Explaining the finances of OpenAI remains a job for Patrick Boyle

Does OpenAI expect a Government Bailout

As always, the excerpts don't Boyle justice -- you need to watch the whole thing -- but here's his take on how Sam Altman produced that epic tweet.

From the transcript (proofed and reformatted appropriately enough by ChatGPT):

[CFO Sarah Friar] “We’re building a really healthy business. Free cash flow—every CFO’s favorite way to fund anything—is climbing quickly. The third area we’ve moved into is working with our ecosystem to structure some interesting financing deals. I’m particularly proud of the AMD warrant structure we put in place a few weeks ago, because it creates a very strong alignment of incentives.” This is a bizarre claim, as OpenAI can’t fund anything with free cash flow when its cash flow is negative. ...

Tech firms have always been creative about financing, but OpenAI’s approach borders on the surreal, where it has become all about trying to find infinite money glitches. MicroStrategy—sorry, “Strategy,” as it now prefers to be called—is attempting a similar trick with its Bitcoin investments, which I don’t expect to end well.

... 

The problem is that they want to lever up their bet on AI, but banks don’t want to lend, and the interest rate on a loan backed by rapidly depreciating chips would be so high that you would need the government to guarantee it.

I can tell that this will make some of my viewers angry, but there’s really no reason to get upset about this, since both Sam Altman and Elon Musk have explained that AGI will soon make money obsolete. So—who cares?

... The cloud – which was supposed to be weightless - turns out to be very heavy. 

... 

I remember seeing ads on CNBC back in 1999 for a company that manufactured equipment used in the wafer-fabrication steps of making semiconductors. At the time, I couldn’t understand why they were paying for TV ads when all of their potential customers already knew who they were and what they sold. No one watches CNBC and decides to start manufacturing computer chips in their garage.

I later realized they weren’t advertising their products—they were advertising their stock. The stock fell about 80% over the next three years.

Recently, I saw a tech CEO being interviewed while wearing a T-shirt with his company’s ticker symbol on it, not the company’s name. And every podcast I listen to seems to have ads for an AI military-tech company. Once again, I find myself wondering whether their potential customers are really listening to a Bloomberg podcast—or whether they just want to pump the stock. I’ll note that the CEO of that company constantly talks about “burning” short sellers while dumping his own shares.