| It's only a matter of time before a movie comes out about OpenAI, hopefully as good as The Social Network was about the founders of Facebook. Perhaps the entire film could be generated with AI from OpenAI's own products. Because that's what remains special about OpenAI: although only three of its eleven founders are left after years of rolling down the street fighting, it continues to develop extraordinary products. It is as if a car keeps winning Formula 1 races while most team members at every pit stop try to rip off their own driver's helmet, remove his steering wheel and puncture his tires. |
Superman becomes Scrooge McDuck
Once upon a time, OpenAI was founded as a foundation with a noble goal: to advance humanity through artificial intelligence. Nothing is left of those altruistic values as it turns into a heavily funded, shareholder-value-driven commercial enterprise. The transition of OpenAI into a for-profit benefit corporation will reportedly earn CEO Sam Altman several billion dollars in shares in the company for the first time. It's like Superman transforming into Scrooge McDuck.
The tensions surrounding this transition apparently caused prominent executives such as Chief Technology Officer Mira Murati, Chief Research Officer Bob McGrew and VP of Post Training Barret Zoph to resign this week, raising questions about the stability of the company. Previously, I wrote about the extraordinary career of Mira Murati, originally from Albania.
Still, investors are eager to pump billions into OpenAI. The huge new round of investment, led by Thrive Capital, values the company at $150 billion. That's fifty percent more than Facebook was worth during its IPO, when it was already making a billion in profits. (I remember experienced investors talking shame about such a valuation, who must now surely grit their teeth at the fact that Meta has since become worth fifteen times as much, but let's put that aside.) Profit is a concept they will see at OpenAI in the coming years only when they enter it as a prompt in ChatGPT, but not in their accounting.
Thrive Capital is investing more than $1 billion in OpenAI's current $6.5 billion investment round and has an added benefit that other investors don't get: the ability to invest another $1 billion next year at the same valuation if the AI company meets a certain revenue target. That's a rare funding condition.
Open AI will do $12 billion revenue at a $15 billion loss?
Anonymous sources told Reuters that OpenAI revenue will rise to $11.6 billion next year, compared with an estimated $3.7 billion revenue in 2024. Losses could reach as much as $5 billion this year, depending on spending on computing power. If the operating margin does not improve very quickly, this means that, at projected 2025 revenue, OpenAI will lose over $15 billion next year.
I can't resist: $15 billion loss per year is $41 million per day, $1.7 million per hour and $476 per second. Loss.
With the new $6.5 billion in its pocket, that carries OpenAI only about six months, although its coffers will not be completely empty at this point. Shall we call it "remarkable" that a company can apparently be so promising that its market capitalization is not ten times its profits, but ten times its losses?