Hi, everybody. Welcome back to the show.
This is your host, Will Walden. I have some news for you.
We are going to be making a move, a power move, if you will,
in the land of podcasting. This is the Elon Musk podcast as
of right now. And we're going to be shifting
gears here because the world of tech isn't just Elon Musk, but
it's all the companies that he owns and everything in his
sphere of influence. So if you hear that term or you
see the logo for stage zero, the name will be changing soon.
And that's on me. We're not being bought out or
anything like that. I just feel like it better
represents what I'm going to be bringing you for this show in
the future before we get in today's topic, which is open AI.
Elon has open AI in his sphere of influence, of course, and Sam
Altman is arch nemesis. And we are going to be
continuing to bring you the same thing that you've always had.
We're not going to be changing anything.
You're still going to get the same content about 10 minutes or
less every day unless we have something special going on.
And then you're going to get a longer episode.
But more than likely it's going to be about 10 minutes or less
with Elon in his sphere of influence, companies and his
friends and also his competitors.
So be ready for that in the future.
It's going to be pretty similar to what we have now, just a
little bit better production values.
And I wanted to get into this without an intro or intro music
or bumpers or anything like that.
Just want to be heart to heart with you and come to you
straight up because I think that's what we need to start
doing here. We're going to have straight up
conversations about some of the stuff, some of the things that
Elon does. He does some mean things.
I'm going to be honest with you upfront.
I'm a fan of his companies. I'm a fan of the technologies
that he creates. I want humans to go to Mars.
I love EVs, I love Teslas, I love the cars, I love the people
that work there. Some of the things that Elon
does, he's not the best guy sometimes, and that doesn't make
this show any worse or any better.
But as somebody who follows Elon Musk, and I've been reporting on
Elon Musk and everything he does for the last five years, I
uprooted my life to move to Star Base, Texas so I could cover a
Starship because I love SpaceX so much.
Everything that I loved, where I was from, I left it all behind
so I can move to Star Base Texas and cover Starship for about a
year on Hwy. 4. And the sacrifices that I had to
make in order to do that were obscene.
So I just wanted to let you know that I am still that same
person. But you have to think about
things like an engineer. You have to think about things
like a scientist. There's no right or wrong.
There's no right down the middle.
Sometimes somebody does something that you don't agree
with, and sometimes if you look at the evidence in front of you,
they do something amazing. Elon Musk has accomplished some
amazing things in his life, and I want to report on that.
But I also have to report on the things that he hasn't done
right. It's the right thing to do.
As somebody who's been in news my whole life, I've been in
content creation for over 20 years now, and I know for a fact
that there are sometimes when people do some weird things.
I've seen it happen in every circumstance that I've reported
them. So I just want to let you know
that will be happening in the future.
You don't have to unsubscribe or anything like that because
you're still going to get the things you like.
You have to keep an open mind about the things that do
actually happen. No one's right 100% of the time,
and we have to report on it. I'm a reporter first.
I'm a news guy first, so we have to get into the news today,
Speaking of that. But I wanted to make this
announcement before it was too late, before I forgot to do it
because I'm recording this really late at night.
But today we're going to be talking about open AII want to
have more conversations like this too on the podcast.
I think it's more natural. We can talk more, we can have
more comments, and I think that the conversation has to
continue. So we're going to talk about
Open AI today. They got $40 billion in cash.
Why does Open AI need $40 billion in cash?
Probably for GPUs. They're burning through their
GPUs with the video generation prompts that people can place in
there are insane. I've been creating Starship
content with it all day, so I understand a space like Starship
content all day. I was probably burning down for
some GPUs myself, but why would they need $40 billion in private
capital, which is more than triple the previous record?
And what is it planning to do with all the money they plan it
with Sam going to do with all that money?
Just when half of it depends on a complete structural overhaul
that's already sparked lawsuits and regulatory scrutiny.
Now it's a kind of question that reveals everything about the
current state of AI, the people funding it, and the unstable
marriage between innovation and corporate ambitions right now.
When Open AI announced on Monday that it closed the largest
private tech funding round in history, the sheer size of the
deal raised so many eyebrows. Everybody was.
I was aghast. I saw this news and I didn't
know what to do. I heard about it in the
Grapevine. They're going to be raising a
bunch of money, but who knew this much?
We're going to talk about some implications.
We're going to talk about some power plays, and then we're
going to talk about burning GPUs down.
