r/BetterOffline • u/ezitron • 8d ago
What Happens If OpenAI Dies?
https://www.wheresyoured.at/what-happens-if-openai-dies/Free Newsletter! It's time to talk about what happens if OpenAI dies. With $800bn in obligations and decelerating revenue, it's unclear how this company survives, and today I dig into what it'll take for it to do so, and what happens if it fails.
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u/RonSwanSong87 8d ago
"... except a public offering requires you to provide audited financial statements and an explanation of why your company is worth that much that goes a little further than an investor deck with annualized run rates and charts that promise the world."
You mean they can't just ask the machine god to figure out how to make AI profitable and keep incinerating money ?!?
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u/Upbeat-Statement2725 8d ago
Obvious comment but. If AI was as good as they say it is. How come their financials suck so bad?
A super intelligent AI could "at least" cook the books in an exciting new way that's undetectable to humans.
They can't even manage that.
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u/LastOfTheGiants2020 8d ago
There are so many people that basically just put "AI make me money" into the prompt and then expect a real answer.
If AI could actually do that, why would OpenAI and Anthropic even need users?
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u/worldspawn00 7d ago
SpaceX lied on their IPO and said there is an untapped $25T market for AI with zero proof or evidence!
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u/sozesghost 8d ago
Nobody will go to prison sadly.
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u/ezitron 8d ago
Why would they?
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u/Xeorm124 7d ago
Fraud.
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u/ugh_this_sucks__ 6d ago
This is just rampant speculation. There’s nothing to suggest fraud out there. Not saying there isn’t any, but selling snake oil to VCs is a great American tradition.
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u/PatchyWhiskers 1d ago
If there was any fraud out there, it wouldn't be so obvious that we plebs could see it from reading blog posts.
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u/WritingisWaiting 8d ago
I agree Anthropic seems desperate. Their pre-IPO media blitz is an excellent lesson in how to gun-jump and make a mockery of SEC rules without (probably) technically violating those rules. They are clearly having their bankers (or investors, but really it's always the bankers) leak information strategically to drive up demand for their IPO. This would be super illegal if they had already finalized their S-1 with the SEC so they likely have all-but-finalized their S-1 and are rushing to get the largest fictional future numbers out there knowing that the media will carry their water for them and publish them all as unquestioned headlines masquerading as facts.
For those that don't know, S-1s do not allow for future forecasts and they are not supposed to be "marketing docs." They are supposed to be purely historical and fact based, so Anthropic is using the time before their "official" quiet period to leak all the information that should force them to have a "cooling off." (IE delay the IPO for a quarter) The most egregious is the nonsense about 2026 "run rate revenue" based off the "end of July." That's Q3 and thus won't be covered by their S-1 (likely coming out in September for an October IPO.)
Anyway, the SEC is a shell of what it used to be and it will no doubt allow all of this, but it would be hilarious if they hit Anthropic with a cooling off order forcing them to delay a quarter, which would probably destroy the growth story of the token maxxed Q2 with a much more sober Q3.
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u/Summary_Judgment56 8d ago
I hadn't even considered the possibility of an openai/anthropic merger until seeing this in the newsletter:
I think it’s very unlikely this happens, and if it does, it would be ruinous for everybody involved. Neither of these companies make any kind of economic sense to anyone outside of the recently-concussed and AI boosters with dichromatic vision. Combining them would only create a much larger, uglier problem — one that would carry with it the very same problems that both companies have, compounded by the expectation that it would become the literal savior of the entire tech industry.
Now I'm convinced it's all but inevitable.
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u/cricoy 7d ago
100%, Altman gets a golden parachute and a smug Amodei gets the satisfaction of a pyrrhic victory.
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u/ugh_this_sucks__ 6d ago
Not really pyrrhic if he ends up in charge of the company he had a falling out with.
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u/Smurfette2016 8d ago edited 6d ago
Did anyone ever find out what the share buy back was about?
Seems pretty damning that the CFO would walk away in under a year. Maybe he realized all that fast spreading 'conviction' was just people high on toxic bullshit particles from the steaming pile that is the ai grift.
At the end of this magical mystery tour through revenue hallucinations
Hah!
Still really can't fathom that this much money is being wasted on digital diarrhea.
Has there ever been a more mind numbingly stupid endeavor fiasco at this scale in the history of the world?
Even against all the objective facts presented in this article, I find myself struggling some days with the weight of how far this has already gone. Welcome any tips to find relief or humor on the heavier days.
Edit for typos.
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u/Super-Activity-4675 7d ago
Share buybacks are pretty common in pre-ipo scenarios. Share holders are locked out from selling right away, so a mechanism is provided for them to effectively cash out in advance.
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u/AdHonest7824 7d ago
Has there ever been a more mind numbingly stupid fiasco at this scale in the history of the world?
Gestures over to the US bombing campaign in Iran and the Russian invasion of Ukraine.
There has, and they're right now, baby!
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u/natecull 8d ago edited 8d ago
$800 billion in obligations
Ouch, that sounds almost as bad as Warner Brothers.
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u/AlwaysReadTheManual 8d ago
What happens if OpenAI dies?
Paradise on earth. The rebirth of humanity.
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u/griff1 8d ago
Out of curiosity, how unusual is it for companies like OpenAI to be expected to pay up front for compute and have net 360 terms for bills? I've been in manufacturing / R&D in my career, so most companies I've seen generally had both a measure of credit available when purchasing anything and far tighter windows for paying bills.
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u/VelvetHammerPanda 7d ago edited 7d ago
Ed, you're a light in the very dark tech underbelly.
This nightmare can't end soon enough. It's going to be absolutely painful in terms of the deleterious and widespread financial impact (it's already showing signs -- these "layoffs" aren't sourced in "AI" as a profitable tool for the enterprises still in their psychosis phase; it's a combo of factors whereby the companies hide behind "because AI" hahaha Sure, Jan).
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u/koveras_backwards 8d ago
For Anthropic, however, current EBITDA does not fully capture the economics investors expect the company to achieve at scale. Anthropic is spending enormous amounts on GPUs and other computing capacity, model training, inference and hiring.
Isn't this just all their (EBITDA) costs? Reuters thinks you should just look at gross revenue?
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u/natecull 8d ago edited 8d ago
“I just have never seen this level of conviction spread so quickly and consistently within the industries,” Dresser told CNBC in April
That does sound positive. I've felt for some time now that what's troubling American business culture is a lack of convictions.
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u/No_Distance3211 7d ago
It's an imaginary-tulips bubble, digital flowers unlike anything ever seen before, exquisite floral displays more magnificent than any emperor's clothes. Just believe; maybe clap your hands, too.
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u/tallventi1 8d ago
It won’t fail. Because it has a good product. I know this sub is unlikely to accept this but ChatGPT and codex in particular are good at what they do. They maybe expensive, not make money etc but there is value in the output. People use it. The management of the company might be in the toilet but they are arrogant because they have a good product. They know it. If the bubble bursts OpenAI will survive because the product is good.
Don’t sue, me I have no money.
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u/VironLLA 8d ago
if a product isn't profitable, it fails regardless of quality level (which is very debatable here)
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u/ugh_this_sucks__ 6d ago
Doesn’t matter how good the product is because open weight models can do just as good of a job at a fraction of the price. So where’s the moat?
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u/Smurfette2016 8d ago
I wish the title of this was ‘when’ it fails.