International Finance

ChatGPT, Sam Altman & the OpenAI-Microsoft Deal

Many are seeing ChatGPT as a major technological breakthrough, and they are ready to invest in this innovation

Sam Altman has revolutionised the world of artificial intelligence and natural language processing with ChatGPT, a large language model developed by OpenAI.

ChatGPT, a chatbot launched by OpenAI in November 2022, has recently passed exams at a US law school in January 2023. It wrote essays on topics like constitutional law and taxation.

As per AFP reports, Minnesota University Law School professor Jonathan Choi gave ChatGPT the same test faced by his students. The chatbot had to answer 95 multiple-choice questions and 12 essay questions. The experiment was a part of a research paper titled “ChatGPT goes to law school”.

The bot scored an overall C+, just enough marks to pass the test. The bot was, however, near the bottom of the class in most subjects and failed in solving MCQs involving mathematics.

ChatGPT has also cleared the Wharton MBA exam, and the US law and medical licensing tests, thus forcing the New York City Department of Education to ban the bot out of the fear that the students may use ChatGPT to complete homework assignments, solve mathematical equations and write essays. The bot has also been banned in several public schools in Seattle. Top French university Sciences Po has also introduced a similar measure.

However, many are seeing ChatGPT as a major technological breakthrough, and they are ready to invest in this innovation.

China’s largest internet search engine Baidu is planning to debut a new AI chatbot service, rivalling ChatGPT and eyeing a March 2023 launch. As per Bloomberg, the AI will be embedded into Baidu’s primary search services, apart from having conversation-style search results. If Baidu meets the launch deadline, then it will beat Google in the race of launching the next big AI.

Feeling the pressure, Google has promised to invest in 20 AI projects. However, one may call this move a badly-timed one as the tech giant has been in the headlines for laying off 12,000 employees in January 2023.

What is ChatGPT?

ChatGPT is commonly called a Chat Generative Pre-Trained Transformer. The chatbot is built on top of OpenAI’s GPT-3 family of large language models, and is fine-tuned with supervised and reinforcement learning techniques. It was launched on November 30, 2022, after which, it quickly grabbed eyeballs by displaying its detailed, well-articulated responses across multiple disciplines of knowledge. However, it has a problem in the form of frequent factual inaccuracies.

Compared to a normal chatbot, ChatGPT can write and debug computer programs, compose music, teleplays, fairy tales, and student essays. It can also answer test questions, apart from writing poetry and song lyrics. Its other abilities include emulating a Linux system, simulating a chat room, playing games like tic-tac-toe and mimicking an ATM.

ChatGPT also remembers its previous prompts given in the same conversation. To prevent offensive outputs from being presented to and produced from the bot, queries get filtered through OpenAI’s moderation API (Application Programming Interface), dismissing racist/sexist prompts during a conversation.

As interesting as the ChatGPT sounds, equally interesting is the story of its emergence.

Samuel Altman & The Game-Changing Tie-Up With Microsoft

Samuel H. Altman, who heads OpenAI, is an American entrepreneur, investor, programmer and blogger.

After finishing his schooling at John Burroughs School, Samuel Altman studied computer science at Stanford University until dropping out in 2005. In 2017, he received an honorary degree from the University of Waterloo.

At the age of 19, Samuel Altman co-founded and became CEO of the location-based social networking mobile application Loopt, in 2005. After raising over USD 30 million from the market, Loopt was shut down in 2012 and was later acquired by the Green Dot Corporation for USD 43.4 million.

After Loopt’s failure, Samuel Altman became a part-time partner at Y Combinator in 2011. In 2014, he became the president of this US-based tech startup accelerator. In the same year, the company’s valuation crossed the USD 65 billion mark. In 2016, Samuel Altman made public his plans of expanding Y Combinator to fund 1,000 new companies per year. He attempted to expand the types of YC-funded companies, especially ‘hard technology’ companies.

In October 2015, USD 700 million growth-stage equity fund YC Continuity came up with the goal of investing in YC companies. Samuel Altman also formed a non-profit research lab called Y Combinator Research and donated USD 10 million to the group.

Samuel Altman was named the top investor under 30 by Forbes in 2015. He also bagged the honour of “Best Young Entrepreneurs in Technology” by BusinessWeek in 2008, apart from getting listed as one of the five most interesting startup founders between 1979 and 2009 by his colleague Paul Graham.

By early 2020, Samuel Altman left YC. As an angel investor, Samuel Altman has backed companies like Airbnb, Stripe, Reddit, Asana and Pinterest. He also headed Reddit for eight days in 2014 after CEO Yishan Wong resigned.

When Samuel Altman formed OpenAI, he got funding from Elon Musk, author and tech entrepreneur Jessica Livingston, LinkedIn co-founder Reid Hoffman, venture capitalist Peter Thiel, Amazon Web Services, Infosys and YC Research. During its launch in 2015, OpenAI raised USD 1 billion.

As per a Wall Street Journal report, OpenAI’s partnership with Microsoft will be a game-changing one, in terms of creating products catering to new-age internet users.

Shortly after becoming OpenAI CEO, Samuel Altman received USD 1 billion in funding from Microsoft head Satya Nadella, along with a business deal. OpenAI also got the resource access to train and improve its artificial intelligence algorithms.

The partnership first introduced a project called DALL-E 2 in 2022, enabling users to create realistic art from strings of text. Then came ChatGPT. Microsoft will also integrate OpenAI’s models into the Bing search app and a new design program called Microsoft Design.

As per the WSJ report, the OpenAI-Microsoft partnership will soon launch the ‘sale of employee-owned stock’. OpenAI’s stock was previously valued at around USD 14 billion and now it has been discussed a higher price for the current offering. Microsoft will also increase its investments in Samuel Altman’s company.

OpenAI’s initial goal was to advance AI for humanity’s benefit, instead of going after corporate profit. However, in 2019, OpenAI brought on its first group of investors and capped returns at 100 times the cost of their contributions. After securing Microsoft’s investment, Samuel Altman pushed OpenAI to bring in more revenue to attract funding and support the computational resources needed to train its algorithms.

Microsoft has become OpenAI’s preferred partner for commercializing its technologies. This arrangement allows Microsoft to easily integrate OpenAI’s models into its products.

Aided by Microsoft funding, OpenAI has changed the game by releasing its disruptive AI models and putting tech giants like Google under pressure.

What’s ahead?

As per WSJ, OpenAI has limited some venture investors’ profits to about 20 times their investments, with the ability to earn greater returns the longer these investors wait to sell their shares. During his recent chat with the investors, Samuel Altman also spoke about the possibility of OpenAI being able to touch the USD 1 billion yearly revenue mark.

The venture has already earned tens of millions of dollars from the sale of its programmable code to other developers, as per reports.

Samuel Altman also told TechCrunch recently about OpenAI’s latest research area, a video-based AI model. He said that his company can build its own software products and services, apart from licensing its technology to other companies, thus leaving experts to wonder whether openAI will rival Google, in the domain of internet search engines.

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