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on Gopher (inofficial)
URI Visit Hacker News on the Web
COMMENT PAGE FOR:
URI OpenAIâs promise to stay in California helped clear the path for its IPO
sanskarix wrote 41 min ago:
One angle I havenât seen much here: governance isnât just âwhere
is HQ?ââitâs who sets the operational guardrails when commercial
pressure collides with model risk. A PBC charter can, in theory, encode
non-financial priorities, but practically you need hard mechanisms: an
independent red-team budget with board visibility, publish-and-freeze
safety commitments that canât be quietly walked back in the S-1, and
a binding incident disclosure policy (think SOC-style) for model
regressions and abuse vectors.
If California wanted durable leverage beyond a âweâll stayâ
letter, they could have tied approval to these process-level controls
with measurable KPIs (eval transparency, red-team scope, postmortem
SLAs). That would make the social license less about geography and more
about demonstrable stewardship. Curious if anyone spotted language in
the MoU that bites at this level rather than just the incorporation
mechanics.
figassis wrote 2 hours 7 min ago:
Question: what does this mean for trust in any non profit structure if
itâs this easy to convert? Why would investors put money in something
they will get no returns on, but that the operators can at anytime turn
into profits for themselves?
ashdksnndck wrote 2 hours 1 min ago:
The new nonprofit is getting $130B of OpenAI stock, which is 1000x
more than the donations OpenAI received as a nonprofit. IMO the
nonprofit donors have a valid complaint that OpenAI is changing the
deal anyway, but the numbers seem worth noting.
nemo44x wrote 5 hours 49 min ago:
Good to see California coming to its senses after years of fever
dreams. Disparaging their tech blessings and holding their biggest
revenue source in contempt out of jealousy was a losing strategy.
Hopefully those people are marginalized more and more and we can again
celebrate technology innovation and the vast wealth and prosperity it
brings millions of people.
deadbabe wrote 6 hours 35 min ago:
Where else would OpenAI move to? Texas? Florida?
htrp wrote 6 hours 52 min ago:
Targeting 1 trillion valuation
ulfw wrote 6 hours 53 min ago:
The IPO of a 'non-profit'. Such a beautiful thing.
andy99 wrote 7 hours 34 min ago:
IPO is to leave someone holding the bag, right? The narrative has
really changed from AGI, the most consequential technology, blabla. If
I had that I would keep it private. If I wanted to cash out, Iâd do
an IPO. Is there a narrative that doesnât make it seem like pump and
dump?
derekdahmer wrote 3 hours 5 min ago:
They have 800M weekly active users that have yet to be monetized but
enormous capital costs. It makes sense they'd be looking to raise
large amounts of money in an IPO.
linuxftw wrote 7 hours 12 min ago:
In the before times, companies went public to raise capital in order
to grow their business.
sexeriy237 wrote 6 hours 14 min ago:
It hasn't been like that for quite some time. The corpse is sold
off to mutual funds and pension plans
andy99 wrote 6 hours 48 min ago:
Does that seem like whatâs happening here?
techblueberry wrote 5 hours 19 min ago:
If theyâre on the path to AGI, thereâs probably a predictable
cost structure to get us to the point where these models are
self-reinforcing and we get fast takeoff. This is the dumbest
theyâll ever be remember.
linuxftw wrote 5 hours 38 min ago:
Maybe? They want to grow the company, and they've run out of VC
and circular financing money. Are they going to use the capital
raised to make actual profits? That's the question.
nateburke wrote 8 hours 28 min ago:
Cali could have called his bluff, he's not moving to Texas any time
soon, and neither are his employees.
terminalshort wrote 6 hours 57 min ago:
In most cases I would say you are correct, but this would be an
extremely rare exception. OpenAI has about 7000 employees, and has
raised a round at a $500B valuation with a realistic shot at a $1T
valuation at IPO. That's a range of $70-140M of equity value per
employee. So if employees hold 10% (and that's a low estimate) it's
an average of $7-14M per employee. So for the average employee
leaving CA before IPO would be a $1 million benefit over paying CA
cap gains taxes.
Of course that isn't distributed remotely evenly and a lot of
employees have not nearly enough to want to leave CA over taxes or
just don't want to leave CA for other reasons. But OpenAI could
easily say "HQ is moving to Austin. All employees must relocate and
will be given $1M relocation bonuses." And the part left unsaid would
be "Failure to comply means you lose 7 figures of options." Take
rate on that would be >95%.
philip1209 wrote 8 hours 58 min ago:
Interesting - this reminds me a lot of the story with Cisco: for
decades they remained a California C-Corp while many other companies
reincorporated in Delaware. I once heard a lawyer say âall my clients
are Delaware C-Corps except Cisco, and their reason is political.â
Eventually Cisco did indeed buckle in 2021 and reincorporate in
Delaware . . .
JumpCrisscross wrote 9 hours 2 min ago:
Copy of the Memorandum of Understanding between California and OpenAI:
URI [1]: https://oag.ca.gov/system/files/attachments/press-docs/Final%2...
khazhoux wrote 9 hours 49 min ago:
I donât understand the animus towards OAI going public. ChatGPT
undoubtedly changed the world. The non->for profit status of the
company is not impacting anyone. Itâs not like their success was
made possible by being a non-profit.
Suddenly everyone here is very very concerned with the classification
of this corporate entity, and I detect people feel personally slighted.
Why is that?
array_key_first wrote 5 hours 46 min ago:
> The non->for profit status of the company is not impacting anyone.
They're quite literally running away with millions in tax money they
stole. That means from YOU.
It's a sense of entitlement that pisses people off. Imagine you're a
hardworking American who pays his taxes for the betterment of his
country.
And then here comes this Sam Altman douchebag, who thinks he's so
important he doesn't have to pay taxes. He thinks you should foot the
bill, because you're nobody, and he's Sam Altman.
If you're not at least a little bit pissed at the precedent this is
setting, I personally view that as pathetic.
khazhoux wrote 5 hours 12 min ago:
What taxes did they not pay? Quick research suggests that they do
pay taxes on revenue, and I can't find any articles that
definitively show what taxes they avoided by having a non-profit
arm.
rottencupcakes wrote 9 hours 34 min ago:
They founded OpenAI on the explicit premise that advanced AI poses
existential risks to humanity, and that a non profit structure was
essential to prioritize safety over profits. They reaped major
benefits from this status, including tax exemptions, easier talent
recruitment (by appealing to mission-driven researchers), and massive
donations.
Then, once GPT models exploded in value, making the for-profit arm
worth tens of billions, they attempted to restructure toward a public
company model to let investors and insiders cash out at scale, while
claiming the non-profit board would still "control" the direction.
This directly contradicts their original charter, which warned that
profit motives could lead to unsafe AI racing.
Now it is clear that we are nowhere near AGI, and hence they have to
make money from making fake tiktok videos and smut. And they just
want to cash out because the original premise won't deliver.
Specifically it was very disingenuous and that is why people hate it.
rvz wrote 3 hours 55 min ago:
i.e: it was a complete grift.
vessenes wrote 9 hours 35 min ago:
They are chronically online and reading uninformed headlines by
fellow youth.
Combined with a feeling that they don't like this wave of GenAI, you
get a lot of uninformed hate that's deeply felt, and probably
reasonably felt. But also totally uninformed.
lukebechtel wrote 9 hours 36 min ago:
Because the development of this technology was originally done under
a certain set of promises ostensibly intended to prevent pure
capitalist profitmaxxing.
The workers and supporters who were taken by this idealistic vision,
believe it was a bait-and-switch, and that the original promises were
never intended to be kept.
JumpCrisscross wrote 8 hours 37 min ago:
> workers and supporters who were taken by this idealistic vision
The only people who can claim harm are donors and workers who
actually left, e.g. Murati. "Supporters" aren't stakeholders in any
material sense.
clhodapp wrote 4 hours 56 min ago:
What about me, a random person?
As stated in their foundational legal filings, the primary
activity of OpenAI is supposed to be described as:
OpenAI, Inc. ("OpenAI") is a nonprofit artificial intelligence
("AI") scientific research organization. Its goal is to engage in
research activities that advance digital intelligence in the way
that is most likely to benefit humanity as a whole, unconstrained
by a need to generate financial return. AI technology will help
shape the 21st century, and OpenAI wants to help the world build
safe AI technology and ensure that AI's benefits are as widely
and evenly distributed as possible. To that end, OpenAI hopes to
build AI as part of a larger community, and wants to openly share
its plans and capabilities along the way.
As a member of humanity as a whole, they are supposed to be
operating for my benefit, not primarily for the benefit of their
investors. If they wanted to operate primarily for the benefit of
their investors, they should have been paying taxes on every
dollar they brought in.
JumpCrisscross wrote 2 hours 31 min ago:
> As a member of humanity as a whole, they are supposed to be
operating for my benefit
No. The common good refers to âwhat is shared and beneficial
for all or most members of a given communityâ [1]. There is
no individual claim to benefit.
You can feel misled. Sort of like when a visionary promises
something you want and then fails to deliver. But that
doesnât mean you were materially misled, which means you
arenât owed anything.
> they should have been paying taxes on every dollar they
brought in
We donât tax investment in America.
URI [1]: https://en.wikipedia.org/wiki/Common_good
clhodapp wrote 1 hour 31 min ago:
It's not that I think they owe me (or any one specific
individual) some specific material value, it's that I don't
believe they should be allowed to "take the money and run"
after amassing it under the guise of being a charity. Their
options should be to continue their mission or to donate
their assets to other charities that might be able to further
their original mission. Anything less is an affront to those
that donated, those that the charity was supposed to support
(which is everyone), and any customer that believed their
dollars were being spent on a product under the management of
a charity.
While it's true that we don't tax investments, we do tax
gifts past a dollar value threshold, which is what donations
become when nonprofit status drops away.
