OpenAI Sets Sights on $750B Valuation, Warner Brothers Questions Paramount’s Funding, The 2025 Model Wars In Review | Diet TBPN

0:01I saved this for the show so this reaction, I haven't seen the video, but I've seen the metrics around the video. It's got 15 ,000 likes just on a quote tweet of it. I think it's going to be very funny. This is OpenAI showing the public its financials once it goes public. Okay, looks pretty good. Getting a haircut. Looks good. Oh, no. You know, I've been watching these haircut videos, and they're actually incredibly good content because... Dude, this video going viral, this guy's gonna be full GigaChad mode within six months. I guarantee it. Guarantee it. Guarantee it. Guarantee it. He knew what was gonna happen.

0:43He did it to inspire himself to, I guess, look. For sure. I looked at a haircut video where, and it's incredibly sticky content because you're watching the guy describe what he wants, and then at the very end, they show you a montage of the photos. And when it works out, obviously the joke there is that, you know, it's a downgrade. It does make me wonder, like, there are certain, like, can every different vertical, can every different type of content become, you know, high retention? Or are there some things that are just, like, more naturally, like, payoff-based, right? Scoop, OpenAI could soon be worth$750 billion in a financing round.

1:23They've had early talks. Let's give it up for early talks. We love early talks. We prefer advanced talks. Yes. Early talks. You've got to start somewhere. About raising tens of billions of dollars or even$100 billion. The company was last valued at$500 billion a few months ago. Tay Kim chimes in, says public markets are crushing OpenAI exposed stocks, while private investors with visibility into OpenAI's metrics and internal numbers, dot, dot, dot. Are piling in, essentially. Both can't be right. I trust Katie Roof reporting. So he's saying that it's bullish for open AI. That's his take from this?

2:01Yeah, maybe some of the publics have been oversold. That said, yeah, I'll be interested to see how this round comes together. Again, remember, I think it's a good time to be fundraising if you need tens of billions of dollars, if Warner Brothers ends up going with Netflix, right? If you're raising tens of billions of dollars, and you're not doing it from strategics like the hyperscalers, it pretty much has to be sovereign wealth funds. If they pass on Warner Brothers, they have loose change in the couch cushions to toss OpenAI's way. They can collect. To the tune of$10 billion checks, potentially.

2:42I mean, it does feel like OpenAI is a bit of a... It feels like the vibes around OpenAI, trough of disillusionment, potentially going into a plateau of productivity. It feels like they're turning it around. It feels like the new models and the products are working. I don't know. I haven't seen many people say, I love 5.2. But then again, outside in the real world, clearly, you know, ask people what AI app they're using. Yeah. That'll give you a lot of signal. It just feels like, you know, okay, maybe we're not in Baja Blast territory, but we know that every code red is followed by an equal. Adult mode.

3:23Adult mode. It's coming in January. Yeah, maybe.

3:31But it does seem like a lot of the negativity has kind of worked its way through. The market's traded down. There's maybe not another. It feels like we're finding a bottom. We're finding the footing of, okay, reset the narratives, rebuild back up. Can they catch up in this? Can they catch up in that? If you see a couple of good charts, a couple of growth charts, then you're sort of back in business because people got so negative. People still got so negative. The point that I'm making is like a couple of months ago, it was like, it's Enron. It's going to blow up. It's zero. It's not going to work at all.

4:10And it does feel like we're turning the corner on that. Maybe you muted the people that are still saying that because they're still saying it. They're still saying it. Well, it just got old. Funny post. Sam says, sell me this pen. Jensen says, I'll lend you the money to buy it. Warner CEO David Zaslav and Netflix co-CEOs Greg Peters and Ted Sarandos on the Warner Brothers lot. They took game day photo. They went out deliberately to just strut and just flax. And they clearly knew what they were doing. Well, this is their new lot. You point. You look over here. Guys, can we look over this direction?

4:49Okay, yeah, that's perfect. Snap, snap, snap. They know what they're doing. No hostile offer can get between us. We're bros. We're hanging out. This is a sign of strength. Signs out. There's palm trees. Yeah, this is them sending the signal, sending a signal. Hey, we're excited to work together. We're excited to be in partnership, collaborating. There was one person who quoted this and was unhappy about it. They were saying that they weren't well-dressed. Yeah, they were saying that they weren't well-dressed. and he was like, I'm kind of in that boat. It's not bad. They threw on their rocking blazers.

