Wouldn't we all.
From the Wall Street Journal, November 5:
Sarah Friar says the AI giant could reach break-even quickly and would like government backstop on data-center investments
OpenAI Chief Financial Officer Sarah Friar said that an IPO is “not on the cards” in the near term, and said the company hopes the federal government might backstop the financing of future data-center deals.
Speaking at The Wall Street Journal’s Tech Live conference, Friar threw a dose of cold water on what could become one of the largest public listings in history. She said the AI giant’s conversion to a new structure doesn’t portend an imminent public offering as the company prioritizes growth and R&D over profitability.
“IPO is not on the cards right now,” Friar said. “We are continuing to get the company into a state of constantly stepping up into the scale we are at, so I don’t want to get wrapped around an IPO axle.”
The company has discussed a public listing as soon as 2027, The Wall Street Journal reported.
As OpenAI ramps up its spending on data center capacity to unheard of levels, the company is hoping the federal government will support its efforts by helping to guarantee the financing for chips behind its deals, Friar said. The depreciation rates of AI chips remain uncertain, making it more expensive for companies to raise the debt needed to buy them.“This is where we’re looking for an ecosystem of banks, private equity, maybe even governmental, the ways governments can come to bear,” she said. Any such guarantee “can really drop the cost of the financing but also increase the loan-to-value, so the amount of debt you can take on top of an equity portion.”
Friar said OpenAI could reach profitability on “very healthy” gross margins in its enterprise and consumer businesses quickly if it weren’t seeking to invest so aggressively.
“I’m not overly focused on a break-even moment today,” she said. “I know if I had to get to break-even, I have a healthy enough margin structure that I could do that by pulling back on investment.”
OpenAI is losing money at a faster pace than almost any other startup in Silicon Valley history thanks to the upside-down economics of building and selling generative AI. The company expects to spend roughly $600 billion on computing power from Oracle, Microsoft, and Amazon in the next few years, meaning that it will have to grow sales exponentially in order to make the payments. Friar said that the ChatGPT maker is on pace to generate $13 billion in revenue this year.
Friar said the company is trying to find new ways to grow sales beyond its ChatGPT subscription business. She emphasized the growth in OpenAI’s enterprise sales, saying that they now account for roughly 40% of revenue, up from 30% at the beginning of the year. Many corporate customers are now moving from “pilot to full production,” she added, citing sectors such as financial services and healthcare.
OpenAI is currently battling its smaller rival Anthropic for these customers. While the company has a commanding lead among consumers, that also means it has to subsidize the computing costs for nonpaying users of ChatGPT, hurting its margins....
....MUCH MORE
No. Not even with convertibles equal to 90% of common equity and perpetual warrants for another Altman's stock at a penny. No.
