OpenAI Raises Record-Breaking $6.6B & Jeep Sales Are Plummeting

0:03When did making plans get this complicated? It's time to streamline with WhatsApp, the secure messaging app that brings the whole group together. Use polls to settle dinner plans. Send event invites and pin messages so no one forgets mom's 60th. And never miss a meme or milestone. All protected with end-to-end encryption. It's time for WhatsApp. Message privately with everyone. Learn more at whatsapp.com. Good morning, Brew Daily Show. I'm Toby Howell. And I'm Kyle Heggie. Today, OpenAI just closed the single biggest VC round in history. And why Michael Jordan is suing NASCAR? It's Thursday, October 3rd.

0:44Let's ride.

0:50Kyle is back in the studio as Neil is taking a much-deserved break. And you could not have joined the show on a better day because today, October 3rd, is Mean Girls Day. For those of you not steeped in Mean Girls lore, early in the movie, the character played by Lindsay Lohan recounts her first interaction with her crush saying, on October 3rd, he asked me what day it was. So from that fateful moment onwards, October 3rd has become Mean Girls Day. Very fetch, Kyle. So fetch. Unfortunately, it's not Wednesday, so we're not wearing pink. We missed it by one day, Toby. One day. That would have been the ultimate Mean Girls confluence of factors.

1:27It would have been too powerful. Too powerful. But you better stay in my good graces, though, because you best believe I have a Morning Brew burn book lurking around. I hope for my sake and your sake and for anyone who works here's sake that it never gets out. If that leaks on Slack, it's going to be an incredible day at Morning Brew. Would be quite the scandal. Now, a quick word from our sponsor, Wise Business, the app for doing things in other currencies. Kyle, I heard you've been crushing the New York Times crossword lately. Oh, yeah. I have my sights set on the American crossword puzzle tournament in Stanford next year.

1:58Well, you might be better at crosswords than me, but I'm wiser. How does that work when I'm the one finishing first? Wiser as in wise business. It's not just about being fast. It's also about being accurate. And wise is accurate, making sure your money is safe with two-factor authentication and keeping your money with established financial institutions. So yeah, you may be fast, but I am wiser. Okay, this is revisionist history. I don't get things wrong. Well, nobody needs to hear that, Kyle. Just be like wise when you compete next year. I'll bring home the title just for them. For anyone looking to handle international payments quickly and wisely, visit wise.com slash business.

2:35That's wise.com slash business. Eczema isn't always obvious, but it's real. And so is the relief from EBCLIS. After an initial dosing phase, about 4 in 10 people taking EBCLIS achieved itch relief and clear or almost clear skin at 16 weeks. And most of those people maintain skin that's still more clear at one year with monthly dosing. EBCLIS, Librikizumab, LBKZ, a 250 milligram per two milliliter injection is a prescription medicine used to treat adults and children 12 years of age and older who weigh at least 88 pounds or 40 kilograms with moderate to severe eczema. Also called atopic dermatitis that is not well controlled with prescription therapies used on the skin or topicals or who cannot use topical therapies.

3:15EBCLIS can be used with or without topical corticosteroids. Don't use if you're allergic to EBCLIS. Allergic reactions can occur that can be severe. Eye problems can occur. Tell your doctor if you have new or worsening eye problems. You should not receive a live vaccine when treated with EpGliss. Before starting EpGliss, tell your doctor if you have a parasitic infection. Searching for real relief? Ask your doctor about EpGliss and visit epgliss.lily.com or call 1-800-LILY-RX or 1-800-545-5979. Open AI's bank account is looking a lot like a turducken these days with just how stuffed to the brim it is.

3:46The maker of ChatGPT officially closed the largest venture capital round of all time yesterday, raising$6.6 billion in fresh powder at a$157 billion valuation. It's one of the largest private investments ever made, and its new valuation vaults OpenAI up alongside the giant SpaceX and TikTok owner ByteDance as the world's third most valuable private company. Not only is the round huge, there also seems to be some sneaky strings attached to investors who participated, including Microsoft, Thrive Capital, and SoftBank. The Financial Times reported that OpenAI asked investors who participated to not back rival AI startups like Anthropic and XAI as it tries to assert its dominance in the cash-intensive world of generative AI.

