Comment by wepple
5 hours ago
This is an interesting shift compared to the past where OpenAI would’ve been public a long time ago (due to various regulations) so we would have much more direct insight.
Right now we have a ~$1 trillion company which a ton of the “economy” and valuations are based on, with near zero information on how it’s doing.
It’s because this IPO is backed by those who grew up through the boom and bust of the dotcom era, so they know now to do all their growth in secret behind the scenes and then dump onto the market when there’s nothing more in that tank. Rather than letting the public have any major growth out of their baby, and only letting the price discovery phase work one way.
Right but why would VCs want this? Wouldn't VCs value the liquidity of being able to flexibly enter and exit positions? I really wish there were a simple explanation of why companies don't want to IPO as early as they used to but there isn't. The closest I've found when talking to CEOs has been they don't want shareholders putting pressure on them for quarterly results and diluting the company's focus, especially when it's still growing and doesn't have a mature business.
This mad dash to build companies worth TRILLIONS and with trillions of dollars in capex commitments based on the best of all possible worlds coming true for their products comes from this generation of CEOs. Nobody is saying “ok we’ve reached a new threshold in AI let’s see if we can expand slowly so it improves over the next 20 years”. They’re saying “we are on the verge of AGI and Superintelligence so we need hundreds and hundreds of billions of dollars to be spent to make it happen NOW”.
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> Wouldn't VCs value the liquidity of being able to flexibly enter and exit positions?
Everyone's eager to get a slice of these pre-IPO companies, and the marginal utility of having it be more liquid on the public markets probably doesn't outweigh the legal requirements behind going public. It's not like VCs are stuck holding the bag until an IPO these days. I'm not sure why that changed, but it's probably not healthy.
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"Right but why would VCs want this? Wouldn't VCs value the liquidity of being able to flexibly enter and exit positions? I really wish there were a simple explanation of why companies don't want to IPO as early as they used to but there isn't."
To me it's pretty clear. The earlier investors take out all the possible upside and then dump it on the retail market. The retail investor will be less and less able to buy stock that will grow 10x and more. It's hard to imagine SpaceX, OpenAI or Anthropic will multiply in value after the IPO. They are priced in a way that they have to execute perfectly for a long time to justify even their current price.
Just another step for the super wealthy to keep profits for themselves instead of letting the broader population to benefit.
Have we considered that many of them are rather dumb.
https://youtu.be/roe3SgezmmU
VCs just want returns on the money, and they don't need to use the stock market for that as much anymore.
I agree with you and the parent comment, but to be fair to VC, they're also assuming risk. For example, if Wework had IPO'd earlier the public would've been holding the bag instead of private investors.
If they had IPO’d earlier there probably would have been better oversight of the excesses.
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I agree but not sure WeWork is a good example. That smelled like pump and dump scheme from the beginning. They pretended to be tech company, while actually being landlord middlemen. Plenty of people predicted that downfall.
WeWork collapsed because of their S-1 was on fire. If they had gone public earlier, it would have still been on fire. The reason they lasted that long is because Masayoshi Son didn't do anything that resembled due diligence, but the market would have always done it.
Kind of agree but their risk is actually spreading through the entire system, as today shows.
Don’t sovereign wealth funds and pension funds also invest in VCs? So even if it’s “private” people are holding the bag?
Also, I think comparing WeWork to AI labs is not valid.
These labs have increasingly become of public interest and are shaping economies around the world, WeWork was just not at that level.
VC money is weird. It can come from private individuals, from loans with extremely low interest, from private funds...
The thing is normally it's money that's intended to be burned in the search of a unicorn, cheap money, so there's no real "risk" there.
What risk is VC assuming in late stage? The only way a business fails at that point really is fraud or management failure.
The common perception is that OAI/Anthropic are pumping up their hype before they unload on retail in their IPOs
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That’s actually not why. It’s because of regulations put into place after Enron collapsed that made it harder and more expensive to go public.
Those regulators in 18 months time: “We had no idea that crash was going to happen. Nobody saw it coming.”
