Sam Altman, CEO of OpenAI, attends the Asia-Pacific Economic Cooperation (APEC) CEO Summit in San Francisco, California, U.S. November 16, 2023.
Carlos Barria | Reuters
A wide swath of Silicon Valley has hitched its hopes and fortunes over the past few years to the kind of generative artificial intelligence technologies that OpenAI helped popularize.
Many industry experts point to the debut of ChatGPT late last year as an iPhone-like moment, ushering a potential shift in the way people interact with computers via written prompts that can produce creative, seemingly human-like text.
Just as Apple had the late Steve Jobs acting as the company’s esteemed figurehead, articulating the appeal of the iPhone and personal computers to the masses, so too did OpenAI have its own charismatic leader in Sam Altman.
With Altman out as CEO — at least for now — after his sudden firing on Friday, the Apple comparisons are flowing freely. Jobs was fired as CEO of Apple in 1985, a move that lives in Silicon Valley lore, since it was after his return in 1997 that Apple found the path that eventually made it the most valuable company in the U.S.
Altman, who previously ran startup accelerator Y Combinator, has spent the past year cozying up to world leaders and making routine appearances at tech events, turning the 38-year-old executive into an industry celebrity, in the mold of Jobs, Meta CEO Mark Zuckerberg, Amazon founder Jeff Bezos and Tesla CEO Elon Musk.
Along with Altman, OpenAI’s board removed Greg Brockman from his role as chairman. Later Friday, Brockman said he was quitting the company.
“What happened at OpenAI today is a Board coup that we have not seen the likes of since 1985 when the then-Apple board pushed out Steve Jobs,” longtime startup investor Ron Conway said Friday evening in an X post. “It is shocking; it is irresponsible; and it does not do right by Sam & Greg or all the builders in OpenAI.”
Efforts are already underway by OpenAI investors to get Altman back, according to people familiar with the matter. Microsoft, Tiger Global, Sequoia Capital and Thrive Capital are among a number of OpenAI’s top backers that are trying to reinstate Altman, said the people, who asked not to be named because discussions are confidential. The Verge reported on Saturday that Altman is “ambivalent” about the possibility of returning.
Airbnb CEO Brian Chesky referred to Altman in an X post as “one of the best founders of his generation” who “has made an immense contribution to our industry.”
Silicon Valley reacts to OpenAI
Matt Schlicht, the CEO of the startup Octane AI, told CNBC that Altman and Brockman, who was formerly the chief technology office of Stripe, “made a technology available that we’d only ever dreamed about” and called it “the most exciting and powerful development of our lifetime.”
Octane is one of many new startups using the so-called large language models that OpenAI packages under its GPT family of software tools. Schlicht said the technology has so far “enabled us to put human-level intelligence inside of our code, and because of that we have helped entrepreneurs generate over half a billion in revenue.”
“I’ve known both Sam and Greg for over a decade, they are incredible and inspiring leaders,” Schlicht said. “After hearing about their untimely departure I was immediately filled with sadness. Innovation in the world was suddenly halted.”
Ryan Jannsen, CEO of Zenlytic, shared Schlicht’s sentiment.
“The AI community is reeling,” Jannsen said, adding that technologists are confused about the circumstances related to Altman’s firing and what it means for OpenAI going forward.
“Sam and OpenAI were the catalyst that showed the world what AI tech is capable of,” Jannsen said. “A huge amount of the excitement and activity in AI today is very directly thanks to their pioneering work.”
Whether or not Altman returns, the turmoil at OpenAI could give rivals an advantage in what’s quickly become a highly competitive market for advanced LLMs. From heavily funded startups like Anthropic and Cohere to cloud computing giants Google and Amazon, companies will likely be “looking for the next best alternative,” given the perceived instability at OpenAI, said industry analyst Patrick Moorhead.
“They’re not the only game in town,” Moorhead said.
Josh Wolfe, a partner at venture firm Lux Capital, said OpenAI is taking a huge reputational hit at a time when companies are deciding what models they’re going to use as building blocks.
“There was a perception of steady, predictable, reliable reputable progress and engagement and communication with industry,” Wolfe said. “The surprise capriciousness of the move signals total unpredictability, which is terrible for companies making plans to work with or trust OpenAI.”
OpenAI’s unusual structure
A big part of the challenge in understanding OpenAI is its unusual company structure. The board of OpenAI oversees the nonprofit, of which the corporate entity is a part, and “acts as the overall governing body for all OpenAI activities,” according to the blog post announcing Altman’s ouster.
The post said that a “deliberative review process by the board” concluded that Altman “was not consistently candid in his communications with the board, hindering its ability to exercise its responsibilities.”
