The depreciation schedule doesn't affect long term profitability. It just shifts the profits/loss in time. It's a tool to make it appear like you paid for something while it's generating revenue. Any company would look really profitable for a while if it chose long enough depreciation schedules (e.g. 1000 years), but that's just deferring losses until later.
No it would in fact be appropriate to match the costs of the model training (incurred over a few months) with the lifetime of its revenue. That’s not some weird shifting - it helps you understand where the business is at. In this case on a per model basis, very profitable.
> it would in fact be appropriate to match the costs of the model training with the lifetime of its revenue
You're right. But this also doesn't mean singron is wrong.
Think about their example. If the deprication is long lived then you are still paying those costs. You can't just ignore them.
The problem with your original comment is that it is too simple of a model. You also read singron's comment as a competing model instead of "your model needs to account for X".
You're right that it provides clues that the business might be more profitable in the future than current naïve analysis would suggest but you also need to be careful in how you generalize your additional information
I think we are, like you suggest, just talking past each other. Depreciation is supposed to conceptually be tied to the useful life of an asset; a 1000 year depreciation schedule might be reasonable for say a Roman bridge.
When we talk accrual basis profits we are trying as best we can to match the revenues and expenses even if they occur at different points in the useful life of the asset.
Almost zero kibitzers or journalists take this accrual mindset into account when they use the word profit - but that’s what profit is, excess revenue applied against a certain period’s fairly allocated expense.
What they generally mean is cashflow; oAI has negative cashflow and is likely to for quite a while. No argument there. I think it’s worth disambiguating these for people though because career and investment decisions in our industry depend on understanding the business mechanics as well as the financial ones. Right now financially simplistic hot takes seem to get a lot of upvotes. I worry this is harming younger engineers and founders.
