Cameron Costa (2:22)

Joe Kernan, Becky Quick and Andrew Ro Sorkin are there too, interviewing and meeting with CEOs and world leaders, making that news happen. Sometimes that news happens right on our set, outside in the crisp alpine air. In this next interview, Joe, Becky and Andrew sat down with OpenAI CFO Sarah Fryer.

Interviewer (Possibly Andrew Ross Sorkin) (2:48)

In the meantime, we are talking all things AI here in Davos, and Sarah Fryer is OpenAI's CFO. Thank you for being here. How do you now start to see, or do you see sort of a distinction between your model, your models, I should say, what Google is now doing, what Anthropic's doing, what Xai is doing. I mean, it does seem like there's starting to be more differentiation in sort of where you think ultimately your market is.

Capella University Announcer (3:15)

Yeah.

Sarah Fryer (3:16)

So I think, I mean, it's a pretty exciting time for AI. You can't walk around the conference floor without talking about it. A year ago, we were starting to talk about agents and about things that could come into your life as a consumer and do tasks for you, be with you in the workplace, help you really do your job. And now we are here talking this week about the agentec enterprise. So really going deep on transformation. We think that consumer and enterprise are symbiotic, so we need to be in both. And in particular, though, I think what demos. I talked to him earlier today, Dario was just with. We all agree there is a massive capability overhang that's occurring. There is AI in people's hands today. They're using it quite simplistically, but the power users are using it seven times more than just the average user. They're coding, they're doing deep research tasks, they're in research labs causing breakthroughs. And a lot of people are still just doing kind of search. So I think that all of us are focused on that. How do we close that capability? Overhand.

Interviewer (Possibly Andrew Ross Sorkin) (4:15)

Big question about this. This is an iPhone and Apple just made a deal with Google to use Gemini in its phone. You had a relationship and still do with Apple. You were the first, though. What was your reaction to learning that Gemini is now going to be effectively, for better or worse, for lack of a better word, really, the new Siri.

Sarah Fryer (4:37)

So actually we are still baked into the Siri piece, but I think importantly what we're finding is consumers are going directly to ChatGPT. Right. 800 million people. When I was here a year ago, we weren't even quite at 300. So we've over 3x'd in just a year. It's kind of wowing if you look at the actual use of Gen AI. So it's not just about users, but it's how deep are they going? They are absolutely doing that. Inside ChatGPT, we become the noun and the verb. So in a way we view the iPhone. And I just saw Tim as amazing distribution partners who. But we think we have to be broad on that distribution spectrum because users want to be able to use their technology on whatever device they use, but.

Interviewer (Possibly Andrew Ross Sorkin) (5:17)

You don't think Gemini now has an advantage by having the surface area not just of Android, but of iPhone in that way?

Sarah Fryer (5:23)

No, because I think people are coming direct to ChatGPT as the brand they trust from an AI perspective. We also have many other partnerships and distribution channels that we're working on and have announced. But again, going back to how do we shift consumers out of just a ChatGPT call and response search, like what's the weather in Davos today? Into something deeper, like a task worker. So we announced healthcare is a great example where you can go deep and now suddenly you have it working for you to help you maybe look at a biopsy and give you a second opinion. We see in health deserts that people are using ChatGPT to help them get some guidance. And even 66% of US physicians say they're using chatbots daily in their work. I find that amazing and so hopeful for what's available to us.

Interviewer (Possibly Joe Kernan or Becky Quick) (6:14)

I do too. I think health care is probably the thing where I have the most hope for what we see from AI. But when Dario was here, he was talking about the advantages that they have at Anthropic. One of them is that he is 8020 enterprise versus consumer. And he thinks that enterprise is a more reliable source of money and it's also a place where you see higher margins. What are you doing besides this health care initiative to try and make sure that you lock your consumers in and that they're more willing to not only use it more, but also pay more for it.

Sarah Fryer (6:44)

Yeah. So maybe just talking about our business at the end of last year, sitting right here, I would have said our business 5050 consumer enterprise, or sorry, 7030 consumer enterprise. Today that number 60 40, I think will end the year closer to 50 50. So again, while the consumer business has been growing at an extraordinary rate. Right. Literally the largest growing consumer platform the world has ever seen, Our enterprise business is also the fastest and largest in AI the world has ever seen. One million businesses using the platform today. How do we think about building consumer trust and loyalty? Like I hate to talk about lock in, because it really should be about value. I think on the consumer side, if.

