Work AGI is the Only AGI that Matters

Today on the AI Daily Brief, why work AGI is the only AGI that the big labs care about

now, and before that in the headlines, IPO fever starts to take hold.

The AI Daily Brief is a daily podcast and video about the most important news and discussions

in AI.

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going to want to get your voting in by Thursday, before we move on to the round of 32.

Again you can find that at agentmadness.ai.

We kick off today with some fairly significant IPO fever.

CNBC recently got a hold of documents that they describe as resembling an open AI IPO

perspective, with the documents warning of numerous risks to open AI like their close

ties to Microsoft.

Potential investors were told that Microsoft is responsible for a substantial portion

of our financing and compute, and open AI also disclosed concentration risks, saying,

if Microsoft modifies or terminates its commercial partnership with us, or if we are unable

to successfully diversify our business partners, our business, prospects, operating results

and financial condition could be adversely affected.

Now this is particularly relevant given reports that Microsoft is considering a lawsuit to block

certain parts of open AI's partnership with Amazon.

Additional risk disclosures include open AI's significant capital expenditure, reliance

on compute resources, ongoing litigation with Elon Musk, and their unusual structure

as a public benefit corporation.

They even mentioned geopolitical risk related to Taiwan.

Now while CNBC kind of sold this at first as a pre-IPO perspective, it appears that this

document was shared with potential investors in open AI's recent fundraising round, meaning

that it doesn't actually seem to be prepared for the IPO, and yet the list of risks will

likely closely mirror disclosures once they actually go public.

Sources additionally said that open AI is seeking a further 10 billion from investors to

add to the 110 billion already raised from Softbank and Vidya and Amazon.

And as we'll hear in the main episode, it sounds like Sam Altman is changing his focus

to be able to concentrate more closely on things like fundraising.

Now an open AI spokesperson basically said that this is just legal nothingburger, commenting,

this is a standard legal risk factor disclosure unrelated to any potential IPO perspectives.

Similar language has been in place for years, Microsoft is and will remain a critical long-term

partner.

Which more tangibly in IPO news, SpaceX is aiming to file their IPO paperwork as soon

as this week.

Sources speaking with the information said that SpaceX and by extension XAI are finalizing

the details of their perspectives and could file documents with the SEC this week.

The stock is expected to begin trading in June if all goes to plan.

That would make XAI the first out of the gate as the three large AI startups head towards

IPO.

SpaceX is said to be aiming to raise 75 billion in the public offering, which would make

it the largest IPO in history by a wide margin.

They were originally aiming for 50 billion, so this would be a substantial up size.

In fact, if it works, that single IPO would surpass all the money raised in IPO's last

year combined.

SpaceX last raised money at 1.25 trillion, suggesting that it would debut as around

the 12th largest company in the world.

When the prospectus does come out, we'll get our first look at XAI's books.

Analysts expect that SpaceX as a whole is losing money and XAI is deep in the red.

Now this IPO is also expected to have a few unconventional features.

Elon Musk has said that he wants to make IPO shares available to retail investors in

larger quantities than usual.

Typically companies offer around 10% of IPO shares available to retail prior to the listing,

but SpaceX is expected to bump that number to 20%.

In addition, the SpaceX IPO won't feature the standard six month lockup for existing

shareholders.

The safeguard is usually put in place to stop insiders dumping their stock and crashing

the price right out of the gate, sources said that a custom arrangement is still being

sorted out.

Although it's unclear if this means a shorter lockup or it actually means a longer lockup.

The information finally reports that Goldman Sachs, Morgan Stanley, Bank of America,

JP Morgan and City have all been preparing IPO plans even though none of them has officially

been hired.

Continuing the theme of Bucking Convention, SpaceX is said to be considering an approach

where each investment bank has assigned a different task as part of this largest IPO

in history.

Now when it comes to XAI's role in all of this, there is plenty of skepticism to go around.

Contrary in Curse on Twitter writes, the obvious reason to merge XAI and SpaceX is because

XAI is a fourth rate lab that Elon knows is screwed unless they get noodles of compute

for free, so they'll raise the 75 to 100 and jam it into GPUs.

SpaceX barely needs the money.

And yet, I don't think there's going to be any shortage of retail excitement.

A new ETF is sending pre-IPO AI stocks to the moon, although that's not necessarily

a good thing.

Last week, Fundrise listed their innovation fund, which holds shares in SpaceX and

thropic and open AI.

