Ep 646: OpenAI: How can A former nonprofit losing $12 billion a quarter go public at $1 trillion?

Topics Covered in This Episode:

1. OpenAI's $1.4 Trillion AI Infrastructure Bet
2. Transition to Public Benefit Corporation
3. OpenAI's $1 Trillion IPO Valuation Plans
4. Microsoft Stake and Cloud Partnerships Breakdown
5. OpenAI’s $12 Billion Quarterly Loss Explanation
6. User Growth: 800 Million Weekly Active Users
7. AGI Race: OpenAI vs Google Analysis
8. Enterprise Adoption and Market Dominance Strategy
9. Sora Launch, Social Features, and Agent Builder
10. OpenAI’s Revenue Projections and Profit Timeline

Keywords:

OpenAI, OpenAI IPO, trillion dollar valuation, AGI, artificial general intelligence, $1.4 trillion AI infrastructure, nonprofit to public benefit corporation, OpenAI recapitalization, Microsoft partnership, SoftBank funding, enterprise adoption, ChatGPT, 800 million weekly active users, Sora app, AI social network, adult mode, hardware initiatives, cloud provider, Azure contract, CoreWeave partnership, Oracle cloud, AWS contract, Anthropic competitor, Google Gemini, model pricing, SaaS margins, agent builder, enterprise market share, retrieval augmented generation, internal company knowledge, business productivity, future revenue potential, circular funding, vendor financing, compute costs, GPT model, model velocity, code generation, AI agent automation, advertising platform, ecosystem stickiness, enterprise penetration, Fortune 100 adoption, business scaling, AI bubble, dot-com bubble comparisons, productivity transformation, future AI predictions, digital transformation

Podcast Transcript

Jordan Wilson [00:00:16]:
OpenAI just made one of the biggest bets in corporate history. They've committed about $1,400,000,000,000 in AI infrastructure spending over the next few years in order to reach AGI artificial general intelligence. And they've restructured their entire company and our bet at betting ongoing public at a reported more than $1,000,000,000,000 valuation. If they get it right, and if OpenAI wins, they become arguably the most valuable company on earth. But if they lose, it's a cautionary tale that'll be taught in business schools for decades. Which will it be? Let's find out on today's episode of everyday AI. What's going on y'all? Welcome to everyday AI. My name is Jordan Wilson.

Jordan Wilson [00:01:11]:
I'm the host, and this thing's for you. It's your daily livestream podcast and free daily newsletter helping everyday business leaders like you and me not just keep up with AI, but how we can make sense of all these changes and what's happening to get ahead, grow our companies, and our careers. So if that's what you're trying to do, awesome. Starts here with the unedited, unscripted livestream podcast. But if you wanna take it to the next level, you gotta go to our website, youreverydayai.com. There, you gotta make sure to sign up and read our daily newsletter where we recap each day's podcast episode and everything else you need to know happening in the world of AI. It's obviously gonna be in our newsletter. So make sure you go check out your cheat code at youreverydayai.com.

Jordan Wilson [00:01:54]:
So open AI, how can a former nonprofit that's reportedly losing $12,000,000,000 a quarter? How can a company like that go public at a $1,000,000,000,000 valuation as it's been reported? Well, that's what we're going to explore. And on today's show, well, we're gonna understand how OpenAI's recent recapitalization that they just completed allows, them to hopefully grow partnerships outside of just Microsoft Microsoft and clear the way for their initial, public offering. We're gonna examine how I think OpenAI's users first profit later strategy and their $1,400,000,000,000 infrastructure gamble can actually coexist. And I'm gonna wear both the bear case of broken economics of OpenAI against the bull case of inevitable market dominance. A lot to tackle on today's show, but it's hot take Tuesday. I'm not going to make you wait to the end. Let me give you my quick hot take. I'm going to make ultimately personally make the bull case for OpenAI.

Jordan Wilson [00:03:06]:
I think that they will be a top five company in the world within five years. And if you're brand new to this show, maybe it's your first episode, you're like, alright. Who's this weird guy? Well, I said the same thing about NVIDIA three years ago before hardly anyone had heard of them. I said they're gonna become the most important company in the world and they have. So, I don't say this lightly when I say that OpenAI could be a top five company in the world in five years, and I think they will be. I think OpenAI has smartly and rightfully so focused on both users and an Apple esque ecosystem, while competitors like Anthropic just focus on profitability per user. OpenAI, I think it's probably a good thing. They're losing billions of dollars because it tells you they're giving immense value to hundreds of millions of users.

