A few times in a generation, a product comes along that catapults a technology from the fluorescent gloom of engineering department basements, the fetid teenage bedrooms of nerds, and the lonely man caves of hobbyists—into something that your great-aunt Edna knows how to use. There were web browsers as early as 1990. But it wasn’t until Netscape Navigator came along in 1994 that most people discovered the internet. There were MP3 players before the iPod debuted in 2001, but they didn’t spark the digital music revolution. There were smartphones before Apple dropped the iPhone in 2007 too—but before the iPhone, there wasn’t an app for that.
On Nov. 30, 2022, artificial intelligence had what might turn out to be its Netscape Navigator moment.
The moment was ushered in by Sam Altman, the chief executive officer of OpenAI, a San Francisco–based A.I. company that was founded in 2015 with financial backing from a clutch of Silicon Valley heavy hitters—including Elon Musk, Peter Thiel, and fellow PayPal alum and LinkedIn cofounder Reid Hoffman. On Nov. 30, some seven years after the company’s launch, Altman tweeted: “today we launched ChatGPT. try talking with it here,” followed by a link that would let anyone sign up for an account to begin conversing with OpenAI’s new chatbot for free.
And anyone—and everyone—has. And not just to chat about the weather. Amjad Masad, a software CEO and engineer, asked it to debug his code—and it did. Gina Homolka, a food blogger and influencer, got it to write a recipe for healthy chocolate-chip cookies. Riley Goodside, an engineer at Scale AI, asked it to write the script for a Seinfeld episode. Guy Parsons, a marketer who also runs an online gallery dedicated to A.I. art, got it to write prompts for him to feed into another A.I. system, Midjourney, that creates images from text descriptions. Roxana Daneshjou, a dermatologist at Stanford University School of Medicine who also researches A.I. applications in medicine, asked it medical questions. Lots of students used it to do their homework. And that was just in the first 24 hours following the chatbot’s release.
There have been chatbots before. But not like this. ChatGPT can hold long, fluid dialogues, answer questions, and compose almost any kind of written material a person requests, including business plans, advertising campaigns, poems, jokes, computer code, and movie screenplays. It’s far from perfect: The results are not always accurate; it can’t cite the sources of its information; it has almost no knowledge of anything that happened after 2021. And what it delivers—while often smooth enough to pass muster in a high school class or even a college course—is rarely as polished as what a human expert could produce. On the other hand, ChatGPT produces this content in about a second—often with little to no specific knowledge on the user’s part—and a lot of what it spits out isn’t half bad. Within five days of its release, more than 1 million people had played with ChatGPT, a milestone Facebook took 10 months to hit.
Artificial intelligence technology has, over the past decade, made steady inroads into business and quietly improved a lot of the software we use every day without engendering much excitement among non-technologists. ChatGPT changed that. Suddenly everyone is talking about how A.I. might upend their jobs, companies, schools, and lives.
ChatGPT is part of a wave of related A.I. technologies collectively known as “generative A.I.”—one that also includes buzzy art generators like Midjourney and Lensa. And OpenAI’s position at the forefront of the tech industry’s next big thing has the hallmarks of a startup epic, including an all-star cast of characters and an investor frenzy that has crowned it with a reported valuation of $29 billion.
But even as its recent surge provokes envy, wonder, and fear—Google, whose lucrative search empire could be vulnerable, reportedly declared an internal “code red” in response to ChatGPT—OpenAI is an unlikely member of the club of tech superpowers. Until a few years ago, it wasn’t a company at all but a small nonprofit lab dedicated to academic research. Lofty founding principles such as protecting humanity from the dangers of unrestrained A.I. remain. At the same time, OpenAI has gone through an internal transformation that divided its original staff and brought an increased focus on commercial projects over pure science. (Some critics argue that releasing ChatGPT into the wild was itself dangerous—and a sign of how profoundly OpenAI’s approach has shifted.)
I think the good case [for A.I.] is just so unbelievably good that you sound like a crazy person talking about it. I think the worst case is lights-out for all of us.
Sam Altman, cofounder and CEO of OpenAI, speaking at a venture-capital-focused event in San Francisco on Jan. 12
An expanded partnership with Microsoft, announced this week, that includes as much as $10 billion in new capital could result in the software giant capturing the lion’s share of OpenAI’s profits for years to come. That deal is likely to deepen the perception that the once idealistic endeavor is now primarily concerned with making money. That said, documents seen by Fortune reveal just how unprofitable OpenAI’s business is currently.
Altman, the 37-year-old cofounder and CEO, embodies OpenAI’s puzzling nature. A serial tech entrepreneur known more for business savvy than for feats of engineering, Altman is both the architect of OpenAI’s soaring valuation and its buzzkiller-in-chief—speaking out publicly about how far ChatGPT is from being truly reliable. At the same time, he sees the technology as a step forward in his broader, quixotic corporate mission to develop a computer superintelligence known as artificial general intelligence, or AGI. “AGI is probably necessary for humanity to survive,” Altman tweeted in July. “our problems seem too big [for] us to solve without better tools.”
