Apparently they overstated revenue in an attempt to try to provide a direct comparison with Anthropic's reported metrics.
From the article: "According to a person with knowledge of the matter, the discrepancy arose from attempts by OpenAI’s own investors to produce a direct comparison with Anthropic’s annualised revenues. The pair calculate the figure in different ways, with Anthropic including the revenue from sales via cloud partners such as AWS and Google Cloud, while OpenAI does not.
Efforts to “gross up” OpenAI’s annualised revenue led to reports that the group’s annualised revenue had hit $40bn in August. The company has since told investors its revenues have grown more than 70 per cent, leading to the $70bn figure"
Obviously not the same thing as lying, but Anthropic had also been juicing the revenues with making smart models incredibly verbose. In August my org 3x more in API credits vs July. In September the spend returned to July levels partially because they made models less verbose, but mostly because we've changed how we are using them.
All that tells you is that they haven't at all abandoned the disinformation: Now they are blaming Anthropic for it and trying to shift attention to them.
You can still learn something from it: Look at what they do, not what they say - look at how sophisticated their public communication is. They deliver that information in the perfect manner - not only the redirection and striking a blow against their rival, but they use an anonymous "person with knowledge of the matter": A named source at OpenAI might betray the self-interest in the statement, but some anonymous third party is just reporting what they know.
These guys are very good at it, though that shouldn't surprise you. Look at their product, in one sense a highly effective disinformation machine.
* Due to the highly persuasive, human-like, manner in which AI output has been designed, users are persuaded to believe absolute falsehoods. As one popular example, lawyers filings with courts sometimes include fabricated citations - even the experts (the lawyers) are fooled.
* AI software is used for mass disinformation campaigns.
That's not all AI software does, but it's a significant part. You might say that the persuasive human tone is the defining characteristic of AI for most people.
Ah yes, my favorite hacker news retort: one is entitled to a prediction if and only if one is prepared to take a huge financial stake in that prediction.
This take has been trotted out so many times, e.g. “How many puts have you bought if you’re so certain?”
>The pair calculate the figure in different ways, with Anthropic including the revenue from sales via cloud partners such as AWS and Google Cloud, while OpenAI does not.
gift link didn't work for me, and is this poorly phrased? because it seems implausible that OpenAI doesn't typically include revenue from their models being used on AWS. Perhaps the "gross up" is referring to how the number is included? like Anthropic was using the value pre-removal of revenue sharing and putting the revenue share subtraction as a separate expense?
[not a finance guy so someone tell me I'm wrong if that's not a plausible reading]
People have a hard time differentiating between bets vs. fraud.
OpenAI is a bet. Maybe a bad bet. Sure. But everyone knows it is a bet. Their investors are experienced and multi-millionaires with teams of analysts. They cannot just act like they are dumb. Not say it's impossible but highly unlikely they can just claim they don't know any better.
SBF was a fraud for using the customers' funds. The customers were promised that their money wouldn't be used for anything. And their customers are average people. Albeit, SBF's investments are pretty godlike based on the current valuations.
Fraud is problematic because it results in harm. Betting in the way Anthropic/OpenAI/Nvidia are is legal, and still incredibly likely to cause harm. So sure, you're technically correct, but the resulting harm that we will all suffer when it all comes crashing down won't be any easier because it was legal...
I’d consider massaging the figures so your “annualised” revenue looks to be 20 billion dollars higher than it is to be on the side of fraudulent rather than betting. And it’s fraudulent because you need to keep pulling in investor cash to keep the thing pumping and afloat, not just dealing with building a decent product and building it out gradually based on what it costs to run and what people will pay for it.
This is an interesting shift compared to the past where OpenAI would’ve been public a long time ago (due to various regulations) so we would have much more direct insight.
Right now we have a ~$1 trillion company which a ton of the “economy” and valuations are based on, with near zero information on how it’s doing.
How much money do they have left? It is hard for me to see how OpenAI doesn't fail at this point. There is no business, no moat. Honestly, the best outcome seems like failing up into a Microsoft acquisition at this point.
The entire US economy is propped up by this bubble, so they will be propped up as much and as long as possible. Basically all money these days is going into this charade, to stop or even slow it down would cause a disastrous collapse
>The entire US economy is propped up by this bubble,
Not really. It'd be a dotcom bust, not a 2008 bust. The average American isn't substantially exposed to these companies and the banking system doesn't hinge on them, there's no systemic risk.
What it would do is wipe out the wealth of a lot of very affluent folks and private investors, which most of us could live with.
The only 'systemic' risk is to venture capital, which the US govt cares a lot about. VC money is why the US has been able to win the past 20 yrs, you realise that? Who funded Google, MSFT, Meta and so on..
>VC money is why the US has been able to win the past 20 yrs, you realise that?
win at what? 98% of Americans aren't going to care if a meteor drops on SV tomorrow. The day FAANG is done I'm throwing a party. I wish that incestuous industry would finally kick the bucket, 95% of American programmers don't even work there.
Do you seriously think anyone's shredding a tear if Zucc's net worth drops to zero and that privacy nightmare of a company is gone? Don't threaten me with a good time
Any company that would hypothetically acquire them would need to be able to fully - and indefinitely - subsidize their unsustainable operational costs. I don't see how that's realistic even for a company like Microsoft.
I think the fact that we have so little information is the most important information we have. If OpenAI had a sound business plan and was on strong financial footing, they'd have IPO'd.
All of this continued stalling and obfuscation can only mean one thing, IMO: OpenAI has no long-term viability and they're desperately hoping for some new breakthrough to reinvent their business model before the VC money faucets turn off for good.
