OpenAI just made another circular investment that's raising eyebrows across Silicon Valley. The AI giant is taking an ownership stake in Thrive Holdings - the same firm whose parent company, Thrive Capital, is one of OpenAI's major investors. This latest move has analysts questioning whether we're seeing genuine business growth or just inflated valuations in the AI bubble.
OpenAI is doubling down on a controversial investment strategy that's becoming impossible to ignore. The company just announced it's taking an ownership stake in Thrive Holdings, marking another chapter in what critics call the AI industry's circular money problem. The twist? Thrive Holdings' parent company, Thrive Capital, happens to be one of OpenAI's biggest investors.
Thrive Holdings operates like a private equity firm designed specifically for the AI revolution. The company rolls up traditional businesses in sectors like accounting and IT services, betting these industries are ripe for AI transformation. Under the new partnership, OpenAI will embed its engineering, research, and product teams directly within Thrive's portfolio companies to accelerate AI adoption and supposedly boost efficiency.
Nether company disclosed financial terms, but CNBC reports that OpenAI's stake will grow as these companies succeed, and the AI giant will get compensated for its embedded services. It's a performance-based arrangement that ties OpenAI's returns directly to how well these traditional businesses can actually leverage AI technology.
This isn't OpenAI's first rodeo with circular investments. The $500 billion AI company has been making similar moves across its ecosystem, recently taking stakes in infrastructure partners like Advanced Micro Devices and CoreWeave. Each deal follows a similar pattern - OpenAI invests in companies that either invest in OpenAI or provide critical services to support its operations.
The strategy raises fundamental questions about how value is actually being created in today's AI boom. When an AI company invests in its own investors' portfolio companies, then provides services to those same companies, the lines between genuine business growth and financial engineering start to blur. It's reminiscent of the dot-com era's circular revenue deals, where companies would buy each other's products to inflate their sales numbers.
Industry observers are split on whether this represents smart strategic positioning or a warning sign. Supporters argue that OpenAI is simply creating deeper integration points across the AI ecosystem, ensuring its technology gets properly implemented where it can drive real business value. The embedded team approach could genuinely help traditional companies navigate AI adoption more successfully than they would on their own.