Interviewer (Possibly Joe Kernan or Becky Quick) (7:24)

You have value, you lock them in. It's one of the same.

Sarah Fryer (7:26)

Exactly. On the enterprise side, how do we drive that kind of moat? I mean, number one is enterprises are starting to move from maybe a chatgpt wall to wall deployment into big transformations. I was just with the CEO of a bank who I was there to pitch him and ironically he had just sat with Carlos Torres, who chairman of BBVA. And my work was done because Carlos said, hey, BBVA, we have seen transformation like OpenAI helped us go from 10,000 deployed seats to over 120,000. They have helped us deploy into our call centers, into our credit screening. It is truly transforming the bank. We're in 25 countries, we can do all that in a multilingual way. And so that is where I think when you're that deep in a business, they are loyal because they're getting so much value.

Interviewer (Possibly Andrew Ross Sorkin) (8:18)

On the consumer side, you were doing something that Sam for a very long time said he did not want to do. It was almost going to be a last resort situation. Advertising, implementing advertising, how are you thinking about that and how do you do it in a way where the customer trusts the answers that are coming back from ChatGPT when you're asking it, plus effectively what the advertisers are paying for?

Sarah Fryer (8:42)

Yeah. So let me talk about the North Stars of advertising as we begin to do some testing. But then I want to talk about the optionality that we're trying to build. Broadly speaking, on the trust side, number one is what you see. North Star is the model always gives you the best answer, not the paid for answer that has to remain goal one. Number two is we don't share your conversations with advertisers, we don't sell your data to advertisers. But I think number three is offering people a non ad layer as well or on ramp. But why are we doing it? It comes back to access. Right? OpenAI's North Star is AGI for the benefit of humanity. We're a research lab, that's what we go on. And it's not for the benefit of humanity who can pay. And so in order to drive access, we need to drive more multidimensionality on the infrastructure. So sometimes it might be for a frontier model, every six months we see a leap in that intelligence or it might be on the inference side. So we drive down costs and are able to supply to users at a lower cost. At the product level, multiple products and then at the business model level, which is is where you get to ads. We started with subscriptions and now we are multi subscription. We have a SaaS based model for enterprises as well as API. Remember we have over 5 million developers developing on the platform. Commerce and into ads is yet another way to think about the 95% of users who today access for free. And then finally, I think there's an interesting value exchange model in our future where we align ourselves on the same Side of the table. A sad drug developer. Let's say it's Amgen, it's Eli Lilly. It might be a group like Thermo Fisher. And we say, we're going to work with you to create this next breakthrough. Can we take a license off of the outcome?

Interviewer (Possibly Joe Kernan or Becky Quick) (10:21)

But can I just ask you, I appreciate the North Star. As a consumer, I don't want you giving me results based on somebody paying for them. But if I'm an advertiser, why am I paying you if it's not to get a better result?

Sarah Fryer (10:33)

So, number one, what we see happen in ChatGPT is a lot of people are using it for commerce already, right? They are probing again. If you look at search data, a Google search is just like a one line. I'm looking for a stroller from. I'm expecting a baby. What stroller did I get? In ChatGPT, you see a whole conversation. You know, I live in San Francisco, there's lots of hills. What's the safest one that's not going to roll down a hill? I'm having twins. I need a whole different setup. So, first of all, the conversation is really meeting and gets down into consideration. At that point, we may enable an advertiser consumer very clearly to see, you're now going to go talk to an advertiser, right? I need a place to stay in Davos this weekend. Maybe Airbnb is the perfect place to go have that conversation.

Interviewer (Possibly Joe Kernan or Becky Quick) (11:18)

But it's going to be clearly labored.

Sarah Fryer (11:20)

Clearly labeled that you've moved into a new zone and that you're now talking to an advertiser. But that's why we see even in ChatGPT, right, when we open up the platform to bring in a booking.com or an Expedia or an Airbnb, so much excitement because users are saying, okay, I got to that moment of consideration, but now help me get to the purchase.

