> OpenAI’s business continues to surge. DealBook hears that the company’s annual recurring revenue has soared to $13 billion, up from $10 billion in June — and is projected to surpass $20 billion by the end of the year.
This is why.
Of course $300B still implies a lot of growth, but when you're growing 100% in 6 months at $10B in ARR, you can demand a lot.
And what's the profit on the 13B?
Irrelevant at this stage.
I like how you are thinking. When hype is involved, why should one bother with facts, timelines and reality.
Great, stable and successful companies like Enron, Wirecard, Theranos, FTX and WeWork are prime examples of that.
Note: I am not saying OpenAI is a fraud like the above, just saying that their valuation is as divorced from reality as Zuck's "Superintelligence is behind the corner" comment last week.
Their models are not largely better than other competitors', they haven't cornered the market, they are burning through money with no profitability in sight, Anthropic just cut their access to Claude (not relevant, just funny).
Come on, their most recent product announcements were:
- an office suite: https://www.computerworld.com/article/4021949/openai-goes-fo....
- a restricted, less powerful (hide-the-spoilers) version called "Study Mode": https://openai.com/index/chatgpt-study-mode/
It's just...there is nothing going on for them at the moment. The valuation is just wishful thinking, if we are looking at the facts.
We live in a crazy world, all one can do is buy some popcorn and enjoy the shitshow.
the problem with the post-dotcom market in a nutshell. everything’s a bubble. bubbles have more durability now. until they don’t.
Sure, but this mentality always would result in missing out on the trillion dollar companies that followed these types of growth curves.
Surely you must understand that prioritizing growth over profit makes economic sense in the long run for a company like OpenAI.
>prioritizing growth over profit makes economic sense in the long run
only if you have a believable plan on how to reverse that, selling 2 dollars for 1 dollar isn't a business model and no amount of praying for the future is going to change that
Mathematics don't matter. It's about what your guru of choice on X tells you to believe in.
Enron was also "growing" a lot when it was in full "paper tiger" mode.
Ok, and? Last I heard were talking about OpenAI, not Enron.
Surely you can spot the similarities if you try hard enough? If not, maybe we can ask ChatGPT about it (below is ChatGPT's "opinion" on the similarities between Enron and OpenAI):
Structural Complexity & Opacity:
- Enron was infamous for its convoluted corporate structure, which helped obscure financial realities.
- OpenAI has a similarly complex setup: originally founded as a nonprofit, it now operates through a for-profit arm with a structure that some critics say lacks transparency.
Investor Hype vs. Financial Fundamentals:
- Enron attracted massive investment based on future projections, not present performance. Its ventures, like NewPower Co., had no clients or revenue but were valued in the billions.
- OpenAI has been valued at over $300 billion despite not turning a profit and having no clear path to profitability. Critics argue this is reminiscent of Enron’s “vibes-based” valuation.
Leadership & Ethical Concerns
- Enron’s leadership was later revealed to have serious ethical lapses.
- OpenAI has faced scrutiny over leadership turnover and internal conflicts, raising questions about governance and long-term stability.
Grandiose Predictions:
- Both companies have been known for bold, sweeping claims about the future. Enron promised revolutionary energy solutions; OpenAI is at the forefront of AI’s transformative potential—but some worry the hype may be outpacing reality
Hope that helps :)
Come on: openAI has a product that you can "touch" - both on your phone /home computer and at work, since their tech sits behind copilot (msft hit the jackpot with the licence).
It is a virtual product yes, but come on - no vapoware.
At work I see it - people want the better (and more expensive ) licences
Enron was a literal energy company, and also vaguely "the next big thing", "America's Most Innovative Company". There's a lot of parallels with how OpenAI is being hyped up and whether it actually merits a 12-13 figure valuation. See also WeWork, et al.
Given what we know about the CEO, it would not come as a shock if in a couple years we learn there was some good old accounting fraud involved.
Enron was a scam energy company pretending to be kind of a tech company, like it’s contemporary Worldcom (the scam telco pretending to be a tech company, scam companies are common in the south). Whether OpenAI is a scam or not, it’s definitely tech and nothing else.
Enron was an energy futures brokerage/exchange that made the age old mistake of market making your own order book with unlimited margin from... yourself. Always very tempting, never a good idea.
It's exactly the same thing FTX did except with energy instead of crypto.
AFAIK they never misrepresented who they were, they were just very loose with their accounting. It probably started out as a small lie to themselves like those things tend to.