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00:00Ed, we were going to talk to you about SpaceX at one point, you know, today or this week.
00:05That's all we've been talking about.
00:07And then we see the news that OpenAI could be filing in the coming days.
00:10What else can you tell us?
00:12Curious timing.
00:14Is it because of the lawsuit or is it because of what SpaceX is doing?
00:19Are these, you know, there's a lot of Elon tied up in this.
00:23Yeah.
00:23So, you know, our source at Bloomberg is saying that it's coming weeks.
00:27The journal had said coming days, you know, and there is a distinction between that in when you're filing.
00:33The net net is, you know, OpenAI being in a position where it could be ready to IPO September.
00:41We had been much more firm in our reporting on Anthropic, that Anthropic was looking at October for an IPO,
00:47but very much framed in a race, right?
00:49So to answer your question, the overhang was the trial.
00:53Musk suing Sam Altman, the CEO of OpenAI, and the other co-founder, Greg Brockman.
00:59And indeed, like Bloomberg Intelligence has written about this in their research, right?
01:03Once the jury decided to reject Elon Musk's suit, even though Musk plans to appeal,
01:09it removed an overhang on the idea that OpenAI could move forward to a IPO in part because of, you
01:18know, the financial, potential financial penalty that Musk was pursuing.
01:23That's where we stand.
01:24But still, Ed, the timing curious for maybe a few more reasons as well.
01:30I mean, we have SpaceX also preparing to go public.
01:33We have Anthropic.
01:35You have to wonder whether all of these firms are kind of rushing to tap into the public markets before
01:41the AI momentum slows down.
01:44Yeah, I guess that's an important point.
01:46Like whenever you have a big IPO, particularly a technology IPO, there always has to be a story behind it,
01:51right?
01:52You know, our reporting is that SpaceX's S1 could flip public today.
01:56Brace.
01:57It could be a wild few hours to come.
02:00But there's also the issue of, like, is there infinite liquidity in capital markets?
02:06If SpaceX is going to do the biggest IPO of all time, add a valuation of more than $2 trillion,
02:11raise $75 billion, and then do the math on how much of the company they offer,
02:16does that take the oxygen out of the room for an OpenAI and or an Anthropic, right?
02:21If OpenAI and Anthropic both want to go public, you know, towards that September-October timeframe end of the year,
02:28you know, that gives investors a really interesting choice.
02:30And, like, part of what we've been reporting over the last six months in aggregate is, like, Anthropic has a
02:36lot of momentum right now.
02:37And the big take overnight is a case study of SoftBank being very concentrated in OpenAI.
02:44These are all considerations.
02:45I love that story.
02:46If you missed that one, check it out on the Bloomberg Terminal, today's big take, as Ed mentioned.
02:50And on the Anthropic side of this, does timing matter who's first?
02:54Because if we think about these two different companies, the way that they're valued and what they offer,
03:00is it fair to say that investors will be making a choice of one or the other?
03:07It's very bifurcated in private markets.
03:10There are those that stick to OpenAI, right?
03:14SoftBank is an interesting example.
03:16There are several venture firms and late-stage or private growth equity investors, indeed sovereigns, that have exposure to both.
03:25The latest reporting from us is that, you know, Natasha and I reported, I think it was last week, week
03:30before,
03:30Anthropic is now sort of taking more seriously, raising money in the private markets, like, more than $35 billion,
03:37at an evaluation between $900 billion and $1 trillion.
03:40The reports on what OpenAI's valuation would be in an IPO is $1 trillion.
03:45And basically, the way that it's put to me, Tim, out here on the left coast or the west coast,
03:52is you have Anthropic, OpenAI, Google, Meta, XAI, several lanes, but in the market, is there room for all of
04:01them?
04:01And, you know, that conversation comes up quite a lot.
04:03And, I mean, you have to wonder also, like, how much money, how much more capital do they really need
04:10to raise?
04:12Ed, can you tell us a little bit about, like, what are really the stated goals, at least for OpenAI,
04:17for what they would do with this new capital that they would raise from an IPO?
04:20Well, they do. They do.