I guess Open AI just pulled off what no other tech company has
ever done, $40 billion in one round.
It values the company best known for chat TPT at about $300
billion, which is based on figures disclosed in the deal
announcement and corroborated by Pitch Book.
The money isn't just a headline figure, though.
It's a tactical war chest. They're taking on Elon, they're
taking on Google, they're taking on Meta.
It's an arms race right now. The number is nearly three times
what Ant Group raised in its $14 billion round in 2018, in more
than the combined hall of every other large private tech
investment round on record. It signals a shift in how
capital flows into aiorwereseeinganother.com bubble
here, and how tightly it's now tethered to the whims of the
few, the powerful few. Now the majority of the cash,
which is $30 billion, is coming from Japan's SoftBank firm,
known for throwing money at futuristic tech companies, with
mixed results. Remaining 10 billion from this
round is split among a syndicate of investors, Microsoft CO2
Thrive Capital Ultimatter. Now these are not little firms
making calculated bets that Open A is current dominance in
generative AI will scale into something even more crazy.
So the monster cash injection doesn't come without conditions,
though. If somebody's going to give you
that kind of money, they want something in return.
There's a string attached that might unravel the whole package.
According to a disclosure from SoftBank filed on Monday, if
Open AI fails to fully restructure into a for profit
entity by the end of this year, the total investment could
shrink from 40 billion to as little as 20 billion.
That's a ton of money. Now that clause forces Open AI
into a very tight corner, requiring illegal maneuvering,
boardroom consent, possibly even a public political fight.
Elon Musk is suing them for this, by the way.
Now, to understand the stakes here, it's important to grasp
open AI strange corporate identity.
They're born in 2015 as a non profit research lab with a
mission to build AI that benefits all of humanity.
Now more often 2019 into a capped profit limited
partnership. It's kind of like a Frankenstein
of legal structures and allows outside investors to profit, but
only up to a certain limit while the original nonprofit retains
control of everything. Now it's controversial, it's
complex. And that's where Elon Musk comes
in. One of open A is original Co
founders. He's now one of its most vocal
critics and haters. Musk has sued Open AI because, I
mean, the company's structural shift to a for profit model
violates its founding principles.
He's not the only obstacle, though.
The transformation also needs green lights from Microsoft, one
of Open AI's biggest backers, and the California attorney
general, who holds sway over nonprofit compliance renders
today. Over the 40 billion raised,
nearly half 18 billion is reportedly earmarked for a
project called Stargate, which is a joint venture between Open
AI, Oracle and SoftBank. That was first announced by
President Donald Trump in January.
And his administration's blessing of the deal brings an
unexpected political twist to an already convoluted financial
narrative. Stargate is designed to build a
massive compute infrastructure capable of training the next
generation of AI models. Whether it gets built or becomes
another money sink depends on more than just hardware orders,
though. Depends on everything from
geopolitics to the legal rulings.
They want performance, structural clarity, and legal
certainty before going all in. If Open AI fails to deliver,
they're prepared to walk away from half the capital.
That puts an immense amount of pressure on CEO Sam Altman and
his executive team to navigate not just tech milestones, but a
labyrinth of financial and legal commitments.
Now Altman, for his part, seems unfazed, though he's always
unfazed about everything. And a Monday post on X, he
boasted one of the craziest fire moments I'd ever seen.
And we added 1,000,000 users in five days, added 1,000,000 users
in the last hour later on that day.
Now the number is, while impressive, don't answer the
real question though. Can user growth translate into
sustainable revenue and long term trust in an organization
that's constantly rewriting its rule book?
Will they be stable? Open AI claims it expects to
triple it's revenue to 12.7 billion by the end of the year,
based largely on demand for Enterprise Products, licensing
deals and usage of ChatGPT. Apple uses ChatGPT on their
platforms. Projections are built on the
foundation of generative AI is current hype cycle, which many
analysts caution could face sharp corrections as competitors
flood the market. And the competitors are huge.
Amazon, Google, Entropic. The start-ups like Perplexity
aren't slowing down. The broader market is beginning
to feel the strain too, exclusively on AI infrastructure
called Core Weave. They went public last week, but
the debut was anything but triumphant.
It slashed its IPO price, ended flat on day one and slid 7% on
day 2. So even AI focus investors are
no longer blindly throwing cash around.
That's not the early dot coms. Open AI backers, though,
hopefully are taking calculated risks, gambling on both the tech
and the legal acrobatics that are required to get this done.
