Why ChatGPT developer OpenAI is the No. 1 company on the 2023 CNBC Disruptor 50 list

No innovation has had a greater cultural impact and no technology product has made more of a splash in the last six months than OpenAI’s ChatGPT.

The Microsoft-the startup’s generative AI-powered chatbot wowed users when it debuted in late November. It revealed a quantum leap in the ability of humans to seamlessly interact with AI, which in turn has access to the entire information universe of the Internet.

AI is having its iPhone moment. Apple’s revolutionary product sparked the invention of a new app ecosystem, providing users with new services ranging from Uber to Instagram because suddenly they had a computer in their pocket. This mobile revolution coincided with the computing revolution, with exponential power to transfer data to the cloud.

We are now seeing a similar technology boom around AI. It’s not just about the amazing experience of interacting with the latest chatbots. AI will impact, disrupt and accelerate every industry. In fact, this is already happening.

With OpenAI topping this year’s Disruptor 50 list, there’s no doubt that the dominant theme not only for the annual ranking, but for the venture-backed tech startup space as a whole, is artificial intelligence.

And it’s not just companies that have AI at their core. We see a range of enterprise applications for AI to drive efficiencies and new opportunities across companies and market sectors. Of the 50 companies on this year’s list, 21 told us that AI is critical to more than 50% of their revenue.

Half of the companies in the top 10 of the CNBC Disruptor 50 list for 2023 feature a key use of AI, and in particular, they represent a diverse range of industries and use cases. Canva, the #3 company, has integrated ChatGPT into its design tools, giving customers a new way to be creative. No. 4 Disruptor Relativity Space uses AI to make 3D printed rockets. No. 7 Disruptor Anduril Industries uses AI to identify and attack security threats. UK-based renewable energy company Octopus Energy, number 8 on this year’s list, uses AI to efficiently match energy supply and demand. No. 9 Lineage Logistics uses AI to optimize the movement of goods along the temperature-controlled supply chain.

“I really think we’re deep into a new technology wave, and this is, I think, the biggest one in a while,” OpenAI CEO Sam Altman said in an interview with CNBC late last week.

Number 19 on the Disruptor 50 list, Scale AI is working with companies including OpenAI to label the vast amounts of data – images, text, voice and video – that machines need to digest to become better learners. Also listed is No. 44 Disruptor, Cohere, which was founded by former Google Brain researchers who helped develop a new natural language processing method—transformers—that allow systems to more accurately grasp the context of a word.

Altman said OpenAI sees artificial intelligence affecting almost every industry. He pointed to the legal profession as the main example.

“What we’re hearing from customers using our API for law firms is that it’s completely transforming the way they work and the efficiency that every single lawyer can achieve and the accuracy, freeing people to do more of what they really do well, and having this new tool to give them as much leverage as possible,” Altman said.

“It’s a pattern we see over and over again in many industries, and I’m very excited about it,” he said.

His ability to make stock market investors afraid became clear when AlphabetShares of have fallen since the launch – which some officials called hasty – of its ChatGPT competitor, Bard, earlier this year. And in one of the sectors considered most at risk from generative AI, education, Chegg’s stock nearly halved just because its CEO pointed to ChatGPT’s impact on customer growth during its recent earnings call.

For now, OpenAI has a dual revenue stream: an enterprise software model where it charges companies for access to the platform, and a premium chat app it offers users for $20 a month, in addition to the free version.

“So far, we’re pretty happy with these two models. We’re super open to explaining other things,” Altman said, “you know, when we’re very much at the very beginning of this technology.”

OpenAI’s business customers include Salesforce, Snapchat and their backer Microsoft, which brings OpenAI’s generative AI technologies to its Bing and Edge internet browsers and the Microsoft 365 suite of business software, including Word, PowerPoint and Excel.

Microsoft’s cumulative investment in OpenAI has reportedly swelled to $13 billion, and the startup’s valuation is estimated at $29 billion. The company declined to provide funding or valuation data.

The growth in AI power has been so rapid and dramatic that it has caused concern from policymakers and regulators. Those looking to play in the space — including Elon Musk, who was an early co-founder of OpenAI and now says he will launch a competitor — also talk about the risks. Musk, along with Apple co-founder Steve Wozniak and a number of professors and CEOs, signed an open letter in March from the Future of Life Institute urging AI labs to stop training models more powerful than OpenAI’s GPT-4.

Altman first responded in an appearance at a virtual event at the Massachusetts Institute of Technology, saying that consistent safety guidance is needed, but that this proposed pause “misses most of the technical nuances of where we need a pause.”

Altman continues to advocate for regulation. “We really need regulation here. We have been calling for it since the beginning of the company,” he said. “I think we’re going to get some regulation and we’re going to get more over time. And I think that’s really critically important. So I’m happy it’s happening.”

“I think that in order to get to the future where we have the best possible use of AI and minimize what can be a pretty bad use of AI,” Altman said, “there’s just no way we can have regulation here. We have regulation for other industries with much less powerful technology. So we definitely have to have her here.”

Reid Hoffman, a partner at venture capital firm Greylock, was an early investor in OpenAI and is now an investor in a number of AI companies and co-founder of AI startup Inflection. He said he finds some of the criticism more dangerous than OpenAI.

“A lot of it is well-intentioned; there are a bunch of different ways that AI can play,” said Hoffman, who is also on Microsoft’s board of directors and served on OpenAI’s board before stepping down due to potential conflicts of interest. “Some of them are less well-intentioned: ‘Everybody else, slow down so I can speed up.’ less secure than what they offer,” he said, referring to OpenAI and Altman.

In addition to concerns that AI is being used to manipulate or mislead, Altman said he is working to reduce bias in OpenAI’s systems.

“A lot of it is what we call RLHF, or reinforcement learning from human feedback, where we take these models that are pre-trained on a significant part of the Internet and we can push them in certain ways,” Altman said. “We can teach the models like, ‘Hey, there’s a bias in the data here. You shouldn’t act that way.” He said that from GPT-3 to GPT-4, the company was able to make great strides in reducing the deviation in the model.

As companies including OpenAI fight bias and push for smart regulation, they’re also working with established tech giants like Microsoft and leaders in all kinds of industries to help them evolve so they’re not disrupted.