April 16, 2025 • 40 mins
In the first part of this week's two-part episode, Ed Zitron walks you through how impossible it will be for OpenAI to stay alive - and how SoftBank’s attempts to help are materially harming the company.
Vote for Better Offline's "Man Who Killed Google Search" as the best business podcast episode in this year's Webby's! Open until April 17! Vote today!
https://vote.webbyawards.com/PublicVoting#/2025/podcasts/individual-episode/business
Vote for Weird Little Guys in this year’s Webby's! https://vote.webbyawards.com/PublicVoting#/2025/podcasts/individual-episode/crime-justice
---
LINKS: https://www.tinyurl.com/betterofflinelinks
Newsletter: https://www.wheresyoured.at/
Reddit: https://www.reddit.com/r/BetterOffline/
Discord: chat.wheresyoured.at
Ed's Socials:
https://www.instagram.com/edzitron
https://bsky.app/profile/edzitron.com
https://www.threads.net/@edzitron
See omnystudio.com/listener for privacy information.
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:03):
Media.
Speaker 2 (00:04):
Hello and welcome to Better Offline. I'm your host ed
Sir Tron. Now, before we go any further, I hate
to ask you to do this, but I need your help.
I'm up for this year's Webbe's for the Best Business
(00:25):
Podcast Award. I know it's a pain in the ars
to register, but can you sign up and vote for
Better Offline? Never won an award in my life, and
I have enough listeners that I think we can tip
the scales. But on with the show. The following two
part episode is the culmination of months of research, presenting
a case I'd been making in parts since July of
last year. Open AYE is a financial abomination, a thing
(00:45):
that should not be, an aberration, a symbol of rot
at the heart of Silicon Valley, a company that unrepentantly
and needlessly burns billions of dollars with no end in sight,
helmed by a creticist, dis ingenuous billionaire who continually lies
about what it is that it will do because he,
like I've been saying since last year, knows that Generative
AI can't do much more than it does today. What
(01:05):
I'm going to lay out for you is my case
the Open AI can't survive, that it's boadline impossible under
any of the current terms for this company to continue,
and that its demise will bring about the death of
a or significant harm of several other firms. A cottage
industry of despicable, billion dollar burn rate capitalistic monstrosities has
sprung up around this stupid fucking company in the hopes
(01:26):
of further inflating a bubble set to burst at any moment.
My discuss for the parties involved is unrelenting. This is
my discuss for a media industry that failed to even
attempt to tackle the subject matter I'm going to detail.
I believe at the end of these episodes you'll see
my point and at the very least agree that open
AI's current situation is totally untenable. If I'm right, open
ai will go down in history as an abdication of
(01:47):
due diligence, fiscal responsibility, in frankly common sense, both in
the venture capitalists and entities that propped it up and
a tech media that was more concerned with taking detailed
notes on my comings and goings than knowing their ass
from their ear hole. Those who have failed to hold
men like Sam Altman and darra Ama Day Accountable have
tacitly approved a financial and environmentally destructive movement that will
(02:09):
lead to the very little actually happening or changing in
the world other than damaging our power grid and the
theft of art from millions of people. These episodes will
be full of numbers and statements and very few declarations
or personal opinions, though probably a few swear words. If
I'm honest, I don't need to get that personal here.
The numbers in question, they're damaging, they're staggering, they're worrying,
(02:30):
and ultimately spell collapse. The truth is, we don't even
need to talk about tarifs for things to go sideways
for this industry. The price of a GPU could rise
one hundred percent, or it could have it really wouldn't
make much of a difference to open AI's chances of survival.
That's how bad the fundamentals are. And to illustrate that point,
I'm going to ask a number of relatively simple questions
(02:51):
over the next couple of episodes and make an attempt
to answer them. First, let's start with something simple, how
much cash does open ai have. At the start of April,
open Ai closed what was called the largest private tech
funding round in history, where it raised and astonishing forty
billion dollars. And the reason I'm saying this with the
(03:12):
sarcastic inflection is that open ai has only actually raised
ten billion dollars of the forty billion dollars, with the
rest arriving by the end of the year, and even
as I record this, I don't know if the money's
actually gone yet. I'll get it into that in a minute. Now.
A lot can happen in a year, and the remaining
thirty billion dollars twenty billion dollars of which will allegedly
be provided by soft Bank, is partially contingent on an
(03:33):
open AI's conversion from a nonprofit to a for profit
by the end of twenty twenty five, and if it fails,
soft Bank will only give open Ai a further twenty
billion dollars. I'll get into how fucking stupid this gets later.
The round also valued open Ai and astonishing three hundred
billion dollars. To put that in context, open Ai had
revenues of four billion dollars in twenty twenty four. This
(03:54):
deal values open Ai at seventy five times its revenue.
That's more than Tesla even at its most looted Chris Peak.
I also want to add that, as of writing this sentence,
this money is yet to arrive. Maybe it will arrive
by the time this is out. Maybe what really make
me look stupid. But based on soft Bank's filings, which
I'll link to in the spreadsheet for this episode, say
(04:15):
that the money will arrive mid April. It's April fourteenth
as I'm recording this, and that soft Bank would be
borrowing as much as ten billion dollars of the financing
for the round, with the option to syndicate, meaning you
bring in other investors the rest of them. For the
sake of argument, I'm going to assume the money actually arrives,
though filings also suggest that, and I'm quoting in certain circumstances,
(04:36):
the second thirty billion dollar tranch could arrive in early
twenty twenty six. This isn't great. It also seems that
soft banks ten billion dollar commitment is contingent on getting
a loan, as it says it's financed through borrowings from
Mizuho Bank Limited, among other financial institutions. Soft Banks had
plenty of loans in the past, so I think they're
(04:56):
going to get it. But I think this is one
of their biggest open a I also revealed it now
has twenty million paying subscribers and over five hundred million
weekly active users. If you're wondering why it doesn't talking
about monthly users, it's because they're likely much higher than
five hundred million, which would reveal exactly how poorly open
ai converts free chat GPT users to paying ones. The
(05:17):
Information reported back in January that open ai was generating
twenty five million dollars in revenue a month from its
two hundred dollars a month pro subscribers, and just so
we're clear, they lose money on every one of those two,
suggesting that they have around one hundred and twenty five
thousand Chat GPT pro subscribers, each losing the money somehow.
Assuming the other nineteen million, eight hundred and seventy five
(05:38):
thousand users are paying twenty bucks a month, that puts
revenue about four hundred and twenty three million dollars a month,
or at least five billion dollars a year from chat
GPT subscriptions. This is what reporters mean when they say
annualized revenue. By the way, it's literally the month. The
monthly revenue that the money they're making in one month
multiplied by twelve, and you'll be surprised to hear that
people play silly buggers with that all the time. In March,
(05:59):
Bloomberg reports the open ai expects its revenue to triple
to twelve point seven billion dollars in twenty twenty five,
assuming a similar split of revenue to twenty twenty four.
This would require open ai to nearly double its annualized
subscription revenue from Q one twenty twenty five from five
billion dollars right now to around nine point twenty seven
billion dollars, and nearly kuldruple API revenue from twenty twenty
(06:19):
four's revenue of one billion, which includes Microsoft's twenty percent
payment for access to open AI's models, and that would
get them about three point four to three billion. We
all need to super worry about these numbers. And I
realized these are messy numbers. It's just unclear how open
ai intends to pull any of this off. It's an
incredible leap, and open AI's own plans don't exactly inspire confidence.
(06:39):
They're really good at getting free subscribers, they don't seem
to be able to get paying ones in quite the
same number, and also they even lose them money. Every
time I think about this company, I start feeling a
little crazy, and if I'm on it anyway, The Information
reported in February that if the open ai plan to
grow its revenue by making three billion dollars a year
selling agents with chat GBT subscriptions seven point nine billion
(07:01):
dollars and API cous one point eight billion dollars making
up the rest. This is, of course, what's the technical term, Oh,
it's bollocks. It's complete fucking bollocks. I'm sorry. Agents, by
the way, are AI chatbots that can do something like
interact with another program on the user's behalf. Open aiy's
agents can't even do the simplest tasks. And three billion
dollars of twelve point seven billion dollar figure appears to
(07:22):
be a commitment made by soft Bank to purchase three
billion dollars a year of Open Aiyes, tech, now, let's
pass out these numbers precisely. So incoming monthly revenue roughly
four hundred and twenty five million dollars give or take
theoretical revenue from soft Banks completely made up thing two
hundred and fifty million dollars a month. However, I really
can find no proof that soft Bank has begun to
(07:43):
make these payments, or indeed that it intends to make
them even how it intends to. Now, let's talk liquidity.
Open Ai has ten billion dollars that they yet to
receive a recording this, but let's assume they get it,
and it will be ten billion dollars seven point five
billion from soft Bank and a syndicate of investors including
my mic Krossoft and Cutchiu and a few others. Potentially.
(08:03):
There's also an indeterminate amount of remaining capital on the
four billion dollar credit facility provided by multiple banks back
in October twenty twenty four, and that was raised alongside
of funding ground that valued the company one hundred and
fifty seven billion dollars now. As a note, the October
announcement stated that open ai had access to over ten
billion dollars in liquidity, giving us a sense of how
fast it's burning through the cash it has on hand,
(08:24):
as that was pretty much all the money they'd raised
at the time. Based on reports, open Ai will not
have access to the rest of the forty billion dollars
that soft Bank is funding them with. Until the end
of the year. And it's unclear what part of the
end of the year that is, but SoftBank's filing says December.
Will it be December first? Will it be Christmas time?
