Some early investors in OpenAI, the artificial intelligence startup behind ChatGPT, are voicing concerns over the company’s $852 billion (£628 billion) valuation, according to a report by the Financial Times. The criticism stems from what they describe as an increasingly unfocused strategy, with the company pivoting away from its core consumer success toward enterprise sales—a market where it trails behind rival Anthropic.
OpenAI, founded in 2015 as a non-profit research lab, has undergone dramatic transformations since its inception. Initially focused on developing safe and beneficial AI, it transitioned to a capped-profit model in 2019 and later launched ChatGPT in November 2022, sparking a global frenzy around generative AI. The chatbot rapidly amassed over one billion monthly users, making it one of the fastest-growing consumer applications in history. However, recent moves by the company have left some early backers puzzled.
“You have ChatGPT, a 1 billion-user business growing 50–100 per cent a year, what are you doing talking about enterprise and code? It’s a deeply unfocused company,” an unnamed early investor told the Financial Times. This sentiment was echoed by other investors who worry that OpenAI’s strategic pivots could leave it vulnerable to competitors like Anthropic and Google.
Anthropic, founded by former OpenAI employees, has positioned itself as a stronger contender in the enterprise AI space. Its Claude model series is designed with a focus on safety and business use cases, and the company has secured partnerships with major corporations. Anthropic is currently valued at $380 billion, making it a lower-cost alternative for investors. One backer who has invested in both OpenAI and Anthropic noted that any new investment in OpenAI would need to assume an IPO valuation of $1.2 trillion or more—a harder sell given Anthropic’s cheaper proposition.
OpenAI’s recent actions have added to the perception of drift. The company shuttered its video generation tool Sora, which had been in development for over a year and was expected to attract significant investment. The closure eliminated a $1 billion commitment from Disney and underscored the startup’s inability to sustain multiple ambitious projects simultaneously. Similarly, OpenAI scrapped plans for an “adult” chatbot, drastically scaled back an investment deal with Nvidia, and halted development on a $30 billion data centre in the UK, as well as an extension of a facility in Abilene, Texas.
The company also faced criticism for its purchase of tech talk show TBPN, a move one investor described as “a distraction.” The acquisition did not align with OpenAI’s core mission and raised questions about its leadership’s priorities. Meanwhile, OpenAI has shifted its focus toward promoting Codex, its AI-powered coding tool, directly targeting businesses. This puts the company in head-to-head competition with Anthropic, which has already carved out a strong position in developer tools and enterprise software.
Jai Das, president of investment firm Sapphire Ventures, who is not an investor in either OpenAI or Anthropic, drew a comparison to the dot-com era. He referred to OpenAI as potentially “the Netscape of AI.” Netscape, the browser pioneer of the late 1990s, was initially dominant but was eventually overtaken by Microsoft’s Internet Explorer and later acquired by AOL for a fraction of its peak value. Das’s comment highlights the risk that even a first-mover could be dethroned if it fails to maintain strategic focus and execution.
Despite these concerns, OpenAI retains significant advantages. It possesses a massive user base and a strong lead over Anthropic in procuring computing resources. The company’s access to advanced hardware from Nvidia and partnerships with cloud providers have allowed it to train and deploy large-scale models more efficiently than most rivals. Sarah Friar, OpenAI’s chief financial officer, recently defended the company’s trajectory, stating that its large funding round—which raised over $6 billion from investors including Microsoft and Thrive Capital—demonstrates confidence in the company’s direction.
OpenAI’s journey from a non-profit laboratory to a multi-billion-dollar enterprise has not been without controversy. The firing and rehiring of CEO Sam Altman in late 2023 highlighted internal tensions about the company’s mission and pace of commercialisation. Since then, Altman has pushed for aggressive growth, but the lack of a clear long-term strategy has alarmed some stakeholders. The company has also faced criticism for its handling of AI safety, with researchers leaving to form Anthropic or other ventures, citing concerns over OpenAI’s commitment to responsible AI development.
In the broader AI landscape, investors are increasingly wary of inflated valuations and unproven business models. While OpenAI generates revenue from subscriptions (ChatGPT Plus, Team, and Enterprise tiers) and API licensing, it has yet to achieve profitability. The company’s expenses are enormous due to the cost of training and running large-scale AI models. The decision to cut projects like the UK data centre and the Sora video tool may be pragmatic, but it also signals a contraction in ambition that could deter long-term partners.
Google, a major competitor with its Gemini models, has integrated AI into its vast ecosystem of products, from search to cloud services. The tech giant has both the resources and the user base to challenge OpenAI across consumer and enterprise markets. Meanwhile, open-source models from Meta and others are gaining traction, potentially eroding OpenAI’s technical lead. The startup must navigate these threats while maintaining investor confidence and focusing on its strengths.
The criticism from early investors underscores a fundamental tension at OpenAI: is it a consumer-focused product company or an enterprise platform? The shift toward Codex and enterprise sales may be necessary for margins, but it risks alienating the massive user base that made ChatGPT a household name. As one backer put it, the company appears to be chasing multiple opportunities without committing to any one direction—a luxury that startups rarely afford.
OpenAI’s next steps will be closely watched. The company has announced plans to release a new version of its GPT model, which could reaffirm its leadership in AI research. However, unless it can articulate a coherent vision and execute consistently, the murmurs of discontent from early investors may grow louder. The AI industry is moving fast, and even a pioneer like OpenAI cannot afford to lose its edge.
Source: Silicon UK News