NVIDIA Panic Mode?, OpenAI’s Funding Hole, Ilya’s Mystery Revenue Plan

30:09Thank you. I was trying to go there and I forgot. I got you. Yeah. Okay. Well, maybe the biggest risk to this entire thing is whether OpenAI can continue to fund the purchases of compute and power and et cetera, et cetera, as it goes. So on the other side of this break, we're going to talk about how much OpenAI will need to raise to continue to operate effectively with some estimates from HSBC. We'll be back right after this. This holiday season, train smarter, not longer. The Hydro Rowing Machine delivers the best results in just 20 minutes a day. It works 86 % of your muscles in one seamless motion, twice as effective as running or cycling.

30:50Hydro is your go-to for the ultimate full-body workout. How ultimate? It works 86 % of your muscles, arms, legs, and core, and it's twice as efficient as cycling or running. Just 20 minutes is all it takes to feel the results. All workouts are led by Olympians and world-class athletes filmed in breathtaking locations around the world. With the largest library of rowing workouts, Hydro keeps motivation high all season long. And it shows 90 % of customers are still active a year later. Head over to Hydro.com and use code BIGTECH to save up to$600 off on Hydro Rower during this holiday season. That's H-Y-D-R-O-W dot com.

31:31Code BIGTECH to save up to$600. Hydro.com. Code BIGTECH. Capital One's tech team isn't just talking about multi-agentic AI. They already deployed one. It's called Chat Concierge, and it's simplifying car shopping. Using self-reflection and layered reasoning with live API checks, it doesn't just help buyers find a car they love. It helps schedule a test drive, get pre-approved for financing, and estimate trade in value. Advanced, intuitive, and deployed. That's how they stack. That's technology at Capital One. Did you know your credit card points and miles can lose value to inflation? Credit card companies often reduce the redemption value of your points and miles.

32:17Now, imagine a credit card with rewards that can grow in value. With the Gemini credit card, you can earn Bitcoin or one of over 50 other cryptos instantly with no annual fee. Every swipe at the store or gas pump earns you instant rewards deposited straight to your account. Plus, sign up now for a$200 Bitcoin bonus to kickstart your rewards. Visit Gemini.com slash card today. Check out the link in the description for more information on rates. Again, if you're looking to invest in Bitcoin but don't know where to start, the Gemini credit card makes it easy. The Gemini credit card is issued by WebBank.

32:54In order to qualify for the$200 crypto intro bonus, you must spend$3 ,000 in your first 90 days. Some exclusions apply to instant rewards in which rewards are deposited when the transaction posts. This content is not investment advice and trading crypto involves risk. The Gemini credit card cannot be used to make gambling-related purchases. And we're back here on Big Technology Podcast Black Friday edition. And let's see if OpenAI can get into the black by the end of the decade. It may be harder than you expect. The FT has a story. OpenAI needs to raise at least$207 billion by 2030 so it can continue to lose money, HSBC estimates.

33:33Here's the article. OpenAI is a money pit with a website on top. HSBC's U.S. software and services team updated its OpenAI model to include the company's $250 billion rental of cloud compute from Microsoft and its$38 billion rental of cloud compute from Amazon. Based on the total cumulative deal value of up to$1.8 trillion, OpenAI is heading for a data center rental bill of about$620 billion a year, though only a third of the contracted power is expected to be online by the end of this decade. LOM subscriptions will become and ubiquitous and useful. Ubiquitous will become as ubiquitous and useful as Microsoft 365 HSBC said.

34:15By 2030, 10 % of OpenAI users will be paying customers up from 5%. Now, the team also assumes LLM companies will capture 2 % of the digital advertising market and revenue, slightly more than zero currently. Okay, so let's go through some of the assumptions that they're making, because this is very interesting. This is the assumptions that they're making. Total consumer AI revenue will be$129 billion by 2030, of which$87 billion comes from search and$24 billion comes from advertising. I'm just going to pause here. This is really interesting projections. Of course, they're at zero with advertising now.

