OpenAI is reportedly considering subscription prices as high as $2,000 per month for the company's upcoming large language models, like Strawberry and Orion.

OpenAI executives are reportedly considering $2,000 per month subscription prices for the company's upcoming large language models. The company plans to release its next-level artificial intelligence product, Strawberry, in the fall. Strawberry will be able to solve novel math problems, develop market strategies, and perform deep research. OpenAI is also reportedly considering changing its corporate structure to be more simple and attractive to financial backers. It is aiming to raise several billion dollars in a funding round that would value it at above $100 billion.

The discussion surrounding the viability of AI companies, particularly those focused on large language models (LLMs), highlights the significant financial and operational challenges they face. Building these models is an expensive endeavor, with companies like OpenAI reportedly burning through billions annually to fund their research and development. As the technology evolves, the costs associated with creating new models are expected to rise, making it increasingly difficult to maintain a competitive edge. The analogy of climbing Mount Everest is used to illustrate this point: as one ascends, the challenges become greater, and the resources required to push further become more demanding. Despite these challenges, there is a strong belief in the potential of LLMs as the next big technological breakthrough. Companies are motivated by the prospect of creating artificial general intelligence and the financial rewards that could follow. However, the rapid pace of innovation means that the value of existing models diminishes quickly. For instance, if a new and improved model is released, users can easily switch to it, making it essential for companies to consistently deliver top-tier models to remain relevant. The article also contrasts the AI industry with traditional cloud service providers. While building a cloud infrastructure requires significant time and investment, creating an AI model can be achieved relatively quickly, especially if a team of skilled researchers decides to leave an established company and start anew. This creates a precarious environment for AI vendors, as their competitive advantages can be eroded swiftly. The question of what constitutes a sustainable competitive advantage for LLM vendors remains open. Brand loyalty, inertia, and the development of superior applications are potential factors, but the ongoing need for substantial investment in model improvement poses a significant risk. Smaller companies, in particular, may struggle to survive without a steady revenue stream or the ability to secure continuous funding. As the market evolves, timing becomes crucial. The current hype surrounding AI may not last indefinitely, and the companies that succeed will likely be those that can adapt to changing market conditions rather than simply being the fastest to innovate. The discussion raises important considerations about the future of AI companies and the sustainability of their business models in a rapidly changing landscape.

While AI applications offer new capabilities to users, the pricing is mostly the same as traditional software applications. Most AI apps use subscription models, often based on the number of users. Free versions or trials are common to drive initial adoption. A new pricing model that AI could help facilitate is success-based pricing, where the user gets charged only when the product delivers a successful outcome.

OpenAI is starting a program for low and middle income countries to expand access to AI knowledge. It also has a professional translation of MMLU (a standard reasoning benchmark) in 15 different languages.

OpenAI's revenue is estimated to be $3.4B, much of that coming from its ChatGPT services.

OpenAI has more than doubled its annualized revenue to hit $3.4B.

OpenAI has announced new enterprise-grade features for its API customers, including enhanced security measures, an upgraded Assistants API, a new Projects feature for granular access control, and cost management tools. These updates demonstrate OpenAI's focus on offering a more "plug and play" experience for enterprises, countering the rise of competitors like Meta's Llama 3 and open models from Mistral.

OpenAI is experiencing rapid growth while simultaneously facing significant financial challenges. Recent reports indicate that the company’s monthly revenue surged to $300 million in August, marking a staggering increase of 1,700 percent since the start of 2023. Projections suggest that OpenAI could achieve approximately $3.7 billion in annual sales this year, with expectations of revenue reaching $11.6 billion in the following year. However, despite this impressive revenue growth, OpenAI anticipates a loss of around $5 billion for the current year, primarily due to high operational costs, including employee salaries and office expenses. The financial documents reviewed reveal that OpenAI's expenses are substantial, and they do not fully account for equity-based compensation, which is a common practice among startups when presenting financial information to potential investors. This omission raises questions about the company's valuation, which stands at $150 billion. While some may debate whether OpenAI can still be classified as a startup given its valuation, it is important to note that it is not a public company, and such practices are typical in the startup ecosystem. The urgency for OpenAI to secure additional funding is underscored by its need to attract outside investors. The company is navigating a complex landscape, particularly as it engages with major players like Apple, which has reportedly withdrawn from financing discussions. This development highlights the challenges OpenAI faces in maintaining investor confidence while managing its financial trajectory. As OpenAI continues to innovate and expand its offerings, the interplay between its rapid revenue growth and the pressing need for capital will be critical in shaping its future. The company’s ability to balance these factors will determine its success in the competitive landscape of artificial intelligence and technology.

