OpenAI leans toward waiting until next year for IPO
nytimes.com
nytimes.com
- OpenAI wants to be the consumer version of AI, modeled after Google and Meta, with a mostly free universal service powered by ads and e-commerce. They haven't fully shown that model can work. The big problem is the lack of zero marginal costs as each new user requires GPU spend.
- Anthropic positions itself more as enterprise AI, modeled after Microsoft ironically enough, and charges big companies for services. The economics of coding agents work but GPUs get expensive fast and open models are getting good enough for most use cases.
So it's a race between ads and e-commerce offsetting AI spend and open source eating almost everyone's lunch.
My bet is that OpenAI will make free ChatGPT work through ads.
It makes sense for it to be expensive, mind. The unit cost of serving an LLM response is so much higher than the unit cost of serving a bunch of Instagram posts, or traditional search results or whatever.
But price too highly, most advertisers won't be able to justify them. Why spend $60 for what you can buy from Meta for $6? It's a brave media buyer who runs with that as a long term strategy. But if you don't price highly, you're just offsetting some of the losses. The whole reason Google, Meta et all's ad networks exploded what because they cost less to get reach than traditional media did before, which opened them up to a bazillion small businesses who otherwise didn't have the capital to get off the ground through traditional media. ChatGPT's will cost more than what's available now. Massively more. There's not a lot of history of that working out!
They'll get some buyers for a little while, the $60 vs $6 equation balances out if the ads are 10x more effective, and companies will throw a bit of money into campaigns to get a feel for how well they perform.
(Google is in a different position, they make basically near infinite margin on other ad types and can lump budgets in together to get still-attractive blended CPMs. It's a hit, but it's worth taking to protect their wider network, just like they did for years when Youtube wasn't remotely profitable.)
In 2026 this is satire. By 2030 it might not be.
The best option at this point is kick the can down the road and hope market sentiment improves next year. Not much signal that it will, and quite a lot of signal the sentiment only declines, but pumping the brakes is the least worst option on the table.
Unless Anthropic also cancels its IPO, this probably isn't it.
Open source is starting to slowly become a source of frustration for frontier labs In the discussion around value for money.
It’s such a fast paced and competitive industry, anyone who takes even a short break is going to have a hard time coming back from it, and that’s basically what they’ve done.
Otherwise people try other cheaper models, and they find out those models work perfectly for what they need.
Go ahead and incorporate that in those 3 variables... lets see what you know before I bother replying.
I only use free Gemini Pro to plan then scrape the log in Google Drive into local Qwen/Gemma+pi set up
I can plan and architect with Gemini on my phone or wherever and a cron job + custom JSON parser at home updates context in local model setup
Ironic, considering that they got their ball rolling by taking from Open Source with neither credit nor attribution.
What are you basing this on? Both are currently doing rounds/tenders that are placing without problems.
The media treats these two differently, as do financial influencers. But I'd be careful about conflating either of them with the market.
The finance market and the market for these products are two different things. Anthropic has definitely been stealing market share to OpenAI in the past few month on many segments (be it enterprise or even consumers).
Can you give an example that shows funds actually souring on OpenAI? (Like, not less enthusiastic than before. Actually souring. Selling.)
It will draw a non-zero number just curious people who never use ChatGPT.
And bots are exfiltrating model knowledge for the benefit of competition.
Reddit has been one of the world's top websites for over a decade, yet they are totally irrelevant in terms of ad product market share.
ChatGPT ads are low quality placed at the bottom barely noticed.
ChatGPT ads will get better. Meta's social userbase is drying up. Google keeps introducing and removing things from chrome to keep access to spy on you for them alone. We'll see how things pan out but in ten more years reddit ads will still be worthless.
How can you tell that? "The Market" at the moment is the private investor market and, to my (admittedly untrained) eye, those two companies are being treated exactly the same when they raise.
What do you mean? I promise I'm not being facetious or satirical. I'm just too simple and conservative of an investor to understand this comment. (for example: Is the price-to-earnings ratio too high? I probably wouldn't want to invest in the business.)
Today everyone knows there's no agi coming up and it will be a very long time until they generate any profits, if ever.
The populist backlash is coming for datacenters. I'm unconvinced that's truly problematic to these companies given data travels close to the speed of light and plenty of countries have energy, data interconnects and governments unresponsive to locals' concerns.
How do you even value a company when we don't even know if GPT-6 will be made available to the general public?
Think it’s pretty safe to assume theirs are less of a dumpster fire
I agree it’s less of a dumpster fire than OAI but that’s not a very hard bar to clear.
Maybe they will show major Ad revenue and Codex sales and get a higher price next year but it’s a risk.
typo
Perhaps that's Anthropic's plan, is they believe OpenAI is weak. If the IPO is good they win. If it's bad OpenAI loses.
I don't think so. There's only two real options here:
1. There's no bubble to pop
2. There's a bubble to pop
In the first case, the first AI company to IPO gets a ton of money from the market who wants to get in on this, and the second to IPO finds that there's not enough capital left in the public markets and has to sell for less than they'd wanted to.
In the second case, the fir5st to IPO gets money from their shares, which drop in value (bubble popping), adn the second to IPO gets absolutely nothing (bubble popped).
In both cases, the first to IPO gets the rewards, the second gets either less or nothing.
Its already not anthropic or openAI.
But there might still be some water in the well for the second one, there definitely won't be for the third one.
Surely if your company isn't just blowing smoke then you have nothing to worry about. Or is this an admission that the insane valuation for these companies is currently just bullshit?
Not really. Plenty of solid companies have to wring their hands around IPO timing based on market conditions. Sometimes, this is due to valuation multiples. Sometimes it's due to fads, e.g. investors preferring capital-structure efficiency versus low leverage.
When was the last time someone seriously asked if OpenAI was going to go public before Anthropic? For me, it's been at least months, maybe closer to a year. The corporate-governance complexity drove half of that, momentum the other half, and messaging from both companies having been consistent with that timeline for months sealed the deal.
Anthropic on 1st June: https://www.anthropic.com/news/confidential-draft-s1-sec
OpenAI shortly before June 8: https://openai.com/index/openai-submits-confidential-s-1/
That was less than a month ago. They seemed to be on a similar pace at least from my point of view.
SpaceX's stock volatile? It's a shame nobody saw that coming.
If S&P had changed its rules for the S&P 500, there would have been an effect. In the end, the drama was almost entirely a spectacle for finance influencers and their viewers.
is tesla stock not volatile too? elon stock's are more like today's crypto than a 20th's century company stock w dividends
Wall Street has never understood engineering. Eventually Tesla will pull a Boeing, GE, Ford, etc- lose the founder of founder's influence, get taken over by suits, and slowly die but hang on by playing the financial games.
There have been plenty of those, like SpaceX buying Solar City bonds then when they were going to go bad he used Tesla to bail them out.
Seeing something coming is very different from having it not only confirmed but also quantified.
It's funny with stock prices - they all go up and down a bit in kind of random ways but people project all sorts of stories onto them that often don't relate much to reality.
I thought it opened at 135.