The OpenAI graveyard: All the deals and products that haven't happened (forbes.com)

by dherls 199 comments 241 points
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199 comments

[−] Hansenq 44d ago
Lots of critiques here! Something missing in this discussion is people asking _why_ it is that they're doing this. The people who work there aren't stupid!

I think this is a disconnect between people who think that large companies are static entities with established products vs. large companies that still operate like a startup and are trying to grow. When you're building your business from $0 in revenue, you don't know what will work! You try different things, you [launch over and over again](https://www.ycombinator.com/library/6i-how-to-launch-again-a...)...all in hopes of something that works, sticks, and starts to grow.

In every example here, I see OpenAI trying something new, hoping it will grow, and shutting it down after it doesn't. Sora is the pre-eminent example of this. They make news, but you don't talk about the things they launch that successfully grow!

OpenAI isn't shutting down Codex or ChatGPT, because those were launches that they did that actually worked! When you go look at the tweets and communication from OpenAI employees when ChatGPT launched, nobody was sure that it would work. But it did. And if they hadn't launched, we would have never known how valuable it was.

All that is to say...you don't know what will work until you launch. Most things fail, and it's correct to shut them down. But focusing on the products that haven't worked instead of the products that have gets you more clicks, but actually depresses innovation by making future launches less likely.

[−] piker 44d ago
People are much more willing to give the benefit of the doubt on things like that when the flagbearers of your industry aren't running around sucking all of the oxygen out of the system and telling people things are "solved": that your product will obsolete them in the next 6-12 months.

We get it. They say that stuff to raise money, make sales and keep the party going. But don't expect too much sympathy when the strategy falters a bit.

[−] lefty2 44d ago
Sora was losing 15M a day and it was running at least 3 months, so that's a total 1.3 Billion. That's a pretty expensive experiment. It sounds like a company with lots of VC to burn and no discipline. Even Jensen Huang accused them of lack of discipline in business approach.
[−] notahacker 44d ago
Yeah. $1.3B isn't scrappy startup pivots, it's the sort of money Google/Meta/Microsoft/Yahoo/Salesforce burn on strategic acquisitions. And those entities absolutely get and deserve the sneers when they "sunset" the product 6-18 months later having concluded that it wasn't even showing enough signs of being a market they should bother with keeping the lights on. At least Sora was novel and technically impressive, I guess.
[−] pyronite 44d ago
Do you have a source for any of this?

I’d previously heard 1M a day.

[−] GCA10 44d ago
Ah, but when you're little, if each misstep annoys a few early users who hit a dead-end with your project, the longer-term reputational damage is trivial. You've still got 99.999% of the TAM (total addressable market) that is ready to be charmed by something new, with no negative vibes in their mind.

As you get bigger, serious numbers of people get annoyed at dealing with a company that keeps inviting us into the Roach Motel of doomed products and features. Big case in point was Google's spree, a few years back, in terms of launching big new services/features that soon afterward got shut down. Great training ground for ambitious PMs; miserable user experience.

Somewhere between the death of Google+ and the demise of Google Hangouts, even folks like me began thinking: Why should I engage with new Google stuff if it's likely to be blown up in a few years, leaving me with buried IP from whatever I tried to do?

[−] aworks 44d ago
I bought a cheap Samsung phone. And it sucked. So I bought the new Pixel and it's so much better. I'll probably never buy a Samsung phone again.

I was disappointed Google killed Reader but I pivoted. Otherwise, Google's reputation for me is fine-ish.

[−] groby_b 44d ago

> When you're building your business from $0 in revenue, you don't know what will work!

When you announce a post money valuation of $852 billion, you should probably be a bit better at figuring out what works, though. You're not a scrappy startup any more, even if you like cosplaying as one.

[−] chromacity 44d ago
I'm not sure your criticism is quite fair. I think everyone here is willing to cut more slack to the underdog. But when your company represents an outsized chunk of the digital economy and employs 10k+ people, and only then says "sooo, let's try to build some sort of a profitable product here", I can see why people are rolling their eyes.

OpenAI also burned a lot of goodwill by pretending to be a nonprofit foundation focused on the betterment of mankind and then executing one of the most spectacular rugpulls in modern history. So yeah, people will be giving them a hard time even if it turns out that the valuation is justified.

[−] jamiek88 44d ago
And literally boasted how it was going to obsolete white collar workers. Like of course most people are cheering for its failure.
[−] port11 43d ago
I’ll cheer for the failure of anything Altman does, and I’m not usually so antagonistic to a CEO.

