OpenAI has filed to go public in the wake of two other giants of the tech industry – Anthropic and SpaceX.
In a brief statement, the ChatGPT creator revealed it had recently submitted a confidential S-1. An S-1 is an SEC filing used by companies that plan on going public to register their securities with the U.S. Securities and Exchange Commission.
‘We Expect it to Leak’
In quite a terse statement, OpenAI revealed the news of the S-1 filing, adding: “We expect it to leak so we’re just announcing it.
“We have not decided on timing yet; it may be a while because there are things we want to do that are likely easier as a private company. But it’s a complicated set of tradeoffs and this gives us the option to go public sooner if that ends up being best.”
In a separate statement on Monday, published around the same time as the announcement, CEO Sam Altman outlined a broad vision for OpenAI. This included building an automated AI researcher, accelerating economic growth, and giving “everyone on Earth a personal AGI (artificial general intelligence)”.
Altman said the company had started out in AI research and moved into commercial product development, but is now moving into its third phase involving a “broad distribution of power” as the economy reshapes around AI technology. OpenAI’s and other AI companies’ progress has at times created worry around the long-term viability of enterprise software companies like Salesforce.
Altman added that OpenAI is “working to ensure the gains are widely shared. Everyone should have an opportunity for a meaningful share in the prosperity AI creates.”
Competition Heating Up
It comes after AI rival Anthropic disclosed on June 1 that it was also moving towards an initial public offering of its shares. This was in the wake of SpaceX, Elon Musk’s rocket company, starting an IPO roadshow.
Sam Altman, CEO of OpenAI, first publicly floated the idea of an IPO last fall, calling it the “most likely path” for the company, bearing in mind its size and the need for huge amounts of capital.
Emarketer analyst Nate Elliott said that the filing comes at a “precarious moment” for OpenAI, which appears to be losing ChatGPT’s strong early leads with consumers and businesses to Google and Anthropic, reports AP.
Elliott added: “But OpenAI doesn´t have a lot of other places to look for the enormous capital required to support its costs.”
Last year, OpenAI decided to restructure its business and convert itself into a public benefit corporation, while remaining technically under the control of a nonprofit. This opened the door to the IPO move.
OpenAI hasn’t disclosed how much money it is making or when it plans to turn a profit yet.
Similar to Anthropic and SpaceX, the company has been losing money due to the huge costs of building out the venture, reports say. ChatGPT also faces strong competition from Claude, made by Anthropic, and Gemini, Google’s AI assistant.
OpenAI’s chief financial officer Sarah Friar had, in an April interview, declined to give a timeline for a potential IPO but said the company was already “acting with the good hygiene of a public company,” like measuring its revenue in the way a publicly traded firm would have to report earnings to the SEC.
She said that OpenAI’s current valuation would make it one of the 15 biggest companies in the S&P 500, telling the AP: “I want us to be ready. I think it’s good to be able to tap the public markets. They’re much bigger than the private markets.”
She also said there is a “credentializing moment of being a public company.”
Final Thoughts: How Will This Affect Salesforce?
Salesforce is a mature software company unlikely to be radically affected by the move, but capital for tech companies going public will have to come from somewhere. It may be the case that AI sucks oxygen away from enterprise software, with yet more ‘SaaSpocalypse’ fears when investors are looking to jump on the AI bandwagon.
Conversely, Salesforce could benefit from a more mature AI ecosystem. If OpenAI gets access to billions in fresh capital, then the advanced model development that comes from it could ultimately benefit Salesforce customers who use OpenAI-powered capabilities through, for instance, Agentforce.
It could be that Salesforce benefits from OpenAI’s expansion, without having to shoulder the infrastructure costs.
