The Dots Are Here!

Travis Hoium (0:02)

The Dots Are Here and Motley Fool Hidden Gems Investing starts now.

Welcome to Motley Fool Hidden Gems Investing. I'm Travis Hoium, joined today by Rachel Warren and Lou Whiteman. Guys, Meta's Muse had the market's attention for nearly a month, but that's long enough in the world of artificial intelligence. Dots Are Here, this is a Muse-like product from OpenAI, can operate within ChetGBT. Rachel, they're all bringing out these interesting characters. They want us to be using agents all the time and interacting on an ongoing basis with Muse, with Dots. What do you think about OpenAI's play into this world?

Rachel Warren (0:45)

I think this is the continued push for durable monetization for OpenAI. There's been a lot of experimentation to see what works. I think this is the next iteration of that. Dots, there's a $200 a month plan. There's also a $500 a month tier for the really heavy corporate users.

This is not for a casual consumer use case. This is very much for digital power users, really highly technical professionals thinking, data analysts that might be running massive sets across systems, software engineers running continuous background code tests. There are applications here. So this isn't a chatbot. It's really an advanced workflow infrastructure layer. What's interesting though is I was reading that OpenAI is already cutting compute limits on the $200 tier because running the background agents is obviously wildly expensive. So that could be a bit of an issue in terms of execution. I mean, as you noted with Meta's views, it sort of held the spotlight for a few weeks. Then OpenAI has jumped in with Dots. I think one of the big takeaways for me here is we're seeing that, at least algorithmically speaking, most don't exist right now. One of these companies invents a new feature, a competitor clones or improves it within weeks. No one is sitting on the lead in terms of those types of products.

Travis Hoium (2:00)

Yeah, Lou, that seems to be a big piece here is that whatever somebody creates, no matter how awesome it is, somebody can just copy it and it only takes about 30 days.

Lou Whiteman (2:08)

Yeah, weren't we just talking about this two weeks ago when we were talking about why we shouldn't be too excited about Meta stock at this? Yeah, sure enough. Look, congratulations on the monetization strategy. At $200 a month, all they need is what? About 200 million users annually to pay for their compute spend.

I don't know what they're doing here. It feels like that maybe they were just annoyed with Meta's valuation because it doesn't feel like that there is a real chance for monetization here. There's no chance normals are going to say, let me sign up to pay $200 a month to find out if this is any good. That's just not going to happen. I mean, I guess you could give it away for free and hope people get addicted. But again, they have Muse down the street and with the compute costs, I don't know if that's a good idea. So this is neat. This is fun. This is still not answering any of the questions that we have about this company.

If it's a great proof of concept, but if it's not a revenue producer, OpenAI still got big questions. If this is an add-on to a $200 subscription plan, I've still got big questions. So I don't know what problem they're solving here other than saying, look what we can do.

Travis Hoium (3:18)

Yeah, Lou, I wanted to touch on that because that seems like the interesting thing with all of these products. And we keep coming back to this over and over again.

This is amazing. I think it's great that we can do all of these things. I've found great use cases in Muse. They're not massive use cases, but just small improvements to my life. And yet I'm not going to pay for them. It's great that Muse is free.

Is this the fundamental problem with these companies is people are getting some use out of it. But when you say, hey, you got to pony up even $20 a month, most people aren't paying that.

Lou Whiteman (3:48)

I don't want to say it's, I want to be careful of my words here because we're early days and there's plenty of paths that we can take to get there. But we've said it before, not with OpenAI and Anthropic because they don't have a history, but all of these companies basically from the valley, these guys are used to double-digit return on invested capital numbers. If you look at the amount of capital that they are spending on this, there's massive amounts of revenue. There was one, was it Apollo, who said we need a couple trillion in revenue in the years to come, just to justify all of what's going on here.