Sam Altman: We raised a $110B round from Amazon, Nvidia, SoftBank
twitter.comThis time, does the $100B actually exist?
https://www.inc.com/leila-sheridan/nvidia-is-wavering-on-its...
What's the statue of limitations for securities fraud? The current administration won't last forever.
Circular economy money
Normally, there's at least a locked suitcase full of newspapers racking up frequent flier miles...
1,000 metric tons do not fit in a airplane…
Fits evenly on a blockchain…
Definitely with regard to Nvidia.
If you make a billion but only pay $2M for a pardon it might be worth it: https://www.independent.co.uk/news/world/americas/us-politic...
> This time, does the $100B actually exist?
Nope. That 100B is in "promises" for over several years in total.
They have $15B out of the $50B from Amazon right now.
> The current administration won't last forever.
This is why OpenAI must IPO and when it does, I won't be surprised that a crash is followed up before 2030.
By then, they will "announce" "AGI" (Which actually means an IPO)
This should probably change to https://openai.com/index/scaling-ai-for-everyone/ which has more details.
> Today we’re announcing $110B in new investment at a $730B pre-money valuation. This includes $30B from SoftBank, $30B from NVIDIA, and $50B from Amazon.
The tweet storm has a bit more substance
e.g. it talks about running NVIDIA's systems (?) on AWS
> NVIDIA has long been one of our most important partners, and their chips are the foundation of AI computing. We are grateful for their continued trust in us, and excited to run their systems in AWS. Their upcoming generations should be great.
Probably something like NVLink Fusion. AWS has been doing deals with suppliers for which the smallest unit of deployable compute is a 44U rack (e.g. Oracle), so this is more of the same.
What would really help is knowing the details of such funding. The hierarchy of who gets paid first in event of going under is very illuminating and while I am not a banker I always wonder if there are caveats too complicated even for the large investors to understand
Without circular investments and valuations what would Open AI be worth? 100B? 300B? Entirely on revenue alone it seems like 20B. Current valuation appears to be two orders of magnitude off.
Let the retailers decide this year at IPO! The heavy bags must be carried by someone
Is this really the con? Be part of the in-group and buy pre-IPO shares to dump them on joe-six-pack shortly afterwards?
Always has been? (Well, with pyramid schemes anyway.)
>Without circular investments and valuations what would Open AI be worth? 100B? 300B? Entirely on revenue alone it seems like 20B. Current valuation appears to be two orders of magnitude off.
They just passed $20B in revenue, you can't really expect a company with this much hype and traction to have a 1x multiple.. that's not to say a 35x multiple makes sense either.
and they say its not a bubble! we saw it with oracle deal, big announcement and than nothing, same with nvidia and now same thing is going again i hpe this is cash infusion and not some credit deal.
SoftBank? The music must be stopping soon, hold onto your butts.
What's the meme with SoftBank? Just that they're super bad at investments?
What? SoftBank has been investing in them repeatedly for years now.
> We continue to have a great relationship with Microsoft. Our stateless API will remain exclusive to Azure, and we will build out much more capacity with them.
This sounds a bit like going forward (some) OpenAI APIs will also run on platforms other than Azure (AWS)?
Anyone knows more?
I guess Amazon would have a hard time justifying their investment if OpenAI remained Azure-exclusive...
Unless I'm mistaken wasn't someone at Microsoft suggesting they would just develop their own models soon?
Wow! This is circular financing. Sharknado, Altnado….
I love how people think the company that basically invented ai is going out of business. Clearly OpenAI is a massive success and will continue to be
Nvidia will get all that money back via GPU purchases, Amazon via cloud rental and SoftBank is being typical SoftBank - a rich but not particularly bright kid in a class :) .
"I give you $30 billion if you use it to buy $30 billion of stuff from me" doesn't sound like a very good investment. Is Nvidia expecting more back than it puts in? Enough more to make the deal profitable?
Or is it just to keep Nvidia from crashing?
Well, I won't pretend I know the answer :) . But I assume that a) they are partially betting on making a normal return on investment (i.e. OAI not crashing), b) they profit from running a huge expense/revenue cycle (a company making say a million of profit and having a billion revenue is favored better than the same but with only ten million revenue), and c) even if all goes wrong, it is still better to get back most of the investment even if not everything and zero profit, compared to a possibility of just losing it all like SoftBank or other investors.
$30B in sales is worth more than $30B in stock appreciation...
I this $110 Billion more or just $110 billion historically?
Burn baby, burn!
BTW, real money or credits?
$30B from Nvidia… so the investments are locked in circular dependency. Great for the economy.
This implies any actual investment took place, which would be an innovative break from the typical scenario with AI firms.
Oh the "investment" is definitely taking place on paper. Whether any money actually changes hands... doubtful.
Kind of leaving out a lot of detail there:
- Amazon's $50B is only $15B, with the rest being "after certain conditions are met", whatever that means (probably an IPO, which isn't happening)
- The $30B each from softbank and NVIDIA is paid in installments
So this is more a $35B fundraise, with a _promise_ of more, maybe, if conditions are met. Not _bad_, but yet more gaslighting from Mr Altman. Anyone reporting this as a closed fundraising deal is being disingenuous at best.