5:23Give them a break. It's definitely like a Hollywood executive style that's sort of become the norm. But this is also a good way for people that are maybe more on the tech side to start dressing up. You don't have to go from jeans straight into a suit. You can throw on a blazer, right? Something to consider. Matt Levine is back. He says, I've missed Christmas, even New Year's, and the 4th of July holidays for newsletters a lot smaller than this. This is as good as it gets for newsletter writers. He says, Warner doesn't trust Paramount, revocable trust, ESG side letters, IPO lockups, destiny of doing deals over the holidays.

5:57Trust. If you're a normal person, most of your wealth is probably in your own name. But if you're one of the richest people in the world, you probably have a lot more complicated estate and tax planning, which probably means that a lot of your wealth is in trust, legal arrangements that your lawyer set up to hold assets for you. Most simply, you might have a revocable trust where your assets technically belong to the trust, but you have control over the trust assets, investment decisions, beneficiaries, et cetera. This can be useful for estate planning, but for most purposes, owning assets in a revocable trust is pretty much like owning them yourself.

6:25I regularly say that Mark Zuckerberg, Mark Zuck, owns a lot of shares of Meta, or that Elon owns a lot of shares of Tesla, even though neither statement is exactly true. Their trusts own the shares, but for most practical purposes you can think of, they own them. This creates, I suppose, a small dumb problem. Let's say you build big yachts and Mark Zuckerberg comes to you and asks to buy a billion dollar yacht. Naturally, he will pay you the billion dollars on completion of the yacht. You might ask him, well, do you have a billion dollars? And he might say, no, actually, I don't. But the Mark Zuckerberg Trust owns like a bajillion dollars worth of Metastock, and I control that, so I'm good.

7:02You find that persuasive, so you pull up the yacht sale contract. Who do you put in as the buyer? If you put Mark Zuckerberg, he has no money. If you put the Mark Zuckerberg trust, it has plenty of money now. But if it is a revocable trust, he can just take all the money shares out whenever he wants. It's revocable. If he changes his mind about the yacht, he can clean out the trust. You'll send the bill to the trust, but the trust will have no money and you'll be stuck with the yacht. Not that bad of a situation to be stuck with a billion dollar yacht. But if you're in the business of selling them, you certainly want to be able to complete the transaction.

7:35I get the point. Honestly, this is a pretty easy problem to solve. you put Mark Zuckerberg in the contract. He doesn't own the assets directly, but he controls the trust. So if he owes you a billion dollars, you can make him take it out of the trust. But maybe you'll get confused or he'll get confused and you'll end up signing a contract with the trust. Then if he changes his mind, he can zero out the trust and stiff you. I cannot imagine that this comes up a lot with yacht builders or anyone else. Elon Musk once did sign a contract to buy Twitter for$44 billion, then changed his mind and tried to get out of it.

8:05The fact that his wealth is mostly in a trust did not, at any stage of the proceedings, trouble anyone. He had signed his equity commitment in his own name, and everyone understood that if he was sued and lost, he'd have to pay with his trust money if necessary. And Twitter did sue him, and he did pay. Fine, fine, fine. On the other hand, Paramount is trying to buy Warner Brothers Discovery, breaking up Warner's deal to sell itself to Netflix Inc., and Paramount does not have nearly enough money to pay for Warner. Instead, much of the money behind the bid comes from Paramount chief executive officer's dad, Larry Ellison.

8:36As of this writing, the fifth richest person in the world, or rather it comes from his trust. And this would be one of the greatest tricks in the history of mergers and acquisitions. One major sticking point is Warner Brothers' concern about the financing proposed by Paramount, which is led by David Ellison. A big part of the equity is backstopped by a trust that manages the wealth of his father, Larry Ellison. Because it's a revocable trust, assets can be taken out of it at any time, and Warner Brothers may have no recourse if that happens, the people said. Matt says, ah, ha, ha, ha, sure. The risk here is Warner throws over Netflix, pays it a$2.8 billion breakup fee, and signs a deal to sell itself to Paramount for something like$108.4 billion in cash.

