It is increasingly look like OpenAI, Anthropic, and SpaceX (xAI) are going to burst their own AI bubble by going public. Their businesses aren't ready for that kind of quarter-by-quarter grinding scrutiny. It is going to be bad when their lockup periods end.
Confidential submission of draft S-1 to the SEC
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Re: Confidential submission of draft S-1 to the SEC
#252Earlier quoted context omitted.
> Apple has completely dropped the ball Apple has sat out a capital-allocation shitshow. Its investors and likely customers are better off for their patience.
Jury is out on that one -- will have to see what happens in the next couple of years. I don't think you can say better off with full confidence right now. Very possible you could say that in the future..
> will have to see what happens in the next couple of years. I don't think you can say better off with full confidence right now
We can't say for confidence they'll find a niche in the AI world. But we can say they probably sat out some value-destroying capital investment. Like, I don't think Apple is going to wind up strategically worse off than Meta. But it won't have blown a metaverse on this.
Re: Confidential submission of draft S-1 to the SEC
#253Earlier quoted context omitted.
> what is driving this is the need for insiders, employees, early investors to be able to sell their stock at scale before the music stops How would you differentiate insiders needing to sell versus insiders needing to dump before a crash? I remember when Uber and Airbnb and WeWork went public in quick succession. There were similar claims. WeWork never made it public. And Uber and Airbnb's IPO investors made of fant…
> How would you differentiate insiders needing to sell versus insiders needing to dump before a crash? To answer this, just ask yourself how many of the insiders would have bought the stock at current IPO's price? Most insiders would probably never touch those stocks at this price. I know a couple people at OpenAI and Anthropic that are very clearly selling everything they can as soon as they can. This is all a caref…
Is it bad for insiders to want out? Is it bad for owners to sell when they think it is overpriced?
I think this is extremely common, if not necessary, part of a functioning market and price discovery. It happens with not just IPOs but also secondary offerings.
Some of this seems like dumb retail wanting to toughtlessly buy without consideration of risk.
Re: Confidential submission of draft S-1 to the SEC
#254What was that Warren Buffett's quote about everyone trying to leave the party seconds before midnight in a room where there are no clocks? I think it was at peak of the dot com bubble
I looked it up: The line separating investment and speculation, which is never bright and clear, becomes blurred still further when most market participants have recently enjoyed triumphs. Nothing sedates rationality like large doses of effortless money. After a heady experience of that kind, normally sensible people drift into behavior akin to that of Cinderella at the ball. They know that overstaying the festivitie…
We all want to sell the top and buy the bottom.
Re: Confidential submission of draft S-1 to the SEC
#255Companies IPOing should be forced to put up their estimated market cap as collateral in cash. Oh what is that? You don't have $1 trillion in cash to put up? Cool, you're not a $1 trillion dollar company then.
Companies always trade at a premium to book, so how would that work?
Some companies trade at a discount to book value (very normal for banks, for example, especially those from e.g. Pakistan).
Re: Confidential submission of draft S-1 to the SEC
#256What was that Warren Buffett's quote about everyone trying to leave the party seconds before midnight in a room where there are no clocks? I think it was at peak of the dot com bubble
I looked it up: The line separating investment and speculation, which is never bright and clear, becomes blurred still further when most market participants have recently enjoyed triumphs. Nothing sedates rationality like large doses of effortless money. After a heady experience of that kind, normally sensible people drift into behavior akin to that of Cinderella at the ball. They know that overstaying the festivitie…
Letter dated Feb 28th 2000, NASDAQ would hit the peak of the bubble March 10th.
Re: Confidential submission of draft S-1 to the SEC
#257Earlier quoted context omitted.
> That's nice way to say "invested in AI that turned out to be flop nobody wants to pay for so they are selling spare capacity" Both takes are true. xAI invested in capacity that was supposed to yield frontier-model-maker margins. Grok failed to generate enough interest. So now they're selling it. That's absolutely a good business, in a way that's more certain than the frontier-model one. But it's also lower margin,…
What I don't understand is how it's even a good low-margin business. Maybe I'm missing something but: Data centers (before recently) are low margin businesses because all the inputs are commodities: you buy power (joules), power (PDU), cooling hardware, physical racks, etc.. from the same vendors as everyone else. Worse, your biggest potential clients have the scale to just build it on their own and cut you out becau…
You're not wrong in the long term, either in general or for SpaceX.
In the long term, hopefully the market stabilizes, new entrants can challenge Nvidia etc. But of course maybe not!
However for SpaceX, this is a dead end move. They made a good decision on buying this compute when they did but they failed to use it to create a compelling model.
So they're selling access to recoup some of their investment (maybe a profit?). But what's the plan as these chips age out over the next three to five years? Become a compute company? They claim they want to... in space!
Regardless, they bought some valuable chips, failed to use them, but can now sell access and recoup over the next few years before they become outdated.
Re: Confidential submission of draft S-1 to the SEC
#258Re: Confidential submission of draft S-1 to the SEC
#259How much did Apple (via Google (via xAI (via SpaceX))) just crush their product? Seems an awful lot like Apple will commoditize the models that power Siri, and just “sherlocked” a trillion dollar private company.
Apple has completely dropped the ball on every single detail of AI rollout for the last 5 years - why do you think they will suddenly stop now? My prior is that the new siri stuff is just as vaporware as the previous "apple intelligence" rollout
Why would Apple even want to be a big player? They aren't major players in search or advertising, so it seems less likely to disrupt them if they sit it out. There are reasons why shareholders might want companies to stay out radically different Technologies unless they are at risk of losing their business model.
It's not an existential risk to them unless they make it one by going all in.
Re: Confidential submission of draft S-1 to the SEC
#260How much did Apple (via Google (via xAI (via SpaceX))) just crush their product? Seems an awful lot like Apple will commoditize the models that power Siri, and just “sherlocked” a trillion dollar private company.
If you think Apple just sherlocked OpenAI, you havn't been paying attention to the pivot OpenAI has been doing for the last 7 months
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