34:52But to be at$24 billion by 2030 in advertising, I mean, Google itself did$56 billion in advertising and search advertising, I think, in the most recent quarter. That's double what all AI is expected to be by 2030 in terms of advertising. I don't know if search is included in that, you know, but still, it's dwarf. Google today dwarfs what AI will look like from a consumer standpoint in 2030. What do you think about this, Ranjan? I was a little bit confused on that, though, like how those things were defined. Because is search just any kind of traditional interaction with AI chat? Is that just like any kind of prompt or query into ChatGPT?

35:43You know, it could, it probably is. Okay, so looking at these numbers again, it probably is that 87 billion is search advertising. And then 24 billion is other forms of advertising, maybe like Pulse. But it's still paltry, I mean, compared to what we see today from the current ad tech leaders. It's going to be a small business in five years. And I think it will. Small, sorry. I feel embarrassed to say small double digit billions, but comparatively. I think my favorite part, though, is as you just read out, is that, you know, you're dealing with a very corporate entity when they say LLM subscriptions will become as ubiquitous and useful as Microsoft 365, which if you speak with any users of Teams or other Microsoft products in 365, they're not useful and ubiquitous, or I guess it is ubiquitous.

36:35But I think in this case here, the most important part of this entire report actually was the actual large-scale numbers around how much cash will be required to fund operations. But actually, I think even more important was that consumer market share, it has slipping to 56 % by 2030, up from around 71 % this year. It's OpenAI's dominance in consumer. And I think we were just talking about it earlier in this episode around Gemini 3. And as long as it's as good, that poses a significant problem. I think like, I mean, yeah, their position in terms of consumer gives me far more concern than how the revenue numbers will actually be made up or will they achieve them.

37:27I do believe if ChatGPT dominates the way it has and continues to, they will figure out the revenue side of things. At least that story is not as concerning. But if they start losing that, I don't see how they make it out of this. You're not assuaged by the fact that it might be a growing pie? Oh, no, but I think it will be. I do think that it's going to be a growing pie. It's going to like there's something to even when Sarah Fryer was like, you know, maybe we'll do something with pharma and different kinds of deals. Like if the assumption is AI will kind of build, I don't want to say eat into, but just kind of we have no way to calculate its true market cap because like how it will actually impact every single industry.

38:19I do believe that is the case. But what that actually looks like for OpenAI's revenue, I mean, how do you think these kind of modeling exercises go? I'm curious, like the HSBC in this report, you know, they model down to 56 % from 71%. They have a mystery. Others is assigned 22 % and Google's excluded entirely. But like forecasting 2030, Chachapiti is only, oh, it's the three-year birthday today, I think. Yeah. So, I mean, how are you forecasting five years out with any confidence? I think you take the projections, the current numbers, and you sprinkle on some special sauce and out comes your projection.

39:07I mean, you can't really know five years down the line. Like, even the people working in this will not project five years down the line. But you do this exercise to give you like a, I mean, if you know, and here's the thing, if you know how much OpenAI needs to pay back, then you try to work your way up from the revenue standpoint, even if you're taking the best case scenario numbers and see how OpenAI is going to be. can meet its obligations. And this, I think, is the bottom line of the HSBC report, is that even these optimistic numbers that it's modeling, I mean, it's modeling$386 billion in annual enterprise AI revenue by 2030.

39:44That's a lot of money. Even if you get there, OpenAI does fall$207 billion short of the money it needs to continue funding its commitment. Right? So in 2030, OpenAI's free cash flow will be about$287 billion, but it's going to need much, much more in order to be able to meet these obligations. So squaring the total, it leaves OpenAI in a$207 billion funding hall. It's just, it's hard to make, I mean, of course, this is all speculation and future projections, but it's hard to make the math work. Yeah, the math doesn't work. I think no one like in, I would actually love to see and in the interest of kind of like insecure corporate communications, maybe OpenAI should actually just release out to the world.

40:44here's how the math can work. Because no one, I've never seen anyone actually clearly state this is exactly how these funding commitments alongside revenue projections, alongside business model growth will actually work. Just tell us, make it as lofty and unrealistic as you want. Just try to make it make sense a little bit. That's all. That's all I'm asking. Yeah. And then here's the downstream implications. If revenue growth doesn't exceed expectations, and prospective investors turn cautious, OpenAI would need to make some hard decisions. Oracle has spooked debt markets. Microsoft's support for OpenAI has been a bit flip-flopped lately.