Jordan Wilson [00:03:58]:
Right? Recent reports say OpenAI has 800,000,000 weekly active users, which is bonkers. It's one of the most, popular products ever, and it's only been out for, about three years. And my last quick hot take is, a lot of people are pointing to OpenAI's recent distractions. Right? They're coming out with all of these new products and features. Right? Sora with this social network, rolling out what they're calling an adult mode, going into hardware reportedly becoming a cloud provider. A lot of people are saying, oh, this is signs of a company that's struggling to turn profit. So they're just throwing a bunch of AI spaghetti at the wall and seeing seeing what sticks. And I'll say on the contrary, I think this is what we've seen as an example from Google starting out as a search engine and now, being a complete ecosystem.

Jordan Wilson [00:04:58]:
The same thing can be said for Apple or Amazon. I think this is smart of OpenAI to explore other verticals in other areas because they are increasing stickiness across the ecosystem. Alright. Livestream audience, good to see you. Yeah. Marie asking is the one point is the one at trillion dollar valuation, notional or real? Right. So that's that's been the the recent report, and I'm gonna get you caught up. So if you haven't been following the news closely, right, if you don't, listen to our, Monday's a, AI news that matters recap shows, and you're like, wait.

Jordan Wilson [00:05:35]:
What the heck is going on? Right. So whether you have no clue or you're following it very closely, I'm gonna recap everything. But, yeah, OpenAI with, the last couple of weeks, a ton of movement, but I think it's things that ultimately point toward the company going public. And a $1,000,000,000,000 valuation actually might not even do their potential very much progress. All right. Let's start. But let's kind of start near the end and look at the current situation. So, according to reports, OpenAI is losing about $12,000,000,000 this past quarter, matching its entire annual revenue.

Jordan Wilson [00:06:20]:
Right? So probably not good if you're losing, reportedly according to, I think this was the Wall Street Journal report. If you're reportedly losing, money each quarter, that's your current revenue. Right? That's a hard, math to overcome the math on that. But the company, even with that, is preparing for a $1,000,000,000,000 IPO. So what that means is, the market would value the company at a trillion dollars, which matches Berkshire Hathaway's current valuation. Right? Yeah. Crazy to go from, a startup that hardly no one had heard about pre ChattGPT to being a who's who on Wall Street. And investors right now are pricing the future platform control and AGI potential, not their current financial performance.

Jordan Wilson [00:07:10]:
So, yeah, when we talk about the future of OpenAI and their current financial struggles and their future revenue potential, I think people are looking at it through the lens of AGI. This isn't gonna be an AGI episode. Right? But, essentially, artificial general intelligence, the the standard, thought or belief around which company achieves AGI First. Is it gonna be Google? Is it gonna be, you know, Microsoft? Is it gonna be OpenAI? Who who will it be? I think whoever achieves AGI First is probably going to be the company that is adding trillions of dollars, in annualized revenue, not in market cap. Let me repeat that. I think whatever company, kind of, quote, unquote, achieves AGI First will have the potential to add trillions of dollars, which is why when you talk about, oh, a $12,000,000,000, quarterly loss. In the grand scheme of things, if if OpenAI is the company that achieves AGI first, I would say it's probably right now maybe a two horse race, between OpenAI and Google. We'll see what China cooks up, but at least domestically here.

Jordan Wilson [00:08:18]:
I think you talk about losing $12,000,000,000 or reportedly $40,000,000,000, you know, loss for the year, I think is what, some estimates are putting it at. I think that's small if OpenAI is the company that achieves AGI, which is what their potential in what this recent IPO is kind of predicated on. So let's talk about some of the recent developments. So OpenAI was founded as a nonprofit in 2015, and I'm not gonna get into the whole, you know, nonprofit drama and the Elon Musk's lawsuits, which I think are, you know, theater more than anything else and, Elon Musk trying to stay relevant in the AI race with Grok and xAI. But they were founded as a nonprofit corporation or a nonprofit, company, but they just last week completed their conversion to a public benefit corporation. It's a little confusing. Right? But essentially, they tweaked. So now they're technically a, PVC or a public benefit corporation versus a nonprofit, and they needed to do this for a couple of reasons.

Jordan Wilson [00:09:19]:
But this conversion allows OpenAI to grow with other partners outside of Microsoft, and the official restructure clears the way for funding rounds that were in progress such as the SoftBank $30,000,000,000 commitment. So OpenAI needed to change some things on paper, and they needed to go from, the scrappy nonprofit that they started with. Right? The mission first AGI for all solving humanity's problems kind of that they started with in their founding in 2015 before they even had any commercial products to today. And this PBC, structure explicitly positions OpenAI to go public and access capital markets. That's not what the, you you know, the intent or the reasoning was on paper, but that is ultimately what it allows and what we're, you know, kind of setting up for here. So the original nonprofit was renamed to, the OpenAI Foundation. And now the nonprofit arm in the new for profit or public benefits, PBC, the nonprofit has a 26% stake. So the most recent valuation of OpenAI is 500,000,000,000.

