Welcome to our Bloomberg television and radio audiences around the world. We're live in Las Vegas. This is Money twenty twenty and we're joined by open AI's CFO Sarah Fryer. And this is interesting.

Welcome to our Bloomberg television and radio audiences around the world. We're live in Las Vegas. This is Money twenty twenty and we're joined by open AI's CFO Sarah Fryer. And this is interesting.

You have some history with.

You have some history with.

Money twenty twenty, history with fintech, but that's kind of the point. And so much of the focus to date on open ai has been I guess, a personal use of chat GPT, but let's start with the banks and finances. How much of that is made up in your business?

Money twenty twenty, history with fintech, but that's kind of the point. And so much of the focus to date on open ai has been I guess, a personal use of chat GPT, but let's start with the banks and finances. How much of that is made up in your business?

Yeah, it's like you.

Yeah, it's like you.

Ad, it's so great to be here, and you're right, Money twenty twenty. I've seen it progress through the years and what an incredible event it is today. And we're here because our customers are here. AI is happening right now. It's not experimental. It's not something that people are just playing around with, banks, financial institutions, FinTechs. People are using it today in their business.

Ad, it's so great to be here, and you're right, Money twenty twenty. I've seen it progress through the years and what an incredible event it is today. And we're here because our customers are here. AI is happening right now. It's not experimental. It's not something that people are just playing around with, banks, financial institutions, FinTechs. People are using it today in their business.

There's the Morgan Stanley case study. Yeah, you know, this week alone or past week, Bank of America's talks about how many patents it's got in machine learning and artificial intelligence. But do you actually have a tangible sense of what is is those financial institutions are doing with your large language models.

There's the Morgan Stanley case study. Yeah, you know, this week alone or past week, Bank of America's talks about how many patents it's got in machine learning and artificial intelligence. But do you actually have a tangible sense of what is is those financial institutions are doing with your large language models.

Yes, absolutely so.

Yes, absolutely so.

Morgan Stanley is a great example in their wealth management business. They're using our models both to help wealth advisors be more productive. They're using it as a way to create better financial advice and outcomes for customers. We're seeing folks like Klarna use it in a customer service. CEO of Clarina has been very loud and proud on this front. That's another great case study in terms of productivity improvements. And then we have banks like VBVA that are using it all across their business. And that's really our message here. It's just get started. Get enterprise chat, GPT, roll out to your organization, see what your people do with it.

Morgan Stanley is a great example in their wealth management business. They're using our models both to help wealth advisors be more productive. They're using it as a way to create better financial advice and outcomes for customers. We're seeing folks like Klarna use it in a customer service. CEO of Clarina has been very loud and proud on this front. That's another great case study in terms of productivity improvements. And then we have banks like VBVA that are using it all across their business. And that's really our message here. It's just get started. Get enterprise chat, GPT, roll out to your organization, see what your people do with it.

Help them just get started.

Help them just get started.

Whether they're in marketing, in finance and product everyone can have really interesting even.

Whether they're in marketing, in finance and product everyone can have really interesting even.

If we are just getting started. Can you help our audience understand how meaningful contribution the financial services sector fintech makes to open AIS revenue? Yes?

If we are just getting started. Can you help our audience understand how meaningful contribution the financial services sector fintech makes to open AIS revenue? Yes?

So today if you look at our largest verticals areas like EEDU, education, healthcare.

So today if you look at our largest verticals areas like EEDU, education, healthcare.

But financials is probably third.

But financials is probably third.

And again I think that's because they are typically early adopters. They're often willing to take that risk because they see the upside in terms of driving more revenue. But they also are very good at managing their cost and efficiency. And it's great when you get an early adopter like Morgan Stanley because it tends to lead the way.

And again I think that's because they are typically early adopters. They're often willing to take that risk because they see the upside in terms of driving more revenue. But they also are very good at managing their cost and efficiency. And it's great when you get an early adopter like Morgan Stanley because it tends to lead the way.

I can think of a wealth.

I can think of a wealth.

Management client today that it's not coming to us to say what do we need to do?

Management client today that it's not coming to us to say what do we need to do?

How do we get started?

How do we get started?

Banks in particular can be sensitive to pricing. There's a lot of curiosity not just in as a consumer how much I'm paying on a monthly basis for chat GPT access, but at the enterprise level as well. Reports are for example, at the corporate per user level, you're thinking it about two thousand dollars per head? How are you managing us give us insight into the pricing strategy.

Banks in particular can be sensitive to pricing. There's a lot of curiosity not just in as a consumer how much I'm paying on a monthly basis for chat GPT access, but at the enterprise level as well. Reports are for example, at the corporate per user level, you're thinking it about two thousand dollars per head? How are you managing us give us insight into the pricing strategy.

