Gurley notes OpenAI wouldn't exist if Google's attention mechanism had been patented instead of open-sourced.
“This concept was done inside of Google as an open source concept, immediately copied by all the other players. So OpenAI doesn't exist today if that's patented and controlled.”
Gurley says OpenAI only exists because Google's attention mechanism was open-sourced, not patented.
“OpenAI doesn't exist today if that's patented and controlled. There's it just doesn't, which is another irony around this open source argument because they've been infringed from massively from a major but the idea of being shared, and this is also why I'm such a massive open source proponent”
Gurley says the $20 consumer subscription concept is gone and was a big part of OpenAI's revenue.
“I think the $20 concept is gone. Yep. And that was a big part of OpenAI's revenue apparently as we believe rumored”
Gurley says Sam Altman warned developers using OpenAI lightly that they'll be steamrolled unless they fully commit data.
“But then he said, if you do that, we're going to steamroll you and you need to bet on us being successful. Which would mean dumping your data and trusting OpenAI more fully.”
Gurley says the $20 subscription model is gone now that Meta AI is free and ad-supported models are coming.
“I think, Perplexity claiming they're going to have an ad portion and OpenAI hinting at that, at least for the time being, I think the $20 concept is gone.”
Gurley says OpenAI executes faster than any company he's seen despite organizational turbulence.
“To execute the way they have. True. Okay? Like, I got faster than any other company I've ever seen delivering great products in the market.”
Gurley suggests incumbents may be aggressively investing in AI specifically to block OpenAI and Anthropic from raising needed billions.
“And now you've got people, you know, trying to project income statements and balance sheets of these companies and they're speculating about whether they might need to raise again or not.”
Gurley argues Sam Altman's Washington access is valuable as regulation could reinforce OpenAI's competitive lock-in.
“He seems to have remarkable touch in Washington and access, which, you know, regulation appears to be coming at us fast and furious.”
Gurley explains Strawberry's logarithmic scaling means 10X to 100X inference costs for linear improvement requiring selective application.
“The implication being in order to get linear improvement, you have to do maybe 10X the amount of processing. And this is all inference.”
Gurley argues scaling law slowdown represents a surprise shift from Sam and Dario's expectations twelve months ago.
“The first thing that comes to my mind, and once again, I'm not asking you to agree with this, it's just like what's in my head, is that this is not the expectation that Sam and Dario had twelve months ago.”
Gurley argues OpenAI and Anthropic expected continued scaling twelve months ago, not current limits.
“Like, because they were promoting a thesis that it was just gonna keep going up”
Gurley says OpenAI and Anthropic promised linear or better scaling with 10x then 100x spending increases.
“there was a argument being made by, you know, OpenAI and Anthropic that, oh, you're just gonna see the next number drop and the next number's gonna be way better than the last number.”
Gurley argues OpenAI and Anthropic leaders previously suggested continued scaling gains before current limits emerged
“Dario and Sam had, prior to this moment, or at least the way I heard them, made it sound like they were just gonna build the next biggest thing and get the same amount of gain. They had left that impression.”
Gurley contrasts Zuckerberg's technical transparency with Altman and Amodei's high-level platitudes about AI.
“Dario and Sam talk in these high level platitudes about how this stuff's gonna cure cancer and we're all gonna not have to work anymore.”
Gurley contrasts Zuckerberg's technical transparency with Altman and Amodei's high-level platitudes, suggesting Zuck may now lead AI.
“Dario and Sam talk in these high level platitudes about how this stuff's gonna cure cancer and we're all gonna not have to work anymore. And Zuck was down in the weeds in the meet.”
Gurley says propco-opco structure would add major lease liability to OpenAI's already complex cap structure.
“if it is a prop co op co structure, this represents a big lease liability or the equivalent of a lease liability for OpenAI.”
Gurley calls the Microsoft-OpenAI deal one of the most complex deals of all time.
“The deal between Microsoft and OpenAI, as it's been reported, once again, I've never seen it. Sounds like one of the more complex deals of all time.”
Gurley warns AI companies trading equity for server capacity don't recognize true COGS and get warped decision-making.
“They're trading equity for server capacity. And so those companies are running on a day to day basis with a high COGS, but they don't know it because they're not paying cash for it.”
Gurley warns AI companies receiving server capacity for equity don't recognize their true COGS in real-time.
“They're trading equity for server capacity. And so those companies are running on a day to day basis with a high COGS, but they don't know it”
Gurley says the Stargate project will use a property-operating company structure he just learned about.
“People are telling me it's gonna be a prop co op co structure, which I didn't even know it was twenty four hours ago,”
Gurley notes uncertainty around whether Microsoft will convert OpenAI profit rights to equity.
“And so they also we don't know. You know, it it sounds like OpenEye wants them to convert to equity, and we have no idea whether they're willing to do that or not.”
Gurley notes OpenAI already has the most complex cap structure ever seen, now adding lease liability.
