00:00I'm pleased to say that the founder joins us now. Ken Smythe, a firm focused on the secondary market. And
00:05Ken, as you told Hema in the story that you are seeing a lot of demand from VCs and other
00:11hedge funds trying to get out of their stakes of open AI. Can you describe to us just the level
00:17that you're seeing of disinterest and offload desire for open AI?
00:22Yeah, I would say it's been an interesting dichotomy to watch. I would say a year ago, we couldn't hang
00:30on to an open AI share for more than a day before it was gone.
00:35What's happened here is obviously as a company has raised much more capital in the last year. So obviously investors
00:43are holding on to a lot more stock.
00:46So in a bit, they've created a little bit of a supply glut, even though, you know, the demand is
00:54still there.
00:55There's just so much more stock out there that it's impossible for many, even of the largest investors, to absorb
01:01this much supply.
01:03I had previously seen, Ken, or heard that funds like, you know, the Robinhood Ventures Fund, we were talking with
01:10Vlad Tenev a couple weeks ago about that, were snapping up all of these shares.
01:15And that as a result, you couldn't get them. But I guess it's just a different story with open AI
01:22versus other, you know, pre-IPO secondaries. Is that the case?
01:28Yeah. So, I mean, in our world, when we look at, I mean, we focus very, very squarely on the
01:33names that are the closest competitors.
01:35And that closest competitor that has been gaining a massive amount of traction is Anthropic.
01:40As you recall, going back just several years ago, in fact, just a little over three years ago, Sam Bankman
01:47-Fried had invested $500 million in Anthropic at a $2.5 billion valuation.
01:53That stake today, just at the most recent round of $380 billion, would be worth over, it would be worth
02:01over $30 billion today.
02:04And if you take $600 billion, which is where we're currently seeing the market Anthropic, you're currently looking at his
02:09stake of a $500 million investment being worth about $60 billion.
02:13And that was made on behalf of FTX.
02:15Now, what we're seeing is that, obviously, as numbers reach the press, and we're talking about financial numbers, OpenAI is
02:25just simply losing a lot more money than Anthropic is.
02:28In fact, by 2029, OpenAI is on track to lose about $215 billion in total between 2026 and 2029 versus
02:40Anthropic, who is narrowing its losses and, in fact, will be profitable and is expected to report $18 billion profit
02:47by 2029.
02:49So you're seeing investors really start to focus on the numbers, the amount of CapEx that OpenAI is spending on
02:56power and data.
02:58And Anthropic being viewed as just a more enterprise-focused and more disciplined current LLM than OpenAI.
03:08What do you then make of the fact that OpenAI and its fundraising rounds is able to keep setting new
03:14records, that it raised $122 billion, that it was valued at $852 billion, which would make it the 13 largest
03:21company in the S&P?
03:23Is that a little bit of a disconnect, then, from what you're seeing on the secondaries market?
03:28Yeah.
03:29So I think you really need to look at OpenAI and start to understand a little bit how they structured
03:34this round, right?
03:35So Bloomberg, others have correctly reported that $122 billion is what they raised.
03:42But let's dig a little deeper and understand that that $122 billion includes $50 billion from Amazon.
03:51Amazon is actually not putting $50 billion of cash in this round.
03:55They're only putting $15 billion, the $1 to $5, on the contingencies that OpenAI goes public or it reaches AGI.
04:04AGI meaning Artificial General Intelligence, which means that it can do anything a human mind can do.
04:11It can do as well.
04:13And it does not need to be trained to do it.
04:15Now, it may be tough for OpenAI to even prove that they've reached AGI.
04:19So right there, you can take that $50 billion, reduce that to $15 billion.
04:24Then you take SoftBank, whose headline commitment is $30 billion, when, in fact, it's only investing $10 billion over the
04:32next three quarters based on other milestones a company has to reach.
04:36Even more telling is that SoftBank actually borrowed $40 billion in a loan to actually fund their commitment of $30
04:46billion, which you're actually not putting to work.
04:48And that loan is a 12-month loan, which has to be repaid, or they have triggers on that loan.
04:55So you kind of have SoftBank making a levered bet.
04:59You have Amazon making a very careful bet based on milestones being reached.
05:04And so that $122 billion is really not a real $122 billion.
05:10It's a round that's based on a lot of contingencies.
05:13Moreover, what we saw is over $3 billion was raised from the private wealth market, including many of the, you
05:20know, Robinhood-type platforms or others, including Cathie Wood's art fund, to also participate in this round.
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