OpenAI: Why the Artificial Intelligence Star Is Already Worth $29 Billion

Posted on January 6, 2023, 5:32 pm

Someone might be born as a non-profit organization but quickly panic about financial assessment accountants. OpenAI, the lab behind the famous chatbot ChatGPT powered by artificial intelligence, has just proved it.

According to the “Wall Street Journal”, the structure founded in 2015 by Sam Altman (Y Combinator), Elon Musk (Tesla, SpaceX, Twitter), Peter Thiel and other Silicon Valley entrepreneurs with an initial investment of one billion dollars could today claim a valuation nearly thirty times higher. Lured by the potential of what has become the tech phenomenon of the winter, investment funds are trying to buy back $300 million in employee stock. On that basis, OpenAI would be worth $29 billion today, double what it was two years ago.

One billion dollars in expected revenue in 2024

The performance is notable for the publisher of a virtual assistant (ChatGPT) still in the testing phase and an automatic image generator (Dall-E), both free for Internet users. Even more so when it comes to an organization founded pro bono to “develop safe artificial intelligence for mankind”. It only became a limited profit company in 2019, from which its investors cannot expect to earn more than a hundred times their stake.

But OpenAI now seems convinced that it will be able to build on the success of ChatGPT. Since the first week, a million internet users have questioned the chatbot capable of answering all kinds of questions and even writing school assignments, marketing pitches, scenarios or even fitness programs in a few seconds. According to Reuters, the San Francisco-based organization generates almost no revenue today, but expects revenue of $200 million in 2023 and up to $1 billion the following year.

A technology license template

While analysts are beginning to believe that OpenAI could convert its chatbot into a true search engine for the general public, OpenAI’s business model is currently based solely on a licensing model with other technology companies. Startups like Jasper or giants like Microsoft are testing or are already customers. The first generates draft emails and advertising copy for 80,000 marketers. According to The Information, the latter would be working on a new version of its Bing search engine to integrate the chatbot.

For every answer given by its algorithms, OpenAI charges its customers one to two cents. On the cost side, the lab must pay the six-figure salaries of the 100 or so Californian engineers it employs. If it can probably benefit from Microsoft’s credit to have access to the necessary IT resources to run its systems, the startup is still spending a fortune on this subject, as its boss confesses. “We’re going to have to monetize (ChatGPT, editor’s note) at some point, the computer calculation costs us the eyes of the head,” Sam Altman chimed in early December on Twitter when asked if the chatbot was going to remain free.

A copyright risk

But this model does not convince everyone. According to the American press, several investment funds closed the process for fear of seeing Google undermine all the efforts of the start-up with its own technology. Others worry about the still high rate of wrong answers on ChatGPT.

Copyright issues also arise. Developers have already launched a class action lawsuit against GitHub, a Microsoft-owned service that relies on OpenAI to automatically generate computer code. The plaintiffs see this as “software piracy on an unprecedented scale”, as the system ingests lines of code developed by others that inspire it to come up with its own.

“To work, these tools must be provided with texts and images sometimes protected by copyright. This can be legal, but under certain conditions,” observe Charles Bouffier and Victoires Danes of the Parisian law firm Racine. Authors of original works can, in particular, refuse to allow them to be taken over by an artificial intelligence. According to Bloomberg, OpenAI has just recruited half a dozen people to double the size of its legal team.

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