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OpenAI completes deal that values company at $157B

nytimes.com

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Re: OpenAI completes deal that values company at $157B

#21

Post by Workaccount2 »

cs702 wrote: post #4

Given the high risk, investors likely want a shot of earning at least a 10x return. $157 billion x 10 = $1.57 trillion, greater than META's current market capitalization. Greater returns would require even more aggressive assumptions. For example, a 30x return would require OpenAI to become the world's most valuable company by a large margin. All I can say to the investors, with the best of hopes, is: Good luck! You'…

>You'll need it!

If they can IPO, they will easily hit a $1.5T valuation. All Altman would have to do is follow what Elon did with Tesla. Lots of massive promises marinated in trending hype that tickles the hearts of dumb money. No need to deliver, just keep promising. He is already doing it.

Re: OpenAI completes deal that values company at $157B

#22

Post by cs702 »

alex_young wrote: post #11
cs702 wrote: post #4

Given the high risk, investors likely want a shot of earning at least a 10x return. $157 billion x 10 = $1.57 trillion, greater than META's current market capitalization. Greater returns would require even more aggressive assumptions. For example, a 30x return would require OpenAI to become the world's most valuable company by a large margin. All I can say to the investors, with the best of hopes, is: Good luck! You'…

Maybe they view it as at least a sure thing for a 2x return... Another issue here is that at this value level they are now required to become a public company and a direct competitor to their largest partners. It will be interesting to see how the competitive landscape changes.

My understanding is that the company is burning $0.5+ to $1+ billion each month.

I'd say that's very high risk.

Re: OpenAI completes deal that values company at $157B

#23

Post by foobarqux »

cs702 wrote: post #4

Given the high risk, investors likely want a shot of earning at least a 10x return. $157 billion x 10 = $1.57 trillion, greater than META's current market capitalization. Greater returns would require even more aggressive assumptions. For example, a 30x return would require OpenAI to become the world's most valuable company by a large margin. All I can say to the investors, with the best of hopes, is: Good luck! You'…

You need to consider time and baseline growth. Google tells me Nasdaq CAGR for the past 17 years is around 17% so that will be just under 5x over 10 years. 10x over 10 years will be about 25%. High, but not as crazy as you suggest.

Re: OpenAI completes deal that values company at $157B

#25

Post by heyitsguay »

If I were an investor, I'd be pretty concerned with such a high valuation after the o1 release. It's great, no question, but in my usage so far it's a modest step up from 4o, much smaller than the 3->4 jump. Real world exponential growth is exponential until it's logistic, and this sort of feels like entering that phase of the LLM paradigm.

Talking to friends who are very successful, knowledgeable AI researchers in industry and academia, their big takeaway from o1 is that the scaling hypothesis appears to be nearing its end, and that this is probably the motivation for trading additional training-time compute for additional inference-time compute.

So where does that leave an investor's calculus? Is there evidence OpenAI can pull another rabbit or two out of its hat and also translate that into a profitable business? Seems like a shaky bet right now.

Re: OpenAI completes deal that values company at $157B

#26

Post by Q6T46nT668w6i3m »

cubefox wrote: post #12
jjice wrote: post #9

Earlier quoted context omitted.

As a layman outsider, it doesn't seem like it. Anthropic is doing great work (I personally prefer Claude) and now there are so many quality LLMs coming out that I don't know if OpenAI is particularly special anymore. They had a lead at first, but it feels like many others are catching up. I could be _very_ wrong though.

They recently released a new model, called "o1-preview", that is significantly ahead of the competition in terms of mathematical reasoning.

On benchmarks where it’s impossible to verify whether there’s contamination?

Re: OpenAI completes deal that values company at $157B

#27

Post by m3kw9 »

cs702 wrote: post #4

Given the high risk, investors likely want a shot of earning at least a 10x return. $157 billion x 10 = $1.57 trillion, greater than META's current market capitalization. Greater returns would require even more aggressive assumptions. For example, a 30x return would require OpenAI to become the world's most valuable company by a large margin. All I can say to the investors, with the best of hopes, is: Good luck! You'…

The investor will probably have no say or be told to stfu and leave if they try to do some stuff like forming an activist group

Re: OpenAI completes deal that values company at $157B

#28

Post by tqi »

cs702 wrote: post #4

Given the high risk, investors likely want a shot of earning at least a 10x return. $157 billion x 10 = $1.57 trillion, greater than META's current market capitalization. Greater returns would require even more aggressive assumptions. For example, a 30x return would require OpenAI to become the world's most valuable company by a large margin. All I can say to the investors, with the best of hopes, is: Good luck! You'…

I think later rounds generally have lower return expectations - if you assume the stock market will return ~10%/year, you probably only need it to 2X by IPO time (depending on how long that takes) for your overall fund's IRR to beat the stock market.

Re: OpenAI completes deal that values company at $157B

#29

Post by jsheard »

cs702 wrote: post #4

Given the high risk, investors likely want a shot of earning at least a 10x return. $157 billion x 10 = $1.57 trillion, greater than META's current market capitalization. Greater returns would require even more aggressive assumptions. For example, a 30x return would require OpenAI to become the world's most valuable company by a large margin. All I can say to the investors, with the best of hopes, is: Good luck! You'…

It's fine, Sam's bulletproof plan is to build AGI (how hard could it be) and then ask the AGI how they can make a return on their investments.

https://www.threads.net/@nixcraft/post/C5vj0naNlEq

If they haven't built AGI yet that just means you should give them more billions so they can build the AGI. You wouldn't want your earlier investments to go to waste, right?

Re: OpenAI completes deal that values company at $157B

#30

Post by m3kw9 »

heyitsguay wrote: post #25

If I were an investor, I'd be pretty concerned with such a high valuation after the o1 release. It's great, no question, but in my usage so far it's a modest step up from 4o, much smaller than the 3->4 jump. Real world exponential growth is exponential until it's logistic, and this sort of feels like entering that phase of the LLM paradigm. Talking to friends who are very successful, knowledgeable AI researchers in i…

Then you alone will not invest
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