Hi, everybody. Welcome back to the show. This is your host, Will Walden. I have some news for you. We are going to be making a move, a power move, if you will, in the land of podcasting. This is the Elon Musk podcast as of right now. And we're going to be shifting gears here because the world of tech isn't just Elon Musk, but it's all the companies that he owns and everything in his
sphere of influence. So if you hear that term or you see the logo for stage zero, the name will be changing soon. And that's on me. We're not being bought out or anything like that. I just feel like it better represents what I'm going to be bringing you for this show in the future before we get in today's topic, which is open AI. Elon has open AI in his sphere of influence, of course, and Sam
Altman is arch nemesis. And we are going to be continuing to bring you the same thing that you've always had. We're not going to be changing anything. You're still going to get the same content about 10 minutes or less every day unless we have something special going on. And then you're going to get a longer episode. But more than likely it's going to be about 10 minutes or less with Elon in his sphere of influence, companies and his friends and also his competitors.
So be ready for that in the future. It's going to be pretty similar to what we have now, just a little bit better production values. And I wanted to get into this without an intro or intro music or bumpers or anything like that. Just want to be heart to heart with you and come to you straight up because I think that's what we need to start doing here. We're going to have straight up conversations about some of the stuff, some of the things that Elon does. He does some mean things.
I'm going to be honest with you upfront. I'm a fan of his companies. I'm a fan of the technologies that he creates. I want humans to go to Mars. I love EVs, I love Teslas, I love the cars, I love the people that work there. Some of the things that Elon does, he's not the best guy sometimes, and that doesn't make this show any worse or any better.
But as somebody who follows Elon Musk, and I've been reporting on Elon Musk and everything he does for the last five years, I uprooted my life to move to Star Base, Texas so I could cover a Starship because I love SpaceX so much. Everything that I loved, where I was from, I left it all behind so I can move to Star Base Texas and cover Starship for about a year on Hwy. 4. And the sacrifices that I had to make in order to do that were obscene.
So I just wanted to let you know that I am still that same person. But you have to think about things like an engineer. You have to think about things like a scientist. There's no right or wrong. There's no right down the middle. Sometimes somebody does something that you don't agree with, and sometimes if you look at the evidence in front of you, they do something amazing. Elon Musk has accomplished some amazing things in his life, and I want to report on that.
But I also have to report on the things that he hasn't done right. It's the right thing to do. As somebody who's been in news my whole life, I've been in content creation for over 20 years now, and I know for a fact that there are sometimes when people do some weird things. I've seen it happen in every circumstance that I've reported them. So I just want to let you know that will be happening in the future.
You don't have to unsubscribe or anything like that because you're still going to get the things you like. You have to keep an open mind about the things that do actually happen. No one's right 100% of the time, and we have to report on it. I'm a reporter first. I'm a news guy first, so we have to get into the news today, Speaking of that. But I wanted to make this announcement before it was too late, before I forgot to do it because I'm recording this really late at night.
But today we're going to be talking about open AII want to have more conversations like this too on the podcast. I think it's more natural. We can talk more, we can have more comments, and I think that the conversation has to continue. So we're going to talk about Open AI today. They got $40 billion in cash. Why does Open AI need $40 billion in cash? Probably for GPUs. They're burning through their GPUs with the video generation prompts that people can place in
there are insane. I've been creating Starship content with it all day, so I understand a space like Starship content all day. I was probably burning down for some GPUs myself, but why would they need $40 billion in private capital, which is more than triple the previous record? And what is it planning to do with all the money they plan it with Sam going to do with all that money?
Just when half of it depends on a complete structural overhaul that's already sparked lawsuits and regulatory scrutiny. Now it's a kind of question that reveals everything about the current state of AI, the people funding it, and the unstable marriage between innovation and corporate ambitions right now. When Open AI announced on Monday that it closed the largest private tech funding round in history, the sheer size of the deal raised so many eyebrows. Everybody was.
I was aghast. I saw this news and I didn't know what to do. I heard about it in the Grapevine. They're going to be raising a bunch of money, but who knew this much? We're going to talk about some implications. We're going to talk about some power plays, and then we're going to talk about burning GPUs down. I guess Open AI just pulled off what no other tech company has ever done, $40 billion in one round.