OpenAI is experiencing rapid growth, with its monthly revenue reaching $300 million in August 2024, marking a staggering increase of 1,700% since the start of the year. The company anticipates annual sales of approximately $3.7 billion for 2024, with projections suggesting revenue could soar to $11.6 billion in 2025. However, despite this impressive revenue growth, OpenAI is also facing significant financial challenges, expecting to incur losses of around $5 billion this year due to high operational costs, including employee salaries and office expenses. The financial documents reviewed indicate that OpenAI's revenue growth is largely driven by the popularity of ChatGPT, which has seen a substantial increase in user engagement. The service has expanded its user base from 100 million in March to approximately 350 million by June. The company expects ChatGPT alone to generate $2.7 billion in revenue for 2024, a significant jump from $700 million in 2023. Additionally, OpenAI is exploring new revenue streams, including partnerships with other businesses that utilize its technology. As OpenAI seeks to raise between $6 billion and $7 billion in funding, the company is navigating a complex financial landscape. The documents reveal that while OpenAI is burning through cash, it believes that its expenses will not continue to scale at the same rate as its revenue growth. This optimism is crucial as the company prepares to transition to a for-profit model, which could complicate its financial structure and investor relations. The investment landscape for OpenAI is also evolving, with Thrive Capital recently investing $750 million in the company. Thrive has secured unique terms that allow it to invest an additional $1 billion at the same valuation through 2025, a privilege not extended to other investors, leading to some frustration among them. This deal structure includes a provision that requires OpenAI to convert to a for-profit entity within two years, or else the funding will convert into debt, a scenario that could pose significant challenges for the company. The relationship between OpenAI and major investors like Microsoft and Apple adds another layer of complexity. OpenAI relies on Microsoft for cloud services, which raises questions about the financial implications of Apple's potential usage of ChatGPT without a direct payment arrangement. This situation could lead to OpenAI effectively using funds from other investors to cover costs associated with Apple's usage of its technology. Overall, OpenAI's financial trajectory is marked by impressive revenue growth juxtaposed with substantial losses and complex investor dynamics. The company's future hinges on its ability to manage these challenges while capitalizing on its rapid expansion in the AI market.

OpenAI is offering $1 million to $5 million a year deals to publishers for data that it has mostly already scraped. While these deals may give the company access to APIs for more up-to-the-moment queries, the payments are more of a way to ensure that publishers don't sue OpenAI for the stuff it has already scraped. A lawsuit would be much more expensive for OpenAI. Its current lawsuit with The New York Times may end up costing it at least $7.5 billion in statutory damages alone.

Sam Altman projected $3.4 billion in annual recurring revenue for OpenAI in June. This report takes a look at publicly available data to calculate whether this projection is accurate. Most of OpenAI's revenue comes from ChatGPT Plus subscribers, with around 21% coming from ChatGPT Enterprise and 15% from the API. The full report is available in the article.

Meta plans to significantly increase computing capacity for training its next-gen large language model, Llama 4, expecting a 10x compute increase over Llama 3. The investment in AI training infrastructure will drive up capital expenditures in 2025. Despite heavy spending, Meta doesn't foresee immediate significant revenue from Gen AI products.