They do because the other part of the equation is that they need to keep spending a lot of money to build out infrastructure faster than their two most significant competitors, one of which is public and wildly profitable (for non-AI reasons) and another has already filed for IPO. So it puts them at a disadvantage to walk away from a massive cash infusion.
Two reasons. First, there's more money in the public markets, and Altman's appetite seems insatiable; and second, public money comes with fewer strings attached - private investors want protections, board seats, etc.
Who knows what Altman wants? It's moot what individual motivations are as he is definitely fronting for investors who have significant power in the business.
Public money comes with legal fiduciary duties.
The reason to IPO is to get private money out, materialise the whole valuation.
I certainly wouldn’t say that public money comes with fewer strings attached. Just different strings. But the strings that come with public money tend to have sharper legal teeth behind them.
I don't know why comments pointing out this simple fact are getting downvoted.
The oversimplified view that has been drilled into startup discussions for years has been that IPO is the singular goal for every startup and they need to get there as fast as possible, but that hasn't been true for a long while. There are high profile examples like Stripe with no intent to go public any time soon. Some public companies are even gradually doing share buybacks partially to remove their public exposure.
Being a public company kind of sucks in many ways. I'll admit my sample size is small, but every post-IPO CEO I've known has expressed some regrets about going public. It was a fascinating revelation to me after being raised on the idea that IPO is the ultimate victory goal of every startup.
I'm guessing downvotes are not because people don't understand that this happens, but because based on OpenAI's words and actions it is highly unlikely that this is what they are doing. Also, Stripe has been confirmed to be profitable.
lol but they're trying to IPO, it's what sam altman has been talking about for the past 2 years? Are you saying you know something better about sam altman than his public opinions?
I am not sure why you'd, at this late date, think Sam Altman's public statements have anything to do with anything. Time and time again demonstrated compulsive bullshitter.
If they wanted to IPO they could do it at any moment and have a swarm of bankers and lawyers knocking down their door to work 16 hour days to get it done.
The only reason they’re not doing it is by choice, because they want to find an optimal time to maximize their returns.
There is no “we’re trying to IPO but can’t”. If they were actually trying, it would be in motion.
Unhinged conspiracy, if you take the implicit goals of AI research orgs at face value (I.e., replacing all knowledge work) and assume it possible; why would they drag a few thousand knowledge workers along to the promised land when they can just shed them after their usefulness has worn out?
What does adding a few more suckers to the pile of tens of millions of other suckers do to those that get the real benefits? It’s not like after they achieve their goals, the people who helped them would have the ramp or resources to recreate the process.
That then begs the question of whether there's any promised land at all after all knowledge work is replaced.
If you've made tens of millions of people unemployed over the timeline of a few years, then you no longer have nearly the market to sell goods and services - including your AI - to.
Assuming these guys answer that with "let's make UBI" - which is a huge assumption given the way SV fetishizes those who "create value" and looks down upon those who don't - you now basically have tech feudalism. The remaining upper crust "generously" pays the rest of the population enough to not starve until they die.
You'll basically have an entire society in stasis, with no hope of improving their lot, being given the bare minimum to keep humans alive, if that. Well, no hope of peacefully improving their lot.
From my read this line of thought was alluded to by GP's ironic "promised land". A promised land for whom? Not for the vast majority of humankind.
Comparisons to feudalism kind of sell the direness of the AGI vision short: in feudalism, the lord still depended on the peasants. The lord would be inconvenienced if he had them all killed. Not so with AGI! He won't even notice their gone.
Exactly why I’m confused with the “techno-feudalism” point as well. What are the serfs for if they’re useless (sans some physical labor maybe?). The AGI dream is for the smallest amount of humans needed to keep the system running, and if AI can do everything feasible, then that group is basically those that “own” the AI. Techno-feudalism, if even necessary, would be a fleeting blip in the end.
The investors need to make a couple trillion dollars soon or it all falls apart, right? Maybe I misunderstand how the financing for this works, but my understanding is they have borrowed and set on fire an enormous pile of money as a sacrifice to summon the Machine-God.
If He fails to arrive, or arrives late, they will be the railroad financiers in the Panic of '73.
At scale that OpenAI is valued at public markets are only place with enough of liquidity. At smaller scale private equity is an option. But if you are speaking of near trillion scale it really is not.
They are in a vicious circle there’s no good way out of. Building and operating their services is not operationally profitable. Therefore they need more funding. The only way to get more funding is to get a wider adoption and show new features. The only way to do that is to keep spending money.
Not being profitable in itself is not a problem or has not been historically. With software, there’s a bunch of investment into making the service but the variable cost of providing it is negligible. It’s ok not to be profitable because the growth of userbase will pay you back. Capex isn’t a thing, you can just rent somebody else’s from the cloud. This is how the world used to work pretty much for a quarter century, ever since the dot-com bubble. But OpenAI is not like it. Their variable cost is huge as is the capex to enable being able to even make that cost happen. It’s not that they are not profitable, it’s that their financial profile does not fit into anything this generation of decisionmakers is used to.
> I think the fact that we have so little information is the most important information we have. If OpenAI had a sound business plan and was on strong financial footing, they'd have IPO'd.
> OpenAI has no long-term viability and they're desperately hoping for some new breakthrough to reinvent their business model before the VC money faucets turn off for good.
If a startup is riding a hype cycle and is one of two leaders in the global industry with unreal growth numbers, they can IPO whenever they want. The incentives lean toward doing an IPO before the hype runs out, not delaying it.
