I’m part of the YC P26 batch that got offered $2M by Sam Altman in funding with OpenAI tokens. I’ve had a few days to think about it so I thought I would share how I’m thinking through the entire thing.
The first thing that makes this offer interesting is how founder-friendly the deal is, meaning that it is low dilution and is a huge token allocation for a small team.
If you are spending thousands of dollars of token per month building, this could be a huge relief and can decrease your burn and improve your startup life expectancy.
There are a few questions that I am asking myself regarding this deal: do I want to lock in with one provider? If we start building an entire company's workflow on OpenAI, what will be the switching cost in a few years? How is token cost gonna evolve and how will that change the value of the deal? Do I need cash right now?
On the other hand, if you are building an AI-native company this could be the opportunity to keep pushing. It is part of the scaling law, the more you put resources in it, the more the potential (at least it kinda worked for compute and LLMs). It also gives you leverage while fundraising because now the question becomes “why would I raise at a X valuation when I can have all this spend already on tokens?” By having that alternative option you can really think about which investors are right for you, and what they can bring to the table aside from just capital.
In the end it obviously depends on your situation and there is no playbook here. I’m excited to see how this will turn out to be in 3, 5 or 10 years from now. This is the beginning of tokens becoming a utility.
The first thing that makes this offer interesting is how founder-friendly the deal is, meaning that it is low dilution and is a huge token allocation for a small team.
If you are spending thousands of dollars of token per month building, this could be a huge relief and can decrease your burn and improve your startup life expectancy.
There are a few questions that I am asking myself regarding this deal: do I want to lock in with one provider? If we start building an entire company's workflow on OpenAI, what will be the switching cost in a few years? How is token cost gonna evolve and how will that change the value of the deal? Do I need cash right now?
On the other hand, if you are building an AI-native company this could be the opportunity to keep pushing. It is part of the scaling law, the more you put resources in it, the more the potential (at least it kinda worked for compute and LLMs). It also gives you leverage while fundraising because now the question becomes “why would I raise at a X valuation when I can have all this spend already on tokens?” By having that alternative option you can really think about which investors are right for you, and what they can bring to the table aside from just capital.
In the end it obviously depends on your situation and there is no playbook here. I’m excited to see how this will turn out to be in 3, 5 or 10 years from now. This is the beginning of tokens becoming a utility.
• • •
Missing some Tweet in this thread? You can try to
force a refresh
