There have been chatbots before. But not like this.
In between all the depressing reports of tech layoffs and high-profile down rounds has been a major outlier: OpenAI—the Sam Altman-led artificial intelligence powerhouse behind ChatGPT. This week, Microsoft said it had finally sealed the deal, making a “multiyear, multibillion” investment into the company. While the tech giant is refusing to put a dollar figure on it, Bloomberg confirmed the investment does, indeed, appear to be $10 billion, as we’ve been reporting in the weeks leading up to Microsoft sealing the deal. Some details are still unclear, however, such as whether Microsoft’s investment is pure cash or whether it includes the value of services Microsoft will provide as part of its partnership with OpenAI, what kind of hurdles may be involved with the investment, or whether some of ChatGPT’s flaws can be sorted out.
But here’s what we do know: OpenAI’s technology could—hypothetically—change the way we access the internet or power a universe of computers that are more effective than humans, which is why Microsoft is bothering to throw billions of dollars at OpenAI while it lays off thousands of employees, and why VCs have been lining up to invest in the money-losing startup while they tell their portfolio companies to get profitable. It’s also why Jeremy Kahn ended up writing about OpenAI for Fortune’s latest cover story, which should hit newsstands in the next week or so. (Michal Lev-Ram and I also did some of the reporting for the cover story.)
There are reasons that ChatGPT took the tech world by storm when it was unleashed at the tail end of last November—even to the surprise of OpenAI management. As my colleague Jeremy puts it:
There have been chatbots before. But not like this. ChatGPT can hold long, fluid dialogues, answer questions, and compose almost any kind of written material a person requests, including business plans, advertising campaigns, poems, jokes, computer code, and movie screenplays. It’s far from perfect: The results are not always accurate; it can’t cite the sources of its information; it has almost no knowledge of anything that happened after 2021. And what it delivers—while often smooth enough to pass muster in a high school class or even a college course—is rarely as polished as what a human expert could produce. On the other hand, ChatGPT produces this content in about a second—often with little to no specific knowledge on the user’s part—and a lot of what it spits out isn’t half bad. Within five days of its release, more than 1 million people had played with ChatGPT, a milestone Facebook took 10 months to hit.
People are using ChatGPT to do things like debug code, write recipes, and create a Seinfeld script. If you’re a regular reader of this newsletter, you know that I even asked ChatGPT to write an edition of Term Sheet a couple of weeks ago.
But, as Jeremy points out in his piece, it takes more than just a technology itself to catapult “from the fluorescent gloom of engineering department basements, the fetid teenage bedrooms of nerds, and the lonely man caves of hobbyists—into something that your great-aunt Edna knows how to use.”
There were web browsers as early as 1990. But it wasn’t until Netscape Navigator came along in 1994 that most people discovered the internet. There were MP3 players before the iPod debuted in 2001, but they didn’t spark the digital music revolution. There were smartphones before Apple dropped the iPhone in 2007 too—but before the iPhone, there wasn’t an app for that…
Artificial intelligence technology has, over the past decade, made steady inroads into business and quietly improved a lot of the software we use every day without engendering much excitement among non-technologists. ChatGPT changed that. Suddenly everyone is talking about how A.I. might upend their jobs, companies, schools, and lives. ChatGPT is part of a wave of related A.I. technologies collectively known as “generative A.I.”—one that also includes buzzy art generators like Midjourney and Lensa. And OpenAI’s position at the forefront of the tech industry’s next big thing has the hallmarks of a startup epic, including an all-star cast of characters and an investor frenzy…
But how will all this play out? It wasn’t until a few years ago that OpenAI became a company, after beginning its life as a nonprofit academic research lab. Its evolution into a startup with billions in funding has redirected some of its focus from pure science to commercial projects, writes Jeremy. And some critics, he notes, “argue that releasing ChatGPT into the wild was itself dangerous—and a sign of how profoundly OpenAI’s approach has shifted.”
With ChatGPT now in the wild, the tech industry is bracing itself for big changes. Even the almighty Google is on edge. And while Microsoft has shored up its relationship with OpenAI, a slew of rivals are busy working to outdo OpenAI’s buzzy creations. Has OpenAI opened a door for a future it won’t be part of? You can read all about all this and more here in Fortune’s latest cover story.
How OnlyFans plans to keep its only fans… In December 2021, OnlyFans got a new CEO out of its 37-year-old chief marketing and communications officer Amrapali “Ami” Gan. She's been faced with a tall task in trying to reshape the company’s image: both among the creators of explicit content that it had attracted (then ostracized when it momentarily said it would ban sexually explicit content), and among those who are suspicious of OnlyFans precisely because of the prevalence of adult content on its platform. Gan is leaning on her unusual background in communications to rebrand OnlyFans as a site that empowers sex workers but also offers a safe-for-work outlet for creators of all kinds, from personal trainers to chefs. And she won’t share much data that would show how it’s going so far. You can read the full story from my colleague Emma Hinchliffe here.
A reminder to weigh in on the private markets… Term Sheet is partnering with Semaphore again for its 15th annual confidence survey of private equity, venture capital, hedge fund, and other professionals. Did 2022 turn out to be a poor year for both investment returns and the managers/service providers of PE, VC, and hedge funds? Are investors complicit in the downfall of Sam Bankman-Fried and FTX? How could a split Congress influence the private markets? Weigh in, if you like, and share your level of confidence in yourself, the economy, and your business; it’s anonymous and should take you 3-4 minutes. You can take the survey here. Have a look at last year’s results here and here.
See you tomorrow,
Jessica Mathews
Twitter: @jessicakmathews
Email: jessica.mathews@fortune.com
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