Market Mondays: Instacart IPO, OpenAI's Enterprise Plan, ESPN Seeks Distribution Partner and Much More
Aug 31, 2023
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Dre, Rodney, and Brylan discuss Instacart's IPO, OpenAI's Enterprise plan, ESPN's search for a distribution partner, and more. They also cover topics like real estate zoning changes, Microsoft's investment in OpenAI, and the valuation of Instacart. The podcast touches on the shifting distribution platforms and potential partners for ESPN, including Amazon and Google.
OpenAI's ChatGPT Enterprise offers unlimited access to GPT-4 with customization for smaller teams.
Microsoft's investment in OpenAI may be aimed at recapturing value and maintaining competitive advantage.
There is potential competition for NVIDIA in the AI chip market from emerging companies focusing on AI-specific chips.
Instacart's IPO presents growth opportunities due to the potential for increasing online grocery purchases.
Deep dives
OpenAI's GPT Models and Fine-Tuning
OpenAI has released ChatGPT Enterprise, a new offering that provides unlimited access to GPT-4 and increases the speed of the model. They also have plans to introduce customization and a self-service model for smaller teams. However, there are concerns about the lack of defensibility in OpenAI's fine-tuning capabilities and the potential for a race to zero in terms of pricing. Microsoft's $10 billion investment in OpenAI may be for future enterprise value and to keep the government off their backs regarding antitrust concerns. NVIDIA, known for its GPUs, is winning the AI chip battle for now, but there are emerging competitors focused on building chips specifically for AI.
Microsoft's Strategy and Defensibility
Microsoft's acquisition of OpenAI may be aimed at capturing enterprise value and maintaining its competitive edge. They have a history of seeking monopolistic advantages and this investment could be seen as a way to enable competition while recapturing value in the long term. Microsoft's ability to lock customers into their ecosystem and their expertise in enterprise software make them a formidable player.
The Future of Fine-Tuning and AI Chip Market
Fine-tuning models may not offer high switching costs, as the process can be replicated with other models. OpenAI's fine-tuning process relies on a CSV file with prompts and desired outcomes. The AI chip market is currently dominated by NVIDIA, but emerging companies focused on building AI-specific chips pose potential competition. NVIDIA's ability to integrate software and hardware gives them a competitive advantage, but their position may not be secure in the long run.
Instacart and the Stock Market
Instacart has filed for an IPO, and while it has been a popular service, some users have stopped using it. The future of Instacart's stock market success remains to be seen.
Instacart's Journey and Public Market Plans
Instacart, a popular grocery delivery app, recently filed to go public after 10 years of operation. The company has seen significant growth, with the gross transaction volume increasing from $5 billion in 2019 to nearly $30 billion in 2022. Instacart's revenue also rose from $1.8 billion in 2021 to $2.5 billion in 2022, while their profit reached $428 million. The company covers around 85% of the US grocery market, with partnerships established in over 80,000 stores. While there is a risk associated with reliance on three major retailers for a significant portion of their revenue, the potential for increasing online grocery purchases, which currently account for only 14% of the market, presents growth opportunities for Instacart.
ESPN's Struggles and Distribution Challenges
ESPN, owned by Disney, has been facing declining subscribers due to the shift from cable TV to streaming platforms. As a result, their ad revenues have been affected. They are currently exploring partnerships to address their distribution challenges, with discussions reportedly taking place with Amazon. It is crucial for ESPN to navigate this transition effectively to maintain relevance in the sports media landscape. The potential for exclusive deals may carry risks, as limiting distribution could hinder their reach. Therefore, exploring partnerships with multiple streaming platforms may be a more viable strategy for ESPN to ensure broader accessibility and maximize viewership.
Possible Paths for ESPN's Future
The future of ESPN depends on its ability to adapt to evolving consumer habits and leverage new distribution channels. While it faces challenges such as loss of leverage and competition from platforms like Overtime, strategic moves such as restructuring the business or potential spin-off from Disney may help redefine its position in the market. Engaging with various streaming platforms, including Amazon, Apple TV, YouTube, and others, could provide the opportunity to create wider content distribution and potentially capture new audiences. ESPN needs to focus on its viewership, analyze market dynamics, and make innovative decisions to ensure long-term relevance and financial success.
Dre (@Dreunlimited), Rodney (@Rg2official), and Brylan (@0xHimzel) discuss Instacart's S-1, ESPN's fall from grace, OpenAI's plan for enterprises, and much more.