While some have praised these pre-IPO wrappers for giving retail investors early access to

startup equity, this isn't necessarily what most had in mind.

Shares in the ETF are up 1500% since launch, most recently seeing a 64% jump on Tuesday while

being halted twice for volatility.

By the end of the day, the fund was valued at more than 16 times the value of the shares

it holds.

There's obviously some wiggle room on how Anthropic stock is valued, but the current ETF's

price implies almost a $5 trillion valuation.

And since they last raised in February at a $380 billion valuation, it is unlikely that

in that subsequent time, no matter how good we think cloud code is, that they have jumped

to become worth more than Microsoft.

Now of course, this is actually just a market structure issue.

It's not possible to create more shares to satisfy the demand, so the ETF can completely

detach from its underlying value.

To sum, it's in early indication that AI startups will have screaming hot IPOs with a ton

of retail demand, while others think it's just a sign that meme stock trading never

went away.

Jack Shannon, a Morningstar said, with the implied valuations when you have this premium,

your upside is gone.

Clearly it's going to attract some meme crowd and get some high octane trading, but if

someone is in this for the long term, frankly, it's a horrible investment at the current

price.

Matt Malone of Opto Investments also pointed out how this demonstrates why staying private

for a really long time is really rough on retail investors.

Malone said that these numbers are great for investors who want to get out, but if you're

coming in, you're paying a huge, huge premium.

This shows the dynamic from private markets to public markets when public markets are often

held out as the preferred pricing mechanism, but in this case, the public market price

doesn't really make sense.

Staying in market themes, SoftBank is apparently pushing the limits as they scrounge up funding

for their open AI bet.

The Financial Times reports that SoftBank is testing their self-imposed borrowing limits

after committing another 30 billion to open AI.

SoftBank had previously held themselves to a 25% loan to value ratio, meaning they won't

borrow against more than 25% of their stock holdings.

Last year's $22.5 billion in funding already stretched them pretty thin, with SoftBank selling

all of their Nvidia holdings and taking out billions of dollars in margin loans against

their arm stock.

Responding to the FT's reporting, SoftBank's CEO Yoshimitsu Gojo said,

�I don't deny the possibility in the future that we may temporarily go beyond 25%.

Still, apparently, SoftBank will permanently change their policy, just temporarily work

around it as they hit a cash crunch.

Basically, more than ever, Masayoshi Sun is betting the company on open AI.

Speaking of open AI, a big new deal between that company and Helion Energy has Sam Altman

stepping down as Chairman and Board Member of the Fusion Energy Company.

Sam Altman personally led Helion's $500 million Series E in 2021 at a $3 billion valuation.

At the time, it was the largest ever venture investment in a nuclear fusion startup.

Axios reported that the new deal with open AI would guarantee the company 12.5% of the

energy initially produced.

The goal would be to scale that to 5 gigawatts by 2030 and 50 gigawatts by 2035.

Lastly, today, the Pentagon's battle with Anthropic has now officially landed in the courts,

with a federal judge dragging the Pentagon for their conduct against Anthropic in the

latest court hearing.

On Tuesday, Anthropic's application for an injunction was heard in Northern California,

and Judge Rita Lynn was very unimpressed.

She said the Pentagon's actions were troubling, her word, as it appeared to be punishing Anthropic

for speaking out.

Now, the genesis of all this is that Anthropic sued the Pentagon two weeks ago, claiming

that their designation as a supply chain risk was on lawful retaliation, and Anthropic

is seeking for that designation to be overturned.

The case is currently in its earliest stages, with Anthropic seeking an injunction to suspend

the designation until there is a full trial.

Now, the Pentagon's lawyer suggested the impact of the designation could be narrower

than previously stated.

He said that his understanding was that the designation would not prevent a military

contractor from using quad code to write software for the military.

Instead, he told the court the designation only stopped Anthropic's technology from

being used within Pentagon's systems.

For those following the story, that is obviously a complete 180 from Secretary of War Pete

Hegs' tweet, where he said, quote, effective immediately, no contractor supplier or partner

that does business with the United States military may conduct any commercial activity

within Anthropic.

The Pentagon is now arguing that this comment was so obviously beyond the scope of the

law that Anthropic shouldn't be allowed to raise it in court.

The judge was unconvinced, stating, it looks like the Pentagon is punishing Anthropic

for trying to bring public scrutiny to this contract dispute, which of course would

be a violation of the First Amendment.

What's more, in this case, the chilling effect of Hegs' death's words, are just as

much of an issue as the actual designation.

