Latest / Elon Musk Podcast / OpenAI funded $40 billion - Close to SpaceX record

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OpenAI funded $40 billion - Close to SpaceX record · Elon Musk Podcast

• 0:02
  Hi, everybody. Welcome back to the show.
• 0:04
  This is your host, Will Walden. I have some news for you.
• 0:07
  We are going to be making a move, a power move, if you will,
• 0:12
  in the land of podcasting. This is the Elon Musk podcast as
• 0:17
  of right now. And we're going to be shifting
• 0:20
  gears here because the world of tech isn't just Elon Musk, but
• 0:25
  it's all the companies that he owns and everything in his
• 0:29
  sphere of influence. So if you hear that term or you
• 0:33
  see the logo for stage zero, the name will be changing soon.
• 0:37
  And that's on me. We're not being bought out or
• 0:39
  anything like that. I just feel like it better
• 0:42
  represents what I'm going to be bringing you for this show in
• 0:46
  the future before we get in today's topic, which is open AI.
• 0:51
  Elon has open AI in his sphere of influence, of course, and Sam
• 0:55
  Altman is arch nemesis. And we are going to be
• 0:58
  continuing to bring you the same thing that you've always had.
• 1:02
  We're not going to be changing anything.
• 1:05
  You're still going to get the same content about 10 minutes or
• 1:08
  less every day unless we have something special going on.
• 1:11
  And then you're going to get a longer episode.
• 1:13
  But more than likely it's going to be about 10 minutes or less
• 1:16
  with Elon in his sphere of influence, companies and his
• 1:20
  friends and also his competitors.
• 1:23
  So be ready for that in the future.
• 1:26
  It's going to be pretty similar to what we have now, just a
• 1:29
  little bit better production values.
• 1:31
  And I wanted to get into this without an intro or intro music
• 1:34
  or bumpers or anything like that.
• 1:36
  Just want to be heart to heart with you and come to you
• 1:40
  straight up because I think that's what we need to start
• 1:44
  doing here. We're going to have straight up
• 1:45
  conversations about some of the stuff, some of the things that
• 1:47
  Elon does. He does some mean things.
• 1:49
  I'm going to be honest with you upfront.
• 1:51
  I'm a fan of his companies. I'm a fan of the technologies
• 1:54
  that he creates. I want humans to go to Mars.
• 1:57
  I love EVs, I love Teslas, I love the cars, I love the people
• 2:01
  that work there. Some of the things that Elon
• 2:03
  does, he's not the best guy sometimes, and that doesn't make
• 2:09
  this show any worse or any better.
• 2:12
  But as somebody who follows Elon Musk, and I've been reporting on
• 2:18
  Elon Musk and everything he does for the last five years, I
• 2:24
  uprooted my life to move to Star Base, Texas so I could cover a
• 2:30
  Starship because I love SpaceX so much.
• 2:33
  Everything that I loved, where I was from, I left it all behind
• 2:38
  so I can move to Star Base Texas and cover Starship for about a
• 2:42
  year on Hwy. 4. And the sacrifices that I had to
• 2:46
  make in order to do that were obscene.
• 2:51
  So I just wanted to let you know that I am still that same
• 2:55
  person. But you have to think about
• 2:58
  things like an engineer. You have to think about things
• 3:01
  like a scientist. There's no right or wrong.
• 3:05
  There's no right down the middle.
• 3:08
  Sometimes somebody does something that you don't agree
• 3:11
  with, and sometimes if you look at the evidence in front of you,
• 3:17
  they do something amazing. Elon Musk has accomplished some
• 3:21
  amazing things in his life, and I want to report on that.
• 3:24
  But I also have to report on the things that he hasn't done
• 3:27
  right. It's the right thing to do.
• 3:30
  As somebody who's been in news my whole life, I've been in
• 3:34
  content creation for over 20 years now, and I know for a fact
• 3:40
  that there are sometimes when people do some weird things.
• 3:45
  I've seen it happen in every circumstance that I've reported
• 3:49
  them. So I just want to let you know
• 3:51
  that will be happening in the future.
• 3:54
  You don't have to unsubscribe or anything like that because
• 3:56
  you're still going to get the things you like.
• 3:58
  You have to keep an open mind about the things that do
• 4:02
  actually happen. No one's right 100% of the time,
• 4:05
  and we have to report on it. I'm a reporter first.
