Startup News: OpenAI’s turmoil, what it could mean for Anthropic, Humane, Cohere and other AI startups

All eyes in the startup world have been focused on events playing out at OpenAI following the board’s controversial decision on November 17 to oust its CEO, Sam Altman. Last week, the company announced that it was rehiring Altman as CEO following intense blowback from investors and employees, hundreds of whom had threatened to quit in protest following the unexpected firing.

According to The Wall Street Journal, the company also announced the creation of a new board of directors – including former U.S. Treasury Secretary Larry Summers – that won’t include three of the four board members involved in removing Altman.

As the corporate drama at OpenAI unfolds, investors in the generative AI industry are waiting to see what happens next and whether the situation at OpenAI, the creator of ChatGPT, can stabilize now that Altman is apparently back at the helm. In the weeks prior to the news of Altman’s ouster, the company reportedly had been in talks about a sale of existing shares at a price that would effectively value the San Francisco-based company at $80 billion or more, making it among a handful of the most valuable startups in the world.

Even if OpenAI comes out of all this turmoil relatively unscathed, the spotlight these days is on several other companies including Anthropic, Humane, and Cohere that are producing competing generative-AI products or previewing exciting new innovations.

Indeed, the tech website The Information reported last week that more than 100 OpenAI customers contacted Anthropic and Cohere about the possibility of doing business with them. And Reuters reported that OpenAI's board of directors contacted Anthropic CEO Dario Amodei last week about him replacing Altman and helping to engineer a merger between the two generative AI companies, according to two people briefed on the matter. According to the article, Amodei “declined on both fronts.’’

Founded in 2017, Anthropic is known for Claude, a rival chatbot to OpenAI’s ChatGPT. Anthropic has also gained a reputation for seeking to develop AI technology that is guided by ethical considerations. The company’s last known valuation, as of May 2023, was $4.1 billion.

Cohere is another company that is benefiting from the general enthusiasm for generative AI technology. In June, the Toronto-based company, which builds AI models for corporate customers, reported that it raised $270 million in a funding round from investors including Nvidia, Oracle, and Salesforce Ventures. According to Reuters, Cohere has been mum about its valuation, but “people familiar with the matter said it is valued at $2.2 billion.”

Meanwhile, other companies are jumping into the world of AI with cutting-edge technology. Humane, a San Francisco-based startup, debuted its “AI Pin,” which essentially is a smart phone replacement without a screen. According to trade publication, The Verge, “you interact with it through voice, and a tiny projector displays things like media controls and incoming calls on the palm of your hand. The idea is to allow you to simply move through the world, unencumbered by digital devices constantly demanding your attention.”

While recent events at OpenAI have dominated headlines, the burgeoning AI story transcends short-term boardroom intrigue at any one company. The AI ecosystem continues to evolve at a rapid pace, so investors and industry observers should remain focused on AI advances as this transformational technology keeps disrupting the world as we know it.

About the Author

John Kimelman is a veteran journalist who has worked at Barron’s and CNBC covering such topics as investing and commercial banking. Mr. Kimelman has received compensation from Forge Global, Inc. for authoring this article. Read more from John.

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