Confidential submission of draft S-1 to the SEC
openai.com296 points by hackerBanana 4 hours ago
296 points by hackerBanana 4 hours ago
> We have not decided on timing yet; it may be a while because there are things we want to do that are likely easier as a private company.
Presumably those things were harder as a charity/non-profit.
They need to financially engineer a good looking quarter beforehand.
Perhaps Larry Ellison can cut them a nice quid pro quo for a few months to make OpenAI look profitable (like the SpaceX/Anthropic deal), although that's probably unlikely given the debt Oracle is taking on to build it's infra.
> like the SpaceX/Anthropic deal
I understand the scepticism around Google's deal with SpaceX, given the former holds a stake in the latter. But Anthropic buying SpaceX's compute doesn't have any related-party smell to it. That genuinely looks like SpaceX having cornered some valuable compute.
I'm actually talking about both. WSJ publishes Anthropic artificial profitability. Days later the reason for the profitability appears in SpaceX S-1; it's compute costs were artificially suppressed. Both are going public. It's a quid pro quo.
> It's a quid pro quo
This is a reasonable accusation! It doesn't make a lot of sense–the Journal article is worth a hell of lot more than SpaceX referencing Anthropic's profitability. And we have zero evidence for it–one could raise this accusation against any compute partner Anthropic were to buy from.
Reasonable or *un*reasonable?
> Reasonable or unreasonable?
Reasonable. The influencers who just learned the term circular financing are mostly idiots. The ones pointing out the conflict of interest with Google are technically correct, but the conspiracy takes so many moving parts to yield such little gain that it would have to be particularly stupid in vision yet competent in execution to pull off.
But asking if there is a quid pro quo between Anthropic and SpaceX? Like, there could be. We have no evidence of it. The S-1 mention doesn't make any sense. But they're both going public and if I were a journalist I'd look into it.
The base case, that there is commercial value to xAI's datacenters that folks in the frontier-model space are competing to get access to, does seem to be one folks here are actively rejecting.
> That genuinely looks like SpaceX having cornered some valuable compute.
That's nice way to say "invested in AI that turned out to be flop nobody wants to pay for so they are selling spare capacity"
> That's nice way to say "invested in AI that turned out to be flop nobody wants to pay for so they are selling spare capacity"
Both takes are true. xAI invested in capacity that was supposed to yield frontier-model-maker margins. Grok failed to generate enough interest. So now they're selling it.
That's absolutely a good business, in a way that's more certain than the frontier-model one. But it's also lower margin, which doesn't support the sort of valuation SpaceX is going for.
What I don't understand is how it's even a good low-margin business. Maybe I'm missing something but:
Data centers (before recently) are low margin businesses because all the inputs are commodities: you buy power (joules), power (PDU), cooling hardware, physical racks, etc.. from the same vendors as everyone else. Worse, your biggest potential clients have the scale to just build it on their own and cut you out because of their scale and because you don't bring anything unique (outside of maybe physical proximity to an interesting market)
xAI has all the same commodity inputs plus another huge upfront capital expense (GPU/storage/networking), and their customer base is exclusively the well-funded companies who would normally just build it on their own.
I assume that they can't get better deals from nvidia than (e.g.) Microsoft because of their scale, so the unit cost of their inputs is the same or worse than their clients.
So the whole game is hoping that they hope to charge more now because people can't build fast enough and try to recoup their upfront costs before either a) other capacity comes online and b) the installed hardware becomes obsolete.
I'm being earnest -- it seems like they're trading one tiny margin service (datacenter) for another tiny margin service, with the added difficulty that there's an additional 10 figures of upfront expenditures and their viability depends solely on paying everything off before the price floor drops. Maybe it's staunching the bleeding, but it seems like not a great move
> because all the inputs are commodities
AI compute hardware is not a commodity. And in a shortage, commodities can command high margins.
xAI has lots of NVIDIA GPUs and HBM. It also has permits and power hook-ups, both things that are getting harder to come by day by day in the U.S. Natural gas is a commodity. Doesn't make having lots of right now bad business.
> the whole game is hoping that they hope to charge more now because people can't build fast enough and try to recoup their upfront costs before either a) other capacity comes online and b) the installed hardware becomes obsolete
Correct. But charging people now generates incumbency advantages that make beating (a) and (b) easier. (From what I can tell, (b) isn't an existential issue, at least for xAI, because they've basically already recouped their investment with commited contracts they'd have to fuck up on to lose.)
It's like buying a ticket for a concert, realizing you can't go and that you can resell it for more than what you paid.
