1 00:00:00,020 --> 00:00:04,320 Ejaaz: A lot of people have written off OpenAI, but they might finally be turning things back around. 2 00:00:04,520 --> 00:00:08,840 Ejaaz: They just raised $122 billion, the largest ever private funding round. 3 00:00:09,040 --> 00:00:11,780 Ejaaz: They purchased TBPN for $200 million plus. 4 00:00:12,120 --> 00:00:18,120 Ejaaz: They cut out Sora. They're reconsolidating every single resource into one singular super app. 5 00:00:18,280 --> 00:00:21,480 Ejaaz: But there's tension amongst the rankings. Their CFO, Sarah Fryer, 6 00:00:21,760 --> 00:00:24,360 Ejaaz: is reportedly being frozen out ahead of a large IPO. 7 00:00:24,480 --> 00:00:28,140 Ejaaz: Their CMO just stepped down. And there's a lot of tension around whether OpenAI 8 00:00:28,140 --> 00:00:30,880 Ejaaz: will regain the throne from Anthropic. 9 00:00:31,060 --> 00:00:33,520 Ejaaz: And that's what we're going to be digging into in today's episode. 10 00:00:33,700 --> 00:00:37,800 Ejaaz: We think that OpenAI is undergoing a pivot that a lot of people are currently missing. 11 00:00:38,450 --> 00:00:41,610 Josh: This is the comeback story. And I think it's told in three parts, right? 12 00:00:41,690 --> 00:00:44,630 Josh: It's like we start with, we have this graveyard of things that have gone wrong 13 00:00:44,630 --> 00:00:47,670 Josh: that led people to believe that open AI is just kind of getting left behind 14 00:00:47,670 --> 00:00:49,590 Josh: by Anthropic and market shares reflected this. 15 00:00:49,770 --> 00:00:52,510 Josh: But then we have all the things that are actually going on behind the scenes, 16 00:00:52,710 --> 00:00:56,790 Josh: followed by this conclusion, their magnum opus, which is leading into the IPO 17 00:00:56,790 --> 00:00:59,370 Josh: and all of the things they're doing behind the scenes that maybe you're not 18 00:00:59,370 --> 00:01:00,950 Josh: privy to or recognizing. 19 00:01:01,150 --> 00:01:03,870 Josh: And starting with Stargate, which may be the biggest failure. 20 00:01:04,090 --> 00:01:07,790 Josh: I mean, the headline number was $500 billion for a data center. 21 00:01:07,930 --> 00:01:12,510 Josh: And if you remember, Sam was at the White House with Masayoshi from SoftBank 22 00:01:12,510 --> 00:01:17,370 Josh: and a few other people announcing half a trillion dollars for these data centers to exist. 23 00:01:18,030 --> 00:01:23,510 Josh: OpenAI has since scrapped the 600 megawatt Abilene extension because it actually 24 00:01:23,510 --> 00:01:26,630 Josh: would have installed GPUs at a site where the power grid wouldn't be ready until 25 00:01:26,630 --> 00:01:28,070 Josh: the next gen chips are available. 26 00:01:28,270 --> 00:01:31,510 Josh: So they've been having a lot of logistical issues. There was another problem 27 00:01:31,510 --> 00:01:34,790 Josh: that they had where the winter weather in Abilene, where they're building these 28 00:01:34,790 --> 00:01:37,930 Josh: data centers, literally knocked the liquid cooling offline for multiple days, 29 00:01:38,490 --> 00:01:39,330 Josh: straining the relationship. 30 00:01:39,330 --> 00:01:44,810 Josh: They've been having a bunch of issues and the competitors are kind of coming in to sweep up the mess. 31 00:01:44,950 --> 00:01:48,470 Josh: And it appears as if OpenAI is kind of shifting the strategy from building these 32 00:01:48,470 --> 00:01:51,890 Josh: gigantic data centers to actually just deferring a lot of the money that they 33 00:01:51,890 --> 00:01:55,510 Josh: raise into cloud infrastructure and just borrowing the compute from other people. 34 00:01:55,650 --> 00:01:58,790 Josh: So this is the first sign of things that weren't going so well. 35 00:01:59,130 --> 00:02:02,910 Josh: Grand ambitions signed at the White House didn't really convert into everything 36 00:02:02,910 --> 00:02:04,210 Josh: that they hoped and wanted for. 37 00:02:04,410 --> 00:02:10,570 Ejaaz: You could also argue that OpenAI were the singular prop for the entire GPU economy, right? 38 00:02:10,670 --> 00:02:14,710 Ejaaz: They started this whole circular economy by signing all these partnerships and deals. 39 00:02:14,890 --> 00:02:19,970 Ejaaz: But it wasn't just GPUs. It was also the memory supply, which is required to build the GPU. 40 00:02:20,130 --> 00:02:23,550 Ejaaz: So every single layer of the picks and shovels, OpenAI was involved. 41 00:02:23,670 --> 00:02:27,790 Ejaaz: They committed to purchasing, I think, around 40% of the global memory supply, 42 00:02:27,910 --> 00:02:30,090 Ejaaz: and they defaulted on that in the last two weeks. 