Sarah Friar: ChatGPT hits 700M weekly users and 5M enterprise seats as OpenAI scales toward AGI

Yes, I have access. But I've seen other things on the timeline. We can talk talk about it later, but it seems like a really good model.

That's amazing. Great to hear. Well, welcome to the stream, Sarah. Good to meet you. How are you doing? Congratulations. A historic day. Thanks so much for taking the time to talk to us. How you doing?

I'm doing great. I mean, how could you not be doing great on the day when GPT5 launches? It's been a a long time in the making and we're so happy it's out.

Uh yeah, fantastic. Um walk me through uh your role and what GPT5 what this launch means specifically for you. Um and uh yeah, well, let's just start there.

Finance has to be you guys have to be the unsung the unsung heroes uh at OpenAI. There's just there's a lot of big numbers bills coming in for crazy training runs and you have to underwrite these against future revenues and I'm sure you've developed many models to uh to figure that out but yeah walk me through what what your role at OpenAI and what what today means for you.

Yeah, absolutely. So I'm open CFO but um the finance can be the unsung heroes but they are an amazing team so I'm going to shout out to them.

They're heroes to us. They're heroes to us. It's a complex world that we're all living in and there are a lot of bees on the end of a lot of the numbers that we look at. Um, look, what is our role? Number one is just making sure we have a healthy, high growth business. Um, it's been incredible watching just first of all the number of weekly activives. 700 million people using Chat GPT every week and I'm assuming after today we should see a very nice little bump in that number.

This is going to be a gonggheavy segment, Jordy. I think we're going to have we have a lot of soundboard for the big number. So congratulations.

I love it. And I love I've never met a number I didn't like. I think the other part of the business that you know and then we have to do

is clapping.

We have to do this balance of the consumer business, the enterprise business and then API business which I think of as somewhat enterprise. Um you know and and balancing that out. So enterprise adoption has also been exploding. I probably do I mean interestingly as a CFO I probably meet four to five customers a week. It's a part of my job I actually love. We have about 5 million paying business users right now from banks to biotech. I was talking to the CFO.

And so that number is individual companies.

That is individual seats at companies.

Seats at companies. Got it.

So what I would say about that number is it's crazy to have done that in just two and a half years because enterprises, right, you got to you got to put your big boy big girl pants on to go sell to an enterprise, right? They want to make sure that you have the table stakes of security, SSO for signing on, you have HIPPA compliance if you're selling to healthcare and so on. They want to know that other people have done it. So they're often looking for that case study. Um, but they also want to be, you know, the innovator right at the front. And so that to grow that scale of business in just two and a half years blows my mind. And it's not just big big businesses which I could talk you know at length on but it's also small mom and pop you know you know literally the people who really keep the lights on in most countries are also gravitating to chat GPT which is wonderful and then on the developer side four million developers have built in our platform and the the question there is like that could be a developer inside a big company like grabb it also could be the next you know startup founder that's why combinator getting going with the next multi-billion dollar unicorn business and so we see the whole gamut there and that's important to us as well because very mission aligned right how are we going to get AGI to all of humanity if we don't do it through this ecosystem so a big part of my you asked my role big part of my role is just keeping that business really healthy making sure we always have the headlights on so people know the decisions they're making from a business standpoint um huge part of what the team does

um the other big part of my role compute. If I didn't talk about that in my first breath, you all should correct me.

I mean, it's making sure we think compute is a massive competitive differentiator.

I give so much kudos to Sam and the team, but particularly Sam because no matter how big a number we look at, Sam always wants to go bigger and he's been right. Um, it is

he's never met a number he doesn't want to add a zero to

that, too. Maybe more, maybe logarithmic,

maybe two zeros. and uh and he's but he has been very right and if you know you've just had a long conversation with Greg Brockman I think he does such a good job of kind of really explaining what a completely different world an agied world is or an AI world is and so I think when people get all caught around the axle of like you know what is what is a gigawatt of compute and oh my god you guys want to have 10 gigawatts and that's more than the compute of like Ireland since I grew up there

um and now You kind of look back on that and you're like those numbers already look small for a world where everyone will have access to intelligence and we're really starting to see what that can mean when you look at the demos today around things like healthcare and education and so on.