There's also internal restructuring underway at Open
AI. The company announced that
Ultimate is stepping back from day-to-day operations to focus
more on research and product development.
Now Brad Lightcap, the current COO, will take over business
operations. Now it that shift is crucial, as
open AI must now juggle investor demands, product delivery, and
legal restructuring. So why does any of this matter
outside of the ultra rich in Silicon Valley and international
boardrooms? Because open AI decisions have a
direct influence on how artificial intelligence is
developed and how it's distributed and how it's
controlled across sectors like education, healthcare, defense,
and public information. Products and research directly
impact how algorithms make decisions that touching millions
of lives and possibly billions in the future.
Then there's another layer Access.
It's a company that started with the promise of open source
transparency and public benefit, but is now in closed door
investment rounds, secrecy clauses, and massive profit
motivations. This is redefining who gets to
participate in the AI future. You must have billions of
dollars to compete. You need that GPU baby.
And As for the $300 billion valuation, it's more than just
an investor. Flex makes Open AI one of the
most valuable private companies in the world, behind only Elon
Musk's SpaceX, which is about 350 billion.
So if they get another 50 billion tie SpaceX which is tied
with Byte Dance which is the Parrot company of TikTok.
Now those companies have vastly different missions though
governance structures, but they all have one thing in common,
dominance over the data and digital experiences of billions
of users. 6 Except SpaceX. They want to go to Mars, and
opening eyes size and scale now demand regulatory oversight and
consumer awareness. They have to tell everybody
about it. And as it barrels towards what
investors believe will eventually be an IPO, opening
eyes ability to manage its identity crisis could determine
whether it's seen as a research powerhouse or a cautionary tale.
The company could go public at some time.
It's just whenever. But they're non committal.
Right now. Everybody's unsure what the path
is. Could they stay private and just
keep getting investment while they continue to make money,
possibly for a while, keep it private so you can continue
getting that venture capital and make it profitable.
Eventually we'll see what they do, but if they do go public,
they have shareholders to listen to and also they will have a
huge influx of money if they go public.
Everybody wants a piece of open AI.
The other structure would not. And this is what the venture
capitalists are banking on, because venture capitalists
don't just invest in your company so they don't get a
payout, right? There's always an exit for these
things. Open AI from the beginning, as a
nonprofit in somebody's head, somebody was thinking of an
accent, they want Open AI to exit.
They want to take that big chunk of money, investor money from
the public. When the IPO, they want to get
those billions of dollars back. If they're going to give them
300 bill, if they have $300 billion valuation, it's only a
matter of time before they get their money back.
They will be profitable. And if they keep it private,
could they be more profitable than SpaceX eventually?
I believe so. SpaceX has government contracts,
but open AI is a commercial product which also does
enterprise and also does government contracts as well.
So they have a broader audience than what SpaceX does.
SpaceX has rocket launches and they have Starlink, of course,
which is a public product and not everybody is going to use
Starlink. And eventually everybody's going
to be using AI for search, research, image generation,
video generation, everything. So AI has a broader appeal than
Starlink. So 350 billion SpaceX, watch
out. Open AI is coming for you.
That's all I'm going to say. In the end, though, it's earth
shattering. It's record shattering funding
route is huge. It changes the stakes for
everyone else in the race though.
Open AI knows their they know their path.
They're going all in now. Whether Open AI can hold the
lead without collapsing under its own contradictions from a
not-for-profit to a very much for profit remains to be seen.
That's a ton of cash now. There's pressure on it.
What it does next will determine whether it remains a pioneer or
becomes a warning of failed companies.
And this could be the AI bubble bursting if open AI doesn't
figure this out, I think we have some time before that.
We have a lot to accomplish with AI before this bubble bursts.
All right, so thanks for listening everybody.
I do appreciate your time. Now, the only thing that I ask
from you is that you like or follow this podcast on whatever
podcast platform you're on right now.
And I'm going to make you a promise.
My promise is that I'm going to do this for 10 more years.
I've already been doing it for 4 1/2 or five years.
So I continue to do this because I'd love to do this.
This podcast is very old and I will continue to produce
episodes for free, not behind a paywall, as long as you follow
the podcast. Right now, that's all I ask.
It's free, it's easy, takes you a second, and you'll get more
content like this in the future. So I'm going to say thank you
for listening today. Please take care of yourselves
and each other and I will see you tomorrow.