43 00:02:30,210 --> 00:02:34,050 Ejaaz: So a lot of this stuff is starting to implode, and people are fearful of OpenAI 44 00:02:34,050 --> 00:02:37,250 Ejaaz: success based off of that. But it's not just the infrastructure side of things. 45 00:02:37,590 --> 00:02:41,850 Ejaaz: We have to talk about the competition between the other major competitive for 46 00:02:41,850 --> 00:02:42,890 Ejaaz: them, which is Anthropic. 47 00:02:43,050 --> 00:02:46,950 Ejaaz: And Anthropic, and they've been cooking in multiple ways, the primary one being enterprise. 48 00:02:47,310 --> 00:02:50,350 Ejaaz: Now, if you looked at this chart about a year and a half ago, 49 00:02:50,470 --> 00:02:54,530 Ejaaz: it would be the inverse. OpenAI had the dominance in the enterprise market share. 50 00:02:54,710 --> 00:02:58,610 Ejaaz: Everyone in Fortune 500 was using ChatGPT. And at some point in the last year 51 00:02:58,610 --> 00:03:00,230 Ejaaz: and a half, that flipped pretty aggressively. 52 00:03:00,410 --> 00:03:04,910 Ejaaz: People became really fond of coding AI. It started becoming productive within their own business. 53 00:03:05,290 --> 00:03:11,510 Ejaaz: And Anthropic took the lead. They now have a 73% market dominance on first-time 54 00:03:11,510 --> 00:03:14,270 Ejaaz: enterprise usage. And it's not just enterprise usage. 55 00:03:14,510 --> 00:03:18,090 Ejaaz: Anthropic has also flipped their own trend on retail. 56 00:03:18,410 --> 00:03:22,550 Ejaaz: Recently, they were adding around a million users or a million signups per day. 57 00:03:22,650 --> 00:03:25,850 Ejaaz: And this came after the Pentagon fallout where Anthropic stood their ground. 58 00:03:25,970 --> 00:03:28,230 Ejaaz: And a lot of retail users really admired that. 59 00:03:28,390 --> 00:03:33,150 Ejaaz: So there is this shuffle or mix that has happened over the last year and a half 60 00:03:33,150 --> 00:03:37,150 Ejaaz: where OpenAI kind of lost that gleam, that number one throne, 61 00:03:37,290 --> 00:03:40,670 Ejaaz: which Sam had held on to for the first couple of years of open AI. 62 00:03:41,010 --> 00:03:42,650 Ejaaz: And there's real competition in the play now. 63 00:03:42,910 --> 00:03:45,570 Josh: Well, for a while, ChatGPT was synonymous with AI for a lot of people. 64 00:03:45,750 --> 00:03:49,790 Josh: It's like people thought that ChatGPT was AI. It was the entirety of AI. 65 00:03:50,070 --> 00:03:54,250 Josh: And what Anthropocistan has kind of punctured a hole in that perception and 66 00:03:54,250 --> 00:03:56,510 Josh: saying that, hey, actually, AI is multiple companies. 67 00:03:56,670 --> 00:03:59,250 Josh: In fact, Anthropoc is another player. And a lot of people have switched over. 68 00:03:59,590 --> 00:04:02,410 Josh: Now, this very much feels like, what is it? Maybe the second inning, 69 00:04:02,410 --> 00:04:06,410 Josh: The first inning was dominated by Chad Shibuti. The second one now is showing some competition. 70 00:04:06,870 --> 00:04:10,250 Josh: There are some more elements in this graveyard that we need to get through before 71 00:04:10,250 --> 00:04:11,110 Josh: we can get to the good stuff. 72 00:04:11,510 --> 00:04:15,710 Josh: Sora being the next biggest one. I mean, Sora was costing allegedly $15 million 73 00:04:15,710 --> 00:04:20,470 Josh: to run per day with no revenue, and they signed a huge deal with Disney. 74 00:04:20,610 --> 00:04:24,090 Josh: Now, Disney didn't know that their deal was getting cut until the rest of the 75 00:04:24,090 --> 00:04:27,430 Josh: world did when Sora came out and announced that they were actually cutting the app. 76 00:04:27,810 --> 00:04:32,350 Josh: Now, this concerned some people. For me, it was this very exciting thing because Sora... 77 00:04:32,730 --> 00:04:36,870 Josh: I mean, it was the AI slop app, right? Like it's like TikTok, except for AI only. 78 00:04:37,270 --> 00:04:40,950 Josh: It was a totally different market than what it seems like they're moving towards 79 00:04:40,950 --> 00:04:45,070 Josh: now. Like we just mentioned, the enterprise market is a huge market that they're going for. 80 00:04:45,330 --> 00:04:48,690 Josh: And Sora has absolutely nothing to do with that. So although Sora getting closed 81 00:04:48,690 --> 00:04:52,530 Josh: down could be perceived as a positive or a negative, there is one last thing 82 00:04:52,530 --> 00:04:55,730 Josh: in the graveyard that is kind of just purely a negative and it has to do with 83 00:04:55,730 --> 00:04:57,390 Josh: the leadership shakeup that they're having right now. 84 00:04:57,930 --> 00:05:02,350 Ejaaz: Yeah, so if we look at OpenAI's products in general, they've been losing favor, 85 00:05:02,350 --> 00:05:06,330 Ejaaz: but the team is what binds the company together. So they're the people who are 86 00:05:06,330 --> 00:05:07,130 Ejaaz: building the products together. 