4:32Not like it really needs to look over its shoulder too much because right now, OpenAI is the clear frontrunner in the Gen AI space. ChatGPT has more than 250 million users and OpenAI's revenue is reportedly in the neighborhood of$3.4 billion. But holy moly, Kyle, 6.6 billion. That is a lot of cash. It's a lot of cash. And the open AI story is so fascinating to me. First, on the venture standpoint, obviously, funds are looking for companies that could have outsized returns. And open AI, like, yeah, if they get to artificial general intelligence, they, like, just replace everything. Like, their revenue becomes the GDP of the world.

5:11So I can see why investors at least buy into that narrative. But the drama surrounding this company, Sam Altman leaving and then coming back, a ton of execs have leaved. And then part of this deal was also OpenAI transitioning from a nonprofit to a for-profit company or investors have the right to get their money back. So a lot is kind of happening under the radar here. And it feels like there's some drama brewing. Oh, absolutely. Remember, the for-profit division of OpenAI is currently governed by that nonprofit. But you are right. They are trying to move away from that nonprofit governance structure.

5:44And if they do not do that, you are correct. the investors in this round will have the chance to to get their money back but yeah the valuation is very very big open ai is forecasting revenue of more than 10 billion dollars next year so we're looking at a little bit more than a 10x multiple which is pretty crazy but it's not insane for a company that's about to go public i mean google and facebook were in kind of a similar neighborhood around that time but this is also assuming they do get to 10 billion dollars in revenue um next year. Optimistically, it projects its revenue will reach$100 billion by 2029.

6:20So it's got that. That's the current sales of Nestle, like the giant snack conglomerate brand. But is it going to get there? Who knows? You are right, because a lot of its executive team just left. Only two of the original 13 founders are still, or only three of the original 13 are still at OpenAI. So you are right that there is drama simmering underneath it. Yeah, I think chat GBT might have hallucinated that prediction for 2029 revenue, but we'll see if they can get there. I mean, because this is such a kind of hot company, I think we forget that it actually has developed one of the most powerful and fast growing consumer products of all time, ChatGBT, which has kind of become like a verb or a noun in and of itself.

6:58And I found like you never bet against companies that have a product that becomes the noun in the space, but it has 250 million weekly active users and it has 11 million paid subscribers monthly. It's generating over a billion dollars just from the consumer division. So the company has done a lot right. It's just a very expensive company to run, hence the giant round. And what is it going to do with all this new capital that it has? It's got all this fresh powder in the bank. It wants to explore more capital intensive, longer term bets. One of those could be making its own AI chips to lessen its reliance on NVIDIA because remember right now, Nvidia makes the hardware that OpenAI trains its models with.

7:39It basically runs on Nvidia. A very funny anecdote I found is one VC who didn't participate in the OpenAI round told Dan Primack from Axios, we have some stock in Nvidia and that's who's going to get all of this money anyways. So you definitely are going to see maybe some rumblings that OpenAI wants to get into the hardware business because so much of this cash is going to go directly into NVIDIA's coffers right here. So that is potentially one of the long-term bets it's going to make to lessen its reliance on another company. It is crazy. I like the CEO of NVIDIA. Anytime an AI company raises money, he's just like, 10 % of that's mine.

8:15Or even more. Yeah, probably more. He's like, this is wonderful. All right, let's move on. What do you get when a Chrysler, Fiat, and Jeep all try to merge into the same lane? You get a corporate car crash. That's right, Stellantis, the company that owns those three car brands and many more, better have its seatbelts It's buckled because it's been quite a bumpy ride recently. Sales and profits have plummeted for the fourth largest carmaker with Stellantis stock price down almost 50 % since its high point in March of this year. Now, Jeep and other Stellantis brands sold in the United States raised prices more than other automakers did in recent years.

8:52They've waited longer to offer discounts. They've kind of taken away a lot of power from dealerships to make decisions on the ground. and high interest rates have kind of compounded all of those problems. And because of this, their CEO, Carlos Tavares, is under fire. He said that recently the company needs to fix some of its quote-unquote arrogant mistakes, including not selling down vehicle inventory, manufacturing issues, a lack of sophisticated GDM strategy. It sounds like Stellantis isn't doing anything right. They also sound like the average light beer of all time. I don't know why they picked Stellantis' name, but Toby, make sense of Stellantis for us.