If they spin-off Codex, I’ll buy; but would never fund anything where he’s involved. My .02

[−] TulliusCicero 44d ago
Companies with non-stupid people can still do stupid things.

I think the issue with the experimentation is that they still don't have an obvious golden goose yet. Google has been able to fuck around with experiments because search/ads are always still there to carry the team and provide an infinite money spigot, even if the experiments mostly fail. But OpenAI doesn't really have an equivalent for that.

[−] df2sdf 44d ago
Or perhaps they lucked into chatGPT and the true prowess of the product function is being laid bare. They've had many failed projects now: that shopping stuff, a web browser, Sora.. the success they are having from Codex wasn't an original idea but a classic-case of copying. Have they run out of steam?

Very much possible. What has come out of Meta organically besides Facebook? Its valuation comes predominantly from the assets they acquired + investments yet to be made that build on the acquired assets.

Google is similarly iffy with product development. OAI is better still, marginally, in terms of delivering a more polished experience.

Also I do regard them stupid, simply because they are not following wisdom that was shared decades ago by someone with an incredible batting average when it comes to innovation: start with the customer experience and work backwards to the technology.

[−] bandrami 44d ago
Enron employed a lot of smart people too. So did Bear Stearns. Smart people given bad incentives can create huge messes.
[−] aworks 44d ago
Dumb people given bad incentives can be even worse. No politicians come to mind...
[−] GorbachevyChase 44d ago
You can also get the reputation as an unreliable vendor. I would put Google in this category.
[−] pseudohadamard 44d ago

  Something missing in this discussion is people asking _why_ it is that they're doing this. The people who work there aren't stupid!
They have infinite amounts of investor money to burn and no obvious way forward. TFA's line about "spaghetti at the wall" pretty much summed up what happens in that situation.

And in terms of "the people who work there aren't stupid", you can have technically talented people who are very good at their specific thing and hopeless at anything else, a friend of mine once summed it up as "the dumbest smart people I ever met". This is why you need skilled management to let them do their thing but also steer them in the right direction as they're doing it. From the descriptions of OpenAI it's kinda rudderless apart from the one-man hype machine at the top.

[−] protocolture 44d ago

>The people who work there aren't stupid!

They very nearly gave Elon Musk a controlling interest in the company. Their justification for not doing so was entirely vibes based. "Stupid" is a broad categorization, someone can be smart in some areas and do dumb things. You shouldn't let your personal appraisal for someones talent color the actual results they produce.

[−] raincole 44d ago

> GPT-4o

Why is this on the list? Like... what? How about including GPT 3.5 and GPT 2 here too?

[−] adrian_b 44d ago
In TFA it is put on the list because some of the users of this GPT version were discontent with its cancellation, which caused even OpenAI to oscillate in its decision, so they first cancelled it, then they resurrected it and then they cancelled it permanently, probably because continuing to run it would have cost more than the generated revenue.

Nothing similar happened when the earlier, presumably worse versions were discontinued.

[−] aerhardt 44d ago
It's Forbes, lads.
[−] kingleopold 44d ago
Gemini models even in last month add this 4o to any text I can bet that that is added by Gemini :D
[−] bcooke 44d ago
They’ve lost a whole lot of people in prominent roles over the past few years. I wonder how much of the misfires and general thrash in product direction is a result of brain drain and/or so many hands changing. Or maybe I’m confusing cause and effect… hard to tell
[−] guzfip 44d ago
That’s pretty crazy, I swear it wasn’t that long ago these companies were about the only people hiring and the comp packages looked absolutely deranged.

For a brief moment I regretted wasting any time of my life on anything but ML research. But I guess the bigger they come…

[−] yanis_t 44d ago
It's missing the voice mode that never reached the level they demoed, and then gradually went to shit from that.
[−] 6thbit 44d ago
OpenAI is growing fast, pivoting is only to be expected. It would normally be something HN folk would typically value and encourage on startups.

They have clearly been lacking focus and now finally they seem to be working towards a narrower direction, which is usually highly valued by investors.

This article doesn't explore the depth of the decisions and only regurgitate what you may find your neighbor complaining about on X but with a better stylesheet.

[−] cmiles8 44d ago
This is important context in the wake of yesterday’s “raise” announcement. A lot of this stuff seems to just quietly never happen once the ink on the PR puff dries.

The AI industry increasingly looks in scramble mode to keep the hype going as those storm clouds of financial and business reality get darker and darker on the horizon.

[−] cj 44d ago
For a company bringing a new technology from zero to mainstream, I think it's pretty normal that there will be a lot of failed attempts at productization.

