OpenAI: Cracking the code
The traditional idea of a start-up involves a couple of pallid college dropouts tinkering in a garage, maxing out their credit cards and hammering friends and family to fund the development of a concept that might one day raise a little interest from a real investor. Somehow OpenAI is still hanging on to the start-up label, despite its latest fundraising round aiming to raise north of $5bn at the distinctly grown-up valuation of $150bn.
This is quite a leap from its valuation of a mere $86bn at the start of the year, and it reflects the stakes involved as it seeks to entrench its position in the forefront of the AI revolution ahead of deep-pocketed rivals such as Google, Meta, Anthropic and Elon Musk’s xAI, all of which are pouring loot into the race by the billion.
On the positive side, it is understood to be negotiating with Apple, Microsoft and Nvidia — a pretty punchy team to have in your corner — about their future relationship.
Such is the prominence of ChatGPT that it seems strange to remember that it was only launched in 2022, and it remains loss-making despite revenues hitting an annualised $2bn at the start of the year.
With goals as ambitious as outperforming the sum total of human intelligence, it is not surprising that the cost of developing cutting-edge models has gone through the roof, but investors are not going to be worrying about short-term profitability when the long-term potential is so huge.
Manchester United: The right chemistry?
No matter how storied a football club’s pedigree, Manchester United’s going to struggle to maintain — let alone grow — a global fan base on memories of the golden era of Sir Alex Ferguson, Eric Cantona and Golden Balls himself.
Ever since their local rivals were boosted by the arrival of Abu Dhabi’s gigantic moneybags and the great Pep Guardiola, United haven’t come close to even being the best side in Manchester, let alone being up with the top performers on the financially vital European stage.
Last season they crashed out of the European Champions League in the early stages and finished eighth in the English Premier League, just sneaking into the sideshow of the Europa League for this season rather than the far more lucrative Champions League.
They still managed to sell a replica shirt or two, and their revenues for the year were up 2.1% to £661m, but a sharp rise in spending on their underperforming squad saw operating expenses jump a perky 12.8% to £768.5m, and losses for the year increased to £113m from £28.7m the year before.
To get their finances back in order and avoid a rap on the knuckles for failing to comply with the Premier League’s profit and sustainability rules, they are going to need a rapid return to form on the pitch. One catalyst for change may well be the arrival of Sir Jim Ratcliffe, who has taken a 27.7% stake in the club. Ratcliffe has built a considerable fortune by turning around unwanted and underperforming assets, but it remains to be seen whether what works in the petrochemicals industry translates to the beautiful game.
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