Yeah keep forcing that AIngel dust up peoples' nostrils.
OpenAI money-go-round sees it invest in company that invested in OpenAI
Scratch my back and I'll scratch yours. OpenAI says that it has taken an undisclosed ownership stake in Thrive Holdings, the management-focused offshoot of private equity heavyweight Thrive Capital, which itself is a major investor in the ChatGPT maker. “This partnership with Thrive Holdings is about demonstrating what’s …
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Tuesday 2nd December 2025 12:26 GMT I ain't Spartacus
Do we even have terms that describe this sort of financial make-believe?
Michael Hoffmann,
It's called re-cycling. How can you not approve of this thrifty, sound and ethical idea, to renew and reuse our Earth's scarce resources? In this case investment capital.
It is an interesting way of increasing the value of your investments, by buying a share of a company at an inflated value and then having that company buy yours at same. It's very 19th Century railway finance - and seems likely to end in the same way. I'm sure they can make it legal by having lots of paperwork to back up their "fair valuations" - and get their auditors to sign it all off.
The other thing it reminds me of is the Japanese 90s real estate crash. Where all the banks held stakes in each other, and everyone seemed to also buy shares in anyone they did regular business with. This led to a situation where no major company could be allowed to go bust, because of the horrible cascade effect it would have across the economy. Which meant that loads of companies were left holding vast assets that they could barely cope with, and nobody had any spare capital to invest - hence Japan got twenty years of economic stagnation.
The recovery from the dot-com bust was relatively rapid, because companies went bust or got bought out on the cheap, if they had useful tech. Or in the case of the fibre companies, who'd laid way more than they could sell (even despite their fraudulent cross-selling agreements between themselves) - that fibre came in useful later on. Much of the useful stuff continued, but with less of the bonkers stuff.
Whereas the banking crash in 2007 was harder to recover from because the banks couldn't afford to lend for investment and we'd bailed-out lots of companies who had to sit there doing very little but keep their heads above water.
I suspect the coming AI crash will be somewhere in between. There's lots of big players, like Amazon, MS and Google that will take big, but not company threatening losses. But it might make them less willing to take risks and invest. And then lots of AI companies with no business model will disappear. I worry that the sheer amount invested is going to cause problems for the finance industry - which hopefully still remembers some of the lessons from 2007. But probably not...
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Tuesday 2nd December 2025 13:39 GMT I ain't Spartacus
Re: "Do we even have terms that describe this sort of financial make-believe?"
Jedit,
It's neither money laundering, nor tax evasion.
It could have the intention of deliberately inflating both companies' value, and therefore be fraud. But if they can claim they bought the stakes at "fair value" - then they get away with that.
It's also a way of tying businesses together, particularly if they're AI companies that don't make profits and so are cash poor. This way, you hand over cash, to be spent on making the losses even bigger, but for a stake in the massive, enormous, amazing future profits that are coming real-soon-now™! Which can then go on your books as an asset, rather than buying some shitty AI product that doesn't work and so lowers the value of your company. Hey presto! You're partners. And can lose money together into the future.
As my finance director (in a former life) used to joke in dull meetings, "our losses go to infinity and beyond!" We not being in some speculative industry actually sold real products for real profits. Although I did have a meeting with him once where I asked to write-off £800,000 - which is the most shareholder value I've managed to destroy in an afternoon's work. Makes me an amateur compared to VCs though.
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Biting the hand that feeds IT
