July 30, 2024

Two roads diverged

Hi there,

OpenAI just took aim at Google with its new SearchGPT.

The feature, currently in preview, combines a web-browsing search interface with the AI models underpinning ChatGPT.

It's a long-anticipated move to capture more of consumers' digital lives by becoming an AI-powered search engine.

At the same time, OpenAI continues to woo enterprises — a massive potential revenue source — primarily via API integrations and robust developer tools.

OpenAI is one of a handful of AI model developers — including competitor Anthropic, as well as big tech players like Google and Microsoft — targeting both the enterprise and the consumer.

But focusing too much on one could alienate the other.

Below, we dig into OpenAI's acquisitions, as well as investments made through its OpenAI Startup Fund, to see where the AI leader is concentrating its efforts — and where it could be making itself vulnerable.

"Riding two horses at the same time"

OpenAI's ChatGPT strategy is a growing concern among some of its enterprise customers that we've spoken with, like this one.

For now, OpenAI remains the dominant closed-source model provider, and most of our recent interviews with customers are positive, with an average customer satisfaction (CSAT) score of 8.6/10.

But competition is fierce — and getting fiercer — from AI startups and big tech rivals. Especially as the open-source movement gains steam among enterprises that prefer to train models in-house.

Meta, for instance, made a splash last week by releasing Llama 3.1, its latest open-source model that it claims can beat the most advanced closed-source models on some benchmarks, while being cheaper to run.

Start your M&A engines

OpenAI's attempting to reassure enterprise customers by bulking up its B2B offerings.

This is reflected in its M&A strategy: in the last year, it announced its first 3 acquisitions, with 2 just taking place in June.

Per the Acquisition Insights on its CBI profile, these deals help it layer on developer-focused tech and talent as it works to set up a holistic business offering.

Help a startup out

Meanwhile, the OpenAI Startup Fund — a corporate venture fund backed by external LPs, including Microsoft — has invested in 20 startups in the last 2 years, with a major focus on enterprise-targeted AI tools for speeding up software development and other workflows. Dig into all of those deals in our just-released investment map here.

Many of these portfolio companies co-develop products with OpenAI or build on top of its infrastructure.

But as OpenAI spreads itself across more and more markets, it may create openings for competitors to pounce.

Check out our latest generative AI market map — with 433 startups mapped across 60 different categories — to see some of the leading startups that pose a threat to OpenAI.

Customers can also drill down into genAI startups' business models, Commercial Maturity scores, and more using this CB Insights platform advanced search.

If you're an enterprise, you can use this to find potential partners based on your risk appetite (i.e., whether you want to link up with more emerging or more established partners).

Advanced search of genAI startups on CB Insights

I love you.

Anand

@asanwal

P.S. OpenAI has also gone on a content licensing spree, with some of these deals running into the hundreds of millions of dollars. Get the data behind every deal here.