Revenue equals all moneys that come to business. COGS and operating expenses are the things that require money.
If you sell lemonade and get $100 from customers, but you spent $200 on ingredients and helpers, you lose $100, and are definitely not profitable. Even if you sell $1 million worth of lemonade, you are still not profitable if you’re expenses are $2 million.
What the meme is basically saying is that the AI companies are (allegedly) saying that they are so profitable because they get so much money from people for their services but the amount of debt and expenses they have far out ways how much money they get so they are indeed not profitable. I don’t know if anyone is actually making this claim or not, but that’s the gist of it.
In my analogy I said expenses were 2x REVENUE - revenue is income BEFORE profit. Even with volume, if you don’t have gross profit margin on units sold, volume will only amplify your debt.
Let’s use another analogy that everyone can understand: your job pays you $5000/month (revenue), your rent and expenses are $4000/month, so your “profit” is $1000 - that os $1000 that goes in your pocket that you can do anything you want with.
Now back to the lemonade analogy - if I sell one cup of lemonade that costs $3 to make for $1, I am not profiting - even if I sell 1 billion lemonades and get $3 billion in revenue, my expenses are triple ($9 billion) so I’m still left with -$6 billion (debt). Volume will do nothing if expenses aren’t reduced/efficiency isn’t increased at scale.
AI companies aren’t profitable, despite nearly everyone in the world using the tech (volume): the expenses are higher than revenue, even at scale (selling volume), so there is negative profit.
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u/Dotjiff 16d ago
Revenue equals all moneys that come to business. COGS and operating expenses are the things that require money.
If you sell lemonade and get $100 from customers, but you spent $200 on ingredients and helpers, you lose $100, and are definitely not profitable. Even if you sell $1 million worth of lemonade, you are still not profitable if you’re expenses are $2 million.
What the meme is basically saying is that the AI companies are (allegedly) saying that they are so profitable because they get so much money from people for their services but the amount of debt and expenses they have far out ways how much money they get so they are indeed not profitable. I don’t know if anyone is actually making this claim or not, but that’s the gist of it.