It’s an unusual guiding philosophy for a moneymaking enterprise, especially considering that some computer scientists dismiss Altman’s obsession as the stuff of fantasy. “AGI is just silly,” says Ben Recht, a computer scientist at the University of California at Berkeley. “I mean, it’s not a thing.”
And yet, with ChatGPT, Altman has turned OpenAI—and the broader A.I. mission—into the thing captivating the tech world. The question is whether the partnership he has forged with Microsoft can fix ChatGPT’s flaws and capitalize on its early lead to transform the tech industry. Google and other titans are hard at work on their own A.I. platforms; and future, more polished software could make ChatGPT look like child’s play. OpenAI may someday find that, much like Netscape’s short-lived browser reign, its breakthrough has opened a door to a future it isn’t part of.
On a Thursday evening in mid-January in San Francisco, Altman makes a rare public appearance. Dressed in a gray sweater, blue jeans, and a pair of groovy, brightly colored tie-dyed sneakers, the CEO walks into a roomful of investors, techies, and journalists, all gathered to glean any dish about ChatGPT or the imminent funding round. When his interviewer, Connie Loizos, the founder of StrictlyVC, a media company focused on venture capital, asks him about the media furor, Altman replies, “I don’t read the news, and I don’t really do stuff like this much.”
The event, on the 46th floor of the Salesforce Tower, is standing room only. One of the speakers during a fintech panel that takes place before the interview even tells the crowd that she knows they’re “all waiting for Sam Altman.”
But despite the buzz, and the circulating rumors of the Microsoft investment, Altman seems to go out of his way to dampen the excitement. “One of the strange things about these technologies is that they are impressive but not robust,” he tells the crowd. “So you use them in the first demo; you kind of have this very impressive, ‘Wow, this is incredible and ready to go’ [reaction]. But you see it a hundred times, and you see the weaknesses.”
That kind of caution seems to be the official mode at OpenAI’s headquarters, situated in an old luggage factory in San Francisco’s Mission District. And indeed, if ChatGPT is A.I.’s Netscape Navigator moment, it is one that very nearly never happened—because OpenAI almost killed the project months ago.
The chat interface that allows users to converse with the A.I. in plain English (and many other languages) was initially conceived by OpenAI as a way to improve its “large language models,” or LLMs. Most generative A.I. systems have an LLM at their core. They are created by taking very large neural networks—an A.I. based very loosely on connections in the human brain—and applying them to vast amounts of human-created text. From this library, the model learns a complex map of the statistical likelihood that any group of words will appear next to one another in any given context. This allows LLMs to perform a vast array of natural language processing tasks—from translation to summarization to writing.
OpenAI had already created one of the world’s most powerful LLMs. Called GPT-3, it takes in more than 175 billion statistical connections and is trained on about two-thirds of the internet, all of Wikipedia, and two large data sets of books. But OpenAI found it could be tricky to get GPT-3 to produce exactly what a user wanted. One team had the idea of using reinforcement learning—in which an A.I. system learns from trial and error to maximize a reward—to perfect the model. The team thought that a chatbot might be a great candidate for this method since constant feedback, in the form of human dialogue, would make it easy for the A.I. software to know when it had done a good job and where it needed to improve. So in early 2022, the team started building what would become ChatGPT.
When it was ready, OpenAI let beta testers play with ChatGPT. But they didn’t embrace it in the way OpenAI had hoped, according to Greg Brockman, an OpenAI cofounder and its current president; it wasn’t clear to people what they were supposed to talk to the chatbot about. For a while, OpenAI switched gears and tried to build expert chatbots that could help professionals in specific domains. But that effort ran into problems too—in part because OpenAI lacked the right data to train expert bots. Almost as a Hail Mary, Brockman says, OpenAI decided to pull ChatGPT off the bench and put it in the wild for the public to use. “I’ll admit that I was on the side of, like, I don’t know if this is going to work,” Brockman says.
The chatbot’s instant virality caught OpenAI off guard, its execs insist. “This was definitely surprising,” Mira Murati, OpenAI’s chief technology officer, says. At the San Francisco VC event, Altman said, he “would have expected maybe one order of magnitude less of everything—one order of magnitude less of hype.”
Courtesy of Matt Wilson/Comedy Central’s “The Daily Show”
ChatGPT isn’t OpenAI’s only hype generator. Its relatively small staff of around 300 has pushed the boundaries of what A.I. can do when it comes to creating, not simply analyzing, data. DALL-E 2, another OpenAI creation, allows users to create photorealistic images of anything they can imagine by typing just a few words. The system has now been emulated by others, including Midjourney and an open-source competitor called Stability AI. (All of these image generators have drawbacks, most notably their tendency to amplify biases in the data on which they were trained, producing images that can be racist and sexist.) By fine-tuning its GPT LLM on computer code, OpenAI also created Codex, a system that can write code for programmers, who only have to specify in plain language what they want the code to do.
More innovations wait in the wings. OpenAI has an even more powerful LLM in beta testing called GPT-4 that it is expected to re
