They need to financially engineer a good looking quarter beforehand.
Perhaps Larry Ellison can cut them a nice quid pro quo for a few months to make OpenAI look profitable (like the SpaceX/Anthropic deal), although that's probably unlikely given the debt Oracle is taking on to build it's infra.
I understand the scepticism around Google's deal with SpaceX, given the former holds a stake in the latter. But Anthropic buying SpaceX's compute doesn't have any related-party smell to it. That genuinely looks like SpaceX having cornered some valuable compute.
I'm actually talking about both. WSJ publishes Anthropic artificial profitability. Days later the reason for the profitability appears in SpaceX S-1; it's compute costs were artificially suppressed. Both are going public. It's a quid pro quo.
This is a reasonable accusation! It doesn't make a lot of sense–the Journal article is worth a hell of lot more than SpaceX referencing Anthropic's profitability. And we have zero evidence for it–one could raise this accusation against any compute partner Anthropic were to buy from.
When Anthropic spends on xAI, it benefits Google. When google spends on xAI, it benefits Google. When xAI spends on Google, believe it or not, that benefits Google.
This is how a Ponzi -style circular financing scheme typically works.
> When Anthropic spends on xAI, it benefits Google
Unless Google is directing these transactions, this is not a novel issue. (We see a similar effect with mutual funds owning most companies [1]. It's a weak effect.)
> This is how a Ponzi -style circular financing scheme typically works
No. It's potential conflicts of interest. It's not circular financing. Circular financing follows the cash. When NVIDIA invests in OpenAI so OpenAI can buy NVIDIA chips, that is circular financing.
Anthropic basically did that by getting two months of free compute from SpaceX. As I recall, this is how they were able to claim that they were profitable. But in reality, they are only profitable for those two months.
If the private subsidiary was doing semi-unrelated stuff to the goals of the non-profit, and using it to fund the non-profit, then your logic could make sense - for example if a cancer research charity ran a business of shops and funnelled the profits up to spend on research, great.
But in OpenAI's case, the claimed goals of the non-profit were essentially "do AI in a way that puts safety above profits". And whether or not one agrees with their previous approach to safety, or even whether safety needs to be cared about, it's undeniable that the for-profit business isn't acting as useful fundraising for the non-profit's goals, it's literally acting in the opposite direction.
A few things, but they work very well for our industry.
The rule is that the nonprofit and disqualified persons (mostly board members), cant own businesses together, well they can but not more than 35% of it together, and a max of 20% can have voting capability
The consequences arent immediate, non profits have 3 years to correct this
Now in the tech industry, getting VCs involved is already the plan from day one and founders get diluted, so getting below 35% is either easy, or easy within 3 years
so they’re fine
there’s a lot of things they can all do to deal with the share consolidation
1) In order to fund research - this stuff costs 10s of billions of dollars - everyone, from Ilya, to Elon, to Sam - all agreed that they would require a profit-arm to raise money. Nobody was going to sponsor that 10s of billions of dollars to a non-profit.
2) The non profit is still there - and controls the commercial element.
The corporation selling shares is just majority owned by the non profit
The corporation selling shares is subject to normal corporate tax regime
The real answer to your question is that non profits can own shares, and there is no legal difference between passive investment of other publicly traded companies and highly consolidated shares of a private company. In the US it is seen as merely happenstance that we have such a liquid market where the shares themselves can rapidly change in value and create profits, but there is nothing controversial about that.
OpenAI CEO Sam Altman pitched the idea of turning over shares in his company to Trump in early 2025 and discussed the matter again with senior officials in recent weeks
that's not the issue, Elon is just a petulant child that is losing the ai game ever since he left OAI. Elon wanted full control, and that dispute over control is the central issue.
I find the irony delicious that this S1 will be fed into ChatGPT so often looking for flaws and edge cases that the LLM will develop sentience just to tell people to stop…
What was that Warren Buffett's quote about everyone trying to leave the party seconds before midnight in a room where there are no clocks? I think it was at peak of the dot com bubble
I'm just anticipating the next version of “Community-based EBITDA" that sama rolls out in the latest attempt to convince everyone that spending >$1 to earn $1 is a good idea.
Once the SEC declares a registration statement "effective," the company is subject to the Exchange Act's reporting requirements. Theoretically one can do this and not list one's shares. That's dumb, so nobody does it.
In practice, we'll get a couple weeks to possibly days ahead of the listing. That process is partly governed by the SEC accepting the company's S-1. It's mostly down to negotiations between the company, its underwriters and IPO investors.
SpaceX IPO is slated to be $75-80bn — the market has size for that. We also have seen robust options and finance markets for AAPL and NVDA over the last years that make the broader ecosystem not overly worrying in my armchair opinion.
I’m not clear how much crossover demand there is between SX and Anthropic/oAI — that seems like the more interesting question. I’m guessing if we had Anthropic/oAI launching at the same time we’d see some pretty interesting capital dynamics.
> if we had Anthropic/oAI launching at the same time
Don't we have exactly that? There are S-1 announcements for SpaceX, Anthropic, and OpenAI. Google is selling to raise money for infra (IIRC). There's an absurd amount of money flowing in at present (prospectively at least).
None of these companies are worth the numbers being tossed around, but SpaceX especially so.
Its Schrodinger's IPO: the space business is so successful how could you question the company's worth? You can't afford to miss out on the next biggest AI business to invest in!
What's going to happen is the music will stop and it's just a question of who cashed in when it does. OpenAI are easily the most vulnerable here.
They expect someone to leak that they had submitted it, so they’re just saying it themselves. I don’t think they mean that the actual contents (like financial projections and all that) will be leaked.
Growing worry I have are the dozens of newly minted corporate elites that will continue to wreck havoc on the tech industry mandating their golden paths while America still lacks medicare for all, college for all, and universal childcare.
If you think Sam Altman is bad for the industry, imagine what 200 of him will be like!
We had universal childcare until we converted single-income families into dual-income families in order to make the boomers who they bought houses from rich.
Women want their own income stream because of the innumerable ways men get into trouble. If her man gets into trouble, she wants a plan B, for her and her children. I don't think anyone was thinking about how that would prop up the housing market 30 years later.
No one has full agency over their life. The men who generally work harder, longer, and for more of their lives, that are shorter as a result, don't have fully agency. Having a boss isn't agency.
"We want to be ready to grift public money at a moment's notice, but there are still opportunities to grift private money right now, so we are holding off."
“Under the JOBS Act, it has been possible since April 2012 for ‘emerging growth companies’ to file a Form S-1 on a confidential basis, only making the contents public 21 days prior to the road show for the IPO” [1]. Since 2017 and 2025 it’s been available to basically all companies [2].
Withdrawing an IPO looks bad. Confidential filing lets issuers start and have the option to abort the process without taking reputational damage. (The specifics of OpenAI’s filing, and any back and forth with the SEC, remains confidential.)
Once it no longer is being drafted—and agreed upon by all parties to meet the needed regulatory standards—it will become final and be publicly published.
The SEC needs to review it before approving a company to go public at all. It’s targeted at investors but they need to clear it, ask questions, demand changes, etc.
Companies IPOing should be forced to put up their estimated market cap as collateral in cash. Oh what is that? You don't have $1 trillion in cash to put up? Cool, you're not a $1 trillion dollar company then.
This makes no sense. Market cap and cash reserves are two different stats for a reason. Why would they need to be the same? Just to make things simpler for people who don't actually know what market cap means? (Which, granted, is the vast majority of people.)
This makes no sense: the whole point is to raise capital. The valuation is never just the current value of the assets; it’s based on the expected future cash flows. A good example is in biotech, some researcher developed a treatment and wants to develop a product. They have valuable IP but zero money. So they IPO to raise capital to bring the treatment to market. The investors expect that in the future, they will get dividends or a buyout.
If a company that wanted to IPO had 1 trillion dollars, their market cap would have to be larger than their cash holding. Their cash on hand is considered or at least should be considered in any normal valuation of the company. Because shares are ownership of the company.
So a simple valuation would be something like
Current Cash + Assets + Expected Future cash - (Expenses + Risk)
Where would a company ever get their market cap in cash? If they had that, wouldn’t they by definition have a higher market cap, since the value of the company is cash + the rest of the company?
> since the value of the company is cash + the rest of the company?
Failing companies sometimes trade below cash value. OP's basically creating a rule by which only failing companies are allowed to go public. (Or those who have paid a king's ransom to a megabank.)
Last year Chegg was trading below net cash (meaning their market cap was smaller than cash in the bank minus debt). Might still be, I haven't checked in a while. There were maybe a hundred on the Tokyo stock exchange trading below net cash.
> We have not decided on timing yet; it may be a while because there are things we want to do that are likely easier as a private company.
Presumably those things were harder as a charity/non-profit.
They need to financially engineer a good looking quarter beforehand.
Perhaps Larry Ellison can cut them a nice quid pro quo for a few months to make OpenAI look profitable (like the SpaceX/Anthropic deal), although that's probably unlikely given the debt Oracle is taking on to build it's infra.
> like the SpaceX/Anthropic deal
I understand the scepticism around Google's deal with SpaceX, given the former holds a stake in the latter. But Anthropic buying SpaceX's compute doesn't have any related-party smell to it. That genuinely looks like SpaceX having cornered some valuable compute.
I'm actually talking about both. WSJ publishes Anthropic artificial profitability. Days later the reason for the profitability appears in SpaceX S-1; it's compute costs were artificially suppressed. Both are going public. It's a quid pro quo.
> It's a quid pro quo
This is a reasonable accusation! It doesn't make a lot of sense–the Journal article is worth a hell of lot more than SpaceX referencing Anthropic's profitability. And we have zero evidence for it–one could raise this accusation against any compute partner Anthropic were to buy from.
Google owns 14% Anthropic and 6% xAI.
When Anthropic spends on xAI, it benefits Google. When google spends on xAI, it benefits Google. When xAI spends on Google, believe it or not, that benefits Google.
This is how a Ponzi -style circular financing scheme typically works.
> When Anthropic spends on xAI, it benefits Google
Unless Google is directing these transactions, this is not a novel issue. (We see a similar effect with mutual funds owning most companies [1]. It's a weak effect.)
> This is how a Ponzi -style circular financing scheme typically works
No. It's potential conflicts of interest. It's not circular financing. Circular financing follows the cash. When NVIDIA invests in OpenAI so OpenAI can buy NVIDIA chips, that is circular financing.
[1] https://insights.som.yale.edu/insights/the-rise-of-the-mutua...
You are forgetting the google space x deal too
Just depreciate their server farms less this year to reduce losses. ;)
Anthropic basically did that by getting two months of free compute from SpaceX. As I recall, this is how they were able to claim that they were profitable. But in reality, they are only profitable for those two months.
> They need to financially engineer a good looking quarter beforehand.
Eh given the quality of recent IPO proposals I think they can just say there's a couple zillion air molecules to turn into gold and be done with it.
you mean the 50% of its company that was leveraged to purchase Paramount?
Like financial reporting and "transparency" that's required for public companies.
so who is buying at the open? anthropic, spacex, openai
i think that we are going to see another leg up but this is gonna be it for a while
I don’t get what’s the point of non-profits if you can IPO them. How does that make any sense?
They're IPOing a commercial subsidiary of OpenAI so that it can donate even more money to the parent nonprofit.
(Actually the subsidiary is everything and the nonprofit is a do-nothing fig leaf but the IRS and Congress seem to not care enough to stop them.)
Checks and balances dear sirs and madams, checks and balances. Excepts apparently it meant cheques used to top up account balances.
But then private shareholders are able to extract shareholder value from the subsidiary, so the "nonprofit" component is utterly meaningless here.
How is this not illegal? What prevents any nonprofit from doing this to sidestep its filing status and extract profit?
not to be a shill, but isn't it good for the non-profit to own a big piece of a successful company?
It depends on context.
If the private subsidiary was doing semi-unrelated stuff to the goals of the non-profit, and using it to fund the non-profit, then your logic could make sense - for example if a cancer research charity ran a business of shops and funnelled the profits up to spend on research, great.
But in OpenAI's case, the claimed goals of the non-profit were essentially "do AI in a way that puts safety above profits". And whether or not one agrees with their previous approach to safety, or even whether safety needs to be cared about, it's undeniable that the for-profit business isn't acting as useful fundraising for the non-profit's goals, it's literally acting in the opposite direction.
A few things, but they work very well for our industry.
The rule is that the nonprofit and disqualified persons (mostly board members), cant own businesses together, well they can but not more than 35% of it together, and a max of 20% can have voting capability
The consequences arent immediate, non profits have 3 years to correct this
Now in the tech industry, getting VCs involved is already the plan from day one and founders get diluted, so getting below 35% is either easy, or easy within 3 years
so they’re fine
there’s a lot of things they can all do to deal with the share consolidation
See: https://www.axios.com/2023/11/18/how-openai-board-is-structu... for the OpenAI Structure.
1) In order to fund research - this stuff costs 10s of billions of dollars - everyone, from Ilya, to Elon, to Sam - all agreed that they would require a profit-arm to raise money. Nobody was going to sponsor that 10s of billions of dollars to a non-profit.
2) The non profit is still there - and controls the commercial element.
“Controls”
That will be especially untrue after IPO when shareholders can claim there are fiduciary responsibilities that conflict with the non profit goals.
> when shareholders can claim there are fiduciary responsibilities that conflict with the non profit goals
The for-profit has fiduciary responsibility to the non-profit as well as other shareholders. The IPO doesn't really change that.
The non profit is a big shareholder of the commercial subsidiary
> non profit is still there - and controls the commercial element
The non-profit hasn't controlled squat since they tried and failed to fire Sam Altman.
> Nobody was going to sponsor that 10s of billions of dollars to a non-profit
How much has MacKenzie Scott donated to non-profits again?
Seems like such a claim is on thin ice.
The nonprofit (OpenAI Foundation) owns ~26% of the for-profit (plus extra warrants).
The for-profit (OpenAI Group PBC) is what's filing the S-1 Draft.
The OpenAI Foundation also exclusively appoints the board of the OpenAI Group PBC and can replace directors at any time.
https://openai.com/our-structure/
(I work at OpenAI, but I am not a lawyer and am not speaking on behalf of OpenAI - just sharing my personal understanding.)
The corporation selling shares is just majority owned by the non profit
The corporation selling shares is subject to normal corporate tax regime
The real answer to your question is that non profits can own shares, and there is no legal difference between passive investment of other publicly traded companies and highly consolidated shares of a private company. In the US it is seen as merely happenstance that we have such a liquid market where the shares themselves can rapidly change in value and create profits, but there is nothing controversial about that.
Novo Nordisk
There is no point, it’s just government sanctioned virtue signaling
This is like a slack message
A very unserious tone from probably the most consequential company of our lifetimes. It's vibing all the way to the top I guess.
Here we go… Let’s see if retail investors are indeed exit liquidity or not
Or just… Americans:
https://www.notus.org/technology/trump-blindsided-ai-compani...
OpenAI CEO Sam Altman pitched the idea of turning over shares in his company to Trump in early 2025 and discussed the matter again with senior officials in recent weeks
Pretty much is, at this point. Spcx is oversubscribed.
Source
You’re always someone’s exit liquidity.
Elon is not going to be happy about this. He's been vocal about his dislike towards the business model OpenAI chose to run with.
that's not the issue, Elon is just a petulant child that is losing the ai game ever since he left OAI. Elon wanted full control, and that dispute over control is the central issue.
Elon is 100% a for profit person.
I find the irony delicious that this S1 will be fed into ChatGPT so often looking for flaws and edge cases that the LLM will develop sentience just to tell people to stop…
What was that Warren Buffett's quote about everyone trying to leave the party seconds before midnight in a room where there are no clocks? I think it was at peak of the dot com bubble
I wonder how much of it is photos?
I have instructed my financial advisor to keep my exposure to the upcoming wave of AI IPOs as close to zero as possible.
So...all cash?
I have a feeling that as soon as OpenAI and Anthropic stocks are up for grabs, the market will implode.
What a weird tone this is written in.
I think it is intended to sound like Sam Altman. Would look exactly like a tweet of his if it didn't have capitalized characters.
I'm just anticipating the next version of “Community-based EBITDA" that sama rolls out in the latest attempt to convince everyone that spending >$1 to earn $1 is a good idea.
When/how are IPO dates released?
> When/how are IPO dates released?
Once the SEC declares a registration statement "effective," the company is subject to the Exchange Act's reporting requirements. Theoretically one can do this and not list one's shares. That's dumb, so nobody does it.
In practice, we'll get a couple weeks to possibly days ahead of the listing. That process is partly governed by the SEC accepting the company's S-1. It's mostly down to negotiations between the company, its underwriters and IPO investors.
Was this meant as an internal team post?
This is the true definition of AGI and will be achieved this year.
The I in AGI has always stood for IPO.
Altman Gets his IPO
Well if you reverse OpenAI ... the first letter is I and the last two are P O...
Artificially Generated Internal-rate-of-Return
Starting the first three sentences with "We" does not pass the Voigh-Kampff / "I am not a robot" test.
"Hey, don't invest too much in Spacex or Anthropic. We're planning an IPO too."
This is the real reason. I don't think equity market has enough capital to support three companies of this size.
SpaceX IPO is slated to be $75-80bn — the market has size for that. We also have seen robust options and finance markets for AAPL and NVDA over the last years that make the broader ecosystem not overly worrying in my armchair opinion.
I’m not clear how much crossover demand there is between SX and Anthropic/oAI — that seems like the more interesting question. I’m guessing if we had Anthropic/oAI launching at the same time we’d see some pretty interesting capital dynamics.
> if we had Anthropic/oAI launching at the same time
Don't we have exactly that? There are S-1 announcements for SpaceX, Anthropic, and OpenAI. Google is selling to raise money for infra (IIRC). There's an absurd amount of money flowing in at present (prospectively at least).
None of these companies are worth the numbers being tossed around, but SpaceX especially so.
Its Schrodinger's IPO: the space business is so successful how could you question the company's worth? You can't afford to miss out on the next biggest AI business to invest in!
What's going to happen is the music will stop and it's just a question of who cashed in when it does. OpenAI are easily the most vulnerable here.
> We recently submitted a confidential S-1. We expect it to leak so we’re just announcing it.
What?
They expect someone to leak that they had submitted it, so they’re just saying it themselves. I don’t think they mean that the actual contents (like financial projections and all that) will be leaked.
Narcissist marketing, Sam loves it.
Growing worry I have are the dozens of newly minted corporate elites that will continue to wreck havoc on the tech industry mandating their golden paths while America still lacks medicare for all, college for all, and universal childcare.
If you think Sam Altman is bad for the industry, imagine what 200 of him will be like!
I was wondering about this the other week.
Is there a chart, somewhere, like a family tree, of what the Apple and Microsoft stock "ordinary millionaires" went on to do?
we need more non tech women to marry and divorce craven tech men so that at least half of these scrooge like fortunes can get donated
We had universal childcare until we converted single-income families into dual-income families in order to make the boomers who they bought houses from rich.
Women want their own income stream because of the innumerable ways men get into trouble. If her man gets into trouble, she wants a plan B, for her and her children. I don't think anyone was thinking about how that would prop up the housing market 30 years later.
And to give women full agency over their own lives
No one has full agency over their life. The men who generally work harder, longer, and for more of their lives, that are shorter as a result, don't have fully agency. Having a boss isn't agency.
"We want to be ready to grift public money at a moment's notice, but there are still opportunities to grift private money right now, so we are holding off."
Here we go
why not let it be public ?
What's the point of a "confidential S-1"?? Isn't the S-1 supposed to inform potential investors?!? So ... shouldn't it _not_ be confidential??
> What's the point of a "confidential S-1"?
“Under the JOBS Act, it has been possible since April 2012 for ‘emerging growth companies’ to file a Form S-1 on a confidential basis, only making the contents public 21 days prior to the road show for the IPO” [1]. Since 2017 and 2025 it’s been available to basically all companies [2].
Withdrawing an IPO looks bad. Confidential filing lets issuers start and have the option to abort the process without taking reputational damage. (The specifics of OpenAI’s filing, and any back and forth with the SEC, remains confidential.)
[1] https://en.wikipedia.org/wiki/Form_S-1
[2] https://www.sec.gov/about/divisions-offices/division-corpora...
Note the word "Draft".
Once it no longer is being drafted—and agreed upon by all parties to meet the needed regulatory standards—it will become final and be publicly published.
Anthropic did exactly the same thing on June 1st: https://www.anthropic.com/news/confidential-draft-s1-sec
The SEC needs to review it before approving a company to go public at all. It’s targeted at investors but they need to clear it, ask questions, demand changes, etc.
Also according to the Financial Times that this confidential filling gives employees who are considering to sell shares transparency.
Too late.
Interest in the SpaceX, Anthropic, and OpenAI IPO is already dropping
Why do you say this? It's OK to make such a bold statement, but you gotta share how you came to this conclusion. This helps with a good discussion.
Would be hilarious if they used an LLM to write it and it started hallucinating revenue streams and numbers.
I’m pretty sure they’re smart enough to remember to put “make no mistakes” in their prompt.
Companies IPOing should be forced to put up their estimated market cap as collateral in cash. Oh what is that? You don't have $1 trillion in cash to put up? Cool, you're not a $1 trillion dollar company then.
This makes no sense. Market cap and cash reserves are two different stats for a reason. Why would they need to be the same? Just to make things simpler for people who don't actually know what market cap means? (Which, granted, is the vast majority of people.)
This makes no sense: the whole point is to raise capital. The valuation is never just the current value of the assets; it’s based on the expected future cash flows. A good example is in biotech, some researcher developed a treatment and wants to develop a product. They have valuable IP but zero money. So they IPO to raise capital to bring the treatment to market. The investors expect that in the future, they will get dividends or a buyout.
If a company that wanted to IPO had 1 trillion dollars, their market cap would have to be larger than their cash holding. Their cash on hand is considered or at least should be considered in any normal valuation of the company. Because shares are ownership of the company.
So a simple valuation would be something like Current Cash + Assets + Expected Future cash - (Expenses + Risk)
Where would a company ever get their market cap in cash? If they had that, wouldn’t they by definition have a higher market cap, since the value of the company is cash + the rest of the company?
> since the value of the company is cash + the rest of the company?
Failing companies sometimes trade below cash value. OP's basically creating a rule by which only failing companies are allowed to go public. (Or those who have paid a king's ransom to a megabank.)
Companies always trade at a premium to book, so how would that work?
Last year Chegg was trading below net cash (meaning their market cap was smaller than cash in the bank minus debt). Might still be, I haven't checked in a while. There were maybe a hundred on the Tokyo stock exchange trading below net cash.
the marketcap represents the cashflow estimated by the market to be taken out of the business over the lifetime of the company discounted today.
your suggestion makes no sense
...what?