Sure, so pricing is super interesting because we're really trying to think about value and what is this person getting from this tool? And I think I actually don't think we've done a great job of that yet ourselves. Despite that we have two hundred and fifty million weekly active users and all of that's a you know, five six percent actually converted to be plus customers, so they're paying but if you look at the value. When we were rolling out oh one, our reasoning model, and this is a model that stops and thinks for you. It actually does hard problems. I was watching a lawyer in action using it to create a brief and at the end we said to him, what would you have paid for that, like if you had a paralegal doing that? He was like, easily one thousand to two thousand dollars per hour. And this is someone who's using it. If it's an enterprise per seeds, probably sixty bucks per month. And this is someone who would have paid one thousand to two thousand dollars per hour. So I think that there's a lot of value that is in the product today, but we are just trying to make sure people can get started, can actually see the outcomes, and over time we believe that value to price will come into alignment.

Sure, so pricing is super interesting because we're really trying to think about value and what is this person getting from this tool? And I think I actually don't think we've done a great job of that yet ourselves. Despite that we have two hundred and fifty million weekly active users and all of that's a you know, five six percent actually converted to be plus customers, so they're paying but if you look at the value. When we were rolling out oh one, our reasoning model, and this is a model that stops and thinks for you. It actually does hard problems. I was watching a lawyer in action using it to create a brief and at the end we said to him, what would you have paid for that, like if you had a paralegal doing that? He was like, easily one thousand to two thousand dollars per hour. And this is someone who's using it. If it's an enterprise per seeds, probably sixty bucks per month. And this is someone who would have paid one thousand to two thousand dollars per hour. So I think that there's a lot of value that is in the product today, but we are just trying to make sure people can get started, can actually see the outcomes, and over time we believe that value to price will come into alignment.

Is a balance right between what's of value to your customer, but also you know you have to account for open AIS spending. So we talked about endlessly, particularly on the compute side, what is that balance in what works best for you and your customer base.

Is a balance right between what's of value to your customer, but also you know you have to account for open AIS spending. So we talked about endlessly, particularly on the compute side, what is that balance in what works best for you and your customer base.

Yeah, so our first and foremost, what's most important to us is to stay on the frontier, building the frontier models, making sure that we are bringing ultimately agi to the benefit of humanity. To do that, it's expensive. We have to invest in large scale compute and so to me, there's really two ways to finance that.

Yeah, so our first and foremost, what's most important to us is to stay on the frontier, building the frontier models, making sure that we are bringing ultimately agi to the benefit of humanity. To do that, it's expensive. We have to invest in large scale compute and so to me, there's really two ways to finance that.

It's either through the free cash flows of.

It's either through the free cash flows of.

The business spoken like a good CFO, or it's through raising equity and debt financing because investors can see the long term potential of this business.

The business spoken like a good CFO, or it's through raising equity and debt financing because investors can see the long term potential of this business.

So on the former, on the cash.

So on the former, on the cash.

Flows of the business, we want to make sure we keep growing that business. I think we have been wowed at just the pace of growth, particularly on the consumer side. It's about seventy five percent of our business today. But even our enterprise businesses, they are young, but they are ready doing an incredible amount of annualized revenue and a real excited by the potential there.

Flows of the business, we want to make sure we keep growing that business. I think we have been wowed at just the pace of growth, particularly on the consumer side. It's about seventy five percent of our business today. But even our enterprise businesses, they are young, but they are ready doing an incredible amount of annualized revenue and a real excited by the potential there.

For a bluebig television and radio audience worldwide. We're in Las Vegas at Money twenty twenty and we're speaking to the Open AI CFO Sarah Fryar, and you talk there about the consumer business. Something very interesting is the future business model ADS supported tiers, for example, very specifically segmented pricing. How do you think about that.

For a bluebig television and radio audience worldwide. We're in Las Vegas at Money twenty twenty and we're speaking to the Open AI CFO Sarah Fryar, and you talk there about the consumer business. Something very interesting is the future business model ADS supported tiers, for example, very specifically segmented pricing. How do you think about that.

Sarah, Yeah, so I think you always want to stay open to alternate business models or ways that you can layer a new business model on top. Now, the key for us is always access. How do we make sure as many people as possible get access to this tool? And that's on a global stage, by the way, And so to do that sometimes you do pivot away from just pure subscription models to models like ads. My last company was all ads, so I've definitely experienced this. I think ads have their place, but you have to be really mindful of were I think in areas like commerce, ads are great. Right if I do a chat GPT prompt for black high heels shoes, something I probably would do, so I actually don't want a history of the black high heeled chew. I want five stores I could buy from right now, probably e commerce. So that's why companies like Shopify are great customers of ours as well. But there are other places where actually the AD model doesn't make as much sense. You want to get the consumer to the answer they need as fast as possible, and I think that's where chat Gibt is a really very different platform from say something like Google Search.

