This is why.
Of course $300B still implies a lot of growth, but when you're growing 100% in 6 months at $10B in ARR, you can demand a lot.
Surely you must understand that prioritizing growth over profit makes economic sense in the long run for a company like OpenAI.
only if you have a believable plan on how to reverse that, selling 2 dollars for 1 dollar isn't a business model and no amount of praying for the future is going to change that
Great, stable and successful companies like Enron, Wirecard, Theranos, FTX and WeWork are prime examples of that.
Note: I am not saying OpenAI is a fraud like the above, just saying that their valuation is as divorced from reality as Zuck's "Superintelligence is behind the corner" comment last week.
Their models are not largely better than other competitors', they haven't cornered the market, they are burning through money with no profitability in sight, Anthropic just cut their access to Claude (not relevant, just funny).
Come on, their most recent product announcements were:
- an office suite: https://www.computerworld.com/article/4021949/openai-goes-fo....
- a restricted, less powerful (hide-the-spoilers) version called "Study Mode": https://openai.com/index/chatgpt-study-mode/
It's just...there is nothing going on for them at the moment. The valuation is just wishful thinking, if we are looking at the facts.
We live in a crazy world, all one can do is buy some popcorn and enjoy the shitshow.
Structural Complexity & Opacity:
- Enron was infamous for its convoluted corporate structure, which helped obscure financial realities.
- OpenAI has a similarly complex setup: originally founded as a nonprofit, it now operates through a for-profit arm with a structure that some critics say lacks transparency.
Investor Hype vs. Financial Fundamentals:
- Enron attracted massive investment based on future projections, not present performance. Its ventures, like NewPower Co., had no clients or revenue but were valued in the billions.
- OpenAI has been valued at over $300 billion despite not turning a profit and having no clear path to profitability. Critics argue this is reminiscent of Enron’s “vibes-based” valuation.
Leadership & Ethical Concerns
- Enron’s leadership was later revealed to have serious ethical lapses.
- OpenAI has faced scrutiny over leadership turnover and internal conflicts, raising questions about governance and long-term stability.
Grandiose Predictions:
- Both companies have been known for bold, sweeping claims about the future. Enron promised revolutionary energy solutions; OpenAI is at the forefront of AI’s transformative potential—but some worry the hype may be outpacing reality
Hope that helps :)
Great catch! You should consider a career as a detective! I hope this sentence from the beginning of my post didn't make it too easy on your impressive deduction skills:
"If not, maybe we can ask ChatGPT about it (below is ChatGPT's "opinion" on the similarities between Enron and OpenAI):"
Still, it's pretty clear Enron and OpenAI are massively different companies. It's kinda strange that one would compare them at all. OpenAI is not even a public company. Their products have nothing alike. Their business models are nothing alike. One had literal fraud (maybe OpenAI does too but that would be speculation). Even if OpenAI dies, it's still the reason for $100s of billions in capex across the industry. It's still the reason why everyone in tech is talking and working on AI. And the product is real. You can use it. It's not a fancy demo with a mechanical turk behind the scenes.
They are. But there are enough parallels to me to be wary of them and their competitors. To me the amount of investments and hype doesn't match what's essentially a fancy autocomplete.
You could say there's spillover with Nvidia and the clouds and such, but that still makes this a different case than Enron. It could be like the dotcom bubble, but bubbles != fraud.
It is a virtual product yes, but come on - no vapoware.
At work I see it - people want the better (and more expensive ) licences
Given what we know about the CEO, it would not come as a shock if in a couple years we learn there was some good old accounting fraud involved.
It's exactly the same thing FTX did except with energy instead of crypto.
AFAIK they never misrepresented who they were, they were just very loose with their accounting. It probably started out as a small lie to themselves like those things tend to.