Can you talk to me about nongap metrics and what you think is going to be useful to track? We were talking to Mark Chen about this and he was saying, you know, DAUs are great, time on site is great, but that's not as impactful of a metric for open AI as it is necessarily for a social network or an entertainment app. And and there can actually be some problems that come up with that. So, it feels like there might be some tension in the organization eventually or or just publicly about um you know, what metrics are worth optimizing for. And then there's also the financial community that wants non-GAAP metrics to track the health and progress of the business. And then of course over you know decades we see companies eventually roll back some of those non-GAAP metrics and as as the business gets more complex. So how do you think about the development and and and sharing of non-GAAP metrics and what do you think is actually interesting and provides signal to the business and the and the investor community? I'm kind of smiling to myself because when anyone normally says talk to me about non-GAAP metrics, I can see like most of people's eyes roll back in their head. I live for non-gap metrics. I would love to do that. Um look, I think in a CFO seat, first of all, it's really important to think about input metrics and output metrics and things like revenue, which is a gap metric as well as anap metric, they're very laggy. um like if you are spending your whole time focusing on the revenue number in an operator seat like you are completely missing what's going on with the business. Yeah. So I push my team a lot to get out of kind of ultimately what the P&L looks like and I'll come back to it though and go way upstream and say what are the true input metrics that tell us about the health health of our business. And so I think it does start with that funnel of monthly activives to weekly activives to daily activives because we do I mean our mission is literally AGI for the benefit of humanity. So we know how many billions of people live on the planet. The fact that we're starting to be able to talk in billions and percentage of the world's population. It blows my mind. Right? Today 85% of our users are outside the United States. And I love that stat. And in fact, if you go look at where where are the big populations of users, it just tracks global population, right? It's countries like India, Indonesia, Brazil, Vietnam, like the Philippines. Like go to anywhere that has big population. The US too of course, but that will be your tracker. So that's kind of number one when I think of an input m metric. From there on the consumer side, you're right. things like time and app I've actually always had somewhat of a lovehate affair with but I think in this case because we're giving people intelligence teaching them how to use that um I actually think is where time and app does become important and one of the things we've really seen with chat GPT are people are spending more time with it now you know we balance that with things like mental health and so on making sure that we're not creating bad things like we might have seen in prior eras of computing but I think we're just getting started on that front. Um, beyond that, like when we go into areas like the API, I don't look only at usage, right? I can look at tokens per minute as a usage metric, but I look at things like latency. I actually try to look at the elasticity of demand, right? We know that developers want performance, they want intelligence, but they also want to make sure the the API is always up, and they want price. And they're often willing to trade across those three three things, right? It's a kind of a linear program depending on what your use case is. And so I think it's important that we are offering things to developers that allow them to optimize across those three metrics. For example, so that's kind of your input metrics. And again, I could wax lyrical, but I won't. But then you go to what you really ask. So investors on the other side, right? They want to see a P&L. They're like, I want to be able to compare you to other companies. I want to be able to create a maybe a DCF. like I want to think about fundamental valuation for a company if I'm going to invest in it. And so, you know, today what I really try to push investors on is we are not a company that should be optimizing for free cash flow today because there's just too much opportunity. Like that point about compute. We have to make a decision on compute today with an eye to what we're going to need in two to three years because data centers don't just spring up overnight. Like they're not mushrooms. They literally take time and effort. The thing we have at frankly I would say is three years ago we didn't have enough foresight to say how big could chat because it didn't exist.

Um it's just a shame on us if we keep doing that over and over. So there can be a bit of a mismatch between our belief on revenue because we don't yet know the product versus the input which is the cost today on compute. And so getting investors comfortable with the fact that there's probably losses for a period of time. I say probably because Chad GPT just generally the revenue models continue to surprise to the upside but at least for now we should be in big investment mode. And then you kind of said it well like as companies mature you move to more gap metrics right if you look at you know the large the mag seven many cases they're looking at like real gap net income. So the whole way down to the bottom of the P&L, we're just not there yet and we should take advantage of that advantage because we can invest as a private company.