JumpCrisscross wrote 1 hour 9 min ago:
I agree that the whole thing seems shady. But I'm
struggling to identify anyone who was hurt. Vague notions
of "everyone" doesn't really pass muster--if we can turn
that into trillion dollar companies, we should do that!
clhodapp wrote 50 min ago:
It's not that I want to see someone made whole for some
hurt.
What I want to see is for government to do its job and
stamp a big "DENIED" on OpenAI's request to reorganize.
The response should be "Sorry if you feel like you
screwed up your corporate structure, but your money
really is locked in this non-profit and you can't just
take it out".
Edit: Put a different way: Your point seems to be that
there is no civil law damage so nothing can be done. My
point is that this isn't a civil law matter, it's a
corporate law matter: it's not about damages, it's about
the social contract we hold corporations to in exchange
for allowing them to exist.
JumpCrisscross wrote 20 min ago:
> What I want to see is for government to do its job
and stamp a big "DENIED" on OpenAI's request to
reorganize
To what end? How thrilled would we be if an adversary
nation did this to its golden goose?
> it's about the social contract we hold corporations
to in exchange for allowing them to exist
Their job is to create wealth. For the time being,
OpenAI is creating wealth to the tune of the GDP of the
Phillipines or Norway [1]. If it's puffery, pursue it
afterwards. If if not...we gained the annual production
of a Nordic petrostate. When it goes public, we'll earn
tax revenues equal to the entire economy of a small EU
member.
Wealth doesn't make right. But I'm failing to see an
incurable harm here that outweighs the upside.
URI [1]: https://en.wikipedia.org/wiki/List_of_countrie...
lukebechtel wrote 7 hours 53 min ago:
choosing whether to use, or advocate for, a company's services is
a form of support
JumpCrisscross wrote 5 hours 2 min ago:
> choosing whether to use, or advocate for, a company's
services is a form of support
Sure. But if the services are rendered, the ideology is
orthogonal. For the slim minority of uncompromising zealots for
whom it is not, damages can be quantified and paid.
lukebechtel wrote 2 hours 26 min ago:
are you asserting this is the way things should work, or how
they do work, or both?
JumpCrisscross wrote 1 hour 25 min ago:
> are you asserting this is the way things should work, or
how they do work, or both?
How it does and, to a limited degree, how it should.
If you donate to or volunteer for a non-profit, you have
non-pecuniary interest in how they are run.
If you're sold a product that's promised to be made in a
certain way, you do too. If you paid for--much less used
without paying--a service because you thought it was
ethical per some definition, but aren't similarly bound in
other purchases in your life, or otherwise can't show this
is a value you consistently follow (and so, in being denied
it here, have been damaged), I'm not sure any functional
economy can work where anyone has a free option to take
back a purchase--or much less, non-monetary use--at any
time in the future because they feel--but can't materially
demonstrate--betrayal.
Like, maybe if Stallman used ChatGPT he could credibly
claim he wouldn't have used it if it hadn't marketed its
claims around goodness. But I'm deeply sceptical a rando
has the same standing.
khazhoux wrote 9 hours 18 min ago:
> The workers and supporters who were taken by this idealistic
vision
I havenât heard from any of the workers. Why are people
white-knighting for them? My hot take is that they donât mind
being able to afford a house (or more) for their efforts.
Whereâs the outraged employees in this conversation?
As for âsupporters,â what does that mean? People who watch
from the sidelines and never actually contributed donât usually
get a say.
Jensson wrote 8 hours 35 min ago:
Donors get a say, did donors get any stock? Its very ugly when
you built your for profit by stealing donations from a
non-profit, people can condemn that even if they themselves
didn't personally lose money similarly to how we can condemn
companies abusing people even if we didn't work there.
khazhoux wrote 7 hours 21 min ago:
Did OpenAI take donations? Iâm assuming that the
âdonorsâ Thiel, Musk, etc, did receive stock. Massive
lawsuit otherwise.
But did regular folks donate? Otherwise it seems people are
outraged that their hypothetical donations were misused.
eagleinparadise wrote 9 hours 55 min ago:
CA needs the UHNW taxpayers lol
brcmthrowaway wrote 3 hours 31 min ago:
Is there a way not to pay tax?
jcmontx wrote 10 hours 2 min ago:
If this happened any non-western country headlines would say
"corruption".
chii wrote 2 hours 3 min ago:
It's only corrupt if it's our "enemies" who does it!
mslate wrote 5 hours 12 min ago:
In California, it's called an "impact fee"
hodder wrote 11 hours 15 min ago:
Can someone explain to me why California would believe Sam Altman plans
to stay in California? This is a weak handshake agreement that could
easily be flipped post IPO. The very flip from non-profit to IPO shows
he will do what it takes for OpenAI to "succeed", so why would the
geographical location be any more permanent than corporate structure.
This isnt a diss to Sam either, it just shows he is motivated by
whatever is best for the entity at any given time.
They might stay in California, but that probably has far more to do
with available researchers and employee preferences than some agreement
with the Attorney General.
dragonwriter wrote 21 min ago:
> Can someone explain to me why California would believe Sam Altman
plans to stay in California? This is a weak handshake agreement that
could easily be flipped post IPO.
It is not a âhandshake agreementâ, but binding written agreement
with terms constraining the governance of the restructure OpenAI
entities. [1] Executed MOU Between OpenAI and California AG re Notice
of Conditions of Non-Objection %2810.27.2025%29 %28Signed by
OpenAI%29 %28Signed by CA DOJ%29.pdf
URI [1]: https://oag.ca.gov/system/files/attachments/press-docs/Final
tw04 wrote 6 hours 0 min ago:
Iâm pretty sure Sam is motivated by whatever is best for Sam, not
OpenAI.
terminalshort wrote 8 hours 2 min ago:
Can someone explain to me how staying in CA has anything whatsoever
to do with whether or not they IPO? Because it seems like it should
have absolutely nothing to do with it. (Linked article is a paywall,
so I can't read it.)
Hansenq wrote 2 hours 16 min ago:
OpenAI needs to IPO because they want to access the public capital
markets to fund their AI investments, more deep-pocketed investors
are wary of investing in a LLC, and for liquidity, etc.
OpenAI needs to convert to a C-corp in order to IPO.
OpenAI needs the CA Attorney General's approval to convert a LLC
into a C-Corp because the LLCs is headquartered in CA and
incorporated with many CA laws.
So the article is making the point that OpenAI likely got the CA
Attorney General's approval for the conversion because they
promised to stay in CA (whether or not that's actually true).
(or support journalism and pay to read the article)
JumpCrisscross wrote 10 hours 20 min ago:
> Can someone explain to me why California would believe Sam Altman
plans to stay in California?
The simple answer is unless developing LLMs becomes commoditised, the
best place in the world to do it is in San Francisco. You don't take
your manufacturing business out of Shenzhen without very good reason.
terminalshort wrote 7 hours 50 min ago:
Seems a little easier than that, though, because there are no
supply chains involved (other than for the data centers, but those
are already not in SF). Why else would the CA government be
worried?
standardUser wrote 6 hours 56 min ago:
There's books written about the Bay Area and the factors that
make (or made) it uniquely suited for developing new
technologies. There's even college courses about it. Some of it's
surely provincial fluff, but it's undeniable that California has
been an essential incubator for a whole series of world-changing,
fortune-making technologies.
terminalshort wrote 6 hours 34 min ago:
I don't want to downplay the network effects here, but it's in
CA entirely by coincidence. SV is in CA because William
Shockley's family is there, which is why he founded Shockley
Semiconductor there. It could have been somewhere else. The
2nd largest tech hub is in Seattle. It's there because that's
were Bill Gates is from. Is SF the best place to start a
startup if you want in office talent in 2025. 100% yes, but
that has nothing to do with the Bay Area and everything to do
with accidents of history.
Hansenq wrote 2 hours 21 min ago:
Not entirely by coincidence. Yes Shockley was from CA, but as
late as the 1980, two places were competing to be the center:
Boston's Route 128 ("America's Technology Highway") or
Silicon Valley.
Silicon Valley won out because the CA constitution explicitly
prohibits non-competes (which MA allows), leading to more
rapid innovation. Very likely the infamous Traitorous Eight
who left Shockley Semiconductor to found Fairchild could not
have done that if noncompetes could be enforced.
JumpCrisscross wrote 2 hours 25 min ago:
> that has nothing to do with the Bay Area and everything to
do with accidents of history
I think youâre wrong. But thatâs irrelevant. The fact
that it exists now is what gives it staying power. One of the
surest bets Iâve seen in seed and Series A investing is
when a market has one or two competitors in a cluster and the
rest outside. The insiders win. Always. Itâs the easiest
bulldozing strategy that exists.
csomar wrote 40 min ago:
> I think youâre wrong. But thatâs irrelevant.
It's on you to prove the parent wrong and you provided
nothing to explain why the Bay Area is special beyond
history/staying power.
shuckles wrote 3 hours 14 min ago:
Shockley Semi was founded 16 years after Hewlett Packard, so
you have to keep reaching backwards.
CPLX wrote 6 hours 10 min ago:
It goes back way way further than that. The special mix of
government funded technology, ruthless entrepreneurship, and
social engineering predates Shockley by almost 100 years.
Start by figuring out who Leland Stanford is and how he got
rich. Read the book âPalo Altoâ if youâre looking for a
good starting point.
vlovich123 wrote 3 hours 43 min ago:
Yeah itâs quite bold to suggest that Shockley would have
done the same thing outside the environment of the Bay Area
rather than that someone other than Shockley would have
done what he did in California if he wasnât there or that
even if he did it outside California that people inside
California still industrialize it. Itâs a very
individualistic view of progress which is uniquely American
and unlikely to capture how stuff happens given that
multiple discoveries often happen simultaneously by people
working on the problem (eg calculus and Newton vs Leibniz).
The truth is the Bay Area has structural reasons why SV
happened and why the same thing has failed to replicate to
any significant degree outside the Bay Area.
