Tech investors David Sacks and Chamath Palihapitiya cautioned AI startup founders about the risks of turning down massive acquisition offers before even releasing a product.
Pre-Product AI Startups Turning Down Billion-Dollar Deals Raise Concerns
During a Sunday episode of All-In Podcast, Sacks highlighted a growing trend of pre-product AI startups rejecting billion-dollar acquisition offers.
"You are seeing founders turning down multi-billion dollar acquisition offers for startups that haven't even released a product yet," he said.
Chamath Palihapitiya Weighs In on OpenAI Founders' Financial Flexibility
Jason, the host, asked, "You think Mira should have taken the billion-dollar offer from Zuck, or Ilya should have taken the $30B, Sacks? I mean, these things never happen."
Sacks responded, "I guess it depends how much they have in the bank account. They're both OpenAI co-founders, so…" Chamath added, "They probably sold a bunch of OpenAI equity at $300B and $500B. They seem like they're free rolling, so they have no incentive to sell."
Sacks emphasized that many founders have never experienced a market downturn. "If they think that this is the normal state of the world, they're going to be sorely mistaken," he said.
"Right now, we're in a part of the cycle where you can justify that valuation based on its strategic value to a multi-trillion-dollar market cap company. But that only lasts while those companies are in the market for strategic acceleration. And if you turn that down, then you have to make your company work on its own as an actual business."
AI Investment Surge: Former OpenAI Leaders Attract Major Funding From Top Tech Giants
Mira Murati and Ilya Sutskever are the OpenAI co-founders, “The Besties,” were talking in the post above.
Former OpenAI Chief Technology Officer Murati has raised a record-breaking $2 billion seed round for her artificial intelligence startup, Thinking Machines Lab, which she co-founded after leaving the AI startup.
Meanwhile, Nvidia Corp. (NASDAQ:NVDA) and Alphabet Inc. (NASDAQ:GOOG) (NASDAQ:GOOGL) have reportedly decided to invest in the artificial intelligence startup co-founded by former OpenAI chief scientist Sutskever, who was also known as the guiding light of OpenAI.
Altman Plans Trillions In AI Infrastructure Spending and Federal Partnership
Last week, OpenAI CEO Sam Altman said people should have expected the company to spend trillions of dollars building infrastructure to power artificial intelligence, drawing parallels between today's AI investment and the late 1990s dot-com bubble.
Altman told reporters that OpenAI would need significant capital to sustain advanced AI development. He added that economists might criticize the approach as reckless, but the company intended to proceed regardless.
Altman also said OpenAI was exploring new ways to fund the effort, suggesting they could design a novel financial instrument for finance and computing that the world had not yet seen.
In addition, Altman secured a new partnership with the U.S. General Services Administration, granting federal agencies access to the company's leading frontier models through ChatGPT Enterprise for $1 per agency for the next year, according to an OpenAI announcement.
The initiative, described as a core part of President Donald Trump's AI Action Plan, provided federal employees with secure access to ChatGPT Enterprise, new training resources, and additional advanced features during a 60-day introductory period.
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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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