41:24And the next biggest shareholder is SoftBank. The best worst option might be to call in some favors and walk away from some data center commitments either before or at the usual contracted period of four to five years. I mean, you know, OpenAI, of course, is building for the best case scenario where it just keeps improving the models and it hits AGI by 2030. So this is not really a worry. But it just goes to show you there's a lot of exposure there.

41:53No, agreed. Also, you never want to see the words in the next biggest shareholder is SoftBank. I feel like Masa somehow, I don't know if it's on purpose, hasn't been front and center, even though he, SoftBank certainly is front and center in this entire AI story right now. But yeah, I think overall, like, I guess, again, going back to what I was saying earlier, there's no, I don't believe there's almost any scenario where they're actually honoring all these commitments. I'm assuming they're not going to actually be held for these commitments in the next five years. Right. Maybe it's giving too much credit yet.

42:36The models could get much better. But even if they do, it takes time to implement these things. So I don't know. On the advertising front, we did get a letter from Harry Morrow, a listener from Australia, about our conversation. Really what I said last week about Fiji Simo and her ability to build an ad business at OpenAI. If we're wondering about whether OpenAI will be able to make an ad business. Harry writes, Fiji isn't just from Instacart, nor is she just a product person. She made, led the team responsible for the build out of the ads business at Facebook for the Facebook news feed and everything that follow.

43:10Advertising courses through her veins and is soon going to be coursing through ChatShift ETs. So my apologies. I didn't fully appreciate how much Fiji is involved in or had been involved in advertising. And maybe this is a good sign for OpenAI that that might be the route that is just going to put ads in. I mean, yeah. What do you think the first ad is going to look like and how is it going to get released into the wild? You're suddenly searching. Yeah, there's two options. Like one is I think most of these companies like to come in with this big, bold brand campaign. So I'm imagining like the Cadillac Escalade like runs like a banner in your Pulse or something like that.

43:51Want to get from here to where Pulse is sending you? Use the Escalade. And the other is that they're going to do like the most weird, personalized, you know, maybe you're using ChatGPT. And if you're a free user, you have to sit through like a 15 second ad that your ChatGPT voice reads to you, talking directly to you. And they're going to revolutionize and make advertising personal once again. And people will hate it. Advertisers will run to it and it becomes a good business. That is actually terrifying. But yeah, the idea like you're in voice mode, and it's, hey, Alex, before I get to that, let me tell you about how to get the best homeowners insurance possible.

44:40Yeah, I but I that's, it's a good question. I honestly, I wish they actually just kind of explained to us again. And it's being a recurring theme of just wanting more information from OpenAI, but just tell us what your plans are. I'm genuinely curious. We all know it's coming at some point, yeah, what's advertising going to look like? And they have a real opportunity, again, going back to Harry's point, like newsfeed monetization was in no way a given. And to actually build the most powerful advertising engine after Google and search. And it was a truly innovative one. Like, but it should look completely different how advertising works in a ChatGPT.

45:31And I'm genuinely excited to see what they come up with. But the one thing that will look similar is the need for an advertising business to tune the engagement dials to keep you there. And that's something that I worry about when ChatGPT does have this advertising business is are they going to be able to resist building styles of bots that just keep people interacting with ChatGPT for a long, long time? Here is a New York Times article that I thought was really interesting. What OpenAI did when ChatGPT users lost touch with reality? It sounds like science fiction. A company turns a dial on a product used by hundreds of millions of people and inadvertently destabilizes some of their minds.

46:12But that is essentially what happened at OpenAI this year. So basically they found that they did this update to Chachapi T4O. This is what the story says that many update candidates were narrowed down to a handful that scored highest on intelligence and safety evaluations. When those were rolled out to some users for standard industry practice called AB testing, the standout version was one called HH internally. Users preferred its responses and were more likely to come back to it daily. And Sam Altman says, we updated GPT-40 today with HH. In the wild, OpenAI's most vocal users hated it. Right away, they complained that ChatGPT had become absurdly sycophantic, lavishing them with unearned flattery and telling them they were geniuses.