BobaFloutist wrote 9 hours 44 min ago:
That still doesn't explain the value of Sam Altman's pinky promise.
JumpCrisscross wrote 8 hours 51 min ago:
> doesn't explain the value of Sam Altman's pinky promise
The MOU [1] requires OpenAI "provide at least 21 daysâ prior
written notice to the Attorney General before consenting to: (a)
a change of control of the PBC; (b) any change to the PBC mission
as set out in the PBC Delaware charter; (c) any amendment to the
PBC Delaware charter that would remove the NFPâs sole right, as
holder of the Class N shares, to appoint PBC directors or
otherwise reduces in any material respect the rights of the Class
N shares; or (d) the relocation of the headquarters of the NFP or
PBC outside of California" [1].
The meat appears to be in the agreements by OpenAI to not change
its ownership and control structure. California's real leverage
would be in re-opening this dispute, though ¶ 22 seems to water
down that power somewhat. (Maybe go after the donors?) [1] ¶ 19
URI [1]: https://oag.ca.gov/system/files/attachments/press-docs/F...
wubrr wrote 9 hours 55 min ago:
The location you're physically sitting in doesn't really matter.
Saying 'san francisco cause san francisco' is also kinda boring and
meaningless.
JumpCrisscross wrote 9 hours 16 min ago:
> location you're physically sitting in doesn't really matter
Of course it does.
The benefits of proximity to business clusters [1] is well
researched [2]. There is no evidence remote work has dampened
that tendency; if anything, as evidenced by AI, the effect seems
to have increased. [1]
URI [1]: https://en.wikipedia.org/wiki/Business_cluster#Cluster_e...
URI [2]: https://www.isc.hbs.edu/competitiveness-economic-develop...
wubrr wrote 8 hours 30 min ago:
You're linking to pre-covid studies, that mention some types of
benefits (for specific reasons like logistics benefits for
businesses relying on physical materials/goos, or physical
access to people for the purposes of networking), for some
kinds of industries, and also mention that these benefits are
not seen for some industries.
> Sometimes cluster strategies still do not produce enough of a
positive impact to be justified in certain industries.
Let's take a step back and look at the fundamentals of a tech
company who's employees are remote - what are the specific
benefits of having a San Francisco office?
JumpCrisscross wrote 8 hours 22 min ago:
> linking to pre-covid studies
I'm linking to studies summarising a century of work. There
is no evidence Covid changed this.
Exhibit A for Covid having not changed this is the continuing
supremacy of Silicon Valley (tech), Shenzhen (manufacturing)
and New York (finance) as industrial clusters that others
have tried to replicate (everyone, America and Miami,
respectively) and failed.
> Let's take a step back and look at the fundamentals of a
tech company who's employees are remote - what are the
specific benefits of having a San Francisco office?
Proximity to investors. Proximity to customers. Proximity to
a skilled employee pool. Proxomity to acquirers. (A lot of
deals happen at cocktail parties and ski trips.)
By the way, I'm not arguing anyone needs an office. Just
people physically and and proximate to the cluster.
wubrr wrote 6 hours 49 min ago:
> Exhibit A for Covid having not changed this is the
continuing supremacy of Silicon Valley (tech)
You mean like when China built chatgpt 4 in a weekend and
open-sourced it for giggles?
> Shenzhen (manufacturing)
..or you mean how US manufacturing 'clusters' almost
completely disappeared/replaced by Chinese ones?
> Proximity to investors. Proximity to customers. Proximity
to a skilled employee pool. Proxomity to acquirers.
Right, cause you have to physically pet every investor on
the head to fundraise, your remote employees must be in
san fran cause network latency interferes with their
windows remote desktop workflow, and, for some reason, you
have to be physically close to your customers when you're
selling your web-only llm wrapper saas.
SR2Z wrote 3 hours 14 min ago:
> You mean like when China built chatgpt 4 in a weekend
and open-sourced it for giggles?
DeepSeek R1 is an amazing feat. It's not at the same
level as other large frontier models from American
companies, just close enough to make them sweat.
> ..or you mean how US manufacturing 'clusters' almost
completely disappeared/replaced by Chinese ones?
The value of goods manufactured in the US has never been
higher. US manufacturing focuses on goods at the top of
the value chain: jetliners, cars, semiconductors, medical
scanners, and other advanced electronics. These tend to
cluster in a few places - for example, Long Beach is a
hub of space and avionics manufacturing, Texas has the
"Silicon Prarie," and Boeing in Everett is one of the
major employers in the region. Manufacturing has
disappeared as a share of GDP, but that's not because we
make less stuff.
> Right, cause you have to physically pet every investor
on the head to fundraise, your remote employees must be
in san fran cause network latency interferes with their
windows remote desktop workflow, and, for some reason,
you have to be physically close to your customers when
you're selling your web-only llm wrapper saas.
You sound sarcastic, but YES. You do generally have to
physically be present to make deals. It is obviously
theoretically possible to run a world-leading software
company fully remote. Despite that, most of them are
in-person at least a few days a week. If you want to
take advantage of SV's easy VC money, you absolutely have
to be present.
Companies are not purely about the numbers. A lot of
business is imprecise and heavily dependent on things
like just plain LIKING the people you're in bed with, and
unfortunately there is no substitute for being in the
same room as someone to make a decision like that.
com2kid wrote 25 min ago:
> Manufacturing has disappeared as a share of GDP, but
that's not because we make less stuff.
We assemble. The actual parts are largely made
overseas.
Because location matters, assemblers in China are able
to do better work at a much lower price, see every
Chinese EV company, or Chinese drone companies.
Heck in China you can buy a competent Chinese EV
motorscooter for less than a kids bicycle in America.
uvaursi wrote 5 hours 14 min ago:
> You mean like when China built chatgpt 4 in a weekend
and open-sourced it for giggles?
Link?
vessenes wrote 9 hours 48 min ago:
This is the opposite of true. It's actively wrong. Location is
almost everything; people move to financial and tech centers for
a reason -- it matters where you are and who you know.
wubrr wrote 8 hours 39 min ago:
nah
also, where you are and who you know are very different things
JumpCrisscross wrote 8 hours 19 min ago:
> where you are and who you know are very different things
Different but related. Getting a purposeful introduction
involves a lot more friction than being invited to someone's
home for dinner with their colleagues and contacts.
yellow_postit wrote 10 hours 8 min ago:
The Texas Stock Exchange launches next year and I predict we will
see a lot of tech try to move to launch there given txse claim to
have lower compliance and less esg needs.
JumpCrisscross wrote 9 hours 4 min ago:
> Texas Stock Exchange launches next year
The TXSE was launched by an energy magnate [1] and "is financed
by institutional investors including Charles Schwab, Fortress,
BlackRock, and Citadel Securities" [2]. It's a direct response to
the NASDAQ and NYSE putting their feet down on carbon emissions.
Nothing about its structure requires a company be incorporated in
Texas much less based there [3]--those restrictions would go
against the reason it was founded. [1] [2]
URI [1]: https://en.wikipedia.org/wiki/Kelcy_Warren
URI [2]: https://en.wikipedia.org/wiki/Texas_Stock_Exchange
URI [3]: https://www.hunton.com/insights/legal/a-comparative-anal...
nradov wrote 9 hours 27 min ago:
I doubt it. The state where a company is incorporated or has its
headquarters located doesn't impact where it can list shares.
There are several foreign companies with no significant US
operations which are listed on US stock markets just to gain
access to capital.
kasey_junk wrote 9 hours 20 min ago:
Not to mention that the actual trading will happen in New
Jersey
everfrustrated wrote 9 hours 36 min ago:
I learned recently that Nasdaq imposes DEI on companies as a
requirement of listing.
kasey_junk wrote 9 hours 21 min ago:
The 5th circuit struck those rules down last year.
afavour wrote 9 hours 47 min ago:
Itâs frauds all the way down
vessenes wrote 9 hours 42 min ago:
downvoted -- this is a low quality comment, and worse, it's
uninformed. Texas may be lower reg than NASDAQ at launch, and
it may compete for business that way, and consumers may or may
not like this and may or may not benefit from it.
However, post Sarbox US is vastly more regulated than the
markets that "built" Silicon Valley, and there are many costs
to corporations, founders and employees of that heavier
regulation -- including a radically less friendly public
capital market for companies worth hundreds of millions of
dollars.
booi wrote 10 hours 17 min ago:
except developing AI is very much a knowledge exercise with very
little dependency on location.
You don't move your manufacturing business out of Shenzhen because
the entire hard supply chain from mining, refining, manufacturing,
test, ship and trade are all there. You can't move a refinery that
easily much less the entire supply chain.
brokencode wrote 10 hours 9 min ago:
Sure, but most of the countryâs AI talent is concentrated
there. Not to mention venture capital.
Whatâs the advantage of moving? Maybe lower taxes and a cheaper
rent.
That seems like a small price to pay compared to the hundreds of
billions theyâre putting into data centers.
alfalfasprout wrote 10 hours 6 min ago:
They're concentrated there because they've been asked to
concentrate there. That can change on a dime.
It's not like data centers are mainly in SF.
hamdingers wrote 8 hours 24 min ago:
You've got it backwards.
Well paid engineers congregate in California because it's a
nice place to live if you can afford it.
Therefore if you want to hire the best engineers, and want an
in-office work culture, you need to go to California.
terminalshort wrote 7 hours 47 min ago:
Well paid engineers congregate in CA because that's where
the companies that hire well paid engineers congregate, and
they (mostly) want those well paid engineers to come to the
office every couple of days. I don't know how you could
get the causality so completely backwards on this.
shuckles wrote 9 hours 25 min ago:
> That can change on a dime.
People tried very hard to change it between 2020-2023 and
utterly failed.
bchasknga wrote 6 hours 5 min ago:
Cries in the number of "next Silicon Valley" in the last 30
years.
vessenes wrote 9 hours 45 min ago:
I think you're wrong. The concentration is for a host of
reasons. Witness the large number of cities and countries
that have tried to create a local Silicon Valley competitor
unsuccessfully over the last 25 years.