87 00:05:07,410 --> 00:05:11,370 Ejaaz: Even they have been suffering a bunch of reshuffling and tension amongst the ranks. 88 00:05:11,530 --> 00:05:14,230 Ejaaz: So a few things happened over the last two weeks. Number one, 89 00:05:14,970 --> 00:05:20,570 Ejaaz: OpenAI's CEO of Applications, Fiji Simo. So not to be confused with Sam Altman himself. 90 00:05:21,170 --> 00:05:24,850 Ejaaz: She has taken a leaf of medical absence for the next couple of weeks. 91 00:05:25,290 --> 00:05:29,330 Ejaaz: There've been rumors for a while now that Fiji has been working remotely from California. 92 00:05:29,610 --> 00:05:33,170 Ejaaz: And so like the fact that she's not gonna be able to have focus on this next 93 00:05:33,170 --> 00:05:36,710 Ejaaz: stage of open AI, kind of suggests that maybe Sam needs to step in or they're 94 00:05:36,710 --> 00:05:39,630 Ejaaz: under pressure from constrained resources to be able to pull off and execute 95 00:05:39,630 --> 00:05:42,410 Ejaaz: their vision of securing AGI by the end of this year. 96 00:05:42,830 --> 00:05:47,570 Ejaaz: There's also Sarah Fryer, the CFO, who is reportedly being frozen out from IPO talks. 97 00:05:47,950 --> 00:05:51,170 Ejaaz: Apparently, she disagrees with Sam's valuation. Apparently, she thinks it's 98 00:05:51,170 --> 00:05:53,370 Ejaaz: too extreme and Sam doesn't really like that. 99 00:05:53,610 --> 00:05:56,670 Ejaaz: Then you have the CMO, Kate Rauch, also stepping down from her position. 100 00:05:56,810 --> 00:06:01,230 Ejaaz: So I understand that there's a period of consolidation of power under OpenAI. 101 00:06:01,410 --> 00:06:05,830 Ejaaz: I know that they called it Code Red about four months ago. So it's to be seen 102 00:06:05,830 --> 00:06:07,330 Ejaaz: whether this is playing off. 103 00:06:07,410 --> 00:06:10,410 Ejaaz: And I think the argument that we want to make here, Josh, on this episode is 104 00:06:10,410 --> 00:06:13,070 Ejaaz: that I think the pivot is working and a lot of people are missing that. 105 00:06:13,570 --> 00:06:16,630 Josh: The CFO news is really exciting. And if you stick around, we'll get into the 106 00:06:16,630 --> 00:06:21,570 Josh: CFO OpenAI IPO confrontation that's currently happening because I think that's 107 00:06:21,570 --> 00:06:22,770 Josh: probably the biggest part of the story. 108 00:06:22,990 --> 00:06:27,170 Josh: But this is where we go behind the scenes and kind of figure out what has been 109 00:06:27,170 --> 00:06:28,090 Josh: working. And I think that's the biggest part of the story. And I think that's the biggest part of the 110 00:06:28,350 --> 00:06:31,630 Josh: I think a lot of people don't really, they see the headlines that Sora got killed, 111 00:06:31,750 --> 00:06:36,050 Josh: but they're not exactly sure why and the reasoning of it being actually something positive. 112 00:06:36,490 --> 00:06:41,370 Josh: Now, Sora compute was a lot. And as we know, because their data centers haven't 113 00:06:41,370 --> 00:06:46,230 Josh: been going online as fast as they needed to, OpenAI is kind of constrained for compute right now. 114 00:06:46,330 --> 00:06:49,610 Josh: They have a very limited amount and a lot of that compute has to go to serving 115 00:06:49,610 --> 00:06:53,290 Josh: users like us, but a lot of it also has to go to researchers for doing research 116 00:06:53,290 --> 00:06:56,150 Josh: and also training in order to train these new models. 117 00:06:56,150 --> 00:06:58,970 Josh: Now by killing Sora it frees up quite a bit 118 00:06:58,970 --> 00:07:01,830 Josh: of GPUs because generating video consumes a lot of 119 00:07:01,830 --> 00:07:04,730 Josh: compute to possibly help them train 120 00:07:04,730 --> 00:07:08,330 Josh: for this new model now this new model is codenamed Spud which 121 00:07:08,330 --> 00:07:13,290 Josh: is possibly GPT 5.5 or GPT 6 and Sam Altman confirmed that pre-training actually 122 00:07:13,290 --> 00:07:17,910 Josh: completed on March 24th and Greg Brockman said this is the result of two years 123 00:07:17,910 --> 00:07:22,370 Josh: of research and it seems like this is their perhaps not AGI moment but this 124 00:07:22,370 --> 00:07:25,410 Josh: is the really big model they've been training for for a long time. 125 00:07:25,550 --> 00:07:30,190 Josh: And we've started to see the leaks coming out of what the outputs of this model can