Prez Says He is Considering “Investing” in AI Companies
Even though AI companies are planning to go public in the next year, right now they are hemorhaging cash at a rate that is not sustainable.
There are a couple of options available.
One that we have already started seeing and likely will dramatically expand is the end of AI buffets – that all you can eat model. As companies buy licenses for employees at insane prices (like $8, $20 or $100 a person a month), employees are using it for anything. Since the marginal cost to the company to increase usage is zero, they just through everything into it. Unfortunately, the marginal cost to the AI company is high.
Some companies, like Salesforce and others, have already realized that this is the quickest way to bankruptcy and now charge for tokens. More are sure to follow.
But AI companies increasingly do not see any possible road to profitability with the current all you can eat model.
Going public just extends the runway. A little bit.
Another option is the government buying into some of the AI companies. For the government, if they get pre-IPO shares, they could make a LOT of money.
Of course that begins to look like Communist countries, where the government owns the means of production, so the look is not so good.
Not to mention, current investors might not be so happy. On the other hand, some investors might view it as a route and possibly the only route to profitability. Intel’s stock price went from $43 to $125 after the government bought 10% of the company (technically 9.9% due to regulations).
The president last week said that the government is actively considering buying a chunk of some of these large, never-profitable AI companies.
Senator Sanders suggested the government own 50 percent of some of these companies. That is likely not an idea that a lot of people would go for.
If the government did buy a piece of these companies (at whatever percentage and more importantly, at what price), would that include board seats? Governance rights?
While the Intel deal could easily be framed as good for taxpayers because Intel has a very solid positive cash flow, buying up AI startups with an unclear route to profitability is a whole different story. We will watch this closely. Credit: Crypto Briefing
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