Sarah, Yeah, so I think you always want to stay open to alternate business models or ways that you can layer a new business model on top. Now, the key for us is always access. How do we make sure as many people as possible get access to this tool? And that's on a global stage, by the way, And so to do that sometimes you do pivot away from just pure subscription models to models like ads. My last company was all ads, so I've definitely experienced this. I think ads have their place, but you have to be really mindful of were I think in areas like commerce, ads are great. Right if I do a chat GPT prompt for black high heels shoes, something I probably would do, so I actually don't want a history of the black high heeled chew. I want five stores I could buy from right now, probably e commerce. So that's why companies like Shopify are great customers of ours as well. But there are other places where actually the AD model doesn't make as much sense. You want to get the consumer to the answer they need as fast as possible, and I think that's where chat Gibt is a really very different platform from say something like Google Search.

You are still relatively early in this role, but it's been two years since the original deal with Microsoft was negotiated, and that compute relationship is critically important. Yes, all those terms change, are they fluid or are you just sticking to the contract that was on your desk when you arrived.

You are still relatively early in this role, but it's been two years since the original deal with Microsoft was negotiated, and that compute relationship is critically important. Yes, all those terms change, are they fluid or are you just sticking to the contract that was on your desk when you arrived.

Now, and it's actually longer than two years. Microsoft and OpenAI have been partners, I think for actually almost five years, so they really came to us when we were a research lab, and the deal that we've worked with them is they do provide compute exclusively and we give them the IP around artificial intelligence.

Now, and it's actually longer than two years. Microsoft and OpenAI have been partners, I think for actually almost five years, so they really came to us when we were a research lab, and the deal that we've worked with them is they do provide compute exclusively and we give them the IP around artificial intelligence.

So it's incredible.

So it's incredible.

The products they're rolling out today are really built a top of open AI's AI. As we go forward and as we get bigger, we absolutely see a maturing in that relationship, and so for consumer benefit, we want to make sure consumers always get access to what they need. That will probably mean compute for more parties over time.

The products they're rolling out today are really built a top of open AI's AI. As we go forward and as we get bigger, we absolutely see a maturing in that relationship, and so for consumer benefit, we want to make sure consumers always get access to what they need. That will probably mean compute for more parties over time.

Where we did.

Where we did.

Discuss the Oracle deal, or Oracle discussed it a few quarters back, and I think that's a good starting point for just how do we maximize compute so we maximize the impact for consumers.

Discuss the Oracle deal, or Oracle discussed it a few quarters back, and I think that's a good starting point for just how do we maximize compute so we maximize the impact for consumers.

The catchphrase or buzz word of this year, I think has been ship products. You're the CFO, and so there's a tension between the cost of doing so and the need to move quickly. I think Sam has denied recently reports that the next model will be out by year end. What can you tell us about the path forward their the cadence of new models to come.

The catchphrase or buzz word of this year, I think has been ship products. You're the CFO, and so there's a tension between the cost of doing so and the need to move quickly. I think Sam has denied recently reports that the next model will be out by year end. What can you tell us about the path forward their the cadence of new models to come.

Yeah, I mean I think you hit the nail on the head ship product product velocity. That is the mantra internally to open an eye. And it's something I've just been so wowed by since I started as just.

Yeah, I mean I think you hit the nail on the head ship product product velocity. That is the mantra internally to open an eye. And it's something I've just been so wowed by since I started as just.

How fast we do ship products right.

How fast we do ship products right.

Even in my short tenure, I've seen one come out our Reasoning model, that huge step forward from kind of what has been more the Chat ChiPT model series. We've launched things like advanced speech talk to the model itself.

Even in my short tenure, I've seen one come out our Reasoning model, that huge step forward from kind of what has been more the Chat ChiPT model series. We've launched things like advanced speech talk to the model itself.

The O series four.

The O series four.

O enough four Mini for example, four O Mini, which is our distilled model, is one hundredth the cost of what the original Chat Ept four model was. That is incredible for developers, and that's why you see the API products be so successful. And again it goes back to how do we get this into the hands of many developers are a force multiplier and today I'm super proud. I think every single Ai unicorn is built atop of open AI's API, and that will tell you how we are the frontier model.

