Venture capital firm’s plan to buy nonprofit hospital system has Ohio community on edge
Dr. Marc Harrison, who’s now CEO of HATCo, speaking at the Healthy Returns conference in New York City on May 21, 2019.
Astrid Stawiarz | CNBC
Dr. Marc Harrison is a different kind of venture capitalist.
He’s not looking for the next Mark Zuckerberg or Elon Musk. He’s not hanging out at startup demo days. He’s definitely not posting life advice screeds to founders on X. (He hardly posts at all.)
Far removed from the internet hub of Silicon Valley, Harrison went to medical school in the late 1980s and has spent the bulk of the past two decades at the upper ranks of medical systems, most recently as CEO of Intermountain Healthcare, a Utah-based nonprofit with 33 hospitals and over 63,000 employees.
In late 2022, Harrison joined venture firm General Catalyst, which has backed tech highfliers like Stripe, Snap and Airbnb. But the move to VC from health care hardly represented a career change.
In January, General Catalyst announced it was buying Summa Health, a nonprofit integrated health system that supports more than 1,000 inpatient beds across its network of hospitals, community-based health centers and its multi-specialty group practice. Summa operates across five counties in northeast Ohio and also runs a health insurance entity.
Under its new structure, Summa will become a for-profit organization, and General Catalyst says it will introduce new tech-enabled solutions that aim to make care more accessible and affordable.
General Catalyst set the stage for the deal when it brought in Harrison and, a year later, introduced a new company called the Health Assurance Transformation Corporation, or HATCo, that would operate on a “decades-long time horizon.” Harrison was named HATCo CEO, and is now in charge of overseeing its work with Summa.
“This is the first time that anybody has done anything quite like this,” Harrison, 60, told CNBC in an interview. “There are many digital health solutions that are out there as point solutions. This is the first holistic transformation of a health system to a thoughtful combination of digital and in-person care.”
The deal isn’t done.
Over the next several months, HATCo and Summa will engage in a due diligence period, work to craft a definitive agreement and begin to map out the specific challenges they hope to tackle. In the latter half of the year, the transaction will go through the regulatory approval process.
The parties declined to share specific financial details about the acquisition with CNBC, but HATCo wants to make clear that this isn’t just “another ‘private equity’ deal,” Harrison wrote in a statement. By that, he means the objective isn’t to overhaul Summa by cutting costs.
Summa Health Medina Medical Center
Courtesy: Summa Health
History in health care
While buying a hospital is an unprecedented move in the venture industry, where firms rake in big piles of money from institutional investors and seek to outperform the market, General Catalyst has a rich history in the broader health-care sector.
The 24-year-old firm has closed the most deals in digital health since 2020, according to data from PitchBook. Its portfolio companies in the space include insurer Oscar and digital health company Livongo, which was acquired by Teladoc almost four years ago.
Hospitals are different though, and many are nonprofits for a reason. Providing health care is expensive, and reimbursement rates can vary dramatically. With patients shouldering so much of the load, a study last year by the Urban Institute found that 73% of adults with medical debt owe hospitals at least some of that money.
An October report from Fitch Ratings said labor costs “remain stubbornly high,” and that controlling these expenses will be crucial if nonprofit hospitals want to reduce credit pressure and deliver stronger margins.
Conditions are not likely to change overnight.
“We expect weak margins to persist through 2023 and into 2024 due to an inelastic revenue model and higher labor costs due to still very tight labor conditions,” Fitch said.
General Catalyst says it wants Summa to serve as a “blueprint” that shows other health systems how delivering better care for patients can also be “good for business.”
Experts like Ceci Connolly have concerns. Connolly, CEO of the Alliance of Community Health Plans, which represents nonprofit provider-aligned regional health plans, said she’s excited to see if the deal presents a new approach that can address some of the problems in health care. She’s just not sure how it will work.
“I would be lying if I didn’t say it gives me a little bit of pause that you are going to take a nonprofit, community-based health-care entity, and now have it answering to investors and needing to generate profits,” Connolly said.
Connolly’s viewpoint makes sense. Limited partners — the endowments, sovereign wealth funds and pensions systems that put money into venture capital — look to the asset class as a bet on innovation in tech. It’s where billions can get minted on a single lucky bet.