You're right that long term it should stabilize into a low margin business.
Elon is also much less risk averse than others, which helps to build stuff fast, possibly cheaper, pushing legality to the limit. Colossus was definitely built much faster than anything else. I think building datacenters suits him better than a pure software play, where "move fast break things" is already the norm.
The concert analogy makes sense (I analogized it as "staunching the bleeding").
WRT SpaceX building data centers: I think there's a natural tension between a "low margin business" and "being risk adverse". SpaceX (the rocket business) did well because it was high risk and high reward. Building a 10b datacenter to hope to get a slice of a low-margin industry is high risk and low reward and just seems fundamentally like a losing strategy.
I wonder if they do have non-commodity AI capabilities, just, ones that don’t translate into a world-class frontier model.
Like they might have hired really good AI infra folks, gotten really good uptimes on their nodes, gotten folks who really know how to configure Infiniband (or whatever). But then, didn’t find the folks who knew what to run on that infrastructure. Or maybe Grok just had too much political drama around it.
Maybe they have something else im the books, I truly have no idea. But once you get down from the top rung of full-bandwidth cross section networking at the 100k node networking scale "AI" infra, theres no shortage of people who can do that. Most importantly, labor isn't the big chunk of the outlay. Even if they have 50 engineers clearing $50m/yr, that's pocket change for everything else
Google owns 14% Anthropic and 6% xAI.
When Anthropic spends on xAI, it benefits Google. When google spends on xAI, it benefits Google. When xAI spends on Google, believe it or not, that benefits Google.
This is how a Ponzi -style circular financing scheme typically works.
> When Anthropic spends on xAI, it benefits Google
Unless Google is directing these transactions, this is not a novel issue. (We see a similar effect with mutual funds owning most companies [1]. It's a weak effect.)
> This is how a Ponzi -style circular financing scheme typically works
No. It's potential conflicts of interest. It's not circular financing. Circular financing follows the cash. When NVIDIA invests in OpenAI so OpenAI can buy NVIDIA chips, that is circular financing.
[1] https://insights.som.yale.edu/insights/the-rise-of-the-mutua...
I think it depends on how you view the payout google will get when these companies IPO and give Google exist liquidity and a nicer looking balance sheet, if needed, either or.
> it depends on how you view the payout google will get when these companies IPO and give Google exist liquidity and a nicer looking balance sheet
Google has a fantastic balance sheet with or without these investments. None of the recent deals have uniquely enabled an IPO. So they'd be playing to increase their stakes' value by a few points ahead of a dump, a dump that would almost certainly wipe out much more than they'd stand to gain by trying to make someone else a dollar so they get nickels and dimes out of it.
No a Ponzi scheme involves not output, but here there is very much output in the inference being sold by Anthropic. Pretty big difference.
If you were to treat all the hyperscalars as one company with one 10-K then Anthropic buying compute from SpaceX/xAI is an internal bookkeeping transfer between two departments. It isn't the same as top-line revenue into the AI companies. It is still mostly just financing money that Anthropic raised being transferred to SpaceX.
> If you were to treat all the hyperscalars as one company with one 10-K then Anthropic buying compute from SpaceX/xAI is an internal bookkeeping transfer between two departments
This is literally true for any revenue. Treat the buyer and seller as a single company and their transaction is internal.
You mean Oracle’s customers will face when their renewal bill includes infrastructure fees.
> They need to financially engineer a good looking quarter beforehand.
Eh given the quality of recent IPO proposals I think they can just say there's a couple zillion air molecules to turn into gold and be done with it.
Anthropic basically did that by getting two months of free compute from SpaceX. As I recall, this is how they were able to claim that they were profitable. But in reality, they are only profitable for those two months.
Like financial reporting and "transparency" that's required for public companies.
Capital is going to dry up. All the AI companies are racing to get to market before the dumb money disappears
How much did Apple (via Google (via xAI (via SpaceX))) just crush their product?
Seems an awful lot like Apple will commoditize the models that power Siri, and just “sherlocked” a trillion dollar private company.
Apple has completely dropped the ball on every single detail of AI rollout for the last 5 years - why do you think they will suddenly stop now? My prior is that the new siri stuff is just as vaporware as the previous "apple intelligence" rollout
If you think Apple just sherlocked OpenAI, you havn't been paying attention to the pivot OpenAI has been doing for the last 7 months
I have instructed my financial advisor to keep my exposure to the upcoming wave of AI IPOs as close to zero as possible.
