Microsoft has been in talks to invest $10 billion into the owner of ChatGPT… The funding, which would also include other venture firms, would value OpenAI… at $29 billion, including the new investment
Whether you think $29 billion is a sensible valuation for OpenAI depends a lot of what you think of their future… On [one] hand, being valued at $29 billion dollars is really a lot for an AI company, historically speaking, on the other Altman often publicly hints that the company is close to AGI
How much would AGI actually be worth? A few years back, PwC estimated that the overall AI market might be worth over $15 Trillion/year by the year 2030; McKinsey published a similar study, coming at at $13 trillion/year… If you really were close to being first to AGI, wouldn’t you want to stick around and take a big slice of that, with as much control as possible? My best guess? Altman doesn’t really know how to make OpenAI into the juggernaut that everybody else seems to think he’s got.
Finally, Marcus shares some interesting information he received from an anonymous source:
Turns out Semafor was wrong about the deal terms. If things get really really good OpenAI gets back control; I am told by a source who has seen the documents “Once $92 billion in profit plus $13 billion in initial investment are repaid [to Microsoft] and once the other venture investors earn $150 billion, all of the equity reverts back to OpenAI.” In that light, Altman’s play seems more like a hedge than a firesale; some cash now, a lot later if they are hugely successful.
It is important to remember that OpenAI isn’t exactly a for-profit company but, instead, a “capped profit” company. From their press release announcing the new corporate structure:
The fundamental idea of OpenAI LP is that investors and employees can get a capped return if we succeed at our mission… But any returns beyond that amount… are owned by the original OpenAI Nonprofit entity.
OpenAI LP’s primary fiduciary obligation is to advance the aims of the OpenAI Charter, and the company is controlled by OpenAI Nonprofit’s board. All investors and employees sign agreements that OpenAI LP’s obligation to the Charter always comes first, even at the expense of some or all of their financial stake.
Although at the end of the day OpenAI can always change course. From The Information:
OpenAI has proposed a key concession as part of discussions with potential new investors. Instead of putting a hard cap on the profit sharing—essentially their return on investment—it could increase the cap 20% per year starting around 2025, said a person briefed on the change. Investors say this compromise, if it goes through, would make the deal more attractive because it would allow shareholders to obtain venture-level returns if the company becomes a moneymaker.