The Venture Capitalist's New Math: A Study in National-Scale Pocket Change

There is a certain point in the accumulation of wealth where numbers cease to behave like currency and begin to behave like astronomical distances. One billion dollars is a figure that most of us can just about visualize, perhaps as a very large warehouse filled with reasonably priced hatchbacks. But one hundred and ten billion dollars is a different beast entirely. It is the sort of number that, if written down on a single piece of paper, would likely require its own zip code.

OpenAI has recently announced that it has secured this exact sum in a private funding round, backed by the usual suspects: Amazon, Nvidia, and SoftBank. It is a financial event so large that it makes the previous record-breaking rounds look like someone finding a particularly shiny fifty-pence piece in the folds of a sofa. One must imagine the meeting where this was discussed. Perhaps it involved a very small biscuit and a very large whiteboard, upon which someone simply drew a one, followed by another one, and then fell asleep while drawing the zeros.

In the traditional world of business—a quaint place where people sold things like umbrellas or artisanal cheese—the goal was generally to make more money than one spent. This was known as 'profit,' a concept that is increasingly viewed in Silicon Valley as a charming but ultimately unnecessary relic of the Victorian era. The new math of the venture capitalist is far more ambitious. It suggests that a company is not truly successful until it has successfully absorbed the equivalent of the gross domestic product of a medium-sized European nation, all in the pursuit of a chatbot that can explain the plot of 'Inception' in the style of a medieval monk.

There is, of course, the question of what one actually does with one hundred and ten billion dollars. One does not simply walk into a hardware store and ask for 'all the GPUs, please.' Although, given Nvidia's involvement, that may be exactly what happened. It is more likely that the money is being used to construct the sort of infrastructure that would make a Bond villain feel a sudden and profound sense of inadequacy. We are talking about data centers the size of small counties, powered by their own dedicated nuclear reactors, all humming away in the desert to ensure that your digital assistant can generate a picture of a cat wearing a tuxedo with slightly more realistic fur.

(I once saw a man try to pay for a bus fare with a hundred-pound note. The driver looked at him with the sort of weary disappointment usually reserved for people who try to explain their dreams at dinner parties. I imagine the global financial system feels much the same way about OpenAI right now.)

The involvement of SoftBank is particularly telling. Masayoshi Son has long been a proponent of the 'Singularity,' a theoretical point in the future where AI becomes so advanced that humans become essentially decorative. To Mr. Son, a hundred billion dollars is not so much an investment as it is a down payment on the end of history. It is the financial equivalent of buying a front-row seat to the heat death of the universe, but with better catering.

Amazon and Nvidia, meanwhile, are playing a slightly more practical game. They are the ones providing the shovels for this particular gold rush, except the shovels are made of silicon and cost as much as a private island. By investing in OpenAI, they are essentially ensuring that the person buying the shovels is using their specific brand of shovel-financing. It is a closed loop of capital that would be deeply impressive if it weren't so utterly surreal.

One must also consider the psychological impact on the rest of the startup ecosystem. For the average founder, trying to raise a few million dollars to build a better way to deliver laundry, the OpenAI round is a bit like trying to win a local bake-off while your neighbor is busy constructing a life-sized replica of the Eiffel Tower out of solid gold sponge cake. The scale is so vastly different that the two activities can no longer be said to belong to the same category of human endeavor.

(There is a persistent rumor that the 'O' in OpenAI actually stands for 'Ouroboros,' the mythical serpent that eats its own tail. This would certainly explain the way the capital seems to circulate within the same three or four boardrooms, growing larger with every pass until it eventually threatens to collapse under its own gravity.)

As we move forward into this new era of national-scale pocket change, one wonders where the ceiling actually is. Will we eventually see a trillion-dollar funding round? Will a startup one day announce that it has successfully acquired the concept of 'Tuesday'? In a world where a hundred billion dollars is considered a reasonable amount of money to spend on a very fast autocomplete, nothing seems particularly off the table.

For now, we can only watch as the numbers continue to climb, reaching toward the heavens like a digital Tower of Babel built out of venture capital and hope. It is a magnificent spectacle, provided one doesn't think too hard about what happens if the tower ever decides it's had enough of standing up. But that is a problem for tomorrow. Today, there are more zeros to be drawn, and more biscuits to be eaten.

In the end, perhaps the most British thing about this entire affair is the quiet, understated way in which it is being handled. No one is screaming in the streets about the sheer absurdity of it all. Instead, we simply nod, sip our tea, and remark that it's 'quite a lot of money, isn't it?' And indeed, it is. Quite a lot indeed.