How do you think about timing fundraisers from my understanding or or or rumors? Uh the last, you know, the most recent financing was very oversubscribed and at the same time you're still committing to capex in the future that is a multiple of current, you know, the current run rate. And so you in the CFO seat, I'm sure there's you're you're trying to find this balance of like what does the business need today while you know not diluting the company uh you know too much uh knowing the the sort of growth rate of the business.

I mean that's exactly right. That's the the art, not the science of it, is that, you know, we did just come off the back of closing out the the the sleeve of investment that we could take down in this current round led by SoftBank and it was massively overs subscribed, which comes back to I think the market really waking up to the fact that AI is a generational opportunity and the scale that it requires is like something people have not even seen before, right? It's, you know, people talk about the internet or like the railways. They're good analogies or transistors. I think Sam always goes back to they're good analogies, but I do think this is bigger than everything that's come before. Um, so there's a, you know, taking down $40 billion, which we just did in this round, that certainly felt like that gave me a lot of confidence. Appreciate that. Um, a lot of confidence to then go out and do large compute deals, right? we announced um the large deal with Oracle for example and to be able to keep working with all of our supply chain Microsoft, Corewave, Oracle, Nvidia and so on.

Um but at the same time, you know, in a world where our valuation has gone up, you know, at pace with our revenue, um you do get an opportunity to keep coming back to market and not take that same dilution because you're getting that higher valuation for the work and the output that you've created. So it is a bit more of an art than a true science. I think for now we will we'll continue to need to fund raise in order to fund that compute but I think we want to start getting more sophisticated like just pure equity fundraising for everything is an expensive way to fund raise and I think we're probably getting to the stage at a company where we can be a little bit more kind of broad and how we think about funding overall and and even just working frankly with our supply chain because you know our success with bringing this era of AI into being is their success too. And I think these companies are realizing that.

What about partner? Last question. Partner selection on the compute front. There's not a lot of companies in the world or or or or firms that can can really be a

you should update your LinkedIn title. We saw someone yesterday works for Discord is in charge of their cloud buying and the and the and the his LinkedIn title was I have full responsibility over buying cloud our our entire cloud budget. And it was clearly like a huge flag, but I'm sure you know you're you're in you're in direct text message, you know, with every single person that's relevant in the industry. But

yeah, but but I'm curious around like, you know, a lot of people uh have been excited about developing data centers over the last couple years in hopes to win.

Oh, yeah.

Uh comp, you know, the business of companies like OpenAI, but I think in when you guys are evaluating partners, I I imagine that scale is is such a such a massive factor. And so a single small data center is not really going to move the needle. You guys need to be thinking in terms of mega projects.

Yeah, I mean I think that's exactly right. I mean it started with our partnership with Microsoft and it's kind of it makes me smile now to go back and look at that original kind of large fabric for pre-training because I think it was only in the maybe 20 megawatt sort of size. Um and you know now we're talking gigawatts even just this year. Uh and you're right that when we think about like what is perfect compute for us or strategically the right compute for us we are definitely thinking about large scale um we're thinking about flexibility right we're learning a lot about um you know pre-training post-training test compute even like where the different kind of scaling is happening um we're kind of recognizing there's more of a blurred line often between what people think of as inference investors always are like your inference compute and your training compute it's like you know literally it's vanilla ice cream and chocolate ice cream when in reality there's like a bit in the middle that is something of both. Um we also need to think about things like um where you know latency where do we want to put our footprints around the world that very global weekly active user base right as they use chat GPT you don't want to slow the model down right the beauty of the intelligence is like the real-time nature of it and then when we get into big compute like where there's lots of tokens being used like deep research image gen um video as that comes online like all the work you saw today actually just even on voice um like that really quickly means that you got to make sure your compute is near your users and so it is a a big plan that's coming together but you're right like small is just not that useful to us. Um, but

what about pushing partners to take risks? From my understanding, you guys are pre-committing to certain, you know, basically spend levels, but at the same time, I imagine you want people to say, "Here's what we know we're going to need, but we want you to build, you know, this much capacity so that we we have the sort of uh incremental capacity built in.

