OK, I like this so far, and I accept the critique on lazy. I might restate to ‘knee jerk uninformed and poorly reasoned journalism’.
Do I think OpenAI’s revenue projections are realistic? I’m aware of leaks that say $12.5bn in 2025 and $100+bn in 2029. Order of magnitude, yes, I think they’re realistic. Well, let me caveat that. I believe they will be selling $100+bn at today’s prices in 2029.
Is this based only/largely on political capture? Don’t know or care really, I’m just tired of (formerly called lazy) journalism that gets people confidently wrong about the future telling everyone OpenAI is doomed.
On the Reuters story — to be clear, OpenAI’s current plans mean that being cash flow positive in 2029 would be a bad thing for the company. It would mean they haven’t gotten investment to the level they think is needed for a long term winning play, and will have been forced to rely on operating cash flow for growth. In this market, which they postulated was winner take all, and now propose is “winner take most” or “brand matters and TAM is monstrous”, they need to raise money to compete with the monstrous cash flow engines arrayed against them: Meta, Google, and likely some day Apple and possibly Oracle. On the flip side, they offer a pretty interesting investment: If you believe most of the future value of GOOG or META will come from AI (and I don’t necessarily believe this, but a certain class of investors may), then you could buy that same value rise for cheap investing in OpenAI. Unusually for such a pitch they have a pretty fantastic track record so far.
For reference, there are roughly 20mm office jobs in USA alone. Chat is currently 65% or so of all chatbot usage. The US is < 1/6 of oAi’s customer base. 10mm people currently pay for chat. OpenAI projects chat to be about 1/3 of income with no innovations beyond Agentic tool calling.
To wit: in 2029 will we be somewhere in the following band of scenarios:
Low Growth in Customers but increased model value: Will 10mm people pay $3.6k a year for chat ($300/month) worldwide in 2029, and API and Agent use each cover a similar amount of usage?
High Growth in Customers with moderate increased model value: Will 100mm people pay $360 a year for o5, which is basically o4 high but super fast and tool-connected to everything?
Ending somewhere in this band seems likely to me, not crazy. The reasons to fall out of this band are: they get beat hard and lose their research edge thoroughly to Google and Anthropic, so badly that they cannot deliver a product that can be backed by their brand and large customer base, or an Open Weights model achieves true AGI ahead of / concurrent with OpenAi and they decide not to become an inference providing company, or the world decides they don’t want to use these tools (hah), or the world’s investors stop paying for frontier model training and everyone has to move to cashflow positive behavior.
Upshot: I’d say OpenAI will be cashflow positive or $100bn+ in CF in 2029.
Do I think OpenAI’s revenue projections are realistic? I’m aware of leaks that say $12.5bn in 2025 and $100+bn in 2029. Order of magnitude, yes, I think they’re realistic. Well, let me caveat that. I believe they will be selling $100+bn at today’s prices in 2029.
Is this based only/largely on political capture? Don’t know or care really, I’m just tired of (formerly called lazy) journalism that gets people confidently wrong about the future telling everyone OpenAI is doomed.
On the Reuters story — to be clear, OpenAI’s current plans mean that being cash flow positive in 2029 would be a bad thing for the company. It would mean they haven’t gotten investment to the level they think is needed for a long term winning play, and will have been forced to rely on operating cash flow for growth. In this market, which they postulated was winner take all, and now propose is “winner take most” or “brand matters and TAM is monstrous”, they need to raise money to compete with the monstrous cash flow engines arrayed against them: Meta, Google, and likely some day Apple and possibly Oracle. On the flip side, they offer a pretty interesting investment: If you believe most of the future value of GOOG or META will come from AI (and I don’t necessarily believe this, but a certain class of investors may), then you could buy that same value rise for cheap investing in OpenAI. Unusually for such a pitch they have a pretty fantastic track record so far.
For reference, there are roughly 20mm office jobs in USA alone. Chat is currently 65% or so of all chatbot usage. The US is < 1/6 of oAi’s customer base. 10mm people currently pay for chat. OpenAI projects chat to be about 1/3 of income with no innovations beyond Agentic tool calling.
To wit: in 2029 will we be somewhere in the following band of scenarios:
Low Growth in Customers but increased model value: Will 10mm people pay $3.6k a year for chat ($300/month) worldwide in 2029, and API and Agent use each cover a similar amount of usage?
High Growth in Customers with moderate increased model value: Will 100mm people pay $360 a year for o5, which is basically o4 high but super fast and tool-connected to everything?
Ending somewhere in this band seems likely to me, not crazy. The reasons to fall out of this band are: they get beat hard and lose their research edge thoroughly to Google and Anthropic, so badly that they cannot deliver a product that can be backed by their brand and large customer base, or an Open Weights model achieves true AGI ahead of / concurrent with OpenAi and they decide not to become an inference providing company, or the world decides they don’t want to use these tools (hah), or the world’s investors stop paying for frontier model training and everyone has to move to cashflow positive behavior.
Upshot: I’d say OpenAI will be cashflow positive or $100bn+ in CF in 2029.