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> OpenAI’s business continues to surge. DealBook hears that the company’s annual recurring revenue has soared to $13 billion, up from $10 billion in June — and

by mgfist 1y ago

> OpenAI’s business continues to surge. DealBook hears that the company’s annual recurring revenue has soared to $13 billion, up from $10 billion in June — and is projected to surpass $20 billion by the end of the year. This is why. Of course $300B still implies a lot of growth, but when you're growing 100% in 6 months at $10B in ARR, you can demand a lot.

indigodaddy 1y ago
And what's the profit on the 13B?
- mgfist 1y ago
  Irrelevant at this stage.
  - KerrAvon 1y ago
    the problem with the post-dotcom market in a nutshell. everything’s a bubble. bubbles have more durability now. until they don’t.
    - mgfist 1y ago
      Sure, but this mentality always would result in missing out on the trillion dollar companies that followed these types of growth curves. Surely you must understand that prioritizing growth over profit makes economic sense in the long run for a company like OpenAI.
      - Barrin92 1y ago
        >prioritizing growth over profit makes economic sense in the long run only if you have a believable plan on how to reverse that, selling 2 dollars for 1 dollar isn't a business model and no amount of praying for the future is going to change that
        ath3nd 1y ago
        Mathematics don't matter. It's about what your guru of choice on X tells you to believe in.
        mgfist 1y ago
        People have said the same about all the big tech companies and now they all print cash and are worth trillions. Will it happen? Who knows. If investing was easy to predict we'd all be very rich ..
  - ath3nd 1y ago
    I like how you are thinking. When hype is involved, why should one bother with facts, timelines and reality. Great, stable and successful companies like Enron, Wirecard, Theranos, FTX and WeWork are prime examples of that. Note: I am not saying OpenAI is a fraud like the above, just saying that their valuation is as divorced from reality as Zuck's "Superintelligence is behind the corner" comment last week. Their models are not largely better than other competitors', they haven't cornered the market, they are burning through money with no profitability in sight, Anthropic just cut their access to Claude (not relevant, just funny). Come on, their most recent product announcements were: - an office suite: https://www.computerworld.com/article/4021949/openai-goes-for-microsofts-jugular-its-office-productivity-suite.html https://www.computerworld.com/article/4021949/openai-goes-fo.... - a restricted, less powerful (hide-the-spoilers) version called "Study Mode": https://openai.com/index/chatgpt-study-mode/ https://openai.com/index/chatgpt-study-mode/ It's just...there is nothing going on for them at the moment. The valuation is just wishful thinking, if we are looking at the facts. We live in a crazy world, all one can do is buy some popcorn and enjoy the shitshow.
pphysch 1y ago
Enron was also "growing" a lot when it was in full "paper tiger" mode.
- mgfist 1y ago
  Ok, and? Last I heard were talking about OpenAI, not Enron.
  - ath3nd 1y ago
    Surely you can spot the similarities if you try hard enough? If not, maybe we can ask ChatGPT about it (below is ChatGPT's "opinion" on the similarities between Enron and OpenAI): Structural Complexity & Opacity: - Enron was infamous for its convoluted corporate structure, which helped obscure financial realities. - OpenAI has a similarly complex setup: originally founded as a nonprofit, it now operates through a for-profit arm with a structure that some critics say lacks transparency. Investor Hype vs. Financial Fundamentals: - Enron attracted massive investment based on future projections, not present performance. Its ventures, like NewPower Co., had no clients or revenue but were valued in the billions. - OpenAI has been valued at over $300 billion despite not turning a profit and having no clear path to profitability. Critics argue this is reminiscent of Enron’s “vibes-based” valuation. Leadership & Ethical Concerns - Enron’s leadership was later revealed to have serious ethical lapses. - OpenAI has faced scrutiny over leadership turnover and internal conflicts, raising questions about governance and long-term stability. Grandiose Predictions: - Both companies have been known for bold, sweeping claims about the future. Enron promised revolutionary energy solutions; OpenAI is at the forefront of AI’s transformative potential—but some worry the hype may be outpacing reality Hope that helps :)
    - mgfist 1y ago
      I like how you clearly used AI to create this comparison. Probably used ChatGPT for it
      - ath3nd 1y ago
        > I like how you clearly used AI to create this comparison. Probably used ChatGPT for it Great catch! You should consider a career as a detective! I hope this sentence from the beginning of my post didn't make it too easy on your impressive deduction skills: "If not, maybe we can ask ChatGPT about it (below is ChatGPT's "opinion" on the similarities between Enron and OpenAI):"

by mgfist 1y ago

indigodaddy 1y ago

And what's the profit on the 13B?

