The hottest AI startup, OpenAI, recently raised $6.6 billion at a valuation of $157 billion. The latest round of funding, led by existing investor Thrive Capital, has brought OpenAI’s total capital raised to $17.9 billion, according to Crunchbase. Thrive Capital contributed approximately $1.3 billion, with the option to invest an additional $1 billion at the same valuation through 2025.
Other major participants in this funding round include Microsoft, NVIDIA, SoftBank, Khosla Ventures, Altimeter Capital, Fidelity, and MGX.
The Wall Street Journal reported that Microsoft’s contribution was just under $1 billion, while NVIDIA committed $100 million, and SoftBank invested $500 million. Previously reported to be participating, Apple was notably absent from the investment round.
“The new funding will allow us to double down on our leadership in frontier AI research, increase compute capacity, and continue building tools that help people solve hard problems,” the company said in a blog post. That explains why it is hiring people aggressively across various job roles, both old and new, including frontiers infrastructure engineer and GPU kernel engineer.
Meanwhile, OpenAI is planning to restructure itself into a for-profit public benefit corporation. This marks a shift from its current structure, which includes a non-profit board overseeing a for-profit subsidiary. Altman could also receive an equity stake in the restructured company, though specific figures haven’t been confirmed yet.
The ChatGPT maker is expecting about $5 billion in losses on $3.7 billion in revenue this year.
OpenAI is NOT a Normal Company
The funding came on the heels of the company’s DevDay 2024 event, where several important announcements were made. These included real-time APIs, vision integration in the fine-tuning API, prompt caching (with 50% discounts and faster processing for recently seen input tokens), and model distillation.
However, the past few days have not been smooth for OpenAI, as its CTO, Mira Murati, announced her resignation after being associated with the company for over six years. She said that she was “stepping away because I want to create the time and space to do my own exploration”.
Bob McGrew, the chief research officer, also announced his departure, simply saying, “It is time for me to take a break.” McGrew had been with OpenAI since 2017.
Barret Zoph, the vice president of research, also resigned alongside Murati and McGrew, describing his departure as a “personal decision based on how I want to evolve in the next phase of my career”.
Regarding the leadership changes, Altman said, “Leadership changes are a natural part of companies, especially companies that grow so quickly and are so demanding.” He added that he obviously won’t pretend it’s natural for this one to be so abrupt, but “we are not a normal company”, he said.
Altman describes being a leader at OpenAI as “all-consuming”. “On the one hand, it’s a privilege to build AGI and be the fastest-growing company that gets to put our advanced research in the hands of hundreds of millions of people. On the other hand, it’s relentless to lead a team through it,” he said.
Despite the departure of many people from OpenAI, Altman is not worried about the company, as he believes its mission is strong enough to sustain it. He also believes that, despite OpenAI raising substantial funds, it remains a research-focused organisation.
“We’ll do whatever works to build safe AGI and figure out how to share the benefits,” said Altman in a fireside chat at DevDay 2024.
“If the answer is a rack of GPUs, we’ll do that. Right now, the answer is to really push on research, and I think you see this with o1. That is a giant research breakthrough that we were attacking from many vectors over a long period of time that came together in this really powerful way. We have many more giant research breakthroughs to come.”
He further added that OpenAI knows how to integrate research and product development. “The fact that we married product and research and all this other stuff together is that we know how to run that kind of a culture that can go—push back the frontier. That’s really hard, but we love it,” he said.
Mission ASI
Altman believes that the arrival of artificial superintelligence is just a few thousand days away. In a recent blog post, titled ‘The Intelligence Age’, Altman said that, “It is possible that we will have superintelligence in a few thousand days (!); it may take longer, but I’m confident we’ll get there.”
However, Altman said that they need to bring down the cost of compute and make it abundant, which requires a lot of energy and chips. “If we don’t build enough infrastructure, AI will be a very limited resource that wars get fought over and that becomes mostly a tool for rich people.”
OpenAI researcher Noam Brown, in a recent podcast, said that the significance of the new o1 model is ‘profound’ because it represents a new dimension for scaling AI models in the domain of inference-time compute, and that “the ceiling is a lot higher than a lot of people have appreciated”.
Similarly, Altman recently mentioned that “o1-preview is deeply flawed, but when o1 comes out, it will feel like a major leap forward”. He described o1-preview as being at the “GPT-2 stage” of reasoning development.
“I think of this as like we’re at the GPT-2 stage of these new kinds of reasoning models,” he explained and stressed that while the model is still early in its development, significant improvements are expected in the coming months.
“Before the end of the year, o1 will support function calling along with system prompts and structured output,” he said.
Moreover, Altman has defined five levels of AI development, the first stage being chatbots, followed by reasoners, which the company claims has now been achieved. The next phases are agents, innovators capable of scientific discovery, and fully autonomous organisations.
Jealous Much?
“OpenAI is evil,” Musk posted soon after the funding announcement. This comes in the backdrop of OpenAI asking its investors not to back rival companies, including Anthropic, Elon Musk’s xAI, Safe Superintelligence (founded by former OpenAI co-founder Ilya Sutskever), search startup Perplexity AI, and enterprise search firm Glean.
Notably, xAI raised $6 billion earlier this year, while Safe Superintelligence secured $1 billion and Anthropic raised $7.3 billion over the past year through various funding rounds and commitments.
At DevDay, Altman mentioned how companies everywhere were trying to copy OpenAI. “We really deeply care about research. I think it’s easy to copy something you know works, and I actually don’t mean that as a bad thing. When people copy OpenAI, I’m like, great—the world gets more AI, that’s wonderful. But to do something new for the first time and find the new paradigm one after the another that is what motivates us.”
In another development, xAI recently relocated to a new office in the Mission district in San Francisco, specifically in the same building that housed OpenAI’s headquarters for several years. “It’s my building. That’s where we created OpenAI (as an open source, non-profit!!) and Neuralink,” posted Musk on X, showing his evident frustration with OpenAI.
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