OpenAI, the San Francisco-based company known for its AI chatbot ChatGPT, is experiencing rapid growth but is also facing significant financial challenges. As reported by The New York Times, the company has seen its monthly revenue soar to $300 million as of August 2024, marking a staggering 1,700 percent increase since the start of the year. OpenAI anticipates annual sales of approximately $3.7 billion for the current year, with projections suggesting revenue could reach $11.6 billion in the following year. However, despite this impressive revenue growth, OpenAI is expected to incur losses of around $5 billion this year due to high operational costs, including employee salaries and infrastructure expenses. The company is actively seeking additional investment, aiming to raise $7 billion in a funding round that could value it at $150 billion, making it one of the most valuable private tech firms. This fundraising effort comes at a critical juncture for OpenAI, which has recently lost several key executives and researchers. The financial documents shared with potential investors reveal a need for ongoing capital to support its expanding operations, as expenses have risen alongside user growth. OpenAI's user base has grown significantly, with around 350 million people using its services monthly, a substantial increase from 100 million in March. The popularity of ChatGPT, which was launched in November 2022, has been a major driver of this growth. The company expects to generate $2.7 billion in revenue from ChatGPT this year, a significant rise from $700 million in 2023. Additionally, OpenAI plans to increase subscription fees for its services, with expectations of raising the monthly fee from $20 to $44 over the next five years. Despite its rapid revenue growth, OpenAI is grappling with high operational costs, primarily due to its partnership with Microsoft, which has invested over $13 billion in the company. Much of this funding is allocated to Microsoft’s cloud computing services, which are essential for hosting OpenAI's products. The company is in discussions with several major investors, including Microsoft, Apple, and Nvidia, as it seeks to secure the necessary funding to sustain its growth. OpenAI's financial strategy includes unique deal structures for investors, with Thrive Capital leading the current funding round. Thrive has committed $750 million and has the option to invest an additional $1 billion at the same valuation through 2025. This preferential treatment has caused some discontent among other investors. The company is also undergoing a transformation from a nonprofit to a capped-profit model, which allows it to attract the necessary capital for its ambitious AI projects. This shift was initiated after key funding sources departed, prompting the need for a more flexible financial structure. OpenAI has a two-year window to complete this transition, or its funding will convert into debt. Overall, while OpenAI is positioned for significant growth in the AI sector, it faces the dual challenge of managing its rapid expansion while addressing substantial financial losses and operational costs.

OpenAI, the San Francisco-based company known for its AI chatbot ChatGPT, is experiencing rapid growth but is also facing significant financial challenges. As reported by The New York Times, the company has seen its monthly revenue soar to $300 million as of August 2024, marking a staggering 1,700 percent increase since the start of the year. OpenAI anticipates annual sales of approximately $3.7 billion for the current year, with projections suggesting revenue could reach $11.6 billion in the following year. However, despite this impressive revenue growth, OpenAI is expected to incur losses of around $5 billion this year due to high operational costs, including employee salaries and infrastructure expenses. The company is actively seeking additional investment, aiming to raise $7 billion in a funding round that could value it at $150 billion, making it one of the most valuable private tech companies. This fundraising effort comes at a critical juncture for OpenAI, which has recently lost several key executives and researchers. The financial documents shared with potential investors provide insight into OpenAI's performance but do not clearly outline the extent of its losses, indicating a need for ongoing capital to support its expanding operations. The surge in revenue is largely attributed to the popularity of ChatGPT, which has grown significantly since its launch in November 2022. The user base has expanded from around 100 million in March to approximately 350 million by June. OpenAI expects ChatGPT alone to generate $2.7 billion in revenue this year, a substantial increase from $700 million in 2023. The company also plans to raise subscription fees for its services, with projections indicating a potential revenue of $100 billion by 2029. Despite its growth, OpenAI faces challenges in managing costs, particularly due to its reliance on Microsoft for cloud computing services. Microsoft has invested over $13 billion in OpenAI, but much of that funding is directed toward operational expenses associated with using Microsoft's infrastructure. OpenAI is currently in discussions with several major investors, including Microsoft, Apple, and Nvidia, to secure the necessary funding. The investment round is notable for its unique deal structures, with Thrive Capital leading the funding and offering additional investment options that could benefit them significantly. However, the departure of key executives, including the chief technology officer and chief research officer, raises concerns about the company's stability and future direction. OpenAI's transition from a nonprofit to a capped-profit model has allowed it to attract investment while still being governed by a nonprofit board. This structure is designed to limit investor returns, but the company is under pressure to convert fully to a for-profit entity within two years to avoid converting its funding into debt. Overall, OpenAI's rapid growth and the increasing demand for its AI technologies are juxtaposed with substantial financial losses and operational challenges, highlighting the complexities of scaling a tech startup in a competitive landscape.

OpenAI has signed licensing deals with The Atlantic and Vox Media, allowing their content to train its AI models and be shared in ChatGPT with proper attribution.

Tech giants are shifting focus from large language models to more efficient small language models (SLMs), with Apple and Microsoft introducing models with substantially fewer parameters yet comparable, or even superior, performance in benchmarks. OpenAI's CEO suggests we're moving beyond the era of LLMs, as SLMs offer advantages like local device operation, increased accessibility for smaller entities, and potential insights into human language acquisition. Training SLMs on high-quality or "textbook-quality" data contributes to their effectiveness despite their smaller scale.