If they were worried about running out of VC money, going to the public (the P in IPO) would be the move.
Companies don't actually have to go public quickly or even at all, even though that's been drilled into us as the only goal of every investor-backed startup.
I know it would be unworkable ripe-for-abuse, but for a moment I wished there was no tax if you sold from an index fund that broke its core rules and operating principles to invest in another that preserved them.
American venture capital and by extension US power (because the expectation is this is re-invested) means that it has to be allowed to happen whether you and I like it or not.
This is the entire game if you zoom out.
Exit -> Recycle some of the money so USA stays ahead. That is the entire game, you see it right...? I hope you do.
That only works long-term if the companies produce real value. Historically speaking, the venture cycle had a lot of failures (and they were allowed to fail) and a few successes, but those success were real and created value internationally.
Spacex is transparently a scam to steal from people's retirement accounts. Normally, that would be a thing that wouldn't be encouraged by regulators, and our president wouldn't have participated in the scam. Times are not normal.
> If they were worried about running out of VC money, going to the public (the P in IPO) would be the move.
Yes? They were geared up for IPO this year until pushing it back. See all the marketing shenanigans around solving mathematics for this month's flavour. They have a balancing act to manage between the hype and the reality of the business.
Sam conceded he had no business plan in 2022 after releasing chatgpt. He even said he doesn't intend to come up with a business model, he would rather wait for the model to reach AGI then ask it to come up with a model.
No he wasn't wearing a red ball on his nose. He didn't even smile saying this. Dead serious.
"If OpenAI had a sound business plan and was on strong financial footing, they'd have IPO'd."
This is a fallacious assertion, there are so many big private companies with strong businesses that stay private for a whole variety of reasons. E.g. Stripe, Revolut, Databricks, etc.
it really is a privatize the gains socialize the losses situation, isn't it? due to the new rules (or lack thereof), public investors didn't have access to all that growth.
no way it ever gives you a return like, say, the amazon IPO could've.
What regulation makes it so that a large private company would have to go public? You have it backwards. Increased regulations make it more burdensome for a company to go public, driving companies like OpenAI to remain private. If you made it less expensive and burdensome to IPO (decreased regulation), you would see companies go IPO earlier.
This also coincides with a growing market for private credit and VC which certainly helps companies stay private for longer.
Regulations that limit the ability of investors to invest in private companies, although these have been weakened in recent decades, which helps fuel the growth of private credit markets that allow private companies to stay private.
I'd say it's the growth of private markets to allow companies to keep getting funding even at the $100 billion range while staying private that has fueled the trend to stay private rather than SOX and other new regulations for public corporate governance dissuading them from going public.
>Regulations that limit the ability of investors to invest in private companies, although these have been weakened in recent decades, which helps fuel the growth of private credit markets that allow private companies to stay private.
It's not that you couldn't stay private before, but there wasn't much benefit because after crossing that cap you had reporting obligations comparable to public companies anyways.
I searched around and your original claim doesn't seem too convincing. Recall the original claim was
>Regulations that limit the ability of investors to invest in private companies ...
The JOBS act raised the cap from 500 investors to 2000, but with VC funds, that's hardly an issue. Does Anthropic (and other unicorns) really need 500+ VC backers? It might change behavior on the margins, but it's hard to imagine that's the cause for the paucity of public listings.
The actual change that made it more tenable to stay private is arguably the carveout for employee stockholders, but summarizing that as "limit the ability of investors to invest in private companies" is a bit misleading.
There was a rule[1] pre-2012 that forced public disclosure (akin to listed companies) for private companies when it had >500 shareholder (which counted employees with shares). This made it so that companies had a choice to stay private with all obligation of public disclosure or go public for added benefit of tapping public market.
In 2012 this was relaxed in JOBS Act which relaxed the 500 threshold to 2000 but more importantly it ignored employees so now private companies of gargantuan trillion dollar valuation and thousands of employees have no disclosure requirements.
So, this is a classic case of regulation that did well but was relaxed and now creates hidden risks.
It's because reporting requirements changed, in particular employees with stock options no longer counted as shareholders for the purpose of crossing the mandatory reporting threshold.
Before that change companies like MS were in essence forced to IPO, because they'd get all the downsizes of public reporting, without the benefit of accessing market liquidity. So once you were over the threshold, it made no sense to not go all the way.
That's no longer true, and has coincided with a huge expansion in private equity funding growth stage companies vs needing public liquidity. As a result these IPOs being done after their growth stage is largely over are offering the public a very different bet that tech company IPOs of the past.
They would also stop selling equity to private investors. They are likely diluting their own stake.
But they need the money. After all that has already been invested they still need more. That is all I need to know about any delusions that they are currently profitable.
> This is an interesting shift compared to the past where OpenAI would’ve been public a long time ago (due to various regulations) so we would have much more direct insight.
There's a good recent YouTube video about the shift in regulations that switched IPOs from being a way to raise money for growth to being a way to dump on retail investors after all the significant growth has been funded by private investors:
There are bits and pieces of info scattered everywhere but no coherent picture. We know from a16z report [1] that only 2% of US households pay for AI subscriptions, so most of the seat based pricing comes from business and enterprise agreements. We know that OpenAI ads business has $1 billion USD in annualised revenue run rate [2]. We know from OpenRouter data [3] that in 2025 70% of the API token spend was across all the proprietary models (Anthropic did very well in 2025, while OpenAI clawed back market share in 2026).
It all starts to look like a very low margins business, and reminds me very much of telecom industry.