• 4:09
  I'm a news guy first, so we have to get into the news today,
• 4:12
  Speaking of that. But I wanted to make this
• 4:14
  announcement before it was too late, before I forgot to do it
• 4:18
  because I'm recording this really late at night.
• 4:20
  But today we're going to be talking about open AII want to
• 4:22
  have more conversations like this too on the podcast.
• 4:25
  I think it's more natural. We can talk more, we can have
• 4:27
  more comments, and I think that the conversation has to
• 4:31
  continue. So we're going to talk about
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  Open AI today. They got $40 billion in cash.
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  Why does Open AI need $40 billion in cash?
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  Probably for GPUs. They're burning through their
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  GPUs with the video generation prompts that people can place in
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  there are insane. I've been creating Starship
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  content with it all day, so I understand a space like Starship
• 4:55
  content all day. I was probably burning down for
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  some GPUs myself, but why would they need $40 billion in private
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  capital, which is more than triple the previous record?
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  And what is it planning to do with all the money they plan it
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  with Sam going to do with all that money?
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  Just when half of it depends on a complete structural overhaul
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  that's already sparked lawsuits and regulatory scrutiny.
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  Now it's a kind of question that reveals everything about the
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  current state of AI, the people funding it, and the unstable
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  marriage between innovation and corporate ambitions right now.
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  When Open AI announced on Monday that it closed the largest
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  private tech funding round in history, the sheer size of the
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  deal raised so many eyebrows. Everybody was.
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  I was aghast. I saw this news and I didn't
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  know what to do. I heard about it in the
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  Grapevine. They're going to be raising a
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  bunch of money, but who knew this much?
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  We're going to talk about some implications.
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  We're going to talk about some power plays, and then we're
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  going to talk about burning GPUs down.
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  I guess Open AI just pulled off what no other tech company has
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  ever done, $40 billion in one round.
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  It values the company best known for chat TPT at about $300
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  billion, which is based on figures disclosed in the deal
• 6:18
  announcement and corroborated by Pitch Book.
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  The money isn't just a headline figure, though.
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  It's a tactical war chest. They're taking on Elon, they're
• 6:28
  taking on Google, they're taking on Meta.
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  It's an arms race right now. The number is nearly three times
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  what Ant Group raised in its $14 billion round in 2018, in more
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  than the combined hall of every other large private tech
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  investment round on record. It signals a shift in how
• 6:46
  capital flows into aiorwereseeinganother.com bubble
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  here, and how tightly it's now tethered to the whims of the
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  few, the powerful few. Now the majority of the cash,
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  which is $30 billion, is coming from Japan's SoftBank firm,
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  known for throwing money at futuristic tech companies, with
• 7:05
  mixed results. Remaining 10 billion from this
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  round is split among a syndicate of investors, Microsoft CO2
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  Thrive Capital Ultimatter. Now these are not little firms
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  making calculated bets that Open A is current dominance in
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  generative AI will scale into something even more crazy.
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  So the monster cash injection doesn't come without conditions,
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  though. If somebody's going to give you
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  that kind of money, they want something in return.
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  There's a string attached that might unravel the whole package.
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  According to a disclosure from SoftBank filed on Monday, if
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  Open AI fails to fully restructure into a for profit
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  entity by the end of this year, the total investment could
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  shrink from 40 billion to as little as 20 billion.
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  That's a ton of money. Now that clause forces Open AI
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  into a very tight corner, requiring illegal maneuvering,
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  boardroom consent, possibly even a public political fight.
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  Elon Musk is suing them for this, by the way.
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  Now, to understand the stakes here, it's important to grasp
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  open AI strange corporate identity.
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  They're born in 2015 as a non profit research lab with a
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  mission to build AI that benefits all of humanity.
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  Now more often 2019 into a capped profit limited
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  partnership. It's kind of like a Frankenstein
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  of legal structures and allows outside investors to profit, but
• 8:37
  only up to a certain limit while the original nonprofit retains
• 8:41
  control of everything. Now it's controversial, it's
• 8:45
  complex. And that's where Elon Musk comes
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  in. One of open A is original Co
• 8:51
  founders. He's now one of its most vocal
• 8:53
  critics and haters. Musk has sued Open AI because, I
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  mean, the company's structural shift to a for profit model
• 9:00
  violates its founding principles.