Anthropic said this has already caused harm among their customers.

The judge acknowledged that point, commenting, everyone, including Anthropic, agrees that

the Department of War is free to stop using cloth and look for a more permissive aivender.

I don't see that as being what this case is about.

I see the question in this case as being a very different one, which is whether the

government violated the law.

Now, even little old super intelligent recently got our first letters from customers asking

us to send them plans on how we will stop using Anthropic because of their relationships

with the US government.

That it should be clear is not something that we are going to do.

Ultimately, the case comes down to this.

The Pentagon lawyer argued, what happens if Anthropic installs a kill switch or functionality

that changes how it functions?

That is an unacceptable risk.

The judge retorted, though.

What I'm hearing from you, though, is that it's enough if an IT vendor is stubborn and

insists on certain terms and it asks annoying questions, then it can be designated as the

supply chain risk because they might not be trustworthy.

That seems a pretty low bar.

Anyways, guys, there will be more on this I'm sure.

For now, however, that is going to do it for today's headlines.

Next up, the main episode.

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Welcome back to the AIDB brief.

The hallmark of 2026 so far has been big inflection point style change.

Obviously that's been the case for individuals, but it also clearly is the case among companies

who are competing in the AI space.

Some of the dominant themes have been the clawification of everything in the convergence

of features, and nowhere has the AID race gotten more focused than acute, then in open

AI strategic shifts as it watches an insurgent anthropic start to dominate the enterprise

and coding conversation.

Now we are coming up on six months now of a renewed focus on coding and knowledge work

from open AI.

Going all the way back frankly to the release of GPT-5, it was increasingly clear that

code AGI was going to be a big part of their strategy as well, and yet for most of 2025,

we were still in the open AI paradigm of letting a thousand flowers bloom.

While Anthropic kept their head down and focused on knowledge work, open AI was a bit more

voracious in its appetite, competing strategically in some ways much more closely to Google's

approach.

But then we got open AI's code red in December, and with it came renewed focus.

And what's more, the focus seemed to pay off.

Codex is increasingly a real choice alongside cloud code for many AI builders, and over the

last week there's been lots of reporting about the ways that open AI is going to consolidate

its focus even more.

CEO of applications, Fiji Simo, in fact confirmed reports from last week that said exactly

this.

We tweeted, companies go through phases of exploration and phases of refocus, both

are critical.

But when new bets start to work like we're seeing now with Codex, it's very important

to double down on them and avoid distractions.

Today we got the latest story on that front.

And if anything, it shows that open AI is quite serious about the idea of putting away

side quests.

Now, some of the news was managerial.

Sam Altman told staff on Tuesday that he would be changing and in fact in some ways reducing

his role.

Altman will no longer have direct oversight of open AI safety and security teams, and

will narrow his focus to raising capital, supply chains, and the data center build out.

The safety team will be folded into the research organization headed by chief research officer

Mark Chen, and the security team will move into the so-called scaling organization under

President Greg Brockman.

When it comes then to core commercial strategy, Altman's reduced role seems to put CEO of

applications, Fiji Simo, in the driver seat.

Her core team, the product division, will be renamed AGI deployment, clearly in line

with the company's ambitions.

Last week, the reporting said that Simo had told engineers that the next big project

would be combining chat GPT codex and the Alice browser into a desktop super app.

Now interestingly, and someone unexpectedly, the latest reporting also gave us some information

around open AI's next big model.

In a memo, Altman told staff that the company had finished pre-training the model that

is code names spud.

He said things are moving faster than many of us expected, and told staff that they expect

to have a, quote, very strong model in a, quote, few weeks that the team believes can

really accelerate the economy, his words.

Now people jumped all over that phrase accelerate the economy, chuped Orat writes, accelerate

the economy is doing a lot of heavy lifting, that's either AGI or a really confident marketing

team.

Now obviously this is an internal communication, and while at this point I think if you're

open AI, you kind of have to assume that anything big that you say is going to be leaked

at some point, it is an interesting choice to use that type of phrasing, which of course

runs a risk of over promising and under delivering ever since the challenges of the release

of GPT-5, which had misaligned expectations, open AI has really shied away from that

sort of big, bombastic over promising.

Of course, someone like Altman has multiple constituencies that he's got to deal with.

In addition to getting users excited, he's got to keep his team excited as well.

And so that communication and idea could be more squarely aimed at rallying the troops

in a moment of intense transition.