The thing that isn't normal is the degree of experimentation relative to company valuation. Normally once a company reaches $700 B+ valuation, they've figured out their product and monetization strategy. ChatGPT is clearly still iterating heavily on that - not normal for a company that size.

[−] mandevil 44d ago
And not normal for a company that has been at it this long.

The Apple II went on sale on June 10th, 1977. Visicalc went on sale October 17th, 1979- 860 days separate the two. ChatGPT was opened to the public on November 30th, 2022, which was 1219 days ago- almost 50% more time has elapsed than between the Apple II and Visicalc.

[−] ianbutler 44d ago
Without me trying to be snarky why do you feel spreadsheet software launching is comparable to this scenario?
[−] mandevil 44d ago
Visicalc is often described as the killer app of the first generation Personal Computer(1). It was the product that drove them into every small business in the country, that blew up sales of personal computers and brought them out of the realm of hobbyists into enterprise. And, honestly, I think Visicalc and spreadsheets are still a greater benefit than what I've seen out of generative AI today. And that happened a lot faster than where we are today with generative AI. Apple had enormous actual profits by 1980 (Apple IPO'd in 1980 with a 21% operating margin). So I think that a lot of the "just got to give it more time" argument misses that the previous computer based revolutions that we know about productized and threw off gobs of cash a heck of a lot faster than this one has.

If the end result of this is "certain classes of white collar workers are 10-25% more productive" (which is the best results I can extrapolate from what I've seen so far) then it's really hard to imagine how OpenAI can return a profit to their investors.

1: https://en.wikipedia.org/wiki/VisiCalc#Killer_app is pretty much the normal narrative on Visicalc and its importance to the Personal Computer.

[−] ApolloFortyNine 44d ago

>If the end result of this is "certain classes of white collar workers are 10-25% more productive" (which is the best results I can extrapolate from what I've seen so far) then it's really hard to imagine how OpenAI can return a profit to their investors.

If we take this as face value, and say that the absolute best case scenario is there are literally no other uses for AI but helping programmers program faster, given 4.4 million software devs, with an average cost to the company of $200,000 (working off the US here, including benefits/levels/whatever should be close), those 4.4 million devs with 20% productivity would save roughly 176 billion dollars a year.

Some companies will cut jobs, some will expand features, but that's the gist. And it's hard not to see the magnitude of improvement that's come in just 3 years, though if that leads to a 'moat' is yet to be seen.

[−] notahacker 44d ago

> If we take this as face value, and say that the absolute best case scenario is there are literally no other uses for AI but helping programmers program faster, given 4.4 million software devs, with an average cost to the company of $200,000 (working off the US here, including benefits/levels/whatever should be close), those 4.4 million devs with 20% productivity would save roughly 176 billion dollars a year.

I don't think that's necessarily out of line with struggling to return a profit to investors though: an individual company is only ever going to capture a tiny fraction of the productivity improvements it enables its customer base to make[1], its own cost base is unusually high for tech, and investors are seeking a 10x+ return on an $852B valuation for a company that isn't even the market leader in that segment (which isn't the only segment, but it's the optimum B2B one). You can have a great business with a great value proposition and a sustainable moat and still not generate the desired returns on investment at a $852B valuation.

[1]and that's productivity improvements over the best-known free models, not productivity improvements over reading StackOverflow

[−] ianbutler 44d ago
Thanks for the in depth explanation. I was definitely not up on my tech history here. :)
[−] mandevil 44d ago
Sorry, I forgot that for many engineers this is, in fact, their first time going through a technology cycle like this, and so would need more explanation. I am too young for Visicalc myself, but the cycle that I saw while I was in high school- the dot-com bubble- doesn't have convenient, easy to mark out dates like the PC does.

Thinking... Thinking... Tim Berners-Lee proposing HTTP in 1989 is kinda like the original Attention is All You Need paper, I guess? Netscape 1.0 release in December 1994 is ChatGPT 1.0? And then Amazon.com opened up to the public in July 1995 and then IPO'd in May 1997 (after raising less than 10 million dollars in two funding rounds). But once again we have the business side of these previous cycles moving much faster than this one.

[−] ianbutler 44d ago
Yeah I started programming in 2006 as a kid and then entered professional work in 2016 I guess as still a kid depending on your perspective :P

This is really the first meteoric rise in tech I've seen / am experiencing first hand.

[−] mandevil 44d ago
All I will say is make sure to enjoy your knees while they don't hurt, whippersnapper.
[−] piker 44d ago
WOW. That does really drive home the perspective. I was an adolescent during those years and it did seem quick then, but that's an insane pace in retrospect.