actually do. 126 00:07:30,390 --> 00:07:33,630 Ejaaz: Yeah, so a lot of things have been leaked out of OpenAI over the last week. 127 00:07:33,690 --> 00:07:36,730 Ejaaz: And we're not entirely sure if what you're seeing on the screen now, 128 00:07:36,830 --> 00:07:42,250 Ejaaz: their new ChatGPT Image 2 model is from the new Spark model that you just referenced 129 00:07:42,250 --> 00:07:45,850 Ejaaz: here, Josh, but it's pretty damn good. It's so good. 130 00:07:46,070 --> 00:07:48,770 Ejaaz: Yeah, like look at some of these examples, like what you're seeing on the screen 131 00:07:48,770 --> 00:07:53,830 Ejaaz: here is four different examples of four different types of medium that you can generate as an image. 132 00:07:53,950 --> 00:07:59,370 Ejaaz: So in this example, you've got the human anatomy in like incredible detail here. 133 00:07:59,510 --> 00:08:02,730 Ejaaz: And it's all accurate. Like you can zoom in. This is such a basic thing. 134 00:08:02,830 --> 00:08:08,250 Ejaaz: But a year ago, it couldn't do this. It couldn't spell English words correctly, let alone Latin words. 135 00:08:08,390 --> 00:08:10,370 Ejaaz: And it is absolutely nailing it in this example. 136 00:08:10,570 --> 00:08:14,250 Ejaaz: And then the one over here, it's nailed like the entire global map. 137 00:08:14,510 --> 00:08:19,970 Ejaaz: And then we have an example of like a real maybe photo of what is this Bath 138 00:08:19,970 --> 00:08:23,070 Ejaaz: and Body Works, where it says, Sorry, we're closed for the evening. See you tomorrow. 139 00:08:23,630 --> 00:08:28,210 Ejaaz: Now, a lot of these seem probably quite basic. We've got like a YouTube thumbnail graphic here as well. 140 00:08:28,840 --> 00:08:33,260 Ejaaz: In order to get the accuracy, spelling, like, look, this is not Mr. 141 00:08:33,320 --> 00:08:34,740 Ejaaz: Beast that you're seeing on your screen right here. 142 00:08:34,920 --> 00:08:38,800 Ejaaz: These aren't real videos that exist at all, has been incredibly hard. 143 00:08:38,900 --> 00:08:42,260 Ejaaz: But now if you were to scroll on X or any other social media platform and see 144 00:08:42,260 --> 00:08:47,220 Ejaaz: these images, you might be convinced immediately that that is real when really it's not. 145 00:08:47,760 --> 00:08:50,560 Josh: Yeah, whatever they're doing with this model, it seems like this is the moment 146 00:08:50,560 --> 00:08:54,380 Josh: in time in which we will no longer be able to tell what's air generated and what's not. 147 00:08:54,560 --> 00:08:57,920 Josh: Because if I saw any of these photos independently, I would have absolutely 148 00:08:57,920 --> 00:08:59,640 Josh: no clue that they were generated by AI. 149 00:09:00,060 --> 00:09:02,080 Josh: Down to the handwritten note that we're seeing on screen here, 150 00:09:02,200 --> 00:09:06,500 Josh: where it actually looks really handwritten, very much like a human wrote it. 151 00:09:06,660 --> 00:09:08,980 Josh: And that hasn't been the case with a lot of previous AI models. 152 00:09:09,240 --> 00:09:14,480 Josh: So whatever they have done to kind of cook this image gen model in the background 153 00:09:14,480 --> 00:09:17,740 Josh: has worked in a way that's very impressive and really powerful. 154 00:09:17,980 --> 00:09:21,580 Josh: And it's also important to note that Anthropic has no image gen capabilities 155 00:09:21,580 --> 00:09:24,380 Josh: at all. When it comes to anything outside of text. 156 00:09:24,580 --> 00:09:28,640 Josh: Anthropic just doesn't exist. They're not really a multimodal model at all. 157 00:09:28,740 --> 00:09:32,320 Josh: And it seems as if ChatGPT now is kind of making a move towards even the Google 158 00:09:32,320 --> 00:09:35,640 Josh: side of things when competing directly with Nano Banana Pro or Nano Banana Mini, 159 00:09:35,880 --> 00:09:38,000 Josh: both of which are unbelievable models. 160 00:09:38,100 --> 00:09:41,740 Josh: So this is really exciting to see. And I think it's an early step into their 161 00:09:41,740 --> 00:09:44,020 Josh: new strategy that they're leaning towards, which is the super app. 162 00:09:44,390 --> 00:09:47,650 Josh: And the super app, I think is probably the reason why a lot of people are switching 163 00:09:47,650 --> 00:09:51,090 Josh: over to Claude, because they have this unbelievable desktop and mobile app that 164 00:09:51,090 --> 00:09:52,750 Josh: has everything that you want under one roof. 165 00:09:52,950 --> 00:09:57,230 Josh: If you use Claude, you get access to like the anthropic models just to chat 166 00:09:57,230 --> 00:10:01,350 Josh: with you get access to co-work and you get access to coding along with all of 167 00:10:01,350 --> 00:10:04,030 Josh: the open claw functionality that they've recently built in like dispatch and 168 00:10:04,030 --> 00:10:05,570 Josh: we covered an episode last week. 169 00:10:05,750 --> 00:10:09,950 Josh: And I think that super app is a very powerful thing because the current chat 170 00:10:09,950 --> 00:10:13,830 Josh: GPT open AI ecosystem, it's very spread out. if you want to use Soar, 171 00:10:13,910 --> 00:10:16,030 Josh: you need to download an app, log into your account. 