47:00When one user mockingly asked it whether a soggy cereal cafe was a good business idea, The chatbot replied it had potential. Then they decided to spike it and then put in a different version called GG. And these sycophantic, very convincing Chachapiti versions have led to some really weird behavior. Here's from the story. Chachapiti told a young mother in Maine that she could talk to spirits in another dimension. It told an accountant in Manhattan that he was in a computer-simulated reality like Neo in The Matrix. told a corporate recruiter in Toronto that he had invented a math formula that would break the internet and advised him to contact national security agents to warn them.

47:45The Times has uncovered nearly 50 cases of people having mental health crises during conversations with ChatGPT. Nine were hospitalized and three died. I mean, this is sort of the worry when ChatGPT becomes an advertising business, as the company does have this ability to turn up and down these engagement knobs and levers. And, you know, can you resist it if you're, let's say, you're a public company and trying to make your numbers in Wall Street? I hope so. I guess overall, like the way the fact that the New York Times kind of like had this, it sounds like science fiction surprised me because I still feel that this is still not that different than meta and its properties and what it has to do or the decisions it has to make on a daily basis.

48:33So I think like, and unfortunately, no, I don't think you resist it. I think there's almost no world. And maybe this is, yeah, as you said, this is how they pay the bills on the compute commitment, the data center commitments. But I cannot imagine, like we saw GPT-5 was less sycophantic. People want that. Sam Altman gave it back to them. Like, you're not going to resist this. Right. Here's how the story ends. In October, the person who runs ChatGPT made an urgent announcement to all employees. He declared a code orange. Open AI was facing the greatest competitive pressure we've ever seen, he wrote.

49:15And, okay, the newer, safer version of the chatbot wasn't connecting with users. That's GPT-5. The message linked to a memo with goals. One of them was to increase daily active users by 5 % by the end of the year. I mean I don't want to say there it is but there it is in a way well yeah people want it people want sycophantic I actually have had to like put in the system instructions like please tell me if an idea is bad oh yeah I have it also my custom prompt don't be sycophantic especially Thanksgiving cooking I was getting experimental I made like an Indian inspired stuffing but like i'd like to be experimental with cooking but i need to know when this is a terrible idea and soggy cereal cafe actually it was very good i know i want to come to your thanksgiving day i mean yeah you gotta you gotta mix it up sometimes um but but yeah sycophantic uh like there is has there ever been a large technology company that is engagement driven that has resisted, like actually made responsible product decisions.

50:29Maybe this is a bit cynical, but like, I mean, there's just no way I see them being able to resist turning that dial. Maybe X, maybe X. We'll get to that at the end of the show. I mean, yeah, speaking of engagement. Yeah, yeah. But before we do that. Actually, you're right. Oh my God, you're right. We'll revisit that because it's worth talking about. Before we get there, another way, I think, to make a company building AI safe from manipulating users and falling into engagement hacks is to build a company, a multi-billion dollar company, that doesn't build a product. This is from Inc. This OpenAI co-founder has raised billions.

51:12He has no product plans yet. Former OpenAI co-founder Ilya Sitzkever has no immediate plans for his AI startup, safe superintelligence, to release a product. but he has plenty of capital,$3 billion to be exact. He said on Dwarkesh's podcast that it is very nice not to be affected by day-to-day market competition. Instead of following the business models of other frontier AI labs like OpenAI and Anthropic, which release new products in order to fund their massively expensive research, SSI claims to be entirely focused on building a world-changing, powerful artificial intelligence far more capable than today's products or today's models.

51:51So Skever said his company would build a super intelligent AI. He's previously said in a straight shot with one focus, one goal, and one product. And by not joining the rat race and not needing to worry about releasing new products, his company will be able to make the$3 billion that it's raised go much further than his commercially minded competitors. So Ranjan, is it the way to make safe super intelligence? Just don't release anything? Don't do it? Is that what the plan is? It's brilliant if you think about it. Like, why have a product? Why have a product? Just be worth billions of dollars, and it is the safest thing you can do.