Here we go… Let’s see if retail investors are indeed exit liquidity or not
Or just… Americans:
https://www.notus.org/technology/trump-blindsided-ai-compani...
OpenAI CEO Sam Altman pitched the idea of turning over shares in his company to Trump in early 2025 and discussed the matter again with senior officials in recent weeks
What was that Warren Buffett's quote about everyone trying to leave the party seconds before midnight in a room where there are no clocks? I think it was at peak of the dot com bubble
I wonder how much of it is photos?
Elon is not going to be happy about this. He's been vocal about his dislike towards the business model OpenAI chose to run with.
that's not the issue, Elon is just a petulant child that is losing the ai game ever since he left OAI. Elon wanted full control, and that dispute over control is the central issue.
Elon is 100% a for profit person, it's just a 10 year rivalry between Sam and Elon.
Let me guess... wall street bets is going to pump $OPEN stock?
What a weird tone this is written in.
I think it is intended to sound like Sam Altman. Would look exactly like a tweet of his if it didn't have capitalized characters.
I thought this was about the college football conference for a second.
This is like a slack message
A very unserious tone from probably the most consequential company of our lifetimes. It's vibing all the way to the top I guess.
I prefer this tone to fake marketing speak. If they’d done a proper job here they’d be accused of having GPT write it. At least this is organic laziness!
Their tone is just as fake as typical fake marketing speak - they are trying to come off as nonchalant. I bet this announcement was wordsmithed to hell.
I'm just anticipating the next version of “Community-based EBITDA" that sama rolls out in the latest attempt to convince everyone that spending >$1 to earn $1 is a good idea.
Good thing they bought that podcast…
I have a feeling that as soon as OpenAI and Anthropic stocks are up for grabs, the market will implode.
Maybe lay down some concrete numbers and timelines, hold yourself accountable, otherwise you risk confirmation bias with your predictions like millions before you.
> the market
Which market? The stock market? Or the tech stocks? Or something else?
> Which market? The stock market? Or the tech stocks?
Both.
Across the entire stock market, not a ton of bright spots _except_ for Tech.
Take a look here: https://finviz.com/map?t=sec_all&st=w52
Then someone says the market; they definitely mean the stock market. I don't know what else you can understand from it.
So are you short the market?
crashes aren't shortable unless you know exactly when they are going to happen
implode as in? to the moon or crash into bits and pieces?
Implode generally implies shrinking/collapsing, so while explode is kinda ambiguous, I think this is fairly clearly saying "bubble will pop".
so who is buying at the open? anthropic, spacex, openai
i think that we are going to see another leg up but this is gonna be it for a while
From what I understand, SpaceX has been engineered such that all kinds of passive investment funds (pension funds, ETFs) will buy into it at their first rebalancing, and as such it should get a decent amount of volume after open.
Having said that, it’s the company I have least faith in due to the recent acquisition of xAI / Twitter.
> SpaceX has been engineered such that all kinds of passive investment funds (pension funds, ETFs) will buy into it
Pension funds are rarely passively run. They tend to be sophisticated investors. For example, several pension funds are already investors in SpaceX.
NASDAQ 100 will include SpaceX after a couple weeks. But it's a tech fund. It's strange to complain about buying the largest tech company in a tech fund. Similarly, S&P total market and Russell total market will buy early. But again, those are total-market funds. If you want to actively manage your portfolio, don't buy total-market funds.
I heard that the rule changes which would allow SpaceX to be auto bought by those funds has been blocked, previous stock seasoning rules will apply
> the rule changes which would allow SpaceX to be auto bought by those funds has been blocked
Nothing was blocked. S&P 500 never adopted them. Influencers misunderstood what a consultation document is and presented a question as a fait accompli.
NASDAQ 100 changed its rules, as did S&P and Russell's total-market funds. But for NASDAQ 100 I'm going to go ahead and say this was a brilliant market move, since nobody ever talked about that index before this.
> But for NASDAQ 100 I'm going to go ahead and say this was a brilliant market move, since nobody ever talked about that index before this.
Most people know the NASDAQ100 as its ticker QQQ. Also known as the high risk - high reward investment.
After reading how Nasdaq changed the rules in order to court all the mega IPOs to list with them, I will never ever consider a Nasdaq fund again. The rule change about the available float is especially shocking.
> After reading how Nasdaq changed the rules in order to court all the mega IPOs to list with them, I will never ever consider a Nasdaq fund again
We have zero evidence for that chain of causation. And we have zero evidence of significant outflows for NASDAQ 100 since this rule change. (There is early evidence of inflows, but I suspect that's just because nobody talked about the NASDAQ 100 before and this turned out to be a brilliant marketing move.)