172 00:10:16,150 --> 00:10:20,230 Josh: If you want to use Codex and write code, you have to create a whole separate entity. 173 00:10:20,410 --> 00:10:23,470 Josh: You have to download a separate app. It doesn't all happen on the same application. 174 00:10:23,470 --> 00:10:27,730 Josh: And it appears as if OpenAI is officially doing the super app. 175 00:10:27,850 --> 00:10:29,470 Josh: And this is a really important pivot for the company. 176 00:10:29,970 --> 00:10:35,610 Ejaaz: Yeah. And the part I like most about this super app is their insane turnaround for coding AI. 177 00:10:35,750 --> 00:10:37,710 Ejaaz: Now I have to stress at the end 178 00:10:37,710 --> 00:10:40,870 Ejaaz: of last year, it was very clear what the number one coding AI model was. 179 00:10:40,970 --> 00:10:44,150 Ejaaz: It was Claude opus 4.6 from anthropic 180 00:10:44,150 --> 00:10:47,130 Ejaaz: and it was number one by a country mile 181 00:10:47,130 --> 00:10:49,930 Ejaaz: now open ai since then called a code red and 182 00:10:49,930 --> 00:10:53,130 Ejaaz: they consolidated all their compute resources all their research talent 183 00:10:53,130 --> 00:10:58,370 Ejaaz: to focus on two specific things building the best generalized llm and to upgrade 184 00:10:58,370 --> 00:11:02,710 Ejaaz: their coding model why because the argument was if you have the best coding 185 00:11:02,710 --> 00:11:06,030 Ejaaz: ai model you will basically win the ai race because you could use that coding 186 00:11:06,030 --> 00:11:09,910 Ejaaz: model to build every other single app that you want to including the next AI 187 00:11:09,910 --> 00:11:10,870 Ejaaz: models that you release. 188 00:11:10,990 --> 00:11:13,890 Ejaaz: And a lot of these companies, OpenAI and Anthropic, are currently using their 189 00:11:13,890 --> 00:11:16,470 Ejaaz: models to build the next model. So coding, very important. 190 00:11:16,990 --> 00:11:24,470 Ejaaz: Codex right now is amazing. Now, it's not seen that way amongst the average user who is vibe coding. 191 00:11:24,570 --> 00:11:29,250 Ejaaz: They still very much prefer Claude Code and Opus 4.6 because the personality 192 00:11:29,250 --> 00:11:32,350 Ejaaz: feels right. It sounds intuitive, it's easy to understand. 193 00:11:33,110 --> 00:11:35,330 Ejaaz: For those of you who are serious about software engineering, 194 00:11:35,570 --> 00:11:39,710 Ejaaz: a lot of the feedback has since been that Codex is a much better coding agent. 195 00:11:39,870 --> 00:11:45,030 Ejaaz: Now, that's not entirely true when it comes to spinning up multiple coding agents. 196 00:11:45,150 --> 00:11:50,010 Ejaaz: A lot of engineers have said Codex kind of loses its ability to coordinate amongst 197 00:11:50,010 --> 00:11:52,570 Ejaaz: themselves, and therefore they need to use Claude Opus 4.6. 198 00:11:52,650 --> 00:11:56,430 Ejaaz: But the turnaround that OpenAI has managed to achieve has been nothing short of amazing. 199 00:11:56,610 --> 00:12:00,950 Ejaaz: And I think Codex has around 2 million weekly active users, which was up from 200 00:12:00,950 --> 00:12:04,270 Ejaaz: like 100,000 at the start of Yeah, so very impressive turnaround. 201 00:12:04,550 --> 00:12:07,470 Josh: It's growing very quickly and it's a great product. I was building a little 202 00:12:07,470 --> 00:12:12,330 Josh: website just to test things out, comparing Codex directly with Opus 4.6 and 203 00:12:12,330 --> 00:12:17,430 Josh: Codex was faster, it was more effective, but Cloud was easier to use. 204 00:12:17,570 --> 00:12:20,610 Josh: It was much warmer, much more friendly and the design I found was just much 205 00:12:20,610 --> 00:12:21,830 Josh: better in general, the design sense. 206 00:12:21,970 --> 00:12:25,870 Josh: So they're both spiky in their own ways, but Codex is an amazing product for 207 00:12:25,870 --> 00:12:29,050 Josh: people who are hardcore coders and just want the absolute best tokens generated. 