Silicon Valley’s high-profile startup CEO firings typically involve wrongdoing, rather than just philosophical differences about where the company is headed.
Several investors told CNBC that OpenAI’s hybrid model presented a red flag from the beginning, in part because incentives can too easily be misaligned. Now, they said, the company risks severe brain drain if top talent chooses to follow Altman to his next project or a competitor in the industry.
Altman, meanwhile, has the advantage of having made such a name for himself that he’d have no problem raising money for a new project from investors who view him as the next great tech luminary.
“Sam Altman is a hero of mine,” former Google CEO and investor Eric Schmidt said in an X post. “He built a company from nothing to $90 Billion in value, and changed our collective world forever. I can’t wait to see what he does next. I, and billions of people, will benefit from his future work- it’s going to be simply incredible.”
Eric Schmidt, the former CEO of Google, arrives for the Inaugural AI Insight Forum in Russell Building on Capitol Hill, on Wednesday, Sept. 13, 2023.
Tom Williams | Cq-roll Call, Inc. | Getty Images
Airbnb’s Chesky wrote that he’d spoken with Altman and Brockman and that they have his “full support.”
“I’m saddened by what’s transpired,” Chesky wrote. “They, and the rest of the OpenAI team, deserve better. He added in a separate post that Altman is “one of the best founders of his generation.”
As for Microsoft, whose CEO Satya Nadella was reportedly caught off guard by the shakeup, several venture capitalists were surprised that the company could be so unaware of what was brewing given the billions they’ve invested in the company.
“I imagine Microsoft might ask for a board seat next time they decide to plow $15 billion into a startup,” said Zachary Lipton, a Carnegie Mellon University professor of machine learning and operations research.
Industry analyst Moorhead said Microsoft could “figure out how to buy this company and how to put Sam in charge.”
“That’s the first play, it’s potentially finding ways to remove the current board of directors, reinstall new board of directors and then bring Sam and company back in — making sure the band stays together,” Moorhead said.
Regardless of the current chaos, Carnegie Mellon’s Lipton said he expects investors to remain bullish on AI.
“This story has elements of corporate and ideological discord, but not even a whiff of diminished promise,” Lipton said.
LISBON, Portugal — British online lender Zopa is on track to double profits and increase annual revenue by more than a third this year amid bumper demand for its banking services, the company’s CEO told CNBC.
Zopa posted revenues of £222 million ($281.7 million) in 2023 and is expecting to cross the £300 million revenue milestone this year — that would mark a 35% annual jump.
The 2024 estimates are based on unaudited internal figures.
The firm also says it is on track to increase pre-tax profits twofold in 2024, after hitting £15.8 million last year.
Zopa, a regulated bank that is backed by Japanese giant SoftBank, has plans to venture into the world of current accounts next year as it looks to focus more on new products.
The company currently offers credit cards, personal loans and savings accounts that it offers through a mobile app — similar to other digital banks such as Monzo and Revolut which don’t operate physical branches.
“The business is doing really well. In 2024, we’ve hit or exceeded the plans across all metrics,” CEO Jaidev Janardana told CNBC in an interview Wednesday.
He said the strong performance is coming off the back of gradually improving sentiment in the U.K. economy, where Zopa operates exclusively.
Commenting on Britain’s macroeconomic conditions, Janardana said, “While it has been a rough few years, in terms of consumers, they have continued to feel the pain slightly less this year than last year.”
The market is “still tight,” he noted, adding that fintech offerings such as Zopa’s — which typically provide higher savings rates than high-street banks — become “more important” during such times.
“The proposition has become more relevant, and while it’s tight for customers, we have had to be much more constrained in terms of who we can lend to,” he said, adding that Zopa has still been able to grow despite that.
A big priority for the business going forward is product, Janardana said. The firm is developing a current account product which would allow users to spend and manage their money more easily, in a similar fashion to mainstream banking providers like HSBC and Barclays, as well as fintech upstarts such as Monzo.
“We believe that there is more that the consumer can have in the current account space,” Janardana said. “We expect that we will launch our current account with the general public sometime next year.”
Janardana said consumers can expect a “slick” experience from Zopa’s current account offering, including the ability to view and manage multiple account bank accounts from one interface and access to competitive savings rates.
IPO ‘not top of mind’
Zopa is one of many fintech companies that has been viewed as a potential IPO candidate. Around two years ago, the firm said that it was planning to go public, but later decided to put those plans on ice, as high interest rates battered technology stocks and the IPO market froze over in 2022.