The data centers I think prove this point, and disprove yours
-- huge spend has gone into data centers, but places like
Wenatchee remain stubbornly not Silicon Valley.
Intel has not made Portland into SV. Austin, while a tech hub
and one of the US supply chain centers for hardware, is
multiple orders of magnitude less productive than SV for tech
startups. Productive as in numbers of unicorns, total value
creation, however you want to spin it.
make3 wrote 10 hours 31 min ago:
In the US, one has to remember that megacorps usually end up winning,
as people mostly only care about money and blindly supporting
corporations is seen as pro-economy. There are also no limits on
political financial contributions, and people have really short
attention spans.
Politicians taking the superficial short-term win, as they will end
up giving in to the megacorp anyway, is not surprising to me.
philipallstar wrote 10 hours 3 min ago:
> and blindly supporting corporations is seen as pro-economy
These clumsy stereotypes are so pointless.
afavour wrote 9 hours 46 min ago:
Itâs a broad statement but I wouldnât say itâs an incorrect
one.
harmmonica wrote 10 hours 34 min ago:
If they're still based in CA when they IPO at least those initial
taxes will be collectible in state (assuming they're structured in a
way where the IPO is a taxable event for the leadership and staff).
Pretty sure the taxes collected from OpenAI will be the single
biggest IPO tax windfall ever (correct me if I'm wrong, but I can't
think of a bigger one).
dragonwriter wrote 10 min ago:
stocks sold by the company in an IPO arenât taxable income.
Pre-IPO stocks that people liquidate because there is now a liquid
market and they want to realize some gains will generate some, but
I donât know how youâd predict the magnitude of that.
mmooss wrote 56 min ago:
What are the taxes on an IPO?
It's capital gains, which aren't taxed until the capital (IPO
stock) is liquidated. I'm sure some people will liquidate their
stock promptly but I expect that most will hold it, expecting
further growth, and that the big investors, including Altman, will
hold onto it for because of the same reason, because they need to
sell optimism (what would people think if Altman or Microsoft sold
a significant chunk of stock?), and because OpenAI needs lots of
assets to build datacenters and buy power.
cosmicgadget wrote 10 hours 31 min ago:
We're finally going to get that bullet train.
int_19h wrote 7 hours 8 min ago:
Yeah, but it'll be run by ChatGPT. ~
harmmonica wrote 10 hours 20 min ago:
Oh man know I know I shouldnât say it but thatâs a genius
reply! Thanks for the (depressing) laugh.
s3r3nity wrote 10 hours 27 min ago:
lol if you think $ was the barrier there, I have a few bridges to
sell you tooâ¦
Hansenq wrote 10 hours 38 min ago:
In any negotiation, you need to understand what leverage either side
has. In this case, CA could block the conversion, and OpenAI could
leave California. Both are possible but extremely unlikely outcomes!
So the whole point is to take these unlikely outcomes to the table,
negotiate in good faith, and come out with an agreement.
So California needs to believe that OpenAI will stay in California
just as much as OpenAI needs to believe that CA won't block the
conversion (or impose other onerous regulations around AI). So yes,
it's possible to speculate about whether or not people are sincere in
their motivations, but when you need to make a deal, there needs to
be a measure of good faith and trust on both sides in order to make
something happen.
And in this case, both sides are incentivized to make the deal.
OpenAI wants to be a PBC in order to access more capital, and
California wants OpenAI to be a PBC so that it can IPO so that all
employees (all of whom are likely CA residents), will sell stock,
which can then be taxed as CA income.
johnrob wrote 9 hours 3 min ago:
If I am understanding things correctly, OpenAI could leave in the
future - but CA canât retroactively block the conversion in that
case.
overfeed wrote 2 hours 39 min ago:
California is home to 1 in 8 Americans, and likely a much higher
fraction of AI researchers, users and partner organizations to
OpenAI (like Nvidia). The California AG has plenty of leverage
beyond blocking/reversing the conversion. What leverage will
OpenAI have after "leaving"[1] the California?
1. They're guaranteed to have an engineering office in the SF
Bay. Not many of those folk will agree to relocate to
Texas/Miami.
groby_b wrote 8 hours 53 min ago:
Yup, but the IPO will still have happened in CA, and there's
going to be a tax windfall from that.
It's about a moment in time, not an "in perpetuity" agreement.
giancarlostoro wrote 7 hours 21 min ago:
Unless you're Universal and Marvel, leaving Disney unable to
buy out Universal's contract with Marvel, and unable to use
classic comic book characters because the parks too close to
Universals. Still cracks me up.
cma wrote 8 hours 46 min ago:
Not if the big holders aren't residents, they can move away
just before like Rogan with his Spotify deal, or Jonathan Blow
just before a game release after developing in California and
going to public college there, etc.
Since it's a non-profit still holding it any gains to the
non-profit entity upon the conversion don't go to California,
and principal stakeholders can move away. Other funds raised
from the IPO can be invested in other states untaxed (long term
datacenter leases instead of booking the capital of building
one) until they move the company away I think.
There will probably be a lot of smaller stakeholders that stay
with a lot of money for the state, and California at least
doesn't do the $15 million QSBS so they may get a lot from that
tail of employees. A large portion of this tail of lower
compensated employees may get laid off due to AI replacement
before IPO and lose a lot of unvested years, if we are to
believe OpenAI's own claims about timelines for job replacement
in that field at lower levels.
tedd4u wrote 8 hours 1 min ago:
I'd recommend anyone expecting to profit from OpenAI stock
and aiming to avoid California taxes to look into the subject
in depth with paid advisors. The California FTB is not stupid
or naïve and has a history of successfully getting paid for
stock that vested with a California nexus, even if the
beneficiary moves out of state. Good luck!
mlmonkey wrote 6 hours 46 min ago:
Take a look at Shohei Ohtani's contract.
cma wrote 7 hours 16 min ago:
You're right, it's harder with vesting stock compensation
than other things you build up over time like an audience
or a developing a game over a long span.
throwaway294729 wrote 10 hours 43 min ago:
> This isnt a diss to Sam either, it just shows he is motivated by
whatever is best for the entity at any given time.
This is the kind of weird rationalist (?) thing that people say a lot
these days to justify bad behaviors: in this case Sam Altman behaves
like a pathological liar.
gyomu wrote 11 hours 0 min ago:
Perhaps itâs not so much that they believe heâll stay in
California long term if he gets what he wants; more that they do
believe heâll leave in the short term if he doesnât.
brcmthrowaway wrote 11 hours 45 min ago:
Is it possible for a poor fool retail investor to invest in OAI
bazmattaz wrote 9 hours 3 min ago:
From what i understand, and Iâm no expert, is that all the smart
money Is able to get in on an IPO early on way before retail
investors have a chance. By the time the retail investors have a
chance itâs too late and usually the stock dips post IPO as the
early investors sell.
Of course the stock can rise again eventually.
astrange wrote 10 hours 47 min ago:
Just buy $QQQ.
The correct time to invest in individual companies is never.
brcmthrowaway wrote 8 hours 25 min ago:
How much?
astrange wrote 8 hours 22 min ago:
[1]
URI [1]: https://en.wikipedia.org/wiki/Kelly_criterion
URI [2]: https://en.wikipedia.org/wiki/Post-modern_portfolio_theo...
starchild3001 wrote 3 hours 22 min ago:
I recently downloaded about 10 years of monthly price returns
for QQQ, TQQQ, NVDA, GBTC, and a few others. Then I asked
ChatGPT and Gemini (separately) to find the portfolio that
maximizes an adjusted CAGR â roughly, mean return minus ½ Ã
standard deviation².
Result: 70% NVDA, 30% GBTC (Bitcoin), and 0% QQQ or TQQQ.
Honestly, not a bad mix â especially for a small, high-risk
slice of your portfolio.
Next, I compared TQQQ (Triple Qs) vs. QQQ using the same
10-year monthly data. The optimizer picked 100% TQQQ, which
again makes sense if youâre doing this in a tax-advantaged
account like a 401(k) or IRA and only with money youâre
willing to take some risk on.
Then I expanded the dataset â 55 years of returns across
major asset classes (S&P 500, gold, short- and long-term
Treasuries, corporate bonds, real estate, etc.) â and asked
for the optimal portfolio.
The winner: ~85% S&P 500, 15% gold, though 75/25 gives nearly
the same return with a better Sharpe ratio.
A few quick takeaways:
Gold â GLDM ETF is the best vehicle.
QQQ â QQQM or TQQQ are the best versions.
And if youâre feeling adventurous: 70% NVDA, 30% IBIT
(Bitcoin) isnât crazy.
For what itâs worth, Iâve been running 75% stocks / 25%
gold for a while now, but Iâm thinking of carving out ~10% of
the stock portion for a more aggressive tilt: TQQQ (6%), NVDA
(2%), IBIT (1%) â because why not?
astrange wrote 2 hours 12 min ago:
Are those pre or post tax returns? Gold is taxed as a
collectible which is pretty bad.
Thinking about it, my recommendation is read: [1] and then
after maxing your 401k, open a Betterment account, and then
max your HSA if applicable. The tax savings easily best
custom portfolio picking.
URI [1]: https://www.reddit.com/r/personalfinance/wiki/index/
hshdhdhehd wrote 11 hours 34 min ago:
The bag is being designed, cut and stitched, with retail investor
shaped handles.