208 00:12:29,490 --> 00:12:34,790 Josh: Now, all of this to say that OpenAI is in a pretty good place and they there's 209 00:12:34,790 --> 00:12:38,230 Josh: been laying the foundation perhaps a little more quietly than they should have 210 00:12:38,230 --> 00:12:41,950 Josh: on the next step forward and that next step forward really is driven by this 211 00:12:41,950 --> 00:12:46,850 Josh: IPO and now the IPO has been a major point of contention because there is some 212 00:12:46,850 --> 00:12:49,410 Josh: conflict in the company but before we get into the conflict 213 00:12:49,920 --> 00:12:53,840 Josh: The new fundraising round is telling. EJ, this is probably the final fundraising 214 00:12:53,840 --> 00:12:55,280 Josh: round they're going to have that's private. 215 00:12:55,580 --> 00:12:58,340 Josh: I mean, the next one is going to be the full public offering. 216 00:12:58,520 --> 00:13:02,760 Ejaaz: And it's the largest ever private round. I want to show you this graphic, 217 00:13:02,860 --> 00:13:07,080 Ejaaz: Josh, just to put into context the scale of this race. 218 00:13:07,440 --> 00:13:08,400 Josh: Yeah, that's outrageous. 219 00:13:08,620 --> 00:13:12,320 Ejaaz: Prior to this, the company that had the single largest private round was also 220 00:13:12,320 --> 00:13:16,580 Ejaaz: OpenAI in 2025, where they raised around $40 billion. dollars. 221 00:13:17,180 --> 00:13:20,340 Ejaaz: This is almost 3x that at that point. 222 00:13:20,520 --> 00:13:25,200 Ejaaz: It is just a gargantuan round and puts things into perspective as to, 223 00:13:25,480 --> 00:13:28,480 Ejaaz: you know, people really believe that the scaling laws are intact. 224 00:13:28,480 --> 00:13:32,100 Ejaaz: What they mean by that is a lot of this round is going to be used to acquire 225 00:13:32,100 --> 00:13:37,520 Ejaaz: GPUs, compute, setting up energy infrastructure grids to be able to train the next model. 226 00:13:38,020 --> 00:13:42,300 Ejaaz: And Greg Rockland on a recent interview last week, I believe, said the same thing. 227 00:13:42,380 --> 00:13:44,640 Ejaaz: He said, if I could get my hands on all of the compute in the world, 228 00:13:44,820 --> 00:13:48,520 Ejaaz: I would, because it is a direct translation into revenue for OpenAI. 229 00:13:48,620 --> 00:13:50,020 Ejaaz: And they've proven that time and time again. 230 00:13:50,160 --> 00:13:53,920 Ejaaz: I think Anthropoc has done the same thing. But a part of me just feel a little 231 00:13:53,920 --> 00:13:57,980 Ejaaz: uncomfortable about this, Josh, because they've raised all this money, right? 232 00:13:58,360 --> 00:14:02,160 Ejaaz: They've given all their investors, I think I saw Ashton Kutcher in like a leaked 233 00:14:02,160 --> 00:14:05,920 Ejaaz: cap table, had made a 43X on his fund from his initial investment from OpenAI. 234 00:14:06,000 --> 00:14:07,440 Ejaaz: So they're already up massively. 235 00:14:07,640 --> 00:14:12,980 Ejaaz: And now they're going to do this huge IPO, which has rumored to be around $1.2 236 00:14:12,980 --> 00:14:15,200 Ejaaz: trillion and above on open market. 237 00:14:15,820 --> 00:14:19,080 Ejaaz: I feel like things might be getting a little bit frothy. I don't know if you 238 00:14:19,080 --> 00:14:22,220 Ejaaz: have the same take here, but I know that they need the funds for scaling their 239 00:14:22,220 --> 00:14:25,460 Ejaaz: AI, but I don't know if a lot of this, I don't know how much of this is just 240 00:14:25,460 --> 00:14:28,140 Ejaaz: kind of PR to get the biggest IPO ever. 241 00:14:28,670 --> 00:14:32,210 Josh: Well, there has been PR and it hasn't been very positive because it appears 242 00:14:32,210 --> 00:14:34,810 Josh: as if Sam Altman has been fighting with the CFO of the company, 243 00:14:34,910 --> 00:14:39,450 Josh: Sarah Fryer, as it relates to the IPO timing and how they're actually going to initiate it. 244 00:14:39,530 --> 00:14:42,610 Josh: So from my understanding, and this is kind of what intuitively makes sense, 245 00:14:42,710 --> 00:14:44,930 Josh: is Sam Altman wants to get out as soon as possible. 246 00:14:45,110 --> 00:14:48,810 Josh: We know SpaceX recently just filed for their IPO. It was privately, 247 00:14:48,970 --> 00:14:52,090 Josh: but it's going to happen sometime around June. They're going to come out of the gates first. 248 00:14:52,310 --> 00:14:55,890 Josh: They're going to raise $75 billion at a $1.75 trillion valuation, 249 00:14:56,270 --> 00:14:57,910 Josh: that's going to absorb a lot of money from the market. 250 00:14:58,150 --> 00:15:00,750 Josh: There's still a lot of enthusiasm for AI companies. 