Tech Brew Ride Home - Tue. 04/01 – OpenAI Closes The Biggest Private Tech Round Ever

Episode Date: April 1, 2025

Masa Son came through for OpenAI, to the tune of a $40 billion dollar round at a $300 billion-dollar post-money valuation. Sam Altman says OpenAI is going back to open weights. A new encryption model for Gmail. A new movie strategy for Amazon. And why the Switch 2 represents a new revenue strategy for Nintendo. Sponsors: FreshBooks.com Links: OpenAI closes $40 billion funding round, largest private tech deal on record (CNBC) OpenAI Finalizes $40 Billion Funding at $300 Billion Value (Bloomberg) OpenAI plans to release a new ‘open’ AI language model in the coming months (TechCrunch) Gmail is making it easier for businesses to send encrypted emails to anyone (The Verge) Amazon’s New Movie Strategy Starts With Theaters (NYTimes) Nintendo Departs From Its Founding Philosophy With Switch 2 (Bloomberg) Learn more about your ad choices. Visit megaphone.fm/adchoices

On April 4th, 2023, around 2 in the morning, a man was found stabbed multiple times on a sidewalk in downtown San Francisco. Hey, who did this to you? What happened next turned the story into a political firestorm. Reports have identified the victim as Bob Lee, the founder of Cash App. From Bloomberg Podcasts, this is Foundering, the Killing of Bob Lee, beginning April 16. Welcome to the TechMe right home for Tuesday, April 1st, 2025. I'm Brian McCullough today. Masasan came through for OpenAI, a $40 billion round at a $300 billion post-money valuation. Sam Altman says OpenAI is going back to Open Waits, a new encryption model for Gmail, a new movie strategy for Amazon, and why the Switch 2 represents a new revenue strategy for Nintendo.

Here's what you miss today in the world of tech. OpenAI has closed a new $40 billion round, the most ever raised by a private tech company at a $300 billion post-money valuation. SoftBank led the round with $30 billion, but according to a source, around $18 billion of that is for Stargate, quoting CNBC. Open AI said it plans to use the fresh capital to push the frontiers of AI research even further and scale its compute infrastructure according to a blog post. About $18 billion of the funding is expected to be used for OpenAI's commitment to Stargate, according to a person familiar with the matter who spoke anonymously due to the confidential nature of the terms of the deal. The joint venture between SoftBank,

OpenAI, and Oracle was announced by President Donald Trump in January. The initial funding will be $10 billion, followed by the remaining $30 billion, by the end of 2025, the person said. But the round comes with a caveat. Softbank said in an updated disclosure on Monday, that its total investment could be slashed to as low as $20 billion if OpenAI doesn't restructure into a for-profit entity by December 31st. The provision ramps up pressure on OpenAI to pull off the for-profit conversion, a plan that will need the blessing of Microsoft and the California Attorney General, and has been challenged in court by Elon Musk, who was one of the co-founders of OpenAI in 2015 when it started as a non-profit research lab. The largest private deal before Open AIs

round was Ant Group's $14 billion capital raise in 2018. After that was Jewel Labs, $12.8 billion raise in 2018, and DD Global's $10.8 billion round the following year, according to Pitchbook. Then comes Dada Bricks's $10 billion round in December, and OpenAI's own $10 billion round in 2023. SoftBank and other investors are betting that ChatGPT's explosive growth can continue. OpenAI said Monday that ChatGPT now has 500 million weekly users up from 400 million last month. OpenAI also expects revenue will triple to 12.7 billion. by the end of this year. CEO Sam Altman wrote Monday in a post on X that though the chat GPT launch was one of the craziest viral moments I'd ever seen and we added one million users in five days,

the company added one million users in the last hour, end quote. More from Bloomberg on the timeline of all this, quote, SoftBank, which is leading the latest funding round, will initially invest $7.5 billion in the company along with $2.5 billion from an investor syndicate, a person familiar with the agreement told Bloomberg. Additional investors in the group include Microsoft, CO2 management, altimeter capital management, and thrive capital. There will be a second tranche of $30 billion invested by the end of 2025, including $22.5 billion from SoftBank and $7.5 billion from a syndicate Bloomberg reported.

