Summary of Key Points
Dick Costolo, former CEO of Twitter (who helped the company go public), offers his insights from the perspective of a seasoned veteran in the tech industry. He analyzes the prospects of three companies—SpaceX, OpenAI, and Anthropic—which are all set to go public: “The narrative after an IPO is more important than the numbers.” Each company has its strengths and weaknesses (SpaceX relies on storytelling; OpenAI faces challenges with its commitment to computational power; Anthropic takes a more cautious approach). The order of their IPOs can be crucial for their success or failure. The AI industry also faces risks such as price wars and resistance from data centers. Additionally, there is a clear divide in Silicon Valley, where a few individuals are becoming extremely wealthy while most others struggle to keep up.
1. After the IPO: Stock Prices Are Volatile, but Narrative Is Crucial
Costolo illustrates the stark differences before and after going public using his experience with Twitter:
- Private Market: Before listing, valuations range from $1 billion to $2 billion; employees are happy if their stock options increase in value, and no one cares about the actual stock price.
- Public Market: It took Twitter six years to reach a stock price of $30 per share, which then soared to $110 in one day before falling back to $40 within two months. Such volatility is the norm, and the team feels anxious, but you can’t constantly provide comfort.
- Narrative Is More Important: During his IPO, he promised to reach 1 billion users. However, for seven years afterward, Wall Street focused solely on monthly active users (MAUs). Even if revenue and profits exceeded expectations, a slight decrease in MAUs would cause the stock price to drop; conversely, a 1% increase in revenue or a higher MAU would boost the stock price. “The story told during the IPO will influence the company’s performance for years.”
2. The Three Companies Going Public: Each With Its Own Challenges
1. SpaceX: Elon’s Storytelling Ability Remains Powerful
Elon is adept at using narrative to control the market (Tesla is a prime example):
- Low Circulation = Strong Control: On the first day of trading, the company’s valuation could exceed $2 trillion, but with few shares outstanding, the price can soar. Elon can maintain stability by leveraging public interest in his stories.
- Atractive Stories: SpaceX’s plans, such as Starlink (a global internet service) and space data centers (although unrealistic—requiring the deployment of large equipment and potential repairs due to space debris), are still believable to many investors.
- Proven Strategy: Tesla’s “this time it didn’t happen but next time it will” strategy has worked for them, and SpaceX can replicate it.
2. OpenAI: Sam Altman’s Promises Pose Challenges
Sam Altman’s problem is making too many substantial commitments:
- The total amount invested in computing power and partnerships exceeds one trillion dollars, but the current revenue model cannot support this level of expenditure.
- The CFO must explain to investors how these investments will generate revenue and when profitability will be achieved—this is much more difficult than Elon’s challenges.
- Recent Progress: AI programming (Codex) has shown rapid growth, and the potential of “agentic coding” could help OpenAI meet its revenue targets.
3. Anthropic: A More Cautious Approach
Anthropics adopts a middle ground:
- Focusing on the corporate market rather than competing with OpenAI for consumer traffic.
- They released Claude Code only after internally confirming it as a competitive advantage, to avoid potential issues with the public.
- Their narrative is consistent and less exaggerated, minimizing their risks.
3. The Order of IPOs: Those Who Go Public First Have the Upper Hand
Market capital is limited:
- The first company to go public absorbs all available funds; subsequent companies receive only a portion.
- Elon’s actions (such as suing OpenAI) may aim to slow down their process, allowing SpaceX to take the lead and deplete market liquidity.
- Investors’ Opportunities: After these companies go public, university endowments and VC firms will have access to substantial cash, making it an ideal time for fundraising 6–12 months later.
4. Hidden Barriers in the AI Industry
- Price Wars: As AI models become more similar, price wars are likely, leading to competitive pressure on valuations.
- Data Center Resistance: The “Not In My Backyard” (NIMBY) movement is uniting Americans from both left and right, with 70% opposing data center construction in their neighborhoods (according to Gallup surveys).
- State governments may impose temporary bans, which could become a political issue in the 2028 elections.
- Company CEOs often argue without explaining the necessity of these data centers to the public.
5. The Divided Silicon Valley
In the past five years, companies like Anthropic, OpenAI, and Nvidia have enabled about 10,000 individuals to earn retirement-level wealth, while others can only earn high salaries but still cannot catch up. Costolo advises: “Don’t compare yourself to others.” Elon may become a trillionaire but spend his days criticizing on Twitter. Professional skills are important, but understanding human emotions is even more crucial; otherwise, you’ll be trapped in the cycle of “he has it and I don’t.”
These insights come from someone who has personally experienced an IPO and understands the challenges involved. For those interested in these companies, the message “the narrative is more important than the numbers” should not be forgotten.