the like can sustain the hype machine, venture capital will keep pumping money in. They have to, because they've got too much money in the system already, and when the bubble pops, the hot air will escape.
If they invested into something cool or meaningful, their returns will be limited. Tech seems to be especially appealing for venture capital because it facilitates the illusion of infinite growth being possible. The super rich don't really trade in money, because they borrow against their assets. Imagine if you owned a fairly modest house that was worth 500k, but you wanted to sell it for more. If you and a bunch of other people constructed an elaborate fiction that led to your house being valued at $10 million, then you could borrow multiple millions of dollars against the inflated value of your house. Even if early investors in a bullshit project wise up and realise their mistake, they haven't necessarily lost money as long as other investors still think the bullshit is worth investing in. So the cycle of venture capital means that everyone has a vested interest in keeping the hype train going.
It's an absurd bubble, and it's going to be absolute chaos when it bursts. Ed Zitron's analysis explores it really well.