On November 30, 2022 we attended an earthquake whose consequences we will surely talk about thirty years from now. “Your uncle told me about that, he sent me a message and I hallucinated.” “They taught me at work, when he was at the agency. We were all freaking out.” “I read it in Xataka”, perhaps someone will say. It was the day that ChatGPT went public.
We already knew the capabilities of the first three versions of GPT, but the conversational interface with memory was the jolt. Being completely free, with unlimited uses, helped skyrocket its fame in its first weeks of life. And now that OpenAI has already announced its intentions to launch a paid subscription for certain types of usage and unlimited queries, it is the time to review his story, because he took a great turn that is close to culminating.
Definition of ‘non-profit’
When he was born in 2015, OpenAI declared itself as a non-profit organization. In fact, that statement can be read further in the article published by the company on its corporate blog in which it introduced itself.
OpenAI is an artificial intelligence research company non profit. Our goal is to advance digital intelligence in ways that are most likely to benefit humanity as a whole, without the constraints of the need to generate financial return. Since our research is free of financial obligations, we can better focus on a positive human impact.
The paragraph is quite eloquent, but in case there are any doubts, in the original text, in English, for the phrase in bold it uses the term “non-profit”. A non-profit company can legally generate income, also regardless of what is achieved by donations and sponsorships.
Nevertheless, You cannot dedicate the benefits of your activity to any type of distribution among your partners or other types of personal purposes, but only for the purpose of the company. The non-profit status serves to have certain tax exemptions, but under the commitment not to privatize the benefits.
In the case of OpenAI, any potential benefits that might one day come should be spent entirely on continuing to “advance digital intelligence in ways that are most likely to benefit humanity as a whole.”
In 2018 everything began to change.
Compound interest for resources
It was when the company published a letter in which it anticipated its intention to stop being a non-profit. As we learned later thanks to a revealing article by Karen Hao in MIT Technology Review, since 2017 there has been an internal suspicion of the need to change the format of the company, towards a more friendly model with its need to accumulate money quickly.
The impossibility of financing the resources that OpenAI demanded made it stop being a non-profit. Now its founders are about to become millionaires thanks to it
The reason, the impossibility of continuing to finance resources that doubled every three or four months. ChatGPT is impressive, but it is also an accumulated work of years that has been skyrocketing its costs.
That letter was so subtle that not only the general public interested in OpenAI realized the change it was proposing. Not even many of his employees did. Semantic engineering that culminated in March 2019, just a few months before Microsoft invested $1 billion in the company.
By then, OpenAI had pivoted as a structure to one capable of achieving artificially limited benefits: each partner will “only” be able to recover their investment… multiplied by a hundred. A fairly generous limit for the investor. To put an analogy: WhatsApp investors obtained a return of fifty times their investment when it was sold to Facebook for 22,000 million dollars. The bar is twice as high in OpenAI.
OpenAI was always apathetic when asked about its future business model, about its plans to go from a nice altruistic project to something capable of generating money. “We have no idea, we have never generated any income, we have no idea how we will be able to generate it one day,” replied Sam Altman, CEO of the company, in 2019.
Win-win para Microsoft
The aforementioned agreement with Microsoft included an adaptation of the OpenAI services to start running on Azure, its dedication to building this cloud and its different Artificial Intelligence technologies, and most interesting of all: the role of preferred partner that Microsoft assumed for when the commercialization of OpenAI technologies arrived. From that dust came everything like the integration of DALL·E 2 in Bing… and what is to come with an API that will reach everywhere.
The year began with the leak of Microsoft’s intentions regarding OpenAI: to invest another 10,000 million dollars in it, for a total valuation of 29,000 million dollars. A high price? It can, but the company hopes to reach 1,000 million dollars billed by 2024. A high investment? You can, too. But it is 5% of what Microsoft billed in 2022. And of course: who knows where the OpenAI ceiling is? Who knows how much business you’ll be able to generate five years from now?
And that’s the current photo. A company that has gone under the radar of the world outside the technology industry or those most interested in Artificial Intelligence and suddenly, after launching a conversational interface that has raised expectations, is faced with the idea of becoming a machine to generate money as perhaps they never imagined in their beginningswhen they were betting on non-profit and simply did not know how they would enter their first dollar.
Now, crowds of venture capital firms are investing in OpenAI, as explained by Axios. Sequoia, Tigers Global, Founders Fund… Companies that will also want to see a return on their investment. Of course, limited to a multiple of one hundred.
Its employees, especially those who have been part of OpenAI since its founding, are seeing how the non-profit company they worked for for years under specific ideals is now looking to be sold for $29 billion for the wealth of its founder, not for the purposes he declared when they arrived.
Background, a Microsoft that will win no matter what because it has played its cards better than andie. If GPT succeeds (and we keep defoliating the daisy until GPT-4 arrives, much more promising than anything seen so far), Microsoft made sure to be a part of it in 2019. And if it executes its current leaked intentions, even more so, it would make sure 75% of the benefits of OpenAI until you recover your investment. It would then continue to hold a 49% stake. And if GPT clicks, Microsoft will have kept a rival at bay at an affordable cost. Because the real battle between the greats of AI is against Google. But that will be another war.
Featured Image: Javier Lacort at Mockuuups Studio.
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