The Backstory of ChatGPT Creator OpenAI

ChatGPT, the artificial intelligence program captivating Silicon Valley with its sophisticated prose, had its origins three years ago, when tech investor Sam Altman became CEO of the chatbot’s developer, OpenAI.

Mr. At that point, Altman decided to move the OpenAI research lab away from its nonprofit roots and toward a new strategy as it raced to build software that could fully reflect the intelligence and capabilities of humans—which AI -researchers call “artificial general” intelligence.” Mr. Altman, who made a name for himself as president of well-known startup accelerator Y Combinator, would oversee the creation of a new for-profit arm, and believes that OpenAI is aggressively fundraising must become to achieve its founding mission.

Since then, OpenAI partners such as Microsoft Corp. got deep pockets, created products that caught the attention of millions of internet users, and is looking for more money. Mr. Altman said the company’s tools could transform technology similar to the invention of the smartphone and tackle broader scientific challenges.

“They’re incredibly embryonic right now, but as they develop, the creativity boost and new superpowers we get — none of us will want to go back,” Mr. Altman said in an interview.

Shortly after becoming CEO, Mr. Altman receives $1 billion in funding after flying to Seattle to demonstrate an artificial intelligence model to Microsoft CEO Satya Nadella. The deal marked a marked change from OpenAI’s early days, when it said its goal would be to build value for everyone rather than shareholders.

The deal with Microsoft gave OpenAI the computing resources it needed to train and improve its artificial intelligence algorithms, leading to a series of breakthroughs.

First, there was Dall-E 2, a project announced in September that allowed users to create realistic art from strings of text such as “an Andy Warhol-style painting of a bunny rabbit wearing sunglasses wear.” And then there was ChatGPT, the chatbot where users get entertaining and intelligent responses to prompts like “describe a debate between two college students about the value of a liberal arts education.”

In October, Microsoft said it would integrate OpenAI’s models into the Bing search app and a new design program called Microsoft Design.

OpenAI is now in advanced talks about a sale of employee-owned stock, people familiar with the matter said. In a previous tender offer, OpenAI’s stock was valued at about $14 billion, the people said, and it negotiated a higher price for the current offering. Microsoft is also in advanced talks to increase its investment in the company, The Wall Street Journal reported.

Despite the recent progress, some investors and researchers have expressed skepticism that Mr. Altman can generate significant revenue from OpenAI’s technology and achieve its stated goal of achieving artificial general intelligence. Mr. Altman’s first venture, a social networking app called Loopt, sold for nearly the amount of money investors put in.

An image generated by Kevin Roose using OpenAI’s DALL-E 2 artificial intelligence program. NYT

Mr. Altman also faced broader concerns from members of the AI ​​community for steering the company away from its promise to make its research transparent and enrich shareholders. Instead, OpenAI has become more closed over time, researchers said.

“They want to acquire more and more data, more and more resources, to build big models,” said Emad Mostaque, founder of Stability AI, a rival startup that has placed fewer restrictions on its image-generating program Stable Diffusion, opening it up. -source and free for developers.

An OpenAI spokesperson said the company made its technology available in several ways, including by open sourcing certain AI models.

OpenAI started as a non-profit organization in 2015 with grants from Mr. Altman, Tesla Inc. CEO Elon Musk, LinkedIn co-founder Reid Hoffman and other supporters. Working out of an office in San Francisco’s Mission District, the team sought to form a research counterweight to big tech companies like Alphabet Inc. ‘s Google, which has carefully shielded its AI initiatives from the public.

Instead of pursuing corporate profit, OpenAI has pledged to advance technology for the benefit of humanity. The group’s founding charter promised to abandon the race to develop artificial general intelligence if a competitor got there first.

That approach has changed. In 2019, OpenAI brought in its first group of investors and capped returns at 100 times the cost of their contributions. Following Microsoft’s investment, Mr. Altman forced OpenAI to bring in more revenue to attract funding and support the computing resources needed to train its algorithms.

The deal also gave Microsoft a strategic foothold in the arms race to capitalize on advances in AI. Microsoft has become OpenAI’s preferred partner for commercializing its technologies, an arrangement that allows Microsoft to easily integrate OpenAI’s models into products like Bing. Microsoft declined to comment.

With the help of the funding, OpenAI accelerated the development and release of its AI models to the public, an approach that industry observers described as more aggressive than the tactics of larger, more heavily scrutinized rivals such as Google.

To help with employee compensation, Mr. Altman also occasionally introduced tender offers to help employees sell their stock. He said OpenAI has no plans to be acquired or go public.

OpenAI has limited some venture capitalists’ profits to about 20 times their investments, with the ability to earn bigger returns the longer they wait to sell their shares, people familiar with the terms said. Mr. Altman said the limited investment structure is necessary to ensure that the value of OpenAI accrues not only to investors and employees, but also to humanity more generally.

Mr. Altman said in recent talks with investors that the company could soon generate up to $1 billion in annual revenue, partly from charging consumers and businesses for its own products, the people said.

Mr. Altman previously said he would solicit input on how to make money for investors by posing the question to a software program that demonstrates general intelligence, which would then provide the answer.

So far, OpenAI has generated tens of millions of dollars in revenue, mostly from selling its programmable code to other developers, people familiar with the company’s financial details said. Mr. Altman said OpenAI is early in its strategy to monetize products.

Some early users of ChatGPT have reported problems asking the program to perform basic math problems. Mr. Altman admitted that the show’s output often contained factual errors.

“It does know a lot, but the danger is that it is confident and wrong a significant fraction of the time,” he wrote on Twitter this month.