>Right now we have a ~$1 trillion company which a ton of the “economy” and valuations are based on, with near zero information on how it’s doing.
This is definitely by design and encouraged by the VC’s. It’s disgusting to consider what a simulacrum of a market the stock market has actually become.
It’s because this IPO is backed by those who grew up through the boom and bust of the dotcom era, so they know now to do all their growth in secret behind the scenes and then dump onto the market when there’s nothing more in that tank. Rather than letting the public have any major growth out of their baby, and only letting the price discovery phase work one way.
I agree with you and the parent comment, but to be fair to VC, they're also assuming risk. For example, if Wework had IPO'd earlier the public would've been holding the bag instead of private investors.
I agree but not sure WeWork is a good example. That smelled like pump and dump scheme from the beginning. They pretended to be tech company, while actually being landlord middlemen. Plenty of people predicted that downfall.
WeWork collapsed because of their S-1 was on fire. If they had gone public earlier, it would have still been on fire. The reason they lasted that long is because Masayoshi Son didn't do anything that resembled due diligence, but the market would have always done it.
Right but why would VCs want this? Wouldn't VCs value the liquidity of being able to flexibly enter and exit positions? I really wish there were a simple explanation of why companies don't want to IPO as early as they used to but there isn't. The closest I've found when talking to CEOs has been they don't want shareholders putting pressure on them for quarterly results and diluting the company's focus, especially when it's still growing and doesn't have a mature business.
This mad dash to build companies worth TRILLIONS and with trillions of dollars in capex commitments based on the best of all possible worlds coming true for their products comes from this generation of CEOs. Nobody is saying “ok we’ve reached a new threshold in AI let’s see if we can expand slowly so it improves over the next 20 years”. They’re saying “we are on the verge of AGI and Superintelligence so we need hundreds and hundreds of billions of dollars to be spent to make it happen NOW”.
Companies used to *need* to go public in order to either raise capital or because they were going to have to start publicly reporting anyways due to the number of shareholders.
The JOBS Act and proliferation of double-vesting trigger RSUs effectively negated these forcing functions and 'going public' went from a necessary growing pain to a burden and distraction.
Yeah, I have similar thoughts. If SpaceX's IPO has been a dumpster fire, and share price dropped to the third of its initial value, it would still have been massively overvalued, and made Musk much richer than if they went with a more realistic market cap, and let the market carry them upwards.
I agree with you for sure, but fwiw there’s a simpler alternate explanation, or at least there’s another way of saying the same thing
I’ve asked at rapidlu growing unicorns where I’ve worked “why don’t we ipo” and the big wigs every time just say, “why?”
If the original point of the ipo was to raise money and now you can do that privately, it stands to reason that a simple explanation might be that it’s not worth the hassle until the VC’s say they want their money back
Casual Finance did a video on this recently. He explains that prior to 2012 there was a rule that private companies would need to start reporting their financials once they reach the threshold of 500 investors. Because of this they would usually just choose to go public at that point. But since the rule was removed, companies are waiting longer because they don’t have that forcing function anymore. Also, the rich have never been richer so the private money is abundant anyways so there isn’t really a need to go public until you’ve reached the highest valuation you think you can ever get.
We actually have a lot of information on this [1], just indirectly: reported figures, revenue commitments with the hyperscalers, announced funding rounds, and so on. The hyperscalers invest directly in OpenAI and Anthropic, so their bets rest on growth they can see from the inside. They have a clear view of the slope of the curve.
OpenAI is already at about $50B in annualised revenue, up from $21B at the end of last year. That puts it on track to beat its internal projection of $58B by year-end.
Of course, none of this answers the trillion-dollar question of whether that growth will continue. But that question is separate from the claim that OpenAI needs to go public before we can see what’s going on. If anything, I think it’s better for them to stay private while venture capital keeps funding them and until they’ve shown they can sustain their growth. The longer they wait before raising public money, the less risk they add to public markets.
Zitron complained about a lot of things, one some he was wrong (eg. llm are not useful), on others(eg. "magic accounting" or datacenters ) he has very good points ... but we will see.
He did not say LLMs are not useful, he said they’re valuable for software engineering and could justify a hundred million or billion dollar valuation but not a trillion dollar valuation
This is latests refactor, in older videos he stated more than once that llms are basically crap (and at the time he said that he was probably right, but it was very short sight)
This is pretty much the main point of his frustration.
The world has standardised methods of accounting. Not only do Anthropic and OpenAI avoid using those methods, they both use the same phrase “annualised revenues” to describe two radically different accounting processes.
They’re both also leaking those annualised numbers slowly to the press at irregular intervals, which hints that they’re disclosing new numbers in the days after a big sale lands. So you see “$30bn annualised” because they managed to land a $1bn contract the week before, bumping the annualised figure up by $12bn compared to the start of the previous month, and the end of the next.
Yes, This is the one thing he says that generally resonated with me. A lot of his talking points (harnesses as elaborate rude goldberg machines) read more as exaggerated negative statements supporting a pre-concieved narrative
I tried to make a similar play on Heath Robinson but couldn't make it work. In any case check him out, he's more-or-less the English version of Rube Goldberg. Both a lot of fun.
No one has rebutted Ed's points. The only rebuttal is "but look how cool AI is!". He mainly sticks to objective facts about their financial situation, and an honest analysis of that situation is dire, regardless of what you think of AI.