O enough four Mini for example, four O Mini, which is our distilled model, is one hundredth the cost of what the original Chat Ept four model was. That is incredible for developers, and that's why you see the API products be so successful. And again it goes back to how do we get this into the hands of many developers are a force multiplier and today I'm super proud. I think every single Ai unicorn is built atop of open AI's API, and that will tell you how we are the frontier model.

I think when I started covering open Ai, there was around five hundred people at the company. It's probably near two thousand now.

I think when I started covering open Ai, there was around five hundred people at the company. It's probably near two thousand now.

Yeah.

Yeah.

That as the CFOs to keep talent long serving talent happy. My understanding is that tenders will be a big part of that, giving employees liquidity. What will be the cadence and sort of increments of that going forward, Sarah, Yeah.

That as the CFOs to keep talent long serving talent happy. My understanding is that tenders will be a big part of that, giving employees liquidity. What will be the cadence and sort of increments of that going forward, Sarah, Yeah.

So we are a company that has done tenders to date, and part of that is because we are in a competitive market, particularly for research talent. When I think about what keeps you on that front edge of the best models out there, it is compute, but more importantly, it's people.

So we are a company that has done tenders to date, and part of that is because we are in a competitive market, particularly for research talent. When I think about what keeps you on that front edge of the best models out there, it is compute, but more importantly, it's people.

It's great researchers.

It's great researchers.

And so in order to compete with companies that have liquidity already in their stock public companies, we have taken this approach to tenders a little bit like others in the space.

And so in order to compete with companies that have liquidity already in their stock public companies, we have taken this approach to tenders a little bit like others in the space.

SpaceX is a great bax one we've covered closer, yes.

SpaceX is a great bax one we've covered closer, yes.

And so we want to be able to keep doing that. We want to do it thoughtfully and mindfully, knowing that. The other rule one is to keep it on the field, make sure we have money for computees. It's always a balance, but we do think it's important to give our researchers that access for.

And so we want to be able to keep doing that. We want to do it thoughtfully and mindfully, knowing that. The other rule one is to keep it on the field, make sure we have money for computees. It's always a balance, but we do think it's important to give our researchers that access for.

Rob Bloomberg television and radio audience all around the globe. We're in Las Vegas and we're speaking to the open Ai CFO, Sarah. Open Ai is a software company, or it was. Now A lot of the focus is on Sam and the team's ambitions with safeguarding infrastructure. How involved are you in that talking about the sort of construction of five gig what data centers and the financing of such things. Yeah, was that a surprise to come in and sort of think, Okay, I need to get a handle on that project.

Rob Bloomberg television and radio audience all around the globe. We're in Las Vegas and we're speaking to the open Ai CFO, Sarah. Open Ai is a software company, or it was. Now A lot of the focus is on Sam and the team's ambitions with safeguarding infrastructure. How involved are you in that talking about the sort of construction of five gig what data centers and the financing of such things. Yeah, was that a surprise to come in and sort of think, Okay, I need to get a handle on that project.

Not a surprise, but definitely a stretch.

Not a surprise, but definitely a stretch.

It's a new territory, stretch from a capital perspective, stretch.

It's a new territory, stretch from a capital perspective, stretch.

From a capital and also just my own learning. Frankly, I think we're all learning in this space. Infrastructure is destiny. It's this wonderful phrase that Chris Lane has managed to get up there in the world, and we do think that this build is important. It's important for us competitiveness, it's important for world productivity. It's important even with a national security lens. And so you are right. One of the key jobs I need to do is to figure out that capital allocation story. It's going to be both a working with part. It's going to be raising financing, but it's always making sure that we are staying ahead of what will be required. Call it two three years out, because you can't just turn on compute today if you need it. You actually have to have thought about it, probably about three years ahead.

From a capital and also just my own learning. Frankly, I think we're all learning in this space. Infrastructure is destiny. It's this wonderful phrase that Chris Lane has managed to get up there in the world, and we do think that this build is important. It's important for us competitiveness, it's important for world productivity. It's important even with a national security lens. And so you are right. One of the key jobs I need to do is to figure out that capital allocation story. It's going to be both a working with part. It's going to be raising financing, but it's always making sure that we are staying ahead of what will be required. Call it two three years out, because you can't just turn on compute today if you need it. You actually have to have thought about it, probably about three years ahead.

On that, if I may.

On that, if I may.

One of the things I heard from some of your investors is you did a very good job early in explaining the basics of the plan, but the ultimate goal is AGI.

One of the things I heard from some of your investors is you did a very good job early in explaining the basics of the plan, but the ultimate goal is AGI.

That's correct.

That's correct.

How confident do you feel you have that sort of into infrastructure in place or a plan to have it for AGI?

