AsianFin -- OpenAI’s Chief Financial Officer (CFO) Sarah Friar on Wednesday suggested the ChatGPT developer is considering an initial public offering (IPO) as it just achieved a monthly revenue milestone of $1 billion.
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While Fariar didn’t giving specific timeline for the potential IPO, this is not the first time she teases the possibility. The CFO in late May said OpenAI could go public owing to its restructuring plans. “A PBC gets us to an IPO-able event … if and when we want to,” said Fariar at the Dublin Tech Summit.
OpenAI last December unveiled its plan to form a public benefit corporation (PBC), with ordinary shares of stock and the OpenAI mission as its public benefit interest, and make the form of for-profit company under the control of its existing non-profit entity. Fariar at the summit in May stressed that the PBC modelcombining a nonprofit parent with a for-profit LLCaligns shareholder interests with OpenAI's mission, and gives the firm the flexibility to pursue an IPO if and when we want to.
Fariar in an interview on Wednesday announced OpenAI hit its first $1 billion revenue month in July, a month after the company confirmed it has hit $10 billion in annual recurring revenue (ARR). The ARR milestone includes sales from the company’s consumer products; ChatGPT business products; and its application programming interface (API); while excluding licensing revenue from its largest shareholder Microsoft Corporation and large one-time deals.
Despite the revenue growth, Friar cautioned OpenAI is still facing chanlleges to meet its computing demands. “It is voracious right now for GPUs and for compute,” she told CNBC on Wednesday, adding that insufficient compute, or computing power, to meet the demand of AI is the company’s biggest challenge. “That’s why we launched Stargate. That’s why we’re doing the bigger builds.”
Friar hinted OpenAI is reducing dependence on Microsoft’s Azure’s cloud capacity because of needs to diversify risk and increase supply in the face of the growing demand for computing power, but it will maintain partnership with the software giant. “Microsoft will be an important partner for years to come, and I think we are very intertwined because of our IP,” Friar said. “Remember, Microsoft AI products are built on OpenAI technology.”
OpenAI is also exploring the possibility of offering artificial intelligence (AI) infrastructure services, representing a potential new revenue line to offset the company’s substantial costs, according to Friar. She said the consideration was inspired by Amazon.com's successful cloud computing model. While OpenAI is not actively pursue this service because of its focus on securing computing capacity for its own operations, “I do think about it as a business down the line, for sure,” said Friar.
OpenAI CEO Sam Altman earlier this week acknowledge insane valuations on AI, calling AI a “bubble”, and warned some investors are likely to “get very burnt.” Nevertheless, Altman said he is still ready to keep aggressively spending on infrastructure as he believes the value created by AI for society will be tremendous. He also said it is expected that OpenAI will spend “trillions of dollars on datacenter construction” in the not very distant future.
Altman said OpenAI is now beyond the compute demand of what any single hyperscaler can offer, and it can not offer better models it now has owing to insufficient capacity .
“You should expect us to take as much compute as we can,” Altman added, per CNBC. “Our bet is, our demand is going to keep growing, our training needs are going to keep going, and we will spend maybe more aggressively than any company who’s ever spent on anything ahead of progress, because we just have this very deep belief in what we’re seeing.”