So? Tell me his data is wrong, and then I'll care. His primary "prediction" is that it's a bubble and will crash. And he has lots of empirical facts regarding Anthropic, OpenAI, and all the related companies' actual financial situation. Him being wrong on different predictions does not change the fact that Anthropic and OpenAI are in massive debt and do not have the revenue to handle it, and that a huge percentage of the stock market is being propped up by AI. As he himself says, I really hope nothing bad happens, but the financials are to dire to ignore.
>For example, when Timothy B. Lee looked at a spreadsheet that Zitron used to create a projection of Anthropic's revenue, he found
>He doesn't count February 1-10, counts March 1-10 twice, counts August 21-October 21 as one month instead of two, and doesn't count October 21-November 1. [another commenter notes that his spreadsheet also contains February 30] ... Ed claims he tried to compute Anthropic's revenue for 2025 and came up with $3.6 billion, suggesting some funny business [but the numbers work out once you fix the errors]
from the above link. Personally I agree it's a bubble and there will likely be some sort of crash. But Ed is way to pessimistic on the underlying technology.
And bubbles and crashes are kind of inevitable with any hot new tech given human nature trying to pile in and get rich quick. It's a bit like prediting it'll rain one day.
His "facts" are not facts, he makes stuff up, miss-states things constantly, and is financially illiterate. Whenever I read anything he writes I'm constantly face-palming because it's basically all rubbish.
He's anti-tech, anti-AI, incredibly biased, and just honestly full of bile.
And yes, I'm saying his data is wrong, his interpretation of the data is wrong, and his conclusions are wrong.
The headline should've been "OpenAI annualised revenues $20B less than previously signalled by us". The FT is just reporting high number to create a story, then a low number to create another story.
Sorry Bence I trust the FT journalists to have due diligence w.r.t. what evidence of AR they got from investors (who got it from OpenAI). I completely believe that the company helmed by "not consistently candid" sama bullshits investors about their AR which is the point of this article.
Though I agree with your sentiment that FT is reporting this stuff in a way to stir the pot and create outrage. Speculating about a private company like this is stupid.
FT clearly didn't do their due diligence, since the auxiliary information provided with the $70B leak (about e.g. growth rates and enterprise sales) made it clear that the number could not possibly be correct.
It just wasn't clear exactly what the error was (e.g. was a projection of a $70B ARR by end of year being misinterpreted as $70B ARR now).
I'm waiting for the IPO; I was hoping we'd see less news like this prior. I'm not sure if plain shorting, or puts are the correct action; I suspect the former, as timing the latter is not reliable.
judging from SpaceX performance, I think the market can handle a couple more low float high valuation issuances
The public markets have floated multiple names up to $6tr marketcap/valuation
so the debuts at $1tr valuation from the private markets don’t mean anything
pre-IPO investors will just collar like they did SpaceX, nullifying any price volatility for them at the high share price, and giving them all the liquidity collateral they need for borrowing
The crash of AI hype will be absolutely beautiful. Sure my 401K will probably tank, but this is honestly not the first time. Have plenty of assets not tied to stock market plus plenty of cash.
Although, I suppose that saying, "the market can remain irrational longer than you can be solvent", is more true than ever.
https://www.sec.gov/Archives/edgar/data/1341439/000119312526... says that in June–August 2026 Oracle made $7.39b from cloud infrastructure, $4.22b from cloud applications (aka their SaaS business), $655m from licensing their software, and $4.9b from support.
Now let's think for a second about why you would ever want to report it that way. There is not one good reason other than hiding your actual measly revenue.
> OpenAI is under pressure to justify its $852 billion valuation to investors as it gears up for what is widely expected to be a blockbuster IPO. OpenAI confidentially filed its prospectus with regulators in June, and executives have signaled that the company is eyeing a 2027 debut.
> Anthropic is also readying for a major IPO. The company has not officially disclosed when it plans to debut, but it’s been engaging in meetings with prospective investors and is reportedly seeking a $2 trillion valuation. In August, Anthropic told investors that its annualized revenue run rate hit $65 billion at the end of July.
Is 15 billion annualized (30% more) supposed to justify the $1 trillion+ difference between the two valuations sought in any event? Or are Anthropic's numbers better because of margins or something?
Do you know who is not surprised by this? Ed Zitron, and anyone who has read his articles or anyone who have looked into these companies at any level deeper than "AI do cool things! AI must be good investment! AI must make much money!"
in this case nothing. they are not public, and they never lied to their actual investors that we know of, they were just being tongue in cheek with the press and never actually made any materially false statement. Being oblique does a lot of the heavy lifting here.
You can be charged with securities fraud for selling private company shares and still have an obligation to honesty and candor to investors. The real difference is that private companies aren’t trusted to sell to the general population and are limited to qualified investors.
Honest question, everyone really hates annualized revenue, but how else do you measure the revenue for a company that is (presumably) growing so much month over month? You can't just state revenue projections because they are growing too fast for them to ever make much sense.
Obviously for fast-growing companies, they always want to overstate their success to get that next bit of funding (or in OAI, Anthropic's case justify their existing valuation), so what metric should they share to investors?
State the truth, what revenue you collected last month, the month before, etc. We're not children that need help with arithmetic. We can all multiply by 12, but we don't because it's meaningless. Report the truth. Report what you have already done and leave the "make up new measures that make us look good by pretending we can predict the future" to others.
Sure, and you do show that (and most companies who use annualized revenue are growing so fast their monthly chart looks like a hockey stick). Annualized revenue is a revenue number that serves as the minimum you expect to do if you are truly fast growing.
> As OpenAI bides its time, the company is engaging in early stage discussions with investors about a potential new funding round. The company could raise around $30 billion, CNBC previously reported, but that figure could change.
