Welcome to the podcast.
I'm your host, Jaden Schafer.
Today on the podcast, we're talking about the latest news from OpenAI, which includes a 110 billion round of funding they just completed.
And they have just reached 900 million weekly active users on ChatGPT.
We're going to get into all of that, including what their COO has been saying about the rollout of ads into ChatGPT.
Before we do.
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All right, let's talk about what's going on with OpenAI.
So like I mentioned, they've just raised $110 billion in private funding.
I mean, basically, this is one of the largest funding rounds in history.
The round had $50 billion from Amazon, $30 billion from Nvidia, and also $30 billion from SoftBank.
And then they had a $730 billion pre-money valuation for this.
So the entire round is open.
They have additional investors that are expected to join in the coming months.
It's kind of interesting when you have around this big.
Basically, I think they're just saying look, 730 billion.
This is the valuation.
And that might actually creep up for people coming in the future.
But I mean, they're basically proving to everyone look, we can get any amount of money 50 billion from Amazon, 30 billion from Nvidia, 30 billion from SoftBank.
And I think what's happening is these are kind of like the anchor players in this round that are going to put in, write the huge checks and then they're going to have a lot of VCs and other capital allocators come in, kind of top up the full fund.
Here's what they said about it.
They said we're entering a new phase where frontier AI moves from research into daily use at global scale.
Leadership will be defined by who can scale infrastructure fast enough to meet demand and turn that capacity into products people rely on.
I think a huge part of the money that they've raised is tied to infrastructure partnerships, right?
I mean, when you're getting it from Amazon, NVIDIA and NVIDIA, those two players, I think is going to be a lot of.
That's going to be CapEx.
Just like they've done with some prior rounds, some of the investment is going to come in the form of services and compute credits.
So it's not actually just pure cash, but they didn't really disclose what the breakdown is.
And I think that that serves a couple different purposes.
One.
I mean, if they want to get some venture capital dollars in and other people investing sovereign wealth funds, all that kind of stuff, who's going to put actual cash in?
I think it makes it look pretty good if they're like, look, we just got $50 billion from Amazon.
Now is 25 billion of that just credits on AWS or perhaps some form of the 30 billion from NVIDIA is just kind of prepayment for the chips that OpenAI is going to directly be purchasing from them.
There's a lot of these kind of deals going on where they're not actually directly getting cash, but the headline number is big and it's able to help them raise actual cash from other players.
This is all following their March round that they did last year, which they brought in about 40 billion at a 300 billion valuation.
So jumping from $300 billion to $750 billion.
$30 billion is massive.
I mean they're getting close to a trillion dollar valuation here and going from 40 billion to 110 billion.
Like they're proving that they are capable of raising money.
And this is just the start of the round as well.
It's open.
We're going to see a lot more.
I think the biggest thing that a lot of people are talking about here is the Amazon partnership.
This is particularly big.
OpenAI is planning to build an entire new stateful runtime environment for for its model on Amazon, Bedrock.
So they're also basically, I think, expanding a lot of their existing AWS agreements.
They have an additional $100 billion on top of the previously committed 38 in compute services.
And this is kind of part of the deal.
OpenAI is going to use at least two gigawatts of AWS Tranium compute.
And they're also going to develop some custom models to help support Amazon consumer products.
So Amazon CEO Andy Jassy said that this whole collaboration is going to allow developers to run OpenAI powered services on AWS with some new capabilities that make AI apps and agents a lot more powerful and persistent.
And there's a bunch of earlier reporting that came out that basically suggested 35 billion of Amazon's investment may be contingent on OpenAI either achieving AGI or completing an IPO by the end of this year.
So Amazon is I mean giving them 50 billion but it feels like there's these contingencies where money could be clawed back if they don't reach certain milestones, if they don't achieve certain things.
I mean, achieving AGI by the end of the year, that's a pretty big gamble.
And I mean, no one's really defined what AGI is.
So that's an interesting term to have embedded in there.
What's interesting to me is that OpenAI actually did confirm that there was some sort of contingency.
They didn't say exactly what the contingency set was.
They just said that that additional 35 billion is going to be delivered quote in the coming months, when certain conditions are met.
So they're not telling the public what the conditions are.
If that's AGI, if that's an IPO, that's still, you know, kind of confidential.
There's a whole bunch of details on the NVIDIA partnership, and those are much more limited.