“A lot of people feel like a PE or venture capital company owning a hospital is kind of like asking Freddy Krueger to come babysit your kids,” said John Bass, CEO of the health-care venture studio Hashed Health. “It just makes people a little nervous, and it doesn’t feel quite aligned with this concept of health care being a human right.”
Still, Bass said he’s “thrilled” to see General Catalyst take big swings in health-care innovation, given all the challenges the industry faces.
HATCo is capitalized outside of General Catalyst’s funds structure. It operates as a holding company within General Catalyst and is completely independent from its venture business, the firm says, though it will collaborate with the investment team.
General Catalyst said HATCo is not designed to realize returns through increases in volume-based revenue or cost cutting. Instead, it will work to generate new revenue streams by introducing new solutions and models of care.
Chris Bischoff has been leading General Catalyst’s health investments since 2021. The firm has been in the space for more than a decade, and Bischoff said it’s come to view the health-care business as having two distinct but interrelated parts.
The first is the “innovation side,” or the more traditional venture business, where General Catalyst works with entrepreneurs to create and scale new solutions. The second is the “transformation side,” which now includes HATCo. The goal there is to partner with health systems to try and speed up delivery and roll out new tools.
“We see a really powerful flywheel between the two,” Bischoff told CNBC in an interview.
Chris Bischoff speaks at Slush 2023.
Courtesy of General Catalyst
General Catalyst has teamed up with more than 20 health systems across the U.S., Canada, the U.K. and Israel as part of its transformation business. The partnerships are designed to share best practices and encourage collaboration. Bischoff said they help reduce friction when it comes to tech deployment, eliminating the need for a bunch of third parties to get involved.
Some partners include HCA Healthcare, University of California Davis Health and Intermountain Healthcare, Harrison’s former employer. In a book published last year about his work at Intermountain, Harrison wrote that General Catalyst was helping the hospital build a new marketplace, much like the App Store, for health care.
“Think of it this way: Major airlines don’t build their own air-planes,” he wrote. “They work with a range of partners to help them deliver their offerings. To revolutionize how we care for patients, we in health care are doing the same.”
The matter is personal for Harrison.
In 2009, he was diagnosed with bladder cancer, which was remedied thanks to “aggressive surgical treatment,” Harrison wrote in his book.
But almost a decade later, he was diagnosed with multiple myeloma, a form of blood cancer, and things looked dire. After a failed bone marrow transplant, Harrison said he “scrambled” and tried a novel immunotherapy that eventually helped him get his condition under control.
“I don’t know how long this treatment and others I might try will contain my disease, so I’m not wasting a minute,” Harrison wrote.
If his athletic accomplishments are any indication, Harrison isn’t one to back down from a grueling fight. He’s a nine-time Ironman participant who represented the U.S. in 2014 at the world triathlon championship.
‘There’s a lot of unused capacity’
Michael Greeley, co-founder and general partner at the health tech VC firm Flare Capital Partners, said the health-care provider world is in “acute distress” as many organizations are trying to operate on “razor thin profit margins.”
“There’s a lot of unused capacity, like beds that are empty, because they literally don’t have the labor to clean the rooms,” Greeley told CNBC in an interview. “It’s a high fixed-costs business that, if you can’t drive the volume through it, you’re gonna lose money.”
On its FAQ page about the acquisition, Summa said it’s in “sound financial standing” and on track to meet its targets. The organization reported $1.79 billion in revenue in 2022, up from $1.67 billion in 2021, according to Summa’s annual reports.
However, the organization said it would have a limited capacity to invest in growth or other improvements within its existing structure since challenges like supply costs will continue to hurt its bottom line.
Summa had been on the market for a partner since 2018. The next year it announced plans to merge with the Michigan-based system Beaumont Health. The organizations reached a definitive agreement that December, but Beaumont, now Corewell Health, suddenly pulled out months later without offering a public explanation.
Summa Health System – Akron Campus
Courtesy: Summa Health
Dr. Cliff Deveny, Summa’s CEO, said that in the years that followed, the organization hadn’t been able to find a health system with adequate digital health resources and technological ambitions, especially since many large providers are contending with similar financial constraints.
“We had been on about a 10-year journey of growing, but not really making the transformational changes in and how we run our business,” Deveny told CNBC in an interview. “We saw this as a way to really pivot and change how we provide care.”