Jordan Wilson [00:10:31]:
So right when people are looking at OpenAI going public, they're like, oh, that's gonna be a two x jump in their current valuation. So the way the current company is split up, actually, Microsoft is the single largest, shareholder with a 27%, stake in this new PBC, while the nonprofit arm now called OpenAI Foundation has a 26% stake, and the rest is kind of split up between current employees and future fundraising efforts. So there's also a safety committee in the new, setup that has a veto authority over model releases regardless of shareholder profit interest according to reports. And like I said, Microsoft is now the largest single shareholder at a 27% stake, which at the 500,000,000,000 valuation comes in at a 135,000,000,000. So covered this on the show yesterday. Not a bad, not a bad turnaround for Microsoft. Right? Reportedly putting $13,000,000,000, in two separate rounds over the years with a 10 x return, not just on that, but they also, got a $250,000,000,000 contract, for Azure cloud services from open AI. So future commitments.

Jordan Wilson [00:11:46]:
So here's where we're at. Can OpenAI cash the checks, right? It's been more than a trillion dollars, which, we'll break down some of that funding later. But how can a company that wasn't technically a nonprofit ten days ago, and they've entered into all of these enormous contracts and partnerships, right? With Nvidia, CoreWeave, Oracle, Amazon. Right? The AWS contract just dropped yesterday. I mean, we're talking, individual contracts worth tens or hundreds of billions. OpenAI has gotta write checks. How are they gonna do that? If they're a company that, as of last week was a nonprofit and is burning, cash at an enormous rate. Well and OpenAI has openly, at least, you know, leaked documents openly stated that they're not even going to be profitable until 2029.

Jordan Wilson [00:12:45]:
So they're essentially asking people, yo, hold up. Yeah. We're gonna make a ton of money. We're gonna achieve AGI. You you know, we may go public with at at a $1,000,000,000,000 valuation at their IPO, but you gotta wait to make money. But the reality is they're in that position. It sounds crazy, but they're in that position because they have a legit stranglehold on the market. So Google is the only company that's getting close.

Jordan Wilson [00:13:12]:
We saw, just yesterday, we talked about on the show that Google has now achieved 650,000,000 monthly active users across their Gemini platforms. But OpenAI, 800,000,000 weekly. So we're talking, monthly versus weekly big difference. But OpenAI slash Chad GPT has become synonymous with AI for better or worse, and I don't see that changing anytime soon. I do think it is a two course race, ultimately between OpenAI and Google on who is going to run away with both the consumer and the enterprise side. Obviously, Microsoft, I think, is in a little bit of a different, situation. They're not necessarily competing on the model side. Right? They're competing on the operating system side, which I think ultimately they're competing against Google at OpenAI, OpenAI with as well.

Jordan Wilson [00:14:07]:
But some interesting reporting has come out in the last month or so. But one interesting nugget is that OpenAI, reportedly 70% of their funding comes from individual consumers, which is why when you look at the burn rate of what OpenAI is burning, I'm not even personally I'm I'm not concerned about that. Right? A lot of people are like, oh, how can you, you know, suggest or, you know, be so bullish on OpenAI and chat g p t? Well, there you go. Their biggest market is yet untapped, and I think we're going to see that explored. Right? So as an example, just two weeks ago, OpenAI finally released something that they called internal knowledge for companies. So they're really just getting, their chip the the their ducks in a row for the enterprise play, which is gonna ultimately be where I think the majority of their revenue is gonna come from. Yet 70% of their current revenue is just coming from individual consumers, and I think that's been their strategy all along. Users first profit later.

Jordan Wilson [00:15:08]:
And like I said, they're apparently according to reports in no hurry to even be profitable, another four ish years. So margins aren't important right now. What's important to OpenAI is market dominance and what they need is compute. Right? And that's where we've seen OpenAI writing checks that a lot of people say they're not going to be able to cash. So $1,400,000,000,000 in recent infrastructure spend. So essentially OpenAI is committing to capital that a lot of people are saying they're not going to be able to provide. But they do have some cloud partnerships with the biggest in the world. So not only with Microsoft in Azure, right, the $250,000,000,000 commitment, but large spends.