mgfist 1y ago
Irrelevant at this stage.
- KerrAvon 1y ago
  the problem with the post-dotcom market in a nutshell. everything’s a bubble. bubbles have more durability now. until they don’t.
  - mgfist 1y ago
    Sure, but this mentality always would result in missing out on the trillion dollar companies that followed these types of growth curves. Surely you must understand that prioritizing growth over profit makes economic sense in the long run for a company like OpenAI.
    - Barrin92 1y ago
      >prioritizing growth over profit makes economic sense in the long run only if you have a believable plan on how to reverse that, selling 2 dollars for 1 dollar isn't a business model and no amount of praying for the future is going to change that
      - ath3nd 1y ago
        Mathematics don't matter. It's about what your guru of choice on X tells you to believe in.
      - mgfist 1y ago
        People have said the same about all the big tech companies and now they all print cash and are worth trillions. Will it happen? Who knows. If investing was easy to predict we'd all be very rich ..
- ath3nd 1y ago
  I like how you are thinking. When hype is involved, why should one bother with facts, timelines and reality. Great, stable and successful companies like Enron, Wirecard, Theranos, FTX and WeWork are prime examples of that. Note: I am not saying OpenAI is a fraud like the above, just saying that their valuation is as divorced from reality as Zuck's "Superintelligence is behind the corner" comment last week. Their models are not largely better than other competitors', they haven't cornered the market, they are burning through money with no profitability in sight, Anthropic just cut their access to Claude (not relevant, just funny). Come on, their most recent product announcements were: - an office suite: https://www.computerworld.com/article/4021949/openai-goes-for-microsofts-jugular-its-office-productivity-suite.html https://www.computerworld.com/article/4021949/openai-goes-fo.... - a restricted, less powerful (hide-the-spoilers) version called "Study Mode": https://openai.com/index/chatgpt-study-mode/ https://openai.com/index/chatgpt-study-mode/ It's just...there is nothing going on for them at the moment. The valuation is just wishful thinking, if we are looking at the facts. We live in a crazy world, all one can do is buy some popcorn and enjoy the shitshow.

pphysch 1y ago

Enron was also "growing" a lot when it was in full "paper tiger" mode.

mgfist 1y ago
Ok, and? Last I heard were talking about OpenAI, not Enron.
- ath3nd 1y ago
  Surely you can spot the similarities if you try hard enough? If not, maybe we can ask ChatGPT about it (below is ChatGPT's "opinion" on the similarities between Enron and OpenAI): Structural Complexity & Opacity: - Enron was infamous for its convoluted corporate structure, which helped obscure financial realities. - OpenAI has a similarly complex setup: originally founded as a nonprofit, it now operates through a for-profit arm with a structure that some critics say lacks transparency. Investor Hype vs. Financial Fundamentals: - Enron attracted massive investment based on future projections, not present performance. Its ventures, like NewPower Co., had no clients or revenue but were valued in the billions. - OpenAI has been valued at over $300 billion despite not turning a profit and having no clear path to profitability. Critics argue this is reminiscent of Enron’s “vibes-based” valuation. Leadership & Ethical Concerns - Enron’s leadership was later revealed to have serious ethical lapses. - OpenAI has faced scrutiny over leadership turnover and internal conflicts, raising questions about governance and long-term stability. Grandiose Predictions: - Both companies have been known for bold, sweeping claims about the future. Enron promised revolutionary energy solutions; OpenAI is at the forefront of AI’s transformative potential—but some worry the hype may be outpacing reality Hope that helps :)
  - mgfist 1y ago
    I like how you clearly used AI to create this comparison. Probably used ChatGPT for it
    - ath3nd 1y ago
      > I like how you clearly used AI to create this comparison. Probably used ChatGPT for it Great catch! You should consider a career as a detective! I hope this sentence from the beginning of my post didn't make it too easy on your impressive deduction skills: "If not, maybe we can ask ChatGPT about it (below is ChatGPT's "opinion" on the similarities between Enron and OpenAI):"