Companies used to *need* to go public in order to either raise capital or because they were going to have to start publicly reporting anyways due to the number of shareholders.
The JOBS Act and proliferation of double-vesting trigger RSUs effectively negated these forcing functions and 'going public' went from a necessary growing pain to a burden and distraction.
It goes both ways. There are a lot of software companies that VCs poured money into that have turned out to be worth a fraction of the valuations.
Yeah, I have similar thoughts. If SpaceX's IPO has been a dumpster fire, and share price dropped to the third of its initial value, it would still have been massively overvalued, and made Musk much richer than if they went with a more realistic market cap, and let the market carry them upwards.
Why is it still afloat then?
What if it's just because the numbers aren't that great at the moment?
> zero information on how it’s doing
I think the fact that we have so little information is the most important information we have. If OpenAI had a sound business plan and was on strong financial footing, they'd have IPO'd.
All of this continued stalling and obfuscation can only mean one thing, IMO: OpenAI has no long-term viability and they're desperately hoping for some new breakthrough to reinvent their business model before the VC money faucets turn off for good.
Sam conceded he had no business plan in 2022 after releasing chatgpt. He even said he doesn't intend to come up with a business model, he would rather wait for the model to reach AGI then ask it to come up with a model.
No he wasn't wearing a red ball on his nose. He didn't even smile saying this. Dead serious.
And yet
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> If OpenAI had a sound business plan and was on strong financial footing, they'd have IPO'd.
OTOH, if a company has a sound business plan and strong financial footing it may not need to IPO -- unless the founders or VCers want out ASAP.
They do because the other part of the equation is that they need to keep spending a lot of money to build out infrastructure faster than their two most significant competitors, one of which is public and wildly profitable (for non-AI reasons) and another has already filed for IPO. So it puts them at a disadvantage to walk away from a massive cash infusion.
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At scale that OpenAI is valued at public markets are only place with enough of liquidity. At smaller scale private equity is an option. But if you are speaking of near trillion scale it really is not.
I don't know why comments pointing out this simple fact are getting downvoted.
The oversimplified view that has been drilled into startup discussions for years has been that IPO is the singular goal for every startup and they need to get there as fast as possible, but that hasn't been true for a long while. There are high profile examples like Stripe with no intent to go public any time soon. Some public companies are even gradually doing share buybacks partially to remove their public exposure.
Being a public company kind of sucks in many ways. I'll admit my sample size is small, but every post-IPO CEO I've known has expressed some regrets about going public. It was a fascinating revelation to me after being raised on the idea that IPO is the ultimate victory goal of every startup.
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The investors need to make a couple trillion dollars soon or it all falls apart, right? Maybe I misunderstand how the financing for this works, but my understanding is they have borrowed and set on fire an enormous pile of money as a sacrifice to summon the Machine-God.
If He fails to arrive, or arrives late, they will be the railroad financiers in the Panic of '73.
VCs always want out when they've made their return. They are not in the business of owning companies for income.
The founders and VCs can shell shares to private investors, it's the employees who are sitting on options who get fucked.
Whatever private-market liquidity events they will be permitted to participate in will be highly disadvantaged compared to the other two groups.
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> OpenAI has no long-term viability and they're desperately hoping for some new breakthrough to reinvent their business model before the VC money faucets turn off for good.
If a startup is riding a hype cycle and is one of two leaders in the global industry with unreal growth numbers, they can IPO whenever they want. The incentives lean toward doing an IPO before the hype runs out, not delaying it.
If they were worried about running out of VC money, going to the public (the P in IPO) would be the move.
Companies don't actually have to go public quickly or even at all, even though that's been drilled into us as the only goal of every investor-backed startup.
Which is why Spacex was so rushed, and why they insisted on new rules for early exits and inclusion in the Nasdaq 100 index.
I'm not certain OpenAI or Anthropic have a viable business, either, but Spacex definitely pulled a massive scam.
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> If they were worried about running out of VC money, going to the public (the P in IPO) would be the move.