Sparkyte wrote 12 hours 34 min ago:
Staying in California doesn't mean it will keep employees in
California. Prepare for the great offshoring.
jacquesm wrote 12 hours 50 min ago:
Prediction for the future: OpenAI IPO's lots of money changes hands, it
chugs along for a while, hits a hard spot and then is taken private for
pennies on the dollar by Microsoft.
bwfan123 wrote 8 hours 41 min ago:
my prediction is that the ai-bubble pops no later than when openai
files for its ipo. openai has an incentive to keep its finances
outside of the prying eyes of the public shareholders. This way their
mystique is kept in tact, and nobody can question their capex and
datacenter investment claims. But, it is becoming difficult since
msft now reports on their openai holdings.
vessenes wrote 9 hours 31 min ago:
Jacques, I've been reading and enjoying your posts here for at least
15 years. (Thank you for your service.)
But I think you're totally incorrect on this; oAI is going to be one
of the enduring tech consumer brands built in this half of the 21st
century.
jacquesm wrote 5 hours 42 min ago:
Time will tell. I've been wrong before. Note that I'm not saying
that OpenAI will disappear, just that it will end up as a wholly
owned subsidiary of Microsoft.
bazmattaz wrote 8 hours 56 min ago:
Why do you say so? Theyâre burning cash and donât currently
have a viable path to profitability. Sure they have millions of MAU
but not many paying ones.
vessenes wrote 58 min ago:
Iâve written about it at some length here, but tldr: their ops
are super profitable, likely 1bn per month net income right now.
Their R&D costs are immense. You need to believe a story in which
their R&D is a waste and other Competitorâs R&D is not or
alternately all R&D in the space is a waste and they somehow are
unable to use their capital advantage to maintain their
substantial brand lead before you believe they are doomed.
laluser wrote 8 hours 14 min ago:
Look at all the companies that have 'burned cash' with no viable
path to profitability over the last 20 years. The good ones
outlive that criticism, easily. Think Uber, etc. They clearly see
a path to profitability and they have plenty of room to
experiment here with what works. With new partnerships and
dependencies, they won't run out of cash for a long time.
array_key_first wrote 5 hours 43 min ago:
I would not be convinced they outlive the criticism.
I think it's highly likely in the next 10 years companies like
Spotify and Uber will no longer exist. They're fundamentally
antogonistic to their capital.
bazmattaz wrote 37 min ago:
Spotify is a profitable business now though right? Sure it
doesnât make huge profits due to paying out about 70% to
larks but itâs finally profitable
nmfisher wrote 7 hours 33 min ago:
I donât know the exact numbers, but I feel like OpenAI raised
far more money than those companies, burned through it far
quicker and has much more competition with a much shakier value
proposition.
They definitely have a strong consumer brand so itâs not like
theyâre going to disappear, but I understand the bear case.
laluser wrote 7 hours 6 min ago:
Sam A is pretty well connected and knows the game well. No
doubt there will be some risks where the whole thing goes
right down to zero, but I personally wouldn't bet against
them.
nmfisher wrote 4 hours 3 min ago:
I'm sure Sam A will be fine, an IPO will probably see him
ride off into the sunset with billions.
The average public investor buying pre-IPO shares, though,
is a different story.
int_19h wrote 6 hours 50 min ago:
I wouldn't bet against Sam Altman personally, but that's
very different from betting on OpenAI.
empath75 wrote 11 hours 35 min ago:
Open AI will probably have the highest market cap of any company in
the world on the opening day of trading.
sipjca wrote 10 hours 52 min ago:
that would be certifiably insane
DenisM wrote 12 hours 45 min ago:
Could you elaborate? Not looking for a proof, just want to
understand your train of thought. Always liked your commentary.
Thanks!
dmbche wrote 9 hours 31 min ago:
Spitballing
There is no clear path to the trillion dollars today. By IPOing,
the owners (who have a good idea of where it's going) can exchange
their ticket to the trillion for cash today.
Seems like a bad deal unless you know the ticket won't get called.
Then you've just made bank.
And you might have noticed some form of hype around AI these last
few years - arguably this could be to make the trillion dollar seem
more realistic and therefore making the owners more money when
selling their ticket to it.
hshdhdhehd wrote 11 hours 23 min ago:
Probably predicting either pop of AI bubble like dotcom in 1999 or
the OpenAI emperor has no clothes and the marker sees its shrunk
hunk.
fourseventy wrote 13 hours 9 min ago:
How can a non-profit IPO? I know that technically OpenAI is a
for-profit company that is owned by a non-profit, but I still don't get
it.
vessenes wrote 9 hours 37 min ago:
There's so, so much misinformation about this out there.
For example - every US nonprofit starts as a plain old vanilla C
corporation, and then applies for 501(c)3 status which the IRS may or
may not grant. It's a privilege to be a nonprofit.
The punishment that may be levied on a nonprofit is ... loss of that
status and a return to a commercial corporation. That loss of status
might have knock-on impacts on things like, say, tax deductions
offered to donors, and I guess possibly on corporate income tax to
the extent a company's accounting shows a profit. But it's not a
thing you're "locked into" somehow and trying to escape. Quite the
opposite; it's a thing the Federal government chooses to support
financially as a matter of public policy.
oAI had a lot of work to do to get recapitalized like it did, but it
was not the non-profit status that was the (major) problem. It was
(at the least) the investment covenants made with the Microsofts of
the world that bound them; the MS deal was the big thing here.
LudwigNagasena wrote 7 hours 58 min ago:
A corporation is locked into its nonprofit status due to its
articles of incorporation and state law regardless of its federal
tax-exempt status.
vessenes wrote 41 min ago:
I think itâs generally more accurate to say that charitable
assets are likely either locked to charitable purposes or need a
fair valuation in case of disposal or wind down. I donât know
all the details here, but I would guess itâs enough of a mess
between the parent and the for profit sub that some negotiation
was inevitable.
adastra22 wrote 12 hours 49 min ago:
It is being restructured to no longer be a nonprofit, but a
for-benefit corporation instead. That is why California's approval
was required (and IMO is just as corrupt as it sounds).
stefan_ wrote 10 hours 35 min ago:
So they avoid billions of tax on nonprofit status, then magically
get to keep it all when they are for-benefit? How about no, fuck
you, dissolve?
ergocoder wrote 10 hours 34 min ago:
I mean, OpenAI has never been profitable. If anything, they are
insanely unprofitable.
terminalshort wrote 7 hours 39 min ago:
The more interesting question is will they be able to deduct
those past losses (while they were "nonprofit") from their
future income in the same way they could if they had been a
normal corporation all along.
polski-g wrote 12 hours 9 min ago:
But aren't non profits a federal thing with rules dictated by the
IRS? Why is California involved?
adastra22 wrote 9 hours 31 min ago:
Corporations and nonprofits are a state regulated thing. The IRS
only gets involved to approve whether donations are federally tax
deductible and things like that, which apply to federal tax laws
only.
mrbabbage wrote 10 hours 53 min ago:
Corporate law is overwhelmingly state law. Every federally tax
exempt entity is a state (or foreign) corporation or other kind
of entity, and states (or foreign governments) impose rules on
corporations registered in their borders.
Plus, many states levy their own corporate taxes. A nonprofit
corporation needs to secure tax-exempt status from states as well
as the federal government. This is a necessary implication of
America's dual-sovereignty system.
wbl wrote 10 hours 57 min ago:
Because charities are also regulated by states as are all
corporations. There is no federal corporate governance statute.
JumpCrisscross wrote 11 hours 56 min ago:
> aren't non profits a federal thing with rules dictated by the
IRS? Why is California involved?
Most states incorporate federal rules for their own exemptions
for charities and non-profits. California treating OpenAI to date
as a non-profit has revenue implications for Sacramento.
righthand wrote 12 hours 4 min ago:
The Usa is divided into states, each with their own legal
jurisdictions. Businesses tend to pay taxes to their state.
OpenAI is headquartered in San Francisco, California.
swyx wrote 13 hours 8 min ago:
you can IPO the for-profit subsidiary. done before. the main tricky
part is resolving the tax issues since as a non profit you are
exempt, but obviously a for profit is not exempt from paying taxes
throwup238 wrote 12 hours 51 min ago:
Mozilla has this same structure (non-profit parent, for-profit
subsidiary) because the subsidiary has to pay taxes on the money
Google pays to be Firefox's default search engine.
As do many gift shops attached to non-profit museums and art
galleries.
mdasen wrote 10 hours 20 min ago:
The difference is that Mozillaâs for-profit arm is owned by the
non-profit. The for-profit part of OpenAI is there to make a lot
of individuals and for-profit corporations rich.
OpenAIâs profit-generating subsidiary isnât just there to
further the non-profit mission like a museum gift shop or
Mozillaâs for-profit subsidiary.
throwup238 wrote 9 hours 10 min ago:
Thatâs why this was scrutinized more and the California AG
got involved but itâs not that rare either.
Novo Nordisk the maker of Ozempic for example IPOd, diluting
the Novo Nordisk Foundationâs share (though they still have
controlling voting rights due to share classes IIRC) to raise
money. SRI International spinoffs often get sold (Siri) or
raise money and IPO (Nuance) diluting the nonprofitâs share
significantly in the process.
A nonprofit that owns a for profit subsidiary is no different
than a regular shareholder and can decide that diluting to
reward employees or get investors is worth it to grow the value
of the whole company.
scyzoryk_xyz wrote 10 hours 47 min ago:
OpenAI - the AGI entity with a gift shop.
jameslk wrote 13 hours 15 min ago:
TFA:
> OpenAI had spent months making the case that it was the economic
heart of the California economyâand would be willing to leave if
Bonta blocked its plan to convert to a simpler corporate structure. [1]
:
> California is my home, and I love it here, and when I talked to
Attorney General Bonta two weeks ago I made clear that we were not
going to do what those other companies do and threaten to leave if
sued.
Hmmm...
URI [1]: https://x.com/sama/status/1983223056668746218
thaumaturgy wrote 9 hours 41 min ago:
OpenAI announced $10 billion ARR in June of this year ( [1] ).
Agriculture in California hit $61 billion in annual receipts in 2024
( [2] ).
So, not that OpenAI isn't big, but, "the heart of the California
economy"?
OpenAI needs to IPO, because if they don't get in on the current meme
stock economy, they're going to collapse.
