This is not a typical VC based company. According the HN crowd this is the one company who can execute on AI and challenge Google and all other trillion dollar AI labs. In my opinion they themselves are aware of the fact they are one trick pony. Given how astute a VC SamAltman is, if there was any thing remotely innovative and defensible about the product they would have never done that.

I don't understand why they wouldn't have raised that money if "there was any thing remotely innovative and defensible about the product"?

What would they have done instead? They still need to fund the operation somehow, and raising money is a good way to build partnerships.

Raising money is ok. Selling 50% of your company for 10B the company when apparantly you have trillion dollar defensible business dont any business sense.

You need money to turn it into a trillion dollar business... Selling equity is how you raise that money.

If you were sure it will be a $1T business you have more reason to sell equity and accelerate the growth of your company, because you know the remaining 50% is going to be so valuable.