Interviewer (Possibly Andrew Ross Sorkin) (11:39)

Before I let you go. Obviously, there's a lot of speculation about when you're going to go public, what's going to happen, but before that happens, Elon Musk is now continuing his lawsuit and it appears that a trial could happen here now. So tell us just about what you think could happen over the next couple of months, if not the year. I know you're fighting, obviously, to remain under this new structure, but there's a whole lot of things that have to happen and go right or wrong before you can get to an IPO at this point.

Sarah Fryer (12:07)

I mean, first of all, we're an incredibly strong business today. Again, in Just a very short two and a half year period, we've gone from zero to a company that is now a pbc, a public benefit Corp. So when it comes to things like fundraising got a heck of a lot easier. Secondly, we have an incredibly strong balance sheet. We exited this year or 2025 with over $40 billion on the balance sheet. We executed the largest private fundraise ever last year, $41 billion raised. And then as we look forward, for us, it's eyes on the prize of how do we add value to the consumer, how do we add value to enterprises and how do we close this capability gap. You're going to hear us talk about this over and over again, again.

Interviewer (Possibly Andrew Ross Sorkin) (12:46)

But does the lawsuit itself? I mean, if you were to lose, the lawsuit would change the entire business model.

Sarah Fryer (12:50)

We just try not to get distracted. Elon has launched many lawsuits at us even since I joined the company. And in the end we think that they're, they're spurious, that it's a distraction tactic. And for us, we've done an incredible job, I think of continuing to just execute through that noise because in the end we need to show up for our customers.

Interviewer (Possibly Andrew Ross Sorkin) (13:09)

Okay, Sarah Fryer, it's great to see you. Thank you.

Sarah Fryer (13:11)

Thank you.

Interviewer (Possibly Andrew Ross Sorkin) (13:12)

Nice to see you all.

Keith Lansford (13:19)

This episode is brought to you by Schwab Market Update, an original podcast from Charles Schwab. Join host Keith Landsford for this information packed daily market Preview delivered in 10 minutes or less, including projected stock updates, monetary policy decisions and key results and statistics that may impact your trading. Download the latest episode and subscribe@schwab.com MarketUpdatePodcast or find Schwab Market Update. Wherever you get your podcasts, is it.

Capella University Announcer (13:48)

Time to reimagine your future? The right business skills may make a difference in your career. At Capella University, we offer a relevant education that's designed to focus on what you need to know in the business world. We'll teach professional skills to help you pursue your goals like business management, strategic planning and effective communication. And you can apply these skills right away. A different future is closer than you think with Capella University. Learn more at Capella. Edu.

Cameron Costa (14:18)

What made you confident that you could.

Capella University Announcer (14:20)

Do something that hadn't been done before?

Sarah Fryer (14:22)

I have no fear of failure.

Capella University Announcer (14:24)

Trailblazing women, changing the game.

Cameron Costa (14:27)

One of my favorite pieces of advice, Think about what your boss's boss needs. Leadership can look in many, many different forms. It really does come down to just trusting yourself. Life is short and you just gotta.

Sarah Fryer (14:38)

Think big to accomplish big things.

Cameron Costa (14:40)

Julia Boorstin hosts, CNBC Changemakers and Power Players. New episodes every Tuesday, wherever you get your podcasts. Thank you for listening to this special Squawk Pod reports from Davos, Switzerland at the World Economic Forum. As we do every year we go to Davos. We are bringing you the best interviews from our entire week there right to your Squawk Pod feed. Make sure you follow us wherever you're listening now and then. Those episodes, like interviews with President Donald Trump and Treasury Secretary Scott Besant, they'll pop up automatically every time we post. Squawk Box is hosted by Joe Kernan, Becky Quick and Andrew Ross Sorkin in Davos or more typically, in Times Square in New York. Squawk Pod is produced by me, Cameron Costa and Zach Valise. Our Katie Kramer is producing on the ground in Switzerland this entire week. Thanks to Julie Tras, our editor for the Davos episodes. Catch you next time. Have a great day.

Capella University Announcer (15:51)

Is it time to reimagine your future? The right business skills may make a difference in your career. At Capella University, we offer a relevant education that's designed to focus on what you need to know in the business world. We'll teach professional skills to help you pursue your goals like business management, strategic planning and effective communication, and you can apply these skills right away. A different future is closer than you think with Capella University. Learn more at Capella. Eduardo.