OpenAI anticipated spending around $4 billion on Microsoft's Azure servers for ChatGPT inference in 2023, potentially causing significant financial losses. Although OpenAI is profiting approximately $2 billion annually from ChatGPT, it may require additional funding within a year to address a projected $5 billion shortfall. It currently utilizes the equivalent of 350,000 Nvidia A100 chip servers, mainly for ChatGPT, with discounted rates from Azure.

High-profile AI startups like Inflection AI, Stability AI, and Anthropic are facing financial pressures as they struggle with the high costs of developing generative AI models. While OpenAI, backed by Microsoft, has shown revenue growth, competitors like Anthropic and Stability AI grapple with substantial gaps between revenue and operating expenses. Microsoft's investment in AI hints at the tech industry's belief in AI's long-term profitability, despite the current challenges in monetizing these expensive technologies.

OpenAI is in talks to raise $6.5B from investors at a valuation of $150B.

OpenAI is reportedly in talks to raise funds at a valuation of more than $100 billion, substantially higher than the company's previous $86 billion valuation. Investors include Thrive Capital and Microsoft. The financing will be OpenAI's biggest outside infusion of capital since Microsoft invested nearly $10 billion in January last year. While OpenAI's revenue eclipsed $3.4 billion early this year, the company is on track to lose nearly $5 billion by year end. It has already burned through $8.5 billion on AI training and staffing.

OpenAI and Anthropic are two prominent players in the artificial intelligence sector, both experiencing significant revenue growth and exploring new financing opportunities. As of August 2024, OpenAI is projected to have an annualized run rate revenue of approximately $3.6 billion, a substantial increase from around $1.6 billion at the end of 2023. This growth trajectory suggests that OpenAI could reach between $5 billion and $5.2 billion by the end of 2024, marking a remarkable year-over-year growth rate of 225%. Looking ahead, OpenAI anticipates revenue of $11.6 billion in 2025, which would represent a further increase of 213%. The revenue breakdown for OpenAI indicates that a significant portion comes from ChatGPT subscriptions, expected to generate about $2.7 billion, accounting for roughly 73% of total revenue. This segment has seen impressive growth, with around 10 million subscribers on the ChatGPT Plus plan and an additional 1 million on higher-priced plans. The API business contributes about $1 billion, or 27% of revenue, with growth rates estimated between 200% and 225%. Despite this growth, OpenAI is projected to incur losses of about $5 billion this year, primarily due to high operating costs and the nature of its subscription model, which offers extensive usage for a relatively low monthly fee. In contrast, Anthropic is expected to reach an annualized run rate revenue of $1 billion by the end of 2024, reflecting a staggering 900% increase from approximately $100 million at the end of 2023. Anthropic's revenue is more heavily weighted towards its API offerings, particularly through partnerships with third-party platforms like Amazon. The revenue breakdown for Anthropic shows that 60-75% comes from third-party APIs, 10-25% from direct API sales, 15% from Claude chatbot subscriptions, and 2% from professional services. Like OpenAI, Anthropic is also facing significant losses, estimated at around $2 billion this year, largely due to high compute and personnel costs. When comparing the two companies, several key observations emerge. OpenAI is significantly larger, with a revenue scale approximately five times that of Anthropic. However, Anthropic is growing at a faster rate. ChatGPT remains the dominant consumer product, generating about $2.7 billion in revenue compared to Claude's estimated $150 million. This disparity highlights the importance of distribution, as Anthropic's revenue heavily relies on its partnership with Amazon, which facilitates access to its models through AWS Bedrock. The competition in the API market appears to be closely contested, with OpenAI's API revenue estimated between $1.2 billion and $1.5 billion, while Anthropic's is around $800 million. This smaller gap indicates that Anthropic's strategic partnerships are yielding significant results. Both companies face substantial capital requirements, underscoring the challenges of competing in the foundation model space. As they strive for profitability, they are likely to focus on reducing inference costs, potentially increasing subscription prices, and shifting their compute strategies to manage costs more effectively. In summary, the financial trajectories of OpenAI and Anthropic illustrate the dynamic nature of the AI industry, characterized by rapid growth, significant capital needs, and the critical role of distribution and partnerships in driving revenue.

Consumers now have subscriptions for everything — streaming services, software, and grocery delivery. App subscription fatigue is about to get even worse with AI. Major tech companies are using the AI boom to push consumers toward pricier subscriptions. They're also using consumers' data to help train various gen AI tools, meaning the consumers are effectively paying for these tools twice.

