OpenAI's initial business model was built on the promise of developing Artificial General Intelligence (AGI), with the idea that AGI would eventually figure out how to generate revenue for the company. This was a hand-wavy, speculative approach to attract investment without a clear path to profitability.
Elon Musk and Sam Altman formed OpenAI as a nonprofit venture to conduct open-source research into artificial intelligence, with the stated goal of ensuring that AI development would benefit humanity and prevent the risks of a single, centralized AI becoming too powerful. However, it was also seen as a strategic hedge against Google, which Musk viewed as a dominant player in AI.
The tech press in 2015 covered OpenAI's founding with a largely uncritical and breathless tone, often portraying it as a heroic effort to save humanity from the dangers of AI. Articles focused on the involvement of high-profile figures like Elon Musk and Sam Altman, with little skepticism about the feasibility or motives behind the project.
Sam Altman played a key role in shaping OpenAI's early narrative by positioning it as a nonprofit venture that would develop AI for the benefit of humanity. He emphasized the open-source nature of the project and the idea that AI should be freely owned by the world, which helped attract talent and investment despite the lack of a clear business model.
Elon Musk viewed OpenAI's nonprofit structure as a way to avoid the profit incentive that could lead to harmful AI development. He believed that a nonprofit focused on safety and open research would mitigate the risks of AI becoming a dystopian force, though this vision did not align with OpenAI's later pivot to a for-profit model.
OpenAI's narrative evolved from a nonprofit focused on open-source AI research for the benefit of humanity to a for-profit company seeking to monetize its technology. The initial promise of AGI figuring out the business model gave way to more concrete revenue strategies, such as advertising and enterprise partnerships, while still leveraging the hype around AGI.
OpenAI's early focus on open-source AI was significant because it positioned the organization as a counterbalance to tech giants like Google, which were seen as monopolizing AI research. The open-source approach was intended to democratize AI development and ensure that the benefits of AI were widely shared, though this commitment waned over time.
OpenAI's founders viewed data as a critical component of AI development, emphasizing the importance of large datasets for training AI models. They discussed leveraging data from sources like Tesla's self-driving cars and Reddit, reflecting a belief that more data would lead to more powerful and intelligent AI systems.
The reaction to OpenAI's claim that AGI would figure out its own business model was mixed. While some investors and tech enthusiasts embraced the idea, others saw it as a speculative and hand-wavy approach to justifying the lack of a clear revenue strategy. Over time, OpenAI shifted to more traditional business models, such as advertising and enterprise solutions.
OpenAI was founded in 2015 during a period of low interest rates and abundant venture capital, which allowed startups to raise funds without immediate profitability. The organization emerged as a response to the dominance of tech giants like Google in AI research, with a narrative focused on open-source development and the prevention of AI-related risks.
Once upon a time, artificial general intelligence was the only business plan OpenAI seemed to have. Tech journalist Brian Merchant joins Emily and Alex for a time warp to the beginning of the current wave of AI hype, nearly a decade ago. And it sure seemed like Elon Musk, Sam Altman, and company were luring investor dollars to their newly-formed venture solely on the hand-wavy promise that someday, LLMs themselves would figure out how to turn a profit.
Brian Merchant) is an author, journalist in residence at the AI Now Institute, and co-host of the tech news podcast System Crash).
References:
Elon Musk and partners form nonprofit to stop AI from ruining the world)
How Elon Musk and Y Combinator Plan to Stop Computers From Taking Over)
Elon Musk's Billion-Dollar AI Plan Is About Far More Than Saving the World)
Brian’s recent report on the business model of AGI, for the AI Now Institute: AI Generated Business: The rise of AGI and the rush to find a working revenue model)
Previously on MAIHT3K: Episode 21: The True Meaning of 'Open Source' (feat. Sarah West and Andreas Liesenfeld))
Fresh AI Hell:
OpenAI explores advertising as it steps up revenue drive)
If an AI company ran Campbell's Soup with the same practices they use to handle data)
Humans are the new 'luxury item')
Itching to write a book? AI publisher Spines wants to make a deal)
A company pitched Emily her own 'verified avatar')
Don't upload your medical images to chatbots)
A look at a pilot program in Georgia that uses 'jailbots' to track inmates)
You can check out future livestreams on Twitch).Our book, 'The AI Con,' comes out in May! Pre-order your copy now).Subscribe to our newsletter via Buttondown).
Follow us!Emily
Alex
Music by Toby Menon.Artwork by Naomi Pleasure-Park). Production by Christie Taylor.