Elon Musk’s AI firm XAI has confirmed elevating $5 billion at a staggering $50 billion valuation, all whereas fixing an enormous headache at X and escalating his battle towards Sam Altman and OpenAI.
I unpacked what’s happening with Advertising and marketing AI Institute founder and CEO Paul Roetzer on Episode 125 of The Synthetic Intelligence Present.
What’s Taking place
First, xAI advised buyers it raised $5 billion at a $50 billion valuation, which is greater than double its valuation earlier this 12 months, in response to The Wall Road Journal. This brings xAI’s complete fundraising to $11 billion this 12 months alone.
Second, The Monetary Occasions is now reporting that buyers who backed Musk’s $44 billion takeover of Twitter have been given a 25% stake in xAI.
This stake may make them complete after main losses on their Twitter funding, which has seen its worth decline by as a lot as 80% in response to some estimates.
Third (as if that wasn’t sufficient for now), Musk additionally filed for a preliminary injunction towards OpenAI, Microsoft, and a number of other key figures together with Sam Altman.
The submitting seeks to stop OpenAI from transitioning to a for-profit construction and alleges numerous anticompetitive behaviors, together with discouraging buyers from backing rival corporations like xAI.
This Has At all times Been About xAI—Not X
It’s simple to assume that this transfer is, partly, about making Musk’s Twitter backers glad whereas he will get the corporate again on strong monetary footing.
However that is probably not the best method to consider it, says Roetzer.
X is now price a fraction of what Musk paid for it. xAI, at a $50 billion valuation, is now price 4 instances as a lot. X was important to serving to xAI attain this valuation, says Roetzer.
“X was important to that valuation as a result of what they’d, he had shut off entry via the API to Twitter’s information when he purchased it,” says Roetzer. “Which meant he was hoarding the proprietary information that lived inside Twitter.”
So, by buying X, Musk acquired unique entry to Twitter’s huge information, which is used to coach xAI fashions. And, he obtained built-in distribution for xAI’s merchandise to thousands and thousands of X customers.
This was by no means about making X an extremely profitable firm, says Roetzer. It was about making xAI one.
“I assumed he was going to make individuals who invested in Twitter complete,” says Roetzer.
“He was going to mainly run the worth of Twitter into the bottom. It didn’t matter anymore as a result of it was xAI that was the way forward for the whole lot. And Twitter was only a feeder of information and distribution for it.”
How Sam Altman and OpenAI Match In
The escalating lawsuit towards Sam Altman and OpenAI are additionally an enormous a part of the story.
The preliminary injunction he’s filed goals to stop OpenAI from transitioning to a for-profit construction—a milestone the corporate should obtain as a part of its final fundraising spherical.
Whether or not it truly works or not is probably not the purpose both, says Roetzer.
“He’ll spend as a lot cash as he must. And he’ll drive Sam, OpenAI, and Microsoft to spend a ton of time and cash and simply make issues insanely difficult for them,” says Roetzer.
That, in flip, goes to provide xAI extra time to catch as much as—and maybe surpass—OpenAI.
And, you possibly can wager Musk will carry his newfound affect within the incoming US presidential administration to bear, too. In any case, OpenAI wants the federal government’s assist as they race in the direction of AGI, says Roetzer. That might get much more troublesome now that Musk has affect within the new administration.
“He intends to make life depressing for Sam Altman, and now Microsoft and different OpenAI leaders,” says Roetzer. “And he’s going to make use of his newfound affect with the incoming administration to do exactly that.”