URI [1]: https://www.cnbc.com/2025/06/09/openai-hits-10-billion-in-an...
URI [2]: https://www.cdfa.ca.gov/statistics/
burningChrome wrote 10 hours 10 min ago:
Musk said the same thing about CA too. All CEO's make decisions based
on what is best for them and their companies. There is no loyalty in
business.
Edward Niedermeyer, author of âLudicrous: The Unvarnished Story of
Tesla Motors,â said Musk was happy to benefit from Californiaâs
largesse when it suited him and to move on when he saw fit.
âI think Musk has made the calculation that heâs gotten all the
benefits heâs likely to get out of the state and heâs moving on
to the next one,â Niedermeyer said. âThe state of California
clearly thought that all its work bought loyalty [from Musk] but,
instead, I think it bought a sense of entitlement.â
Elon Muskâs messy divorce with California leaves ugly grievances
all around:
URI [1]: https://www.latimes.com/california/story/2024-07-23/elon-mus...
isx726552 wrote 11 hours 37 min ago:
This feels like a narrative being pushed. Tech oligarchs these days
are flexing by showing off how much they are able to bully
government, and Altman wants to get in on the game by spinning things
this way. Iâm not convinced they really bent the rules for OpenAI
any more than usual given they only employ a few hundred people.
dmix wrote 11 hours 27 min ago:
I doubt OpenAI has to try very hard to convince state politicians,
especially to the point of bullying. It's usually the complete
opposite where they throw money at you to stay.
Imagine if California managed to scare away the hottest company in
the world and all the tax revenue it brings...
colinmorelli wrote 11 hours 32 min ago:
OpenAI has over 5,000 employees. In addition to their headcount,
they are now the highest valued private company in the world.
They're going to have some leverage.
swyx wrote 13 hours 12 min ago:
> if Bonta blocked its plan to convert to a simpler corporate
structure.
i'm a bit out of the loop but honestly why does California have a
say? surely the investor base and Microsoft was a far harder
negotiation than this one. this one smells of govt overreach.
array_key_first wrote 5 hours 52 min ago:
Yes, blocking a NON-PROFIT from magically IPO-ing as a for profit
company and therefore skirting years of taxes is overreach.
Guys, the only state morally bankrupt enough to just allow that is
Texas. Why do you think these tech bozos love Texas? It's basically
cyberpunk over here. Our government actively hates us.
We struck down paid water breaks in Texas. I once worked a job with
no breaks at all. 10 hour days, no lunch. Yes, that's legal here.
ergocoder wrote 3 hours 31 min ago:
The point about profit is a bit moot because OpenAI would have
never paid any tax if it were for profit, as in they haven't made
any profit.
conradev wrote 11 hours 29 min ago:
But who oversees how charities use their assets and ensures that
they are used for public benefit?
That job lies with the Charitable Trusts Section of
Californiaâs Office of the Attorney General, which is part of the
stateâs Department of Justice. Charged with both regulatory and
law enforcement responsibilities, the section has a big job.
URI [1]: https://www.svcf.org/about/news-media/blog/california-atto...
mandevil wrote 12 hours 36 min ago:
Because of the unusual history of OpenAI, the Government had far
more of a say than normal for a company. Remember, OpenAI was
originally created as a California non-profit (a charity doing work
to create a better AI future). As a charity, it doesn't have to pay
the same taxes as it would as a for-profit company, but in exchange
it has more rules it needs to follow. And then it released ChatGPT,
it exploded in value, it needed to raise truly absurd amounts of
capital in order to get to the next model, and thus the lawyers had
to spend a good long time extracting the company from the charity.
For very good reasons, the laws make it hard to go from a charity
to a for-profit company- because if you could easily transition
between the two you could game tax laws with ease. In the end,
being allowed to do this required negotiations, and promising to
keep OpenAI in California- where they would be subject to other
California regulations and taxes in the future.
If they had a "normal" corporate history- had been founded as a
Delaware S Corp from the beginning- then this wouldn't be a thing
and they would be free to move as they like(1). But, being a weird
charity probably helped them attract talent in the critical
beginning phases (before it became a money race with Zuck), and it
has consequences now.
1: Just as an example, Palantir moved their corporate headquarters
to Denver from Palo Alto years ago without a peep from the CA
government.
terminalshort wrote 7 hours 32 min ago:
I don't know whether or not OpenAI should be allowed to convert
to a for profit corporation. That sounds like a complex legal
question. But I'm pretty damn sure that the decision absolutely
shouldn't depend on whether or not the company stays in CA to
provide a cash cow for the government on IPO. This whole thing
reeks of corruption.
JumpCrisscross wrote 10 hours 15 min ago:
> a California non-profit (a charity doing work to create a
better AI future)
Note: non-profit != charity. (All charities are non-profits. Not
all non-profits are charities. PACs and non-profit hospitals, for
example, are not charities, though the latter can have charitable
arms.)
mandevil wrote 8 hours 52 min ago:
While that is true in the general case, OpenAI was founded as a
501(c)3 to whom all donations were tax-deductible, which is why
I used non-profit and charity interchangeably in describing it
in particular. There was a for-profit subsidiary spun up in
2019, four years after the original non-profit was created. But
it was still owned and operated by the larger non-profit
charity organization.
See, for example, Charity Navigator's page on OpenAI:
URI [1]: https://www.charitynavigator.org/ein/810861541
bix6 wrote 13 hours 0 min ago:
Because the company was formed as a non-profit and now wants to
cash out? He has to protect the integrity of non-profits as a
distinct entity type.
danielmarkbruce wrote 13 hours 7 min ago:
The entity in question operates in california and is thus subject
to california law. California has laws around charitable entities.
One might reasonably claim it's overreach, but in response OpenAI
could just leave the state. Which is what they threatened.
wbl wrote 10 hours 55 min ago:
Not when the AG sues the board and Sam for all the violations
that happened around his ouster. The board isn't independent.
terminalshort wrote 7 hours 32 min ago:
Violations such as?
danielmarkbruce wrote 3 hours 47 min ago:
Such as those made up in people's heads because they don't
happen to like a guy they never met.
danielmarkbruce wrote 9 hours 31 min ago:
They absolutely can leave the state.
Board independence is largely a silly idea, people aren't even
on the same page as to what the board is supposed to be
independent of, and in this case it's not even clear which
board you mean - the current one? The previous one? In what way
are they less independent than any other board?
JumpCrisscross wrote 8 hours 41 min ago:
> people aren't even on the same page as to what the board is
supposed to be independent of
In the U.S. they absolutely are. The SEC defines independent
directors [1]. If the majority of a (Delaware corporation's)
Board isn't independent, it opens up the company and even
individual Board members to heightened scrutiny by the courts
[2]. [1]
URI [1]: https://www.skadden.com/-/media/files/publications/2...
URI [2]: https://www.faegredrinker.com/en/insights/publicatio...
danielmarkbruce wrote 4 hours 38 min ago:
You link to a skadden doc, not an SEC rule, and in that doc
the first words are:
"Independence is neither a fixed condition nor a universal
status for all purposes. " and goes on to talk about how
complicated it is to even define and how it depends on who
is defining it.
Your document makes my exact point, not yours. You are out
of your depth.
JumpCrisscross wrote 2 hours 29 min ago:
> Independence is neither a fixed condition nor a
universal status for all purposes
This is true of all law. That doesnât mean âpeople
aren't even on the same page as to whatâ it means.
> Your document makes my exact point, not yours. You are
out of your depth
It doesn't and probably not. How many boards have you
been on? Public companies? Non-profit? Have you litigated
a shareholder lawsuit under Delaware law?
hrimfaxi wrote 13 hours 10 min ago:
Corporations exist at the pleasure of government do they not? They
are not some naturally-existing thing.
JumpCrisscross wrote 13 hours 3 min ago:
> Corporations exist at the pleasure of government do they not?
No. âAt the pleasure ofâ means total discretion. The
government canât just stop letting businesses incorporate
because it doesnât like how a county voted.
NickC25 wrote 9 hours 32 min ago:
>The government canât just stop letting businesses
incorporate because it doesnât like how a county voted.
The government can revoke a corporation's charter at any time
it desires to.
terminalshort wrote 7 hours 21 min ago:
No it can't. It must comply with other constitutional
obligations like the equal protection clause and 1A.
Basically any action to revoke the charter of a single
corporation (or group of corporations) for any reason other
than violating pre-existing law is going to be very hard to
justify in court. And threatening to leave the state is
clearly not against the law (nor could it ever be because
that law would violate 1A). Furthermore, even if a state is
able to revoke a corporate charter, it can't stop it from
re-incorporating in another state and continuing to do
business in the original state under its new charter
(commerce clause).
hrimfaxi wrote 11 hours 34 min ago:
Why can't the government do that? Is it because the government
created laws that limited its total discretion? That is besides
my point. The people allow for corporations to exist is what I
was getting at, and in the US businesses incorporate at the
state level. So asking why California has a say in the
structure of a company incorporated in it seemed odd to me on
its face.
terminalshort wrote 7 hours 13 min ago:
> Is it because the government created laws that limited its
total discretion?
Yes. As you said, "the people allow for corporations to
exist," and the same people created the government and allow
it to exist. And when those people created that government
they created rules that govern what laws the government is
allowed to enact. Those rules are known as the constitution.
And one of the first rules the people made when they created
the government is the aptly named "first amendment." And
that rule clearly states that the government can't take legal
action against a citizen for saying something the government
doesn't like. The CA government retaliating against OpenAI
for its CEO threatening to leave the state would clearly
violate this rule.