Yes? They were geared up for IPO this year until pushing it back. See all the marketing shenanigans around solving mathematics for this month's flavour. They have a balancing act to manage between the hype and the reality of the business.
> I think the fact that we have so little information is the most important information we have. If OpenAI had a sound business plan and was on strong financial footing, they'd have IPO'd.
What about Stripe?
The same is true for Anthropic, by the way.
Anthropic appears to have found a path to profitability: https://www.forbes.com/sites/jonmarkman/2026/08/17/anthropic...
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Yep, I agree. The only 'frontier' any of the big labs are racing towards is the frontier of financial ruin.
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Anthropic likely would not be saying, in October, that they planned to go public next month, if this were also true of their business.
In the last ~month, OpenAI announced a delay to its IPO and Anthropic put a relatively near-term range on its IPO date. These are very different signals.
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IPO = It's Probably Overpriced.
The reason is that companies can choose the best timing to go public - when their financial look the best - and they do. Anthropic trying to go public very soon is a good tell their financial look pretty decent. OpenAI postponing the IPO is a very good tell theirs look bad.
“The plan is to invent AGI and then task it with working out how to make money”
There are bits and pieces of info scattered everywhere but no coherent picture. We know from a16z report [1] that only 2% of US households pay for AI subscriptions, so most of the seat based pricing comes from business and enterprise agreements. We know that OpenAI ads business has $1 billion USD in annualised revenue run rate [2]. We know from OpenRouter data [3] that in 2025 70% of the API token spend was across all the proprietary models (Anthropic did very well in 2025, while OpenAI clawed back market share in 2026).
It all starts to look like a very low margins business, and reminds me very much of telecom industry.
[1] https://www.a16z.news/p/state-of-markets-ii
[2] https://www.reuters.com/business/media-telecom/openais-ad-bu...
[3] https://openrouter.ai/state-of-ai
Nobody is quiet about doing well. And the frenetic release schedule of kinda half baked products tells a story (not a good one)
What regulation makes it so that a large private company would have to go public? You have it backwards. Increased regulations make it more burdensome for a company to go public, driving companies like OpenAI to remain private. If you made it less expensive and burdensome to IPO (decreased regulation), you would see companies go IPO earlier.
This also coincides with a growing market for private credit and VC which certainly helps companies stay private for longer.
There was a rule[1] pre-2012 that forced public disclosure (akin to listed companies) for private companies when it had >500 shareholder (which counted employees with shares). This made it so that companies had a choice to stay private with all obligation of public disclosure or go public for added benefit of tapping public market.
In 2012 this was relaxed in JOBS Act which relaxed the 500 threshold to 2000 but more importantly it ignored employees so now private companies of gargantuan trillion dollar valuation and thousands of employees have no disclosure requirements.
So, this is a classic case of regulation that did well but was relaxed and now creates hidden risks.
[1]: https://www.investopedia.com/terms/5/500-shareholder-thresho...
I think they would have kept it under 500 if they had to. I doubt this is the determining factor. In fact a lot more than 2k investors have exposure through SPVs or holding companies on top of holding companies. So no, I don't think this was the determining factor that allowed OpenAI to stay private longer.
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Regulations that limit the ability of investors to invest in private companies, although these have been weakened in recent decades, which helps fuel the growth of private credit markets that allow private companies to stay private.
I'd say it's the growth of private markets to allow companies to keep getting funding even at the $100 billion range while staying private that has fueled the trend to stay private rather than SOX and other new regulations for public corporate governance dissuading them from going public.
>Regulations that limit the ability of investors to invest in private companies, although these have been weakened in recent decades, which helps fuel the growth of private credit markets that allow private companies to stay private.
Which regulations are these?
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It's because reporting requirements changed, in particular employees with stock options no longer counted as shareholders for the purpose of crossing the mandatory reporting threshold.
Before that change companies like MS were in essence forced to IPO, because they'd get all the downsizes of public reporting, without the benefit of accessing market liquidity. So once you were over the threshold, it made no sense to not go all the way.