Janardana said he doesn’t envision a public listing as an immediate priority, but noted he sees signs pointing toward a more favorable U.S. IPO market next year.
That should mean that Europe becomes more open to IPOs happening later in 2026, according to Janardana. He didn’t disclose where Zopa would end up going public.
“To be honest, it’s not the top of mind for me,” Janardana told CNBC. “I think we continue to be lucky to have supportive and long-term shareholders who support future growth as well.”
Last year, Zopa made two senior hires, appointing Peter Donlon, ex-chief technology officer at online card retailer Moonpig, as its own CTO. The firm also hired Kate Erb, a chartered accountant from KPMG, as its chief operating officer.
The company raised $300 million in a funding round led by Japanese tech investor SoftBank in 2021 and was last valued by investors at $1 billion.
Edith Yeung, general partner at Race Capital, and Larry Aschebrook, founder and managing partner of G Squared, speak during a CNBC-moderated panel at Web Summit 2024 in Lisbon, Portugal.
Rita Franca | Nurphoto | Getty Images
LISBON, Portugal — It’s a tough time for the venture capital industry right now as a dearth of blockbuster initial public offerings and M&A activity has sucked liquidity from the market, while buzzy artificial intelligence startups dominate attention.
At the Web Summit tech conference in Lisbon, two venture investors — whose portfolios include the likes of multibillion-dollar AI startups Databricks Anthropic and Groq — said things have become much more difficult as they’re unable to cash out of some of their long-term bets.
“In the U.S., when you talk about the presidential election, it’s the economy stupid. And in the VC world, it’s really all about liquidity stupid,” Edith Yeung, general partner at Race Capital, an early-stage VC firm based in Silicon Valley, said in a CNBC-moderated panel earlier this week.
Liquidity is the holy grail for VCs, startup founders and early employees as it gives them a chance to realize gains — or, if things turn south, losses — on their investments.
When a VC makes an equity investment and the value of their stake increases, it’s only a gain on paper. But when a startup IPOs or sells to another company, their equity stake gets converted into hard cash — enabling them to make new investments.
At the same, however, there’s been a rush from investors to get into buzzy AI firms.
“What’s really crazy is in the last few years, OpenAI’s domination has really been determined by Big Techs, the Microsofts of the world,” said Yeung, referring to ChatGPT-creator OpenAI’s seismic $157 billion valuation. OpenAI is backed by Microsoft, which has made a multibillion-dollar investment in the firm.
‘The IPO market is not happening’
Larry Aschebrook, founder and managing partner at late-stage VC firm G Squared, agreed that the hunt for liquidity is getting harder — even though the likes of OpenAI are seeing blockbuster funding rounds, which he called “a bit nuts.”
“You have funds and founders and employees searching for liquidity because the IPO market is not happening. And then you have funding rounds taking place of generational types of businesses,” Aschebrook said on the panel.
As important as these deals are, Aschebrook suggested they aren’t helping investors because even more money is getting tied up in illiquid, privately owned shares. G Squared itself an early backer of Anthropic, a foundational AI model startup competing with Microsoft-backed OpenAI.
Using a cooking analogy, Aschebrook suggested that venture capitalists are being starved of lucrative share sales which would lead to them realizing returns. “If you want to cook some dinner, you better sell some stock, ” he added.
Looking for opportunities beyond OpenAI
Yeung and Aschebrook both said they’re excited about opportunities beyond artificial intelligence, such as cybersecurity, enterprise software and crypto.
At Race Capital, Yeung said she sees opportunities to make money from investments in sectors including enterprise and infrastructure — not necessarily always AI.
“The key thing for us is not thinking about what’s going to happen, not necessarily in terms of exit in two or three years, we’re really, really long term,” Yeung said.
“I think for 2025, if President [Donald] Trump can make a comeback, there’s a few other industries I think that are quite interesting. For sure, crypto is definitely making a comeback already.”
At G Squared, meanwhile, cybersecurity firm Wiz is a key portfolio investment that’s seen OpenAI-levels of growth, according to Aschebrook.
Wiz is now looking to reach $1 billion of ARR in 2025, doubling from this year, Roy Reznik, the company’s co-founder and vice president of research and development, told CNBC last month.
“I think that there’s many logos … that aren’t in the press raising $5 billion in two weeks, that do well in our portfolios, that are the stars of tomorrow, today,” Aschebrook said.
LISBON — Samsung’s foray into smart rings isn’t concerning the boss of the product category’s pioneer, Oura — in fact, Tom Hale says he’s seeing a boost in business.
