Early in its history, Uber faced a litany of lawsuits from taxi unions across America that accused it of operating illegally. It racked up losses for years as it focused on growth and market share over profit, losing $1.8 billion in the year before its IPO. Still, its promise of disruption and massive growth won investors over. And despite taking 14 years to turn a profit, Uber has beaten competitors like Lyft to come out not only as the clear winner in ride hailing but also a force in online food delivery.
OpenAI appears to be on the same path, albeit with some bigger numbers. It promises that its AI products will usher in a wave of world-shattering disruption that’ll boost productivity like it’s never been boosted before.
That’s not to say it has an easy road ahead. It faces a slew of copyright lawsuits that could gut its business. It’s racking up huge losses (it’s on pace to lose $5 billion in 2024 and as much as $14 billion by 2026), and its list of major competitors is growing. It’s also anticipating that the cost to train its models could rise to as much as $9.5 billion a year by 2026.
But despite counting the biggest names in tech as rivals, OpenAI has held its first-mover advantage. Its flagship product, ChatGPT, is the most popular chatbot with 250 million weekly users. Meta says its AI bot is used by 600 million people a month, but it relies on being heavily pushed to users on some of the internet’s most popular apps.
OpenAI is converting users into revenue: in October its CFO said that 75% of its business comes from consumer subscriptions. Since then, the company’s launched a new ChatGPT tier for $200 a month. If ChatGPT manages to become an everyday utility for enough people, OpenAI will be well positioned to steadily raise prices, as Uber did in ending the “millennial lifestyle subsidy.”
OpenAI appears to have taken some lessons from Uber’s struggles. Uber took more than a decade to start playing nice with taxis, the industry it stood poised to disrupt into oblivion. OpenAI, on the other hand, has struck massive licensing deals with media publishers like News Corp. and content goldmine Reddit. It’s also said to be flirting with the idea of throwing ads into ChatGPT, something Uber wishes it did before 2022, as its two-year-old ad division is already a $1 billion business.
Despite outcry and anxiety from workers and lawmakers, the tech industry seems more serious about genAI than the hype magnets that came before it (the metaverse, Web3). Barring a unique, not easily replicable killer product from a competitor like Google or Meta — which hasn’t happened — OpenAI’s lead will continue. And just as Uber is today used colloquially for any ride-sharing service, “ChatGPT” is already becoming de facto for “using a generative chatbot service.”
OpenAI is well on its way to becoming the Uber of AI.
