I like Gaben's take on going public. This is a clip from a longer talk he gave which I think is really insightful into many aspects of the economics of software and company culture.
Maybe this is a dumb take but I don't think they'll ever go public. Their company is so volatile and unsustainable in the long-term that I don't think it makes sense to go public at all.
It really doesn't matter. They're doing secondary offerings for employees and individual holders, and they'll have no issue allowing private transactions for larger holders.
The general wealth distribution has shifted to the point that they do not need access to public funds, and frankly, if they can't find private funds for their needs, it is a huge red flag that they would just be dumping on the public.
The problem with secondary offerings is that it means that someone in the private markets winds up holding the bag. It is in the best interests of insiders to have the public holding the bag if and when things go south. Even if you don't believe it will ever go south, the profits OAI would need to generate to justify the investment the private markets have flooded into OAI are absolutely gargantuan, and they are generally not built to sit around for multiple years collecting distributions. They need to return money to their LPs, and soon.
In its current state the economics of the company make little sense to me. The astronomical costs to execute a prompt versus the relatively tiny price tag to the customer smells like an Enron scandal to me except everyone knows it and we’ve accepted it. Wall street is less forgiving.
Isn’t one of the reasons to go public to raise capital? They seemed to be doing that just fine without the weight of the open market with extremely profitable companies like Nvidia funneling billions of dollars in.
I have not gotten good numbers on the real inference costs, its kind of annoying. Most comparisons are with the API costs, where we have no idea how profitable it is.
I was just thinking of this today. AI is pretty much precisely a Theranos style grift, but unlike Theranos, who were shooting for something outright impossible, Dario and Sam may be running the biggest "fake it till you make it" success story of all time. Because like Professor Harold Hill they came through in the clutch at the last possible moment, and produced a band that could kinda play music, enough to win enough faith and goodwill to fund the next round. That kind of good fortune is going to be worth untold billions if not trillions, and it's gonna make a lot of programmers butthurt because their hopes of getting in on the ground floor and being a "founding engineer" in the next Silicon Valley unicorn are dashed forever, because the Valley doesn't need them anymore. Just a business bro and enough compute to generate the operations for the business.
This gives off major "we don’t trust our own product" energy. Actually, they tell exactly this. Matrix vibes, anyone?
Also, unpopular opinion: The 4th movie isn’t as bad as people say.
Dumb question (I should just sit down and watch rest of the movies, I've only seen the first one): can you explain the "matrix vibes" you're referencing. Spoilers are fine.
I would suggest watching the Animatrix - particularly The Second Renaissance (part 1 & 2) which tells the story of how humanity ended up at war with the machines. It's only about 20 minutes total, but it's really well done.
I like Gaben's take on going public. This is a clip from a longer talk he gave which I think is really insightful into many aspects of the economics of software and company culture.
https://www.youtube.com/watch?v=QvS-IwYFCP4
However bad anthropic’s financials look I’m sure OpenAI’s look even worse
Time for Dario to walk the walk
Almost: https://www.youtube.com/watch?v=c5sdWOwH4rg (great track)
Maybe this is a dumb take but I don't think they'll ever go public. Their company is so volatile and unsustainable in the long-term that I don't think it makes sense to go public at all.
Their company is so volatile and unsustainable in the long-term that it makes sense to go public (for the current owners)
Yes, Sam definitely doesn’t want to be holding this bag.
It really doesn't matter. They're doing secondary offerings for employees and individual holders, and they'll have no issue allowing private transactions for larger holders.
The general wealth distribution has shifted to the point that they do not need access to public funds, and frankly, if they can't find private funds for their needs, it is a huge red flag that they would just be dumping on the public.
The problem with secondary offerings is that it means that someone in the private markets winds up holding the bag. It is in the best interests of insiders to have the public holding the bag if and when things go south. Even if you don't believe it will ever go south, the profits OAI would need to generate to justify the investment the private markets have flooded into OAI are absolutely gargantuan, and they are generally not built to sit around for multiple years collecting distributions. They need to return money to their LPs, and soon.
> it is a huge red flag that they would just be dumping on the public
unless the public is clueless
Only if they can find a way to dress up their financials for the IPO filing. They don't want to get WeWorked.
In its current state the economics of the company make little sense to me. The astronomical costs to execute a prompt versus the relatively tiny price tag to the customer smells like an Enron scandal to me except everyone knows it and we’ve accepted it. Wall street is less forgiving.
Isn’t one of the reasons to go public to raise capital? They seemed to be doing that just fine without the weight of the open market with extremely profitable companies like Nvidia funneling billions of dollars in.
I have not gotten good numbers on the real inference costs, its kind of annoying. Most comparisons are with the API costs, where we have no idea how profitable it is.
> Wall street is less forgiving.
Have you heard of $TSLA before?
Tesla generally makes enough money to cover their costs though
> Wall street is less forgiving.
We've seen multiple times how "Wall street" is an exit for insiders, with retail investors left holding the bag.
I don't get it. Isn't every IPO a potential exit for investors?
I was just thinking of this today. AI is pretty much precisely a Theranos style grift, but unlike Theranos, who were shooting for something outright impossible, Dario and Sam may be running the biggest "fake it till you make it" success story of all time. Because like Professor Harold Hill they came through in the clutch at the last possible moment, and produced a band that could kinda play music, enough to win enough faith and goodwill to fund the next round. That kind of good fortune is going to be worth untold billions if not trillions, and it's gonna make a lot of programmers butthurt because their hopes of getting in on the ground floor and being a "founding engineer" in the next Silicon Valley unicorn are dashed forever, because the Valley doesn't need them anymore. Just a business bro and enough compute to generate the operations for the business.
I mean, this seems fairly clear.
Either OpenAI fails, and goes nowhere.
Or it succeeds, in which case IPOing will be a quaint aspect of history.
People really aren't following through on what it means for any of these companies to succeed.
Or the ipo happens before hand and pension funds and passive trackers transfer to the insiders.
the only way they never go public is if they die quickly
edit: which I doubt btw. investors are going to want to dump the bags very soon
This gives off major "we don’t trust our own product" energy. Actually, they tell exactly this. Matrix vibes, anyone? Also, unpopular opinion: The 4th movie isn’t as bad as people say.
I didnt even know there was a 4th movie
Dumb question (I should just sit down and watch rest of the movies, I've only seen the first one): can you explain the "matrix vibes" you're referencing. Spoilers are fine.
I would suggest watching the Animatrix - particularly The Second Renaissance (part 1 & 2) which tells the story of how humanity ended up at war with the machines. It's only about 20 minutes total, but it's really well done.