Jordan Wilson [00:16:00]:
We just talked about the one that was reported yesterday with Amazon Web Services, AWS. You also have Oracle, NVIDIA, AMD. But this multi cloud freedom was technically not really possible with their prior agreement in their prior structure with Microsoft. So this restructure, even though it seems like a boring legal thing on paper, I think this is gonna, what's gonna be, what's going to allow OpenAI to ultimately move and shake. So the $1,000,000,000,000 question is this, is it even possible? Can OpenAI actually achieve this? Can they actually be a company worth a trillion dollars or more? Would an IPO be successful? Well, reports have shown that it could be. Right? The expectations, both whether a mixture of internal according to reports and external put OpenAI's potential, initial public offering at a trillion dollars. And let's put that into perspective. That would be three x.

Jordan Wilson [00:17:09]:
It would be three times as big as the largest IPO ever, which was, US based IPO, which was Alibaba's, which brought in $20,000,000,000 in funding from investors. So, reports are saying OpenAI may bring in 60,000,000,000, with their IPO, which would put them at 1,000,000,000,000. And depending on when and if this IPO happens, we're seeing dates anywhere from, you know, potentially as early as 2026, maybe 2027. I'm gonna say this, and I'm not drinking the Kool Aid here. I'm not drinking the Kool Aid as I take a sip of mine, espresso. I think the $1,000,000,000,000 could be modest. Yes. You can't look at the current economics.

Jordan Wilson [00:17:57]:
You have to look at the upside potential, and I don't think that's the shortsighted way to look at it. I think that's the way that you have to look at it. Right? So many people when they're, looking at opening eyes valuation and their current burn rate and saying, oh, this is a company that's destined to fail. It's because you're using playbooks that don't matter anymore. I've said this for years. Artificial intelligence is in a league of its own. In so many companies that I think are failing or not succeeding at the rate at which they could, one of the reasons is they're trying to apply the cloud playbook to AI or the mobile playbook or the Internet playbook. Right? Artificial intelligence rewrites business rules.

Jordan Wilson [00:18:42]:
One of the reasons is every single tech innovation so far has changed how intelligence is shared. AI changes how intelligence is created. So, you can't, I think, necessarily look even at other companies, you know, how other companies became profitable. You can't even really, I think, hold OpenAI to that flame. So a little more on this potential IPO according to reports, we've seen it could happen as early as the 2026, but there's been some public listing, targeted for 2027, which would allow OpenAI two years to essentially demonstrate revenue scaling. And their private valuation already reached $500,000,000,000 last month after a secondary share sale. But you have to look. Right? If revenue is projected in 2025 to reach just 20,000,000,000, and I say just, that's a 50 x revenue multiple, which is not normal.

Jordan Wilson [00:19:50]:
And that has skeptics asking and doubting the possibility and the feasibility of OpenAI hitting that public valuation or even being profitable in the first place. Right. People are just saying, Oh, this is, they're just burning tokens or they're creating an imaginary economy. And and part of this came from a recent podcast where Sam Altman and Microsoft CEO, Sadia Nadella, went on the b g two podcast. And a lot of people are pointing to kind of a testy exchange, right, where, Sam Altman was asked, how can OpenAI commit to $1,400,000,000,000 in spending with only $13,000,000,000 in revenue? A lot of people are saying, oh, Sam Altman was a little testy, in in this exchange, or maybe a little cocky, but I don't think so. You know, so even if OpenAI is burning anywhere from we've seen reports all over the place, you know, mid twenties, billions to 40 billions, $40,000,000,000. How can they actually be profitable? And Sam Altman's answer was essentially, well, revenue is gonna go up, and kind of hinted at, well, they're gonna see a $100,000,000,000 in revenue by 2027. So this implies that OpenAI is going to five x their revenue in two years.

Jordan Wilson [00:21:21]:
That's the projection. That's the assumption when we're saying, oh, how can OpenAI, company losing billions of dollars justify a trillion dollar IPO? And he was defiant and essentially said, yeah. If you wanna sell your shares, I'll find you a buyer. Yeah. So we'll link, to the full podcast if you didn't check it out. The great, great show. But Altman essentially dared his skeptics to go ahead and short the stock. Right? You can't do that now.

Jordan Wilson [00:21:48]:
But once you're public, you know, saying, hey. If you wanna bet against OpenAI, go ahead. And backed up by Microsoft CEO, Satya Nadella, which if you look at Microsoft's last five years, I don't know. I wouldn't bet against Satya Nadella. But he essentially said that OpenAI has never missed a business plan projection. So with everyone out there, right, OpenAI making all these new deals with NVIDIA, Oracle, SoftBank, AWS. Right? These companies obviously did their due diligence. They're not going to sign these large, you you know, $1,000,000,000,000, commitments and contracts with OpenAI if they don't have the faith that OpenAI will be able to deliver.

