https://www.bloomberg.com/opinion/articles/2019-06-26/everyt...
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"
**sorry the gift link can only be viewed 3 times..
Just to clarify from my understanding of the quote, "they" here is openai investors, not openai.
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]
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?”
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?
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.
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.
> 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?
The $70b estimate was based on a comparison to Anthropic, which includes revenue from cloud providers. OpenAI does not include this in their numbers.
So, the number did not come from OpenAI. It was an accounting mistake made by some investors and media, who did not adjust for this before reporting on it. I see fintwit calling on FT/Axios to issue a retraction; good luck with that.
It sure is interesting to see the rush to judgement in this thread. Another poster correctly pointed out this mistake (now buried under the sea of misinformed posts trending above it.) The Internet is cooked.
Also bear in mind that the original $70b number came from an 'anonymous' source to Axios.
That's a different thing from what you said, that the 70B "was based on a comparison to Anthropic". It wasn't, or we can't say that using the source material. The 70B was based on an anonymous source, which used the different metric (including cloud revenue etc) supposedly to make a comparison with anthropic, which does those things, easier.
Anyway, it doesn't seem like this is "not news"
> far short of the $70bn reported by the FT and other media outlets late last month based on information that was provided to investors.
Still, seems it is still true that their number is not directly comparable to Anthropic's because they calculate it differently, I think that part still stands and is pretty relevant here.
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 -- that would have been stupid, but less stupid than the "investors added a fudge factor to the numbers" story that they're now going with).
> based on information that was provided to investors.
It was OpenAI spreading their bullshit annualized revenue.
OpenAI and Anthropic always play this silly game to pretend they are in anyway viable. It is always ARR, "adjusted" revenue, etc. "We are profitable when we pretend we don't have expenses".
Its comically bad how this circus is playing out.
The press that reports on this shit is very much complicit, they report on bullshit metrics spread by these companies to generate hype.
> outside of OpenAI control.
If OpenAI is as uncertain of their numbers to the magnitude of 20B, they should stop spreading bullshit metrics. In fact this should be considered fraud.
People can just write stuff. That does not make it wrong but that also does not make it right. If your claim rests on some claim that some anonymous actor got some information, that's just not super convincing and neither is pointing at it as some sort of truth.
>> based on information that was provided to investors.
>It was OpenAI spreading their bullshit annualized revenue.
Did you read the article?
>The discrepancy arose from attempts by OpenAI’s own investors to produce a direct comparison with Anthropic’s annualised revenues, according to a person familiar with the matter. The pair calculate the figure in different ways, with Anthropic including the revenue from sales via cloud partners such as Amazon’s AWS and Google Cloud, while OpenAI does not.
>Investors’ efforts to “gross up” OpenAI’s annualised revenue prompted reports that the figure was around $40bn in July, said the person.
>OpenAI later told its backers that its annualised revenues had jumped more than 70 per cent since July, prompting reports that the figure was about $70bn at the end of September — a number the company did not deny.
>However, the new investor presentation shows close to $30bn annualised revenues in July.
Sounds like what happened wasn't that openai "spreading their bullshit annualized revenue", it was that they gave some vague figure that investors the media and other investors extrapolated, and it turned out that extrapolation was incorrect. Both the $40bn and $70bn figure did not come from openai directly.
2.5bn in revenue for all of July. That is a disaster.
Squeaky bum time
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.
Even their hokey run rate figure is falling?
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?
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
Uhm, that's definitely not their business, despite what they want to you to believe.
Personally I found it shows Oracle is more of a data center company than I had realized.
I'm sure there's other devils hiding in details, but that alone would make it a very tempting target for orgs that want to move off-prem to chase the 'move to cloud' 'KPI' 'Synergy' but still have a bunch of trash queries/etc running under the covers, with the additional benefit of you are safer when the sales/legal folks from licensing visit your offices for renewals and the like.
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
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.
You might ask: how could this possibly pencil out for my employer? Answer: I’m the only person left on what used to be a team.
So much ARR.
Although, I suppose that saying, "the market can remain irrational longer than you can be solvent", is more true than ever.
My anuallized revenue is about 4.5M. I just need now to get a salary every day.
There is a reason we consider annual results. A year is a natural complete cycle. There isn’t equal amount of demand in January as in June for almost any product.
So taking one good week and multiplying it by 52 (or 4 x 13 as the case may be) is at least naïve and realistically — deceptive.
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.
And also set up moats so for security only they are allowed to push the state of the art forward.
So true. I know I'd rather be murdered by an American ASI than a Chinese one.
Everyone's eager to get a slice of these pre-IPO companies, and the marginal utility of having it be more liquid on the public markets probably doesn't outweigh the legal requirements behind going public. It's not like VCs are stuck holding the bag until an IPO these days. I'm not sure why that changed, but it's probably not healthy.
I know plenty of companies that are failing on VC dime, whose investors can't sell their equity. I disagree that everyone wants a slice of these companies. It's not clear to me whether it's a net win for VCs to hold onto illiquid investments for so long (meaning I can see both the upsides and the downsides.)