I predicted last month when they launched Luna that they had raised more funding and I suspect this tidbit dropped to CNBC is just prepping the public for a fundraising that’s already happened. There will probably be an announcement this month.
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[ 2.7 ms ] story [ 78.5 ms ] threadApparently they overstated revenue in an attempt to try to provide a direct comparison with Anthropic's reported metrics.
From the article: "According to a person with knowledge of the matter, the discrepancy arose from attempts by OpenAI’s own investors to produce a direct comparison with Anthropic’s annualised revenues. The pair calculate the figure in different ways, with Anthropic including the revenue from sales via cloud partners such as AWS and Google Cloud, while OpenAI does not. Efforts to “gross up” OpenAI’s annualised revenue led to reports that the group’s annualised revenue had hit $40bn in August. The company has since told investors its revenues have grown more than 70 per cent, leading to the $70bn figure"
Just to clarify from my understanding of the quote, "they" here is openai investors, not openai.
You can still learn something from it: Look at what they do, not what they say - look at how sophisticated their public communication is. They deliver that information in the perfect manner - not only the redirection and striking a blow against their rival, but they use an anonymous "person with knowledge of the matter": A named source at OpenAI might betray the self-interest in the statement, but some anonymous third party is just reporting what they know.
These guys are very good at it, though that shouldn't surprise you. Look at their product, in one sense a highly effective disinformation machine.
What do you mean by this?
* Due to the highly persuasive, human-like, manner in which AI output has been designed, users are persuaded to believe absolute falsehoods. As one popular example, lawyers filings with courts sometimes include fabricated citations - even the experts (the lawyers) are fooled.
* AI software is used for mass disinformation campaigns.
That's not all AI software does, but it's a significant part. You might say that the persuasive human tone is the defining characteristic of AI for most people.
I'm confident both companies are lying about their revenues.
This take has been trotted out so many times, e.g. “How many puts have you bought if you’re so certain?”
gift link didn't work for me, and is this poorly phrased? because it seems implausible that OpenAI doesn't typically include revenue from their models being used on AWS. Perhaps the "gross up" is referring to how the number is included? like Anthropic was using the value pre-removal of revenue sharing and putting the revenue share subtraction as a separate expense?
[not a finance guy so someone tell me I'm wrong if that's not a plausible reading]
So much ARR.
You might ask, how could this possibly pencil out for the employer? Answer: I’m the only person left on what used to be a team.
Technology.
> Was the team disbanded specifically because of your productivity with AI?
Company has laid many people off, and moved many into new lines of business. I don’t know how management decided who went where.
When it hit $20k it triggered a talk with management, but ultimately they decided it was worth because of the value the LLM was providing.
This is something we've been trying to do for a while now and have not found a convincing metric.
OpenAI is caught doing the same thing, just like a 'startup' which is funny.
OpenAI is asking maybe $60B BTW not $2T.
Yes when asking for VC funding, not when asking for IPO. That thing is qualled quarterly earnings.
People have a hard time differentiating between bets vs. fraud.
OpenAI is a bet. Maybe a bad bet. Sure. But everyone knows it is a bet. Their investors are experienced and multi-millionaires with teams of analysts. They cannot just act like they are dumb. Not say it's impossible but highly unlikely they can just claim they don't know any better.
SBF was a fraud for using the customers' funds. The customers were promised that their money wouldn't be used for anything. And their customers are average people. Albeit, SBF's investments are pretty godlike based on the current valuations.
Right now we have a ~$1 trillion company which a ton of the “economy” and valuations are based on, with near zero information on how it’s doing.
Not really. It'd be a dotcom bust, not a 2008 bust. The average American isn't substantially exposed to these companies and the banking system doesn't hinge on them, there's no systemic risk.
What it would do is wipe out the wealth of a lot of very affluent folks and private investors, which most of us could live with.
win at what? 98% of Americans aren't going to care if a meteor drops on SV tomorrow. The day FAANG is done I'm throwing a party. I wish that incestuous industry would finally kick the bucket, 95% of American programmers don't even work there.
Do you seriously think anyone's shredding a tear if Zucc's net worth drops to zero and that privacy nightmare of a company is gone? Don't threaten me with a good time
I think the fact that we have so little information is the most important information we have. If OpenAI had a sound business plan and was on strong financial footing, they'd have IPO'd.
All of this continued stalling and obfuscation can only mean one thing, IMO: OpenAI has no long-term viability and they're desperately hoping for some new breakthrough to reinvent their business model before the VC money faucets turn off for good.
OTOH, if a company has a sound business plan and strong financial footing it may not need to IPO -- unless the founders or VCers want out ASAP.
OpenAI hasn’t had any problems getting impressive amounts of funding. So why ipo?
Who knows what Altman wants? It's moot what individual motivations are as he is definitely fronting for investors who have significant power in the business.
Public money comes with legal fiduciary duties.
The reason to IPO is to get private money out, materialise the whole valuation.
The oversimplified view that has been drilled into startup discussions for years has been that IPO is the singular goal for every startup and they need to get there as fast as possible, but that hasn't been true for a long while. There are high profile examples like Stripe with no intent to go public any time soon. Some public companies are even gradually doing share buybacks partially to remove their public exposure.
Being a public company kind of sucks in many ways. I'll admit my sample size is small, but every post-IPO CEO I've known has expressed some regrets about going public. It was a fascinating revelation to me after being raised on the idea that IPO is the ultimate victory goal of every startup.
The only reason they’re not doing it is by choice, because they want to find an optimal time to maximize their returns.
