The Nkwo Day and OpenAI’s Projected $44 Billion Loss

The elders gather on Nkwo day, which is an important day of the week in that ancestral Igbo village tradition, as men take time out of work, to discuss the state of the community over palm wine. The village palm wine tapper had  brought all his brews that day, as no person sells any wine on Nkwo day. The wine served by the “Diobu” is a prepaid service for a day his kinsmen will gather without wine, but would be expected to abandon whatever they are doing, and enter bushes to look for him, as most times, palm wine tappers fall at work.

The matter to be discussed is an important one and the associated task is daunting on resources. Yes, massive communal energy required for another project. As the elder speaks, one by one, men begin to depart, leaving the village square for their homes.

One murmured “we like these projects, but we’re not ready for another, because we need time to recover…the bridge at Umundereke is still fine. Everyone should use that until after the next yam festival. Then, we will have resources to fix the broken one at Umundikaike”.

Then Ndoziobodo, the great yam farmer, raised his voice and shouted, “agwa ogbenye ihe eji abu ogaranya, ? s? ka ya buru ogbenye ya bu” [If you tell the poor what it takes to be rich, he will likely accept to stay poor]. He promised to provide all the resources to fix the broken wood bridge. “You will live long” was the chorus, as men asked for more wine, and those leaving reversed course.

Good People, read this line from LinkedIn News: ”OpenAI … the artificial intelligence company still has a long road to profitability… OpenAI projects it will not become profitable until 2029, financial documents viewed by the publication show. It also estimates that its losses could reach $14 billion in 2026 — almost triple its projected losses in 2024. The company, which is said to be exploring a public-benefit structure, expects revenue to hit $100 billion by 2029, with losses of $44 billion between 2023 and 2028.”

Do you still want to build an AI company in the image of OpenAI if within 5 years, you have to lose $44 billion?

Comment on Feed

Comment 1: While the perspective shared highlights the immense costs associated with building a large-scale AI company like OpenAI, there are other angles to consider when contemplating entering the AI space.

Yes, building an AI company to rival OpenAI might involve significant financial risk, but that doesn’t necessarily mean it’s unwise to do so. A key factor to think about is scalability. Companies like OpenAI are operating on a global scale, with monumental ambitions, cutting-edge research, and infrastructure costs that reflect their objectives. However, building an AI company doesn’t always have to follow that path. There are smaller-scale opportunities that can be just as impactful and, more importantly, sustainable.

Here are some points to consider:

(1) Niche Specialization: While OpenAI is aiming to solve a broad range of AI challenges, a smaller AI startup could focus on solving industry-specific problems. For instance, AI applied to healthcare, education, agriculture, or even logistics can be much more manageable in terms of resources.

(2) Partnerships and Open Innovation: By collaborating with universities, governments, or industry stakeholders, you can share the financial burden. Many AI projects benefit from grant funding or joint ventures.

(3) Open Source Communities: Rather than reinventing the wheel, many AI companies tap into open-source communities that provide a wealth of pre-built models and frameworks. This can significantly reduce R&D costs.

(4) Incremental Progress: You don’t need to shoot for the moon right away. AI advancements often happen in increments. By focusing on building products that solve immediate problems, you can generate early revenue streams while gradually expanding your AI capabilities.

In contrast to the “massive communal effort” mentioned in the Igbo village tradition, where the burden might seem overwhelming, starting small in the AI industry might allow you to make strategic, thoughtful investments without incurring massive losses upfront. Yes, the bridge at Umundereke is still fine—perhaps the key is ensuring the bridges you build now are sustainable before attempting to cross larger rivers.

In short, the path to building an AI company may not have to involve the kind of eye-watering losses projected for OpenAI. With the right strategy, focus, and incremental approach, you can create something valuable without having to replicate the enormous financial risks taken by larger players.

Comment 2: I feel that it’s normal to not make huge profits in the early years for such big projects/investments like OpenAI.

Amazon had similar stories. To me, what is most important is that they are able to determine appropriately at what point the break even point is and the expected rate of returns and the related profit growth rate after they break even. This they have already done according to the narration.

If they have all the accurate data in place, their continued investments in the project is deliberate as they are sure that the years of earning huge returns will come and they are willing to wait for it. The years of losses will certainly be submerged with long years of huge profits to be earned.

It is common with big and long term capital intensive projects not to make profits in the early years. That’s the reason such investors must be serious minded risk takers that demonstrates patience; especially with huge projects/investments like OpenAi.

Comment 3: Key Points:

• The Nkwo day gathering of Igbo elders over palm wine represents a traditional communal decision-making process, where important matters are discussed and resources are pooled together for critical projects.

• The story connects this to the modern challenge of building an AI company like OpenAI, which anticipates significant financial losses, but envisions long-term success.

• OpenAI expects to lose $44 billion by 2028 but aims for profitability by 2029, projecting $100 billion in revenue.

• The lesson is that large-scale projects require massive resources and patience, and decisions must be timed carefully to ensure community (or business) recovery and success.

• Ndoziobodo’s offer to fund the repair of the broken bridge mirrors the idea of someone stepping up to sustain the effort when others are hesitant, much like investors backing AI companies despite initial losses.

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