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OpenAI is closing in on raising $6.5B. Largest VC raise in history
- rahkiin 2y agoHow could this ever IPO? And if it cannot, who could ever buy it at a multiple of this?
- koolala 2y agoAGI will buy back the company.
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- shmatt 2y agoThe bigger the raise, the more news and hype, the easier it will be to offload the stock to retail investors. Theres definitely a sweet spot here where I assume the large funds will want retail investors to start picking up the losses instead of them. I don't see this as a long path till IPO like Stripe or SpaceX but I could be wrong The losses will just get bigger and bigger, and eventually there will be an appetite for retail investors to pick up the tab
- loceng 2y agoThe financial industrial complex will make money on transaction fees selling the stock to their clients, institutional or otherwise. They don't need it to actually succeed in the long-term - as it is the clients, people's money, on the line, e.g. incentives aren't aligned properly.
- ericd 2y agoWhy couldn’t it IPO? People would certainly invest at this valuation.
- delusional 2y agoAt this point I don't think they see it as an investment, but rather as securing a previous investment. They aren't looking for a return on the 6.5B, but rather as a deployment of strategic capital to secure their previous investment. A large amount of AI funding seem FOMO driven. Companies aren't seeing large returns on AI stuff, they are afraid of being left behind if somebody finds some sort of use for it.
- FinnKuhn 2y agoWith inflation being a thing the biggest [sum of money] always leaves me a bit sceptical as people often don't account for it...
- martin_a 2y agoThe best iPhone of all times! Same category of headline...
- bbqfog 2y agoLlama is good enough and I don’t have to give my data to a very sketchy organization. Happy to never use OpenAI again.
- daghamm 2y agoNot today, but I have a feeling that 3 years from now things will look very very different.
- bbqfog 2y agoI'd say Llama has improved at a much faster clip than anything OpenAI has released, so probably in 3 years what I said will be even more true.
- slashdave 2y agoAll these models train on the same data (sort of) and so all will pretty quickly reach the same asymptote.
- logicchains 2y agoEventually they'll be put in robots able to gather real-world data live, and they'll have a practically infinite amount of video/audio/tactile data to learn from.
- slashdave 2y agoSure, but this scales rather poorly. How many robots do you expect, and don't you expect some resistance from the public, for privacy reasons at the least?
- bbqfog 2y agoI agree, I don't think there's a moat and this is going to be a commodity feature.
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- tootie 2y agoThis seems crazy. It's a truly innovative company and all but they don't have revenue to justify this nor a moat given how many plausible competitors sprung up so quickly. Elon Musk just reached into his own pocket and made Grok appear.
- Mistletoe 2y ago> In finance, the greater fool theory suggests that one can sometimes make money through speculation on overvalued assets — items with a purchase price drastically exceeding the intrinsic value — if those assets can later be resold at an even higher price. They just need one more set of people past them to buy it. I know lots of uninformed people that would jump on it thinking they are “getting in early”.
- nkohari 2y agoBy "reached into his own pocket," you mean he leveraged engineering resources from Twitter, and then once it became clear that Grok wasn't a competitive model, raised $6,000,000,000 in capital from VCs and sovereign wealth funds [1] to pay for the additional compute necessary? [1] https://x.ai/blog/series-b https://x.ai/blog/series-b
- logicchains 2y agoIf six billion dollars is all it takes to build a competitor, OpenAI doesn't deserve a 100 billion+ valuation.
- rchaud 2y agoReally stretching the definition of "competitor" here.
- CuriouslyC 2y agoOpenAI is looking more and more like a Ponzi scheme ego play from sama. They'll find ways to offload the losses to retail investors and everything valuable will end up in Microsoft's pocket in the end.
- daghamm 2y agoTime to invest in nvidia and Microsoft stocks I guess. Because let's face it, that's where the money is going.
- mr90210 2y agoYou are already late.
- j4coh 2y agoIs there any evidence they have already peaked?
- Jensson 2y agoIts already priced in, things are still moving as expected. They could go up higher in the future, but not from this information.
- manishsharan 2y agoNo. This is the same logic that I used when I did not buy Amazon and missed that ride. The market is not always rational.
- CBLT 2y agoMy hot take: the market is good at pricing in possibilities, but less so at pricing in certainty (or lack thereof). When AMD launched the Zen architecture, everyone said they were on the up-and-up, and the market gave them a boost. The company's shares only started to climb much higher later on, when there were irrefutable revenue numbers. There was plenty of time to buy and make money. Someone with the domain knowledge like us can definitely have an edge in the market because we understand the product well enough to formulate better odds, then we can profit off the difference between our odds and the market's odds.
- reducesuffering 2y ago
- andsoitis 2y agoIf you can tell a good story, you can attract an audience with cash.
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- monkeydust 2y agoCurious does anyone use the secondaries private platforms like https://forgeglobal.com/ https://forgeglobal.com/ to get exposure to OpenAI or similar pre-IPO tech companies?
- Timber-6539 2y agoFor perspective, xAI raised an almost similar amount at a pre-money valuation of $18B. https://xcancel.com/elonmusk/status/1794975702812426595 https://xcancel.com/elonmusk/status/1794975702812426595
- onemoresoop 2y agoDo they have anything to show for it?