52:31In reality, it's also super intelligent. It's just don't have a product. Thinking machines as well, Mira. It's kind of like gauche to have a product these days. No, I think it's a terrible, terrible use of fun to actually build something. yeah also uh barkish asked him how are you going to make money and this was a meme on uh x over the weekend ilia says the answer to that question will reveal itself i think there will be lots of possible answers you know and that's like people like posted that screenshot and they're like you know my wife when uh when i my wife when my wife asks when i'll clean up or something the answer to that question will reveal itself i think there'll be lots of possible answers i don't know what do you make of all this?

53:14It's kind of weird, isn't it? We joke, but like, I mean, the classic HBO Silicon Valley episode of like trying to, making revenue is the worst thing you can do. This is not, this is not new, basically. Like who was the character? Russ was his name. I could never watch that show. It was too close to home for me. Oh, really? Oh, I mean, but the, the, the way the whole scene plays out again, it's like, you know, They're talking about how they're going to actually scale revenue. And then they're told by their investor, do not make revenue because then everyone can extrapolate out and make projections.

53:51And that's bad. And instead, you want to be pre-revenue. Now it's pre-product, but it's the same thing. I mean, after this little, you know, public, rare public sighting that we've had of Ilya, are you more or less optimistic about what he's building? I will admit personally, that level of like, whatever we want to call it, I don't know, is it a startup? Is it a research lab? Is it a company? Is it not? Like, I don't pay that much attention to that beach just because working directly in the AI industry, like, I mean, yeah, I just can't get my head to think about whatever what is what is going on over there.

54:35I don't know. Does this help you gain any clarity? No, I'm not sold by this. I mean, I think the VCs are betting that there's a chance that he figures it out. But I think the more likely chance is that that money is going to be lit on fire without ever seeing a product. I'm not even going to say that. It's more like I just it's I think it's going to certainly capture it. It captures the moment very well. But again, I mean, maybe he does come up with something. It's more like trying to gauge an understanding of what's actually going on with SSI and with think machines and stuff. I mean, it's impossible.

55:17There's no way we could wrap our heads around it. Well, Ranjan, to that, I have to say, the answer to the question will reveal itself and there will be lots of possible answers. Well played. And in terms of safe superintelligence, I had asked that question. Has there ever been a company that has actually created its product or created a feature that actually runs counter to their engagement based model? And as you had just mentioned, I will have to say today that X and Elon Musk's X actually did that this week. They built what I think is one of the most fascinating, incredible features that shows what is the location that your account is based in.

56:10It shows how many username changes you've had. And it completely, it kind of shines a light and brings transparency into what we've all kind of known or suspected, or at least we in the technology industry have. I'm guessing vast majority of people don't actually think that most of the engagement driven accounts that you're looking at are doing it completely just to rage bait you, just to potentially make money via the creator program. but actually do not believe what they're saying and most likely are not what they say. So NBC News had covered around like X's head of product, Nikita Beer. Is it buyer or beer?

56:56Beer. Teased the feature last month as a way to help users verify the authenticity of content. They read and limit the influence of troll farms. And we saw like an account that calls itself Ultra Maga Trump 2028 claims to be based in Washington, D.C. It's listed as being based in Africa. My favorite, an account with the username at American, complete with a profile picture featuring a bald eagle over an American flag, is based in South Asia. It's based in Pakistan. Like, I mean, first of all, to get that handle at American, good for them. Nice job. Good for that troll farm, whoever you are. I mean, I'm hoping you're buying up some – you own a bunch of domains as well.

57:39But like, to me, the reason this is it honestly like this is a kind of amazing moment. To me, this is the single most like effective, impactful feature that any platform has released to counter misinformation that I can remember. After all the years of Zuckerberg on Capitol Hill and whatever else, this actually just brings more light to misinformation than anything. I thought this was stunning. And it's amazing that it hadn't been done previously. And you're right. It exposed a lot of folks who were trying to basically, in a U.S. context, exploit divisions in the U.S. to make some money or grow an account from posing as if they were in the U.S., but from other countries.

