OpenAI in Davos…Looking Back on 10 Years of Unicorns With Aileen Lee...Stripe and SpaceX’s Secondary Pricing
Plus, 'MANG' companies are all-in on AI investing.
Welcome back! Jumping into this week’s big story:
Sam Altman making the rounds at Davos this week was a reminder of the remarkable extent to which OpenAI is facing all the challenges of being a “big tech” superpower all at once, and so early in its corporate life. Selling the world on the idea that you’re going to create an intelligence smarter than humanity, it turns out, means that you’d better be ready to build the company on hard mode.
OpenAI has already raised gobs of funding and enjoyed explosive revenue growth. There’s been executive drama of the first order, with Altman being ousted and then quickly reinstated just four years into his tenure. (Travis Kalanick’s forced resignation from Uber, similarly operatic, came eight years after he co-founded the company.)
Now, OpenAI is ditching its equivalent of the “Don’t Be Evil” slogan— The Intercept reported last week that OpenAI had removed language saying its technology could not be used for “military and warfare.” It took Google roughly 18 years to retire its high-minded motto.
This week at Davos, OpenAI’s vice president of global affairs Anna Makanju announced partnerships with the Department of Defense on several upcoming projects, including open-source cybersecurity software, Bloomberg reported. Makanju said the language change on its website was part of a broader policy update, and that the company still banned the use of its technology to build weapons, destroy property, or harm people.
An OpenAI spokesperson said the company had already been working with DARPA to build open-source cybersecurity tools, adding: “the goal with our policy update is to provide clarity and the ability to have these discussions."
The US government deal comes amid the heightened regulatory scrutiny most other big tech platforms weren’t subject to until a decade or more after their founding. There are already rumblings of US and UK antitrust concerns around OpenAI. Europe is poised to move ahead with the AI Act, the first major regulatory push on the new wave of technologies.
And OpenAI is now in the thankless business of combating election misinformation around the world—a topic on no one’s mind in the early days of Microsoft or Google or Meta.
As The Information’s Stephanie Palazzolo mused on Wednesday, it will be interesting to see what kinds of cybersecurity efforts come out of the DoD/OpenAI collaboration.
“My view is that they’re dipping their toe in in ways that are predictable,” one defense tech investor shared. “Cybersecurity is a great example of an area where OpenAI can be impactful.”
Other defense tech VCs openly praised the policy change. Brad Harrison, managing partner of the military-oriented Scout Ventures, was “encouraged to see OpenAI working with our colleagues in the DoD” and was excited about the “potential offensive and defensive capabilities” that AI will bring to cybersecurity and government infrastructure.
Still, tech employees aren’t always excited about working with the defense department— note the Google employee protests in 2018 over the Pentagon potentially using its AI technology to improve drone strike targeting.
With OpenAI already in the spotlight over AI safety and election misinformation, balancing its relationship with the U.S. military is just another big company problem.
Dispatch from a VC
Aileen Lee’s Look Back on Unicorns — 10 Years Later
Aileen Lee, who made history when she coined the term “unicorn” for a billion-dollar startup back in 2013, is out with some fresh research and insights on how the unicorn universe is changing.
It’s an extensive deep dive into the explosion and subsequent slowdown of unicorn startup formation over the last decade.
Among the takeaways: strong unicorns are now far more likely to be involved in enterprise tech than consumer tech, with enterprise-focused companies now making up 78% of the current 532 unicorns.
Many of these unicorns remain “papercorns,” she notes, as they have yet to exit and prove their value in an open market.
Lee also calls out the potentially treacherous waters ahead for the 60% of current unicorns that are actually “ZIRPicorns” — unicorns that haven’t raised funding since interest rates were low. These companies could face a rude awakening come their next round.
“We are working through a very big hangover,” said Lee, of the current market. “There's a lot of companies that are having to work through things to get to a better place with the cash that they have.”