"But $100B is an insane/unprecedented/silly amount of money to still be pre-revenue, let alone profitable."
This... isn't obvious to me. Doesn't your downside DCF analysis alone prove that this isn't correct? What is the amount of capital that has gone into pre-revenue AI investment? How much went into the initial CleanTech boom? If there's a plausible, conceivable upside case (which even now it feels like there is), then is it really silly?
Not that it is necessarily a bad investment but that you need patience (relative to a lot of recent startups that have gone Seed to public so fast) and there is still so much uncertainty. Agreed, maybe that’s a good thing – maybe we should have longer investment timelines and be more tolerant of huge losses for the financial/societal benefits from world-changing outcomes.
But it may also be a bad investment (so far). I updated above, but to respond here: don’t look at my downside case, look at Waymo’s last valuation ($30B). To get to that, you might see an IRR of 11-12% - harder to justify. But maybe that was a conservative valuation and there is still a reasonably likely upside case.
Last, this is for Waymo, the leader/future winner and only ~7% of that $106B. For the industry overall (and its investors), this is likely not a big success.
"But $100B is an insane/unprecedented/silly amount of money to still be pre-revenue, let alone profitable."
This... isn't obvious to me. Doesn't your downside DCF analysis alone prove that this isn't correct? What is the amount of capital that has gone into pre-revenue AI investment? How much went into the initial CleanTech boom? If there's a plausible, conceivable upside case (which even now it feels like there is), then is it really silly?
Not that it is necessarily a bad investment but that you need patience (relative to a lot of recent startups that have gone Seed to public so fast) and there is still so much uncertainty. Agreed, maybe that’s a good thing – maybe we should have longer investment timelines and be more tolerant of huge losses for the financial/societal benefits from world-changing outcomes.
But it may also be a bad investment (so far). I updated above, but to respond here: don’t look at my downside case, look at Waymo’s last valuation ($30B). To get to that, you might see an IRR of 11-12% - harder to justify. But maybe that was a conservative valuation and there is still a reasonably likely upside case.
Last, this is for Waymo, the leader/future winner and only ~7% of that $106B. For the industry overall (and its investors), this is likely not a big success.