Maybe the most discussed new news though as it relates to Open AI's new focus is the

fact that the mandate to end side quest has claimed its first victim.

As part of his memo, Altman announced that Sora would be sunset, and Open AI would

discontinue all products that use their video models.

Within hours of the report breaking, the official Sora app account on Twitter tweeted,

we're saying goodbye to the Sora app, to everyone who created with Sora, shared it,

and built community around it, thank you.

What you made with Sora mattered and we know this news is disappointing.

We'll share more soon including timelines for the app and API and details on preserving

your work.

The decision was apparently largely due to constraints in compute resources.

The Wall Street Journal reported that some Open AI staff had been surprised on how compute

hungry the Sora app was given the comparative lack of demand relative to all their other

products.

With Sora winding up, Altman said the substantial compute resources could be redeployed

to run that spud model once it's released.

Hater on Twitter wrote,

Open AI has finished training a new model codename spud which they expect will greatly accelerate

the economy.

They're also renaming their products division to AGI deployment, basically they want

more compute for codex which is why they discontinued Sora.

Now on the one hand this makes obvious sense for Sora to be the primary casualty of the

renewed focus because not only is it distracting from a consumer perspective, it also is extremely

resource intensive and as we know there's just not enough compute to go around.

But I do think it marks a pretty significant moment in that this is maybe the first time

that we've seen Open AI really have to choose at least in such a public way to not do something

that they had clear interest in and ambition in because of compute constraints and their

need to compete in the market.

Yes, we have had Altman and other Open AI executives at various points in the past say

that one model or another was delayed because of compute constraints, but shutting down

an entire application that had been unveiled not that long ago with much fanfare.

Is it pretty compelling demonstration of just how big the stakes of these decisions are?

Speaking of which, one bit of fallout from the end of Sora is the end of the deal with

Disney.

You might remember that after the Sora launched last October instead of suing Open AI,

Disney chose to partner with them and plan to do more with the technology.

In the wake of Sora ending, Disney announced that they had canceled the partnership and

will not be following through with their billion dollar investment into Open AI.

The still the split seems amicable enough with Disney commenting in a statement.

As the nascent AI field advances rapidly, we respect Open AI's decision to exit the video

generation business and to shift its priorities elsewhere.

We appreciate the constructive collaboration between our teams and what we learned from

it and we will continue to engage with AI platforms to find new ways to meet fans where

they are while responsibly embracing new technologies that respect IP and the rights

of creators.

Now, one part of the response to Sora ending from some parts of the community was dancing

on the grave.

The primegin writes, Good, Sora accelerated one of the worst aspects of the new AI economy,

absolutely horrible thing for Open AI to create.

This of course relates to the feeling that some had around the announcement of Sora that

by creating AI TikTok, whatever Open AI's intentions were, they were effectively behaving

like just the latest tech company to try to steal all of our attention for the sake of ads.

A modest man agreed, saying Open AI just killed Sora and nothing of value was lost.

Put those GPUs to good work rather than making stupid videos.

Maybe even try to cure cancer like your original mission said?

Yet while some said that this was an indictment of the AI video space as a whole, Mindo, who's

about as deep in that space as anyone out there, as the co-founder of machine cinema rights,

it's funny seeing people retweeting the demise of Sora as evidence that AI video is doomed,

not realizing that there's a whole ecosystem now.

And Sora was first announced it was just mid-Journey and runway in the game.

Now it's over 100 companies clamoring into the space and marketing departments agencies

and studios are all locked in.

Open code DAX also made the point that even if you didn't like the Sora experiment, this

type of experimentation is just part and parcel of figuring out what actually is valuable.

He writes,

It's lame to see all the people saying, Ha, called it, I knew Sora wouldn't work.

Yeah, duh.

Everyone thought that including the people who were working on it, they probably learned

a lot trying to make it work anyway.

For every successful thing that exists, 100 efforts like this had to fail, and those

learnings are fed into making something that ultimately does work and provides you with

your steady paycheck.

Now on this idea that these resources could be better spent elsewhere, not just in terms

of compute, but in terms of talent, it is worth noting that the end of Sora is not coming

with job cuts.

Open AI's head of Sora bill Peoples basically said that the Sora research team would

be moving into the world model space, focusing on, quote, systems that deeply understand

the world by learning to simulate arbitrary environments at high fidelity.

With the prize as he put it, being automating the physical economy, all men reaffirmed this

in the memo saying that the Sora research team will quote, prioritize longer term world

simulation research, especially as it pertains to robotics.

