| Thanks for reading The Briefing, our nightly column where we break down the day's news. If you like what you see, I encourage you to subscribe to our reporting here.
Greetings! On the public markets, the idea of companies that are burning cash also spending money on stock buybacks is a giant no-no. Yet for some reason, private tech investors are willing to give startups a pass for doing the same thing. Exhibit A is OpenAI, which we reported wants to use some of the $6.6 billion in cash it raised in its recent fundraising to buy shares from employees. That's despite the fact that OpenAI could lose around $5 billion this year, largely because of the computing costs associated with the training and operation of its large language models. Its revenue is growing quickly, to be sure, but that doesn't mean it will start generating cash anytime soon. In other words, OpenAI needs every penny of the money it raised to fund its operations. It has become common for mature private tech firms, like Stripe and ByteDance, to buy shares from employees (or to arrange for investors to buy employee shares in tender offers). But those companies are profitable and don't need investor cash for their operations. That's not the case for OpenAI. So why is OpenAI wasting some of its precious capital on employee buybacks? The answer, we're told, is competition for talent. If OpenAI doesn't keep its employees happy, they can all too easily leave and start something new—as former chief scientist Ilya Sutskever has done, and as recent departee Barret Zoph has said he will do—thanks to the plentiful availability of venture funding for AI startups. But every cent that OpenAI spends on buybacks is money it will have to replace in a future funding round, at least until it starts generating cash. While the company also arranged a $4 billion revolving credit facility, which it announced today, that money isn't cheap—according to CNBC it has an interest rate that right now would amount to 6%. Also, it's a loan. It has to be paid back. To recap, then, the result of OpenAI buying back employee shares is that the company will have to ask venture investors for more money sooner because those same investors are all too happy to give OpenAI's rock-star employees money to do their own thing. How does this strategy make any sense? OK, this isn't about artificial intelligence, but it's significant in its own way. According to 9to5Mac, Apple will use its upcoming iPhone SE 4 as the guinea pig for its new internally developed 5G modem. In other words, if you want the new version of the cheaper iPhone, you're going to have to risk that you won't be able to pick up calls because it won't be carrying the tried-and-true Qualcomm-made modems used in current iPhones. Qualcomm is, of course, the gold standard for cellular modems. (One reason why Google's Pixels are thought to have suffered from spotty cellular coverage is their reliance on Samsung-made modems.) Apple, though, has been wanting to move away from Qualcomm in favor of internally developed modems—part of a broader push to become self-reliant when it comes to components. The 9to5Mac story also said the new modem will offer Wi-Fi and Bluetooth functions, which means Apple will also be able to replace Broadcom's chips in iPhones. Self-reliance in components has proved a smart strategy for Apple. But for consumers, there's a risk that its new modem won't work too well. Who wants to be the first to try it out? - Google on Thursday launched advertisements next to new conversational answers that appear in its search engine, a long-awaited move as it changes the look of its biggest moneymaker in response to rising search competition from OpenAI's ChatGPT.
- Amazon plans to hire 250,000 workers for its U.S. fulfillment and transportation operations this holiday season, the company said Thursday. That's the same hiring figure it announced for last year's holiday season.
Dealmaker was named the "Best in Business" newsletter for its insightful coverage of private technology and the AI hype cycle. Start receiving the newsletter here. |
0 comentários:
Postar um comentário