Amazon is perhaps a counter-example to your point, though, to be fair. It seems to me they did a lot of spaghetti throwing while making accounting losses for a good number of years. Granted, they did it on OpenAI's dining budget.

[−] df2sdf 44d ago
"It seems to me they did a lot of spaghetti throwing while making accounting losses for a good number of years."

They actually didn't. They knew what they were doing. Bezos had a proper background in Finance, unlike Altman.

[−] bombcar 44d ago
I took it the other way, spreadsheets shook up the world way more than AI has (to date) - it's possible that history will look back and count AI as the bigger "thing" but if I had to pick a killer app, VisiCalc and computer spreadsheets in general would beat ChatGPT.
[−] aworks 44d ago
Good link from the other day about spreadsheet impact on business https://davidoks.blog/p/how-the-spreadsheet-reshaped-america
[−] taco_emoji 44d ago
Visicalc is widely regarded to be the first "killer app" for the Apple computer. Perhaps even the first "killer app" period.
[−] Marazan 44d ago
VisiCalc was the killer app.
[−] zozbot234 44d ago
VisiCalc was "the" killer app for early micros, but being able to edit a written text on screen and then print it out with letter-like quality was nothing to sneeze at, either. This was plausibly a key gain in efficiency for the service sector, perhaps comparable to the 10%~25% that's now being talked about re: LLM's (which is huge on a secular basis).
[−] ianbutler 44d ago
Ah got it. I wasn’t drawing that connection. Thanks
[−] skydhash 44d ago
IMO, the AI companies are trying to be both T-Mobile and Google Doc at the same time. Even Apple is struggling with being both the platform and the product. The issue with OpenAI is that the platform has no moat (other than money) and the product can be easily copied. In the game console world, the platforms have patents and trademarks, and games are not easily produced.
[−] beachy 44d ago
The Apple II was so simple (by today's standards) that it came with a complete printed circuit diagram. Visicalc was so simple it was written by two guys in a year.

AI is so many orders of magnitude more complex that the comparison is not really useful.

[−] convexly 44d ago
For most companies an $850B valuation means you figured out the business model. Here it seems to mean you convinced enough people that figuring it out is inevitable. Those are very different bets.
[−] aworks 44d ago
I'm curious how long it took Google to reach that valuation.
[−] gbibas 44d ago
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[−] ai-x 44d ago
Which is a good thing. Elon has showed the world, the only thing that limits the upper bound is bureaucracy, extreme risk-averse and no culture for experimenting.

More and more companies will start operating on the correct reward/risk curve or else getting crushed by firms who do. OpenAI has forced Google, Apple, Meta out of their comfort zone because they know OpenAI will eat their lunch

[−] dgellow 44d ago
Anthropic does look healthier, with their enterprise focus. Or am I missing something?
[−] sharadov 44d ago
The circular deals are getting old - it's like rearranging the chairs on the Titanic's deck.
[−] xnx 44d ago
OpenAI != The AI industry

OpenAI has stagnated technologically, and is a financial zombie, but that's not true for every part of the industry. Once these early movers flame out, there will be more stability with Google, Microsoft, and AWS.

[−] therobots927 44d ago
All the “raises” consist of “committed capital” and all of the revenue is annualized.

Welcome to dot com 2.0

[−] nacozarina 44d ago
sell the roadmap, deliver a sku, sell/comp consulting services on escalations

the silicon valley shuffle, tried & true

[−] mtrifonov 44d ago
The pattern with most of these is they optimized for the demo, not the sustained interaction. Making an AI impressive for 5 minutes is easy. Making it feel like a presence that belongs in your daily life, knowing when to talk, what to remember, what to forget. That's a completely different engineering problem.
[−] Mistletoe 44d ago
Has there ever been a period o time where people saw a bubble coming and that we were in one, but it just inexorably refused to pop/drug out this long? This isn’t a rhetorical question, I’m wondering how this period compares to other irrational periods of the economy like railroad fever etc.
[−] nope1000 44d ago
What they really should focus on is making those models more efficient. With them most likely losing money on inference (+model training + salaries + building data centers), I can't see why they would want more compute and more products, since more tokens spent is actually bad for them.
[−] bigbuppo 44d ago
And if Forbes is reporting this, that means the actual movers and shakers were talking about this months ago.
[−] woah 44d ago
My guess is Sam Altman is a better VC than CEO. Better at hype, networking, fund raising, and back room political hijinks than shipping a focused product

He seems to be trying to take almost a "venture studio" approach by throwing shit at the wall, but the problem with these things is always that the "internal startups" are "founded" by people who don't have enough incentive or control over their product to perform as well as an actual startup, and are distracted by internal politics. And frankly, it may also be that the really good founders will just do their own startup vs working on a quasi-startup inside a large org so there's some selection bias as well.