Will Sam Mortman look on to the tree and Messiyoshi
san will be there? We'll find out, won't we. But
(08:46):
we can assume in this case that open ai likely has,
in the best case scenario, access to about roughly sixteen
billion dollars in liquidity at any given time. It's reasonable
to believe that open ai will raise more debt this
year despite this massive raise, and it does so to
the tune of around five or six billion dollars. Without it,
I'm genuinely not sure what they're going to do. And
(09:07):
as a reminder, kids, open ai loses money on every
single user, free or paying. Now here's my next question,
what are open AI's obligations? Now? When I put out
(09:28):
how does open ai survive and open aiy is a
bad business? I used reported information to explain how this
company was at its court unsustainable. I'll link to the
newsletters and the spreadsheet in the podcast too. But let's
refresh our memory, shall we. Okay, compute costs at least
thirteen billion dollars of which are going to Microsoft a
loan in twenty twenty five, and as much as five
hundred and ninety four million dollars to my favorite company,
(09:51):
core Wave. Core Weave's back. Every time I think I
got away from core Weave, they pop out like a
sour turd coming back in the toilet. Anyway, it seems
from even a cursory glance that open AI's costs are
increasing dramatically. The information reported earlier in the year the
open ai projects to spend thirteen billion dollars on compute
with Microsoft the loan in twenty twenty five, nearly tripling
(10:13):
what it spent in total compute in twenty twenty four,
which was five billion dollars, with three billion for training
and two billion for running their models. This suggests that
open aiyes costs as skyrocketing, and that was before the
launch of their new image generator, which led to multiple
complaints from Sam Mormon about a lack of available GPUs,
leading to open Aiy's Terrible Little Man CEO saying that
(10:33):
he expected stuff to break and delays in new products. Nevertheless,
even if we assume open ai in factored in the
compute increases into its projections, it still expects to pay
that thirteen billion dollars to Microsoft a loan. This number, however,
doesn't include the twelve point nine billion dollar five year
long compute deal signed with core Weave, a deal that
was a result of Microsoft declining to pick up the
(10:54):
option to buy the compute themselves for open Ai. As
an aside from what I am here and this is
sources telling me most of the Microsoft compute was open Ai.
It's basically they put an open Ai sticker over Microsoft.
It's basically the same thing. Now, payments for this deal
with with open Ai and core Weave they start in
October twenty twenty five according to the information, and assuming
(11:18):
that it's even paid, or like evenly paid or even
like anyone gets the cash. But these contracts are weird,
you never know exactly how they're paid, this would still
amount to roughly two point three eight billion dollars a year. However,
for the sake of argument, let's consider the payments are
around one hundred and ninety eight million dollars a month.
Though there are scenarios such as say core weaves build
(11:39):
out partner not being able to build the data centers
or core weave not having the money to pay to
build them, where open ai might end up paying less.
And don't worry, I'll get to that later. Let's talk
about Stargate. You heard this, You've seen this. Stargate is
this data center project the open ai is going into.
And they've dedicated somewhere in the region of nineteen billion
dollars to this project, along with another nineteen billion dollars
(12:02):
provided by Software Bank at some indeterminate time. And there
are other partners too, like oor Coins. Not even obvious
what they're putting in either. One thing I can tell you, though,
is the Trump administration is not actually spending any money
on this anyone. I've had tons of people emailing me
being like, hey, yeah, Donald Trump was there. Yeah, Donald
Trump was there. Doesn't mean shit anyway. Based on reporting
(12:25):
from Bloomberg, open Ai plans to have sixty four thousand
Blackwell GPUs running by the end of twenty twenty six,
or roughly about three point eighty four billion dollars worth
of them. I should also note that Bloomberg said that
sixteen thousand of these chips would be operational by summer
twenty twenty five, though it's unclear if that will actually happen,
and as I'll get to later, I got some more
questions about what exactly is happening at Stargate or told.
(12:48):
Though it's unclear who actually pays what parts of Stargate,
it's safe to assume that open Ai will have to
at least put a billion dollars into a project that
is meant to be up and running by the end
of twenty twenty six, if not more. Now Stargate really
on has one like data center project under development is
in Abilene, Texas, and as I've mentioned, it's not really
clear how it's going though. Are recent piece from the
(13:10):
Information reported that it was currently empty and incomplete, and
if it stays that way, and I quote again, open
Ai could walk away from the deal, which would cost
Oracle billions of dollars. Though the article takes great pains
to assure the reader that that won't be likely. Even
an inkling of such a possibility is a bad fucking sign.
Business insiders reported on the site in Abilene calls it
(13:30):
a three point four billion dollar data center development, as
did the press release from the developer Crusoe, who will
get too later. Though these numbers don't include GPUs hardware
or the labour necessary to run them. Right now, Cruso is,
according to Business Insider, building six new data centers, each
with a minimum square footage, which will join the two
it is already constructing for Oracle. Oracle is signed, according
(13:50):
to the information, a fifteen year long lease with Cruiser
for its data centers, all of which will be rented
to open Ai. In any case, open AI's exposure could
be much, much, much higher than billion dollars. And I'll
explain in greater depth how I've reached the figure at
the women I get there. But nevertheless, it could be
much higher. If OpenAI has to contribute significantly to the
costs of associating with Stargate in general, it could cost
(14:13):
them a lot of money. Data centers aren't something you
can do. Funny money math with Data Center Dynamics reports
that the Abilene site is meant to have two hundred
megawatts of compute capacity in the first half of twenty
twenty five, and then as much as one point two
gigawats by mid twenty twenty six. To give you a
sense of the total cost of the project, Former Microsoft
VP of Energy Brian Janis said in January that it
(14:33):
costs twenty five million dollars a megawat or about twenty
five billion dollars a gigawe, meaning that the initial capital
expensures for Stargate to spin up its first two hundred
megawat data center will be around five billion dollars, spiraling
to thirty billion dollars or more for the entire project.
The Information has reported that the site, which could be
and I quote potentially one of the biggest AAY identify
data centers, could cost fifty billion to one hundred billion
(14:56):
dollars in the coming years. Where's that fucking money coming from? Me?
Stick with the lower end of these cost estimates, it's
likely the open AI is on the hook for over
five billion dollars for the Abilene site. Based on the
nineteen billion dollars it's committed to the overall Stargate Data
center project. This expenditure won't come all at once and
will be spread across several years. Still, assuming even the
(15:17):
rosiest numbers, it's hard to see how open ai doesn't
have to pony up at least a billi in twenty
twenty five, and that's likely because the development at this
site is going to be heavily delayed by both tariffs,
labor shortages, and oracles as reported by Information. Well, they're
trusting and I this is the kind of quote you
really want to hear. They're trusting scrappy but unproven startups
to develop the project. Is that good? Is that who
(15:39):
you want doing this? I know when I get a
contractor in to fix something, my first thought is, is
this guy's scrappy? Anyway, Let's talk about the other costs.
They're at least three point five billion based on reporting
from the information from last year, open ai will spend
at least two point five billion dollars across salaries, data
referring to buying data from other companies, hosting another cost
(15:59):
of sales in sales and marketing, and then another billion
on what infrastructure open ai owns. I expect the latter
cost to balloon with open AI's investment in physical infrastructure
for stargame. Here's another bloody question. How does open ai
meet its obligations? Based on previous estimates, open ai spends
about two dollars and twenty five cents to make a buck.
At that rate, it's likely the open AI's cost in
(16:20):
its most rosy reed revenue projections of twelve point seven
billion dollars or at least twenty eight billion, meaning that
it's on course to burn at least fourteen billion dollars
in twenty twenty five a loan, assuming that open ai
has literally all of the money they had from last year.
They don't, but for the sake of argument, let's pretend
they have ten billion dollars, as well as ten billion
(16:40):
from soft Bank. It's still unclear how they pay for
everything now. While open ai likely has preferential payment structures
with all of their vendors, such as discounted rates with Microsoft,
Razi or cloud Services, it will eventually have to pay someone,
especially in the case of costs related to stargate, many
of which are upfront and involve physical things happening. In
(17:00):
the event that its costs a severe as reporting suggests,
open AI's revenue comes at a terrible cost and will
likely be immediately funneled directly into funding the obscene cost
behind inference and training models like GPT four point five,
which Sam Wuonton called a giant expensive model, and yeah,
nevertheless he pushed that to every single user. Worse. Still,
(17:21):
open ai has while delaying its next model, GPT five
promised to launch after all that its O three reasoning
model after saying it wouldn't do so, which is strange
because it turns up three is actually way more expensive
to run that people thought. With arc Price Foundation, a
nonprofit that makes the RKGI test for benchmarking models, because
real tests don't work on them, they need to make
(17:41):
something out. Well, they're estimating they will cost about thirty
grand a task, which is that's a lot of money.
And yes, they again it. Open Ai has a new
sugar Daddy in the form of SoftBank. But SoftBank has
to borrow money to meet its obligations for Stargate and
also open Ai, and this is leading to its financial
(18:03):
condition likely deteriorating. And that's S and P Global that
you know, you know, the S and P five those people,
those people said that that's not what you want to hear.
Let's look soft Bank. As of right now, soft Bank
has committed to the following at least thirty billion dollars
in funding, is part of open AI's recent forty billion
dollar funding round. Now. Soft Bank's filing surrounding open AI's
(18:24):
funding also suggests that they are ultimately on the hook
for the entire forty billion, but they can syndicate it.
Like I mentioned earlier, reporting suggests that the syndication will happen,
and it will happen with people at COUTE, Microsoft and
other investors. Now here's the funny part. If open ai
fails to convert to a for profit, that forty billion
dollars slashed down to a paltry thirty billion dollars, although
(18:44):
again soft Banks shares contingent upon whether it finds other
investors to join the deal. Now there's another three billion
dollars that soft Bank's promised to spend on open AI's tech,
and then nineteen billion dollars for the Stargate Data Center project,
which soft Bank is taking full financial responsibility for. The
information reports, and the total is either fifty two billion
(19:05):
dollars or sixty two billion dollars, with at least ten
billion dollars due by the end of twenty twenty five,
but more like twenty Like there's so much money. To
be clear, SoftBank had to borrow all of the ten
billion dollars. How the fuck are they meant to get
the thirty billion dollars? Now I kind of mentioned s
and P. But I want to really return to that now,
SoftBank's exposure to open Ai is materially harming the company,
(19:27):
and I'm quoting the Wall Street Journal here. Ratings agency
S and P Global said Tuesday that SoftBank's financial condition
will likely deteriorate as a result of the open Ai investment,
and that its plans to add debt could lead the
agency to consider downgrading SoftBank's ratings. While one might argue
that SoftBank has a good amount of cash, the journal
also adds that they're somewhat hamstrung in its use as
(19:48):
a result of CEO Massaoshi's son's dick shit reckless gambles.