9:29Yeah, they kind of timed everything wrong since 2021 when all those brands merged into the same lane, as you put it. They started discontinuing some of their smaller vehicles and started focusing on more of these bigger, pricier cars instead. But it did that just as Americans started to kind of warm up to the idea of some smaller, cheaper, more efficient rides. So it kind of timed that incorrectly. You see these massive hulking Jeeps these days. But then also in a double dose of bad timing, the company is also prepped to roll out this whole new fleet of electric vehicles. Again, right as consumers are showing that maybe their preference is hybrid vehicles, not necessarily all electric vehicles.

10:11So it kind of timed two of these waves wrong. It misread the situation of what consumers really wanted from their cars. And I think those are two reasons why Salinas is riding the struggle bus right now. Yeah, it's not in a good spot. And I think there's some brewings of like a strike or some negotiations with some of the unions at their plants as well. And you're right, like pretty much everything that could have gone wrong went wrong. And it's unfortunate to me that they have some of the, I think, most iconic American brands like Jeep under their kind of brand of brands. And so I hope they can figure it out going forward.

10:44Yeah, it has been ugly. U.S. sales between July and September fell 20 % from the year before, 11 % from the previous quarter. You're right, shares are down 50 % from their high point. Chrysler and Dodge have both seen sales of those two brands plunge more than 40 % last quarter. every Stellantis brand except for Fiat actually, which does make those smaller cars, mostly European audience too, logged negative growth. So a lot of issues could be a CEO problem as well, because some of those dealerships came together, wrote an open letter to him saying like, hey, you sacrifice the company's long-term health potentially to just get yourself short-term profits because they did note that short-term profits did qualify him for a 50 % raise.

11:24So they think some of the citizens Tavares made were in his own interest rather than in the long-term interest of the company. So you are correct. He wants to correct those arrogant mistakes, as he called it. And he's in the hot seat right now. He's definitely in the opposite. Anytime an open letter gets involved, things aren't going well. It's truly like the Morning Brew bird book that I was cooking up. But yes, correct. Speaking of cars, let's move on to NASCAR, where even a fully loaded stock car ain't fast enough to outrun antitrust scrutiny yesterday two teams including the one owned by michael jordan filed a federal lawsuit against nascar and its chairman the antitrust suit claims that the way car series currently operates is unfairst to teams drivers and sponsors the main issue it brings up is that nascar acts a lot like big tech in the way that it buys up smaller racing tracks and forces teams to only use suppliers chosen by nascar essentially creating this walled garden that prevents teams from competing in any other stock car races and jordan is fed up the case put forth by the two teams front row motorsports and jordan's 23 xi racing argues that they've been denied a fair share of the sports revenue which has made it tough to even operate a team in a financially sustainable manner kyle i didn't even know jordan had a nascar team but he does and he's taking the fight to nascar of course michael jordan has a ask.

12:47It just feels right. The most funny thing about this to me is that Michael Jordan calling other people a bully. I'm like, has Michael Jordan seen last dance? Like this is someone who punched his own teammate in the face. Like it's crazy. Also, he's like, I just want everyone to win. You're the most hyper competitive person on the planet. So I think Michael Jordan does not want everyone to win. He just wants this to be a little fair for himself. But what's very interesting to me, Michael Jordan also got the Michael Jordan of lawyers on the case. He has Jeffrey Kessler, who's representing his team.

13:19This is someone that brought free agency to the NFL. This is someone who's done some antitrust stuff with the NCAA. This is the real deal lawyer, and I think they actually have a good case. You brought up all of the stuff that NASCAR is doing to create a monopoly, to pressure teams to sign contracts that probably aren't in their best interest. And for the sake of the sport, I think they have to figure this out if they want to grow it and let their partners also make money as NASCAR grows. One unique thing about NASCAR is it's the only professional sport in North America that is run by a single family.

13:50That's the French family. The suit says that they're kind of enriching themselves. They're engaging in these unchecked monopolistic practices, as the suit says. They're saying that teams really struggle to even survive in NASCAR while investors put millions of dollars into the teams themselves. One, the leader of Front Row Motorsports, which is one of the people who brought the case to NASCAR, said that he's been in the business for 20 years and has yet to make a profit. There's just, and you can see it too in the amount of turnover that happens in NASCAR. Of the 19 team owners that were originally granted charters in 2016, only eight of those teams remain in the sport.