I'm agreeing with you that overall this might be a good marketing move overall. But they lost me personally as a customer.
And I don't really care about the chain of causation. The change of rules for the available float and the fact those funds will buy based on the market cap and not the float makes it a completely irresponsible investment at this point.
Crsp changed as well.
> Crsp changed as well
Yes. For their total-market fund. That makes sense. (CRSP is probably the most-significant index to make the change. But even then, it won't be a significant source of demand. Total market means lots of components.)
S&P is no longer allowing this, only the NASDAQ. I think the bigger risk would be if they were included in the S&P 100/500. There was too much backlash.
These capitalists are taking advantage of the corrupt administration in charge at the moment (not that a blue admin would be that much better), but they can get away with almost everything at the moment. Keep your head on a swivel, the billionaire class knows they don't have to worry about going to jail for the next few years and they'll make sure to screw everyone they possibly can to satisfy their endless greed.
Death to the fascist insect that feeds on the blood of the people.
> There was too much backlash
There wasn't. A consultation was rejected. It happens all the time. If S&P management had a say, they would have wanted SpaceX included.
When/how are IPO dates released?
> When/how are IPO dates released?
Once the SEC declares a registration statement "effective," the company is subject to the Exchange Act's reporting requirements. Theoretically one can do this and not list one's shares. That's dumb, so nobody does it.
In practice, we'll get a couple weeks to possibly days ahead of the listing. That process is partly governed by the SEC accepting the company's S-1. It's mostly down to negotiations between the company, its underwriters and IPO investors.
Was this meant as an internal team post?
The timing of all of these IPOs has a smell similar to both the US Mortgage company trend shortly before interest rates spiked and all those companies started shedding jobs progressively since, and/or the DotCom IPO boom.
Where we land remains to be seen.
While I agree on the smell I think that the situations are really different. I am not an economist but I think that other than the situation of the huge amount of money in play we are in a really different case. The general user (and I have noticed it especially with today's WWDC) basically doesn't get any benefit from AI (neither LLMs, image generation or photo editing). They were promised living like in Wall-e in 5 years and they are basically still living the same life. White collar jobs slightly benefited from the LLMs and same with programmers (while many say that they can get huge leverage the public results of what software companies produce didn't get the same benefit). Everyone knows the market will crash, nobody knows how much.
My father in law owns a small manufacturing business and is not technical at all. His computer skills stop with some CAD and basic excel. He pays for ChatGPT as does his wife and her kids. The internet and dot com bubble didn't have millions and millions of non technical users paying cash for a product. Almost every coffee shop I go to has people talking about AI and ChatGPT even in areas with no tech populations.
I still think it could crash, but it's got real users and a mind share like nothing I've ever seen.
The internet and dot com bubble didn't have millions and millions of non technical users paying cash for a product
The dot com bubble was basically based on regular people buying computers and internet service, and then using them to buy products they used to buy in stores.
These companies are never, ever going to make their money back off of retail customers. It's not even clear if those customers would be profitable at all, let alone enough to justify hundreds of billions in capital expenditures.
This seems to ignore the fact that millions of non-technical people did pay cash for a product: AOL. And in fact the AOL buyout of Time Warner coincided almost exactly with burst of the dot com boom.
> the AOL buyout of Time Warner
To be clear, there is a world of difference between IPOs and LBOs. In the risk they create. And in the risk they signal.
The question in my mind is persistence. Everyone goes through the honeymoon phase. I'm absolutely loathing the idea that phones are arriving soon with chatbot junk built deeply into it, enough that the thought is more what if I could maybe just stop using my phone so much. I threw myself at the Llama WhatsApp integration when I first got it, now the idea of having Llama in WhatsApp just feels so dumb.
I was a huge early fan of ChatGPT voice too, but I don't think I've used voice mode anywhere in at least 6 months. The question is what is the right level people are generally going to settle on for the use of these tools in the long term. 80% of my usage isn't much more than a better Google, I could live without it and I could live with cheaper options. I'm not sure the consumer money is going to be there en masse as hoped
Of course it still leaves a huge amount of business cases open, but I suppose the same principle applies. How soon will people tire of talking to robo-voice when they call their bank? etc.
I definitely believe in the broad existence of people like your father in law. What I’m not sure about is how many of them would keep paying if their subscriptions were priced profitably.
I wouldn't argue the same.