Jordan Wilson [00:22:39]:
And here you go. Arguably, you could say Sadia Nadella is one of the best CEOs of all time as he's really led Microsoft, through this AI transition successfully. And he is undoubtedly the executive that has the most personal experience of working with OpenAI. They were the original big, backer in OpenAI. Microsoft themselves, hitched their pony to the, or hitched their wagon to the OpenAI pony, and you could make that argument that it's that partnership. Right? Microsoft Copilot has largely been powered by OpenAI's models. You could say that that's the bet that has paid off, the best the best or the biggest for Microsoft and Satya Nadella, Satya Nadella. And he said straight up, OpenAI's never missed a business plan projection.

Jordan Wilson [00:23:33]:
And that public display of confidence is the main kind of rallying cry countering all of the growing skepticism against OpenAI's financial sustainability. Here's the reality. You have to look past current economics, which I know a lot of people are gonna even point at me and saying, alright, Jordan. That's not how business works. I don't care. Like I said, with artificial intelligence, generative AI, we are in uncharted territory. And the reaction, on the media and social media has been huge. Right? Saying that Sam Altman is selling snake oil.

Jordan Wilson [00:24:13]:
Right? OpenAI can never be profitable. And I don't think that's the case because you can't argue with the numbers that I think ultimately matter. 800,000,000 weekly active users. And I would venture to say more so. Right? More so than, other SaaS products, more so than, you know, social media networks. This stickiness of the OpenAI ecosystem is real, and it's going to get even more real. Go back and listen. Last week we did an episode, which I should have talked a little bit about, but make sure you go listen to that episode where we talk about, OpenAI's future, play on ads.

Jordan Wilson [00:25:02]:
So go listen to episode six forty one, but that explains the stickiness a little bit more. But I think advertising I think OpenAI, once they pull that lever and they are, I laid out the nine reasons that personalized ads are coming to chat g v t very soon. I think that is ultimately going to be something that rivals Google's ad business, that rivals Meta's ad business. But the stickiness is going to be much higher, I believe, right, versus other SaaS products, right, versus, you know, something like Amazon, something like, Facebook. Because so many people are sharing personal and business information with the OpenAI platform. And they're gonna be able to not just retain that, but as they start bringing in these other third party apps, as you're gonna be able to sign on to other platforms with your OpenAI credentials. The amount of data and personalization that OpenAI is gonna have and what they can just churn out from ads. And in all honesty, I think, OpenAI, if they wanted to, they could be making tens of billions of dollars of revenue just from ads within a year after flipping that switch on.

Jordan Wilson [00:26:18]:
But investors are betting on essentially the inevitability of profitability versus the realities of the short term burn. Another issue that I think is inevitable to overcome is I think enterprise adoption has been slow for a number of reasons. Some of it is misinformation, disinformation, but a lot of it is simple education, training, and development. But talk about deep say deep seek. Right? The January 2025, and, I think this hurt a lot of the big AI labs, and it hurt AI AI adoption in general. Right? Not gonna go into that. Didn't entire episode, but that was, proven to be not factually accurate. Right? When DeepSeek said, oh, you know, we did this model.

Jordan Wilson [00:27:07]:
We made this model for only $5,000,000. Not true. But that caused some market, whiplash and also some AI adoption. And then you also have the MIT study that came out a couple of months ago. Also complete rubbish, FYI. This is hot take Tuesday, so I'm gonna cut it to you straight. I think now, right, the, the consensus around this MIT study, which just hit the rounds again yesterday, which is why I'm bringing it up because I think it was the New York the New Yorker wrote about it again or for the first time, right, where they said 95% of, you know, AI pilots fail and that's caused AI adoption to slow install. Right? But that was, a bunch of malarkey.

Jordan Wilson [00:27:47]:
It was, built on garbage. The MIT study was based on 52 interviews, not a real study, not real research. Right? And then you saw actual studies that came out recently such as from, Wharton that was, a a real study with hundreds of enterprise leaders showed that three fourths of companies are already seeing, ROI on GenAI. But I think those two things among others have just slowed enterprise adoption, which is, I think, the big bucket of potential future revenue for OpenAI. Right? 70% of their current revenue coming from consumers. And the market has just reacted, I think, to negative headlines faster than positive productivity, which I think has been hard to measure. In these media driven narratives, I think are slowing enterprise deployment, but I think that's going to completely change, through the 2025 and in 2026. All I know all the companies.

