A recent opinion by Analytics India Magazine (AIM) claimed that Sam Altman’s OpenAI, which is also the creator of the infamous ChatGPT, will go bankrupt by 2024 due to the decline in user base, astronomical operational costs, and unrealistic revenue expectations. However, on detailed analysis, the claims of AIM are found to be lacking expert insights, rendering the article to be perceived as mere sensationalism.
The article cited significant daily expenditures, notably around $700,000 per day (approximately ₹5.8 crore per day), dedicated solely to ChatGPT. However, the writert fails to consider the fact that such huge expenses are quite common for early stage startups. The report also mentions that ChatGPT user base has declined as users are making use of LLM APIs in their workflows. This assertion also seems to undermine the fact that APIs are also a major source of revenue for the startup.
Microsoft-backed OpenAI has projected an annual revenue of $200 million in 2023. According to the AIM article, OpenAI “expects to reach $1 billion in 2024, which seems to be a long shot since the losses are only mounting.” We must consider here that OpenAI is still in its initial operational phase and has several projects and resources to raise decent funding to stay afloat.
After the AIM opinion gained some traction, Ather Energy CEO Tarun Mehta took to Twitter to explain how the ChatGPT maker won’t go bankrupt despite various claims.
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Tarun Mehta of Ather Energy voiced confidence on Sunday that OpenAI will easily manage its predicament, despite the claims of AIM. Mehta cited well-known Indian startups that later became well-known corporations, such as Flipkart, Meesho, Ola, Paytm, and Swiggy, as evidence in favor of his claim. These companies, he noted, also experienced extended periods of significant financial burns.
In addition, he pointed out that many Indian companies have seen a comparable level of capital consumption during their peak moments, and many of them have been able to maintain stability. According to him, Uber, at its height, consumed ten times the capital for an extended period of time. “They will be fine folks,” he added.
OpenAI is funded by multiple large companies and is at the forefront of Large Language Models as of now. Microsoft has invested about $10 billion in OpenAI and there is every possibility that it will continue to invest more. For years, Microsoft has been in a tug-of-war with Google. Now, partnering with and investing in OpenAI gives Microsoft a once in life-time opportunity to make Google eat dirt, and we doubt that it will let OpenAI go bankrupt.
To add to the narrative, OpenAI today announced that it has acquired a New York-based AI design studio called Global Illumination. Now, it is only sensible to ask why would a startup, which is on the very precipice of bankruptcy, spend such crucial capital on acquisition. It only implies two things, either Sam Atham is out of his senses, or OpenAI is not going bankrupt.
Considering all these facts, it is safe to say that OpenAI will not be going bankrupt, or at least at any rate not because of the reasons cited by the AIM article, and certainly not as early as 2024.