251 00:15:01,250 --> 00:15:04,730 Josh: OpenAI surely wants to get there first. I can't imagine a world in which you 252 00:15:04,730 --> 00:15:05,830 Josh: wouldn't want to be ahead of 253 00:15:05,830 --> 00:15:09,470 Josh: Anthropic when the resource that matters the most to scaling is capital. 254 00:15:09,970 --> 00:15:12,570 Josh: Now, Sarah Fryer is kind of, E.J. 255 00:15:12,610 --> 00:15:15,990 Josh: To your point that you were mentioning earlier, she's a little bit more cautiously 256 00:15:15,990 --> 00:15:20,070 Josh: optimistic where she's like, hey guys, we have a lot of money. 257 00:15:20,210 --> 00:15:21,310 Josh: We just raised a ton of money. 258 00:15:21,570 --> 00:15:24,170 Josh: Our problem isn't actually raising money, it's deploying it effectively. 259 00:15:24,370 --> 00:15:26,990 Josh: And we haven't proven that we can deploy this capital effectively. 260 00:15:26,990 --> 00:15:29,930 Josh: So why are we going to rush to raise so much more? 261 00:15:30,050 --> 00:15:34,830 Josh: And I think that's a totally valid argument. And I understand the case for both. One is very pragmatic. 262 00:15:34,990 --> 00:15:36,950 Josh: One is very CEO optimistic. 263 00:15:37,170 --> 00:15:41,250 Josh: We are going to raise a ton of money and we are going to deploy it effectively 264 00:15:41,250 --> 00:15:47,150 Josh: and bring 10 gigawatts of compute on by the end of 265 00:15:47,700 --> 00:15:51,940 Josh: Is right, but it appears as if Sam is going to win. And having more capital 266 00:15:51,940 --> 00:15:53,920 Josh: on the balance sheet, maybe it's not a bad thing. 267 00:15:54,060 --> 00:15:58,020 Josh: In the case that things are frothy, in the case that capital does start to disappear, 268 00:15:58,520 --> 00:16:01,580 Josh: they want to have at least some amount of runway to continue to scale these data centers. 269 00:16:01,680 --> 00:16:04,440 Josh: And that's what this IPO would afford them. So we'll see. 270 00:16:04,660 --> 00:16:09,500 Josh: But all of this is kind of guiding towards a gigantic IPO at some point this 271 00:16:09,500 --> 00:16:11,720 Josh: year for OpenAI, possibly ahead of Anthropic. 272 00:16:12,000 --> 00:16:17,400 Ejaaz: So what do we have as major IPOs this year? We have Anthropic that you mentioned. 273 00:16:17,560 --> 00:16:20,620 Ejaaz: I I think they're rumored to go IPO at around $800 billion. 274 00:16:21,000 --> 00:16:24,060 Ejaaz: So they don't quite hit the trillion dollar mark. And then you have SpaceX, 275 00:16:24,440 --> 00:16:29,240 Ejaaz: which last week Bloomberg reported that they're apparently valuing it at a $2 trillion IPO. 276 00:16:29,460 --> 00:16:35,540 Ejaaz: So OpenA, I think wants to- You think it's too high? 1.75, 1.75. 277 00:16:36,140 --> 00:16:39,220 Ejaaz: Okay, so you're fine with $250 billion discount. Got it, okay, 278 00:16:39,240 --> 00:16:43,900 Ejaaz: right. Okay, okay. But the point is, I think Sam wants to kind of. 279 00:16:44,580 --> 00:16:48,600 Ejaaz: Mark the ground, plant the flag that OpenAI is a serious company and that they 280 00:16:48,600 --> 00:16:52,340 Ejaaz: are capable of raising huge amounts of capital for a very necessary technology. 281 00:16:52,560 --> 00:16:55,680 Ejaaz: Now, there's the optimistic take where if things are going well, 282 00:16:55,880 --> 00:16:57,320 Ejaaz: you kind of want to add fuel to the fire. 283 00:16:57,480 --> 00:17:01,500 Ejaaz: But also, if things go horribly wrong, it's kind of nice to have $122 billion 284 00:17:01,500 --> 00:17:05,720 Ejaaz: in the back, I guess, to kind of bail yourself out. So I see the angle that they're going for. 285 00:17:06,120 --> 00:17:10,840 Ejaaz: Again, to my earlier point, apparently this is their leaked cap table that I'm 286 00:17:10,840 --> 00:17:15,780 Ejaaz: showing you on screen, which shows how much original investors in OpenAI are up, 287 00:17:16,000 --> 00:17:21,320 Ejaaz: including recent ones, by the way, such as SoftBank, who wrote a 64 or 65 billion 288 00:17:21,320 --> 00:17:23,660 Ejaaz: dollar check and is already up one and a half times. 289 00:17:23,820 --> 00:17:27,380 Ejaaz: The only one that's actually down, ironically, is NVIDIA, the richest company 290 00:17:27,380 --> 00:17:30,560 Ejaaz: in the world, who is underwater by 500 million dollars because they recently 291 00:17:30,560 --> 00:17:34,460 Ejaaz: invested 30 billion dollars into the 122 billion dollar round. 