Again quoting from the Wall Street Journal, SoftBank had a
decent buffer of thirty one billion dollars of cash as
of December thirty first, but the company is also pledged
to hold mone much of that in reserve to quell
worried investors. Soft Bank is committed to not borrow more
than twenty five percent of the value of its holdings,
which means it will likely need to sell some of
(20:08):
the other parts of its empire to pay the rest
of the open Ai deal. Worse still, it seems that
as mentioned before that SoftBank will be financing the entirety
of the first ten billion seven point five billion if
they're able to syndicate it. As a result, soft Bank
is likely going to have to sell off parts of
their actually valuable holdings in companies like Alababa or arm
or worse still, parts of their ailing investments from a
(20:30):
vision fund, resulting in a material loss and its underwater deals.
This is an untenable strategy, and I'd like to explain why. First.
Open Ai needs at least forty billion dollars a year
to survive and its costs are only increasing. While we
don't have much transparency into open AI's actual day to
day finances, we can make educated guesses that its costs
(20:51):
are increasing based on the amount of capital it's raising.
If open AI's costs were flat or only mildly increasing,
we'd expect to see raises roughly the same size as
the pre vis one six point six billions something in
that range. A forty billion dollar raise is nearly six
times the previous funding round. Admittedly, multiples like that aren't
particularly unusual. If a company raises three hundred grand in
the pre seed round and a three million dollar series
(21:14):
a round in funding. That's a tenfold increase. But we're
not talking about hundreds of thousands of dollars or even
millions of dollars. We're talking about billions of dollars. If
open AI's funding round with soft Bank goes as planned,
it will raise the equivalent of the entire GDP of Estonia,
a fairly wealthy country itself that's also a member of
NATO and the European Union. That alone should give you
(21:34):
a sense of how fucking stupid this all is. Stupid, sure,
but undoubtedly necessary. Per the information, open ai plans to
spend as much as twenty eight billion dollars in compute
on Microsoft dosy or cloud in twenty twenty eight. Over
a third of open AI's revenue, per the same article,
will come from SoftBank's alleged spend. It's reasonable to believe
(21:55):
that open ai will, as a result, need to raise
in excess of forty billion dollars a year, though it's
reasonable to believe that it will need to raise more
like fifty billion a year until they reach profitability you
know never And now this actually has a reason. It's
due to the growing cost of doing business as well
as the various infrastructure commitments they've made, both in the
terms of Stargate as well as deals with third party
(22:16):
suppliers like core Weavan, indeed, Microsoft. Open Ai CEO Sam
Mortman's statement around costs also suggests that they're going up
quite fiercely. In late February, he claimed that open ai
was out of GPUs. While this suggests that there is
demand for some products like it's horrifying him as generating
tech that has made abominations that insult Miyazaki and I
(22:37):
will hate them for it forever and thus made them
go viral in much it also means that to meet
the demand of the horrible abominations, open Ai needs to
spend more, and at the risk of repeating myself, that
demand doesn't necessarily translate into revenue or profitability. Now. Second,
soft Bank cannot fund open ai long term. I must
be clear. Open AI's costs are projected to be three
(22:59):
hundred twenty billion dollars over the next five years. SoftBank
has to overcome significant challenges to fund both open ai
and it's part of Stargate, and when I say fund,
I mean fund the current state of both projects, assuming
no further obligations or complications. The Information reports the open
Ai forecast that will spend as I mentioned, twenty eight
(23:20):
billion dollars on compute with Microsoft a loan in twenty
twenty eight, and I apologize for repeating myself, these numbers
fucking matter. The same arcle also reports that open ai
would turn profitable by the end of the decade after
building out Stargate, suggesting that open AI's operating expend ditches
will grow exponentially year over year. According to the Information,
it expects its costs to surpass three hundred and twenty
(23:41):
billion dollars between twenty twenty five and twenty thirty, with
half of that going towards funding model training and development.
How the fuck does building stargate make them profitable? I
really can't anyway, it won't. It's the same shit. But
SoftBank has had to and will continue having to go
to remarkable lengths to fund open AI's current forty billion
dollar round, lengths so significant that it may lead to
(24:02):
their credit rating being further downgraded. As I mentioned, even
if we assume the best case scenario, open ai successfully
converts to a for profit entity by the end of
twenty twenty five and gets that full thirty billion dollars.
It seems unlikely, if not impossible, for it to continue
raising the amount of capital they need to to continue operations.
As I've argued in multiple news letters and podcasts, there
(24:24):
are only a few entities that can provide the kind
of funding that open AI needs. These include big tech
focused investment firms like soft Bank, sovereign wealth funds like
those of Saudi Arabia and the UAE, and perhaps the
largest tech companies. I also want to be clear that
I keep getting messages being like the gatherment could do
it daily, couldn't it get me word? If the government
did get it's not going to happen. Stop fucking asking me.
(24:45):
It's just not going to happen. The government's not sending
forty billion dollars to Sam Altman. They're not going to
do it. I will apologize personally to each and every
one of you if I'm wrong, but they will need
to send forty billion dollars cash to open ai. But
these entities can meet open ai needs for some time,
but not all the time. It's not realistic to expect
(25:05):
soft Bank or Microsoft or the Soald's Oracle or whoever
to provide forty billion dollars every year for the foreseeable future.
And just to be clear, this is what open Ai needs. Eventually,
even the Souds have to have a break. And I
don't know if you remember from a previous episode, but
Masayoshi's son gets a lot of his money from them,
and they're not happy with him. In fact, Masaoshi's son
has said a few years ago that he owed Muhammad
(25:27):
bill and Salmon. Not a great guy to owe anyway.
This really is especially true for soft Bank by the way.
They're bruised. They're battered after several rough years, including a
failed multi billion dollar investment in we Work. Based on
its current promise to not borrow more than twenty five
percent of its holdings, it's near impossible that SoftBank will
be able to continue to fund open Ai at this rate,
(25:47):
and forty billion dollars a year may not actually be enough.
Based on soft Bank's last reported equity value of its holdings,
they have about two hundred and twenty nine billion dollars
of stuff, meaning that they can borrow just over fifty
seven billion while remaining compliant with these guidelines. In any case,
it's unclear how soft Bank can fund open Ai, but
it's far clearer that nobody else is willing to. Now
(26:24):
we're going to move off the questions for a minute
because I just want to get into some problems. I've
popped because it turns out that open ai they got
doodoo ass. That's a professional finance term. I did just
say financi and we're just going to keep that. Now.
Open Ai has started running into capacity issues, and this
is a real problem, and it suggests material instability in
their business or infrastructure, and it's really not clear how
(26:47):
open ai expands further. Let me explain it's important to
note that open ai does not really have any of
its own compute infrastructure. The majority of its compute is
provided by Microsoft, though as mentioned previously, open now has
a deal with core Weave to take over the capacity
that Microsoft was going to have twelve billion dollars or
so of capacity in the future. Anyway, in the last
(27:08):
ninety days, Sam Altman has complained about the lack of
GPUs and pressure on open ai servers many times. In
my newsletter published a few days ago, I was did
six such examples. Should you be curious, these statements in
a bubble seem either harmless or like open AI's growth
is skyrocketing, the latter of which might indeed be true,
but botzil for a company that burns money with every
single user, any mention of rate limits or performance issues
(27:31):
suggests that open ai is having significant capacity issues, and
at this point it's unclear what further capacity it can
actually expand to outside of that currently available. Sam Wilton's
complaining about melting GPUs, You've got the lead from Sourer saying, yeah,
we're gonna have some problems showing you stuff for a minute,
just because like, yeah, we're melting GPUs. There was a
whole thing about how you should expect delays on product
(27:52):
launches and service problems. None of it's really good, And
like I said, it isn't really obvious how open ai
is going to expand much further. Remember Microsoft has now
pulled as much as two gigawatts of data center projects,
walked away from a billion dollar data center development in
Ohio and declined the option the one I just mentioned
on twelve billion dollars a compute from Corewave that open
(28:14):
ai had to pick up, Meaning that open ai may
be pushing up against the limits of what is physically available.
While The total available capacity of GPUs at many providers
like Lambda and Crusoe is unknown, and indeed, I don't
know if Cruso has a single data center at this point.
We know that Corewave has upon approximately three hundred and
sixty megawats available compared to microsoft six point five to
(28:35):
seven point five gigawads, a large chunk of which I
think powers open Ai. If open ai is running into
capacity issues, it could be one of the following. They
could be running up against the limit of what Microsoft
has available or is willing to offer the company. The
Information reported in October twenty twenty four the open Ai
was frustrated with Microsoft and said it wasn't moving fast
enough to supply open ai with servers and now. It
(28:58):
could also be that while open ai is cony is sufficient,
it does not have the resources available to easily handle
bursts in user growth in the stable manner. Per The
Information's reporting, Microsoft promised open Ai three hundred thousand in
Vidio GB two hundred Blackwell chips. By the end of
twenty twenty five, are roughly eighteen billion dollars worth of them.