OpenAI is in discussions to raise several billion dollars in a new funding round led by Thrive Capital that would value the company above $100 billion, with Microsoft also expected to participate.

OpenAI and Anthropic are two prominent players in the artificial intelligence sector, and recent reports have shed light on their financial performance and revenue growth. As both companies are rumored to be seeking new financing rounds, understanding their revenue metrics becomes crucial. As of August 2024, OpenAI is projected to have an annualized run rate revenue of approximately $3.6 billion, a significant increase from around $1.6 billion at the end of 2023. The company anticipates reaching a total revenue of $3.7 billion for 2024, with estimates suggesting it could end the year with a run rate between $5 billion and $5.2 billion. This growth represents a remarkable year-over-year increase of 225%. Looking ahead, OpenAI aims for $11.6 billion in revenue by 2025, which would mark a 213% increase from the previous year. The revenue breakdown for OpenAI indicates that a substantial portion comes from ChatGPT subscriptions, projected to generate about $2.7 billion, accounting for roughly 73% of total revenue. This segment has seen impressive growth, with around 10 million subscribers on the ChatGPT Plus plan and an additional 1 million on higher-priced plans. The API segment contributes about $1 billion, representing 27% of revenue, with growth rates between 200% and 225%. However, OpenAI is expected to incur significant losses, estimated at around $5 billion this year, primarily due to high operating costs and the nature of its subscription model. In contrast, Anthropic is expected to reach an annualized run rate revenue of $1 billion by the end of this year, reflecting a staggering 900% increase from approximately $100 million at the end of 2023. Anthropic's revenue is more heavily weighted towards its API offerings, particularly through partnerships with third-party platforms like Amazon. The revenue breakdown shows that 60-75% comes from third-party APIs, while direct API sales account for 10-25%, and Claude chatbot subscriptions contribute about 15%. Despite both companies facing substantial losses—around $2 billion for Anthropic—there are notable differences in their revenue strategies. OpenAI's dominance in the consumer market is evident, with ChatGPT significantly outpacing Anthropic's Claude in revenue generation. ChatGPT is projected to bring in about $2.7 billion, compared to Claude's estimated $150 million, highlighting the importance of distribution and market presence. The competition in the API market appears to be closer than expected, with OpenAI's API revenue estimated between $1.2 billion and $1.5 billion, while Anthropic's is around $800 million. This smaller gap suggests that Anthropic's strategic partnerships, particularly with AWS, are yielding substantial results. Both companies face enormous capital requirements to sustain their operations and growth. The reported fundraising efforts indicate that the landscape for foundation models is becoming increasingly competitive, with only a handful of players capable of maintaining a foothold in the market. As they strive for profitability, trends such as reducing inference costs, potential price increases for consumer subscriptions, and shifts in computing strategies are likely to shape their future trajectories. In summary, the financial metrics of OpenAI and Anthropic reveal a dynamic and rapidly evolving landscape in the AI industry, characterized by significant growth, competitive pressures, and the necessity for substantial investment to support ongoing development and market expansion.

OpenAI has released a set of code for its rules based rewards for language model safety project. It includes some data they used for training.

Salesforce is overhauling its AI strategy, introducing generative AI tools for tasks without human supervision and revising its pricing model to $2 per AI-driven conversation. This shift aims to address investor concerns about AI-induced job losses impacting subscription-based revenues. The new AI tools offer higher efficiency and autonomy compared to traditional copilots and chatbots.

OpenAI is restructuring its management and organization to attract major investors like Microsoft, Apple, and Nvidia while aiming for a $100 billion valuation. The company faces internal conflicts about its mission and safety practices, leading to significant staff turnover, including key researchers joining rivals like Anthropic. Despite growing revenues and user base, OpenAI grapples with balancing profit motives and ethical concerns in advancing AI technologies.

In a recent interview, Microsoft CTO Kevin Scott expressed confidence that large language model "scaling laws" will continue to drive AI progress, countering skepticism about diminishing returns.

OpenAI announced a new AI model yesterday called GPT-4o that can converse using speech in real time, read emotional cues, and respond to visual input. It will roll out over the next few weeks for free to ChatGPT users and as a service through API. Paid subscribers will have five times the rate limits of free users. The API will feature twice the speed, 50% lower cost, and five times higher rate limits compared to GPT-4 Turbo. A 26-minute long video that introduces GPT-4o and demonstrates its abilities is available in the article.