AI Investors’ Dilution Dilemma; Dueling Open Letters for Maguire

On Monday, I reported how much OpenAI was spending on stock-based compensation. It’s a lot: $4.4 billion last year, or more than five times its stock-based compensation the prior year, amounting to a whopping 119% of revenue. 

Stock-based compensation expenses typically don’t cut into cash flow until a company goes public, so startup founders and investors don’t spend as much time worrying about these costs. But these expenses can hurt investor returns by diluting their stakes when the company issues new shares to employees.