04:22You know, the argument that OpenAI, to their credit, has been consistent on is that if they had more compute,
04:28A, users of their technology would not be constrained, right?
04:31That's something that's been talked about on social media just in the last 24 hours.
04:34But they could also offer more stuff.
04:36The concern is different.
04:38The concern is that the revenue growths just simply do not keep pace with the spending growth to justify an
04:45IPO, right?
04:46When you go public, through the mechanism of the filing, you open up to the world about your business and
04:54the finances of that.
04:55And, you know, in the world of tech, profit isn't always important, but investors still want to kind of see
05:02what the plan is longer term,
05:04the total addressable market and the road to profit.
05:07And so that's more of the calculus with OpenAI specifically.
05:10Well, let's talk about those books, Ed.
05:12I mean, it's a private company at this point.
05:14It's, you know, we don't know.
05:15We don't have full disclosures at this point.
05:17But what can you tell us what has been reported when it comes to OpenAI's books?
05:21What numbers do we know?
05:23I'm trying to scramble to pull up my notes now.
05:25But basically, you know, the revenue run rates in the tens of billions and OpenAI's own projections for the coming
05:3312 months through the 2030 is for a lot of growth.
05:36But you have to remember that OpenAI is on the hook for also almost a trillion dollars of projects around
05:42the world,
05:42largely relating to infrastructure, where there's a mix of it's committing capital or a partner is committing capital on its
05:49behalf,
05:50or it is on the hook to be the lead tenant and lease that capacity, but somebody else has built
05:55it.
05:55So that's the underlying concern, revenue in the tens of billions, but the exposure, the committed spending over time being
06:03in the hundreds of billions and that being worrying.
06:05Did I hear you say anything about profit?
06:08Yeah, I don't, you know, I just don't think we're anywhere near that, right?
06:12You know, in the economics of AI, for a company that trains a model and then deploys it through a
06:20series of products, it's on a dollar per token basis, right?
06:24That's the study.
06:25But your compute costs will directly factor into that.
06:28There are some people out there, Ed, who may be old-fashioned and say maybe a company should wait until
06:32it's profitable,
06:33at least for a few consecutive quarters to go public.
06:35Is that a different era?
06:37Oh, I don't know.
06:38So, you know, as a student of Silicon Valley, and, you know, one of the reasons I came here to
06:43San Francisco,
06:43like the people that back those companies at an early stage right through to taking them public,
06:49you know, whether it's software or hardware, there's not really that focus.
06:54You know, we should not get into this, but it's like, I remember the days where people were fixated on
06:58whether Uber would have positive EBITDA.
07:02Yeah, and there are plenty of companies, we should know, there are plenty of companies that do go public that
07:05are not yet profitable,
07:06and there's definitely investor appetite.
07:08No question.
07:09Yeah.
07:09Yeah.
07:10The one thing I would say real quick, remember Rivian, right, was the sixth biggest IPO in U.S. history,
07:14and that was in 2021.
07:17Yeah, here we are, they're still not profitable.
07:19So, you know, that's a good indicator.
07:22Who is poised to benefit most from the OpenAI IPO, and I imagine some of the investors in OpenAI right
07:31now are some of the ones that are also tied up in these other large companies potentially going public soon?
07:37Well, it's a mix of the strategics, which are other technology companies.
07:41I would say to the audience, go and read our reporting, which was linked to the trial between Elon Musk
07:46and Sam Altman, again, dismissed by the jury and the judge,
07:51but about Microsoft's economic gains from its initial investments in OpenAI.
07:57And then at the other end of the spectrum, you have somebody like Vinod Kostler of Kostler Ventures, a venture
08:01capitalist,
08:02who wrote one of the first institutional checks into OpenAI at the time that was at issue in that trial,
08:10like very early stages where it was a very different beast.
08:13And so over time, and then the people themselves, right, Sam Altman, Greg, Sam Altman has a very curious lack
08:19of stake in OpenAI, which you can read about.
08:21Greg Brockman has a more sizable stake.
08:24You know, the individuals at play as well, that is what's at question here.
