TOP BYTE: OpenAI Wants $86bn Valuation

On Wednesday Bloomberg broke the news that OpenAI will be seeking a valuation of $86 billion for its existing employee shares, citing unnamed sources.

The Wall Street Journal had previously reported in Sept. that they may go as high as $90 billion.

At $86 billion, OpenAI would become one of the world’s most valuable closely held corporations.

The Financial Times reports that earlier this year, when it took more investments from Microsoft and Thrive Capital, its valuation was estimated at $29 billion.

“As much as $1bn in employee shares could be sold in the tender offer, according to people with knowledge of the matter, who added that the total sold was likely to be considerably less as employees opt to hold on to stock,” the Financial Times said in its report, citing anonymous sources. “Offering employee stock to investors via a tender offer is a way of letting staff cash in on the company’s success. In turn, that is expected to help OpenAI compete with other start-ups and more established rivals including Google and Amazon in the war for engineering talent.”

The Financial Times story noted that Sam Altman, CEO of OpenAI, won’t profit personally from any valuation increases: “Altman has said he does not hold a direct stake in OpenAI and only an ‘immaterial’ position through the start-up accelerator Y Combinator. He has argued he is wealthy enough, having invested in some of Silicon Valley’s most successful start-ups, including payments company Stripe.”

Note that not everything is positive in OpenAI’s world: The Information reported this week on a new AI model the company killed after it couldn’t get the results it wanted.

More Generative AI News This Week

• A new study from IBM shows that CEOs are embracing generative AI technologies as tools for productivity.

• Generative AI Spending To Hit $143 Billion by 2027

• Payment processor Square has jumped on the AI bandwagon, offering what it says are 10 new AI-driven features.

• Reports are coming out about how iOS 18 will incorporate AI.

• Google is using AI to go after Duolingo.

• And with all these companies adding AI (or trying to) to their product line, great time to read this article by Alex Dobrenko illustrating the AI hype bandwagon.  

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