14:27So it is just a very low margin business. These teams are saying, listen, just throw us a bone here. NASCAR makes a lot of revenue. It just signed this massive media deal as well, but most of that is going to the French family and not dripping down and not falling down to the teams themselves. So I do think you're right. They have a great lawyer. Kessler also helped land that huge equal pay settlement for the members of the U.S. women's national soccer team. So he is the Michael Jordan of lawyers. And if anyone, I would be pumped that Michael Jordan is going to bat for the rest of the NASCAR teams because you're right.

14:58He is quite competitive. And he can bring the publicity this probably needs. And you've seen all these other sports grow, but the owners of the teams and the players also see that growth and see increased earnings. And it hasn't happened for NASCAR. So hopefully this kind of changes the sport to some degree. Also, I just can't think of anything less French than NASCAR. So that was crazy that a French family owned NASCAR. No, it's just the French is, is just their last name. I should have looked into that a little more. Our good old Americans. Yes, you would be correct. Up next, we don't have deals numbers and I for one am sad.

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16:36By the way, it's the France family, not the French family. So we were both off in that last story, Kyle. But today is Thursday, which usually means it is time for Neil's Numbers, where Neil shares three stats on the week's news to make you the office know it all. But alas, Neil is away for the day, which means it's just another regular story coming your way. Just kidding. We're doing this segment anyways, but we're calling it Toby's Tallies and Kyle's Calculations. Let's go. Kyle, I won the pre-show game of Who Misses Neil Moore, so I'm up first. And my first tally is$100 because that is the price point that the world's largest champagne producer is hoping you'll pay for a bottle of non-alcoholic bubbly.

17:16Yes, the luxury goods and spirits giant LVMH is buying a steak in a French maker of non-alcoholic sparkling wine that you can confidently pop at a middle school graduation without getting in trouble with the other parents. The company is called French Bloom, and it is trying to capitalize on the rising demand for low and no alcohol drinks. It also gives LVMH a chance to diversify itself away from the alcohol biz as demand for its champagnes and spirits remains sluggish. Kyle, first there was non-alcoholic beer, then mocktails, and now we're on to champagnes with all the bubbles and none of the buzz.

17:52I actually really like this. I mean, from a business perspective, you nailed it. This, to me, is a hedge for LVMH. They have so many high-status alcohol brands that if the alcohol market gets a little sluggish, they're at least protected from some downside risk if this does start to pop off. Second is the process is actually really cool to make something that is a wine or is a champagne that tastes like it but has no alcohol. The process is pretty complicated. And a lot of people think it should be cheaper because they're like, well, there's no alcohol in it. But they build it with alcohol, and then they remove it through this very unique process.

18:24so it is still very expensive. Yeah, let's dig into that process a little bit. When you de-alcoholize, that's a tough word, a sparkling wine like this, it loses about 60 % of the aroma. So to combat that, the founders say, you have to make it essentially undrinkable first. You make it so overpowering, so aromatic, so tasteful that when you pare it down, you don't lose all those tastes and all those aromas. To remove the alcohol, you do use this technique called cold vacuum distillation where the wine is gently heated. It burns off some of that alcohol. But I think you are totally right. This is a booze-free movement that we're seeing right now.

19:02And right now, we've spoke about this on the past on the show. LVMH is struggling in the wine and spirits division because when the global economy is feeling a little uncertain, sales of champagne goes down because if there's no reason to feel like celebrating... There's no reason to celebrate. Yeah, people don't buy champagne. And so this is a real thing that... A real headwind that they've been facing. So this investment in French Bloom is just smart because we are seeing just this increased interest in non-alcoholic drinks as well. Right. You take a look at Athletic Brewing, which sells non-alcoholic beer.

19:32It's actually the number one most sold beverage in alcohol versus non-alcohol in some whole foods. So this is something that is growing quite rapidly. I also think this is a really interesting play because it's a high status play as well. Like if people buy$10 ,000 handbags, they'll buy expensive non-alcoholic champagne. paint. And it's not crazy expensive too, because most of their wines come in around that$39 to $44 range. They do have a$100 plus brand as well. So it's not insanely expensive, but you're all right. It does feel nice to hold a nice glass of bubbly. My second tally is best consumed at an internal temperature of 135 degrees because it has to do with steak.

