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OpenAI’s promise to stay in California helped clear the path for its IPO
301–310 of 359 posts
Re: OpenAI’s promise to stay in California helped clear the path for its IPO
#302IPO is to leave someone holding the bag, right? The narrative has really changed from AGI, the most consequential technology, blabla. If I had that I would keep it private. If I wanted to cash out, I’d do an IPO. Is there a narrative that doesn’t make it seem like pump and dump?
They have 800M weekly active users that have yet to be monetized but enormous capital costs. It makes sense they'd be looking to raise large amounts of money in an IPO.
A capital investment is predicated on there being future profits. I don't understand why they can't be profitable already. If 800M AU is not a critical mass for flipping on the revenue switch, I can't imagine what is.
So what stops them from monetizing those users today? Why would it be any different in the future if they can't?
I say further limit the free tier and more aggressively push those free users to a paid plan. Raise the prices for Business users and API access. An IPO isn't going to raise the trillion they need to keep running off capital.
Once OpenAI reaches the eventual pricing needed to break even, I suspect we'll see that it no longer makes sense for many of their customers to replace humans with AI after all. As it stands now, their investors are essentially paying OpenAI to put employees of other businesses out of jobs by masking the true costs. The sooner they can reach the sustainable pricing phase the better.
Re: OpenAI’s promise to stay in California helped clear the path for its IPO
#303Earlier quoted context omitted.
You link to a skadden doc, not an SEC rule, and in that doc the first words are: "Independence is neither a fixed condition nor a universal status for all purposes. " and goes on to talk about how complicated it is to even define and how it depends on who is defining it. Your document makes my exact point, not yours. You are out of your depth.
> Independence is neither a fixed condition nor a universal status for all purposes This is true of all law. That doesn’t mean “people aren't even on the same page as to what” it means. > Your document makes my exact point, not yours. You are out of your depth It doesn't and probably not. How many boards have you been on? Public companies? Non-profit? Have you litigated a shareholder lawsuit under Delaware law?
Go show this discussion to all the boards you apparently sit on.
Re: OpenAI’s promise to stay in California helped clear the path for its IPO
#304Earlier quoted context omitted.
I don't want to downplay the network effects here, but it's in CA entirely by coincidence. SV is in CA because William Shockley's family is there, which is why he founded Shockley Semiconductor there. It could have been somewhere else. The 2nd largest tech hub is in Seattle. It's there because that's were Bill Gates is from. Is SF the best place to start a startup if you want in office talent in 2025. 100% yes, but t…
It goes back way way further than that. The special mix of government funded technology, ruthless entrepreneurship, and social engineering predates Shockley by almost 100 years. Start by figuring out who Leland Stanford is and how he got rich. Read the book ‘Palo Alto’ if you’re looking for a good starting point.
Yep, I would highly recommend reading the Secret History of Silicon Valley for those that are interested: https://steveblank.com/secret-history/
Re: OpenAI’s promise to stay in California helped clear the path for its IPO
#305Earlier quoted context omitted.
They are chronically online and reading uninformed headlines by fellow youth. Combined with a feeling that they don't like this wave of GenAI, you get a lot of uninformed hate that's deeply felt, and probably reasonably felt. But also totally uninformed.
If only everyone was as enlightened as you are.
I at least like to be informed - I sense you disagree with my hot take.. Any concrete thoughts other than performative eye rolling?
Re: OpenAI’s promise to stay in California helped clear the path for its IPO
#306Prediction for the future: OpenAI IPO's lots of money changes hands, it chugs along for a while, hits a hard spot and then is taken private for pennies on the dollar by Microsoft.
Could you elaborate? Not looking for a proof, just want to understand your train of thought. Always liked your commentary. Thanks!
An IPO is traditionally thought of as a way to raise capital in amounts that are not available privately, but more recently IPOs are just a way to transfer vast amounts of wealth from speculating retail and institutional investors to stakeholders. The IPO itself is the least interesting thing: if Microsoft wanted they could avoid the IPO and instead offer to buy the shares beforehand.
If the financial future of OpenAI is not as rosy as they say it is then there is a fair chance that post IPO the stock will not rise. There are plenty of signs that this is the case, including the 'erotic' version of ChatGPT slated for release in December, the strong push to monetize even the most inane interactions and the mention of advertising as a possible source of income. All of those combined tell me that OpenAI is seriously worried about their bottom line.
But Microsoft already has a bottom line and AI is the one way in which they could put one over on Google, which they've been dying to do for many years.
So the logical progression to me seems to be:
- do the IPO, everybody associated with OpenAI will be filthy rich (including MS)
- attempt to polish up the financials
- if that fails activate plan B, have Microsoft make an offer to take OpenAI private again
The hype around this IPO increases the chance the stock will drop post IPO.
Re: OpenAI’s promise to stay in California helped clear the path for its IPO
#307IPO is to leave someone holding the bag, right? The narrative has really changed from AGI, the most consequential technology, blabla. If I had that I would keep it private. If I wanted to cash out, I’d do an IPO. Is there a narrative that doesn’t make it seem like pump and dump?
They have 800M weekly active users that have yet to be monetized but enormous capital costs. It makes sense they'd be looking to raise large amounts of money in an IPO.
800m users, 25m paying subscribers
LLMs have been commodified... Why would I pay for chatgpt when I can rotate free accounts on all providers and essentially never run out of tokens?
Re: OpenAI’s promise to stay in California helped clear the path for its IPO
#308Earlier quoted context omitted.
How many of these users will be able to be monitized is an unanswered question as of yet however. API usage on the other hand has a clear path to monetization and as of right now Anthropic is looking a lot better than OpenAI there.
Everyone. People are becoming dependent on chatgpt. They literally cannot function professionally or even socially without it. They will pay their last 20-30 dollars if needed. It's literally like a drug especially when it's asking you if you want to followup/continue.
How do you explain that not even 5% of users are on paid subscriptions?
Re: OpenAI’s promise to stay in California helped clear the path for its IPO
#309Earlier quoted context omitted.
They're concentrated there because they've been asked to concentrate there. That can change on a dime. It's not like data centers are mainly in SF.
Anecdotal evidence: I moved to CA twice as an engineer. Once to get my masters after college. Stayed for 13 years. Left during COVID. Second time to raise kids. Our reasons include weather, intellectual atmosphere, safety (in many regards), schools, and job opportunities. The geo area sandwiched between Berkeley and Stanford is only rivaled by Boston. You think Stanford and Berkeley are in the Bay because they’re tol…
How many other places, inside and outside the U.S., have you lived?
Re: OpenAI’s promise to stay in California helped clear the path for its IPO
#310Interesting - this reminds me a lot of the story with Cisco: for decades they remained a California C-Corp while many other companies reincorporated in Delaware. I once heard a lawyer say “all my clients are Delaware C-Corps except Cisco, and their reason is political.” Eventually Cisco did indeed buckle in 2021 and reincorporate in Delaware . . .
IIRC Apple also isn't a Delaware C-Corp.