HATCo set its sights on Summa after scanning the broader health-care environment. Harrison said he was fortunate to meet Deveny early in the search.
Summa’s executive leadership team will remain intact, and the organization says it will continue to provide the same services to patients and the greater community.
Harrison said the executives will have to remain careful and rigorous about managing traditional operations, but that they will now have additional “money, time, people, technology.”
“This is not like a turnaround, this is not a distressed system,” Harrison said. “This is an excellent system that has weathered maybe the most difficult time in health care that anybody’s ever experienced, and they’ve done it well. And now they’re ready to go to the next level.”
HATCo said its primary objective is to bring sustainable and agile innovation to Summa, particularly through the introduction of new platforms and tech solutions. The organization will also transition to what’s known as a value-based care model, which incentivizes preventative care and keeping patients healthy as opposed to charging fees for services like appointments and procedures.
It’s an expensive undertaking, and aligning insurance payers, clinicians and patients behind a value-based care model is often easier said than done.
Harrison said HATCo will likely use tech solutions from some of General Catalyst’s portfolio companies, as well as from others. The tech companies HATCo taps will be on the mature side, not early-stage startups, he added.
Ben Sutton, Summa’s operating chief, said the two organizations are also still evaluating what introducing new technologies will look like in practice.
“We want to build it from the ground up,” Sutton told CNBC. “We really want to make sure that we’re tailoring those solutions to the challenges that we’re having here in Akron and in the region that we serve, and make sure that we’re implementing things that are most impactful immediately.”
Additionally, Summa will no longer operate as a nonprofit system. Summa said on its website it will start a new community foundation in order to maintain its commitment to charity care, but the Summa Health Foundation will no longer be operational.
We’re not ‘guinea pigs’
Summa supports a workforce of around 8,500 people, making it the largest employer in Summit County, home to the city of Akron. There’s some fear among the locals about what happens next.
At a luncheon in late January, Akron Mayor Shammas Malik said residents and employees have expressed some confusion and concern about the deal, according to a report by Ideastream Public Media. More than 450 people have signed a petition urging Summa to remain a nonprofit and to halt negotiations with HATCo.
James Hardy, a member of Akron’s city council, said during a meeting on Jan. 22, that he opposed the sale, citing a “moral objection to the use of Summa, its staff and its patients as ‘guinea pigs’ for venture capitalists.”
During his more than six-minute speech, which was met at the end with scattered applause, Hardy went on to ask that Summa pause the process and consider alternatives like converting the hospital to a “county-owned system.”
“The community has not been consulted at all and we stand to gain or lose the most at the outcome of this proposal,” Hardy said. “At the very least, Summa owes greater Akron a transparent process where concerns and questions of the general public are asked and answered.”
Mayor Malik met with Harrison and Summa executives early in February, following the city council meeting, and had a “positive and thoughtful conversation” about their ambitions to create a “new model” for health care instead of making cuts, the mayor said in a statement to CNBC.
“When looking at the proposed Summa acquisition, there are plenty of fair and understandable concerns,” Malik said in a statement. “There is also the potential for this to be a very positive and transformative step for Summa, stabilizing a pillar of our community.”
Harrison has dealt with competing concerns in the past. In his book, he wrote about steering Intermountain during the Covid pandemic, when health-care workers, government officials and Utah residents openly disagreed about the right path forward.
“Rather than avoiding conflict or seeking to ram through it, we’ve accepted it as a fact of life and attempted to manage it adroitly and compassionately on behalf of progress,” Harrison wrote.
HATCo has a complex, decades-long road ahead, and Harrison is now at the center of an effort to show that community-based health-care providers can be profitable without cutting costs or abandoning patients.
Flare Capital’s Greeley said other VCs are unlikely to follow General Catalyst’s lead because of all the costs and complexities involved in owning a hospital system. But he said he’s cheering the firm on from the sidelines.
“Hats off,” he said. “If anybody can pull it off, I think they’ll have a reasonably good shot.”
Technology
AI research takes a backseat to profits as Silicon Valley prioritizes products over safety, experts say
Sam Altman, co-founder and CEO of OpenAI and co-founder of Tools for Humanity, participates remotely in a discussion on the sidelines of the IMF/World Bank Spring Meetings in Washington, D.C., April 24, 2025.