“So this company already had probably the most complex cap structure of any company like it that we've ever known,”
Gurley says OpenAI already has the most complex cap structure ever and is adding more complexity.
“So this company already had probably the most complex cap structure of any company like it that we've ever known, and they're gonna be putting one more complex piece on top.”
Gurley says the Microsoft-OpenAI deal with $90 billion profit rights is one of the most complex ever.
“The deal between Microsoft and OpenAI, as it's been reported, once again, I've never seen it. Sounds like one of the more complex deals of all time. They have profit rights up to, like, $90,000,000,000.”
Gurley says late-stage investors enable two-year employee liquidity at OpenAI and Stripe, removing IPO pressure.
“one of the things they're doing is they're supporting massive founder liquidity and employee liquidity. And so that's happening at Stripe, that's happening.”
Gurley notes Microsoft has profit rights up to $90 billion, unprecedented in any prior deal.
“They have profit rights up to, like, $90,000,000,000. No one's ever signed a piece of paper like that before.”
Gurley reports DeepSeek pricing is one twentieth of OpenAI on comparable API models.
“if you look at the models that are apples to apples on the API right now, that that DeepSeek's pricing about one twentieth of OpenAI.”
Gurley notes OpenAI will burn $7 billion annually, calling it radically different from traditional venture.
“I think OpenAI said they're gonna be 7,000,000,000 in a year. That's not your grandfather's startup business or your grandfather's venture capital. That's a radically different world.”
Gurley argues OpenAI must go public to democratize access to trillion-dollar company returns beyond private market insiders.
“It needs to be a public company. The idea that we're going to have trillion dollar companies and the only people who get to participate are the people sitting around this table, right?”
Gurley contrasts Google's 187,000 employees with OpenAI's 2,700, noting OpenAI plans to stay under 20,000 using AI agents.
“Google has 187,000 employees, OpenAI 2,700. We're not going to be a company of 20,000 employees. He didn't say we're not going be a company of 187,000 employees, Right?”
Gurley believes OpenAI's long-term success depends more on switching costs than staying at model frontier.
“I continue to believe that OpenAI's most likely chance to long term success comes from switching cost and lock in more than it will come from staying on the edge of the of the model race? Because I think”
Gurley notes Google cannot match OpenAI's competitive advantage of losing seven billion dollars annually.
“I still think it's particularly interesting that Google has to compete with OpenAI because OpenAI is gonna lose 7,000,000,000 this year and Google won't. Like they would never allow themselves to do that.”
Gurley notes OpenAI is being funded at $300-500 billion pre-money valuation by proven multi-decade investors.
“They clearly like, you're not funding something at 300,000,000,000 pre, 400, 500,000,000,000 pre if you don't already believe that.”
Gurley says OpenAI's burn rate is five times Amazon's or Uber's, unprecedented in venture capital.
“And when we did at Uber, we had the same kind of burn rate, but Open the Eyes got a burn rate that's five times that size.”
Gurley argues Anthropic and OpenAI seek regulation to handicap startups and open source competitors.
“I think for certain reason Anthropic and OpenAI are begging for regulation is so that they can write rules that make it harder for startups, open source models to be competitive with them, which I think is very rational for them to do, but I don't think it's good for society.”
Gurley explains Microsoft's OpenAI deal involves cashless revenue through cloud credits for equity.
“So you get equity for credits and then those credits are used to run workloads on Azure. That is cashless revenue for Microsoft.”
Gurley mentions rumors of a thirty billion dollar investment from Nvidia into OpenAI and calls it a sport of kings.
“And so, there's rumors today of a $30,000,000,000 investment from Nvidia into OpenAi on top of everything they've already already raised and spent. So it it I I call it a sport of kings,”
Gurley cites rumors of thirty billion dollar Nvidia investment into OpenAI, calling it sport of kings venture capital.
“there's rumors today of a $30,000,000,000 investment from Nvidia into OpenAi on top of everything they've already already raised and spent.”
“As Brandeis said: “Sunlight is said to be the best of disinfectants; electric light the most efficient policeman.” The correct regulatory response here is to demand a full third party investigation of what happened here and share it with everyone. “Our models are too magical” https://t.co/ibsBsNhOjV”
“When I saw this article, I couldn't get Kool and the Gang out of my head. Hat-tip to Claude for the lyrics! I very confused about who might own the copyright. REGULATE (to the tune of "Celebration") [Intro] Regu-LATE! R-E-G-U-L-A-T-E good times, come on! (It's a regulation!) https://t.co/5DTp81043E”
“When I saw this article, I couldn't get Kool and the Gang out of my head. Hat-tip to Claude for the lyrics! I very confused about who might own the copyright. REGULATE (to the tune of "Celebration") [Intro] Regu-LATE! R-E-G-U-L-A-T-E good times, come on! (It's a regulation!) https://t.co/5DTp81043E”
“I favor prosecuting companies that use AI to break existing laws vs allowing those same companies to write new laws. Otherwise you create a perverse incentive to keep doing dangerous things to gather attention and power. https://t.co/d7DbltbV3I”