There is no “we’re trying to IPO but can’t”. If they were actually trying, it would be in motion.
Whatever private-market liquidity events they will be permitted to participate in will be highly disadvantaged compared to the other two groups.
What does adding a few more suckers to the pile of tens of millions of other suckers do to those that get the real benefits? It’s not like after they achieve their goals, the people who helped them would have the ramp or resources to recreate the process.
If you've made tens of millions of people unemployed over the timeline of a few years, then you no longer have nearly the market to sell goods and services - including your AI - to.
Assuming these guys answer that with "let's make UBI" - which is a huge assumption given the way SV fetishizes those who "create value" and looks down upon those who don't - you now basically have tech feudalism. The remaining upper crust "generously" pays the rest of the population enough to not starve until they die.
You'll basically have an entire society in stasis, with no hope of improving their lot, being given the bare minimum to keep humans alive, if that. Well, no hope of peacefully improving their lot.
It won't be a promised land at that point.
Comparisons to feudalism kind of sell the direness of the AGI vision short: in feudalism, the lord still depended on the peasants. The lord would be inconvenienced if he had them all killed. Not so with AGI! He won't even notice their gone.
Besides as much as I love UBI it requires Star Trek technology: ubiquitous space travel and replicators.
If He fails to arrive, or arrives late, they will be the railroad financiers in the Panic of '73.
Not being profitable in itself is not a problem or has not been historically. With software, there’s a bunch of investment into making the service but the variable cost of providing it is negligible. It’s ok not to be profitable because the growth of userbase will pay you back. Capex isn’t a thing, you can just rent somebody else’s from the cloud. This is how the world used to work pretty much for a quarter century, ever since the dot-com bubble. But OpenAI is not like it. Their variable cost is huge as is the capex to enable being able to even make that cost happen. It’s not that they are not profitable, it’s that their financial profile does not fit into anything this generation of decisionmakers is used to.
What about Stripe?
If a startup is riding a hype cycle and is one of two leaders in the global industry with unreal growth numbers, they can IPO whenever they want. The incentives lean toward doing an IPO before the hype runs out, not delaying it.
If they were worried about running out of VC money, going to the public (the P in IPO) would be the move.
Companies don't actually have to go public quickly or even at all, even though that's been drilled into us as the only goal of every investor-backed startup.
I'm not certain OpenAI or Anthropic have a viable business, either, but Spacex definitely pulled a massive scam.
This is the entire game if you zoom out.
Exit -> Recycle some of the money so USA stays ahead. That is the entire game, you see it right...? I hope you do.
Spacex is transparently a scam to steal from people's retirement accounts. Normally, that would be a thing that wouldn't be encouraged by regulators, and our president wouldn't have participated in the scam. Times are not normal.
Yes? They were geared up for IPO this year until pushing it back. See all the marketing shenanigans around solving mathematics for this month's flavour. They have a balancing act to manage between the hype and the reality of the business.
No he wasn't wearing a red ball on his nose. He didn't even smile saying this. Dead serious.
But for the US this is the last throw of the dice. All chips on red.
Sam parlayed working for YC into owning a significant holding of Reddit (and other companies?).
To me, he appears to be a successful parasite that selects the fattest hosts. There are plenty of people that laud VC culture.
Silicon Valley No Revenue: https://www.youtube.com/watch?v=BzAdXyPYKQo
This is a fallacious assertion, there are so many big private companies with strong businesses that stay private for a whole variety of reasons. E.g. Stripe, Revolut, Databricks, etc.
You're letting your bias leak out here.
no way it ever gives you a return like, say, the amazon IPO could've.
This also coincides with a growing market for private credit and VC which certainly helps companies stay private for longer.
I'd say it's the growth of private markets to allow companies to keep getting funding even at the $100 billion range while staying private that has fueled the trend to stay private rather than SOX and other new regulations for public corporate governance dissuading them from going public.
Which regulations are these?
It's not that you couldn't stay private before, but there wasn't much benefit because after crossing that cap you had reporting obligations comparable to public companies anyways.
>Regulations that limit the ability of investors to invest in private companies ...
The JOBS act raised the cap from 500 investors to 2000, but with VC funds, that's hardly an issue. Does Anthropic (and other unicorns) really need 500+ VC backers? It might change behavior on the margins, but it's hard to imagine that's the cause for the paucity of public listings.
The actual change that made it more tenable to stay private is arguably the carveout for employee stockholders, but summarizing that as "limit the ability of investors to invest in private companies" is a bit misleading.
In 2012 this was relaxed in JOBS Act which relaxed the 500 threshold to 2000 but more importantly it ignored employees so now private companies of gargantuan trillion dollar valuation and thousands of employees have no disclosure requirements.
So, this is a classic case of regulation that did well but was relaxed and now creates hidden risks.
[1]: https://www.investopedia.com/terms/5/500-shareholder-thresho...
My guess would be - oxytocin, cortisol and dopamine regulation, or rather the failure of said regulation.
Before that change companies like MS were in essence forced to IPO, because they'd get all the downsizes of public reporting, without the benefit of accessing market liquidity. So once you were over the threshold, it made no sense to not go all the way.
That's no longer true, and has coincided with a huge expansion in private equity funding growth stage companies vs needing public liquidity. As a result these IPOs being done after their growth stage is largely over are offering the public a very different bet that tech company IPOs of the past.
But they need the money. After all that has already been invested they still need more. That is all I need to know about any delusions that they are currently profitable.
