Tuesday, February 27, 2024

OpenAI’s ChatGPT: The Hottest Startup in Silicon Valley Taking on Google with Microsoft’s Support

OpenAI, the Microsoft-backed developer of ChatGPT, a highly-acclaimed chatbot that can write a poem, college essay or even a line of software code, is currently the hottest startup in Silicon Valley.

The chatbot has caught the attention of internet users and has raised some concerns over its potential misuse. The company is said to be in talks with Microsoft to increase the initial investment of $1 billion to $10 billion in a goal to challenge Google’s search engine. If agreed, this would value OpenAI at $29 billion.

Early Investment and Partners

Tesla tycoon Elon Musk was an early investor in OpenAI and Microsoft is reported to be in talks to up an initial investment of $1 billion to $10 billion in a goal to challenge Google’s world-dominating search engine.

The multi-billionaire served on OpenAI’s board until 2018, but left to focus on Tesla, the electric vehicle company. The startup also relies on a team of computer scientists and researchers led by Ilya Sutskever, a former Google executive who specialises in machine learning.


Before the release of ChatGPT, OpenAI had wowed tech geeks with Dall-E 2, a software that creates digital images with simple instructions. Microsoft, which makes no secret of its AI ambitions, has integrated Dall-E 2 into several of its applications and now, according to a report in Bloomberg, the tech giant wants to graft ChatGPT to its Bing search engine to take on Google.

Since ChatGPT was introduced in November, the prowess of this chatbot has aroused the curiosity and fascination of internet users. It is capable of formulating detailed and human-like answers on a wide range of subjects in a few seconds, raising fears that it is vulnerable to misuse by school cheats or for disinformation.

Marketing Strategy

The dizzying success of ChatGPT is due in part to OpenAI´s clever marketing strategy in which it made its research accessible to non-experts, said AI specialist Robb Wilson, founder of OneReach.ai, a software company.

“Having this technology available to technologists was one thing. Offering it in a chat user interface and allowing non-developers to start playing with it ignited a conversation,” he said.

OpenAI’s Path to Financial Independence

Founded as a nonprofit, the startup became a “capped for-profit” company in 2019 to attract more investors and this week co-founder Greg Brockman said that a paid version of ChatGPT was in the works.

The search for funding seems necessary for a company with exorbitant expenses. In a Twitter exchange with Musk in early December, Altman acknowledged that each conversation on ChatGPT costs OpenAI several US cents. According to estimates by Tom Goldstein, an associate professor in the University of Maryland´s computer science department, the company is shelling out $100,000 a day for its bot, or about $3 million a month.

Partnering with Microsoft, which provides the startup with its remote computing services, could cut costs, but “either way, it´s not cheap,” Goldstein said.

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