58:27And it isn't just in U.S. politics. It's in global politics. If there's a base to be enraged, somebody will find a way to make money from it. from a different country because they don't care about that country's, you know, the health of that country, and they just care about the bottom line. And so, yeah, you're going to see less rage baiting because people won't fall for it, hopefully, because they'll be able to see exactly where they're from. And the fact that it's taken until 2025 to do this is bananas to me, and I'm glad it's there. I think it's a much better Twitter because of it. Yeah, no, no.

59:00And it's a reminder that since 2016, we've been – and I've written a lot about it, thought a lot about it in terms of misinformation. And even in margins, we've written around basic tweaks you should make to the platform, to any of these platforms to actually make things work better. And yeah, it's such a good reminder that like there's really straightforward things all these platforms can do to just make them operate much better and just make people more aware of what is happening to them and what they're seeing. And Elon Musk and X, they're leading the charge against misinformation and freedom and a stable democracy, it looks like.

59:46Wait, they're leading the charge against? No, no, sorry, you're right. for, for, for, for stability and democracy. Against misinformation for freedom. Yes. But I will say on my account, they missed a crucial piece of data that they tried to peg me as and they got it wrong. They said I had zero username changes, but I had one and they didn't find it. Oh, really? It used to be A. Kantrowitz and now it's just Kantrowitz. So to Elon, Nikita, and the whole team there, I have to say, good start. Come back to me when this is better. And one thing I also have to say is to all my Bangladeshi and Indian and Nigerian accounts out there that are creating MAGA-based content, I'm not hating against those people.

1:00:37I genuinely, like, I kind of, in a way, it's an opportunity. They make good content. They make good rage-based content. And it was given to them as an opportunity. So I'm not going to quite shout you out, but I'm still going to say, I mean, it's not a bad job. I see what you're saying, but I can't get on board with that. No. Come on, man. Come on. I mean, it's. To build an account that you just, these accounts are just trying to rip people apart. Maybe you're going to make. It's the business model. It's given to them by the platform. Well, I expect more people than to do stuff like that. Like, man, come on.

1:01:22Really? It's terrible. It's a terrible thing to do. I expect people to respond to incentives. Fair enough. And anyway, look, I think it's good that, you know, for whatever reason, finally Twitter has woken up to this. And it's given us the transparency that we need to, you know, we can see the misinformation, but at least we know where it's coming from. Let's agree on that. I agree. Agreed. I'm thankful for that. I'm thankful for Elon Musk and X. Doing this one thing. Yeah. Okay. Well, Ranjan, I'm thankful for our continued conversations here on Fridays, and I look forward to many more. So thank you.

1:02:03Happy Thanksgiving. Happy Black Friday. And let's do it again next week. All right. See you next week. See you next week. All right, everybody. Thank you for listening. We will be back on Wednesday, I believe, with a couple of anthropic researchers talking about how AI models can be turned evil and what to do about it. So we'll be back then and we'll see you next time on Big Technology Podcast. Did you know your credit card points and miles can lose value to inflation? Credit card companies often reduce the redemption value of your points and miles. Now, imagine a credit card with rewards that can grow in value.

1:02:35With the Gemini credit card, you can earn Bitcoin or one of over 50 other cryptos instantly with no annual fee. Every swipe at the store or gas pump earns you instant rewards deposited straight to your account. Plus, sign up now for a$200 Bitcoin bonus to kickstart your rewards. Visit Gemini.com slash card today. Check out the link in the description for more information on rates. Again, if you're looking to invest in Bitcoin but don't know where to start, the Gemini credit card makes it easy. The Gemini credit card is issued by WebBank. In order to qualify for the$200 crypto intro bonus, you must spend$3 ,000 in your first 90 days.

1:03:15Some exclusions apply to instant rewards in which rewards are deposited when the transaction posts. This content is not investment advice and trading crypto involves risk. The Gemini credit card cannot be used to make gambling-related purchases. Rinse takes your laundry and hand delivers it to your door, expertly cleaned and folded, so you could take the time once spent folding and sorting and waiting to finally pursue a whole new version of you, like tea time you. Mmm. Or this tea time you. Or even this tea time you. Said you hear about Dave. Or even tea time, tea time, tea time you. Mmm. So update on Dave.

1:03:53It's up to you. We'll take the laundry. Rinse. It's time to be great.