Brendan Smialowski | AFP | Getty Images
Not long ago, Silicon Valley was where the world’s leading artificial intelligence experts went to perform cutting-edge research.
Meta, Google and OpenAI opened their wallets for top talent, giving researchers staff, computing power and plenty of flexibility. With the support of their employers, the researchers published high-quality academic papers, openly sharing their breakthroughs with peers in academia and at rival companies.
But that era has ended. Now, experts say, AI is all about the product.
Since OpenAI released ChatGPT in late 2022, the tech industry has shifted its focus to building consumer-ready AI services, in many cases prioritizing commercialization over research, AI researchers and experts in the field told CNBC. The profit potential is massive — some analysts predict $1 trillion in annual revenue by 2028. The prospective repercussions terrify the corner of the AI universe concerned about safety, industry experts said, particularly as leading players pursue artificial general intelligence, or AGI, which is technology that rivals or exceeds human intelligence.
In the race to stay competitive, tech companies are taking an increasing number of shortcuts when it comes to the rigorous safety testing of their AI models before they are released to the public, industry experts told CNBC.
James White, chief technology officer at cybersecurity startup CalypsoAI, said newer models are sacrificing security for quality, that is, better responses by the AI chatbots. That means they’re less likely to reject malicious kinds of prompts that could cause them to reveal ways to build bombs or sensitive information that hackers could exploit, White said.
“The models are getting better, but they’re also more likely to be good at bad stuff,” said White, whose company performs safety and security audits of popular models from Meta, Google, OpenAI and other companies. “It’s easier to trick them to do bad stuff.”
The changes are readily apparent at Meta and Alphabet, which have deprioritized their AI research labs, experts say. At Facebook’s parent company, the Fundamental Artificial Intelligence Research, or FAIR, unit has been sidelined by Meta GenAI, according to current and former employees. And at Alphabet, the research group Google Brain is now part of DeepMind, the division that leads development of AI products at the tech company.
CNBC spoke with more than a dozen AI professionals in Silicon Valley who collectively tell the story of a dramatic shift in the industry away from research and toward revenue-generating products. Some are former employees at the companies with direct knowledge of what they say is the prioritization of building new AI products at the expense of research and safety checks. They say employees face intensifying development timelines, reinforcing the idea that they can’t afford to fall behind when it comes to getting new models and products to market. Some of the people asked not to be named because they weren’t authorized to speak publicly on the matter.
Mark Zuckerberg, CEO of Meta Platforms, during the Meta Connect event in Menlo Park, California, on Sept. 25, 2024.
David Paul Morris | Bloomberg | Getty Images
Meta’s AI evolution
When Joelle Pineau, a Meta vice president and the head of the company’s FAIR division, announced in April that she would be leaving her post, many former employees said they weren’t surprised. They said they viewed it as solidifying the company’s move away from AI research and toward prioritizing developing practical products.
“Today, as the world undergoes significant change, as the race for AI accelerates, and as Meta prepares for its next chapter, it is time to create space for others to pursue the work,” Pineau wrote on LinkedIn, adding that she will formally leave the company May 30.
Pineau began leading FAIR in 2023. The unit was established a decade earlier to work on difficult computer science problems typically tackled by academia. Yann LeCun, one of the godfathers of modern AI, initially oversaw the project, and instilled the research methodologies he learned from his time at the pioneering AT&T Bell Laboratories, according to several former employees at Meta. Small research teams could work on a variety of bleeding-edge projects that may or may not pan out.
The shift began when Meta laid off 21,000 employees, or nearly a quarter of its workforce, starting in late 2022. CEO Mark Zuckerberg kicked off 2023 by calling it the “year of efficiency.” FAIR researchers, as part of the cost-cutting measures, were directed to work more closely with product teams, several former employees said.
Two months before Pineau’s announcement, one of FAIR’s directors, Kim Hazelwood, left the company, two people familiar with the matter said. Hazelwood helped oversee FAIR’s NextSys unit, which manages computing resources for FAIR researchers. Her role was eliminated as part of Meta’s plan to cut 5% of its workforce, the people said.
Joelle Pineau of Meta speaks at the Advancing Sustainable Development through Safe, Secure, and Trustworthy AI event at Grand Central Terminal in New York, Sept. 23, 2024.