It values the company best known for chat TPT at about $300 billion, which is based on figures disclosed in the deal announcement and corroborated by Pitch Book. The money isn't just a headline figure, though. It's a tactical war chest. They're taking on Elon, they're taking on Google, they're taking on Meta. It's an arms race right now. The number is nearly three times what Ant Group raised in its $14 billion round in 2018, in more than the combined hall of every other large private tech
investment round on record. It signals a shift in how capital flows into aiorwereseeinganother.com bubble here, and how tightly it's now tethered to the whims of the few, the powerful few. Now the majority of the cash, which is $30 billion, is coming from Japan's SoftBank firm, known for throwing money at futuristic tech companies, with
mixed results. Remaining 10 billion from this round is split among a syndicate of investors, Microsoft CO2 Thrive Capital Ultimatter. Now these are not little firms making calculated bets that Open A is current dominance in generative AI will scale into something even more crazy. So the monster cash injection doesn't come without conditions, though. If somebody's going to give you that kind of money, they want something in return.
There's a string attached that might unravel the whole package. According to a disclosure from SoftBank filed on Monday, if Open AI fails to fully restructure into a for profit entity by the end of this year, the total investment could shrink from 40 billion to as little as 20 billion. That's a ton of money. Now that clause forces Open AI into a very tight corner, requiring illegal maneuvering, boardroom consent, possibly even a public political fight.
Elon Musk is suing them for this, by the way. Now, to understand the stakes here, it's important to grasp open AI strange corporate identity. They're born in 2015 as a non profit research lab with a mission to build AI that benefits all of humanity. Now more often 2019 into a capped profit limited partnership. It's kind of like a Frankenstein of legal structures and allows outside investors to profit, but only up to a certain limit while the original nonprofit retains
control of everything. Now it's controversial, it's complex. And that's where Elon Musk comes in. One of open A is original Co founders. He's now one of its most vocal critics and haters. Musk has sued Open AI because, I mean, the company's structural shift to a for profit model violates its founding principles. He's not the only obstacle, though.
The transformation also needs green lights from Microsoft, one of Open AI's biggest backers, and the California attorney general, who holds sway over nonprofit compliance renders today. Over the 40 billion raised, nearly half 18 billion is reportedly earmarked for a project called Stargate, which is a joint venture between Open AI, Oracle and SoftBank. That was first announced by President Donald Trump in January.
And his administration's blessing of the deal brings an unexpected political twist to an already convoluted financial narrative. Stargate is designed to build a massive compute infrastructure capable of training the next generation of AI models. Whether it gets built or becomes another money sink depends on more than just hardware orders, though. Depends on everything from geopolitics to the legal rulings.
They want performance, structural clarity, and legal certainty before going all in. If Open AI fails to deliver, they're prepared to walk away from half the capital. That puts an immense amount of pressure on CEO Sam Altman and his executive team to navigate not just tech milestones, but a labyrinth of financial and legal commitments. Now Altman, for his part, seems unfazed, though he's always
unfazed about everything. And a Monday post on X, he boasted one of the craziest fire moments I'd ever seen. And we added 1,000,000 users in five days, added 1,000,000 users in the last hour later on that day. Now the number is, while impressive, don't answer the real question though. Can user growth translate into sustainable revenue and long term trust in an organization that's constantly rewriting its rule book?
Will they be stable? Open AI claims it expects to triple it's revenue to 12.7 billion by the end of the year, based largely on demand for Enterprise Products, licensing deals and usage of ChatGPT. Apple uses ChatGPT on their platforms. Projections are built on the foundation of generative AI is current hype cycle, which many analysts caution could face sharp corrections as competitors flood the market. And the competitors are huge. Amazon, Google, Entropic. The start-ups like Perplexity
aren't slowing down. The broader market is beginning to feel the strain too, exclusively on AI infrastructure called Core Weave. They went public last week, but the debut was anything but triumphant. It slashed its IPO price, ended flat on day one and slid 7% on day 2. So even AI focus investors are no longer blindly throwing cash around.