JumpCrisscross wrote 1 hour 22 min ago:
> that rule clearly states that the government can't take
legal action against a citizen for saying something the
government doesn't like. The CA government retaliating
against OpenAI for its CEO threatening to leave the state
would clearly violate this rule
What? Conspiracy to commit a crime is punishable. If you're
credibly threatening to do something that could be
unlawful, the state can pursue that. Altman, of all people,
is not being punished for his speech. Nor has he any track
record of free speech bona fides to stand on.
zeroonetwothree wrote 12 hours 55 min ago:
There is no constitutional right to incorporate. Theoretically
states could stop it at any time. Although they would still
have to honor corporations formed in other states so itâs of
limited effect.
terminalshort wrote 7 hours 28 min ago:
But there is a constitutional right to equal protection under
the law. So while a state can say "everybody can
incorporate" or "nobody can incorporate" without scrutiny,
there are some pretty hash restrictions on rules that say
some people can incorporate and others can't, especially if
those restrictions look like they are written to be
retaliatory against someone who pissed off the government.
JumpCrisscross wrote 12 hours 39 min ago:
> There is no constitutional right to incorporate
The Constitution directly grants very few individual rights.
Itâs mostly a document about what the government canât
do.
> Theoretically states could stop it at any time
Sure. Thatâs not âat the pleasure of.â Driverâs
licenses are not issued âat the pleasure ofâ a state.
Neither are marriage certificates. Theyâre issued as a
matter of process that binds both the issuer and recipient to
a predictable set of rules.
atonse wrote 13 hours 6 min ago:
I would think that sort of framing implies that the government
gives them permission to exist.
Rather than, the natural state is that they exist unless they do
something bad enough to be shut down.
Unless you mean, they need the government's "permission" to even
file to become a corporation... But even in that case, you aren't
asking for permission, you're doing the old school equivalent of
signing up for a domain, you're submitting a filing and reserving
a spot for that name/ID.
palmotea wrote 12 hours 21 min ago:
> I would think that sort of framing implies that the
government gives them permission to exist.
> Rather than, the natural state is that they exist unless they
do something bad enough to be shut down.
JFC, come on. Corporations are legal entities and have no
existence separate from the law. If they even have a natural
state, that natural state is non-existence.
JumpCrisscross wrote 10 hours 13 min ago:
> If they even have a natural state, that natural state is
non-existence
A corporation is a legal fiction that describes an
association of people. The association is real and has a
natural state. The corporate existence does not. (Analogous:
a house is real. Land is real. Property is a social
construct.)
atonse wrote 9 hours 25 min ago:
This is exactly my point that you articulated in way fewer
words, thanks.
atonse wrote 10 hours 55 min ago:
Yeah I think we're splitting hairs and actually aren't in any
sort of disagreement here. I 100% agree that you have to be
registered on paper with a government entity to get all the
legal protections, insurance, etc etc etc. I've been a
business owner for nearly 20 years. Like, a real business,
with real paperwork and insurance and all that.
I'm thinking of all the unofficial mom and pops that transact
and do business every day without having a proper legal
entity. so it's more of a "does that count as a business even
if they didn't file articles of incorporation?" of course it
does, as far as its customers are concerned.
Think of the idea of "this guy has a lawn care business, I
pay him every week to mow my lawn for 10 years", as far as
his customers are concerned, he didn't need to get permission
from the government to start doing that. And this sort of
thing happens all the time.
I am NOT arguing whether a business where you filed articles
is a legal entity, etc. There's no question that they are.
Hope that clarifies my point.
int_19h wrote 7 hours 2 min ago:
I mean, if Sam Altman wants to run OpenAI as individual
proprietorship, without the limited liability that
corporate shield gives, he's totally welcome to do so, and
that would require far less paperwork.
travisjungroth wrote 11 hours 56 min ago:
> All corporations are devoid of inherent nature.
> There is no inherent nature whatsoever.
> What is inherently existing is empty.
> What is empty is inherently existing.
NÄgÄrjuna vs Delaware
ElevenLathe wrote 12 hours 59 min ago:
It's more than that. When you file to incorporate, there is a
birth. A new person is created, one that can potentially never
die. Yes, it's routine, but it wasn't always, and it doesn't
need to be forever. The ability to create a new, fake, person
in order to shield yourself and your business partners from
liability is a not a right. It is a deliberate policy that some
sovereign jurisdictions allow their citizens.
trilogic wrote 13 hours 21 min ago:
OpenAi managed to keep Microsoft as major shareholder. Looking at the
speed of growth Nvidia and friends are growing, OpenAI is 1 click far
to IPO and one more click to 10x after IPO then finally buy Nvidia when
GPU market cools down.
Just sayin...
leetharris wrote 13 hours 26 min ago:
This is kind of a wild story. Sam Altman is openly flexing that he was
able to skirt the rules and regulations by threatening economic damage
to California. It's not even subtle anymore.
This reminds me of when the former CEO of Hyundai, Chung Mong-koo, went
to prison for embezzlement. In just 3 years he was pardoned because the
President of South Korea basically said, "we need you for the economy."
We're not even pretending that the government is in control anymore.
It's just full on anarcho-capitalism on display.
scottrogers86 wrote 11 hours 50 min ago:
didn't Sam does this before with another company? he was able to
restructure it and come out on top... searching for article... was it
Helion? now that i think harder, didnt he comment about it on HN??
clhodapp wrote 5 hours 26 min ago:
You might be thinking of Reddit
GolfPopper wrote 12 hours 33 min ago:
That seems like expected behavior from someone whose barely veiled
pitch is "the first one to AGI will IPO - Install Planetary
Overlord.[1] Give me money and be part of the future ruling elite!"
(Whether his actual plan is based on what he's saying in public, or
to take the money and run, permanently install his company as in
inescapable rent-extracting middle-man for modern life[2], or
something else, I don't know.)
1. Credit to Charles Stross, The Jennifer Morgue
2. Thneed-style capitalism
trhway wrote 13 hours 9 min ago:
The government believed him that OpenAI will stay in CA the same way
that that government, OpenAI founders and others believed that OpenAI
will be non-profit.
I think here is the answer to another commenter's question about
success - it looks like great success comes to one who is able to
recognize in time when old obligations become "obsolete" and thus
drop them well before those obligations start to block or heavily tax
the way to further success.
swyx wrote 13 hours 11 min ago:
> threatening economic damage to California.
whoa there. corporations have the right to move to the best location
for them. California does not have the eternal right to OpenAI's
taxes and employee base. think about what you're implicitly assuming
here. if one company simply leaving causes concerning "damage" then
perhaps it is the government that is the problem, not the corporation
driving economic growth.
jayd16 wrote 7 hours 52 min ago:
Maybe its the insane wealth gap that's the problem...
dmitrygr wrote 8 hours 33 min ago:
> California does not have the eternal right to OpenAI's taxes and
employee base
ehh.... [1] Skip to the "What California Can Still Tax After You
Leave" section
If they do this to people, i am sure they can to corps too
URI [1]: https://www.greenbacktaxservices.com/blog/california-exit-...
dragonwriter wrote 13 hours 7 min ago:
Corporations are applications of government power and have no
natural rights, their legal rights are at best proxies for the
rights of natural persons with some interest in them, and at worst
a fiction which serves to limit the rights of natural persons.
Also, having a right to do something does not contradict a
description of you leveraging power by using a threat of doing it,
in the first place.
JumpCrisscross wrote 13 hours 0 min ago:
> Corporations are applications of government power and have no
natural rights
Sure. Whatever. The people who own and work at OpenAI have no
obligation to remain in California.
(Iâd also argue that global norms are currently walking back
from the notion of natural rights pretty much everywhere except
for in some parts of Europe. The concept doesnât work without
an appeal to divinity.)
MichaelZuo wrote 11 hours 14 min ago:
The legal entity is what owns the IP, contracts, obligations,
property, etc⦠so even if 100% of the current employees and
owners moved, their collective worth and prospects would be
significantly reduced if the legal entity doesnât also come
along.
rxyz wrote 13 hours 8 min ago:
Corporations used to not have that much political power
platevoltage wrote 8 hours 25 min ago:
Yeah. The East India Company was famously powerless.
krapp wrote 12 hours 52 min ago:
Corporations used to have their own militaries, they colonized
entire nations and owned people. They underwrote kings and
empires.
int_19h wrote 6 hours 59 min ago:
While this is all true, they were limited to targeting smaller,
less economically developed nations, where a private army was
sufficient.
Today, though, one can reasonably argue that megacorps have
managed to successfully capture the most powerful government on
Earth.
danielmarkbruce wrote 13 hours 15 min ago:
This is very cynical, and almost certainly deliberately false take.
Many situations are fundamentally uncertain with respect to
laws/rules in place. The idea that they "skirted rules and
regulations" is wrong. Did they push in an attempt to get a decision
made which would favor them? Sure. But there was a decision to be
made.
And, the people are supposed to be in control anyway, not the
government.
int_19h wrote 6 hours 56 min ago:
This is Sam Altman we're talking about, a man with a long track
record of conning people. I don't think any benefit of the doubt is
warranted here - I'm going to assume guilty unless and until
clearly proven innocent because you only get to screw people over
so many times.
danielmarkbruce wrote 4 hours 30 min ago:
It doesn't matter who it is, it's naive about how the legal
system works and takes the worst possible view of all the actors
involved.
This wasn't some straightforward matter. Many things are not.
OpenAI are not obliged to passively sit and wait while various
other parties try to influence the outcome (and there were many,
and they weren't nobodies).
coliveira wrote 10 hours 59 min ago:
With cynical people, a cynical take is the right one.
CamelCaseName wrote 13 hours 19 min ago:
Can someone explain to me what Sam Altman is doing to be so far ahead
of everyone else in terms of navigating these high stakes roles?
This happened at YC and a number of other places too, he goes into
situations with nothing and comes out on top despite all odds.
Is he that skilled an operator, negotiator, or manipulator or
something?
nilkn wrote 5 hours 19 min ago:
His pattern seems to be:
(0) Be exceptionally intelligent and capable of applying that
intelligence to people, not just code or math â necessary for
everything that follows.
(1) Keep attention diversified as long as possible until the
winning path becomes obvious.
