What Do OpenAI's Latest Moves Reveal About a Future IPO? | Pivot

1. KSKara Swisher0:00

   OpenAI appears to be addressing recent security concerns with the new addition to its board of directors. The company announced last week that retired General Paul Nakasone, uh, will be joining the board. He's also, uh, sit on a newly formed safety and security committee. Nakasone was director of the NSA, which is causing a lot of, like, the crazy right to go crazy about this and saying it's a deep state, um, and led, uh, including Elon, I think, and led the US military's Cyber Command before stepping down early this year. He's very well regarded, but, uh, again, uh, this is a big appointment. Um, OpenAI said in a statement that this appointment underscores a growing significance of cybersecurity. Uh, what do you think about this, bringing in... uh, Edward Snowden wasn't happy. He posted on- this on social media saying, "Do not ever trust OpenAI or its products. There is only one reason for appointing an NSA director to your board." So, as usual, without proof, Edward. Uh, but, you know, okay, sure, spy is spy. So, uh, but it's one of those open-ended questions that never really has an answer or any proof attached to it. But that's okay, they c- they can do that, so it's a thing. What do you think about that?

2. SGScott Galloway1:04

   I absolutely love it. Um, anyone who's an army general and works their way up as, as someone... You know, (laughs) General Nakasone isn't a, you know... uh, this is a very impressive person, and also, this person has proven themselves a patriot. And for all these weirdos on the far right that think there's a deep state, and for all these weirdos on the far left that are under the assumption that, that peace is a natural right, that it's not something that requires constant vigilance and sacrifice, we need... The NSA does an amazing job keeping Americans safe, and, uh, it's important that we have laws that keep them in check, but at the same time, I, I just, I worry that America has become so naive to this notion that peace is a right. It is not. It is earned, and it is not the natural order. As soon as people can come for our Netflix and espresso folks, they will. And they won't do it by interesting, nice means. They'll be violent about it, just as we are... need to be violent and smart about protecting our borders. So, to have someone like this on the board of OpenAI, to occasionally raise his or her hand and say, "You know what? That is a threat to America, and I am not down with this," I love having this guy on the board of OpenAI. I think it's a wonderful thing.

3. KSKara Swisher2:17

   Yeah. I- it's interesting, because it sort of sets up these deep state, leave us alone, don't tread on me gang. Um, and I mean that in a negative don't tread on me way, the sort of demented don't tread on me. In Edward Snowden's case, I re- I recognize that he did uncover some really heinous behavior by our security officials. That said, the wa- there, there's plenty of argument to be made that, that how he handled it was wrong. But he couldn't have handled it... I, look, we can debate Edward Snowden all you want. I interviewed him once. It's a very complex topic. But, y- the fact... a- assuming every NSA chief is, has malintent is the way to bring down all institutions. Now, they've been abusive enough that there's, that there needs to be strong, um, strong laws and oversight in place. Absolutely. I, if a spy, a spy is gonna spy, that is just the way it goes, right? It's not, there's no other way to put it. And including the Chinese government, they're gonna spy whether you have proof or not. That's what they do. In this case, as many people on the board... Now, I would also put on someone who's, uh, more of a, like, a, sort of an opposite to him could be interesting. So, you have all the different outlooks brought there. And I'm not talking... The problem they had was they had people that were so at cross-purposes, there was no agreement. And I think if they bring in someone who's more, not distrustful of government, but then challenges government o- o- overreach, I think that's fantastic too, right? That's what you kinda want on a board. Um, but this guy has, has really, a very, a very strong reputation. I just... the immediate attacks on him were fascinating to watch in a lot of ways. Speaking of, of OpenAI, they're, uh, further angering all, all the PR crowd. Um, CEO Sam Altman has told some shareholders that the company is considering changing its governance to a pro- for-profit business that the nonprofit board doesn't control, according to the information.

4. SGScott Galloway4:05

   (laughs) I'm shocked. I'm shocked!

5. KSKara Swisher4:06

   What? What?

6. SGScott Galloway4:08

   I'm shocked.

7. KSKara Swisher4:08

   What? (laughs) They are a profit company.

8. SGScott Galloway4:11

   Oh, my goodness.

9. KSKara Swisher4:11

   One option for forming a for-profit benefit corporation similar to what Anthropic and xAI have in place. That, that's a, that's... I, you can explain what a for-profit. I don't understand it. Altman said the restructuring conversations are fluid and that he and his fellow directors can end up taking a different approach. Oh, come on, Sam! Come on. You can't stand that nonprofit situation. Um, so OpenAI reportedly is on pace, by the way, t- for a $3.4 billion of annual revenue. Well done. Um, if OpenAI did become a for-profit company, what's your prediction for an IPO? They just hired a very well-regarded, um, person, Sarah Friar, who was a former, uh, CEO of Nextdoor, and it's... as its chief financial officer.

10. SGScott Galloway4:49

    Exactly right. Yeah.

11. KSKara Swisher4:49

    She used to work for Square. She's terrific. Uh, she, she dealt with IPOs at Nextdoor, as well as Square, as I've said.

12. SGScott Galloway4:55

    Yeah.

13. KSKara Swisher4:55

    What e- what e- what is that called now? I forget the new name for S-... I call it Square still.

14. SGScott Galloway4:58

    Is it Block? Is that what it's called now?

15. KSKara Swisher5:00

    Uh, whatever. I don't know. I don't know. I don't know what it's called. But anyway, Square is what I call it. Um, but what do you think about this? Talk about this a little bit.

16. SGScott Galloway5:07

    So, all of the stuff about the drama at the board and it going back and forth and whether... you know, and Sam being fired and then rehired, it's a bit of noise because now OpenAI, uh, in the last six months, they've doubled... um, they have doubled their, uh, revenue base. They're kinda running away with it. And if you look at their run rate right now relative to their valuation, they're actually the most reasonable (laughs) , reasonably valued company in AI, despite the fact that they're the leader, the leader. They are clearly, clearly putting on their best dress for an IPO because the individual that you reference is a, is a, an incredibly street... It's like when Google brought in Ruth Porat, and she wasn't there to take them public. But this is a very street-friendly hire. So, they're clearly getting ready for an IPO. And all of the kind of noise around OpenA- AI, I saw these numbers on how they're doing. They are running away with it.

17. KSKara Swisher6:04

    You know what they have, Scott?

18. SGScott Galloway6:05

    What's that?

19. KSKara Swisher6:05

    They've decided to be Google and not Netscape.

20. SGScott Galloway6:08

    Decided to be Google and not...

21. KSKara Swisher6:08

    That's what it is.

22. SGScott Galloway6:08

    Oh, I see what you're saying.

23. KSKara Swisher6:10

    You know, you know, Netscape had it and then lost it. Google almost lost it and then had it, right? They really pushed aggressively. Um, it's also expanding into healthcare with a cancer copilot. Um, it's working with Color Health to develop an AI assistant using OpenAI's G-... They're doing deals all over the friggin' map. Like, they're, they're like running circles around the competitors. But go ahead.

24. SGScott Galloway6:32

    No, the... you're, you're exactly right. They're, they are... I mean, uh, we have a tendency to focus on the sop op-... uh, soap opera end of this. But despite all of this distraction, they are growing their revenues fast. From Mistral, this company in France, which I think will do well because I think a lot of European companies, um, and regulators would like an AI company in Europe to emerge.

25. KSKara Swisher6:56

    Mm-hmm.

26. SGScott Galloway6:57

    But if you look at just sheer revenue growth and size of revenues, it's...

27. KSKara Swisher7:01

    It's NVIDIA and OpenAI are sort of running away with it.

Episode duration: 7:09