Jordan Wilson [00:28:49]:
Right? We're gonna see a Gemini three from Google soon, which means we're gonna see, OpenAI has hinted that they're gonna come out with, you know, a similar kind of ship miss, what they did last year with a bunch of releases toward the end of the year. What is going to be possible with today's large, with tomorrow's large language models is going to look comically small compared to what we have today. Right? So what is, available and achievable in three months from now, six months from now, we're gonna look back at what we have today, and it's gonna be laughable. I think revenue potential is going to explode in the next two quarters. So let's quickly go over the bear case and the bull case. Right? Critics are pointing to a scattered focus. Right? They're saying, oh, like, just the last two months alone, OpenAI has kind of been all over the place. Right? They released their Sora, video maker, which I'm sure they're losing billions of dollars on.

Jordan Wilson [00:29:52]:
They essentially launched a social network alongside with Sora. They're, you know, coming out with what's deemed as a controversial adult mode reportedly at the end of this year. So there's just seeing constant new releases that look very disjointed from their core business focus. Also, their enterprise market share has dropped, while others has gone up. And if you look at their gross margins, reportedly, OpenAI says 40% versus traditional SaaS products are maybe closer to 70 to 90%. But, I think that's more of, an indicator of it's going to go down. Compute inference getting cheaper by the day. Another case on the bare side of, yeah.

Jordan Wilson [00:30:39]:
OpenAI is bound to fail. They're not going to be able to cash those checks, right? These future partnerships, totaling now more than $1,400,000,000,000 is currently 70 times more than what their revenue is projected at for 2025. And the kind of circular funding concerns or vendor financing. Right? You're seeing, oh, like, people saying, oh, OpenAI raising money from companies, but then they have to give that money back. Right? A $100,000,000,000 raised from NVIDIA, but you you just for future, financing for GPUs and compute. Right? And these skeptics are pointing to this and saying and that makes sense. Right? And they're saying that these commitments just they're not showing future revenue growth potential. All this is is fixed costs.

Jordan Wilson [00:31:32]:
Right? This is just vendor financing. It's not traditional fundraising. And they're saying that this is just crippling their future revenue, potential. And critics are drawing parallels to the 19nineties.com bubble bursting where infrastructure overbuilding led to mass bankruptcies. But it's not the case. It's not the case. I'll probably do a dedicated episode sometime soon on the differences between the .com bubble versus the AI bubble. AI is in a bubble.

Jordan Wilson [00:32:03]:
Right? The big difference is the .com bubble, wasn't at the time propping up the entire economy. Right now, you have six of the seven most valuable companies in The United States investing every dollar they can into AI infrastructure. That wasn't the case for the .com bubble burst, but let's look at the bull case and why OpenAI's $1,000,000,000,000 valuation is actually justified as absolutely bonkers as that may seems seem. Well, even though I don't agree with it, I think the Sora two launch in September showed the mass potential and how OpenAI can actually compete with other companies in other markets. So a lot of times people are thinking, okay, first, you know, OpenAI is, well, they're an AI lab. They're competing with Anthropic. And then when you're like, oh, they could, they could sell ads. Then you're like, oh, they're competing with Google.

Jordan Wilson [00:33:06]:
Well, then you saw them release Sora and you're like, oh, well, they're competing with Meta. And I think they can compete across all of those different channels. Sora, again, I'm not personally a fan of how they released it. It is brain rot, and I'm not going to sugarcoat that it is brain rot, right? It is TikTok style, brain rot, but AI generated, but consumers love it. It has been for the most part since it was launched, the number one app on the iOS app store. Right? Which is crazy to think about. It's still number three, but it's spent the majority of its first, you know, two months or so on the market as the most popular app in The United States. Users are flocking to it.

Jordan Wilson [00:33:55]:
Right? Another way for OpenAI to monetize. And you have the social features and also the agent capabilities. OpenAI just released, their agent builder, which I think is going to create a lot of future revenue potential in their agent kit, essentially allowing any company to very easily put a version of chat GPT on their website connected to their company data. So, again, tapping into that, you know, the huge enterprise market that they haven't really. The other thing that people are still overlooking, depending on what benchmarks you look at, yes, Gemini 2.5 pro is widely considered one of the most powerful models in the world, and we're gonna see a Gemini three soon. But a lot of the benchmarks are still showing, OpenAI's more powerful versions of GPT five as the most powerful model in the world. So OpenAI is not going anywhere. Right? They're not losing out to Anthropic.

Jordan Wilson [00:34:57]:
They're not losing out to Meta. They're not losing out to just, you know, Google. Even though I do think it is a two horse race, at least on the model side between OpenAI and Google, they are still going to continue to be a model provider. I think on the codecs side, on the coding side, their revenue is increasing there. They just released, new options, which I think are gonna bring in a lot of revenue for people to buy additional, you know, Sora credits, codex credits. So I think the product velocity just, over the last couple of weeks alone, just the amount of releases demonstrates that OpenAI can innovate across multiple categories simultaneously, not just on the model side, which they proven to be a leader in. More on the bull case. I think model pricing, I've been saying this for a long time.

