(In a P/E ratio, the “earnings” is profit, which in Cyc’s case is probably negative. Gwern is using a P/S ratio, price to sales where sales=revenue, since these are usually used for startups since they’re scaling and earnings are still negative. 5 seems reasonable because, while P/S can go much higher for startups rapidly scaling, Cyc doesn’t seem to be rapidly scaling.)
I thought I was being generous by applying what several articles/blog posts told me was a fairly typical multiplier for small private businesses: I can’t think offhand of an ‘AI startup’ (are you still a ‘startup’ if you are 26 years old and going nowhere fast?) I’d rather own less than a big knowledge base and inference engine dating from the ’80s. In any case, if you believe the multiplier should be much bigger than 5x, then that makes buying look all the worse.
(In a P/E ratio, the “earnings” is profit, which in Cyc’s case is probably negative. Gwern is using a P/S ratio, price to sales where sales=revenue, since these are usually used for startups since they’re scaling and earnings are still negative. 5 seems reasonable because, while P/S can go much higher for startups rapidly scaling, Cyc doesn’t seem to be rapidly scaling.)
I thought I was being generous by applying what several articles/blog posts told me was a fairly typical multiplier for small private businesses: I can’t think offhand of an ‘AI startup’ (are you still a ‘startup’ if you are 26 years old and going nowhere fast?) I’d rather own less than a big knowledge base and inference engine dating from the ’80s. In any case, if you believe the multiplier should be much bigger than 5x, then that makes buying look all the worse.