It's unclear if this has changed since Microsoft allowed open
(29:18):
Ai to seek other compute from other companies in late
January twenty twenty five. I also don't believe that open
ai has any other viable options for existing compute infrastructure
outside of Microsoft. Corweep's current data centers mostly feature in
Vidia's aging Hopper GPUs, and while it could and likely
is retrofitting its current infrastructure with Blackwell chips, doing so
isn't easy or cheap. Blackwell chips require far more powerful
(29:41):
cooling and server infrastructure to make them run smoothly, a
problem which led to a delay in their delivery to
most customers according to the information. And even if Corey
was able to replace every last Hopper GPU with a Blackwell,
and they won't, it still wouldn't match what open ai
needs to expand one might argue that it simply needs
to wait for the construction of the Stargus data center,
or for core we have to finish the gigawa or
(30:02):
so of construction it's working on. I want to be
clear how impossible that is. I need to be clear.
One of my least favorite responses to my work as
people saying they'll just build more data centers. They just
go and build them inn They're just going to build
them right now. They won't. You can't just data centers
don't just grow from the fucking ground. As I've argued
in the past, I have serious concerns over the viability
(30:23):
of core We've ever completing. It's alleged contracted one point
three gigawatts of capacity. Based on calculations, it'll have to
spend in excess of thirty nine billion dollars to build it.
It's unclear how that will happen, and it doesn't have
the money to do so, like it actually does not
have the cash. I'll get into that later, but they
don't have the money. However, even if I were to
(30:44):
humor this idea, it's impossible that any of this project
is done by the end of twenty twenty five, and
I'd argue even in twenty twenty six. I can find
no commitments to any time scale, other than the fact
that open Ai will allegedly start paying core Weave in
October per the information, which could very well be using
their current capacity. I also can't find any evidence that Cruso,
the company building the Stargate data center in Texas, has
(31:06):
any compute anywhere else. Lander, a GPU compute company that
raised three hundred and twenty million dollars earlier in the year,
and according to Data Center Dynamics, operates out of co
location data centers in San Francisco, California, and Allen, Texas.
It's backed by Moorner eight hundred and twenty million in
funds raised this year. All of that just kind of
doesn't say that they have a data center at all.
(31:27):
A colocation. That means you're in someone else's buddy. You
don't own a house, you're ranting one. And just to
be clear, open AI's ability to scale is entirely contingent
on the availability of whatever data center providers it has
relationships with, and all of their growths coming from these
to these two companies. I'll get there, don't worry. But
every time I kind of say this stuff out loud,
(31:50):
I feel my soul slightly stripped from me. I feel
like I feel like I'm in hell because this is
an insane thing. If you or I win to someone
went like, hey, look, I'm going to lose five billion dollars,
but I promise you God will come out of the computer.
They institutionalize you or me, they definitely would instalize me.
(32:11):
It's just fucking stupid, But in any case, this means
that open AI's only real choice for GPUs is either
Core Weave or Microsoft. And while it's hard to calculate precisely,
open AI's best case scenario is that sixteen thousand GPUs
come online in the summer of twenty twenty five as
part of the Stargate Data Center project. And that's a
drop in the bucket compared to the three hundred thousand
of the fucking things that Microsoft have previously promised. Now,
(32:34):
one last thing, any capacity or expansion issues that happen
with open Ai will needcap this company, open ai is,
regardless of how you or I may feel about generative Ai,
one of the fastest growing companies of all time. It
currently has, according to its own statements, over five hundred
million weekly active users. Putting aside that each user is unprofitable.
(32:56):
Such remarkable growth, especially as it's partially as a result
of its extremely resourced intensive image generator, is a massive,
horrifying strain on their infrastructure. The vast majority of open
aiyes users are free customers using chat GPT with only,
like I mentioned earlier, twenty million paying subscribers, and the
vast majority of them on the cheapest twenty bucks plan.
(33:17):
Open Aiyes, services, even in the case of image generation,
are relatively commoditized, meaning that users can, if they really care,
go and use any number of other large language model services.
They could use bing Oh, they could use stable Diffusion,
they could even use GROC if they really I don't
like saying it, but free users they're a burden on
the company, especially with such piss poor conversion rates, losing
(33:40):
money with each prompt, which is by the way, also
case with paying subscribers, and the remarkable popularity of its
horrible image generator, it only threatens to bring more burdens
than one off customers that will generate a few abominable
studio ghibli pictures of Garfield with giant knockers and then
never return. If AI's growth continues at this rate, it
(34:02):
will run into capacity issues, and it does not have
much room to expand. Well, we don't know how much
capacity they're taking up with Microsoft, or indeed whether Microsoft
is approaching capacity or otherwise limiting them. We do know
that open ai has seen reason to beg for access
for more GPUs. In simpler terms, even if open ai
wasn't running out of money, even If open ai wasn't
un horrifyingly unprofitable, it also may not have enough GPUs
(34:25):
to continue providing its services in a reliable manner. If
that's the case, there really isn't that much that can
be done other than significantly limiting free users activity on
the platform, which is open AI's primary mechanism for revenue
growth and customer acquisition. Limiting activity or changing the economics
behind its paid product. And this is quoting sam Orman.
They could potentially find some way to let people pay
(34:47):
for compute they want to use more dynamically, that's not good.
Almans come up with some other ideas, like an idea
for paid plans on March fourth, where twenty bucks a
month goes to credits which you can use across features
like deep research, oh one at four point five sore
and so on, with no fixed limits per feature, and
you choose what you want. If you run out of credits,
you can buy more. I just want to be clear
(35:07):
that that is a terrible fucking deal. We have no
idea what the credits would be, and it would definitely
be rigged so that you would have to buy more.
He's also brought up things like mentioning losing two hundred
bucks a month on the pro subscription, but he's a
funny one. Buried in an article from the Information from
March fifth is a comment that suggests that open ai
is considering measures like changing its pricing model entirely, with
(35:29):
Altman reportedly telling developers in London in February twenty twenty
five the open aiy is prime to judge twenty or
thirty percent of pro customers a higher price because of
how many research queries they're doing. But he suggested in
a la carte or pays you go approach when it
comes to agents, though we have to judge more than
two hundred dollars a month. Fucking just this fucking guy.
(35:50):
The problem is that with all of these measures, even
if they succeeded in generating more money for the company,
also need to reduce the burden on open aiyes available infrastructure.
Remember remember data centers can take three to six years
to build, and even with stargates accelerated, and I'd argue
on realistic timelines, open ai isn't unlocking a tenth of
the promised compute that Microsoft gave them. Three hundred thousand
(36:12):
GPUs is a lot sixteen thousand. Really not, so what
might these capacities look like? What are the consequences? You
love payal horses. I love payal horses. Let's get riding.
Though downtime might be an obvious choice. Capacity issues that
open ai will likely manifest in hard limits on what
free users can do, some of which I've documented previously. Nevertheless,
(36:34):
I believe the real pay all horses of capacity issues
come from arbitrary limits on any given user group, meaning
both free users and paid users. Some limits on what
a user can do, a reduction in the number of
generations of images for paid users, any introduction of peak hours,
or any increases in prices are assigned that open ai
is running out of GPUs, which it's already said as
happening publicly. However, the really obvious thing, the real obvious
(36:58):
pale horse, would be service degradation delays in generations of
any kind, five hundred status code errors, or chat GBT
just failing to produce an answer. Open ai has up
until this point had fairly impressive uptime. Still, it's if
it's running up against the wall this streak will end.
The consequences depend on how often these issues occur. And
to whom they occur. If free users face service degradation,
(37:20):
they'll bounce off the product, as their US is likely
far more fleeting than the paid user, which will begin
to erode open AI's growth. Ironically, rapid and especially unprecedented
growth in one of open AI's competitors like Higher or
Anthropic could also represent a pale horse for open Ai,
though based on the monthly active users I've seen from Anthropic,
I don't think that's going to be a problem now.
(37:41):
If paid users face service degradation, it will likely cause
the most harm to the company is while paid users
still lose open Ai money, in the end, at least
they receive some money. Open Ai is effectively one choice
here get more GPUs from Microsoft, and really its future
depends heavily on both Microsoft's generosity and there being enough
of them time when Microsoft is pulled back from over
(38:01):
two gigabats of data centers, specifically according to td COD
because of it moving away from providing compute to open Ai. Now, admittedly,
open Ai has previously spent more on training models than inference,
and that's the actual running of them, and the company
might be able to smooth downtime issues by shifting capacity.
This would of course have a knock on effect on
its ability to develop new models, and the company is
(38:22):
already losing ground, particularly when it comes to Chinese rivals
like Deepseek. Now, I know this has been a long
episode and the fact is I'm not even close to finish.
I have some more tough, tough questions and tough problems
for open Ai. Tune in to the next episode to
hear them. I realized this has been a lot, and
I know you're very patient with me. You let me
read the long scripts. But this stuff is important. It's
(38:43):
important to me, and I think you're going to find
it important too. And I'll have a nice sexy conclusion
to this at the end of the next one. But
before I go, please vote for me in the fucking Webbies.
I want to win. It's my pin post on Blue
Sky and to wear in my handles eadsit Tran dot
Com and Blue Sky. Please he vote for me and
the Webbies. Anyway, catch you next episode. Thank you for
(39:11):
listening to Better Offline. The editor and composer of the
Better Offline theme song is Matasowski. You can check out
more of his music and audio projects at Matasowski dot com,
M A T T O S O W s ki
dot com. You can email me at easy at better
offline dot com or visit better offline dot com to
find more podcast links and of course my newsletter. I
(39:33):
also really recommend you go to chat dot Where's Youreed
dot at to visit the discord, and go to our
slash Better Offline to check out our reddit. Thank you
so much for listening.
Speaker 1 (39:43):
Better Offline is a production of cool Zone Media. For
more from cool Zone Media, visit our website cool Zonemedia
dot com, or check us out on the iHeartRadio app,
Apple Podcasts, or wherever you get your podcasts.
Media.
Speaker 2 (00:04):
Hello and welcome to Better Offline. I'm your host ed
Sir Tron. Now, before we go any further, I hate
to ask you to do this, but I need your help.