But I think, opening I said that they've committed about three gigawatts of dedicated inference capacity and two gigawatts of training on NVIDIA's Vera Rubin systems.
So Nvidia's participation in this.
I think this is something that a lot of people have been speculating about.
There were some early reports of a potential $100 billion commitment.
This obviously has been revised downwards, right?
And not to say that maybe they won't put more in the future, but that was kind of.
The headline was going to be 100 billion.
And now it's somewhere closer to $100 billion.
30 billion.
And, you know, a lot of people have kind of asked Jensen Huang why that happened.
In January he pushed back on a bunch of rumors talking about how NVIDIA was going to invest really heavily in OpenAI's work specifically, versus just like some of the other competitors.
So I think a lot of the funding announcements are happening at the same time that they're announcing some big milestones.
And this typically is something that happens when you see companies go and raise money.
They'll hit the milestones or they'll be close to hitting the milestones, but go and kind of announce that to investors.
Look, we're about to hit XYZ target or Maybe they've hit it.
And then once they raise the money from the investors and they make a big public announcement.
In this particular case, ChatGP has now reached 900 million weekly active users.
They're closing in on a billion, not monthly, but weekly active users.
This is up from 800 million in October.
So they've been able to grow another million since October.
And I think they're, I mean, they're getting really close to this billion dollar mark.
OpenAI also reported that they have 50 million paying subscribers.
They said subscriber momentum accelerated meaningfully to start the year.
This is all in a blog post that they did.
They said that January and February were on track to be the largest months for new subscribers in their history.
They said, right now their usage is scaling a lot, but they also need to make a lot of improvements on speed reliability, safety and consistency.
And these are becoming a lot more important to users, according to them.
So, at the same time as all of these kind of financial announcements, this raising money and getting new users, they've also been experimenting with more monetization beyond just the subscriptions.
We know last month they confirmed plans to introduce ads into the free and go tier.
The go tier is the 8 a month tier, which personally I think is sort of a scam to charge people 8 a month and still show them ads.
If you would like to use ChatGPT for 8 a month and not pay for ads, go check out AIboxai, my own platform.
Not so subtle plug there because ads are rolling out in the US.
They actually rolled out earlier this month to users.
Some people were criticizing them and Theropic put out you know Super Bowl ads.
Criticizing them and said you know we'll never have ads inside of Anthropic, but they don't have the cheaper tier.
Speaking at the AI Summit in India, OpenAI's COO Brad Lightcap was basically describing the ad rollout as iterative and kind of emphasized that it's really important for them to get users' trust and privacy.
He said that the ads, if they could do them thoughtfully, could actually enhance instead of distract from the user experience.
But he also said that you know he definitely acknowledges the company is still in the early process with all of this.
OpenAI has not specified whether they're planning to add ads beyond the US market.
So that's all we know for the time being that they're going to add.
I think there's a lot of competitive tension that has obviously spilled out into the public because of this.
Earlier this month the CEO, Sam Altman.
He was criticizing Anthropic on X.
He basically said that they were building an expensive product aimed at rich people.
And then he was kind of defending opening eyes to free access for everyone.
He also argued that scale basically creates a different kind of challenge.
He said that more Texans use ChatGPT for free than the total number of Claude users in the US, And I think there are some reports that say OpenAI is charged as much as 60 for a thousand impressions of ads when they start to roll these out.
And they're going to have a minimum commitment of about $200,000.
So, according to the information, which is a newspaper that often gets you know, it's a good journal online that gets leaks on a lot of these tech things.
They said that Shopify merchants can now advertise on ChatGPT through shop campaigns.
They're also joining some early testers like Target and Williams Sonoma and then Adobe.
All of those are going to be some of the early advertisers on the platform.
This is definitely an exciting time for OpenAI and for Chad GPT, as they're, you know, basically getting record amounts of users, record amounts of money.
But also they're in some tricky situations where they definitely have to still continue to hit deadlines and continue to hit certain milestones in order to unlock a lot of this capital.
So it's going to be interesting to see how they pull this off where they're able to get money from things like ads and other areas like that.
ChatGPT has a lot of work and a lot going for it into the future.
I'll definitely keep you up to date on everything that's going on with the company.
Thank you so much for tuning into the podcast today.
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And, as always, make sure to go check out AIboxai if you want to get all of the AI models in the world, all the top ones, for 899 a month.
All right.
Thanks so much for tuning in.
I'll catch you in the next episode.
