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When ChatGPT — OpenAI’s brilliant, garrulous, and occasionally out of joint chatbot — was asked this week how much the company behind it is worth, the response was, “It’s likely worth hundreds of millions of dollars, if not.” more.”
Microsoft, which is rumored to be weighing a $10 billion investment in OpenAI on top of a previous $1 billion commitment, is betting the company is worth a lot more — despite the fact that neither ChatGPT nor other AI OpenAI models still generate huge amounts of cash profits. OpenAI has created several impressive and attention-grabbing demos and supports a popular autocomplete feature for programmers offered by Microsoft’s GitHub. But despite the hype surrounding its technology, the startup hasn’t created a groundbreaking, highly lucrative product or business.
“We don’t really know what ChatGPT is going to be great at,” says James Cham, a partner at Bloomberg Beta, an investment firm. But while the bot’s path to wealth may not be clear, Cham shares the sentiment of many VCs and entrepreneurs that the technology behind the bot will pay off in big ways. OpenAI’s technology is at the center of a growing interest in what is known as generative AI, a term that encompasses algorithms that can generate text, images, or other data.
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Cham compares the current situation to the early days of the internet, when a few obscure but powerful demos emerged as proving to be a fundamental shift in the way software, tech companies, and society functioned. “We’ve had great AI demos for decades, but this is the first where you give it to someone and they’re really excited about the possibilities,” Cham says of ChatGPT.
OpenAI’s chatbot took the internet by storm when it was released in December 2022, demonstrating an uncanny ability to answer questions and perform tricks like creating mostly coherent essays, producing working computer code, and reasoning about meaning of life. It is based on GPT-3, a text generation algorithm developed by OpenAI, which was fed huge amounts of text from the Internet and other sources and then additionally trained to answer questions.
Some developers were so inspired by ChatGPT that they quickly used it to create apps such as a spreadsheet assistant able to perform complex calculations in response to a simple typed query.
But because of how ChatGPT works – by finding statistical patterns in text rather than associating words with meanings – it will also often fabricate facts and figures, misunderstand questions and show biases found in its training data. This is likely to complicate efforts to spread the technology, for example by mixing misleading or biased information into search results.
One reason the tech industry is excited about ChatGPT, fueled by its parlor tricks, is the suggestion that it could disrupt the longstanding dominance of Google and other tech giants by allowing small businesses to outperform much larger competitors. A popular theory is that the bot could transform web search.