Bryan R. Smith | Via Reuters
OpenAI’s 2022 launch of ChatGPT caught Meta off guard, creating a sense of urgency to pour more resources into large language models, or LLMs, that were captivating the tech industry, the people said.
In 2023, Meta began heavily pushing its freely available and open-source Llama family of AI models to compete with OpenAI, Google and others.
With Zuckerberg and other executives convinced that LLMs were game-changing technologies, management had less incentive to let FAIR researchers work on far-flung projects, several former employees said. That meant deprioritizing research that could be viewed as having no impact on Meta’s core business, such as FAIR’s previous health care-related research into using AI to improve drug therapies.
Since 2024, Meta Chief Product Officer Chris Cox has been overseeing FAIR as a way to bridge the gap between research and the product-focused GenAI group, people familiar with the matter said. The GenAI unit oversees the Llama family of AI models and the Meta AI digital assistant, the two most important pillars of Meta’s AI strategy.
Under Cox, the GenAI unit has been siphoning more computing resources and team members from FAIR due to its elevated status at Meta, the people said. Many researchers have transferred to GenAI or left the company entirely to launch their own research-focused startups or join rivals, several of the former employees said.
While Zuckerberg has some internal support for pushing the GenAI group to rapidly develop real-world products, there’s also concern among some staffers that Meta is now less able to develop industry-leading breakthroughs that can be derived from experimental work, former employees said. That leaves Meta to chase its rivals.
A high-profile example landed in January, when Chinese lab DeepSeek released its R1 model, catching Meta off guard. The startup claimed it was able to develop a model as capable as its American counterparts but with training at a fraction of the cost.
Meta quickly implemented some of DeepSeek’s innovative techniques for its Llama 4 family of AI models that were released in April, former employees said. The AI research community had a mixed reaction to the smaller versions of Llama 4, but Meta said the biggest and most powerful Llama 4 variant is still being trained.
The company in April also released security and safety tools for developers to use when building apps with Meta’s Llama 4 AI models. These tools help mitigate the chances of Llama 4 unintentionally leaking sensitive information or producing harmful content, Meta said.
“Our commitment to FAIR remains strong,” a Meta spokesperson told CNBC. “Our strategy and plans will not change as a result of recent developments.”
In a statement to CNBC, Pineau said she is enthusiastic about Meta’s overall AI work and strategy.
“There continues to be strong support for exploratory research and FAIR as a distinct organization in Meta,” Pineau said. “The time was simply right for me personally to re-focus my energy before jumping into a new adventure.”
Meta on Thursday named FAIR co-founder Rob Fergus as Pineau’s replacement. Fergus will return to the company to serve as a director at Meta and head of FAIR, according to his LinkedIn profile. He was most recently a research director at Google DeepMind.
“Meta’s commitment to FAIR and long term research remains unwavering,” Fergus said in a LinkedIn post. “We’re working towards building human-level experiences that transform the way we interact with technology and are dedicated to leading and advancing AI research.”
Demis Hassabis, co-founder and CEO of Google DeepMind, attends the Artificial Intelligence Action Summit at the Grand Palais in Paris, Feb. 10, 2025.
Benoit Tessier | Reuters
Google ‘can’t keep building nanny products’
Google released its latest and most powerful AI model, Gemini 2.5, in March. The company described it as “our most intelligent AI model,” and wrote in a March 25 blog post that its new models are “capable of reasoning through their thoughts before responding, resulting in enhanced performance and improved accuracy.”
For weeks, Gemini 2.5 was missing a model card, meaning Google did not share information about how the AI model worked or its limitations and potential dangers upon its release.
Model cards are a common tool for AI transparency.
A Google website compares model cards to food nutrition labels: They outline “the key facts about a model in a clear, digestible format,” the website says.
“By making this information easy to access, model cards support responsible AI development and the adoption of robust, industry-wide standards for broad transparency and evaluation practices,” the website says.
Google wrote in an April 2 blog post that it evaluates its “most advanced models, such as Gemini, for potential dangerous capabilities prior to their release.” Google later updated the blog to remove the words “prior to their release.”
Without a model card for Gemini 2.5, the public had no way of knowing which safety evaluations were conducted or whether DeepMind checked for dangerous capabilities at all.
