OpenAI now thinks it's worth $30 Billion

WSJ Report: ChatGPT Creator Is in Talks for Tender Offer That Would Value It at $29 Billion

Hey Everyone,

So OpenAI had a good demo with ChatGPT, they got tons of data for free to optimize their RLHF for GPT-4 (coming out in May, 2023).

The WSJ has reported internally they are valuing themselves at $29 Billion, even in a global economic climate that is showing significant Earnings and margins compression.

This is like Sam Altman putting on his SBF face. (see image above).

I understand how A.I. hype works, but this isn’t ethical. The 7 year old startup is in talks to sell existing shares in a tender offer that would value the company at around $29 billion, according to people familiar with the matter, making it one of the most valuable U.S. startups on paper despite generating little revenue.

This is also to strong-arm a bigger amount from Microsoft for less share. But there’s no real indication ChatGPT will enable Microsoft Bing to take on Google anytime soon, in spite of plans to roll it out around March, 2023.

Basically OpenAI has burned through cash very quickly I speculate, and the startup is in panic mode but pretending it’s all good due to the PR manufactured hype created by the ChatGPT demo event in December, 2022.

If you have followed the ChatGPT coverage closely, Twitter and LinkedIn appear to have been complicit into helping to generate the hype. Elon Musk was a cofounder of OpenAI and Microsoft is a sponsor, major conflicts of interesting.

Venture-capital firms Thrive Capital and Founders Fund are in talks to invest in the deal, which would total at least $300 million in share sales, the people said. The deal is structured as a tender offer, with the investors buying shares from existing shareholders such as employees, the people said.

It’s a pit of shady Venture Capital startup politics at work, where the transaction is structured as a tender offer, where investor buy shares from existing holders.

Now I thought the valuation of Open at $20 Billion was ridiculous, but nearly $30 Billion? It’s beyond comprehension. It’s pure greed, considering how far from democratizing A.I. OpenAI has become as a closed company, totally against the spirit in which it was originally founded.

The new deal would roughly double OpenAI’s valuation from a prior tender offer completed in 2021, when OpenAI was valued at about $14 billion, The Wall Street Journal reported.

But how profitable is the fledgling startup? As influential as GPT has been for A.I. as a whole, it’s not exactly with a considerable moat and what revenue? OpenAI has generated just tens of millions of dollars in revenue, in part from selling its AI software to developers, but some investors have expressed skepticism that the company can generate meaningful revenue from the technology. Skepticism? It’s A.I. hype robbery.

It’s A.I. kool-aid of the worst kind, the unprofitable kind. The $29 billion valuation for OpenAI would be about double the $14 billion valuation the company was valued at in 2021, when it last completed a tender offer, according to the WSJ.

This is all somewhat internal or a planned leak to try to boost its value artificially. In the real world, this shows very poor leadership and integrity. No final deal has been reached and terms could change, the people said. OpenAI didn’t immediately respond to a request for comment.

Listen OpenAI has been a trail-blazer but things are moving fast and it’s just one startup. OpenAI released a series of artificial intelligence-based products last year that captured the public’s attention, including the image-generation program Dall-E 2 and chatbot ChatGPT. Now there is Stability.AI and so many other A.I. labs and Google competing directly with them with LaMDA likely as mature as ChatGPT in the first place.

Where is their moat? What is their unique value proposition besides starting a trend of A.I labs selling out to BigTech for access to their supercomputers? It’s actually a disgrace that could dangerously lead to a more centralized A.I. innovation hub ruled by the Cloud such as Azure, AWS and Google Cloud.

Listen I enjoy the reporting by the WSJ, but it’s horrible news. Microsoft Corp. has also been in advanced talks to increase its investment in OpenAI, the Journal reported. In 2019, Microsoft invested $1 billion in OpenAI and became its preferred partner for commercializing new technologies for services like search engine Bing and design app Microsoft Design.

It’s positively dystopian how A.I. hype can be manipulated via Twitter and other channels just for a startup to pretend it’s worth more than it is. PaLM with RLHF is open-source, OpenAI’s servitude of the goals of Microsoft is actually a red alert for anti-trust violations in the A.I. and Cloud space. Generative A.I. was supposed to be about a democratization of A.I.

What do you think?