08:28Ed, remind us how OpenAI has been changing its business, sort of trimming or more focusing on certain parts of
08:35its business ahead of an IPO.
08:37I'm thinking about Sora, for example.
08:39Yeah, so like, you know, Sora was an interesting project.
08:42There was a partnership and sort of financial relationship with Disney that was scaled back.
08:47You know, Sora being a tool that is a text-to-image tool.
08:51So when we talk about generative AI, generative can mean you create something that's in different forms.
08:56We're very accustomed to chat GPT, where the input is text, the prompt is text, and the output is text.
09:02In Sora's case, it was image.
09:04But it didn't, you know, both on usage and the compute costs and the net results of it, it didn't
09:08really work.
09:09So that's part one.
09:10The other part, you know, and this is where it pits itself more closely with Anthropic, and based on our
09:15recent reporting, Elon Musk's XAI as well, is going after the enterprise customer.
09:20You know, think in the world of finance or healthcare, et cetera, getting those organizations at scale to use either
09:28the underlying model or to use the tool.
09:31That has been an area where Anthropic really focused, and it's been a big driver of revenue for growth for
09:36them.
09:37OpenAI's origin was chat GPT.
09:39Everyday people like you, me, and Emily just using chat GPT for hours and hours, but they want that enterprise
09:45business to kind of outpace it.
09:47Right. I'm very curious if there's going to be any use of chat GPT, at least on the banking side.
09:53They're probably not allowed to do this, but drafting these prospectuses.
09:55But that's not my question for you, Ed.
09:57My question is, of course, when the paperwork finally comes out, can you sum up, like, the one or two
10:05big questions that you have about this company that will potentially be revealed in this paperwork?
10:12Wait, we're still talking about OpenAI?
10:14Yeah.
10:16Well, so this is the thing, right?
10:17So, like, there's mechanics to this.
10:19What we're talking about is, in the first instance, reports from various media, including Bloomberg News, that they are thinking
10:27of filing confidentially.
10:29It hasn't even happened yet.
10:30Right.
10:30Then there's a period of time where you don't know what's in it unless you know somebody pretty high up
10:36on the inside until it flips public.
10:38That's the moment we're waiting for today with SpaceX.
10:41SpaceX filed confidentially May 4th.
10:43Like, not May 4th.
10:45Tim, when was I in Florida for Artemis?
10:46The beginning of April.
10:48Yeah, beginning of April.
10:49Yeah.
10:49So, then that was when we reported, citing sources, the confidential filing.
10:54What happens after that is it goes back to the SEC.
10:57The SEC makes recommendations for how it could be changed and updated.
11:01And at some point, it goes public.
11:02And that's when you find out about everything.
11:04So, I'm not answering your question, Emily, but I think we're probably a little ways off from learning.
11:08But it's about financials, where they see the addressable market, and then surprises along the way, like the structure of
11:14the company, ownership.
11:15I'm really glad you went to SpaceX, and that's where I want to end, Ed, just in the last minute
11:20with you or so.
11:21And it's about SpaceX AI, as it now is, versus, you know, Anthropic and OpenAI, specifically in the context of
11:29OpenAI and a potential IPO.
11:30Because SpaceX now has XAI as part of it, does that pull some oxygen slash interest from OpenAI and Anthropic?
11:39Yeah.
11:39So, like, just one easy answer is, like, debt.
11:45So, when SpaceX merged with XAI, the SpaceX part was valued at about a trillion.
11:51The XAI part, 250 billion.
11:52So, the combined entity, 1.25 trillion.
11:55But SpaceX also took on XAI to its balance sheet, which would include debt.
11:59So, then that should be disclosed in the S1 when it gets flipped publicly.
12:03There should be something in there about that.
12:05It's, like, also the story.
12:07Why is a rocket company who's building constellations of satellite for Internet, Starlink, and wants to build data centers in
12:14space, acquiring a frontier lab?
12:17That should kind of be answered, right, in the document and prospectus, because it will help investors understand it ahead
12:23of the IPO.
12:24And there's also the question, Ed, that we don't have time to answer, what it means for Tesla and Tesla
12:29shareholders, because that's part of the conversation, too.
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