That's not the early dot coms. Open AI backers, though, hopefully are taking calculated risks, gambling on both the tech and the legal acrobatics that are required to get this done. There's also internal restructuring underway at Open AI. The company announced that Ultimate is stepping back from day-to-day operations to focus more on research and product development. Now Brad Lightcap, the current COO, will take over business
operations. Now it that shift is crucial, as open AI must now juggle investor demands, product delivery, and legal restructuring. So why does any of this matter outside of the ultra rich in Silicon Valley and international boardrooms? Because open AI decisions have a direct influence on how artificial intelligence is developed and how it's distributed and how it's controlled across sectors like education, healthcare, defense,
and public information. Products and research directly impact how algorithms make decisions that touching millions of lives and possibly billions in the future. Then there's another layer Access. It's a company that started with the promise of open source transparency and public benefit, but is now in closed door investment rounds, secrecy clauses, and massive profit motivations. This is redefining who gets to participate in the AI future. You must have billions of
dollars to compete. You need that GPU baby. And As for the $300 billion valuation, it's more than just an investor. Flex makes Open AI one of the most valuable private companies in the world, behind only Elon Musk's SpaceX, which is about 350 billion. So if they get another 50 billion tie SpaceX which is tied with Byte Dance which is the Parrot company of TikTok.
Now those companies have vastly different missions though governance structures, but they all have one thing in common, dominance over the data and digital experiences of billions of users. 6 Except SpaceX. They want to go to Mars, and opening eyes size and scale now demand regulatory oversight and
consumer awareness. They have to tell everybody about it. And as it barrels towards what investors believe will eventually be an IPO, opening eyes ability to manage its identity crisis could determine whether it's seen as a research powerhouse or a cautionary tale. The company could go public at some time. It's just whenever. But they're non committal.
Right now. Everybody's unsure what the path is. Could they stay private and just keep getting investment while they continue to make money, possibly for a while, keep it private so you can continue getting that venture capital and make it profitable. Eventually we'll see what they do, but if they do go public, they have shareholders to listen to and also they will have a huge influx of money if they go public. Everybody wants a piece of open AI.
The other structure would not. And this is what the venture capitalists are banking on, because venture capitalists don't just invest in your company so they don't get a payout, right? There's always an exit for these things. Open AI from the beginning, as a nonprofit in somebody's head, somebody was thinking of an accent, they want Open AI to exit. They want to take that big chunk of money, investor money from the public. When the IPO, they want to get
those billions of dollars back. If they're going to give them 300 bill, if they have $300 billion valuation, it's only a matter of time before they get their money back. They will be profitable. And if they keep it private, could they be more profitable than SpaceX eventually? I believe so. SpaceX has government contracts, but open AI is a commercial product which also does enterprise and also does government contracts as well. So they have a broader audience than what SpaceX does.
SpaceX has rocket launches and they have Starlink, of course, which is a public product and not everybody is going to use Starlink. And eventually everybody's going to be using AI for search, research, image generation, video generation, everything. So AI has a broader appeal than Starlink. So 350 billion SpaceX, watch out. Open AI is coming for you. That's all I'm going to say. In the end, though, it's earth shattering. It's record shattering funding
route is huge. It changes the stakes for everyone else in the race though. Open AI knows their they know their path. They're going all in now. Whether Open AI can hold the lead without collapsing under its own contradictions from a not-for-profit to a very much for profit remains to be seen. That's a ton of cash now. There's pressure on it. What it does next will determine whether it remains a pioneer or becomes a warning of failed companies.
And this could be the AI bubble bursting if open AI doesn't figure this out, I think we have some time before that. We have a lot to accomplish with AI before this bubble bursts. All right, so thanks for listening everybody. I do appreciate your time. Now, the only thing that I ask from you is that you like or follow this podcast on whatever podcast platform you're on right now. And I'm going to make you a promise. My promise is that I'm going to do this for 10 more years.
I've already been doing it for 4 1/2 or five years. So I continue to do this because I'd love to do this. This podcast is very old and I will continue to produce episodes for free, not behind a paywall, as long as you follow the podcast. Right now, that's all I ask. It's free, it's easy, takes you a second, and you'll get more content like this in the future. So I'm going to say thank you for listening today. Please take care of yourselves and each other and I will see you tomorrow.