20:11For most of the U.S.'s political history, politicians have hobnobbed at various steak establishments across D.C., but in recent years, it's become much more of a partisan affair. According to campaign finance reports, Republicans now outspend Democrats at every major steakhouse in D.C., but especially so at their favorite establishment, Capitol Grill. Republicans have outspent their counterparts nearly 13 to 1 so far in this election cycle, dropping$762 ,000 at their favorite enclave, according to Open Secrets data, compared to just 59 grand spent by Democrats. Kyle, whining and dining key constituents and lobbyists, that is just a normal part of the political machine, but it is surprising to see how much one political party favors steakhouses these days.

20:58This was such an interesting article to read, and I loved it. It was like a deep dive on the history of steakhouses in D.C. I just can't believe that we've polarized steak. How did we make steakhouses partisan? It's just coming for everything, it seems like. Speaking of that deep dive into the DC steakhouse world, the first DC steakhouse was Occidental, opened all the way back in 1912. It was literally an old boys club at the time because for three years, no women were allowed. It was the first restaurant with a commercial electric stove. It was also the first restaurant to hang those big signed portraits of its occupants or its clientele on the walls.

21:32It included Woodrow Wilson at the time. But then World War II happened. Steakhouses were hit with all these strict rationing of beef. And so they all sort of went into hibernation for a few years, then came roaring back in the 50s and emerged as this kind of cultural center for politics. But it was not partisan, like you mentioned. They were the favorites of both sides of the aisle. It was more a matter of prestige, maybe some of that macho culture, that it was a partisan sort of sorting hat that we see today. But you are correct. Like, battle lines have clearly been drawn in Washington. And one one theory that has been put forth is that as D.C.

22:05becomes a little bit more polarized, Republicans have drifted more towards those towards those traditional establishments, while Democrats maybe prefer a more eclectic food scene. That's one theory that's emerged. But steaks for everyone. Like, come on. Steak is for everyone. And I love that the Capitol Grill has become like the go to place, which in my mind is just like a Chili's. It's like it's a chain steakhouse. Yeah. So if you're in D.C., go check out the Capitol Grill. Well, Toby, I have some great news for everyone. You no longer need to live in a pineapple under the sea in order to get your hands on a Krabby Patty, which has inspired Kyle's calculation for today.

22:42And that number is 100. That's 100 SpongeBob-themed meals in over 250 restaurants across North America being rolled out through the Krabby Patty Collab program. Now, Wendy's is one of these 250 restaurants, and they'll be dropping a Krabby Patty collab cheeseburger and a pineapple under the sea Frosty at restaurants in the U.S. and Canada beginning on October 8th. The reason for this release is it's the 25th anniversary of SpongeBob SquarePants, the animated TV series, which that stat made me feel old as hell. And now I do need a Krabby Patty just to make myself feel better. Toby, are you busy on October 8th?

23:19My schedule's completely free for SpongeBob, but man, I tell you what, millennials are the easiest group to market to because everyone wanted to try a Krabby Patty when they grow up, and Wendy's is giving you that chance. Although canonically, I learned that from the Brew's copy editor that the Krabby Patty is technically a veggie burger, so it is not a beef patty. The ingredients of the patty are purposely kept a secret throughout the series, but the creator, Steven Hillenburg, has stated that the patties were vegetarian, so that is a fun fact. And so this is not necessarily a lower accurate Krabby Patty that you're going to get at Wendy's.

23:55But yeah, you're absolutely right. 25 years of SpongeBob is crazy. I dug into kind of the beginning stages of SpongeBob, where it came from. And Steven Hillenburg started out as a marine science educator. He created this illustrated comic book that showed kind of the flora and fauna that lived around tidal pools. He called it the intertidal zone. And the narrator of that comment was Bob the sponge. At the time he was round and wore sunglasses. It was only later when he pivoted his career to animation, which what a pivot, by the way, you go from Marine science to animator. And he finally is like, once I realized that it should be a square, like a kitchen dish bun, that's where it really clicked for me.