Tech columnist Edward Zitron argues that the current business model of OpenAI, the creator of ChatGPT, is unsustainable due to the lack of a clear path to profitability and excessive costs. However, several industry executives disagree with this view.
“Ultimately, I believe that OpenAI in its current form is a failure,” Zitron said in his latest newsletter “Where's Your Ed At?” The announcement comes amid reports that OpenAI could lose up to $5 billion in 2024, putting the company at risk of running out of cash within 12 months.
Zitron argues that for OpenAI to "survive" beyond 2026, it will need to raise more funding than any startup has ever raised in history, and continue to raise it continuously.
Additionally, he stated that OpenAI must achieve a major technological breakthrough to dramatically reduce GPT development costs. “Make a significant technological breakthrough that will reduce the cost of creating and operating GPT - or any other model that will replace it - by thousands of times,” he added.
Zitron also noted that to justify the “huge” capital investment and infrastructure needed to move forward, OpenAI will have to create new jobs and automate existing ones.
LA Times columnist Brian Merchant expressed a similar sentiment in a July 25 post in X, saying that “generative AI is extremely expensive to train and operate, and OpenAI will likely have to raise more money this year to stay afloat.”
Industry executives disagree
However, not everyone in the industry believes OpenAI is at risk of bankruptcy.
“OpenAI has changed the world forever and will never go bankrupt!” said Abacus.AI CEO Bindu Reddy in his July 29th post X.
Ath Energy CEO Tarun Mehta also dismissed rumors of OpenAI's possible bankruptcy when they first surfaced in August 2023.
“Uber, at its peak, burned through 10 times its capital for years,” Mehta wrote in an August 2023 X post, arguing that OpenAI “may be one of the most important startups in recent memory. They will be wonderful people,” he added.
Positive developments for OpenAI
In a positive development for OpenAI, on June 12, Elon Musk withdrew his lawsuit against OpenAI and its CEO Sam Altman. The lawsuit accused the company of straying from its original mission of developing artificial intelligence for the benefit of humanity rather than for profit.
Earlier on February 29, Musk sued OpenAI and Sam Altman for breach of contract, claiming that the ChatGPT creator had strayed from its original mission of developing large language models for "the benefit of humanity, not profit."
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