Yeah, we want I mean being extensible is really important. Um, and we do want to see partners like I think Oracle OCI has done a really nice job of that of kind of starting we started with like one large it felt really large at the time data center footprint in Abalene and Texas and now that has really multiplied up into multiple sites that can all be connected and that's a good example of a partner who has the capability to start in one way but to be able to show you a path to maybe 5xing just in that in that single footprint. That said, I we are finding that as we go around the world, there is an ability to go work with governments. For example, we just made an announcement in Norway, made an announcement in the UK. Um, this is the first time in my professional career I've seen countries come to the table and want to do commercial deals like wallto-wall chatbt. I think the government of Estonia put Chat GBT into all of their high schools um high school or I can't remember was up in the university level. But that's kind of wowing and handinhand with that they are viewing AI infrastructure as incredibly strategic for their population. And you know it's a whole other level of selling versus you know I've I've seen enterprise large enterprises before but never anything at this scale.

Last question. Whose idea was it to give every federal agency chat GPT for a dollar a year? Yeah, I imagine I imagine that pulling your hair out. You could have gotten more than a dollar. The CFO must be really upset here.

$10 that's 10 times as much money. Now, of course,

this is one where I think it's really important. Opening is, you know, in some ways a US asset and national asset. And we want to make sure we're accelerating our government like all of the resources as we think about, you know, Western democracy and so on that we are absolutely putting our technology into those hands. It's that guy Kevin Wheel. He's been moonlighting for the US government. It's like, which team are you playing for, Kevin? Are you on Open AI or are you on the US government?

Kevin just did his basic training. I don't know if I'm allowed to tell you that, but I was hearing all about it yesterday.

I saw some photos. They look great.

Yeah, it's a good thing. It's even better for Kevin. Yeah, it's great. Um, last question for me. I I I you know the open source model launched uh two days ago and um there's this world where like you have this dominant the accidental consumer company you have this dominant consumer app that's generating so much revenue then you have B2B and enterprise and API and that looks more like a cloud provider but then is there a world where the Red Hat Linux of open-source LLMs is an open AI division and that and that there's actually serious revenue and profit that comes from helping companies implement an open-source uh large language model like Red Hat built a pretty fantastic business for a long time on top of open source Linux implementations.

Totally like yeah I mean I think it's the right question to be ask to be asking I mean I think step one was getting

yeah you got to get it out two days our second open source model out um and getting seeing what that traction is and then seeing what the community needs. I think it's important to leave space for a community to develop, right? That is the beauty of open source is that ecosystem that develops and that was true with Linux. It's true in areas like crypto too. But I do think you'll find over time that as enterprises want to deploy it like I now dinosaurs myself, but when I was a, you know, when I was a research analyst at Goldman Sachs back in the day, I covered software and I covered I covered Red Hat actually. Oh, that growth. I I wrote a research report called fear the penguin at one point because Linux being deployed

but then you started to understand that for an enterprise you couldn't depend on like patching and upgrading to happen via community model like you needed some of the rigor that goes with an enterprise business where you kind of know when you know if you need maintenance if you need a bug patch and so on and so that did allow Red Hat to grow an incredible business so I don't know if it's us or we'd be supportive of others but I think we are so excited to see open source out there and getting incredible feedback and I think we want to do that ahead of GPT5 to keep coming back to like we're here to grow this ecosystem.

Well, we'll give you market cap credit for it anyway even if it's early stage. Well, thank you so much for coming on. This is fantastic. We'll talk to you soon.

Thank you. Great to see you both. Take care. Have a good one. Cheers.

Bye. Up next, we have DD Credo from Kudo. I believe I'm pronouncing that correctly. Uh let me tell you about