That's no longer true, and has coincided with a huge expansion in private equity funding growth stage companies vs needing public liquidity. As a result these IPOs being done after their growth stage is largely over are offering the public a very different bet that tech company IPOs of the past.
> What regulation makes it so that a large private company would have to go public?
My guess would be - oxytocin, cortisol and dopamine regulation, or rather the failure of said regulation.
Meta (formerly Facebook) was forced to take their company public because of how many private investors they had. It’s the Securities Exchange Act of 1934 and also the Jobs Act of 2012 which set these limits (currently 2000 shareholders is the limit). Companies use right of first refusal on their shares to keep the number of shareholders low.
it really is a privatize the gains socialize the losses situation, isn't it? due to the new rules (or lack thereof), public investors didn't have access to all that growth.
no way it ever gives you a return like, say, the amazon IPO could've.
What are you talking about?
Losses are much more privatized staying private. Instead of hitting people's 401k or pension fund, this is mostly contained to a concentrated set of VC and PE investors, not large public markets.
The companies involved still come for the 401k/pension funds, they just now wait until the majority of the upside growth has been realized and then dump the downside on to 401k/pension funds.
See: SpaceX and the Nasdaq 100 rule changes.
>Right now we have a ~$1 trillion company which a ton of the “economy” and valuations are based on, with near zero information on how it’s doing.
This is definitely by design and encouraged by the VC’s. It’s disgusting to consider what a simulacrum of a market the stock market has actually become.
What past regulations would have forced OpenAI to go public sooner?
> This is an interesting shift compared to the past where OpenAI would’ve been public a long time ago (due to various regulations) so we would have much more direct insight.
There's a good recent YouTube video about the shift in regulations that switched IPOs from being a way to raise money for growth to being a way to dump on retail investors after all the significant growth has been funded by private investors:
https://www.youtube.com/watch?v=roe3SgezmmU
They would go public if they were doing well.
They would also stop selling equity to private investors. They are likely diluting their own stake.
But they need the money. After all that has already been invested they still need more. That is all I need to know about any delusions that they are currently profitable.
I agree with you for sure, but fwiw there’s a simpler alternate explanation, or at least there’s another way of saying the same thing
I’ve asked at rapidlu growing unicorns where I’ve worked “why don’t we ipo” and the big wigs every time just say, “why?”
If the original point of the ipo was to raise money and now you can do that privately, it stands to reason that a simple explanation might be that it’s not worth the hassle until the VC’s say they want their money back
How much money do they have left? It is hard for me to see how OpenAI doesn't fail at this point. There is no business, no moat. Honestly, the best outcome seems like failing up into a Microsoft acquisition at this point.
They’re raising another $30B:
https://www.reuters.com/legal/transactional/openai-targets-3...
Any company that would hypothetically acquire them would need to be able to fully - and indefinitely - subsidize their unsustainable operational costs. I don't see how that's realistic even for a company like Microsoft.
The entire US economy is propped up by this bubble, so they will be propped up as much and as long as possible. Basically all money these days is going into this charade, to stop or even slow it down would cause a disastrous collapse
>The entire US economy is propped up by this bubble,
Not really. It'd be a dotcom bust, not a 2008 bust. The average American isn't substantially exposed to these companies and the banking system doesn't hinge on them, there's no systemic risk.
What it would do is wipe out the wealth of a lot of very affluent folks and private investors, which most of us could live with.
it will fail the day there is a downturn of the economy. That day will be at a 2001 or a 2008 like event - anytime within the next few years (I've no crystal ball, but strong convictions haha).
And yes, they will be acquired by a company which will have survived the next crash at a fraction of their currently estimated valuation and we will truly have the next ride of the economy .. many years ahead if 2001 is an example.
Why does it have to be such a crash? Could it be just flatlining for a long time? Or perhaps slowly going down? What makes you so sure that it will be a big booom like dotcom or 2008?
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There is a moat: government contracts. Everything from NSF grant reviews, drone warfare, DHS visa processing and Medicare/Medicaid claims processing are up for grabs under the right administration.