Right now we have a ~$1 trillion company which a ton of the “economy” and valuations are based on, with near zero information on how it’s doing.
I think the fact that we have so little information is the most important information we have. If OpenAI had a sound business plan and was on strong financial footing, they'd have IPO'd.
All of this continued stalling and obfuscation can only mean one thing, IMO: OpenAI has no long-term viability and they're desperately hoping for some new breakthrough to reinvent their business model before the VC money faucets turn off for good.
OTOH, if a company has a sound business plan and strong financial footing it may not need to IPO -- unless the founders or VCers want out ASAP.
If a startup is riding a hype cycle and is one of two leaders in the global industry with unreal growth numbers, they can IPO whenever they want. The incentives lean toward doing an IPO before the hype runs out, not delaying it.
If they were worried about running out of VC money, going to the public (the P in IPO) would be the move.
Companies don't actually have to go public quickly or even at all, even though that's been drilled into us as the only goal of every investor-backed startup.
What about Stripe?
It all starts to look like a very low margins business, and reminds me very much of telecom industry.
[1] https://www.a16z.news/p/state-of-markets-ii
[2] https://www.reuters.com/business/media-telecom/openais-ad-bu...
This also coincides with a growing market for private credit and VC which certainly helps companies stay private for longer.
In 2012 this was relaxed in JOBS Act which relaxed the 500 threshold to 2000 but more importantly it ignored employees so now private companies of gargantuan trillion dollar valuation and thousands of employees have no disclosure requirements.
So, this is a classic case of regulation that did well but was relaxed and now creates hidden risks.
[1]: https://www.investopedia.com/terms/5/500-shareholder-thresho...
My guess would be - oxytocin, cortisol and dopamine regulation, or rather the failure of said regulation.
I'd say it's the growth of private markets to allow companies to keep getting funding even at the $100 billion range while staying private that has fueled the trend to stay private rather than SOX and other new regulations for public corporate governance dissuading them from going public.
no way it ever gives you a return like, say, the amazon IPO could've.
Losses are much more privatized staying private. Instead of hitting people's 401k or pension fund, this is mostly contained to a concentrated set of VC and PE investors, not large public markets.
This is definitely by design and encouraged by the VC’s. It’s disgusting to consider what a simulacrum of a market the stock market has actually become.
There's a good recent YouTube video about the shift in regulations that switched IPOs from being a way to raise money for growth to being a way to dump on retail investors after all the significant growth has been funded by private investors:
https://www.reuters.com/legal/transactional/openai-targets-3...
And yes, they will be acquired by a company which will have survived the next crash at a fraction of their currently estimated valuation and we will truly have the next ride of the economy .. many years ahead if 2001 is an example.
Apparently they overstated revenue in an attempt to try to provide a direct comparison with Anthropic's reported metrics.
From the article: "According to a person with knowledge of the matter, the discrepancy arose from attempts by OpenAI’s own investors to produce a direct comparison with Anthropic’s annualised revenues. The pair calculate the figure in different ways, with Anthropic including the revenue from sales via cloud partners such as AWS and Google Cloud, while OpenAI does not. Efforts to “gross up” OpenAI’s annualised revenue led to reports that the group’s annualised revenue had hit $40bn in August. The company has since told investors its revenues have grown more than 70 per cent, leading to the $70bn figure"
**sorry the gift link can only be viewed 3 times..
2.5bn in revenue for all of July. That is a disaster.
Squeaky bum time
The public markets have floated multiple names up to $6tr marketcap/valuation
so the debuts at $1tr valuation from the private markets don’t mean anything
pre-IPO investors will just collar like they did SpaceX, nullifying any price volatility for them at the high share price, and giving them all the liquidity collateral they need for borrowing
The world has standardised methods of accounting. Not only do Anthropic and OpenAI avoid using those methods, they both use the same phrase “annualised revenues” to describe two radically different accounting processes.
They’re both also leaking those annualised numbers slowly to the press at irregular intervals, which hints that they’re disclosing new numbers in the days after a big sale lands. So you see “$30bn annualised” because they managed to land a $1bn contract the week before, bumping the annualised figure up by $12bn compared to the start of the previous month, and the end of the next.
Although, I suppose that saying, "the market can remain irrational longer than you can be solvent", is more true than ever.
Anyway, if I had a hundred bucks to burn, I’d bet this is a move to undermine Anthropic’s IPO.
So much ARR.
My anuallized revenue is about 4.5M. I just need now to get a salary every day.
And the sad fact is even though they did this, they were still 20 billion too low.
Not only will this never be an IPO, this is a signal of a collapse of the economy
gift link didn't work for me, and is this poorly phrased? because it seems implausible that OpenAI doesn't typically include revenue from their models being used on AWS. Perhaps the "gross up" is referring to how the number is included? like Anthropic was using the value pre-removal of revenue sharing and putting the revenue share subtraction as a separate expense?
[not a finance guy so someone tell me I'm wrong if that's not a plausible reading]
Just to clarify from my understanding of the quote, "they" here is openai investors, not openai.
I'm confident both companies are lying about their revenues.