In response to CNBC’s inquiry on April 2 about Gemini 2.5’s missing model card, a Google spokesperson said that a “tech report with additional safety information and model cards are forthcoming.” Google published an incomplete model card on April 16 and updated it on April 28, more than a month after the AI model’s release, to include information about Gemini 2.5’s “dangerous capability evaluations.”
Those assessments are important for gauging the safety of a model — whether people can use the models to learn how to build chemical or nuclear weapons or hack into important systems. These checks also determine whether a model is capable of autonomously replicating itself, which could lead to a company losing control of it. Running tests for those capabilities requires more time and resources than simple, automated safety evaluations, according to industry experts.
Google co-founder Sergey Brin
Kelly Sullivan | Getty Images Entertainment | Getty Images
The Financial Times in March reported that Google DeepMind CEO Demis Hassabis had installed a more rigorous vetting process for internal research papers to be published. The clampdown at Google is particularly notable because the company’s “Transformers” technology gained recognition across Silicon Valley through that type of shared research. Transformers were critical to OpenAI’s development of ChatGPT and the rise of generative AI.
Google co-founder Sergey Brin told staffers at DeepMind and Gemini in February that competition has accelerated and “the final race to AGI is afoot,” according to a memo viewed by CNBC. “We have all the ingredients to win this race but we are going to have to turbocharge our efforts,” he said in the memo.
Brin said in the memo that Google has to speed up the process of testing AI models, as the company needs “lots of ideas that we can test quickly.”
“We need real wins that scale,” Brin wrote.
In his memo, Brin also wrote that the company’s methods have “a habit of minor tweaking and overfitting” products for evaluations and “sniping” the products at checkpoints. He said employees need to build “capable products” and to “trust our users” more.
“We can’t keep building nanny products,” Brin wrote. “Our products are overrun with filters and punts of various kinds.”
A Google spokesperson told CNBC that the company has always been committed to advancing AI responsibly.
“We continue to do that through the safe development and deployment of our technology, and research contributions to the broader ecosystem,” the spokesperson said.
Sam Altman, CEO of OpenAI, is seen through glass during an event on the sidelines of the Artificial Intelligence Action Summit in Paris, Feb. 11, 2025.
Aurelien Morissard | Via Reuters
OpenAI’s rush through safety testing
The debate of product versus research is at the center of OpenAI’s existence. The company was founded as a nonprofit research lab in 2015 and is now in the midst of a contentious effort to transform into a for-profit entity.
That’s the direction co-founder and CEO Sam Altman has been pushing toward for years. On May 5, though, OpenAI bowed to pressure from civic leaders and former employees, announcing that its nonprofit would retain control of the company even as it restructures into a public benefit corporation.
Nisan Stiennon worked at OpenAI from 2018 to 2020 and was among a group of former employees urging California and Delaware not to approve OpenAI’s restructuring effort. “OpenAI may one day build technology that could get us all killed,” Stiennon wrote in a statement in April. “It is to OpenAI’s credit that it’s controlled by a nonprofit with a duty to humanity.”
But even with the nonprofit maintaining control and majority ownership, OpenAI is speedily working to commercialize products as competition heats up in generative AI. And it may have rushed the rollout of its o1 reasoning model last year, according to some portions of its model card.
Results of the model’s “preparedness evaluations,” the tests OpenAI runs to assess an AI model’s dangerous capabilities and other risks, were based on earlier versions of o1. They had not been run on the final version of the model, according to its model card, which is publicly available.
Johannes Heidecke, OpenAI’s head of safety systems, told CNBC in an interview that the company ran its preparedness evaluations on near-final versions of the o1 model. Minor variations to the model that took place after those tests wouldn’t have contributed to significant jumps in its intelligence or reasoning and thus wouldn’t require additional evaluations, he said. Still, Heidecke acknowledged that OpenAI missed an opportunity to more clearly explain the difference.
OpenAI’s newest reasoning model, o3, released in April, seems to hallucinate more than twice as often as o1, according to the model card. When an AI model hallucinates, it produces falsehoods or illogical information.
OpenAI has also been criticized for reportedly slashing safety testing times from months to days and for omitting the requirement to safety test fine-tuned models in its latest “Preparedness Framework.”
Heidecke said OpenAI has decreased the time needed for safety testing because the company has improved its testing effectiveness and efficiency. A company spokesperson said OpenAI has allocated more AI infrastructure and personnel to its safety testing, and has increased resources for paying experts and growing its network of external testers.
