Inside OpenAI’s Rise: Lessons from a $90 Billion AI Giant
Inside OpenAI’s Rise: Lessons from a $90 Billion AI Giant
OpenAI, once considered a modest nonprofit, has rapidly transformed into a leading force in artificial intelligence, now valued at an astonishing $90 billion. With its ambitious pursuit of artificial general intelligence (AGI), OpenAI’s journey has become a case study in the shifting values and strategies shaping today’s AI industry.
From Humble Origins to Industry Dominance
Karen Hao, the acclaimed author of “Empire of AI”, has tracked OpenAI’s evolution from its earliest days. Initially driven by a mission to create AI for the benefit of all humanity, the company’s culture quickly absorbed the competitive ethos typical of Silicon Valley: move fast, scale aggressively, and redefine success in terms of sheer impact and valuation.
Power Struggles and Hidden Costs
In a recent podcast interview, Hao revealed how OpenAI’s internal structure was shaped by the rivalry of three powerful “clans,” each pushing the organization in competing directions. This internal dynamic helped set the stage for OpenAI’s explosive growth, but also led to tough ethical trade-offs:
- Resource Hoarding: Like historical empires, leading AI firms are amassing data, computing power, and talent to stay ahead.
- Labor Concerns: The human cost of AI development is often hidden, with data labeling and content moderation outsourced to workers in developing countries for low wages.
- Environmental Impact: The race for ever-larger models is driving up energy consumption, raising questions about sustainability.
Geopolitics and the "China Competition" Narrative
Hao also discussed how the narrative of competing with China has fueled investment and regulatory support for U.S.-based AI companies. This framing, she argues, primarily benefits Silicon Valley by encouraging rapid scaling and consolidation, sometimes at the expense of thoughtful innovation and global cooperation.
Opportunities Beyond the AGI Race
For founders and investors, OpenAI’s trajectory offers both inspiration and caution. While the potential rewards of AI are enormous, Hao believes there’s room—and necessity—for alternative models that prioritize ethical labor practices, sustainability, and more distributed power structures. Entrepreneurs who seek to build in these areas could help shape a more balanced future for AI.
Listen to the Full Conversation
To hear more of Karen Hao’s analysis, including the internal dynamics at OpenAI and the broader consequences for the tech industry, listen to her full interview on the Equity podcast:
