AI Summary
5 min readAI Hits a Wall
OpenAI completed a $7 billion employee share sale last week, but instead of using outside investor money, it bought its own stock at the $865 billion valuation from its last fundraising round. Days later, Chief Revenue Officer Denise Dresser left the company—she had been there less than a year and walked away from tens of millions in unvested shares. In April, she told CNBC she had "never seen this level of conviction spread so quickly and consistently within the enterprise industry." That conviction apparently did not keep her at a company that claims it will go public in 2027.
The Revenue Numbers Nobody Can Define
Bloomberg reported that OpenAI is "on track" to hit $40 billion in annualized revenue—$7 billion less than what Anthropic claimed in May. Bloomberg did not define what "run rate" meant in either case. Anthropic then announced it had hit $65 billion in annualized run rate, which Bloomberg defined as "a metric that projects full-year revenue from a shorter period" with no further explanation. AI boosters had been convinced by anonymous sources and data aggregators like Yipit that OpenAI's run rate was somewhere between $70 billion and $100 billion. Neither company is close.
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What you'll learn
- 1 (02:00) **Introduction & Thesis** - Ed Zitron introduces the episode and states the central thesis: the deterioration of OpenAI and the AI industry hitting a wall.
- 2 (02:42) **OpenAI's Internal Chaos** - Ed details the contradictory signals coming from OpenAI, including a major employee share sale and the departure of two top executives.
- 3 (03:31) **Anthropic's IPO Threat** - Ed explains how Anthropic's accelerated plans to go public create a direct and existential problem for OpenAI.
- 4 (03:46) **The "Run Rate" Revenue Numbers are Bullshit** - Ed eviscerates the recent Bloomberg reports on OpenAI and Anthropic's revenue, calling the metrics meaningless and deceptive.
- 5 (05:09) **The Growth Slowdown is Real** - Ed explains why the revenue growth for both OpenAI and Anthropic has inevitably decelerated.
- 6 (06:05) **OpenAI's "Safety Pause" is a Cover Story** - Ed analyzes OpenAI's announcement that it will pause training for safety reasons, arguing it's a sign of hitting a wall, not responsible stewardship.
- 7 (07:54) **The Real Problem: A Compute Shortage** - Ed presents the evidence that both OpenAI and Anthropic are running out of the computing power needed to train and serve their models.
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Guests on this episode
Show Notes
In this week's Better Offline monologue, Ed Zitron runs through how Anthropic and OpenAI’s revenue growth is decelerating, and how OpenAI’s pause on model development and collapsing economics create the very real possibility it could collapse.
EDITOR’s NOTE: I incorrectly say at the beginning of this that NVIDIA’s earnings were this week. They’re next week. Sorry!
Newsletter: What If OpenAI Dies? https://www.wheresyoured.at/what-happens-if-openai-dies/
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