9:18for some reason, changing market conditions, regulatory difficulties, and a change of heart by the Ellisons, or a change of heart by their co-investors, the Ellisons decide they don't want to close the deal. Quietly, in the comfort of his own home, without saying anything to Warner, Larry Ellison takes all of his stock out of the trust, leaving it empty. Yoink, he whispers to himself. Oops, never mind, Paramount tells Warner. Warner sues Paramount for specific performance, seeking to make it pay$108.4 billion and close the deal. LOL, we don't have that kind of money, says Paramount, which has a market capitalization of about$15 billion and about$3 billion of cash.

9:54When we signed the deal, you knew that the money was coming from the Ellison Trust. So Warner sues the Ellison Trust for a specific performance, seeking to make it pay$108 billion and close the deal. LOL, we don't have that kind of money, says the Ellison Trust. We did, sure, but the trust got revoked. Yoink, adds Larry Ellison more loudly this time. So Warner sues Larry Ellison for the money. He says, who, me? Says Larry Ellison. You have no deal with me. I don't even know what you're talking about. This is not my problem. This does not strike me as especially likely, and it would obviously be bad for Paramount and the Ellisons, but I suppose it is possible, and it would be a pretty fun trick.

10:31Today, Warner officially rejected Paramount's bid, advising shareholders not to sell their shares in Paramount's tender offer. Paramount's own tender offer says that the Ellison equity commitment and guarantee will be from the Lawrence Ellison revocable trust, not from Larry Ellison himself. The author points out that the trust is rich. The Ellison Trust has financial resources well in excess of what would be required to meet its financial obligations under the equity commitment letter, including many other assets and financial resources available to it, record and beneficial ownership of approximately 1.16 billion shares of Oracle stock with a market value of approximately 252 billion as of the date of this offer to purchase.

11:09But as the name says, it's revocable. This seems extremely fixable. Have Larry Ellison signed the commitments personally? William Cohan reports that the whole situation is trains passing in the night and quote, the Ellisons believe they can still be sued for specific performance to fund the deal. He quotes a person familiar with their thinking saying that there is no financing condition in the deal and Paramount and the Ellison slash Redbird along with our lenders are legally obligated to close regardless of future financial or business performance at Paramount. That is not an impossible thought to convey in merger papers, and yet so far they apparently haven't.

11:47The real trick is obviously create a revocable trust and name it the irrevocable trust. Can you just do that? One simple trick. One simple trick. F &A lawyers hate this one simple trick. I am wondering if this is very common. I mean, Matt Levine talks about this, but like why did Elon not do this during the Twitter buyout? That is a good question. Because it says Elon did sign the contract in his own name, which he could have just done to the trust and then he could have backed out when he wanted to. Well, I mean, one thing is like, it feels like Elon like just rips checks and was very much just like, yeah, I'm good for it.

12:23I'm going for it. I don't want to play this game at all. Like, because I'm all in, you have the full faith and credit of the bank of Elon Musk, essentially. We talked about with like, when you make an offer for a big company, there's like the expected value of the close and saying, hey, we have this backstop is something that increases the probability that you close, that the financing condition is met. But then saying, okay, we're doing it in a trust or revocable trust takes that down a little bit. But again, there's a world where all of the different capital providers lined up and you're not even talking about trust revocable or irrevocable because you never get there because all the different funds are jumping.

13:09I want to get in. I have to get my stake. I want 10 % of this. Here's 10 billion. I'm ready to go. You don't even care about the backstop or you don't care about the trust because everyone's lining up. The only reason that maybe they're in this scenario is because it feels like Warner Brothers did actually sort of kick the tires on the Paramount deal. and get to the end state of evaluating it and saying, oh, well, like we've heard, you know, you mentioned Jared Kushner's in, like is Affinity Partners really in? And when they push them, Affinity Partners just seemed like they might be out. I don't know.

13:42I don't know exactly what happened. But there's a variety of stakeholders that came in. And the level of, it's not just that they were thumbs up, thumbs down. There were some that were, that people said that they were thumbs up, they wound up being thumbs down. Some of them were, you know, here and they wound up being there, You know, a little bit edgy, depending on a lot of different folks where it's like, you know, it's like putting together any other financing round. Like, ideally, every investor that goes into a seed stage company or series A company is like, yes, I'm good regardless of who else is in the round.

14:13Every once in a while, you get VCs who say, yeah, I'll sign a term sheet, but term sheets are non-binding, and we'll see how the round pencils out. I'll sit on this signature. I'm not going to sign this. I'm not going to wire. Or they would give a verbal and thinking that Sequoia is going to come in. Sequoia doesn't. And they're like, oh. Or vice versa. They give the verbal. They sit on it. They're not wiring. They're maybe leaning back. And then Sequoia comes in or Founders Founder and Dreesen or someone comes in. And then they're like, wait, wait, wait. You said that I could get 2 % of this company for 100K.