I'm up for this year's Webbe's for the Best Business
(00:25):
Podcast Award. I know it's a pain in the ars
to register, but can you sign up and vote for
Better Offline? Never won an award in my life, and
I have enough listeners that I think we can tip
the scales. But on with the show. The following two
part episode is the culmination of months of research, presenting
a case I'd been making in parts since July of
last year. Open AYE is a financial abomination, a thing
(00:45):
that should not be, an aberration, a symbol of rot
at the heart of Silicon Valley, a company that unrepentantly
and needlessly burns billions of dollars with no end in sight,
helmed by a creticist, dis ingenuous billionaire who continually lies
about what it is that it will do because he,
like I've been saying since last year, knows that Generative
AI can't do much more than it does today. What
(01:05):
I'm going to lay out for you is my case
the Open AI can't survive, that it's boadline impossible under
any of the current terms for this company to continue,
and that its demise will bring about the death of
a or significant harm of several other firms. A cottage
industry of despicable, billion dollar burn rate capitalistic monstrosities has
sprung up around this stupid fucking company in the hopes
(01:26):
of further inflating a bubble set to burst at any moment.
My discuss for the parties involved is unrelenting. This is
my discuss for a media industry that failed to even
attempt to tackle the subject matter I'm going to detail.
I believe at the end of these episodes you'll see
my point and at the very least agree that open
AI's current situation is totally untenable. If I'm right, open
ai will go down in history as an abdication of
(01:47):
due diligence, fiscal responsibility, in frankly common sense, both in
the venture capitalists and entities that propped it up and
a tech media that was more concerned with taking detailed
notes on my comings and goings than knowing their ass
from their ear hole. Those who have failed to hold
men like Sam Altman and darra Ama Day Accountable have
tacitly approved a financial and environmentally destructive movement that will
(02:09):
lead to the very little actually happening or changing in
the world other than damaging our power grid and the
theft of art from millions of people. These episodes will
be full of numbers and statements and very few declarations
or personal opinions, though probably a few swear words. If
I'm honest, I don't need to get that personal here.
The numbers in question, they're damaging, they're staggering, they're worrying,
(02:30):
and ultimately spell collapse. The truth is, we don't even
need to talk about tarifs for things to go sideways
for this industry. The price of a GPU could rise
one hundred percent, or it could have it really wouldn't
make much of a difference to open AI's chances of survival.
That's how bad the fundamentals are. And to illustrate that point,
I'm going to ask a number of relatively simple questions
(02:51):
over the next couple of episodes and make an attempt
to answer them. First, let's start with something simple, how
much cash does open ai have. At the start of April,
open Ai closed what was called the largest private tech
funding round in history, where it raised and astonishing forty
billion dollars. And the reason I'm saying this with the
(03:12):
sarcastic inflection is that open ai has only actually raised
ten billion dollars of the forty billion dollars, with the
rest arriving by the end of the year, and even
as I record this, I don't know if the money's
actually gone yet. I'll get it into that in a minute. Now.
A lot can happen in a year, and the remaining
thirty billion dollars twenty billion dollars of which will allegedly
be provided by soft Bank, is partially contingent on an
(03:33):
open AI's conversion from a nonprofit to a for profit
by the end of twenty twenty five, and if it fails,
soft Bank will only give open Ai a further twenty
billion dollars. I'll get into how fucking stupid this gets later.
The round also valued open Ai and astonishing three hundred
billion dollars. To put that in context, open Ai had
revenues of four billion dollars in twenty twenty four. This
(03:54):
deal values open Ai at seventy five times its revenue.
That's more than Tesla even at its most looted Chris Peak.
I also want to add that, as of writing this sentence,
this money is yet to arrive. Maybe it will arrive
by the time this is out. Maybe what really make
me look stupid. But based on soft Bank's filings, which
I'll link to in the spreadsheet for this episode, say
(04:15):
that the money will arrive mid April. It's April fourteenth
as I'm recording this, and that soft Bank would be
borrowing as much as ten billion dollars of the financing
for the round, with the option to syndicate, meaning you
bring in other investors the rest of them. For the
sake of argument, I'm going to assume the money actually arrives,
though filings also suggest that, and I'm quoting in certain circumstances,
(04:36):
the second thirty billion dollar tranch could arrive in early
twenty twenty six. This isn't great. It also seems that
soft banks ten billion dollar commitment is contingent on getting
a loan, as it says it's financed through borrowings from
Mizuho Bank Limited, among other financial institutions. Soft Banks had
plenty of loans in the past, so I think they're
(04:56):
going to get it. But I think this is one
of their biggest open a I also revealed it now
has twenty million paying subscribers and over five hundred million
weekly active users. If you're wondering why it doesn't talking
about monthly users, it's because they're likely much higher than
five hundred million, which would reveal exactly how poorly open
ai converts free chat GPT users to paying ones. The
(05:17):
Information reported back in January that open ai was generating
twenty five million dollars in revenue a month from its
two hundred dollars a month pro subscribers, and just so
we're clear, they lose money on every one of those two,
suggesting that they have around one hundred and twenty five
thousand Chat GPT pro subscribers, each losing the money somehow.
Assuming the other nineteen million, eight hundred and seventy five
(05:38):
thousand users are paying twenty bucks a month, that puts
revenue about four hundred and twenty three million dollars a month,
or at least five billion dollars a year from chat
GPT subscriptions. This is what reporters mean when they say
annualized revenue. By the way, it's literally the month. The
monthly revenue that the money they're making in one month
multiplied by twelve, and you'll be surprised to hear that
people play silly buggers with that all the time. In March,
(05:59):
Bloomberg reports the open ai expects its revenue to triple
to twelve point seven billion dollars in twenty twenty five,
assuming a similar split of revenue to twenty twenty four.
This would require open ai to nearly double its annualized
subscription revenue from Q one twenty twenty five from five
billion dollars right now to around nine point twenty seven
billion dollars, and nearly kuldruple API revenue from twenty twenty
(06:19):
four's revenue of one billion, which includes Microsoft's twenty percent
payment for access to open AI's models, and that would
get them about three point four to three billion. We
all need to super worry about these numbers. And I
realized these are messy numbers. It's just unclear how open
ai intends to pull any of this off. It's an
incredible leap, and open AI's own plans don't exactly inspire confidence.
(06:39):
They're really good at getting free subscribers, they don't seem
to be able to get paying ones in quite the
same number, and also they even lose them money. Every
time I think about this company, I start feeling a
little crazy, and if I'm on it anyway, The Information
reported in February that if the open ai plan to
grow its revenue by making three billion dollars a year
selling agents with chat GBT subscriptions seven point nine billion
(07:01):
dollars and API cous one point eight billion dollars making
up the rest. This is, of course, what's the technical term, Oh,
it's bollocks. It's complete fucking bollocks. I'm sorry. Agents, by
the way, are AI chatbots that can do something like
interact with another program on the user's behalf. Open aiy's
agents can't even do the simplest tasks. And three billion
dollars of twelve point seven billion dollar figure appears to
(07:22):
be a commitment made by soft Bank to purchase three
billion dollars a year of Open Aiyes, tech, now, let's
pass out these numbers precisely. So incoming monthly revenue roughly
four hundred and twenty five million dollars give or take
theoretical revenue from soft Banks completely made up thing two
hundred and fifty million dollars a month. However, I really
can find no proof that soft Bank has begun to
(07:43):
make these payments, or indeed that it intends to make
them even how it intends to. Now, let's talk liquidity.
Open Ai has ten billion dollars that they yet to
receive a recording this, but let's assume they get it,
and it will be ten billion dollars seven point five
billion from soft Bank and a syndicate of investors including
my mic Krossoft and Cutchiu and a few others. Potentially.
(08:03):
There's also an indeterminate amount of remaining capital on the
four billion dollar credit facility provided by multiple banks back
in October twenty twenty four, and that was raised alongside
of funding ground that valued the company one hundred and
fifty seven billion dollars now. As a note, the October
announcement stated that open ai had access to over ten
billion dollars in liquidity, giving us a sense of how
fast it's burning through the cash it has on hand,
(08:24):
as that was pretty much all the money they'd raised
at the time. Based on reports, open Ai will not
have access to the rest of the forty billion dollars
that soft Bank is funding them with. Until the end
of the year. And it's unclear what part of the
end of the year that is, but SoftBank's filing says December.
Will it be December first? Will it be Christmas time?
Will Sam Mortman look on to the tree and Messiyoshi
san will be there? We'll find out, won't we. But
(08:46):
we can assume in this case that open ai likely has,
in the best case scenario, access to about roughly sixteen
billion dollars in liquidity at any given time. It's reasonable
to believe that open ai will raise more debt this
year despite this massive raise, and it does so to
the tune of around five or six billion dollars. Without it,
I'm genuinely not sure what they're going to do. And
(09:07):
as a reminder, kids, open ai loses money on every
single user, free or paying. Now here's my next question,
what are open AI's obligations? Now? When I put out
(09:28):
how does open ai survive and open aiy is a
bad business? I used reported information to explain how this
company was at its court unsustainable. I'll link to the
newsletters and the spreadsheet in the podcast too. But let's
refresh our memory, shall we. Okay, compute costs at least
thirteen billion dollars of which are going to Microsoft a
loan in twenty twenty five, and as much as five
hundred and ninety four million dollars to my favorite company,
(09:51):
core Wave. Core Weave's back. Every time I think I
got away from core Weave, they pop out like a
sour turd coming back in the toilet. Anyway, it seems
from even a cursory glance that open AI's costs are
increasing dramatically. The information reported earlier in the year the
open ai projects to spend thirteen billion dollars on compute
with Microsoft the loan in twenty twenty five, nearly tripling
(10:13):
what it spent in total compute in twenty twenty four,
which was five billion dollars, with three billion for training
and two billion for running their models. This suggests that
open aiyes costs as skyrocketing, and that was before the
launch of their new image generator, which led to multiple
complaints from Sam Mormon about a lack of available GPUs,
leading to open Aiy's Terrible Little Man CEO saying that
(10:33):
he expected stuff to break and delays in new products. Nevertheless,
even if we assume open ai in factored in the
compute increases into its projections, it still expects to pay
that thirteen billion dollars to Microsoft a loan. This number, however,
doesn't include the twelve point nine billion dollar five year
long compute deal signed with core Weave, a deal that
was a result of Microsoft declining to pick up the
(10:54):
option to buy the compute themselves for open Ai. As
an aside from what I am here and this is
sources telling me most of the Microsoft compute was open Ai.
