OpenAI CFO Sarah Friar: IPO, AI Rivalries, New Device, and Spending $100B+ on Compute

Sarah Friar: Our strategy is different, right? So we are building the AI layer, the infrastructure, and it's really important that there's a single foundation, but then with many interfaces out into the world. So ChatGPT is 1 to the consumer. Over 900 million people use ChatGPT weekly, and it's become the noun and the verb. It's how most people experience AI for the first time. ... We think that because it's served up on one model, there's a compounding element of advantage that comes from that. More users, more data, more ability to personalize. ChatGPT asks as a front door. As models get bigger, there's more efficiency that should lower the overall cost. to give you a token in the world, that should compound to higher gross margins, ultimately more ways to pay for compute.

Sarah Friar: So let's talk a little bit about a strategy. Our strategy is different, right? So we are building the AI layer, the infrastructure, and it's really important that there's a single foundation, but then with many interfaces out into the world. So ChatGPT is 1 to the consumer. Over 900 million people use ChatGPT weekly, and it's become the noun and the verb. It's how most people experience AI for the first time. [...] We think that because it's served up on one model, there's a compounding element of advantage that comes from that. More users, more data, more ability to personalize. ChatGPT asks as a front door. As models get bigger, there's more efficiency that should lower the overall cost. to give you a token in the world, that should compound to higher gross margins, ultimately more ways to pay for compute.

Sarah Friar: We're changing into a consumer substrate that I cannot tell you what it is, but by the end of this year, we will unveil it. I have seen it. I've tried it. I am a hand talker right now. I'm sitting on my hand. ... It's very, what Johnny and team are really good at is bringing humanity to devices. And I don't really know how to explain that well, but when you see it, you feel it. feels natural in some way. It feels very natural, but it feels very lovable. ... Technology is very, can be very mechanistic, but we all know great design just makes everything fade away, right? It's what at the time, the simple is hard.

Sarah Friar: So just two years ago, we were literally one. We had one CSP, we worked with Microsoft Azure. We sat on one chip, Nvidia. We had one product, ChatGPT, one price point, $20 a month. So I often use a Rubik's Cube as kind of my metaphor. ... Today, if you look at our strategy, it's been to go, first of all, multiple CSPs, because what CSPs do for us, in effect, is they shift CapEx into OPEX. So you pay as you get the revenue, so as you're actually utilizing the data centers. So in effect, we are riding somewhat on their ability to build and have CapEx and financing. So today we sit on top of every CSP, Oracle, CoreWeave, Microsoft, GCP, AWS, and a bunch of small neoscalers. On the chip side, we've also gone for a program of being multi-chip because we want to make sure you're always on the frontier. ... So today, NVIDIA remains our absolute priority partner. ... Our next big trading run in the fall will be done on Vera Rubens. ... But we also now have chips in the pipeline from AMD. Cerebras is already online. And there's our own chip that we're working on with Broadcom.

Sarah Friar: So just two years ago, we were literally one. We had one CSP, we worked with Microsoft Azure. We sat on one chip, Nvidia. We had one product, ChatGPT, one price point, $20 a month. [...] Today, if you look at our strategy, it's been to go, first of all, multiple CSPs, because what CSPs do for us, in effect, is they shift CapEx into OPEX. So you pay as you get the revenue, so as you're actually utilizing the data centers. So in effect, we are riding somewhat on their ability to build and have CapEx and financing. So today we sit on top of every CSP, Oracle, CoreWeave, Microsoft, GCP, AWS, and a bunch of small neoscalers. On the chip side, we've also gone for a program of being multi-chip because we want to make sure you're always on the frontier. [...] NVIDIA remains our absolute priority partner. They have the frontier chip. Our next big trading run in the fall will be done on Vera Rubens. [...] But we also now have chips in the pipeline from AMD. Cerebras is already online. And there's our own chip that we're working on with Broadcom.

Sarah Friar: And so that's why today, when I think about our position, and it comes back to where I started, why we want to be that AI intelligence layer is because a year ago, people talked about the commoditization of the LLMs. And frankly, it's gone the opposite, because as you start building an agentic layer, and we've all started to use this word harness, but the harness is what brings the context, the memory, right? [...] And that makes the model more powerful for me. Now think about what happens when that memory in that context is brought into an actual enterprise environment. [...] There was all the data in the world that told you what a stock should do post an earnings call. But give me one second. Then you called your trader and the trader would be like, yeah, stock's not going up, Sarah. And I'm like, what are you talking about? Like all the numbers say it did this, did this, did this. And he's like, yeah, no, but I know this fund is under pressure, and they need to sell down their book, and that is going to kill the stock for the next week. That is the intuition of an enterprise.

Sarah Friar: So first of all, on the ad front, we want to stick by our principles. We want to make sure that you know you're always getting the best result based on the model, not by something that was sponsored. So that has to hold true. And I think the second thing is that we'll always provide a free, a tier, sorry, an ad-free tier for people that just don't want ads. But with that said, if you took, if you took, Fiji says this really well, if you know Google and Meta had a baby, it would be ChatGPT. Because what you have in Google search, and by the way, we know we have at least 11% of the search market, it's a lot more because actually when you do a Google search and the page refreshes, that counts as one. In ChatGPT, when you do a whole conversation where you might ask 50 questions, that also only counts as one. So in reality, we have a much higher portion, very high intent. That is great for advertisers because I'm effectively telling you what I'm doing, right? [...] In Meta's case, right, they use this like people like you sort of intent so they have the demographic. We have more than that because we have memory, right? I just told you it knows who I am. So imagine putting memory in context next to intent, you should have a very potent ad platform, which gives you an ability to offer up massive access to the world writ large, because now you can pay for it.

Sarah Friar: If you took, if you took, Fiji says this really well, if you know Google and Meta had a baby, it would be ChatGPT. Because what you have in Google search, and by the way, we know we have at least 11% of the search market, it's a lot more because actually when you do a Google search and the page refreshes, that counts as one. In ChatGPT, when you do a whole conversation where you might ask 50 questions, that also only counts as one. So in reality, we have a much higher portion, very high intent. That is great for advertisers because I'm effectively telling you what I'm doing, right? ... In Meta's case, right, they use this like people like you sort of intent so they have the demographic. We have more than that because we have memory, right? I just told you it knows who I am. So imagine putting memory in context next to intent, you should have a very potent ad platform, which gives you an ability to offer up massive access to the world writ large, because now you can pay for it.