• 9:02
  He's not the only obstacle, though.
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  The transformation also needs green lights from Microsoft, one
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  of Open AI's biggest backers, and the California attorney
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  general, who holds sway over nonprofit compliance renders
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  today. Over the 40 billion raised,
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  nearly half 18 billion is reportedly earmarked for a
• 9:21
  project called Stargate, which is a joint venture between Open
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  AI, Oracle and SoftBank. That was first announced by
• 9:28
  President Donald Trump in January.
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  And his administration's blessing of the deal brings an
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  unexpected political twist to an already convoluted financial
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  narrative. Stargate is designed to build a
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  massive compute infrastructure capable of training the next
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  generation of AI models. Whether it gets built or becomes
• 9:47
  another money sink depends on more than just hardware orders,
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  though. Depends on everything from
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  geopolitics to the legal rulings.
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  They want performance, structural clarity, and legal
• 9:59
  certainty before going all in. If Open AI fails to deliver,
• 10:03
  they're prepared to walk away from half the capital.
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  That puts an immense amount of pressure on CEO Sam Altman and
• 10:10
  his executive team to navigate not just tech milestones, but a
• 10:14
  labyrinth of financial and legal commitments.
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  Now Altman, for his part, seems unfazed, though he's always
• 10:20
  unfazed about everything. And a Monday post on X, he
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  boasted one of the craziest fire moments I'd ever seen.
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  And we added 1,000,000 users in five days, added 1,000,000 users
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  in the last hour later on that day.
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  Now the number is, while impressive, don't answer the
• 10:37
  real question though. Can user growth translate into
• 10:40
  sustainable revenue and long term trust in an organization
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  that's constantly rewriting its rule book?
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  Will they be stable? Open AI claims it expects to
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  triple it's revenue to 12.7 billion by the end of the year,
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  based largely on demand for Enterprise Products, licensing
• 10:59
  deals and usage of ChatGPT. Apple uses ChatGPT on their
• 11:05
  platforms. Projections are built on the
• 11:07
  foundation of generative AI is current hype cycle, which many
• 11:10
  analysts caution could face sharp corrections as competitors
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  flood the market. And the competitors are huge.
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  Amazon, Google, Entropic. The start-ups like Perplexity
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  aren't slowing down. The broader market is beginning
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  to feel the strain too, exclusively on AI infrastructure
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  called Core Weave. They went public last week, but
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  the debut was anything but triumphant.
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  It slashed its IPO price, ended flat on day one and slid 7% on
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  day 2. So even AI focus investors are
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  no longer blindly throwing cash around.
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  That's not the early dot coms. Open AI backers, though,
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  hopefully are taking calculated risks, gambling on both the tech
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  and the legal acrobatics that are required to get this done.
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  There's also internal restructuring underway at Open
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  AI. The company announced that
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  Ultimate is stepping back from day-to-day operations to focus
• 12:04
  more on research and product development.
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  Now Brad Lightcap, the current COO, will take over business
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  operations. Now it that shift is crucial, as
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  open AI must now juggle investor demands, product delivery, and
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  legal restructuring. So why does any of this matter
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  outside of the ultra rich in Silicon Valley and international
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  boardrooms? Because open AI decisions have a
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  direct influence on how artificial intelligence is
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  developed and how it's distributed and how it's
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  controlled across sectors like education, healthcare, defense,
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  and public information. Products and research directly
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  impact how algorithms make decisions that touching millions
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  of lives and possibly billions in the future.
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  Then there's another layer Access.
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  It's a company that started with the promise of open source
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  transparency and public benefit, but is now in closed door
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  investment rounds, secrecy clauses, and massive profit
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  motivations. This is redefining who gets to
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  participate in the AI future. You must have billions of
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  dollars to compete. You need that GPU baby.
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  And As for the $300 billion valuation, it's more than just
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  an investor. Flex makes Open AI one of the
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  most valuable private companies in the world, behind only Elon
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  Musk's SpaceX, which is about 350 billion.
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  So if they get another 50 billion tie SpaceX which is tied
• 13:41
  with Byte Dance which is the Parrot company of TikTok.