It's basically they put an open Ai sticker over Microsoft.
It's basically the same thing. Now, payments for this deal
with with open Ai and core Weave they start in
October twenty twenty five according to the information, and assuming
(11:18):
that it's even paid, or like evenly paid or even
like anyone gets the cash. But these contracts are weird,
you never know exactly how they're paid, this would still
amount to roughly two point three eight billion dollars a year. However,
for the sake of argument, let's consider the payments are
around one hundred and ninety eight million dollars a month.
Though there are scenarios such as say core weaves build
(11:39):
out partner not being able to build the data centers
or core weave not having the money to pay to
build them, where open ai might end up paying less.
And don't worry, I'll get to that later. Let's talk
about Stargate. You heard this, You've seen this. Stargate is
this data center project the open ai is going into.
And they've dedicated somewhere in the region of nineteen billion
dollars to this project, along with another nineteen billion dollars
(12:02):
provided by Software Bank at some indeterminate time. And there
are other partners too, like oor Coins. Not even obvious
what they're putting in either. One thing I can tell you, though,
is the Trump administration is not actually spending any money
on this anyone. I've had tons of people emailing me
being like, hey, yeah, Donald Trump was there. Yeah, Donald
Trump was there. Doesn't mean shit anyway. Based on reporting
(12:25):
from Bloomberg, open Ai plans to have sixty four thousand
Blackwell GPUs running by the end of twenty twenty six,
or roughly about three point eighty four billion dollars worth
of them. I should also note that Bloomberg said that
sixteen thousand of these chips would be operational by summer
twenty twenty five, though it's unclear if that will actually happen,
and as I'll get to later, I got some more
questions about what exactly is happening at Stargate or told.
(12:48):
Though it's unclear who actually pays what parts of Stargate,
it's safe to assume that open Ai will have to
at least put a billion dollars into a project that
is meant to be up and running by the end
of twenty twenty six, if not more. Now Stargate really
on has one like data center project under development is
in Abilene, Texas, and as I've mentioned, it's not really
clear how it's going though. Are recent piece from the
(13:10):
Information reported that it was currently empty and incomplete, and
if it stays that way, and I quote again, open
Ai could walk away from the deal, which would cost
Oracle billions of dollars. Though the article takes great pains
to assure the reader that that won't be likely. Even
an inkling of such a possibility is a bad fucking sign.
Business insiders reported on the site in Abilene calls it
(13:30):
a three point four billion dollar data center development, as
did the press release from the developer Crusoe, who will
get too later. Though these numbers don't include GPUs hardware
or the labour necessary to run them. Right now, Cruso is,
according to Business Insider, building six new data centers, each
with a minimum square footage, which will join the two
it is already constructing for Oracle. Oracle is signed, according
(13:50):
to the information, a fifteen year long lease with Cruiser
for its data centers, all of which will be rented
to open Ai. In any case, open AI's exposure could
be much, much, much higher than billion dollars. And I'll
explain in greater depth how I've reached the figure at
the women I get there. But nevertheless, it could be
much higher. If OpenAI has to contribute significantly to the
costs of associating with Stargate in general, it could cost
(14:13):
them a lot of money. Data centers aren't something you
can do. Funny money math with Data Center Dynamics reports
that the Abilene site is meant to have two hundred
megawatts of compute capacity in the first half of twenty
twenty five, and then as much as one point two
gigawats by mid twenty twenty six. To give you a
sense of the total cost of the project, Former Microsoft
VP of Energy Brian Janis said in January that it
(14:33):
costs twenty five million dollars a megawat or about twenty
five billion dollars a gigawe, meaning that the initial capital
expensures for Stargate to spin up its first two hundred
megawat data center will be around five billion dollars, spiraling
to thirty billion dollars or more for the entire project.
The Information has reported that the site, which could be
and I quote potentially one of the biggest AAY identify
data centers, could cost fifty billion to one hundred billion
(14:56):
dollars in the coming years. Where's that fucking money coming from? Me?
Stick with the lower end of these cost estimates, it's
likely the open AI is on the hook for over
five billion dollars for the Abilene site. Based on the
nineteen billion dollars it's committed to the overall Stargate Data
center project. This expenditure won't come all at once and
will be spread across several years. Still, assuming even the
(15:17):
rosiest numbers, it's hard to see how open ai doesn't
have to pony up at least a billi in twenty
twenty five, and that's likely because the development at this
site is going to be heavily delayed by both tariffs,
labor shortages, and oracles as reported by Information. Well, they're
trusting and I this is the kind of quote you
really want to hear. They're trusting scrappy but unproven startups
to develop the project. Is that good? Is that who
(15:39):
you want doing this? I know when I get a
contractor in to fix something, my first thought is, is
this guy's scrappy? Anyway, Let's talk about the other costs.
They're at least three point five billion based on reporting
from the information from last year, open ai will spend
at least two point five billion dollars across salaries, data
referring to buying data from other companies, hosting another cost
(15:59):
of sales in sales and marketing, and then another billion
on what infrastructure open ai owns. I expect the latter
cost to balloon with open AI's investment in physical infrastructure
for stargame. Here's another bloody question. How does open ai
meet its obligations? Based on previous estimates, open ai spends
about two dollars and twenty five cents to make a buck.
At that rate, it's likely the open AI's cost in
(16:20):
its most rosy reed revenue projections of twelve point seven
billion dollars or at least twenty eight billion, meaning that
it's on course to burn at least fourteen billion dollars
in twenty twenty five a loan, assuming that open ai
has literally all of the money they had from last year.
They don't, but for the sake of argument, let's pretend
they have ten billion dollars, as well as ten billion
(16:40):
from soft Bank. It's still unclear how they pay for
everything now. While open ai likely has preferential payment structures
with all of their vendors, such as discounted rates with Microsoft,
Razi or cloud Services, it will eventually have to pay someone,
especially in the case of costs related to stargate, many
of which are upfront and involve physical things happening. In
(17:00):
the event that its costs a severe as reporting suggests,
open AI's revenue comes at a terrible cost and will
likely be immediately funneled directly into funding the obscene cost
behind inference and training models like GPT four point five,
which Sam Wuonton called a giant expensive model, and yeah,
nevertheless he pushed that to every single user. Worse. Still,
(17:21):
open ai has while delaying its next model, GPT five
promised to launch after all that its O three reasoning
model after saying it wouldn't do so, which is strange
because it turns up three is actually way more expensive
to run that people thought. With arc Price Foundation, a
nonprofit that makes the RKGI test for benchmarking models, because
real tests don't work on them, they need to make
(17:41):
something out. Well, they're estimating they will cost about thirty
grand a task, which is that's a lot of money.
And yes, they again it. Open Ai has a new
sugar Daddy in the form of SoftBank. But SoftBank has
to borrow money to meet its obligations for Stargate and
also open Ai, and this is leading to its financial
(18:03):
condition likely deteriorating. And that's S and P Global that
you know, you know, the S and P five those people,
those people said that that's not what you want to hear.
Let's look soft Bank. As of right now, soft Bank
has committed to the following at least thirty billion dollars
in funding, is part of open AI's recent forty billion
dollar funding round. Now. Soft Bank's filing surrounding open AI's
(18:24):
funding also suggests that they are ultimately on the hook
for the entire forty billion, but they can syndicate it.
Like I mentioned earlier, reporting suggests that the syndication will happen,
and it will happen with people at COUTE, Microsoft and
other investors. Now here's the funny part. If open ai
fails to convert to a for profit, that forty billion
dollars slashed down to a paltry thirty billion dollars, although
(18:44):
again soft Banks shares contingent upon whether it finds other
investors to join the deal. Now there's another three billion
dollars that soft Bank's promised to spend on open AI's tech,
and then nineteen billion dollars for the Stargate Data Center project,
which soft Bank is taking full financial responsibility for. The
information reports, and the total is either fifty two billion
(19:05):
dollars or sixty two billion dollars, with at least ten
billion dollars due by the end of twenty twenty five,
but more like twenty Like there's so much money. To
be clear, SoftBank had to borrow all of the ten
billion dollars. How the fuck are they meant to get
the thirty billion dollars? Now I kind of mentioned s
and P. But I want to really return to that now,
SoftBank's exposure to open Ai is materially harming the company,
(19:27):
and I'm quoting the Wall Street Journal here. Ratings agency
S and P Global said Tuesday that SoftBank's financial condition
will likely deteriorate as a result of the open Ai investment,
and that its plans to add debt could lead the
agency to consider downgrading SoftBank's ratings. While one might argue
that SoftBank has a good amount of cash, the journal
also adds that they're somewhat hamstrung in its use as
(19:48):
a result of CEO Massaoshi's son's dick shit reckless gambles.
Again quoting from the Wall Street Journal, SoftBank had a
decent buffer of thirty one billion dollars of cash as
of December thirty first, but the company is also pledged
to hold mone much of that in reserve to quell
worried investors. Soft Bank is committed to not borrow more
than twenty five percent of the value of its holdings,
which means it will likely need to sell some of
(20:08):
the other parts of its empire to pay the rest
of the open Ai deal. Worse still, it seems that
as mentioned before that SoftBank will be financing the entirety
of the first ten billion seven point five billion if
they're able to syndicate it. As a result, soft Bank
is likely going to have to sell off parts of
their actually valuable holdings in companies like Alababa or arm
or worse still, parts of their ailing investments from a
(20:30):
vision fund, resulting in a material loss and its underwater deals.