14:47Like, give me my terms. And you're like, you didn't sign that doc. You were very much leaning out. I've been in that situation. Wall Street gets early taste of hot year expected for IPOs. Shares of a company called Medline began trading in the biggest new stock listing since 2021. Wall Street is getting a glimpse of what could be the biggest year ever for IPOs in the U.S. After four years of choppiness in the market. You didn't even let me get to the number. The medical supply company raised$6.3 billion in its stock offering. The stock closed at$41 a share. Massive offering. It's the biggest IPO since Rivian, actually, in 2021.

15:32We're the largest company no one's ever heard of, said the chief executive, Jim Boyle. So the offering could help set the stage for some of the most highly anticipated IPOs with Rocketmaker SpaceX, AI company Anthropic, and mortgage giants Fannie Mae and Freddie Mac among the companies looking at listings in 2026. OpenAI also rumored. There's a couple other companies that might go out. There's a bunch of tech darlings that look kind of like infants in comparison to... But still might be at a level of maturity to go out. Very notable. Yeah, data breaks. Companies that are basically at Figma scale.

16:08Sure, yeah. Or even beyond. For a long time, if you're a$10 billion company in the tens of billions, the decacorns, any decacorn should be comfortable going out, potentially. as long as they're not in some crazy R &D cycle and they actually have the core financials humming at this point. Bankers say their teams have been busy in recent weeks pitching companies to be lead advisor on their IPOs, marking a pickup activity. Many startups had a shoot going public in recent years. I'm not sure that's entirely true anymore, said Magdalena Henrich, head of U.S. Technology Equity Capital Markets at Bank of America.

16:44In our newsletter today, we did a little review of the model wars. What a year. Just in terms of model releases, August 7th, OpenAI releases GPT-5. September 29th, Anthropic releases Claude Sonnet 4.5. Then the day after, OpenAI releases Sora 2. The same day, Meta releases the Meta Ray-Bans displays. November 3rd, OpenAI and Amazon announced a partnership valued at 38 billion. November 12th, 5.1 drops from OpenAI. November 17th, XAI releases Grok 4.1. November 18th, Google releases Gemini 3. Massive response to that. It's crazy that that was just one month ago. November 20th, Nano Banana Pro comes out.

17:35Then November 24th, Anthropic releases Claude Opus 4.5. We talked to Sholto about that. And then December 1st, DeepSeek releases DeepSeek version 3.2. And of course, before the end of the year, OpenAI had to fire back with GPT 5.2 on December 11. And then December 17th, Google releases Gemini 3 Flash. Also today, I think OpenAI released 5.2 Codex. So like the, you know, coding modelers. I think there's this whole narrative where like, oh, AI is stagnating. Yeah. Where it's like, bro, look at the benchmarks. Like, it's like, it's on the trend. Look at the benchmarks. They're saturated. There was a moment where just multiplying two really, really big numbers together on a computer, you needed more memory to do like a thousand digits times a thousand digits.

18:22We need to get you a massive winter coat to get through this AI winter. Because the AI winter is happening, dude. I'm telling you. There's no AI winter. There is. I mean, it's the age of research, okay? The age of research is the age of winter. Tyler, just keep the coat on, buddy. You can't take it off till it's over. Till it's over. The progress is... People want AI to stagnate so bad. They do. So many people want that. They do. And it's not happening, bro. It's like the models are getting better. Everyone without bags is saying it's stagnating. Well, no, because all those people are like, oh, like I missed NVIDIA or whatever.

19:00You think Carpathia's like, I missed NVIDIA, so I got to go trash AI. Well, I think we can all agree, Tyler, that it's the age of research. But it's also the age of deals. Okay. We've got to talk about Trump media and technology. This morning I woke up and, you know, a lot of people that, you know, do like mental health podcasts, they say, look at your phone within five seconds, opening your eyes. Yeah. Just immediately, you know, connect with the Internet and just sort of start kind of marinating in all the notifications that you maybe got over the last eight hours. That's what I did this morning.