How confident do you feel you have that sort of into infrastructure in place or a plan to have it for AGI?

I think we have the plan in place. I think if Sam we're sitting on the seat, he would tell you AGI is closer.

I think we have the plan in place. I think if Sam we're sitting on the seat, he would tell you AGI is closer.

Than most think.

Than most think.

But I what would you say?

But I what would you say?

I would agree based on what I'm seeing. Like one of the best meetings I get to go to once in a while is the research meeting, and it would blow your mind to see what's already coming and what as we have learned how to take reasoning models like oh one preview yes on top of GPT models and the interplay between those. You're now really starting to see some incredible outcomes. PhD level outcomes where you have in your pocket human intelligence that is PhD level and physics and biology and chemistry in English literature, like whatever the job is you need to do if you're a healthcare researcher, if you're a banker, if you're in education. The tool that you are now caring the power there blows my mind.

I would agree based on what I'm seeing. Like one of the best meetings I get to go to once in a while is the research meeting, and it would blow your mind to see what's already coming and what as we have learned how to take reasoning models like oh one preview yes on top of GPT models and the interplay between those. You're now really starting to see some incredible outcomes. PhD level outcomes where you have in your pocket human intelligence that is PhD level and physics and biology and chemistry in English literature, like whatever the job is you need to do if you're a healthcare researcher, if you're a banker, if you're in education. The tool that you are now caring the power there blows my mind.

Sarah, you touched on it a moment ago, financing the needs to raise capital. You've just done a pretty astonishing large round. But a follow on, I mean you must have a good sense of the cadence of needing to raise funds on an annual basis. I don't know how you plan it.

Sarah, you touched on it a moment ago, financing the needs to raise capital. You've just done a pretty astonishing large round. But a follow on, I mean you must have a good sense of the cadence of needing to raise funds on an annual basis. I don't know how you plan it.

Yeah, so it goes back.

Yeah, so it goes back.

To what you said, which is really understanding in your plan, what are your big expenses? Compute is the biggest, but we also need to run a company, so we have real operating expenses. We're right in the guts right now of FY twenty five planning that is usually a three year outlook in most companies and for us, it needs to be because we have to make those compute decisions. And with that comes then Okay, what is our balance sheet going to look like? What's our cash burn rate? At what point can we generate enough free cash flow to actually help the business? Not ready to tell you that today, that's for the next time we talk. And then on top of that, how do I help keep bringing our syndicative investors along?

To what you said, which is really understanding in your plan, what are your big expenses? Compute is the biggest, but we also need to run a company, so we have real operating expenses. We're right in the guts right now of FY twenty five planning that is usually a three year outlook in most companies and for us, it needs to be because we have to make those compute decisions. And with that comes then Okay, what is our balance sheet going to look like? What's our cash burn rate? At what point can we generate enough free cash flow to actually help the business? Not ready to tell you that today, that's for the next time we talk. And then on top of that, how do I help keep bringing our syndicative investors along?

I called them with us.

I called them with us.

We are less than a week from the election, and I think about my own use of four to Oh, I've not used it related to the elections searching for information, but are you preparing for that election and what impact might it have on open AI?

We are less than a week from the election, and I think about my own use of four to Oh, I've not used it related to the elections searching for information, but are you preparing for that election and what impact might it have on open AI?

Yeah, we absolutely are.

Yeah, we absolutely are.

We have to be very mindful from a safety perspective today.

We have to be very mindful from a safety perspective today.

If you do.

If you do.

Searching around the election, you'll actually see that often we will not return a response or will return with a caveat. That says to be mindful of your sources, and I think I learned a lot of that. Frankly, Yet nextdoor, right, you cannot need to be careful of not being paternalistic or paternalistic around people. People need to be able to find information make their own educated decisions. But at the same time, you also need to be very aware when you have a platform that today services two hundred and fifty million people every single week, we have to recognize that they're going to want to do things, and we need to provide avenues, but in a safe and secure way.

Searching around the election, you'll actually see that often we will not return a response or will return with a caveat. That says to be mindful of your sources, and I think I learned a lot of that. Frankly, Yet nextdoor, right, you cannot need to be careful of not being paternalistic or paternalistic around people. People need to be able to find information make their own educated decisions. But at the same time, you also need to be very aware when you have a platform that today services two hundred and fifty million people every single week, we have to recognize that they're going to want to do things, and we need to provide avenues, but in a safe and secure way.

Open AI CFO Sarah Friar here live in Las Vegas. Thank you very much, exactly to catch up

Open AI CFO Sarah Friar here live in Las Vegas. Thank you very much, exactly to catch up