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Will OpenAI go the way of WeWork?

I think this comparison by Gary Marcus is overstated because OpenAI have a remarkable (if flawed) product whereas WeWork had commercial office space masquerading as a disruptive innovation. But the structural case he’s making here cannot be dismissed and it’s easy to imagine how as a slow unravelling could rapidly accelerate:

I said it before, and I will say it again: OpenAI could wind up being seen as the WeWork of AI. Huge operating losses, big staff expenses, an apparent morale problem, no GPT-5 yet, competitors catching up, Meta giving away similar tech for free, Microsoft cutting deals with competitors.

https://garymarcus.substack.com/p/the-openai-plot-thickens

It’s seemed glaringly obvious to me throughout this generative AI is both a remarkable technology and a hype cycle. I don’t see any contradiction between holding these two positions, which I have since the first presentation I did on this in February 2023, but perhaps other people disagree with me. My immediate practical concern is that increasingly desperate attempts to keep the bubble inflated will lead to panicked commercialisation strategies which eliminate what is remarkable and useful about this technology. Imagine the transition from 2010’s Twitter to 2024’s X taking place in a matter of months rather than years.

See also Ed Zitron’s claim that OpenAI will need to do the following to survive longer than the next two years:

  • Successfully navigate a convoluted and onerous relationship with Microsoft, one that exists both as a lifeline and a direct source of competition.
  • Raise more money than any startup has ever raised in history, and continue to do so at a pace totally unseen in the history of financing.
  • Have a significant technological breakthrough such that it reduces the costs of building and operating GPT — or whatever model that succeeds it — by a factor of thousands of percent.
  • Have such a significant technological breakthrough that GPT is able to take on entirely unseen new use cases, ones that are not currently possible or hypothesized as possible by any artificial intelligence researchers.
  • Have these use cases be ones that are capable of both creating new jobs and entirely automating existing ones in such a way that it will validate the massive capital expenditures and infrastructural investment necessary to continue.
https://www.wheresyoured.at/to-serve-altman/?ref=ed-zitrons-wheres-your-ed-at-newsletter

The relationship with Microsoft seems crucial following an investment which, as Ed memorably points out, took a strange form:

Semafor reports that, at least by November 2023, OpenAI had received “a fraction” of the $10 billion investment, which was (is?) delivered in tranches (stages), and that a “significant portion” of that money was in cloud compute credits, meaning that Microsoft’s investment was predominantly in the supposed value of a currency that can only be used on its own services. For those who don’t fully understand how weird this is, it’s like an airline investing in a company but, instead of providing cash, it hands over air miles. You can still travel, but you are locked into A) one airline and B) their interpretation of what one “mile” is actually worth.

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