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OpenAI likely missed the window to have a successful IPO. A year ago, even 6 months ago, folks would have been still hypnotized by the hype and they would have

by cmiles8 4mo ago

OpenAI likely missed the window to have a successful IPO. A year ago, even 6 months ago, folks would have been still hypnotized by the hype and they would have pulled it off. Today too many people see a burning ship of cash and no moat to justify the burn. The story just isn’t there anymore.

DoesntMatter22 4mo ago
Musk best move IMO was going public before anyone else and gobbling up those 85 billion. I'm sure anthropic will do the same, leaving OpenAI maybe holding the bag. We'll see.
- rvz 4mo ago
  Correct. We will have to see about the first quarterly report from them first.
bayarearefugee 4mo ago
> OpenAI likely missed the window to have a successful IPO. I wish I could believe this but lighting giant stacks of cash on fire is, unfortunately, no longer a disqualifying event for tulip buyers. I wouldn't bet they will have a successful IPO, but I also wouldn't bet they won't, it will be almost entirely vibes based at time of launch.
grey-area 4mo ago
SpaceX IPO shows that the mania is alive and well. The big AI IPOs this year will mark the high point in the bubble IMO, with retail FOMO ensuring that they pop like SpaceX has. After that I expect them to crater, just like all those Spacs and Blockchain startups.
- ai_slop_hater 4mo ago
  What do you mean spacex has? Did spacex stock go down?
  - grey-area 4mo ago
    Pop as in go up to an even more insane valuation initially.
raincole 4mo ago
After reading Financial Times and Ed Zitron's articles[0][1], I've reached the opposite conclusion. OpenAI's situation healthier than what the outsiders once believed: > Revenue: $13.07 billion > Cost of Revenue: $7.5 billion In other words generating tokens is actually a profitable business even for the frontier models. It's best to IPO when it's the case. [0]: https://www.ft.com/content/e15b0d7e-ff6b-4f16-ba7a-4068feddb828 https://www.ft.com/content/e15b0d7e-ff6b-4f16-ba7a-4068feddb... [1]: https://www.wheresyoured.at/exclusive-openai-financials/ https://www.wheresyoured.at/exclusive-openai-financials/
- cmiles8 4mo ago
  The problem with that calculation though is that you’re ignoring the deprecation cost of developing the models which is where much/most of the cost actually lies. Your math is saying an apartment building is profitable because rent exceeds utilities and other direct expense but ignores the mortgage. Real estate run with that math goes bankrupt quite quickly and this is essentially the same problem Open AI has.
- 4k0hz 4mo ago
  To be fair, a lot of that revenue is from subscriptions that aren't necessarily fully utilized. OpenAI said in March [0] that they have 50 million subscribers. Assuming they're all on the $8/month plan, that's $4.8 billion a year, likely at a pretty low COR. [0]: https://openai.com/index/accelerating-the-next-phase-ai/ https://openai.com/index/accelerating-the-next-phase-ai/
- etempleton 4mo ago
  Assuming that constant R&D is not a requirement to compete. At what point can any of these companies stop improving their models? The answer is when they have a monopoly position. And we’re nowhere near that happening.

by cmiles8 4mo ago

DoesntMatter22 4mo ago

Musk best move IMO was going public before anyone else and gobbling up those 85 billion. I'm sure anthropic will do the same, leaving OpenAI maybe holding the bag. We'll see.

rvz 4mo ago
Correct. We will have to see about the first quarterly report from them first.

bayarearefugee 4mo ago

> OpenAI likely missed the window to have a successful IPO. I wish I could believe this but lighting giant stacks of cash on fire is, unfortunately, no longer a disqualifying event for tulip buyers. I wouldn't bet they will have a successful IPO, but I also wouldn't bet they won't, it will be almost entirely vibes based at time of launch.

grey-area 4mo ago

SpaceX IPO shows that the mania is alive and well. The big AI IPOs this year will mark the high point in the bubble IMO, with retail FOMO ensuring that they pop like SpaceX has. After that I expect them to crater, just like all those Spacs and Blockchain startups.

ai_slop_hater 4mo ago
What do you mean spacex has? Did spacex stock go down?
- grey-area 4mo ago
  Pop as in go up to an even more insane valuation initially.

raincole 4mo ago

After reading Financial Times and Ed Zitron's articles[0][1], I've reached the opposite conclusion. OpenAI's situation healthier than what the outsiders once believed: > Revenue: $13.07 billion > Cost of Revenue: $7.5 billion In other words generating tokens is actually a profitable business even for the frontier models. It's best to IPO when it's the case. [0]: https://www.ft.com/content/e15b0d7e-ff6b-4f16-ba7a-4068feddb828 https://www.ft.com/content/e15b0d7e-ff6b-4f16-ba7a-4068feddb... [1]: https://www.wheresyoured.at/exclusive-openai-financials/ https://www.wheresyoured.at/exclusive-openai-financials/

cmiles8 4mo ago
The problem with that calculation though is that you’re ignoring the deprecation cost of developing the models which is where much/most of the cost actually lies. Your math is saying an apartment building is profitable because rent exceeds utilities and other direct expense but ignores the mortgage. Real estate run with that math goes bankrupt quite quickly and this is essentially the same problem Open AI has.
4k0hz 4mo ago
To be fair, a lot of that revenue is from subscriptions that aren't necessarily fully utilized. OpenAI said in March [0] that they have 50 million subscribers. Assuming they're all on the $8/month plan, that's $4.8 billion a year, likely at a pretty low COR. [0]: https://openai.com/index/accelerating-the-next-phase-ai/ https://openai.com/index/accelerating-the-next-phase-ai/
etempleton 4mo ago
Assuming that constant R&D is not a requirement to compete. At what point can any of these companies stop improving their models? The answer is when they have a monopoly position. And we’re nowhere near that happening.