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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

#221

Post by bryanlarsen »

changing1999 wrote: post #123
bryanlarsen wrote: post #63

Earlier quoted context omitted.

If OpenAI hits $100B in revenue, $15B in profit with a 50% CAGR they will likely be worth even more than Tesla was at those numbers. Tesla has really dropped off on its 50% CAGR number so now it is worth half that.

It took around 20 years for Amazon to get to $15B profit, and over 10 years for Meta/FB. Both had very clear paths to profit: sales and ads. OpenAI did not yet demonstrate how they will be able to consistently monetize their models. And if you consider how quickly similar quality free models are released today, it's definitely raising questions.

Yah, I need a "big if" interjection in my comment or something. I highly doubt they'll get there. But like Tesla & Meta, if they did get there they'd be a trillion dollar company.

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

#222

Post by paxys »

signatoremo wrote: post #155
paxys wrote: post #122

Earlier quoted context omitted.

> The have a product people love and practically incalculable upside potential I'm willing to bet that if you swapped out GPT with Claude, Gemini or Llama under the hood 95% of their users wouldn't even notice. LLMs are fast becoming a commodity. The differentiating factor is simply how many latest NVIDIA GPUs the company owns. And even otherwise, people loving a product isn't what makes a company successful. People…

> I'm willing to bet that if you swapped out GPT with Claude, Gemini or Llama under the hood 95% of their users wouldn't even notice You can say exactly the same about Google and Bing (or any other search engines), yet Google search is still dominant. Execution, market perception, brand recognition, momentum are also important factors, not to mention talent and funding. Not everyone who wants to invest, can invest in…

Yeah because no company that attracted funding from lots of top VCs has ever failed...

How is A16Z's massive crypto fund doing again? And what about Softbank's other big bets?

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

#224

Post by sally_glance »

seanhunter wrote: post #130
bpodgursky wrote: post #126

Earlier quoted context omitted.

It actually represents the scenario where they invent a revolutionary superintelligence that doesn't kill the VCs investing in the firm, and allows them enough control to take profit. In the top range ASI capacity outcomes, the sand god does not return trillions to the VCs. This actually represents only the narrow "aligned" range of AI outcomes, so it makes sense it's a small one.

Judging by the ones I have met, the VCs probably believe that any kind of superintelligence would by definition be something that would like them and be like them. If it wasn’t on their side they would take it as incontrovertible proof that it wasn’t a superintelligence.

Thanks, made me giggle because it rings true! But what if... it's training actually caused it to acquire similar motivation?

(Don't want to think about that too much but man just imagine... A superintelligence with Sam Altman mindset)

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

#225

Post by cs702 »

paxys wrote: post #100

$6.6B raise. The company loses $5B per year. So all this money literally gives them just an extra ~year and change of runway. I know the AI hype is sky high at the moment (hence the crazy valuation), but if they don't make the numbers make sense soon then I don't see things ending well for OpenAI. Another interesting part: > Under the terms of the new investment round, OpenAI has two years to transform into a for-pro…

Yeah, they're buying a bit of time.

Everyone involved is hoping OpenAI will either

a) figure out how to resolve all these issues before the clock runs out, or

b) raise more money before the clock runs out, to buy more time again.

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

#226

Post by danielmarkbruce »

s1artibartfast wrote: post #148
danielmarkbruce wrote: post #54

Earlier quoted context omitted.

This is a company at a $4 bill annual run rate. In times gone by this would be a public company already. It's just an investment in a company with almost 2000 employees, revenue, products, brand etc. It's not an early stage VC investment, they aren't looking for a 10x. The legal and compliance regime + depth of private capital + fear of reported vol in the US has made private investing the new public investing.

Expected return is set by risk and upside, not offering size. What do you think the risk of ruin is here? I think there is a substantial chance that Open AI wont exist in 5 years.

There was an implication in there on risk. If you don't believe a company doing $4 bill of revenue is significantly less risky than the average VC investment, you might be in dreamworld.

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

#227

Post by paxys »

CSMastermind wrote: post #201
paxys wrote: post #99

Earlier quoted context omitted.

Apple is an extremely conservative minded company. Making a huge gamble on an overhyped overvalued company for a chance at a 10x return isn't in their DNA.

But why wait until the 11th hour to pull out? They were on the round up until today.

I assume the valuation got too rich for their liking. $157B is even higher than what was speculated on the news in recent weeks.

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

#228

Post by tptacek »

tempusalaria wrote: post #218
tptacek wrote: post #191

Earlier quoted context omitted.

Facebook got all the way to an IPO with business fundamentals so bad that after the IPO, Paul Graham wrote a letter to all the then-current YC companies warning them that the Facebook stink was going to foul the whole VC market in the following years. Meta is now worth something like 1.4T.

Facebook grew 100% and had 45% gaap operating margins the year before their IPO. Facebooks IPO financials were among the best financials at IPO ever OpenAI has negative 130% adjusted operating margins.

I don't think OpenAI is about to IPO.

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

#229

Post by Nathanael_M »

changing1999 wrote: post #107
mattmaroon wrote: post #80

Earlier quoted context omitted.

If they accomplish AGI first, they will be the world’s most valuable company, by far. If they fall short of AGI there are still many ways a more limited but still quite useful AI might make them worth far more than Meta. I don’t know how to handicap the odds of them doing either of these at all, but they would seem to have the best chance at it of anyone right now.

Aren't they proving the opposite of your proposed alternative already? A limited AI is not making them money and since every new model becomes obsolete within a year, they can't just stop and enjoy the benefits of the current model.

It’s an arms race, then, no? Whichever company can survive the burn can sit on their LLaurels and recoup?

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

#230

Post by paulcole »

paxys wrote: post #100

$6.6B raise. The company loses $5B per year. So all this money literally gives them just an extra ~year and change of runway. I know the AI hype is sky high at the moment (hence the crazy valuation), but if they don't make the numbers make sense soon then I don't see things ending well for OpenAI. Another interesting part: > Under the terms of the new investment round, OpenAI has two years to transform into a for-pro…

All they have to do in order to make the bet pay off is create a heretofore only imagined technology that will possibly lead us into either a techno-utopia or post-apocalyptic hellscape.

I don’t see why that’s so far-fetched?

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