Dear Studio Fam,
OpenAI is once again at the heart of tech news. While no stranger to sudden staff departures, OpenAI experienced its most significant management changes amidst reports of major changes to its corporate structure. We think these changes signal significant shifts in how OpenAI and other gen AI companies do business, informed by our own experience leveraging the enterprise versions of their tools.
Studio is building a number of products on top of gen AI models. Our recent experience with a data project deployed on Azure OpenAI has made clear the real costs of utilizing gen AI systems at scale. Relatively trivial test runs of a gen AI document scanner incur $1 to $5 charges and will incur thousands of dollars of ongoing costs when deployed at scale. While there is a clear path towards some efficiencies, it's never been more obvious to us how much money ChatGPT loses on its $20 per month subscription to any daily user.
It feels like gen AI is still in its "First 5 Uber rides for $5" phase. Read on for all of the OpenAI news that that foretells massive price increases for ChatGPT and other gen AI tools.
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OpenAI Goes For-Profit
Originally founded as a non-profit to develop AI for the public good, OpenAI is re-organizing into a for-profit company according to anonymous sourced reporting by Reuters. This shift includes giving CEO Sam Altman equity for the first time, a decision that could signal growing financial incentives for all staff. While the non-profit arm will allegedly retain a minority stake, this change has raised concerns about the potential for price increases and decreased transparency of the governance required of non-profits.
OpenAI Loses CTO, Research Leaders
Mira Murati, OpenAI’s Chief Technology Officer, shocked the industry by announcing her sudden resignation after over six years at the company. Murati played a pivotal role in driving development of signature products like DALL-E and ChatGPT. Murati, alongside other departing executives in the research team including Chief Research Officer Bob McGrew, was deeply committed to OpenAI’s original non-profit mission, indicating likely disagreement with Sam Altman’s plan to transition to a for-profit business.
Sam Altman Derided As “Podcasting Bro” By Chip Executives
Crucial to the success of a growing gen AI company is reliable access to the special hardware that powers large language and diffusion models. Chip makers like NVIDIA and TSMC have made incredible profits while companies such as OpenAI, Anthropic, and Hugging Face compete for their limited supplies. As originally reported in the NY TImes, OpenAI CEO Sam Altman toured TSMC facilities last year to secure long term contracts and even discuss the construction of dedicated chip factories. Altman’s requests were so outlandish – going so far as to pitch the immediate construction of more chip factories than in existence today – that TSMC executives dismissed his requests as delusional and began referring to him internally as “podcasting bro.”