OpenAI is Lyft
First to market doesn’t mean first place in market.
Back in 2007, the US housing market was about to fall off a cliff, and “Irreplaceable” by Beyoncé was the song of the year. Most people didn’t have smartphones, and you still had to pick up a phone to call a cab after having one too many drinks. (Let’s be honest: most people didn’t.)
Then came Zimride, a Facebook-based ride-share service founded by John Zimmer, an analyst at Lehman Brothers, and Logan Green, a student at UC Santa Barbara. It was inspired by Green’s travels to Zimbabwe, where carpooling services were common.
Zimride eventually became Lyft, which today most people think of as a less successful competitor to Uber, the ride-hailing service that came out in 2009. Despite being first to market, Lyft now has a fraction of Uber’s market share.
OpenAI may face a similar fate. An early entrant that got beat at its own game. Not your first choice but the cheaper alternative. The one that doesn’t become a verb.
Let’s look at OpenAI’s signature product, ChatGPT. Its chatbot hasn’t proved to be any better than others. Truly, none of the chatbots have demonstrated they have any secret sauce. If you found somebody who’s been living under a rock for the past five years and asked them to use ChatGPT, Claude, Gemini, or Perplexity, I don’t think they’d be able to tell you which one has the most resources; they’re all more similar than they are different.
As a journalist, I’ve tried to use chatbots as an alternative to Google, but found myself reinvesting some of the time I saved by fact-checking its answers. Perplexity, a smaller competitor to OpenAI’s ChatGPT, at least has citations next to each statement, which makes the fact-checking step easier.
Uber is bigger because it successfully expanded globally and into other types of services, like food delivery. Lyft decided to stay Stateside and focused on US market domination, which it has yet to achieve. In other words, Lyft failed because Uber was better at identifying synergies and what consumers wanted.
So far, OpenAI has not shown that it’s particularly good at those things. Frankly, OpenAI should consider itself lucky if it reaches a similar fate to Lyft in 10 years. Lyft is still a useful, relevant, and profitable product even if it is underperforming its peers. Personally, I’m still not convinced generative-AI technology will be any of those things a decade from now.