To me it's pretty clear. The earlier investors take out all the possible upside and then dump it on the retail market. The retail investor will be less and less able to buy stock that will grow 10x and more. It's hard to imagine SpaceX, OpenAI or Anthropic will multiply in value after the IPO. They are priced in a way that they have to execute perfectly for a long time to justify even their current price.
Just another step for the super wealthy to keep profits for themselves instead of letting the broader population to benefit.
VCs just want returns on the money, and they don't need to use the stock market for that as much anymore.
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.
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.
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 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.
No he wasn't wearing a red ball on his nose. He didn't even smile saying this. Dead serious.
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.
If He fails to arrive, or arrives late, they will be the railroad financiers in the Panic of '73.
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.
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.
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.
What about Stripe?
I'm absolutely certain that we will reach that point, just not when. Could come sooner than we think though.
Remember a few weeks ago when all the AI labs said "we need to slow down, to uh, prevent destroying the world"?
Is there no end to this kind of lazy conspiracy theory
These are useful and too big to run locally.
The ultimate size of that business in terms of revenues and profits may not match current expectations, but it's also not 0
ok, where are:
- The economies of scale?
- The network effects?
- The switching costs?
- The intangible assets (e.g. brand?)
Running AI models for a fee has none of these. At best, there are some economies of scale for running a datacenter, but OpenAI and Anthropic have none.
The business logic is similar to the general transition to cloud. Corporations and individuals are better off paying someone else to manage physical hardware that they just access over the network. That is even more true of large, expensive, fancy AI GPUs than regular web servers.
OpenAI and Anthropic may both fail, or may not, I don't know. But I'm sure there is some kind of viable business running some kind of AI in the cloud.
The problem is that the investment does not expect "some kind of viable business" ROI needs to be in the order of several trillion for this to make any sense.
That money may not be made back in the way people hope.
But there is a whole ecosystem of companies on OpenRouter etc. who have a viable commodity business serving Chinese open source models on GPUs. I'm sure at least some kind of business like that will survive even if OpenAI and Anthropic completely fail. And I'm sure AWS, GCP and Azure will end up having something like that too.
In the last ~month, OpenAI announced a delay to its IPO and Anthropic put a relatively near-term range on its IPO date. These are very different signals.
they are 50/50 at best.
So yeah, if they stop training models forever, Anthropic will probably start making a profit... until someone else with better models comes along to eat their lunch.
[1] https://www.morningstar.com/news/marketwatch/2026091414/the-...
All these figures are so utterly weaselly. AAR is a made up measure to make them look good. If they cannot show GAAP numbers, they are hiding something. Full stop. While as private companies they are under no legal obligation to show us their books, their PR and intent to go public requires it.
Earnings Before Bad Things.
If an AI company can exclude the cost of training the new models they release every three months from the business of whether they are profitable, it would be shocking if they weren't profitable. And the figure is tiny compared to the valuation they appear to be seeking, and may only be positive because of a short term boost.
Steve Eisman said the other day that he suspects part of Anthropic's rush to get to IPO is that their third quarter figures are terrible.
My low level conspiracy theory is AI is encouraging habits of people not to read so noone can read statements like "we excluded our costs from our profit calculation"
The reason is that companies can choose the best timing to go public - when their financial look the best - and they do. Anthropic trying to go public very soon is a good tell their financial look pretty decent. OpenAI postponing the IPO is a very good tell theirs look bad.
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 also coincides with a growing market for private credit and VC which certainly helps companies stay private for longer.
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...
We have historical data on how it worked out for companies that were pushed into going public by the old regulations... Microsoft, Google, Facebook, et al.
Their early stage employees did... pretty well... financially.
The only real difference from the employee perspective is that a lot of the money that made them rich came from public investors (who also had a chance to make a lot of money), whereas now it only comes from private investors and the public is locked out.
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.
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.
My guess would be - oxytocin, cortisol and dopamine regulation, or rather the failure of said regulation.
no way it ever gives you a return like, say, the amazon IPO could've.
Losses are much more privatized staying private. Instead of hitting people's 401k or pension fund, this is mostly contained to a concentrated set of VC and PE investors, not large public markets.
See: SpaceX and the Nasdaq 100 rule changes.
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.
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
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
https://www.reuters.com/legal/transactional/openai-targets-3...
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.
And yes, they will be acquired by a company which will have survived the next crash at a fraction of their currently estimated valuation and we will truly have the next ride of the economy .. many years ahead if 2001 is an example.
- economy has been slowing down (the real one, the people) while stocks are at record high
- a long overdue business cycle which has been pushed back and back and back ...
- rates hiking (in a slowing down economy)
- bubbles, and that AI bubble is huge. Loving AI on an every day basis but revenue wise, it's not mainstream, far from it. Average people want free stuff, they're good with Google or Facebook throwing them ads, they don't want to pay $200 for a subscription and fact is, 2026 revenues are about $100b totall. Meanwhile hyperscalers are spending about $1 to $2 trillion alone in 2026, and meant to increase within the next few years. You need a lot of imagination to see how this can "flatten" nicely.
Like internet didn't disappear after 2001, AI is here to stay, too. But...