As part of the new deal, OpenAI has an incentive to complete the process of restructuring quickly. If its restructuring isn't completed by the end of the year, SoftBank would have the option to reduce its total contribution to $20 billion, from $30 billion, and OpenAI could seek additional investors to add to that sum, according to the person with knowledge of the situation. Softbank chairman Masayoshi Son called AI a defining force-shaping humanity's future in a statement about the deal. Our expected partnership with Open AI accelerates our shared vision to unlock its full potential, he said. Other investors, including

Magnitar Capital and Founders Fund have also been in talks to participate in the round. Magnetar Capital and Evanston, Illinois-based hedge fund could contribute as much as one billion, billion dollars, according to multiple people, all of whom asked not to be identified because the information is private, end quote. And one more detail. SoftBank is reportedly seeking a bridge loan of as much as $16.5 billion to help fund AI investments in the U.S. its largest ever borrowing denominated solely in U.S. dollars. Sam Altman also said yesterday that OpenAI plans to release a powerful new open-weight language model with reasoning in the coming months, which would be its first open weight model since GPT2, quoting TechCrunch. That's according to a feedback form the

company published on its website Monday. The form which OpenAI is inviting developers, researchers, and members of the broader community to fill out includes questions like, what would you like to see in an open weight model from OpenAI and what open models have you used in the past? We're excited to collaborate with developers, researchers, and the broader community to gather inputs and make this model as useful as possible. Open AI wrote on its website, if you're interested in joining a feedback session with the OpenAI team, please let us know in the form below. OpenAI plans to host developer events to gather feedback and in the future demo prototypes of the model. The first developer event will take place in San Francisco within a few weeks,

followed by sessions in Europe and Asia-Pacific regions. Open AI is facing increasing pressure from rivals such as Chinese AI Lab Deepseek that have adopted an open approach to launching models. In contrast to Open AI strategy, these open competitors make their models available to the AI community for experimentation and in some cases commercialization. It has proven to be a wildly successful strategy for some outfits. Meta, which has invested heavily in its Lama family of OpenAI models, said earlier in March that Lama had racked up over one billion downloads. Meanwhile, DeepSeek has quickly amassed a large worldwide user base and attracted the attention of domestic investors. In a recent Reddit Q&A, OpenAI CEO Sam Altman said that he thinks OpenAI has been

on the wrong side of history when it comes to open sourcing its tech. I personally think we need to figure out a different open source strategy, Altman said. Not everyone at OpenAIA shares this view, and it's also not our current highest priority. We will produce better models going forward, but we will maintain less of a lead than we did in previous years, end quote. Altman expanded on OpenAIs open model plans in a post on X on Monday afternoon, saying that OpenAI's upcoming open model will have reasoning capabilities along the lines of OpenAIs O3 Mini, end quote. Google is rolling out a new Gmail encryption model that doesn't require senders or recipients to use custom software or exchange certificates. Quoting the Verge. The feature is rolling out in beta starting today and will initially be available for Google Enterprise users to send encrypted emails to other Gmail users within the same organization.

Google says this will expand to emails sent to any Gmail inbox in the coming weeks and to inboxes from any third-party email provider later this year. Gmail's current encryption feature, based on the secure multi-purpose internet mail extensions protocol, can already be used to send external emails. But doing so requires the recipient to have S-MIME configured and complete multiple steps with the sender before emails can be securely exchanged, however. The new process will allow Gmail users to simply toggle on additional encryption in the email draft window to send an encrypted message. Non-Gmail recipients without S-MIME will then be provided a link to sign into a guest's Google Workspace account to securely view and reply to the email in a restricted version of Gmail. If the recipient already has S-MIME configured, then Gmail will send the message via the

S-Mime process it currently uses. Emails to both business and personal Gmail accounts will be automatically decrypted in the recipient's inbox. The encryption provided using this new system is higher than the standard transport layer security Gmail uses by default on all emails, but we should note that this isn't technically end-to-end encryption, even if that's what Google is calling it. The updated capability is powered by client-side encryption, which gives workspace administrators control over encryption keys, allowing them to revoke user access and monitor users encrypted files, according to Google's help page, end quote.

I guess that James Bond deal was a tell, because in a new strategy, Amazon apparently plans to release 14 to 16 movies per year in theaters, basically. doing what the other major studios do, with most running for 45 days in theaters before heading to streaming. Quoting the Times, after a decade-long dalliance with big-screen theatrical releases, the giant tech company will take center stage this week at the annual convention for theater owners, spending several millions of dollars to parade a stream of A-list stars, including Ryan Gosling, Ben Affleck, and Chris Hemsworth. It's the first time the company has ever taken on such a role. The point? To prove that its movie arm, Amazon, MGM,

Studios is serious about releasing around 14 big, broad commercial films a year to theaters nationwide and around the world. The appearance is the culmination of a strategic change for Amazon that began when it bought MGM with the Venerable Studios Impressive Library in 2022 for $8.5 billion. For years, the company has released five to eight films theatrically, but it was never clear how long they would stay in theaters before going to Prime Video, Amazon's streaming service. Air, starring Mr. Affleck and Mr. Damon, received a 37-day exclusive theatrical release. Red One with Dwayne Johnson and Chris Evans hit Prime just weeks after it debuted in theaters. Now with 14 movies a year, Amazon's lineup will rival those from the big studios in both size and scope,

