4 ms·

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

by pphysch 1y ago

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):"
      - mgfist 1y ago
        Lol ngl I somehow missed that. Still, it's pretty clear Enron and OpenAI are massively different companies. It's kinda strange that one would compare them at all. OpenAI is not even a public company. Their products have nothing alike. Their business models are nothing alike. One had literal fraud (maybe OpenAI does too but that would be speculation). Even if OpenAI dies, it's still the reason for $100s of billions in capex across the industry. It's still the reason why everyone in tech is talking and working on AI. And the product is real. You can use it. It's not a fancy demo with a mechanical turk behind the scenes.
        ath3nd 1y ago
        > Still, it's pretty clear Enron and OpenAI are massively different companies. They are. But there are enough parallels to me to be wary of them and their competitors. To me the amount of investments and hype doesn't match what's essentially a fancy autocomplete.
        mgfist 1y ago
        Well the biggest difference is most of the big foundation labs (OpenAI, Anthropic, xAI) are private companies, so it's not like you have to go out of your way to not hold any equity. This wasn't the case with Enron which was part of the SP500 and thus included in many passive funds. You could say there's spillover with Nvidia and the clouds and such, but that still makes this a different case than Enron. It could be like the dotcom bubble, but bubbles != fraud.
rvba 1y ago
Come on: openAI has a product that you can "touch" - both on your phone /home computer and at work, since their tech sits behind copilot (msft hit the jackpot with the licence). It is a virtual product yes, but come on - no vapoware. At work I see it - people want the better (and more expensive ) licences
- pphysch 1y ago
  Enron was a literal energy company, and also vaguely "the next big thing", "America's Most Innovative Company". There's a lot of parallels with how OpenAI is being hyped up and whether it actually merits a 12-13 figure valuation. See also WeWork, et al. Given what we know about the CEO, it would not come as a shock if in a couple years we learn there was some good old accounting fraud involved.
  - seanmcdirmid 1y ago
    Enron was a scam energy company pretending to be kind of a tech company, like it’s contemporary Worldcom (the scam telco pretending to be a tech company, scam companies are common in the south). Whether OpenAI is a scam or not, it’s definitely tech and nothing else.
    - msgodel 1y ago
      Enron was an energy futures brokerage/exchange that made the age old mistake of market making your own order book with unlimited margin from... yourself. Always very tempting, never a good idea. It's exactly the same thing FTX did except with energy instead of crypto. AFAIK they never misrepresented who they were, they were just very loose with their accounting. It probably started out as a small lie to themselves like those things tend to.

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):"
    - mgfist 1y ago
      Lol ngl I somehow missed that. Still, it's pretty clear Enron and OpenAI are massively different companies. It's kinda strange that one would compare them at all. OpenAI is not even a public company. Their products have nothing alike. Their business models are nothing alike. One had literal fraud (maybe OpenAI does too but that would be speculation). Even if OpenAI dies, it's still the reason for $100s of billions in capex across the industry. It's still the reason why everyone in tech is talking and working on AI. And the product is real. You can use it. It's not a fancy demo with a mechanical turk behind the scenes.
      - ath3nd 1y ago
        > Still, it's pretty clear Enron and OpenAI are massively different companies. They are. But there are enough parallels to me to be wary of them and their competitors. To me the amount of investments and hype doesn't match what's essentially a fancy autocomplete.
        mgfist 1y ago
        Well the biggest difference is most of the big foundation labs (OpenAI, Anthropic, xAI) are private companies, so it's not like you have to go out of your way to not hold any equity. This wasn't the case with Enron which was part of the SP500 and thus included in many passive funds. You could say there's spillover with Nvidia and the clouds and such, but that still makes this a different case than Enron. It could be like the dotcom bubble, but bubbles != fraud.

rvba 1y ago

Come on: openAI has a product that you can "touch" - both on your phone /home computer and at work, since their tech sits behind copilot (msft hit the jackpot with the licence). It is a virtual product yes, but come on - no vapoware. At work I see it - people want the better (and more expensive ) licences

pphysch 1y ago
Enron was a literal energy company, and also vaguely "the next big thing", "America's Most Innovative Company". There's a lot of parallels with how OpenAI is being hyped up and whether it actually merits a 12-13 figure valuation. See also WeWork, et al. Given what we know about the CEO, it would not come as a shock if in a couple years we learn there was some good old accounting fraud involved.
- seanmcdirmid 1y ago
  Enron was a scam energy company pretending to be kind of a tech company, like it’s contemporary Worldcom (the scam telco pretending to be a tech company, scam companies are common in the south). Whether OpenAI is a scam or not, it’s definitely tech and nothing else.
  - msgodel 1y ago
    Enron was an energy futures brokerage/exchange that made the age old mistake of market making your own order book with unlimited margin from... yourself. Always very tempting, never a good idea. It's exactly the same thing FTX did except with energy instead of crypto. AFAIK they never misrepresented who they were, they were just very loose with their accounting. It probably started out as a small lie to themselves like those things tend to.