My parents love using ChatGPT, asking it all kinds of questions. My mom discovered Claude and helps her immensely with her job - where she would have to take it home and work a few hours to be able to finish the tasks on her computer, as her company that still uses Office 98, now Claude does it in 5 minutes.
They fixed so many random issues using it, it is insane. My dad had a bike issue which would otherwise be solved by either trying to find obscure manuals from 20 years ago on random forums with me translating it from english to our language, or by taking it to a mechanic which could take months. This way, he just snapped a few photos, said what the problem is, and in a few minutes he had the fix.
I've built software that uses LLM's for a specific usecase - besides general adoption, professionals in the field contacted me and thanked me for making their lives easier, as the tasks would often take a lot of manual work. These people are earning way more from using my software, than I am from their subscriptions, which is still about 20x more than my API costs are.
While most non-dev people are behind the curve, the impact it has on their lives is becoming bigger and bigger by the day.
> I think that the situations are really different
Keep in mind that people said this before both of those crashes.That's the problem with bubbles. It's impossible to say if this time really IS different.
There is ton of utility. I use it all the time to study, to look up what's happening in the world, to understand the context behind what others are saying, cooking recipes, and much more. Considering LLMs have access to tools for searching the internet they have a superset of the capabilities of Google and consumers got a lot of value from Google. In fact from putting ads on the search results Google has made billions of dollars from such consumers getting value from their service.
When you ask it to give you a digest of current events or as a study aid how are you ensuring that what your reading is a valid representation of the source material? Has it never given you false information?
Ben Felix got a great video on this subject: https://www.youtube.com/watch?v=iOyFja87uyw
The point he makes is that companies go public when they think they can get the maximum our of their shares on the retail market. Which make sense I guess.
But the fact that the 3 of them are hitting the public market at the same time means they all came to the conclusion that now is the perfect time to unload those shares. Probably because they know there is a high chance of a big crash coming after.
I will not touch those IPOs with a 10 feet long pole. But unfortunately a lot of people are about to get burned.
My prediction is that this is what will be remembered as the last bit of exuberance before everything starts to unravel.
Books will be written about how insiders will be profiting millions by unloading those shares to the greatest fools.
> point he makes is that companies go public when they think they can get the maximum our of their shares on the retail market
I think this is what's going on right now. But there are a variety of reasons that can drive IPO timing. Need for cash and owners needing liquidity being chief among them.
I'd also say that post-Covid, retail has become a commanding section of the American equity markets in a way I don't think they've been in my lifetime. As a result, every IPO from now on will have to target retail.
Both OpenAI and Anthropic were able to raise astronomical amount of cash on the private markets just weeks ago. I don't think that's what's driving them.
I really think what is driving this is the need for insiders, employees, early investors to be able to sell their stock at scale before the music stops.
And You can only do that through a full IPO. All those companies had private secondary transaction but none of them were big enough to transfer the Trillions of $ required for the insiders to unload their bags.
I’m also staying away. I need to not lose money more than I need to gain money.
The content of all these comments has a smell similar to 2023 when NVDA had a spectacular run and HN was absolutely sure that AI is a bubble.
It's also similar to 2024 when HN was sure that AI is a bubble.
Similar to 2025 when HN commentators were sure that AI is a bubble.
1000% gains later, HN will continue to identify patterns of 2000/2008 and are absolutely convinced it is a bubble
Note: If a company gains 1000% and loses 50%, you can't claim you were right.
Both OpenAI and Anthropic have already gained 1000% since 2023 (In Anthropic's case almost 10,000%)
Depending on how much that bubble will pop, all of those above might still be very right.
We could very well go back to the 2021 valuations.
Yes, many companies going out of business altogether, some of them large, is what a bubble pop would look like. As opposed to a uh.... Correction.
There was a similar wave of IPOs with Uber and AirB&B, not tied to a bubble popping.
(I mean, I think this looks incredibly like a bubble too, but for completeness sake, that's the counterexample I can think of.)
Starting the first three sentences with "We" does not pass the Voigh-Kampff / "I am not a robot" test.
[meta, off-topic but relevant]
Maybe the solution to s..tposters is to do what Wikipedia does.
Some articles/topics are "protected" and new/unverified accounts cannot touch them.
"Hey, don't invest too much in Spacex or Anthropic. We're planning an IPO too."
This is the real reason. I don't think equity market has enough capital to support three companies of this size.
SpaceX IPO is slated to be $75-80bn — the market has size for that. We also have seen robust options and finance markets for AAPL and NVDA over the last years that make the broader ecosystem not overly worrying in my armchair opinion.