and most will spend 45 days in theaters before hitting pay-per-view and then Prime. Amazon is making the change in the middle of its own corporate shuffle. Jennifer Selke, who had overseen the film and television operations at Amazon Studios for seven years, abruptly left her job last week, surprising many people inside the company. So when the lights dim at the CinemaCon conference on Wednesday, all eyes will be on Courtney Valenti, Amazon MGM's head of film, who will lay out the vision for the company's theatrical future. We have been talking about the theatrical slate and the commitment this company has to theatrical for about two years now, Ms. Valenti 61 said in an interview, finally we get to show,

not tell. Will Ms. Salke's departure upend any of that? It won't, Ms. Valenti said. Amazon is pushing into theaters even as the movie business appears to be shrinking and audiences are more fickle than ever. Box office sales are down 11% from a year ago and remain far below pre-pandemic levels. It is one of the few out-of-home entertainment businesses that have yet to recover from COVID. Some theater owners say they hope Amazon will help fix one of the major problems plaguing their business, a scarcity of wide-release movies. Attendance is still down 35% and that's not because moviegoers are somehow afraid to go to theaters, said Adam Aaron. Chairman and Chief Executive of AMC Entertainment, the wide release movie count is down 30 percent, so it's extremely good news for us that a major deep-pocketed company like Amazon is about to increase the number of movies.

In addition to the 14 to 16 films that Amazon now expects to release in theaters each year, another dozen will be produced directly for Prime Video. The company is also forming its own international distribution arm. Amazon is not doing this for us because they want to feel good. they're doing it because it should be good for their business, said Greg Marcus, chief executive of the company that operates Marcus Theaters, the fourth largest chain in the country. Amazon is saying, if we're going to be in the streaming business, then we need to be in the theatrical business, too, if we want to maximize the impact of these movies, end quote. Tomorrow morning, we're getting a big Nintendo event where they will share all the details of the upcoming Switch 2 console. This is really kind of a big deal because with the Switch 2 Nintendo is trying to do what it is.

rarely done before. Follow one hit console with another. Every time they have a hit console generation, they tend to misfire with the next one, see the Nintendo Wii, followed by the Wii U. Basically, just making this the Switch 2 largely the same form factor, largely just a spec bump, is a bit of a tell here. It's part of Nintendo's larger strategy of late, branching out to use its characters in cinema, theme parks, and merch in a very Disney-like way to create more consistent revenue and avoid the boom-bust cycle that can often bedevil the console business. Quoting Bloomberg. Nintendo said last week that a live-action legend of Zelda movie will hit theaters in March

27. The team in charge of films at the company is headed by revered creator Shigeru Miyamoto. While it's still a small group, it is gaining influence within the firm after the massive success of the Super Mario Brothers movie in 2023. More similar works are ahead, with the goal of exploiting the company's wealth of intellectual property assets in more ways. well over a century old. Nintendo's goal is to increase touch points with consumers who otherwise wouldn't spend time on its consoles. In the ideal cycle, loyal game fans would flock to movie theaters and stores, generate buzz, entice more people to try playing its games and create more fans. It's a strategy shift at a company that's long-taken pride in releasing unique products

and combining technologies that other people wouldn't contemplate. Remember the ring-fit Hulu hoop accessory? It was another winner. Nintendo has never been afraid of recent, setting successful product lines and starting from zero. It just appears to have decided that 2017 Switch was such a success that it's better to iterate and build on it rather than taking more risk to wow any lingering doubters. The Switch 2 is about carrying over hundreds of millions of users to the new platform through online membership programs and the huge library of original Switch games. That has many parallels with Cooper Tino, California-based Apple, which long ago outgrew the phase of reinventing its core products. Apple's primary work now is

iterating on the iPhone, iPad, and Apple Watch, drawing on network effects to keep users ensconced in its product ecosystem. The U.S. company aims to generate more revenue per user, which means more in the way of software and services rather than groundbreaking hardware. Nintendo, likewise, appears to be making a bigger push to grow its ecosystem rather than building the most cutting-edge gadget. Making the business outlook more predictable and sustainable by turning itself into a more iterative and conventional business has felt almost inevitable for Nintendo for quite a while. The company now has the largest pool of investors ever with its shares soaring to new heights on anticipation about the new console. Its recent crop of hires also comes

from top-tier institutions and might expect a somewhat more cautious approach than the buccaneering spirit of the early era of video game development. In short, Nintendo likes surprises, but investors don't. The company may yet retain the joy of springing total novelties by turning out more peripheral products like its popular Alarmo-Alarm clock, but its communication. style has already changed. In October last year, Nintendo opened its first official museum in the Uji area of Kyoto. For many years on the wall, and the company's headquarters hung a framed work of calligraphy depicting the brushstrokes for Nintendo, which roughly translates to leaving luck to the heavens. This embodiment of the company's founding philosophy has been

consigned to the museum, an artifact from the company's 135-year history. That perhaps is the clear a sign yet that Nintendo is ready to move on, end quote. Nothing more for you today. Talk to you tomorrow.