You can still learn something from it: Look at what they do, not what they say - look at how sophisticated their public communication is. They deliver that information in the perfect manner - not only the redirection and striking a blow against their rival, but they use an anonymous "person with knowledge of the matter": A named source at OpenAI might betray the self-interest in the statement, but some anonymous third party is just reporting what they know.
These guys are very good at it, though that shouldn't surprise you. Look at their product, in one sense a highly effective disinformation machine.
What do you mean by this?
> far short of the $70bn reported by the FT and other media outlets late last month based on information that was provided to investors.
Still, seems it is still true that their number is not directly comparable to Anthropic's because they calculate it differently, I think that part still stands and is pretty relevant here.
Though I agree with your sentiment that FT is reporting this stuff in a way to stir the pot and create outrage. Speculating about a private company like this is stupid.
It just wasn't clear exactly what the error was (e.g. was a projection of a $70B ARR by end of year being misinterpreted as $70B ARR now -- that would have been stupid, but less stupid than the "investors added a fudge factor to the numbers" story that they're now going with).
> based on information that was provided to investors.
It was OpenAI spreading their bullshit annualized revenue.
OpenAI and Anthropic always play this silly game to pretend they are in anyway viable. It is always ARR, "adjusted" revenue, etc. "We are profitable when we pretend we don't have expenses".
Its comically bad how this circus is playing out.
>> based on information that was provided to investors.
>It was OpenAI spreading their bullshit annualized revenue.
Did you read the article?
>The discrepancy arose from attempts by OpenAI’s own investors to produce a direct comparison with Anthropic’s annualised revenues, according to a person familiar with the matter. The pair calculate the figure in different ways, with Anthropic including the revenue from sales via cloud partners such as Amazon’s AWS and Google Cloud, while OpenAI does not.
>Investors’ efforts to “gross up” OpenAI’s annualised revenue prompted reports that the figure was around $40bn in July, said the person.
>OpenAI later told its backers that its annualised revenues had jumped more than 70 per cent since July, prompting reports that the figure was about $70bn at the end of September — a number the company did not deny.
>However, the new investor presentation shows close to $30bn annualised revenues in July.
Sounds like what happened wasn't that openai "spreading their bullshit annualized revenue", it was that they gave some vague figure that investors the media and other investors extrapolated, and it turned out that extrapolation was incorrect. Both the $40bn and $70bn figure did not come from openai directly.
I'm not certain OpenAI or Anthropic have a viable business, either, but Spacex definitely pulled a massive scam.
Yes? They were geared up for IPO this year until pushing it back. See all the marketing shenanigans around solving mathematics for this month's flavour. They have a balancing act to manage between the hype and the reality of the business.
Which regulations are these?
The press that reports on this shit is very much complicit, they report on bullshit metrics spread by these companies to generate hype.
> outside of OpenAI control.
If OpenAI is as uncertain of their numbers to the magnitude of 20B, they should stop spreading bullshit metrics. In fact this should be considered fraud.
People can just write stuff. That does not make it wrong but that also does not make it right. If your claim rests on some claim that some anonymous actor got some information, that's just not super convincing and neither is pointing at it as some sort of truth.
See: SpaceX and the Nasdaq 100 rule changes.
This take has been trotted out so many times, e.g. “How many puts have you bought if you’re so certain?”
OpenAI hasn’t had any problems getting impressive amounts of funding. So why ipo?
If He fails to arrive, or arrives late, they will be the railroad financiers in the Panic of '73.
The oversimplified view that has been drilled into startup discussions for years has been that IPO is the singular goal for every startup and they need to get there as fast as possible, but that hasn't been true for a long while. There are high profile examples like Stripe with no intent to go public any time soon. Some public companies are even gradually doing share buybacks partially to remove their public exposure.
Being a public company kind of sucks in many ways. I'll admit my sample size is small, but every post-IPO CEO I've known has expressed some regrets about going public. It was a fascinating revelation to me after being raised on the idea that IPO is the ultimate victory goal of every startup.
Whatever private-market liquidity events they will be permitted to participate in will be highly disadvantaged compared to the other two groups.
What does adding a few more suckers to the pile of tens of millions of other suckers do to those that get the real benefits? It’s not like after they achieve their goals, the people who helped them would have the ramp or resources to recreate the process.
So yeah, if they stop training models forever, Anthropic will probably start making a profit... until someone else with better models comes along to eat their lunch.
[1] https://www.morningstar.com/news/marketwatch/2026091414/the-...
All these figures are so utterly weaselly. AAR is a made up measure to make them look good. If they cannot show GAAP numbers, they are hiding something. Full stop. While as private companies they are under no legal obligation to show us their books, their PR and intent to go public requires it.
In the last ~month, OpenAI announced a delay to its IPO and Anthropic put a relatively near-term range on its IPO date. These are very different signals.
These are useful and too big to run locally.
The ultimate size of that business in terms of revenues and profits may not match current expectations, but it's also not 0
I'm absolutely certain that we will reach that point, just not when. Could come sooner than we think though.
Remember a few weeks ago when all the AI labs said "we need to slow down, to uh, prevent destroying the world"?
The reason is that companies can choose the best timing to go public - when their financial look the best - and they do. Anthropic trying to go public very soon is a good tell their financial look pretty decent. OpenAI postponing the IPO is a very good tell theirs look bad.
Is there no end to this kind of lazy conspiracy theory