Good morning. Andrew here. The president of OpenAI, Greg Brockman, is expected to publish an essay today about the increasing cybersecurity threats that artificial intelligence presents, describing a tipping point that may be underappreciated. He says that OpenAI is improving its cyberdefenses as models get smarter and more dangerous, and he offers advice to others: “Over the coming months, every organization will need to begin significantly automating its security program to stay secure.” Keep an eye out for it later this morning. More below. (Was this newsletter forwarded to you? Sign up here.)
Cuban vs. Khanna on the wealth taxCalifornia’s wealth tax proposal has become an expensive and closely watched political fight, as the issue of economic disparity looks set to dominate midterm elections in November and beyond. Now, more tech heavyweights have weighed in amid concern that Proposition 40 — which would impose a one-time 5 percent tax on California billionaires — could upend the state’s start-up ecosystem. The latest: On Saturday, Representative Ro Khanna, a Democrat who represents parts of Silicon Valley, posted on X that the measure was gaining traction. “California voters want a Democratic Party that will stand up for the working class over the billionaire class,” Khanna said, adding that the proposal has the backing of Senator Bernie Sanders, independent of Vermont, and California labor groups.
The backlash was swift. Mark Cuban, the prominent entrepreneur and investor, warned Khanna that the California proposal would sock entrepreneurs who raise billions for their start-ups. Cuban wrote on X: How are you going to tax them ? Make them borrow money against their shares, if they can? They just raised money to grow their company and a bank will come along and loan them money ? A company that has been in business maybe less than a year ? “IMO, if this passes, only idiot startup founders stay in Cali,” Cuban added. The debate continued. Khanna responded that state assistance would let founders pledge shares with a loan (of perhaps 10 years) from the government to pay tax, paid back in cash or in equity. Palmer Luckey, a founder of the start-up Anduril and a supporter of President Trump, responded on X: Great, so founders would have 10 years to speedrun their way to a giant pile or cash and forced to surrender their company to the government if they can’t do it fast enough. The fight over Prop 40 is drawing more money. Building a Better California, a coalition backed by Sergey Brin, a Google founder, donated $5 million to oppose the measure. Other California billionaires have donated nearly $40 million to the campaign to defeat the measure as well, according to The Financial Times, including John Doerr of Kleiner Perkins, a venture capital firm; Chris Larsen of Ripple; and Neil Mehta of Greenoaks Capital.
Stripe reportedly reaches a deal for OpenRouter. Stripe, the big payment processor, agreed to pay more than $7 billion for OpenRouter, which runs a marketplace for artificial intelligence models, Bloomberg reports, citing unnamed sources. The acquisition would give Stripe a bigger presence in A.I. and reflects interest in helping companies limit their spending on the technology. The Trump family’s crypto business moves closer to the banking world. The company, World Liberty Financial, said on Friday that the Office of the Comptroller of the Currency had granted a subsidiary, World Liberty Trust, preliminary conditional approval to operate as a chartered national trust bank. The effort underscores the Trump family’s ties to the cryptocurrency industry, which have weighed on national legislation to regulate the sector. The Fed and retailers’ earnings are in focus this week. The health of the consumer will be a big discussion point in earnings reports, including from Home Depot tomorrow; TJX, Lowe’s and Target on Wednesday; and Walmart on Thursday. Investors will also closely scrutinize the minutes from the last policy meeting, which are set for release on Wednesday.
The spotlight on Mark Walter’s businesses growsThe sports world is still reeling over the $12.5 billion that Josh Kushner, the venture capitalist, and Bob Iger, the former Disney C.E.O., agreed to pay to buy the L.A. Lakers. But Wall Street is increasingly taking note of the seller: Mark Walter, the financier who bought control of the N.B.A. franchise just over a year ago. Federal prosecutors are reportedly examining several Walter-linked businesses, according to The Wall Street Journal, which cited unnamed sources. They include Bradford Allen, a real-estate broker, and Hudson Trading, a Chicago financial firm. The authorities are investigating whether Walter or his companies committed fraud by failing to disclose connections between insurers that the financier controlled and other businesses of his. Proceeds from the loans passed through the entities that prosecutors are examining, The Journal added. The inquiry could have wider repercussions, particularly for the trillion-dollar private credit industry, which has largely copied Walter’s strategy of using insurers’ cash hoards to bet on alternative assets, according to The Financial Times: The private capital industry is worried that a scandal engulfing Walter’s insurers could fuel doubts about how trillions of dollars of US retirement funds are being managed by private capital groups, spoiling the party. While the issues at Walter’s insurers could unfold over many months, one top insurance adviser said their new disclosures pose longer-term risks over their capital position. Separately, the sports industry is still unpacking the repercussions of the Lakers sale, and the increasingly escalating valuations of sports teams.
Meet OpenAI’s new revenue chiefThe departure of Denise Dresser as OpenAI’s chief revenue officer after just eight months on the job added to the flurry of executive exits at the artificial intelligence giant. But it’s worth paying attention to her replacement, Dali Rajic, whose experience and technical expertise could be key as OpenAI prepares to go public as soon as next year, Sri Muppidi reports. Who is Rajic? He was most recently the president and chief operating officer of Wiz, the cybersecurity company that Google bought in a $32 billion acquisition that closed this year. Before Wiz, Dali was a top executive at Zscaler, a publicly traded cloud security company. He was also the chief customer and revenue officer at AppDynamics, a software analytics company that Cisco bought for $3.7 billion in 2017. Rajic is methodical about go-to-market planning, say people who have worked with him. He tracks in-depth data about sales to ensure that a company hits its quarterly goals. That could help OpenAI demonstrate a predictable revenue stream to prospective I.P.O. investors. He brings a similar technical approach to hiring salespeople. “Dali was able to recruit like a scientist,” Shardul Shah, a partner at Index Ventures who led the firm’s investment in Wiz, told DealBook. Rajic’s also an expert in selling to business customers, a key focus of OpenAI as it seeks to catch up with Anthropic on enterprise sales.
Rajic’s hire comes as Greg Brockman assumes a bigger role at OpenAI, DealBook has learned. Brockman, the company’s president, has taken charge of commercial functions — including sales, partnerships and advertising — since Fidji Simo stepped down as a full-time executive. Brockman has been hiring executives like Rajic who are aligned with his metrics-driven approach. We hope you’ve enjoyed this newsletter, which is made possible through subscriber support. Subscribe to The New York Times.
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