This is an untenable strategy, and I'd like to explain why. First.
Open Ai needs at least forty billion dollars a year
to survive and its costs are only increasing. While we
don't have much transparency into open AI's actual day to
day finances, we can make educated guesses that its costs
(20:51):
are increasing based on the amount of capital it's raising.
If open AI's costs were flat or only mildly increasing,
we'd expect to see raises roughly the same size as
the pre vis one six point six billions something in
that range. A forty billion dollar raise is nearly six
times the previous funding round. Admittedly, multiples like that aren't
particularly unusual. If a company raises three hundred grand in
the pre seed round and a three million dollar series
(21:14):
a round in funding. That's a tenfold increase. But we're
not talking about hundreds of thousands of dollars or even
millions of dollars. We're talking about billions of dollars. If
open AI's funding round with soft Bank goes as planned,
it will raise the equivalent of the entire GDP of Estonia,
a fairly wealthy country itself that's also a member of
NATO and the European Union. That alone should give you
(21:34):
a sense of how fucking stupid this all is. Stupid, sure,
but undoubtedly necessary. Per the information, open ai plans to
spend as much as twenty eight billion dollars in compute
on Microsoft dosy or cloud in twenty twenty eight. Over
a third of open AI's revenue, per the same article,
will come from SoftBank's alleged spend. It's reasonable to believe
(21:55):
that open ai will, as a result, need to raise
in excess of forty billion dollars a year, though it's
reasonable to believe that it will need to raise more
like fifty billion a year until they reach profitability you
know never And now this actually has a reason. It's
due to the growing cost of doing business as well
as the various infrastructure commitments they've made, both in the
terms of Stargate as well as deals with third party
(22:16):
suppliers like core Weavan, indeed, Microsoft. Open Ai CEO Sam
Mortman's statement around costs also suggests that they're going up
quite fiercely. In late February, he claimed that open ai
was out of GPUs. While this suggests that there is
demand for some products like it's horrifying him as generating
tech that has made abominations that insult Miyazaki and I
(22:37):
will hate them for it forever and thus made them
go viral in much it also means that to meet
the demand of the horrible abominations, open Ai needs to
spend more, and at the risk of repeating myself, that
demand doesn't necessarily translate into revenue or profitability. Now. Second,
soft Bank cannot fund open ai long term. I must
be clear. Open AI's costs are projected to be three
(22:59):
hundred twenty billion dollars over the next five years. SoftBank
has to overcome significant challenges to fund both open ai
and it's part of Stargate, and when I say fund,
I mean fund the current state of both projects, assuming
no further obligations or complications. The Information reports the open
Ai forecast that will spend as I mentioned, twenty eight
(23:20):
billion dollars on compute with Microsoft a loan in twenty
twenty eight, and I apologize for repeating myself, these numbers
fucking matter. The same arcle also reports that open ai
would turn profitable by the end of the decade after
building out Stargate, suggesting that open AI's operating expend ditches
will grow exponentially year over year. According to the Information,
it expects its costs to surpass three hundred and twenty
(23:41):
billion dollars between twenty twenty five and twenty thirty, with
half of that going towards funding model training and development.
How the fuck does building stargate make them profitable? I
really can't anyway, it won't. It's the same shit. But
SoftBank has had to and will continue having to go
to remarkable lengths to fund open AI's current forty billion
dollar round, lengths so significant that it may lead to
(24:02):
their credit rating being further downgraded. As I mentioned, even
if we assume the best case scenario, open ai successfully
converts to a for profit entity by the end of
twenty twenty five and gets that full thirty billion dollars.
It seems unlikely, if not impossible, for it to continue
raising the amount of capital they need to to continue operations.
As I've argued in multiple news letters and podcasts, there
(24:24):
are only a few entities that can provide the kind
of funding that open AI needs. These include big tech
focused investment firms like soft Bank, sovereign wealth funds like
those of Saudi Arabia and the UAE, and perhaps the
largest tech companies. I also want to be clear that
I keep getting messages being like the gatherment could do
it daily, couldn't it get me word? If the government
did get it's not going to happen. Stop fucking asking me.
(24:45):
It's just not going to happen. The government's not sending
forty billion dollars to Sam Altman. They're not going to
do it. I will apologize personally to each and every
one of you if I'm wrong, but they will need
to send forty billion dollars cash to open ai. But
these entities can meet open ai needs for some time,
but not all the time. It's not realistic to expect
(25:05):
soft Bank or Microsoft or the Soald's Oracle or whoever
to provide forty billion dollars every year for the foreseeable future.
And just to be clear, this is what open Ai needs. Eventually,
even the Souds have to have a break. And I
don't know if you remember from a previous episode, but
Masayoshi's son gets a lot of his money from them,
and they're not happy with him. In fact, Masaoshi's son
has said a few years ago that he owed Muhammad
(25:27):
bill and Salmon. Not a great guy to owe anyway.
This really is especially true for soft Bank by the way.
They're bruised. They're battered after several rough years, including a
failed multi billion dollar investment in we Work. Based on
its current promise to not borrow more than twenty five
percent of its holdings, it's near impossible that SoftBank will
be able to continue to fund open Ai at this rate,
(25:47):
and forty billion dollars a year may not actually be enough.
Based on soft Bank's last reported equity value of its holdings,
they have about two hundred and twenty nine billion dollars
of stuff, meaning that they can borrow just over fifty
seven billion while remaining compliant with these guidelines. In any case,
it's unclear how soft Bank can fund open Ai, but
it's far clearer that nobody else is willing to. Now
(26:24):
we're going to move off the questions for a minute
because I just want to get into some problems. I've
popped because it turns out that open ai they got
doodoo ass. That's a professional finance term. I did just
say financi and we're just going to keep that. Now.
Open Ai has started running into capacity issues, and this
is a real problem, and it suggests material instability in
their business or infrastructure, and it's really not clear how
(26:47):
open ai expands further. Let me explain it's important to
note that open ai does not really have any of
its own compute infrastructure. The majority of its compute is
provided by Microsoft, though as mentioned previously, open now has
a deal with core Weave to take over the capacity
that Microsoft was going to have twelve billion dollars or
so of capacity in the future. Anyway, in the last
(27:08):
ninety days, Sam Altman has complained about the lack of
GPUs and pressure on open ai servers many times. In
my newsletter published a few days ago, I was did
six such examples. Should you be curious, these statements in
a bubble seem either harmless or like open AI's growth
is skyrocketing, the latter of which might indeed be true,
but botzil for a company that burns money with every
single user, any mention of rate limits or performance issues
(27:31):
suggests that open ai is having significant capacity issues, and
at this point it's unclear what further capacity it can
actually expand to outside of that currently available. Sam Wilton's
complaining about melting GPUs, You've got the lead from Sourer saying, yeah,
we're gonna have some problems showing you stuff for a minute,
just because like, yeah, we're melting GPUs. There was a
whole thing about how you should expect delays on product
(27:52):
launches and service problems. None of it's really good, And
like I said, it isn't really obvious how open ai
is going to expand much further. Remember Microsoft has now
pulled as much as two gigawatts of data center projects,
walked away from a billion dollar data center development in
Ohio and declined the option the one I just mentioned
on twelve billion dollars a compute from Corewave that open
(28:14):
ai had to pick up, Meaning that open ai may
be pushing up against the limits of what is physically available.
While The total available capacity of GPUs at many providers
like Lambda and Crusoe is unknown, and indeed, I don't
know if Cruso has a single data center at this point.
We know that Corewave has upon approximately three hundred and
sixty megawats available compared to microsoft six point five to
(28:35):
seven point five gigawads, a large chunk of which I
think powers open Ai. If open ai is running into
capacity issues, it could be one of the following. They
could be running up against the limit of what Microsoft
has available or is willing to offer the company. The
Information reported in October twenty twenty four the open Ai
was frustrated with Microsoft and said it wasn't moving fast
enough to supply open ai with servers and now. It
(28:58):
could also be that while open ai is cony is sufficient,
it does not have the resources available to easily handle
bursts in user growth in the stable manner. Per The
Information's reporting, Microsoft promised open Ai three hundred thousand in
Vidio GB two hundred Blackwell chips. By the end of
twenty twenty five, are roughly eighteen billion dollars worth of them.
It's unclear if this has changed since Microsoft allowed open
(29:18):
Ai to seek other compute from other companies in late
January twenty twenty five. I also don't believe that open
ai has any other viable options for existing compute infrastructure
outside of Microsoft. Corweep's current data centers mostly feature in
Vidia's aging Hopper GPUs, and while it could and likely
is retrofitting its current infrastructure with Blackwell chips, doing so
isn't easy or cheap. Blackwell chips require far more powerful
(29:41):
cooling and server infrastructure to make them run smoothly, a
problem which led to a delay in their delivery to
most customers according to the information. And even if Corey
was able to replace every last Hopper GPU with a Blackwell,
and they won't, it still wouldn't match what open ai
needs to expand one might argue that it simply needs
to wait for the construction of the Stargus data center,
or for core we have to finish the gigawa or
(30:02):
so of construction it's working on. I want to be
clear how impossible that is. I need to be clear.
One of my least favorite responses to my work as
people saying they'll just build more data centers. They just
go and build them inn They're just going to build
them right now. They won't. You can't just data centers
don't just grow from the fucking ground. As I've argued
in the past, I have serious concerns over the viability
(30:23):
of core We've ever completing. It's alleged contracted one point
three gigawatts of capacity. Based on calculations, it'll have to
spend in excess of thirty nine billion dollars to build it.