292 00:17:34,620 --> 00:17:39,100 Ejaaz: So a A lot of people are up. Ashton Kutcher, again, greatest investor of all time, is up around 43x. 293 00:17:39,500 --> 00:17:41,340 Ejaaz: The point is there's a lot of money here. 294 00:17:41,860 --> 00:17:46,740 Ejaaz: Evaluations are hugely inflated. OpenAI cannot afford not to deliver at this 295 00:17:46,740 --> 00:17:49,840 Ejaaz: point because if they do, I fear it would lead to the implosion of a lot of 296 00:17:49,840 --> 00:17:51,580 Ejaaz: capital markets, not just AI. 297 00:17:52,140 --> 00:17:56,720 Josh: Yeah, but if they do, if this new model codenamed SPUD does land sometime in 298 00:17:56,720 --> 00:18:01,620 Josh: April or May, and it performs as advertised, as this pseudo-artificial general 299 00:18:01,620 --> 00:18:06,140 Josh: intelligence, then every single open AI is dead narrative kind of reverses overnight. 300 00:18:06,320 --> 00:18:10,820 Josh: Yes. And then the GPT exodus becomes a thing of the past. And the bet that Sam 301 00:18:10,820 --> 00:18:13,740 Josh: is making is that he's going to 302 00:18:13,740 --> 00:18:16,920 Josh: be able to create the most consequential product probably since GPT 4.0. 303 00:18:16,980 --> 00:18:19,100 Josh: Yep. And if they could do that, if they could pull that off, 304 00:18:19,180 --> 00:18:23,980 Josh: and if they could do so leading up to their IPO, then that's a very strong headwind 305 00:18:23,980 --> 00:18:26,800 Josh: that they can have leading into this giant fundraising round, 306 00:18:27,000 --> 00:18:31,460 Josh: hopefully giving them a ton of money on the cap table, but also raising quite a large valuation. 307 00:18:31,700 --> 00:18:35,500 Josh: So there's a lot of things at play here. There's a lot of strategy being deployed 308 00:18:35,500 --> 00:18:36,740 Josh: and great products being built. 309 00:18:36,900 --> 00:18:40,600 Josh: And I think over the next coming weeks and months, we're going to see the fruits 310 00:18:40,600 --> 00:18:46,220 Josh: of their labor kind of come to life. And I'm hopeful that they are a grand slam, 311 00:18:46,420 --> 00:18:47,880 Josh: home run, incredible products. 312 00:18:48,100 --> 00:18:50,480 Josh: And I'm pretty stoked for the future of OpenAI. 313 00:18:50,740 --> 00:18:56,420 Ejaaz: Well, what if I told you Sam had written a industrial policy on post-AGI economics, 314 00:18:56,580 --> 00:19:00,300 Ejaaz: aka universal high income, where he dropped this this morning. 315 00:19:00,500 --> 00:19:06,280 Ejaaz: And he basically describes a world where AGI basically does and automates all human labor. 316 00:19:06,580 --> 00:19:09,380 Ejaaz: And so we need to figure out a way to give dividends to humanity. 317 00:19:09,380 --> 00:19:13,400 Ejaaz: So he talks about restructuring the entire tax system, giving people a salary 318 00:19:13,400 --> 00:19:17,400 Ejaaz: every couple of weeks or every month, and humans just get a four-day work week, 319 00:19:17,420 --> 00:19:19,320 Ejaaz: which sounds amazing probably to a lot of listeners. 320 00:19:19,460 --> 00:19:22,820 Ejaaz: So I'm just saying he wouldn't probably be writing this manifesto if part of 321 00:19:22,820 --> 00:19:25,220 Ejaaz: what he's claiming to deliver on is real. 322 00:19:25,810 --> 00:19:29,990 Josh: Yeah. So bullish on OpenAI as a company, bullish on the roadmap, 323 00:19:30,310 --> 00:19:32,970 Josh: bullish on the kind of foundational work they've been doing the last few months, 324 00:19:32,990 --> 00:19:34,730 Josh: and just very excited to see where they end up. 325 00:19:34,790 --> 00:19:37,390 Josh: I think a lot of people who are doubting them, who are canceling their premium 326 00:19:37,390 --> 00:19:40,550 Josh: subscriptions, are going to find themselves sadly mistaken over the next coming 327 00:19:40,550 --> 00:19:43,150 Josh: weeks and months, particularly starting with this new image model, 328 00:19:43,270 --> 00:19:44,970 Josh: which seems pretty incredible. 329 00:19:44,970 --> 00:19:48,050 Josh: And I imagine once it's fully released, and it's not just in its leaked form, 330 00:19:48,390 --> 00:19:49,870 Josh: we're going to be getting some really amazing demos. 331 00:19:49,870 --> 00:19:53,790 Josh: We'll be offering them up here on the show as always and as always thank you 332 00:19:53,790 --> 00:19:56,670 Josh: guys so much for joining us and for watching this episode we're kicking off 333 00:19:56,670 --> 00:20:00,030 Josh: another strong week in the world of ai if you enjoyed this please don't forget 334 00:20:00,030 --> 00:20:03,130 Josh: to share with your friends your family anyone who you think would be interested 335 00:20:03,130 --> 00:20:07,670 Josh: in this type of content and each has any final words before we take off for the day nope 336 00:20:07,670 --> 00:20:10,370 Ejaaz: Thank you guys so much for listening and we'll see you on the next one.