It's the model, stupid. OpenAI just had its worst run of news in months, and Rick Watson thinks the fix is simpler than anyone inside OpenAI wants to admit.

This week Rick and Jessica Lesesky work through three stories about platforms and owners deciding what business they actually want to be in.

First, Shopify pulls the plug on vapes. Every merchant selling them got a notice to strip the products by July 8 or lose the store. States leaned on Shopify over illegal sales, and Shopify answered with a blanket ban rather than a state-by-state fix. To Rick, this is not Shopify taking a stand for entrepreneurs, it is Shopify reading the writing on the wall and staying on the right side of the law. If your category is drifting from gray to red, the payment processor is the pressure point, and you may want to own your software before someone else decides your business for you.

This episode is sponsored by Avalara. Learn more at avalara.watsonweekly.com

Second, the great private equity traffic jam. Nearly a decade into the exit drought, PitchBook's midyear scorecard is not pretty. Per their data, the big buyout deals that were supposed to reach a quarter of all activity have slipped toward 19% by May. Rick counts roughly 13,000 US companies sitting in PE portfolios, an eleven year backlog at the current selling pace. Sellers don't know what their asset is worth. Buyers can afford to wait. His take is that the AI bubble may have to deflate at least a little before the ordinary software deals start moving again.

Third, OpenAI's worst Thursday: lawsuits, exits, and a dead browser. Apple trade secret allegations, a top lieutenant stepping back for health reasons, the head of safety systems out the door, and the Atlas browser shut down less than a year after launch. The new model, ChatGPT 5.6, draws strong benchmarks and better press, and OpenAI positions it as beating Opus at a fraction of the cost. Rick argues the deeper problem is governance. The list of ex-OpenAI founders now running billion dollar startups keeps getting longer, and you cannot win a race this fast while your talent walks out the side door.

Can a $20 subscription outrun Google's distribution, Apple's install base, and Anthropic's grip on enterprise? The magic eight ball points to no.

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