OpenAI, a non-profit AI company that will lose anywhere from $4 billion to $5 billion this year, will at some point in the next six or so months conve

OpenAI Is A Bad Business

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2024-10-02 17:30:03

OpenAI, a non-profit AI company that will lose anywhere from $4 billion to $5 billion this year, will at some point in the next six or so months convert into a for-profit AI company, at which point it will continue to lose money in exactly the same way. Shortly after this news broke, Chief Technology Officer Mira Murati resigned, followed by Chief Research Officer Bob McGrew and VP of Research, Post Training Barret Zoph, leaving OpenAI with exactly three of its eleven cofounders remaining.

This coincides suspiciously with OpenAI's increasingly-absurd fundraising efforts, where (as I predicted in late July) OpenAI is raising the largest venture-backed fundraise of all time as much as $6.5 billion or more — at a valuation of $150 billion.

Yet despite the high likelihood of the round's success, there are quite a few things to be worried about. The Wall Street Journal reported last week that Apple is no longer in talks to join the round, and while one can only speculate about its reasoning, it's fair to assume that Apple (AAPL), on signing a non-disclosure agreement, was able to see exactly what OpenAI had (or had not) got behind the curtain, as well as its likely-grim financial picture, and decided to walk away. Nevertheless, both NVIDIA (NVDA) and Microsoft (MSFT) are both investing, with Microsoft, according to the Wall Street Journal, pushing another $1 billion into the company — though it's unclear whether that's in real money or in "cloud credits" that allow OpenAI to continue using Microsoft's cloud.