Jordan Wilson [00:35:46]:
Eventually, model pricing is going to go up. Right? Maybe not model pricing, but subscription pricing. Right? I it it's not gonna be one of those things, you know, oh, $20 a month. It's it's not gonna be like that forever. At least if you want the latest and the greatest features. A lot of, especially we're gonna see them on the enterprise side. Some of the more powerful features and modes are gonna start to cost more, period. And at the same time, margins on OpenAI side are going to improve.

Jordan Wilson [00:36:20]:
So I do think that they're gonna we're gonna see, pricier, like, costs are gonna increase. Right? Same thing. If you look at your Netflix subscriptions, if you look at anything that you've paid for four years, prices go up over time. That $20 a month is not going to stay like that forever. Or if it does, all that means is it's going to become a muted or less powerful product over time. But operational efficiencies are inevitable. Right? Compute costs are going down week over week as inference and training improves. So those three trends working together, I think, could completely transform OpenAI's economics.

Jordan Wilson [00:37:02]:
And going from the 40% margins reportedly, which aren't that great to getting into the more traditional SaaS margins at the 70%. And then I I've already talked about this OpenAI hasn't even really made a real play on the enterprise side. Yes. They've had the chat g p t enterprise, available for more than a year now, but they just released internal company knowledge, which brings a version of retrieval augmented generation or rag to companies in a couple of clicks. The ability to ground answers in your company's data. I'll tell you one thing. One thing OpenAI is not they're not good at marketing. They're not.

Jordan Wilson [00:37:42]:
Right? I I feel bad saying that since I talked to people on the go to market side, and I think, OpenAI doesn't advertise. They don't market. They don't tell ongoing stories about their products and in simple ways that people can understand. If I'm being honest, it's probably one of the reasons why this podcast has even grown because I try to break things down simply. And I'm like, yo. Do you guys not realize what's happening here? OpenAI, I think, is maybe rightfully so. They're a very lean organization. The amount of revenue per employee, is astronomical, but they essentially ship something that is potentially game changing for enterprises, and then they don't really revisit it.

Jordan Wilson [00:38:31]:
Right? They don't continue to tell the story on the business impact. And I think that's going to change in 2026, but it's been hard for them to do that. And I think they've kind of failed to capitalize on their current product offerings and how that's valuable for enterprises. But that is potential hundreds of billions of dollars in annualized revenue when and if OpenAI figures that out, and I think they ultimately will. And ChatGPT is already reportedly used by 92 of Fortune 100 companies, and they're going to continue, I think, to convert free users to paid users, paid users to business users, business users to enterprise users. Right? You go from $0 to $20 a month to, $25 a month on a business plan and the enterprise plan reportedly about $60 a month and it scales up from there. But OpenAI is serving 5,000,000 paying business clients today, but I think that penetration remains shallow with massive expansion room. So let's wrap this up.

Jordan Wilson [00:39:36]:
I gave you all the kind of boring on paper details. OpenAI has gone from a nonprofit with this, you know, honorable mission to create AGI to serve humanity to now they are a company that is potentially preparing for an IPO. They're a company now that's trying to compete with just about anyone in the online space, not just Anthropic and the AI labs. They're trying to become the default search engine. They're trying to become the default browser with Atlas, and they're trying to become the default advertising platform even on the social side with, offerings like Sora. Here's my verdict. You have to look at history. And I think so many people, and you have to be careful about who you're listening to and who you're paying attention to.

Jordan Wilson [00:40:29]:
There's so many anti media companies, individuals on social media out there who are just professional rage baiters. Alright. They're just putting out, click bait to try to get you to pay attention to them. Right? They're screaming. They're saying, oh, OpenAI. The the they're gonna fail. OpenAI is gonna fail. Right? Look at the economics.

Jordan Wilson [00:40:53]:
They don't make sense. They shouldn't make sense because this is a revolutionary technology. But even if you do wanna go back and look. Ready? You know I bring receipts. What do I say? More receipts than your local CVS. Sip on the coffee. Ready? Anyone? I think who net right now, whether you know, they're an AI skeptic or a, you know, open AI skeptic. I think they're either click bait, rage bait, or they just don't understand.

