The vibes are off at OpenAI

OpenAI is in a relatively precarious position. The company is and has been a funding behemoth — just over a week ago, it closed $122 billion in funding at a post-money valuation of $852 billion. It’s potentially planning for an IPO later this year. ChatGPT’s longtime lead in consumer-facing AI led it to name-brand status akin to “Kleenex” for tissues. But in recent months, a slew of executive reshufflings, discontinued projects, and other news has raised questions about how stable the company really is — and how long it may be able to stay on top.

OpenAI’s current batch of public controversies started early in the year. At the end of February, the company agreed to an apparently expansive Pentagon contract that its competitor Anthropic had refused to sign out of concerns about autonomous weapons and domestic mass surveillance. The move created controversy both internally and externally, and even CEO Sam Altman acknowledged OpenAI had come off as “opportunistic and sloppy.”

Then came the product announcements. Last month, OpenAI unexpectedly announced it would discontinue Sora, an AI video-generation app that it had planned to roll into ChatGPT. It exited its Disney partnership so rapidly that the companies had reportedly been working together just 30 minutes before Disney found out about the shutdown. The company said it was shelving long-gestating plans for the ability to sext with ChatGPT last month as well. “We cannot miss this moment because we are distracted by side quests,” OpenAI’s Simo reportedly told employees last month, as the company announced it would pivot to focusing on enterprise and coding tools. Even its once-heralded Stargate data center project may have largely stalled.

Just last Friday, the company announced a laundry list of changes to its C-suite. Fidji Simo, OpenAI’s CEO of AGI deployment — who was until recently the company’s CEO of applications — is stepping away from her role “for the next several weeks” due to medical leave, with company president Greg Brockman stepping in to run the product organization and run its super app initiative. CMO Kate Rouch decided to depart to focus on her health. Brad Lightcap decided to leave his role as OpenAI’s COO to instead start a role “focused on special projects” and reporting directly to Altman.

At the start of this week, a piece in The New Yorker expanded on years of reports of Altman potentially misleading OpenAI’s board, former company executives, and even contemporaries in roles he held before co-founding OpenAI.

And later this month, OpenAI is scheduled to defend itself in a potentially nasty court battle with cofounder Elon Musk, whose suit against the company has already revealed extensive internal communications from its early days.

The barrage of recent changes, and headlines, have seemed to leave the company reeling — and looking to control its narrative. Last week OpenAI announced that it was acquiring TBPN, the online viral news show. Simo wrote that it made the deal to “help create a space for a real, constructive conversation about the changes AI creates—with builders and people using the technology at the center.” She wrote, “As I’ve been thinking about the future of how we communicate at OpenAI, one thing that’s become clear is that the standard communications playbook just doesn’t apply to us.”

OpenAI is vulnerable, especially as it nears its potential IPO. As investors pour in billions of dollars, all eyes are on its balance sheet. CFO Sarah Friar has reportedly expressed concerns that the company isn’t ready to go public as soon as Altman desires. There’s never been more pressure to generate revenue.

In the past, Altman hadn’t expressed much concern about when and how OpenAI would turn a profit; in 2024, reports suggested that the company didn’t expect to do so until 2029. At OpenAI’s annual Dev Day in October, Altman told reporters, “Obviously, someday we have to be very profitable, and we’re confident and patient that we will get there.” But he appeared defensive later that same month on a podcast appearance, when host Brad Gerstner told him “The single biggest question I’ve heard all week, and hanging over the market, is ‘How can a company with $13 billion in revenue make $1.4 trillion in spend commitments? You’ve heard the criticism, Sam.” Altman interrupted to respond, “First of all, we’re doing well more revenue than that. Second of all, Brad, if you want to sell your shares, I’ll find you a buyer. I just... Enough.” And in December, Altman reportedly announced that the company was declaring a “code red” amid competition to ChatGPT.

As the pressure builds to square OpenAI’s revenue with its nearly unprecedented spending, the company is looking to put its compute behind projects with the highest profit potential. It’s attempting to catch up to leading rival Anthropic’s current popularity in coding, while also facing significant competition from Google, since Gemini is well-integrated within Google’s ecosystem of apps and tools. It’s possible the company will find a way to pull ahead — but things may not be going as smoothly as Altman hopes.