- typon 2y agoA significantly worse model that says naughty words.
- anonyfox 2y agoI jump between ChatGPT, Claude 3.5 and Grok2 on a regular basis, and I'd say its not "worse" in the general sense. I find it much better on anything sentiment-analysis related or for shortcutting customer research, and image generation is really good.
- devops000 2y agoWhat is the multiple over revenues/ ebitda?
- HarHarVeryFunny 2y agoI'm not sure how relevant that is at this stage. Not loo long ago I read that OpenAI had ~$2B revenue, but are still losing money. At this point I'd say this is a faith investment that either LLM/GenAI use is going to explode, and OpenAI is going to get a significant share of that, or that OpenAI will achieve a much more powerful and valuable AGI. It seems corporate evaluation/adoption of GenAI is still early stages, and not at all clear who the winners are going to be if there is a lot of revenue forthcoming. How does OpenAI complete with free models from Meta, or open source ones, or pricing strategies from giants like Microsoft, Google and Amazon?
- devops000 2y agoOk so with $2B revenue is a 75x sales multiplier, which means a 54% CAGR for 10 years. They estimates $150B/y revenue within 10 years. Google is at $300B/y revenue.
- neilv 2y agoThe photo on the story looks like Altman is leaving with a backpack full of money?
- onemoresoop 2y agoOf course he's greasing his own wheels. The question is whether the investors will reap any benefits and whether Altman makes OpenAi profitable
- l5870uoo9y 2y agoApparently, investors do not see the loss of several leading engineers and the “missing” GPT-5 as a reason not to invest. Maybe they do have moat.
- tsurba 2y agoBeating all other models in latest benchmarks by a wide margin with a completely new approach, while having the only properly working audio chat with transformer isn’t enough? Not to even mention SORA if actually comes out someday. I’m not an OpenAI fanboy but come on, credit where it’s due, they have so far been one step ahead of the competition from the start on every front. I do research in other ML topics but I do follow the qualitative leaps they are pulling off continuously so far.
- falcor84 2y agoIn what way is GPT-5 missing? They never announced a release date, did they? And we had the o1 release just a couple of weeks ago, so why wouldn't they take more time working on improving GPT-5?
- ChrisArchitect 2y agoMisleading OP. This is not news from this week. Last week or even older. https://www.bloomberg.com/news/articles/2024-09-19/openai-to-decide-which-backers-to-let-into-6-5-billion-funding https://www.bloomberg.com/news/articles/2024-09-19/openai-to...
- ChrisArchitect 2y agoNumber of earlier stories on same "closing in" topic: OpenAI Fundraising Set to Vault Startup's Value to $150B https://news.ycombinator.com/item?id=41514954 https://news.ycombinator.com/item?id=41514954 And even earlier OpenAI in Talks for Funding Round Valuing It Above $100B https://news.ycombinator.com/item?id=41514954 https://news.ycombinator.com/item?id=41514954
- nuz 2y agoWay lower than the $100B I heard they were aiming for
- manishsharan 2y agoI , for one, thank the investors for subsidizing AI and making it affordable for us. I am not sure my measly US$20 per month will be enough to cover the cost of my usage but I am grateful for the fun I am having while the music plays.
- redleggedfrog 2y agoJust one more step for Altman in his Bankman-Fried journey.
- Loughla 2y agoI legitimately get their names mixed up, and have had a hard time in occasion wondering why open ai would be controlled by someone who seems to really like doing fraud.
- mossTechnician 2y ago[dead]
- paulddraper 2y agoExactly. The only difference between the two is that one has a business providing a useful service to millions and millions of people.
- choilive 2y agoMy guess is this investment was contingent on OpenAI going "for-profit".
- rvz 2y agoThis is a definitive bubble. Inference and training costs with $0 free AI models such as Llama which is good enough for AI solutions are all factors that are actually impacting OpenAI. What is not mentioned is that all these costs are quietly suffocating them whilst the company continues to suffer from a significant talent drain. Companies like OpenAI cannot afford to continue racing their prices down to $0 and will just continue the pyramid scheme of raising billions to avoid bankrupting themselves over the said costs. These fund raising rounds of A,B,C,D....X,Y,Z can't go on forever as these costs continue to suffocate the company. If OpenAI fails, there will be a horrific AI crash with hundreds of billions of dollars wiped out.
- cerebra 2y agoThey're racing to AGI.
- slantedview 2y agoJust because they say it doesn’t mean we have to believe it.
- rvz 2y agoExactly. At this point, AGI could mean anything, from taking the majority of people's jobs to enriching themselves and never achieving 'AGI' in the first place. It is entirely possible that 'AGI' could be a massive lie and was all about capturing the wealth for a few people at the company. Believe what they do; not what they say.
- gdiamos 2y agoDo tech giants really want to give Sam that much money and power - it looks like the answer is yes. What will he spend it on?
- surfingdino 2y agoLooks like the real winner here is nVidia, because they will be getting their investment money back as payment for GPUs using money invested by MSFT and APPL. Or is that view too simplistic?