It's unclear how that will happen, and it doesn't have
the money to do so, like it actually does not
have the cash. I'll get into that later, but they
don't have the money. However, even if I were to
(30:44):
humor this idea, it's impossible that any of this project
is done by the end of twenty twenty five, and
I'd argue even in twenty twenty six. I can find
no commitments to any time scale, other than the fact
that open Ai will allegedly start paying core Weave in
October per the information, which could very well be using
their current capacity. I also can't find any evidence that Cruso,
the company building the Stargate data center in Texas, has
(31:06):
any compute anywhere else. Lander, a GPU compute company that
raised three hundred and twenty million dollars earlier in the year,
and according to Data Center Dynamics, operates out of co
location data centers in San Francisco, California, and Allen, Texas.
It's backed by Moorner eight hundred and twenty million in
funds raised this year. All of that just kind of
doesn't say that they have a data center at all.
(31:27):
A colocation. That means you're in someone else's buddy. You
don't own a house, you're ranting one. And just to
be clear, open AI's ability to scale is entirely contingent
on the availability of whatever data center providers it has
relationships with, and all of their growths coming from these
to these two companies. I'll get there, don't worry. But
every time I kind of say this stuff out loud,
(31:50):
I feel my soul slightly stripped from me. I feel
like I feel like I'm in hell because this is
an insane thing. If you or I win to someone
went like, hey, look, I'm going to lose five billion dollars,
but I promise you God will come out of the computer.
They institutionalize you or me, they definitely would instalize me.
(32:11):
It's just fucking stupid, But in any case, this means
that open AI's only real choice for GPUs is either
Core Weave or Microsoft. And while it's hard to calculate precisely,
open AI's best case scenario is that sixteen thousand GPUs
come online in the summer of twenty twenty five as
part of the Stargate Data Center project. And that's a
drop in the bucket compared to the three hundred thousand
of the fucking things that Microsoft have previously promised. Now,
(32:34):
one last thing, any capacity or expansion issues that happen
with open Ai will needcap this company, open ai is,
regardless of how you or I may feel about generative Ai,
one of the fastest growing companies of all time. It
currently has, according to its own statements, over five hundred
million weekly active users. Putting aside that each user is unprofitable.
(32:56):
Such remarkable growth, especially as it's partially as a result
of its extremely resourced intensive image generator, is a massive,
horrifying strain on their infrastructure. The vast majority of open
aiyes users are free customers using chat GPT with only,
like I mentioned earlier, twenty million paying subscribers, and the
vast majority of them on the cheapest twenty bucks plan.
(33:17):
Open Aiyes, services, even in the case of image generation,
are relatively commoditized, meaning that users can, if they really care,
go and use any number of other large language model services.
They could use bing Oh, they could use stable Diffusion,
they could even use GROC if they really I don't
like saying it, but free users they're a burden on
the company, especially with such piss poor conversion rates, losing
(33:40):
money with each prompt, which is by the way, also
case with paying subscribers, and the remarkable popularity of its
horrible image generator, it only threatens to bring more burdens
than one off customers that will generate a few abominable
studio ghibli pictures of Garfield with giant knockers and then
never return. If AI's growth continues at this rate, it
(34:02):
will run into capacity issues, and it does not have
much room to expand. Well, we don't know how much
capacity they're taking up with Microsoft, or indeed whether Microsoft
is approaching capacity or otherwise limiting them. We do know
that open ai has seen reason to beg for access
for more GPUs. In simpler terms, even if open ai
wasn't running out of money, even If open ai wasn't
un horrifyingly unprofitable, it also may not have enough GPUs
(34:25):
to continue providing its services in a reliable manner. If
that's the case, there really isn't that much that can
be done other than significantly limiting free users activity on
the platform, which is open AI's primary mechanism for revenue
growth and customer acquisition. Limiting activity or changing the economics
behind its paid product. And this is quoting sam Orman.
They could potentially find some way to let people pay
(34:47):
for compute they want to use more dynamically, that's not good.
Almans come up with some other ideas, like an idea
for paid plans on March fourth, where twenty bucks a
month goes to credits which you can use across features
like deep research, oh one at four point five sore
and so on, with no fixed limits per feature, and
you choose what you want. If you run out of credits,
you can buy more. I just want to be clear
(35:07):
that that is a terrible fucking deal. We have no
idea what the credits would be, and it would definitely
be rigged so that you would have to buy more.
He's also brought up things like mentioning losing two hundred
bucks a month on the pro subscription, but he's a
funny one. Buried in an article from the Information from
March fifth is a comment that suggests that open ai
is considering measures like changing its pricing model entirely, with
(35:29):
Altman reportedly telling developers in London in February twenty twenty
five the open aiy is prime to judge twenty or
thirty percent of pro customers a higher price because of
how many research queries they're doing. But he suggested in
a la carte or pays you go approach when it
comes to agents, though we have to judge more than
two hundred dollars a month. Fucking just this fucking guy.
(35:50):
The problem is that with all of these measures, even
if they succeeded in generating more money for the company,
also need to reduce the burden on open aiyes available infrastructure.
Remember remember data centers can take three to six years
to build, and even with stargates accelerated, and I'd argue
on realistic timelines, open ai isn't unlocking a tenth of
the promised compute that Microsoft gave them. Three hundred thousand
(36:12):
GPUs is a lot sixteen thousand. Really not, so what
might these capacities look like? What are the consequences? You
love payal horses. I love payal horses. Let's get riding.
Though downtime might be an obvious choice. Capacity issues that
open ai will likely manifest in hard limits on what
free users can do, some of which I've documented previously. Nevertheless,
(36:34):
I believe the real pay all horses of capacity issues
come from arbitrary limits on any given user group, meaning
both free users and paid users. Some limits on what
a user can do, a reduction in the number of
generations of images for paid users, any introduction of peak hours,
or any increases in prices are assigned that open ai
is running out of GPUs, which it's already said as
happening publicly. However, the really obvious thing, the real obvious
(36:58):
pale horse, would be service degradation delays in generations of
any kind, five hundred status code errors, or chat GBT
just failing to produce an answer. Open ai has up
until this point had fairly impressive uptime. Still, it's if
it's running up against the wall this streak will end.
The consequences depend on how often these issues occur. And
to whom they occur. If free users face service degradation,
(37:20):
they'll bounce off the product, as their US is likely
far more fleeting than the paid user, which will begin
to erode open AI's growth. Ironically, rapid and especially unprecedented
growth in one of open AI's competitors like Higher or
Anthropic could also represent a pale horse for open Ai,
though based on the monthly active users I've seen from Anthropic,
I don't think that's going to be a problem now.
(37:41):
If paid users face service degradation, it will likely cause
the most harm to the company is while paid users
still lose open Ai money, in the end, at least
they receive some money. Open Ai is effectively one choice
here get more GPUs from Microsoft, and really its future
depends heavily on both Microsoft's generosity and there being enough
of them time when Microsoft is pulled back from over
(38:01):
two gigabats of data centers, specifically according to td COD
because of it moving away from providing compute to open Ai. Now, admittedly,
open Ai has previously spent more on training models than inference,
and that's the actual running of them, and the company
might be able to smooth downtime issues by shifting capacity.
This would of course have a knock on effect on
its ability to develop new models, and the company is
(38:22):
already losing ground, particularly when it comes to Chinese rivals
like Deepseek. Now, I know this has been a long
episode and the fact is I'm not even close to finish.
I have some more tough, tough questions and tough problems
for open Ai. Tune in to the next episode to
hear them. I realized this has been a lot, and
I know you're very patient with me. You let me
read the long scripts. But this stuff is important. It's
(38:43):
important to me, and I think you're going to find
it important too. And I'll have a nice sexy conclusion
to this at the end of the next one. But
before I go, please vote for me in the fucking Webbies.
I want to win. It's my pin post on Blue
Sky and to wear in my handles eadsit Tran dot
Com and Blue Sky. Please he vote for me and
the Webbies. Anyway, catch you next episode. Thank you for
(39:11):
listening to Better Offline. The editor and composer of the
Better Offline theme song is Matasowski. You can check out
more of his music and audio projects at Matasowski dot com,
M A T T O S O W s ki
dot com. You can email me at easy at better
offline dot com or visit better offline dot com to
find more podcast links and of course my newsletter. I
(39:33):
also really recommend you go to chat dot Where's Youreed
dot at to visit the discord, and go to our
slash Better Offline to check out our reddit. Thank you
so much for listening.
Speaker 1 (39:43):
Better Offline is a production of cool Zone Media. For
more from cool Zone Media, visit our website cool Zonemedia
dot com, or check us out on the iHeartRadio app,
Apple Podcasts, or wherever you get your podcasts.
Host
Ed Zitron
Popular Podcasts
The Breakfast Club
The World's Most Dangerous Morning Show, The Breakfast Club, With DJ Envy And Charlamagne Tha God!
Dateline NBC
Current and classic episodes, featuring compelling true-crime mysteries, powerful documentaries and in-depth investigations. Follow now to get the latest episodes of Dateline NBC completely free, or subscribe to Dateline Premium for ad-free listening and exclusive bonus content: DatelinePremium.com
Decisions, Decisions
Welcome to "Decisions, Decisions," the podcast where boundaries are pushed, and conversations get candid! Join your favorite hosts, Mandii B and WeezyWTF, as they dive deep into the world of non-traditional relationships and explore the often-taboo topics surrounding dating, sex, and love. Every Monday, Mandii and Weezy invite you to unlearn the outdated narratives dictated by traditional patriarchal norms. With a blend of humor, vulnerability, and authenticity, they share their personal journeys navigating their 30s, tackling the complexities of modern relationships, and engaging in thought-provoking discussions that challenge societal expectations. From groundbreaking interviews with diverse guests to relatable stories that resonate with your experiences, "Decisions, Decisions" is your go-to source for open dialogue about what it truly means to love and connect in today's world. Get ready to reshape your understanding of relationships and embrace the freedom of authentic connections—tune in and join the conversation!