when When ChatGPT — the ingenious, loquacious and occasionally unhinged chatbot from OpenAI — was asked this week how much the company behind it was worth, its responses included: “It’s probably worth hundreds of millions of dollars, if not more.” if”
With rumors that Microsoft is weighing a $10 billion investment in OpenAI, on top of the $1 billion it promised earlier, the company is betting the company is worth far more — despite the fact that ChatGPT and other software created by OpenAI None of the AI models are raking in huge amounts of cash yet. OpenAI has built several impressive and compelling demos, and a popular autocomplete feature for coders available on Microsoft’s GitHub. But despite the hype surrounding its technology, the startup hasn’t created a groundbreaking, lucrative product or business.
“We really don’t know what ChatGPT is going to be good at,” said James Cham, a partner at investment firm Bloomberg Beta. But while the road to riches in robots may not be clear, Cham, like many venture capitalists and entrepreneurs, believes the technology behind the robots will pay off big. OpenAI’s technology is at the heart of interest in so-called generative AI, a term that includes algorithms that can generate text, images or other data.
Cham likens the current situation to the early days of the internet, when obscure but evocative demos turned out to prove a sea change in the way software, tech companies and wider society functioned. “We’ve had great AI demos for decades, but this is the first time we’ve given it to someone, and they’re really excited about the possibilities,” Cham said 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 such as writing mostly coherent essays, generating valid computer code, and contemplating the meaning of life. It’s powered by GPT-3, a text-generating algorithm developed by OpenAI that takes large amounts of text from the web and other sources, then receives additional training on how to answer questions.
Some developers were inspired by ChatGPT and they quickly used it to create applications such as Spreadsheet Assistant Ability to perform complex calculations in response to simple types of requests.
But because of the way ChatGPT works—by looking for statistical patterns in text rather than associating words with meaning—it also often fudges facts and figures, misinterprets questions, and exhibits the biases found in its training data. That could complicate efforts to use the technology widely, for example by mixing misleading or biased information into search results.
One of the reasons the tech industry is excited about ChatGPT is that, thanks to its in-house tricks, it could disrupt the long-standing dominance of Google and other tech giants, allowing smaller companies to outcompete their bigger rivals. A popular theory is that bots can change web searches.
For Microsoft, investing more in OpenAI could provide a way to ensure that when a disruptive AI moment arises, the company is not only unharmed, but also benefits from it. Air Street Capital investor Nathan Benaich, who tracks AI trends, said that while there is a lot of hype surrounding generative AI, there are a number of ways Microsoft could use the technology to improve its products.
The company’s broad and diverse product range, from enterprise and cloud services to consumer devices and software, presents many potential opportunities. Microsoft already uses the technology behind ChatGPT to automatically generate code snippets in its Visual Studio products, and it’s reportedly considering using ChatGPT to improve the performance of its lagging search engine, Bing.
“The surface — the application space that Microsoft provides to all of its customers — is vast,” Benaich said. For Microsoft, which is worth about $1.7 trillion, $10 billion is not a lot of money given the potential return, he said. Semafor reported that the investment would value OpenAI at $29 billion.