> - Amazon's $50B is only $15B, with the rest being "after certain conditions are met", whatever that means (probably an IPO, which isn't happening)
Startup funding is often given in increments depending on milestones being met. Most startups just don’t announce that it’s conditional.
For large funding rounds, nobody gets a check for the full amount at once.
The funding would not be conditional on an IPO because that wouldn’t make any sense. The IPO is the liquidity event for the investors and there’s no reason for a startup to take private investment money that only enters the company after IPO.
The conditions are either an IPO or achieving AGI. I’d be curious to know how the contract defines AGI. If I recall correctly, the OAI-Microsoft deal just defined it as “AI-shaped tech that can generate $100 billion in annual profits”, which I think is actually close to the correct answer, insofar as we will have AGI when the markets decide we have AGI and not when some set of philosophical criteria seem to be satisfied.
> If I recall correctly, the OAI-Microsoft deal just defined it as “AI-shaped tech that can generate $100 billion in annual profits”, which I think is actually close to the correct answer
So if they hit 100 billion annual then it's AGI but if Kellogg's launches “FrostedFlakes-GPT" and steals 30% of the market it's no longer AGI at 70 billion?
This is pretty standard. Usually the conditions are performance benchmarks, but may also include IPO. Typically its done in multiple tranches, e.g. 15B at the start, 5 more if you gain +500m users, 5 more if your profit exceeds X, and the rest for IPO (im over simplifying)
Not to nitpick but to expand, many funding deals (pretty much all above 100M) are structured like that.
You'll never get a billion dollar check from anyone.
I've even seen startups raise like 500k pre-seed with tranches in it, lmao!
nit: I think you mean tranches
Whoops, typo. Thanks!
*tranche
Great. This stupid AI tulip craze is going to keep going.
It’s not craze. It’s technology shift. Bitcoin and 3D printing were craze. It’s like a move from analog photography to digital. I am telling you this as a very conservative person. Even for me it’s helpful.
3D printing is helpful too. The infrastructure created during the dot-com bubble of the late 1990s was also helpful. The UK is still profiting from the railway infrastructure created during the railway craze of the 1840s (https://en.wikipedia.org/wiki/Railway_Mania). The question is just how much of the valuation of AI companies is because they are useful and how much is speculation...
> 3D printing were craze
That's certainly a take, industry loves it. Sure, all that "everybody will print widgets at home instead of going to the store" stuff was never going to happen, but 3d printing is nonetheless here to stay.
I do not long back to the days of reused boxes and ducktape as homes for my electronics. It's here to stay.
It can be both a craze and a technology shift. AI isn't going away, it will transform some industries. But right now it's overhyped, overfunded and due a trip back to reality.
3D printing has a CAGR of 18-25%, not exactly 'were craze'
It most definitely COULD be a craze from the perspective of scope of investment, societal impact and timing. No one surfing the crest of this wave could be described as "conservative".
So how much are you willing to pay for it?
Personally at this point my combined AI spend is the most expensive recurring monthly subscription I have, and that’s even with my company also paying for the AI tools I use at work.
If it weren’t subsidized I would pay more. Wouldn’t be happy about it but I would do it.
At this stage in the game I don’t really understand where this skepticism of the value these tools provides comes from.
Actually it is not about this stage. It is about the sustainability of this when training data runs out and there is less and less human generated content.
An echo cannot go on forever!
> Actually it is not about this stage. It is about the sustainability of this when training data runs out
This is an argument from 2024. Somehow, the models have continued to improve.
If they stopped improving today they are good enough as they already are to generate profound change.
The wave front is already visible, we’re just on the shore waiting for the impact.
When training data runs out, they usefulness will diminish quickly. They will still be useful for searching documents etc, but I guess they are not good at that even now.
When training data runs out, their usefulness will stop growing quickly. Why should their usefulness diminish?
Because they would not be up-to date with programming languages, tools, best practices etc.
May be there is some way to keep the model up-to date in less dramatic ways. But I think something gotto give..
I mean, even now the vibe coded stuff is reprehensible.
> At this stage in the game I don’t really understand where this skepticism of the value these tools provides comes from.
Fear
I get it. I’m scared too. I’d be lying if I said I wasn’t.
20 bucks a month
> It’s not craze. It’s technology shift.
It is a bubble with extreme levels of debt + funding from too many promises from companies that are in these sort of rounds.
People being consumed by the hype will also be completely consumed by the crash.
Comments like this is exactly how a 2000 and a 2008 style crash will happen.
"This time it's different!"
> Bitcoin and 3D printing were craze.
What bitcoin gave us essentially? Huge pump and dump schemes coordinated by big hands? Crypto investments which made 95% of investors poorer? What's left? Maybe 0.01% of it was beneficial.
Freedom from overregulated and antiquated retail banking especially wrt cross-border transfers.
I guess it isn't that noticeable from inside US, but the rest of the world is grateful.
Meaningless, zero information post on twitter/X from someone that looks exactly like corporate psycho Carter Burke in the film Aliens.