I’m not clear how much crossover demand there is between SX and Anthropic/oAI — that seems like the more interesting question. I’m guessing if we had Anthropic/oAI launching at the same time we’d see some pretty interesting capital dynamics.
> if we had Anthropic/oAI launching at the same time
Don't we have exactly that? There are S-1 announcements for SpaceX, Anthropic, and OpenAI. Google is selling to raise money for infra (IIRC). There's an absurd amount of money flowing in at present (prospectively at least).
I was under the impression SpaceX was going to be a trillion dollar company.
The media and market is hyping these three companies up to be all trillion dollar companies.
Afaik SpaceX is only putting 5% of its shares up on the public market when it IPOs (newly minted shares, diluting the existing private shareholders).
So the markets only "need to absorb" $75B when SpaceX IPOs, not its whole $1.7T valuation. At least until the lockup period expires.
None of these companies are worth the numbers being tossed around, but SpaceX especially so.
Its Schrodinger's IPO: the space business is so successful how could you question the company's worth? You can't afford to miss out on the next biggest AI business to invest in!
What's going to happen is the music will stop and it's just a question of who cashed in when it does. OpenAI are easily the most vulnerable here.
codex is great
> We recently submitted a confidential S-1. We expect it to leak so we’re just announcing it.
What?
They expect someone to leak that they had submitted it, so they’re just saying it themselves. I don’t think they mean that the actual contents (like financial projections and all that) will be leaked.
This is the true definition of AGI and will be achieved this year.
The I in AGI has always stood for IPO.
Well if you reverse OpenAI ... the first letter is I and the last two are P O...
The cheap money for subsidizing tokens has begun to run out. Not all gone, yet, but it's getting harder to pretend the chatbots are cost-effective to run. Soon, they're going to need to tap a larger pool for money: Everyone's retirement accounts.
The numbers are public now, this is obviously false
If SpaceX, OpenAI, and Anthropic get fast tracked to be on NASDAQ or S&P 500 then they are required to be included in index funds which will be automatically included in retirement accounts and that will give investors an exit.
> If SpaceX, OpenAI, and Anthropic get fast tracked to be on NASDAQ or S&P 500
S&P 500 said no. NASDAQ 100 is a tiny tech index. The retirement conspiracy could have been a thing, and its effect isn't zero, but oh my god was it overblown by the influencer crowd.
yes it will keep the grift going for a couple months due to the index artificial demand. Actually, SpaceX timed the unlocking of their shares to the timeline index funds will have to buy.
Guess who will hold the bag when it's all going downhill?
What a shitty company, and this shitty announcement proves they are going to be shittier after the IPO.
Growing worry I have are the dozens of newly minted corporate elites that will continue to wreck havoc on the tech industry mandating their golden paths while America still lacks medicare for all, college for all, and universal childcare.
If you think Sam Altman is bad for the industry, imagine what 200 of him will be like!
I was wondering about this the other week.
Is there a chart, somewhere, like a family tree, of what the Apple and Microsoft stock "ordinary millionaires" went on to do?
we need more non tech women to marry and divorce craven tech men so that at least half of these scrooge like fortunes can get donated
edit: id love to tally all the donations done by techies and compare them to how much of bezos fortune has ended up routed to charity via his ex
If you're a tech billionaire, you don't marry unless you are incredibly stupid.
Altman and Thiel are also gay, so theres that too.
No idea where this comes from; I wasn't talking about a literal family tree but a figurative one (I grew up with Rock Family Trees)
Also: Altman is married.
i think i was trying to make the point that the type of person to make a shitload of money tends to be the type of person to hold onto a shitload of money
... Being gay does not limit altman or theil from getting married...
And last I checked, plenty of tech billionaires are married and by no stretch of the imagination stupid.
We had universal childcare until we converted single-income families into dual-income families in order to make the boomers who they bought houses from rich.
Women want their own income stream because of the innumerable ways men get into trouble. If her man gets into trouble, she wants a plan B, for her and her children. I don't think anyone was thinking about how that would prop up the housing market 30 years later.
And to give women full agency over their own lives
No one has full agency over their life. The men who generally work harder, longer, and for more of their lives, that are shorter as a result, don't have fully agency. Having a boss isn't agency.
"We want to be ready to grift public money at a moment's notice, but there are still opportunities to grift private money right now, so we are holding off."
I don’t get what’s the point of non-profits if you can IPO them. How does that make any sense?
They're IPOing a commercial subsidiary of OpenAI so that it can donate even more money to the parent nonprofit.