(2) Focus on fringe bets, but pursue many simultaneously until one
clearly dominates (see (1)).
(3) Extreme social manipulation â people-pleasing, control- and
power-seeking, selective transparency, skillful large-scale
dishonesty, and a willingness to hurt or betray when it serves (1)
and (2) and the relational cost is acceptable.
(2) brought him into the startup ecosystem and the first YC batch
in the first place (he had to start somewhere); combined with (3)
he made an early fortune from a failed startup. (3) also
ingratiated him with PG and others in those years. (1)+(2) ensured
he always had exposure to every plausible frontier of the industry;
when he was effectively fired from YC for (1)+(3), (2) made the
OpenAI pivot the next obvious move â and a better one. (3) almost
cost him his career a second time when the board fired him from
OpenAI temporarily, but he survived because (3) also ensured he had
enough to offer everyone else that he leveraged his way back in.
btian wrote 10 hours 38 min ago:
He has great foresight, which helps a lot in investing and
operating OAI.
coliveira wrote 11 hours 6 min ago:
There is a book written about this topic. SA is the classic
manipulator. He talks to each person whatever they want to hear,
irrespective of what he really believes. Many of the things he says
about AI and OpenAI are clear BS, but he'll sell that to anyone
with a different flavor.
alhazraed wrote 10 hours 8 min ago:
What book?
bazmattaz wrote 9 hours 9 min ago:
âEmpire of AIâ maybe?
SecretDreams wrote 11 hours 16 min ago:
> Is he that skilled an operator, negotiator, or manipulator or
something?
He probably has everything every politician has ever asked chatgpt
index and ready to be emailed out at any given time?
mrDmrTmrJ wrote 12 hours 28 min ago:
It's a great question. Here are two Paul Graham (PG) quotes on Sam
Altman (Sama) from 2008 and 2009.
Note, PG is the founder of YC, Sam's former boss, and the one who
removed Sam from the position of President of YC after first
appointing Sam to succeed him as President of YC. (Sama was more
focused on OpenAI than on YC at the time, which doesn't work when
you're supposed to be leading YC.)
2008 Essay "A Fundraising Survival Guide" [1] Sam Altman has it.
You could parachute him into an island full of cannibals and come
back in 5 years and he'd be the king. If you're Sam Altman, you
don't have to be profitable to convey to investors that you'll
succeed with or without them. (He wasn't, and he did.) Not everyone
has Sam's deal-making ability. I myself don't. But if you don't,
you can let the numbers speak for you.
2009 Essay "5 Founders" [2] 5. Sam Altman
I was told I shouldn't mention founders of YC-funded companies in
this list. But Sam Altman can't be stopped by such flimsy rules. If
he wants to be on this list, he's going to be.
...
What I learned from meeting Sama is that the doctrine of the elect
applies to startups. It applies way less than most people think:
startup investing does not consist of trying to pick winners the
way you might in a horse race. But there are a few people with such
force of will that they're going to get whatever they want.
That's PG's take on Sama.
I would say, looking at a wide range of Sam Altman's more
investments [3] from OpenAI to Helion energy (Fusion), to Retro
Biosciences (longevity), Neuralink (brain computer interface), to
Reddit
Sama really wants to "build the future," and when some of those
investments "hit", like OpenAI did - basically become the first new
company with a clear path to a $1T valuation since Facebook or
TikTok), you gain immense credibility for "betting the future will
happen and getting your organization there first."
If YC's motto is "build something people want," and OpenAI is now
serving 800M active users while delivering incredible revenue
growth (and investors want to see both). Sama gains power by giving
investors what they want, by giving users what they want, and
basically authoring an entire new type of software company and a
new part of the economy.
A thing to note here is that, being a YC partner and top angel
investor from 2011 to 2020, you can argue that Sam himself is "the
most successful YC graduate." He saw thousands of companies go
through YC. He saw hundreds of 'hard tech companies' go through YC.
And in that decade, he could only have learned an immense amount
about how VCs/successful CEOs think and make decisions. Certainly,
we see the learnings of those experiences in what he's been able to
pull off since.
URI [1]: https://www.paulgraham.com/fundraising.html
URI [2]: https://paulgraham.com/5founders.html
URI [3]: https://observer.com/2025/06/sam-altman-startup-investment...
danielmarkbruce wrote 13 hours 3 min ago:
It's a bit much to say he goes into situations with nothing - he,
along with others created OpenAI. It's a decent sized company now
and they have sway with governments. All decent sized companies do
as employers. This kind of stuff happens all the time and it just
doesn't get reported as much.
bix6 wrote 13 hours 5 min ago:
URI [1]: https://www.newyorker.com/magazine/2016/10/10/sam-altmans-...
FloorEgg wrote 13 hours 13 min ago:
I can only speculate so take it with a spoon of salt... But people
who are really good at sussing out other people's wants can find
ways to make more people happy. It's like a maze of interests and I
guess he's just really motivated and good at navigating and
aligning them (at least among the rich and powerful).
He also seems to understand something about power and perception,
in that he takes calculated risks that seem to keep working out.
So in other words, he seems to be an extraordinarily skillful
politician (in both the general and the Patrick Lencioni sense).
thereitgoes456 wrote 12 hours 54 min ago:
It's too early to say if his risks "keep working out".
Restructuring is not a risk. His, and others', original decision
to make the company a non-profit was also not a calculated risk
in this sense.
When he was fired from OpenAI, his use of employee manipulation
to regain his position is not a risk; it is the only option he
had. It was his bond maturing, of carefully cultivated loyalty he
had accrued over years. Gaining that loyalty was not really a
risk. It was smart politics.
One risk he took is: signing away such a large portion of the
company to Microsoft. I'm not sure whether that is working out.
Another risk he took is: neglecting and sidelining the "safety"
portion of his organization. This caused a talent exodus and led
to the formation of many competitors. I'm not sure whether that
is working out either.
JumpCrisscross wrote 10 hours 10 min ago:
> Restructuring is not a risk...his use of employee
manipulation to regain his position is not a risk; it is the
only option he had
In both cases he had the option of accepting the status quo.
kridsdale1 wrote 13 hours 23 min ago:
Democracy lets us swap out our king and some of the nobles.
The dukes and earls are still essential to run the nation, and must
be courted.
AndrewKemendo wrote 13 hours 34 min ago:
It used to be that you could find an IPO underwriter after 100M in
revenue and growing YoY above others in the competitive basket.
Iâm not sure thatâs true anymore, I think you still need the
revenue, but just need attention. everything else is just whatever
because you canât predict 10 year outcomes for any business at this
point with any level of confidence, and thereâs nothing to compare it
to other than extremely different businesses.
Ultimately itâs more of the same goal with differing levers:
Offload a massive illiquid investment onto the public so that investors
make their fund
Make sure it can tread water long enough for people to forget about it
so it can go through the long and slow enshittification period
After all the prime investors have liquidated and some cooling period,
risk of lawsuits from activist investors drops significantly, they can
ratchet up the margins, do a few years of layoffs to pump the price.
Then everyone involved is back to where they started, only the top 100
richest people put even more distance between themselves and everyone
else so they can now invest in radical life extension or whatever
nemo44x wrote 5 hours 53 min ago:
A ton of regulation happened after 2008/09. So to even become a
public entity itâs a ton of effort and expense. And scrutiny. Not
saying the laws are bad (but overdone) but the side effect is that
small companies with upside donât go to the public market now.
Among other reasons like better developed VC outlets. That were
formed because of the regulations.
JumpCrisscross wrote 8 hours 25 min ago:
> Offload a massive illiquid investment onto the public so that
investors make their fund
Anyone with OpenAI stock can do this in the private markets right now
to the tune of hundreds of millions of dollars. Not billions. But I'm
not convinced liquidity--versus appreciation, for investors, and
access to capital, for the company--is the primary motivation for
going public.
neom wrote 12 hours 58 min ago:
For folks curious, In terms of IPO, rule of 40 was common when I was
involved in thinking about IPOs. [1] Depends how you look at it but
at DO we shot for 50, ended around 55. (25 % growth + 30 %
profitability)
URI [1]: https://www.mckinsey.com/industries/technology-media-and-tel...
jppope wrote 13 hours 23 min ago:
> "Offload a massive illiquid investment onto the public so that
investors make their fund"
This is what it looks like to me. Crazy growth numbers to bump the
valuation and public interest, go public, gradually let the company
shift into irrelevancy after major owners have cashed out.
The smoke and mirrors part here is that no one except the AI research
community knows what the ML/AI capabilities will look like in 5
years. What that means is that the general public is probably going
to eat up this IPO. Probably a better move to hedge by buying
Microsoft, but whatevs.
gretch wrote 13 hours 27 min ago:
I agree with you and I hope you are right.
>Offload a massive illiquid investment onto the public
Because this state seems like a very solvable problem: All you have
to is not buy it
Jensson wrote 8 hours 33 min ago:
> Because this state seems like a very solvable problem: All you
have to is not buy it
Your index fund will buy them.
somanyphotons wrote 13 hours 23 min ago:
ETFs like VOO will buy it eventually.
It started me wondering if theres an ETF that explicitly avoids the
top 20 companies
d0odk wrote 13 hours 2 min ago:
My gut instinct is that this would be a hugely underperforming
investment strategy on both an absolute and risk adjusted basis.
I would welcome empirical evidence contradicting my gut.
jakub_g wrote 10 hours 53 min ago:
There's SPXT (S&P 500 excluding tech sector), +79% in 5y, vs
full S&P +110% in 5y.
Obviously, in tech/AI bull market it can't be not
underperforming.
hshdhdhehd wrote 11 hours 13 min ago:
I'd rather cross to international (including. US) than to that,
for a less performing but more Black Swan proof fund.
CGMthrowaway wrote 13 hours 9 min ago:
XMGA
NewJazz wrote 13 hours 21 min ago:
Couldn't you set up some options to simulate that?
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