Jordan Wilson [00:41:27]:
They're just not very smart, and can't see past, today and tomorrow. But let's look. Let's look at today's most successful startups. Amazon. They were burning cash for nine years y'all. Founded in '94 was not profitable until 2003. Tesla, seventeen years operating at a loss. Now sixth most valuable company in The US by market cap.

Jordan Wilson [00:42:04]:
Uber, fourteen years in the red. Now one of the most profitable startup companies ever. Spotify eleven years in the red. Founded in 2006, they weren't profitable until, well, it was technically more than eleven years until about 2017. Airbnb, twelve years in the red. This is how startups work. Alright. So, and I only say this, if you are a decision maker and you are still on the fence, right? And I'm not just saying this, like, you know, being an open AI shill, chat gbt shill, Google, whatever.

Jordan Wilson [00:42:44]:
Right. I say this to business makers out there. If you are still in the experimental phase and one of the reasons is you're believing these headlines. Right? Oh, OpenAI is gonna fail. Large language models are are are fake. They're not real. I can't warn you anymore. Right? OpenAI will be an extremely profitable company.

Jordan Wilson [00:43:08]:
They're not too big to fail. People are looking, you know, pointing at the circular, you know, the circular funding, the the the vendor financing deals and saying, oh, it's all fake money. No. It's not. I think people are saying, oh, you know, this is the case. OpenAI is gonna be the first bubble that burst, and it's gonna burst the whole economy. No. I don't think this is the case of OpenAI is too big to fail.

Jordan Wilson [00:43:28]:
I think their their technology is too revolutionary not to change how humans work and ultimately live. And the bet on AGI is fundamentally transforming productivity, making today's losses completely irrelevance to tomorrow's dominance. And if I, if AI agents, right, we haven't even got into AI agents. If they can just automate 10% of today's knowledge work, the total addressable market that's measured in trillions. Yes. There's a big bet on AGI. And I did open up this show by saying there's going to be the binary, the, the, the outcomes binary, right? Either they're gonna be a top five opening eye is either gonna be a top five company in The U S by market cap or the biggest failure. But I don't think they're fail.

Jordan Wilson [00:44:35]:
They're going to fail. And I don't think the reason is, oh, they're too big. It's, you know, they're artificially propped up. I don't think that's the case. Y'all I've been covering the generative AI scene every single day for nearly three years. I'm lucky enough to get to talk to all the smartest people in the world, both offline and on the show. And I obviously use this technology hours every single day. I think OpenAI is the new infrastructure layer for human AI collaboration, regardless of AGI and the implications there.

Jordan Wilson [00:45:12]:
I think OpenAI is that layer that is going to dictate how all humans right? OpenAI slash Google. Alright? And I think both horses can win, right, just like Uber and Lyft. I think two horses can win the AGI race or, you you know, the, ultimately being that level of success. They're not going to fail. Are they gonna be a $100,000,000,000 of revenue by 2027? I don't know. It's awful. It's an awfully lofty claim by OpenAI, but I don't even think or by the same moment, I don't even think they need to. I don't think they need to because the ecosystem is that good.

Jordan Wilson [00:45:53]:
The technology is that revolutionary, and the business reliance is that high. That's the other thing that people aren't talking about. Right? All these studies and stats that we see, so many, and I'm talking about millions of knowledge workers across The United States are pocketing the time that they're saving from using large language models. And I think that the technology is too pivotal. And, yes, I'll say it by this, I'll end the show by saying this. Yes. Open AI can be losing tens of billions of dollars, even next year. It's not going to matter.

Jordan Wilson [00:46:34]:
They are still going to go public. They are still going to, I think, ultimately be turning hundreds of billions of dollars in revenue, maybe by the end of this decade. And I think, ultimately, that $1,000,000,000,000 potential IPO is gonna seem small when we reflect back on it in a couple of years, and OpenAI is ultimately, a top five company in The US, which you might think is crazy. But by their current $500,000,000,000 valuation, people don't talk about this. They are the most valuable private company in the world by market cap. And if they were a public company today, they would be a top 20 public company in The US. So to think that OpenAI could be a company worth trillions of dollars is not far fetched. If you do the math and connect the dots, it's actually inevitable.

Jordan Wilson [00:47:26]:
Alright. I hope today's hot take Tuesday full of rants, episode was helpful. But, y'all, this is unedited, unscripted. I'm trying to give you, just the facts, the stats. But on Tuesdays, I give you my hot takes and my opinion. So, I hope this was helpful. If so, please go to youreverydayai.com. Sign up for the free daily newsletter.

Jordan Wilson [00:47:47]:
If you miss anything from today's show, we're gonna be recapping it there. So thank you for tuning in. Hope to see you back tomorrow and everyday for more everyday AI. Thanks y'all.