• 13:45
  Now those companies have vastly different missions though
• 13:50
  governance structures, but they all have one thing in common,
• 13:53
  dominance over the data and digital experiences of billions
• 13:58
  of users. 6 Except SpaceX. They want to go to Mars, and
• 14:03
  opening eyes size and scale now demand regulatory oversight and
• 14:08
  consumer awareness. They have to tell everybody
• 14:10
  about it. And as it barrels towards what
• 14:13
  investors believe will eventually be an IPO, opening
• 14:17
  eyes ability to manage its identity crisis could determine
• 14:20
  whether it's seen as a research powerhouse or a cautionary tale.
• 14:26
  The company could go public at some time.
• 14:29
  It's just whenever. But they're non committal.
• 14:32
  Right now. Everybody's unsure what the path
• 14:35
  is. Could they stay private and just
• 14:37
  keep getting investment while they continue to make money,
• 14:42
  possibly for a while, keep it private so you can continue
• 14:46
  getting that venture capital and make it profitable.
• 14:50
  Eventually we'll see what they do, but if they do go public,
• 14:54
  they have shareholders to listen to and also they will have a
• 15:01
  huge influx of money if they go public.
• 15:04
  Everybody wants a piece of open AI.
• 15:08
  The other structure would not. And this is what the venture
• 15:12
  capitalists are banking on, because venture capitalists
• 15:17
  don't just invest in your company so they don't get a
• 15:23
  payout, right? There's always an exit for these
• 15:27
  things. Open AI from the beginning, as a
• 15:30
  nonprofit in somebody's head, somebody was thinking of an
• 15:36
  accent, they want Open AI to exit.
• 15:40
  They want to take that big chunk of money, investor money from
• 15:45
  the public. When the IPO, they want to get
• 15:49
  those billions of dollars back. If they're going to give them
• 15:51
  300 bill, if they have $300 billion valuation, it's only a
• 15:57
  matter of time before they get their money back.
• 16:01
  They will be profitable. And if they keep it private,
• 16:04
  could they be more profitable than SpaceX eventually?
• 16:09
  I believe so. SpaceX has government contracts,
• 16:11
  but open AI is a commercial product which also does
• 16:14
  enterprise and also does government contracts as well.
• 16:17
  So they have a broader audience than what SpaceX does.
• 16:20
  SpaceX has rocket launches and they have Starlink, of course,
• 16:24
  which is a public product and not everybody is going to use
• 16:27
  Starlink. And eventually everybody's going
• 16:30
  to be using AI for search, research, image generation,
• 16:35
  video generation, everything. So AI has a broader appeal than
• 16:40
  Starlink. So 350 billion SpaceX, watch
• 16:45
  out. Open AI is coming for you.
• 16:46
  That's all I'm going to say. In the end, though, it's earth
• 16:49
  shattering. It's record shattering funding
• 16:51
  route is huge. It changes the stakes for
• 16:54
  everyone else in the race though.
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  Open AI knows their they know their path.
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  They're going all in now. Whether Open AI can hold the
• 17:03
  lead without collapsing under its own contradictions from a
• 17:08
  not-for-profit to a very much for profit remains to be seen.
• 17:14
  That's a ton of cash now. There's pressure on it.
• 17:19
  What it does next will determine whether it remains a pioneer or
• 17:22
  becomes a warning of failed companies.
• 17:26
  And this could be the AI bubble bursting if open AI doesn't
• 17:33
  figure this out, I think we have some time before that.
• 17:38
  We have a lot to accomplish with AI before this bubble bursts.
• 17:44
  All right, so thanks for listening everybody.
• 17:47
  I do appreciate your time. Now, the only thing that I ask
• 17:51
  from you is that you like or follow this podcast on whatever
• 17:56
  podcast platform you're on right now.
• 17:57
  And I'm going to make you a promise.
• 18:00
  My promise is that I'm going to do this for 10 more years.
• 18:02
  I've already been doing it for 4 1/2 or five years.
• 18:05
  So I continue to do this because I'd love to do this.
• 18:09
  This podcast is very old and I will continue to produce
• 18:13
  episodes for free, not behind a paywall, as long as you follow
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  the podcast. Right now, that's all I ask.
• 18:22
  It's free, it's easy, takes you a second, and you'll get more
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  content like this in the future. So I'm going to say thank you
• 18:30
  for listening today. Please take care of yourselves
• 18:34
  and each other and I will see you tomorrow.