(Actually the subsidiary is everything and the nonprofit is a do-nothing fig leaf but the IRS and Congress seem to not care enough to stop them.)
Checks and balances dear sirs and madams, checks and balances. Excepts apparently it meant cheques used to top up account balances.
Just the fact that they still calling themselves OpenAI is so grotesque.
Similar to Google with "Don't be evil". At least they got the decency to eventually remove it when they realized they were actually doing evil.
But then private shareholders are able to extract shareholder value from the subsidiary, so the "nonprofit" component is utterly meaningless here.
How is this not illegal? What prevents any nonprofit from doing this to sidestep its filing status and extract profit?
Every step taken by the nonprofit leadership has to be, (or at least seem to be at the time), net positive for the stated goal of the nonprofit. To be legal, the IPO needs to be a net gain for the nonprofit.
It can easily be that, if they believe that the capital it raises increases the long-term value of the company by a greater multiple than the proportion of the company that is lost from the nonprofit to outside investors.
The primary example of this is Novo Nordisk (the Ozempic company). Their largest shareholder is, through an intermediary, the Novo Nordisk Foundation, which is one of the largest charities in the world. Nordisk used to be a charity that owned 100% of it's own labs and facilities, but in 1989 they realized that they were just too small, and would get trampled by larger international players without greatly increasing their scope. So they made their subsidiary go public (through a complex merger, not an IPO), and now only own 28% of it, instead of 100%. But, in large part because of the capital that going public brought them, despite constantly distributing money for research and charity, that's 28% of a company that's more than 100x bigger that what they used to be. And they retained 77% voting control.
not to be a shill, but isn't it good for the non-profit to own a big piece of a successful company?
I think it depends on context.
If the private subsidiary was doing semi-unrelated stuff to the goals of the non-profit, and using it to fund the non-profit, then your logic could make sense - for example if a cancer research charity owned a profitable business and funnelled the profits up to spend on research, great.
But in OpenAI's case, the claimed goals of the non-profit were essentially "do AI in a way that puts safety above profits". And whether or not one agrees with their previous approach to safety, or even whether safety needs to be cared about, it's undeniable that the for-profit business isn't acting as useful fundraising for the non-profit's goals, it's literally acting in the opposite direction.
> it's undeniable that the for-profit business isn't acting as useful fundraising for the non-profit's goals, it's literally acting in the opposite direction
It's generally not up to your or to me, it's up to the donors to the non-profit. If what you find to be undeniable is very much deniable to them, then that is their right.
The only question of public concern is whether OpenAI, Inc., a charity, meets the exemption requirements [1].
[1] https://www.irs.gov/charities-non-profits/charitable-organiz...
A few things, but they work very well for our industry.
The rule is that the nonprofit and disqualified persons (mostly board members), cant own businesses together, well they can but not more than 35% of it together, and a max of 20% can have voting capability
The consequences arent immediate, non profits have 3 years to correct this
Now in the tech industry, getting VCs involved is already the plan from day one and founders get diluted, so getting below 35% is either easy, or easy within 3 years
so they’re fine
there’s a lot of things they can all do to deal with the share consolidation
See: https://www.axios.com/2023/11/18/how-openai-board-is-structu... for the OpenAI Structure.
1) In order to fund research - this stuff costs 10s of billions of dollars - everyone, from Ilya, to Elon, to Sam - all agreed that they would require a profit-arm to raise money. Nobody was going to sponsor that 10s of billions of dollars to a non-profit.
2) The non profit is still there - and controls the commercial element.
“Controls”
That will be especially untrue after IPO when shareholders can claim there are fiduciary responsibilities that conflict with the non profit goals.
> when shareholders can claim there are fiduciary responsibilities that conflict with the non profit goals
The for-profit has fiduciary responsibility to the non-profit as well as other shareholders. The IPO doesn't really change that.
> non profit is still there - and controls the commercial element
The non-profit hasn't controlled squat since they tried and failed to fire Sam Altman.
> Nobody was going to sponsor that 10s of billions of dollars to a non-profit
How much has MacKenzie Scott donated to non-profits again?
Seems like such a claim is on thin ice.
The nonprofit (OpenAI Foundation) owns ~26% of the for-profit, plus some extra warrants.
The for-profit (OpenAI Group PBC) is what's filing the S-1 Draft.
The OpenAI Foundation also exclusively appoints the board of the OpenAI Group PBC and can replace directors at any time.
https://openai.com/our-structure/
(I work at OpenAI, but I am not a lawyer and am not speaking on behalf of OpenAI - just sharing my personal understanding.)