“I’m sure that a major tech company making an announcement saying: ‘Hey, this is a category that matters. It’s going to be something that’s big.’ I think it’s probably helpful,” Hale told CNBC in an interview this week.
“In terms of the impact on our business, it has made zero impact. If anything, our business has gotten stronger since their announcement.”
In a wide-ranging interview with CNBC at the Web Summit conference in Lisbon, Hale discussed Oura’s plans for new areas of insight it wants to give users, how he is thinking about new devices and the company’s intentions for international expansion.
Oura’s flagship product is the Oura Ring 4, a device known as a smart ring. It is packed with sensors that can track some health metrics, allowing Oura app users to learn more about the quality of their sleep or how ready they are to tackle the day ahead.
Founded in Finland in 2013, the company has been called a pioneer by analysts in the smart ring space. Oura said it has sold more than 2.5 million of its rings since it launched its first product. CCS Insight forecasts Oura will end the year with a 49% market share in smart rings.
Competition is starting to rear its head in the space. The world’s largest smartphone maker Samsung made its first venture into smart rings this year with the Galaxy Ring, which some analysts say has put the device category on the map and popularized it with a broader audience.
Hale is keen to position Oura as a “health company and a science company from the get-go,” with the aim of its product being “clinical grade.” Oura is seeking approval from the U.S. Food and Drug Administration (FDA) for its ring to be used for diagnostics, although Hale declined to provide too many further details.
He did say that Oura’s focus on health and science is what sets it apart from competitors.
“If you’re actually thinking [of] yourself as a healthcare company, it is very different in many ways and different postures you might take towards data privacy. … So instead of being like a tech company where data is some sort of oil to be extracted and then used to create some kind of advantage of network effects, we’re really a healthcare company where your data is sacrosanct,” Hale said.
Oura’s business model relies on selling the hardware, as well as on a $5.99 monthly subscription service that allows users to get the insights from their ring. Oura says it has nearly 2 million subscribers.
“We look more like a software company than we do look like a hardware company. And I think that’s a function of the business model, and the fact that it’s working. Our subscribers are continuing to pay,” Hale said.
Oura eyes nutrition as next ‘pillar’
Oura takes the data gathered by the ring to provide insight to its users, focused on a person’s levels of sleep, activity and readiness to take on the day.
Hale said the company is now testing out nutrition, with users able to take a picture of their meal and log it into the Oura app. Also in the nutrition space, he highlighted Oura’s recent acquisition of Veri, a metabolic health startup that can take data from continuous glucose monitors — small devices inserted into a person’s arm — to give insight into someone’s blood sugar levels. Hale says that this, combined with Oura’s food tracking feature, could tell a user how certain meals affect their glucose levels.
Many glucose monitors today are invasive and need to be inserted into the skin. Some observers see a non-invasive glucose monitor on wearable gear as something that could be transformative — but Hale warns this is a difficult goal to achieve.
“The idea that a wearable [device] will get there, I think, has definitely been a Holy Grail, and like the Holy Grail, they may never find it, because it’s a very difficult problem to solve with any kind of accuracy,” Hale said.
“Never say never. Certainly, technology continues to advance and all the capabilities continue to advance,” he added.
New hardware and AI
While Oura only sells rings currently, Hale sees the company developing new products in the future. He declined to elaborate.
“I think we’ll undoubtedly see other Oura-branded products, beyond the ring,” he promised.
He also said the company hopes to work with other devices as well, even if they are not Oura’s own hardware.
Like many hardware companies, such as Apple and Samsung, Oura is looking at ways it can use the advancing capabilities of artificial intelligence to give users more personalized insights. Smartphone makers have spoken about so-called “AI agents,” which they see as assistants that are able to anticipate what a user wants.
Oura is testing out an AI product called Oura Advisor in a similar vein.
“Think of it as the doctor in your pocket that knows all the data about you,” Hale said.
International push
Hale‘s presence at the Web Summit in Lisbon underscores his push to raise Oura’s brand awareness in markets outside of the U.S., especially as more people learn about smart rings.
“I think the point about the category being something that people are learning about, the unique benefits of that maturity, is in our favor. We’re expanding internationally,” Hale said.
He said he is particularly “excited” about venturing into Western Europe, including in countries like the U.K., Germany, France and Italy. Looking even further forward, Hale said an initial public offering for the business is not currently on the table, adding that operating as a private company gives Oura more “freedom.”
“I really enjoy the freedom that we get as a private company. We’re accountable to our investors and our shareholders, but they’re willing to let us operate with a lot license,” he said. “And if we decided we wanted to turn unprofitable because we wanted to invest in owning some category of healthcare software, it’ll be fine. They would be happy for that.”