OpenAI Beat Musk. Now It Gets to Go Public.
Now that the last obstacle is cleared away, OpenAI is headed for history's largest IPO. And if it sticks to its principles as a public company, it will be the first.
Quick note: I blew all of yesterday putting together a long piece about my new favorite thing, which is students booing the commencement speakers who tell them to “adapt to AI.” (The term for an older AI enthusiast, I’ve learned, is “clanker,” which alone suggests the kids see what’s happening more clearly than we do.) It’s a legit trend, but I realized by day’s end that it’s been covered very well by many, many outlets already. Rather than add to the pile, I’m pointing to the best of that reporting in “Other Currents” below, and turning instead to something that also deserves your scrutiny.
When Google filed to go public in April 2004, Larry Page and Sergey Brin opened their IPO prospectus with a declaration. “Google is not a conventional company,” they wrote. “We do not intend to become one.” They promised to “optimize for the long term rather than trying to produce smooth earnings for each quarter” and to prioritize doing good over maximizing profit. The letter became a touchstone — proof, people said, that a technology company could go public without surrendering its soul.
By the time Page returned as CEO in 2011 and addressed his first earnings call, the register had shifted. “We’re very careful stewards of shareholder money,” he told analysts.
The mechanism that produces this change is slow and subtle, like a descending escalator: quarterly earnings calls create pressure to explain variance; analyst coverage creates pressure to hit estimates; short sellers create pressure to defend valuation. The principles don’t disappear. They just gradually get tucked deeper inside the company, and cease to be load-bearing.
The AI industry is about to test its commitments in that very way, and OpenAI seems to be going first.
The Wall Street Journal reports that OpenAI is preparing to file for an initial public offering, working with Goldman Sachs and Morgan Stanley on a draft prospectus, targeting a public debut as early as September. (The New York Times confirmed the Journal’s account.) OpenAI is valued at $852 billion in its most recent funding round. A listing at that valuation would be the largest IPO in American history, and would place it next to the value of peak dot-com Microsoft or that of Standard Oil just before its 1911 antitrust breakup.
Why now? Well, two days ago Elon Musk’s lawsuit, which demanded that the company be converted back to a nonprofit, was tossed out. (The jury never ruled on whether OpenAI had abandoned its founding promise — to develop artificial intelligence for the benefit of humanity — nor on whether Sam Altman was a trustworthy steward of that promise. It ruled that he’d sued too late, and that was that.) Judging from the timing, and in spite of Musk’s plans to appeal, that presumably means the company considers the lawsuit to have been their last obstacle, and also considers it to be out of the way.
OpenAI and much of the business press seem to see this moment as vindication. The legal threat to its for-profit structure is gone. Public capital markets — and the cash they can deliver — are now within reach. Sam Altman, who built the company from a nonprofit research lab into one of the most valuable private companies on earth, will have liquid shares to show for it. By almost every conventional measure, this is what success looks like.
But what will success cost a company built on the promise that it would be different? And what will it go on to cost all of us?