[−] yalogin 44d ago
The stargate, nvidia and amd deals are all linked together and the fallout is not public. Nvidia and amd stock seems to not care about it at all. Oracle fired 30000 employees, not sure if it’s to fund that initiative or a fall out of that
[−] wpferrell 44d ago
Had to move away from this thing. Claude is so much better. In every respect.
[−] jexe 44d ago
I'm not an OAI fanboy by a longshot - but I'd view lots of experiments that didn't work out as a healthy thing, especially for a company trying to find footing in a new industry.
[−] moron4hire 44d ago
"Disney’s then-CEO Bob Iger... was sold on Sora, too. He lauded Altman’s ability to “look around corners”..."

WTF is that supposed to mean? I'm sorry, maybe I'm being dense. I can't figure out what "look around corners" is supposed to mean. "Think outside the box," I guess? Why "look around corners?"

I mean, maybe I do get it. Altman has a weird face that looks like you can't predict where his eyes are based on where his head is. "Shifty," one might say. But I doubt that's what Iger meant.

It's dumb. It's dumb corporate speak. I'm so sick of this kind of stuff getting a pass. We used to bully people over using the word "synergy." Let's make america anti-corporate-weasel again.

[−] crispyambulance 44d ago
I think the VC/investor community needs to take A LOT of blame here. They've created an insane rush to financialize everything to moon at the drop of a hat.

I mean, even Andresson-Horowitz was taking NFT's seriously as though they weren't a scam only a few years ago (https://a16z.com/the-nft-starter-pack-tools-for-anyone-to-an...).

These people are also looking (and funding) quantum computing companies as though quantum computing is right around the corner after AGI.

They need to cool their jets. AI is certainly a worthwhile and super important development, but it's still possible to go overboard with it.

[−] xnx 43d ago
I'd add Whisper to the list. Hasn't been updated in 4 years.
[−] EGreg 44d ago
So is OpenAI on track to overtake Google for discontinuing projects?
[−] andrewstuart 44d ago
The future of ChatGPT maybe well be as a Microsoft product.
[−] TimLeland 44d ago
Unfortunately I would bet OpenClaw will be on the list soon
[−] MisterTea 44d ago
Who is the person in the portrait at the top of the page?
[−] ipaddr 44d ago
Why sunset sora instead of raising the price 100x?
[−] irishcoffee 44d ago
I asked an LLM today to take a word document and a PowerPoint template to “convert” the docx to a ppt. It asked some good questions like “it looks like this template is a title slide and content slide only, would you like all the content on the content slide?”

“Yes” I said, slightly impressed. It then asked me to clarify the subheadings, which were correct.

“Cool, this seems neat” I mused.

It generated the PowerPoint. There was not a single word on it from the docx, the header slide was devoid of words, and the 6 following content sliders were identical, and empty of words.

I suppose it’s cool that it used the correct template.

I did the work manually in 10 minutes after waiting around and responding to an LLM for 15.

What a fucking joke. “AI” is a term that we really need to stop fucking using.

[−] Divisibly3 43d ago
What happened to that Jonny Ive thing?
[−] 6510 44d ago
Before he left I use to enjoy enraging a manager several layers above me. In one instance I explained that asking us to cut a few corners to get things done was fine, usually we can figure out acceptable ways of doing it. But then, it is your job to take those fake numbers and figure out how we are doing. No matter how much effort you make if bullshit goes in you know what will come out.

Now imagine an entire economy working like that. Like say, LLM's are good enough to run entire companies but you don't get to run a company because you are good at it. LLM's can perfectly manage employee schedules but the real job is more like marriage counseling or group therapy. Somewhere along the road we forgot which jobs make the economy go. They are probably the ones with the lowest salaries as those lack the effort of conjuring the job into existence.

Humanity needs obvious things cloths, food, housing, transportation etc but that isn't where the money is. The people cooking the books have the money and they are looking for something like a book cooking book. The market for openAI will be in lying convincingly for the benefit of the investor. Reality must be auctioned off like domain names or search engine placements. Altman is really the perfect guy for the job no one wants. ha-ha

Alternatively we could humble ourselves, ask the Chinese how reality works and attempt to steal their fu. It's just a thought.

[−] TimLeland 44d ago
Unfortunately I would bet OpenClaw is going to be on the list soon
[−] toolpipe_dev 44d ago
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[−] clawfund 44d ago
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[−] guzfip 44d ago
Lying is a virtue.