OpenAI is reportedly generating $3.4bn in annual recurring revenue, roughly double its level six months earlier and up from almost nothing before ChatGPT.
Host Pablo Srugo argues Sam Altman's strategy is about positioning rather than predicting the future, citing Paul Graham's call Altman the best strategist he has ever worked with.
A reported Apple partnership announced at WWDC could give OpenAI access to 1.5bn Apple users and make it Apple's preferred AI partner over Google and Meta.
Sam Altman's positioning moves explain OpenAI's jump to $3.4bn
Srugo presents OpenAI's rise as a case study in strategy as positioning rather than prediction. He reads each move, from the nonprofit to the consumer launch and the Microsoft and Apple deals, as placing OpenAI where it could win. He credits that pattern for revenue now reported near $3.4bn.
Takeaways
Strategy is positioning, not predicting the future. Host Pablo Srugo argues Altman's moves should be read as positioning rather than a master plan. He cites Paul Graham, who worked closely with Altman for years and called him the best strategist he had ever worked with.
OpenAI's revenue growth is extraordinary. OpenAI is reported at $3.4bn in annual recurring revenue, roughly double six months earlier. It ended 2023 at $2bn, up from $200m a year before, and ChatGPT had over 10m paying subscribers within about eighteen months.
The nonprofit structure attracted top researchers early. Srugo argues the nonprofit made sense because it galvanized leading people around concerns about AGI safety before any clear business case existed. Altman later added a for-profit component, which let him raise serious capital.
Going direct to consumers was the decisive choice. Before ChatGPT, customers reached OpenAI's models mainly through APIs. Once GPT-3.5 was so compelling, Altman judged that working behind the scenes was not enough. ChatGPT hit 100m users in two months, faster than Instagram and TikTok, though Threads had Meta's ecosystem behind it.
Microsoft was a deliberate enterprise partner choice. Srugo calls Microsoft the biggest enterprise company in the world. He argues the $1bn investment in 2019 and the $10bn announced in 2023 made it OpenAI's chosen enterprise partner, giving the company a route into business customers.
Apple extends reach to affluent consumers. Srugo calls Apple the biggest consumer company in the world. The WWDC partnership is expected to give OpenAI access to 1.5bn users over time. He argues Apple users have more disposable income, so they are likelier to pay $20 a month.
ChatGPT became a household brand within months. About a year and a half before the episode, ChatGPT was a completely unknown name. Srugo says it is now known even to 60-year-olds and 70-year-olds, including his own parents, which gives OpenAI a consumer brand few companies build.
How OpenAI got here
2015: Altman starts OpenAI as a nonprofit with Elon Musk and Peter Thiel.
2019: GPT-2 is released. Altman leaves his role as CEO of Y Combinator to run OpenAI full time.
2020: GPT-3 launches, and customers reach it mainly through APIs.
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On this episode 1
Late 2022: after GPT-3.5, OpenAI launches ChatGPT directly to consumers.
2023: within twelve months OpenAI ships the paid $20 plan, GPT-4 and an iOS app. A Mac app follows later.
Reported at WWDC: Apple announces a partnership with OpenAI.