Now for some of the natural next question then, was with the end of Sora, would we also

see the end of Open AI's ad push?

The short answer is that nothing there has been canceled yet.

In fact, Open AI has hired former meta executive Dave Duggan as their new VP of global ad

solutions.

The pilot phase of ads is over and ads will be rolling out to all free and go subscribers

in the coming weeks.

And yet apparently there's still a lot of work to be done.

Ad buyers have complained that Open AI doesn't have a modern ad sales platform and are providing

very minimal metrics, with multiple ad agency executives saying that they were unable

to prove to their clients that Chatchee BT ads were working.

On shopping, Open AI is dramatically pairing back the feature.

The Instant Checkout feature which allows customers to buy directly from the Chatchee BT window

hasn't been a success.

Open AI announced on Tuesday that they would be revamping the feature, writing, we found

that the initial version of Instant Checkout did not offer the level of flexibility that

we aspire to provide.

So we're allowing merchants to use their own checkout experiences while we focus our

efforts on product discovery.

Basically Open AI will now support a variety of checkout paths, encouraging merchants

to deploy their own Chatchee BT apps, as well as clicking away to external shopping platforms.

So one does have to wonder if there are bigger changes in the offing.

Click Health, Simon Smith writes.

Now, when does Open AI kill its ad side quest?

Since it's like a $680 billion market dominated by incumbents, versus the largely untapped

roughly $40 trillion plus market of automatable knowledge work, Simon's implicit argument

here is of course that even if the path to get there is more vague, the opportunity to reinvent

how work happens in the world just feels quite a bit bigger than the opportunity to reinvent

how people buy stuff on the internet.

Now with the renaming of the product team to the AGI deployment team, we've had a renewed

wave of conversations about what AGI actually means.

When an appearance on the Lex Friedman podcast, Jensen was asked a question where AGI came

up.

Friedman basically asked when Jensen thought an AI would be able to start, grow and run

a successful technology company worth more than a billion dollars.

Jensen responded, I think it's now.

I think we've achieved AGI.

It is not out of the question that a claw was able to create a web service, some interesting

little app that all of a sudden you know a few billion people used for 50 cents, and

then it went out of business again shortly after.

Now we saw a whole bunch of those types of companies during the internet era, and most

of those websites were not anything more sophisticated than what OpenClaw could generate

today.

Now when Friedman drilled down, Jensen noted that his prediction only really applied to

novelty software for the moment rather than anything more complicated.

He said that he wouldn't be surprised if some social thing happened or somebody created

a digital influencer or some social application that feeds your little Tamagotchi or something

like that, and it became out of the blue in instant success.

A lot of people use it for a couple of months and it kind of dies away.

However, he continued, the odds of 100,000 of those agents building Nvidia is 0%.

80,000 hours Benjamin Todd wrote an essay, do we already have a GI?

With his short answer being no, and his longer answer being, on the most prominent definitions,

current AI is superhuman in some cognitive tasks, but still worse than almost all humans

at others.

That makes it impressive general, but not yet a GI.

Now regular listeners will know that I don't think the AGI question is particularly useful

in practice.

However, one thing that I have been thinking about recently, especially as we had that

discussion around what the atomic unit of AI disruption should be, and why it should

be tasks rather than jobs, I think effectively what we have, and something that might kind

of explain the jagged frontier of AI capability, is it's almost like we have task AGI.

Almost anything that you can ask AI to do that is specific and discrete, it can do really

well.

The problem is that a lot of work is strings of tasks together, where AI capability starts

to break down.

And so to the extent that one's definition of AGI involves long strings of those tasks

working together effectively, without a lot of human oversight or intervention, then

sure it's more debatable if we're there or not.

I kind of think Ethan Maulick has the right of it when he tweeted, maybe we should

retroactively, I'll just agree with Tyler Cowan that O3 was AGI so we can stop arguing

about it.

Also doing so will drive home the lesson AGI alone is not enough for transformation.

As all the stories recently of OpenAI and Anthropic trying to partner with consulting and private

equity firms suggest, they are well aware that even if the models are AGI capable, it's

going to take a lot of work to actually get them to diffuse and fully work and reinvent

the systems inside big companies.

Still, if you can take away anything from all these moves from OpenAI and from the relentless

pace of shipping at Claude, is that right now more than ever for AI companies, the only

type of AGI that matters to them is work AGI.

For now however, that is going to do it for today's AI Daily Brief, appreciate you listening

or watching as always and until next time, peace.