In April, the company shipped GPT-4.1, one of its new models, without a safety report, as the model was not designated by OpenAI as a “frontier model,” which is a term used by the tech industry to refer to a bleeding-edge, large-scale AI model.
But one of those small revisions caused a big wave in April. Within days of updating its GPT-4o model, OpenAI rolled back the changes after screenshots of overly flattering responses to ChatGPT users went viral online. OpenAI said in a blog post explaining its decision that those types of responses to user inquiries “raise safety concerns — including around issues like mental health, emotional over-reliance, or risky behavior.”
OpenAI said in the blogpost that it opted to release the model even after some expert testers flagged that its behavior “‘felt’ slightly off.”
“In the end, we decided to launch the model due to the positive signals from the users who tried out the model. Unfortunately, this was the wrong call,” OpenAI wrote. “Looking back, the qualitative assessments were hinting at something important, and we should’ve paid closer attention. They were picking up on a blind spot in our other evals and metrics.”
Metr, a company OpenAI partners with to test and evaluate its models for safety, said in a recent blog post that it was given less time to test the o3 and o4-mini models than predecessors.
“Limitations in this evaluation prevent us from making robust capability assessments,” Metr wrote, adding that the tests it did were “conducted in a relatively short time.”
Metr also wrote that it had insufficient access to data that would be important in determining the potential dangers of the two models.
The company said it wasn’t able to access the OpenAI models’ internal reasoning, which is “likely to contain important information for interpreting our results.” However, Metr said, “OpenAI shared helpful information on some of their own evaluation results.”
OpenAI’s spokesperson said the company is piloting secure ways of sharing chains of thought for Metr’s research as well as for other third-party organizations.
Steven Adler, a former safety researcher at OpenAI, told CNBC that safety testing a model before it’s rolled out is no longer enough to safeguard against potential dangers.
“You need to be vigilant before and during training to reduce the chance of creating a very capable, misaligned model in the first place,” Adler said.
He warned that companies such as OpenAI are backed into a corner when they create capable but misaligned models with goals that are different from the ones they intended to build.
“Unfortunately, we don’t yet have strong scientific knowledge for fixing these models — just ways of papering over the behavior,” Adler said.
WATCH: OpenAI closes $40 billion funding round, largest private tech deal on record
Omar Marques | Sopa Images | Lightrocket | Getty Images
Shares of stock brokerage platform eToro popped in their Nasdaq debut on Wednesday after the company raised almost $310 million in its initial public offering.
The stock opened at $69.69, or 34% above its IPO, pushing its market cap to $5.6 billion. Shares were last up more than 40%.
The Israel-based company sold nearly six million shares at $52 each, above the expected range of $46 to $50. Almost six million additional shares were sold by existing investors. At the IPO price, the company was valued at roughly $4.2 billion.
Wall Street is looking to the Robinhood competitor for signs of renewed interest in IPOs after an extended drought. Many investors saw President Donald Trump’s return to the White House as a catalyst before tariff concerns led companies to delay their plans.
Etoro isn’t the only company attempting to test the waters. Fintech company Chime filed its prospectus with the U.S. Securities and Exchange Commission on Tuesday, while digital physical therapy company Hinge Health kickstarted its IPO roadshow, and said in a filing it aims to raise up to $437 million in its offering.
EToro had previously filed to go public in 2021 through a merger with a special purpose acquisition company, or SPAC, that would have valued it at more than $10 billion. It shelved those plans in 2022 as equity markets nosedived, but remained focused on an eventual IPO.
EToro was founded in 2007 by brothers Yoni and Ronen Assia and David Ring. The company makes money through trading-related fees and nontrading activities such as withdrawals. Net income increased almost thirteenfold last year to $192.4 million from $15.3 million in 2023.
The company has steadily built a growing business in cryptocurrencies. Revenue from crypto assets more than tripled to upward of $12 million in 2024, and one-quarter of its net trading contribution stemmed from crypto last year. That is up from 10% in 2023.
EToro said that for the first quarter, it expects crypto assets to account for 37% of its commission from trading activities, down from 43% a year earlier.
Spark Capital is the company’s biggest outside investor, with 14% control after the offering, followed by BRM Group at 8.7%. CEO Yoni Assia controls 9.3%.
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