> The OpenAI Foundation also exclusively appoints the board of the OpenAI Group PBC and can replace directors at any time.
Isn't it hard to write this with a straight face?
If they truly wanted it to be in the benefit of the not-for-profit and safe from interference, the ownership by the foundation would be much closer to or just over 50%.... just thinking out loud...
The magic 50% ownership isn't relevant for that purpose. There are special provisions which means that the Foundation effectively exerts full control over the company because it appoints the entire board.
The corporation selling shares is just primarily owned by the non profit
The corporation selling shares is subject to normal corporate tax regime
The real answer to your question is that non profits can own shares, and there is no legal difference between passive investment of other publicly traded companies and highly consolidated shares of a private company. In the US it is seen as merely happenstance that we have such a liquid market where the shares themselves can rapidly change in value and create profits, but there is nothing controversial about that.
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Here we go
why not let it be public ?
Too late.
Interest in the SpaceX, Anthropic, and OpenAI IPO is already dropping
Why do you say this? It's OK to make such a bold statement, but you gotta share how you came to this conclusion. This helps with a good discussion.
What's the point of a "confidential S-1"?? Isn't the S-1 supposed to inform potential investors?!? So ... shouldn't it _not_ be confidential??
> What's the point of a "confidential S-1"?
“Under the JOBS Act, it has been possible since April 2012 for ‘emerging growth companies’ to file a Form S-1 on a confidential basis, only making the contents public 21 days prior to the road show for the IPO” [1]. Since 2017 and 2025 it’s been available to basically all companies [2].
Withdrawing an IPO looks bad. Confidential filing lets issuers start and have the option to abort the process without taking reputational damage. (The specifics of OpenAI’s filing, and any back and forth with the SEC, remains confidential.)
[1] https://en.wikipedia.org/wiki/Form_S-1
[2] https://www.sec.gov/about/divisions-offices/division-corpora...
Note the word "Draft".
Once it no longer is being drafted—and agreed upon by all parties to meet the needed regulatory standards—it will become final and be publicly published.
The SEC needs to review it before approving a company to go public at all. It’s targeted at investors but they need to clear it, ask questions, demand changes, etc.
Anthropic did exactly the same thing on June 1st: https://www.anthropic.com/news/confidential-draft-s1-sec
Also according to the Financial Times that this confidential filling gives employees who are considering to sell shares transparency.
I find the irony delicious that this S1 will be fed into ChatGPT so often looking for flaws and edge cases that the LLM will develop sentience just to tell people to stop…
Would be hilarious if they used an LLM to write it and it started hallucinating revenue streams and numbers.
I’m pretty sure they’re smart enough to remember to put “make no mistakes” in their prompt.
Companies IPOing should be forced to put up their estimated market cap as collateral in cash. Oh what is that? You don't have $1 trillion in cash to put up? Cool, you're not a $1 trillion dollar company then.
This makes no sense. Market cap and cash reserves are two different stats for a reason. Why would they need to be the same? Just to make things simpler for people who don't actually know what market cap means? (Which, granted, is the vast majority of people.)
This makes no sense: the whole point is to raise capital. The valuation is never just the current value of the assets; it’s based on the expected future cash flows. A good example is in biotech, some researcher developed a treatment and wants to develop a product. They have valuable IP but zero money. So they IPO to raise capital to bring the treatment to market. The investors expect that in the future, they will get dividends or a buyout.
If a company that wanted to IPO had 1 trillion dollars, their market cap would have to be larger than their cash holding. Their cash on hand is considered or at least should be considered in any normal valuation of the company. Because shares are ownership of the company.
So a simple valuation would be something like Current Cash + Assets + Expected Future cash - (Expenses + Risk)
Companies always trade at a premium to book, so how would that work?
Last year Chegg was trading below net cash (meaning their market cap was smaller than cash in the bank minus debt). Might still be, I haven't checked in a while. There were maybe a hundred on the Tokyo stock exchange trading below net cash.
Where would a company ever get their market cap in cash? If they had that, wouldn’t they by definition have a higher market cap, since the value of the company is cash + the rest of the company?
> since the value of the company is cash + the rest of the company?
Failing companies sometimes trade below cash value. OP's basically creating a rule by which only failing companies are allowed to go public. (Or those who have paid a king's ransom to a megabank.)
In theory the purpose of an IPO is to raise cash to expand a company. If the company already has the cash they don't need to do an IPO.
the marketcap represents the cashflow estimated by the market to be taken out of the business over the lifetime of the company discounted today.
your suggestion makes no sense