There's a good recent YouTube video about the shift in regulations that switched IPOs from being a way to raise money for growth to being a way to dump on retail investors after all the significant growth has been funded by private investors:
https://www.youtube.com/watch?v=roe3SgezmmU
It all starts to look like a very low margins business, and reminds me very much of telecom industry.
[1] https://www.a16z.news/p/state-of-markets-ii
[2] https://www.reuters.com/business/media-telecom/openais-ad-bu...
[3] https://openrouter.ai/state-of-ai
This is definitely by design and encouraged by the VC’s. It’s disgusting to consider what a simulacrum of a market the stock market has actually become.
The thing is normally it's money that's intended to be burned in the search of a unicorn, cheap money, so there's no real "risk" there.
Also, I think comparing WeWork to AI labs is not valid.
These labs have increasingly become of public interest and are shaping economies around the world, WeWork was just not at that level.
VCs just want returns on the money, and they don't need to use the stock market for that as much anymore.
Paraphrasing Bill Hicks.
The JOBS Act and proliferation of double-vesting trigger RSUs effectively negated these forcing functions and 'going public' went from a necessary growing pain to a burden and distraction.
I’ve asked at rapidlu growing unicorns where I’ve worked “why don’t we ipo” and the big wigs every time just say, “why?”
If the original point of the ipo was to raise money and now you can do that privately, it stands to reason that a simple explanation might be that it’s not worth the hassle until the VC’s say they want their money back
OpenAI is already at about $50B in annualised revenue, up from $21B at the end of last year. That puts it on track to beat its internal projection of $58B by year-end.
Of course, none of this answers the trillion-dollar question of whether that growth will continue. But that question is separate from the claim that OpenAI needs to go public before we can see what’s going on. If anything, I think it’s better for them to stay private while venture capital keeps funding them and until they’ve shown they can sustain their growth. The longer they wait before raising public money, the less risk they add to public markets.
[1] https://finance.visnia.xyz/economy/ai-buildout
My anuallized revenue is about 4.5M. I just need now to get a salary every day.
And the sad fact is even though they did this, they were still 20 billion too low.
Not only will this never be an IPO, this is a signal of a collapse of the economy
The world has standardised methods of accounting. Not only do Anthropic and OpenAI avoid using those methods, they both use the same phrase “annualised revenues” to describe two radically different accounting processes.
They’re both also leaking those annualised numbers slowly to the press at irregular intervals, which hints that they’re disclosing new numbers in the days after a big sale lands. So you see “$30bn annualised” because they managed to land a $1bn contract the week before, bumping the annualised figure up by $12bn compared to the start of the previous month, and the end of the next.
He's made dozens of predictions that were just wrong.
>For example, when Timothy B. Lee looked at a spreadsheet that Zitron used to create a projection of Anthropic's revenue, he found
>He doesn't count February 1-10, counts March 1-10 twice, counts August 21-October 21 as one month instead of two, and doesn't count October 21-November 1. [another commenter notes that his spreadsheet also contains February 30] ... Ed claims he tried to compute Anthropic's revenue for 2025 and came up with $3.6 billion, suggesting some funny business [but the numbers work out once you fix the errors]
from the above link. Personally I agree it's a bubble and there will likely be some sort of crash. But Ed is way to pessimistic on the underlying technology.
And bubbles and crashes are kind of inevitable with any hot new tech given human nature trying to pile in and get rich quick. It's a bit like prediting it'll rain one day.
He's anti-tech, anti-AI, incredibly biased, and just honestly full of bile.
And yes, I'm saying his data is wrong, his interpretation of the data is wrong, and his conclusions are wrong.
Though I agree with your sentiment that FT is reporting this stuff in a way to stir the pot and create outrage. Speculating about a private company like this is stupid.
It just wasn't clear exactly what the error was (e.g. was a projection of a $70B ARR by end of year being misinterpreted as $70B ARR now).
Anyway, if I had a hundred bucks to burn, I’d bet this is a move to undermine Anthropic’s IPO.
IMHO, the Bears will be proven right on this one sooner or later. =3
2.5bn in revenue for all of July. That is a disaster.
Squeaky bum time
The public markets have floated multiple names up to $6tr marketcap/valuation
so the debuts at $1tr valuation from the private markets don’t mean anything
pre-IPO investors will just collar like they did SpaceX, nullifying any price volatility for them at the high share price, and giving them all the liquidity collateral they need for borrowing
Although, I suppose that saying, "the market can remain irrational longer than you can be solvent", is more true than ever.
Uhm, that's definitely not their business, despite what they want to you to believe.
https://m.xkcd.com/605/
I imagine, when your company grew astronomically fast to the level that was unseen in the past, the investors would be a lot more forgiving.
Even their hokey run rate figure is falling?
> Anthropic is also readying for a major IPO. The company has not officially disclosed when it plans to debut, but it’s been engaging in meetings with prospective investors and is reportedly seeking a $2 trillion valuation. In August, Anthropic told investors that its annualized revenue run rate hit $65 billion at the end of July.
Is 15 billion annualized (30% more) supposed to justify the $1 trillion+ difference between the two valuations sought in any event? Or are Anthropic's numbers better because of margins or something?
https://www.bloomberg.com/opinion/articles/2019-06-26/everyt...
(I subscribe to his newsletter and generally really enjoy it.)
Obviously for fast-growing companies, they always want to overstate their success to get that next bit of funding (or in OAI, Anthropic's case justify their existing valuation), so what metric should they share to investors?
I predicted last month when they launched Luna that they had raised more funding and I suspect this tidbit dropped to CNBC is just prepping the public for a fundraising that’s already happened. There will probably be an announcement this month.