19:37I opened my eyes. I immediately grabbed my phone. I see this push notification. I think it was from Bloomberg that truth social parents to merge with nuclear fusion firm in a six billion dollar deal. And I thought I was dreaming still because it just seemed insane. Trump's been so active this year on the on the deal making side. who would have thought he had another multi-billion dollar deal to do this year. So, of course, Trump Media and Technology Group, the social media and crypto company, part owned by President Trump, said it would develop a utility scale fusion power plant. President Trump's social media company, which recently expanded into streaming and cryptocurrency, is now entering its fourth act, Fusion Power, a promising but still unproven source of alternative energy.

20:25DJT and Tay Technologies have said Thursday they had agreed to an all-stock merger that the company's valued at more than$6 billion. The deal would be a metamorphosis for Trump Media, the money-losing parent company of True Social, a social media platform that has struggled to gain market share beyond serving as the main online megaphone for President Trump. Mr. Trump is the company's largest shareholder with a large stake worth more than$1 billion that is held in a trust, we're trust-maxing, of course, managed by Don Jr., who is a Trump Media board member. The company, based in Sarasota, Florida, has only a few dozen full-time employees and has recorded tens of millions of losses in recent years.

21:02The merger with Tay would create one of the first publicly traded nuclear fusion companies, according to the release. You know, people are going to talk trash about this, like, oh, what is a social network doing building energy assets? But you look at what Amazon's doing building massive data centers for AWS. Amazon owns Twitch. That's a social network. What else does Amazon own? Well, they own some diesel generators for backup power at the data centers. Fusion, theoretically cleaner. Who would have thought that out of the Silicon Valley tech people, they would be using diesel while the big guy is using clean energy to power his social network?

21:43Fascinating, fascinating stuff. Truth Gestual is also getting into the prediction market game. No way. Launching a native prediction market feature in the app. It's crazy that they're not partnering with anyone. I wonder if it'll be like predict. I would have guessed, presumably. Trade on the content of Trump's next post. I am interested to see how the future presidents approach business, right? Who was the guy with the peanut farm? Jimmy Carter. He got into a little hot water because of his peanut farm. I think he didn't fully divest. No, he did divest. But he still got in hot water? No. It's just remarkable because the peanut farm was so small and so insignificant in the US economy and even in his personal balance sheet, but the fact that he was saying, look, I don't want any, any idea of impropriety, so I'm gonna divest from a small peanut farm that I'm associated with, so that no one can say that I'm in the pocket of big peanut, or I'm pro peanut, or little peanut.

22:45And so the fact that Jimmy Carter divested from the peanut farm, He was not he was not, you know, in big oil or a railroad baron or associated with banking. He had very little conflict of interest and he reduced it even further. That's always been a sign of like the what what great looks like. Trump has been in founder mode for a long time, getting all kinds of criticism about the business from people who aren't actually in the arena. It is it is crazy the degree to which he is a successful technology founder. People can have their issues with the president, but they cannot deny that. They cannot say with a straight face that he is not a technology entrepreneur.

23:27He's never founded a unicorn tech company. He's never taken a social media app public. You can't say that. You can't say that. He's never merged with a nuclear fusion company backed by Chevron and Google and Goldman Sachs. Almost$1 trillion has been invested into AI so far, and that may just be the start. Look at this graph. This is an interesting way to visualize the flow of money because we see it as these moments in time, a$10 billion deal here,$100 billion deal there. This is showing the investment over time. And you can see NVIDIA flowing to Amazon and all the different companies. Where's OpenAI?

24:05OpenAI is just flowing around. It's just a cool little data visualization. I thought this was fun to look at. Can't wait for this AI bubble to pop so we can all go back to normal just like how the internet completely disappeared after The dot-com bubble popped. It's another bullish take for AI. It's not going anywhere. Yeah, you agree great take It is a great day and 18 ,000 people agree. It's a great day. I also think it's a great take This doesn't seem so fast takeoff build more Internet build which is slow takeoff the internet has slow takeoff Everyone thought it was gonna be the internet is the superhighway.

24:41It's gonna be you know 1 ,000x growth, Yahoo's going to be worth a trillion dollars. And then it kind of settled in. It took a while for things to find use cases, find value. But eventually, it did transform everything. But this time it's different. Yeah, this time it's different. Exactly. Because this time we have the internet, so it's way faster to do distribution. Yes. You weren't even alive in there, Tyler. I don't even want to. I was racking servers in a data center while you were in the cradle.