Some early investors in OpenAI are questioning the start-up’s $852 billion (£628bn) valuation, amid shifts in strategy that make it appear unfocused, the Financial Times reported. The criticism comes as the company, once seen as the undisputed leader in generative artificial intelligence, faces increasing competition from rivals such as Anthropic and Google, and as its own strategic pivots raise concerns about long-term focus and execution.
OpenAI, founded in 2015 as a non-profit research lab and later restructured into a capped-profit entity, has been at the forefront of the AI revolution. Its flagship product, ChatGPT, launched in late 2022 and quickly amassed over 1 billion users, making it one of the fastest-growing consumer applications in history. The product is said to be growing at 50-100% annually, a trajectory that would normally delight investors. Yet, instead of doubling down on this consumer success, the company has pivoted toward higher-margin enterprise sales—a domain where it trails behind Anthropic, the startup founded by former OpenAI employees that has built a strong reputation for safety and enterprise reliability.
“You have ChatGPT, a 1 billion-user business growing 50-100 per cent a year, what are you doing talking about enterprise and code? It’s a deeply unfocused company,” an unnamed early backer of OpenAI told the paper. The remark reflects a broader sentiment among early investors who fear that the company is spreading itself too thin, chasing multiple strategic vectors simultaneously—consumer AI, enterprise tools, coding assistants, and even media ventures—without a clear prioritization.
One investor who has backed both OpenAI and Anthropic noted that an investment into OpenAI’s most recent funding round would have to assume an IPO valuation of $1.2 trillion or more to yield attractive returns. That valuation is becoming harder to justify given the cheaper proposition of buying into Anthropic, which is valued at $380 billion. The valuation gap highlights the risk premium that OpenAI commands, but also the skepticism that its growth story may be losing clarity.
OpenAI’s recent moves have included a series of high-profile cancellations and shifts. The company shuttered its video generation tool Sora, which had already secured a $1 billion investment commitment from Disney. Sora was seen as a breakthrough in AI-generated video, capable of creating realistic short clips from text prompts. Its sudden closure not only cost OpenAI a major partnership but also raised questions about the company’s ability to manage product development cycles. Additionally, OpenAI scrapped plans for an “adult” chatbot after internal and external backlash, drastically paring back an investment deal with Nvidia that had been expected to provide crucial computing resources. The company also halted plans to develop a $30 billion data centre in the UK and paused the expansion of a site in Abilene, Texas. These moves suggest a retrenchment from ambitious infrastructure projects that were central to its long-term strategy.
In contrast, the company has pivoted to aggressively pushing its Codex coding tool to businesses, directly competing with Anthropic’s Claude Code product. Codex, which generates code from natural language prompts, has been positioned as a key enterprise offering. However, analysts point out that Anthropic has a stronger foothold in the enterprise segment, with a reputation for delivering reliable, secure AI solutions that meet corporate compliance requirements. OpenAI’s late entry into this space could be a misstep, especially if it dilutes focus from its consumer success.
Jai Das, president of investment firm Sapphire Ventures, who is not an investor in OpenAI or Anthropic, referred to OpenAI as potentially “the Netscape of AI.” Netscape was the dominant browser company of the late 1990s that was eventually overtaken by Microsoft’s Internet Explorer and later acquired by AOL. The comparison is a cautionary tale: a first-mover that loses its edge by failing to adapt or by spreading its efforts too broadly. Das’s remark underscores the anxiety that OpenAI could suffer a similar fate if it does not refocus its strategy.
Despite the criticism, OpenAI maintains some significant advantages. The company holds a strong lead over Anthropic in securing computing resources, particularly through its partnership with Microsoft, which has invested billions of dollars and provides access to massive Azure cloud infrastructure. OpenAI’s CFO, Sarah Friar, recently stated that the company’s large funding round—which raised $6.6 billion at the $852 billion valuation—demonstrates the confidence of investors. She emphasized that the capital would be used to accelerate research and development, expand computing capacity, and invest in new products. However, the funding round itself has been a subject of debate, with some investors questioning whether the valuation is sustainable given the strategic turmoil.
To understand the current situation, it is helpful to review OpenAI’s evolution. The company began as a non-profit research lab with the mission of ensuring that artificial general intelligence (AGI) benefits all of humanity. In 2019, it created a for-profit arm to attract capital, while capping investor returns at 100x. The launch of ChatGPT turned it into a commercial powerhouse, but it also brought internal conflicts. In November 2023, the board suddenly ousted CEO Sam Altman, citing a lack of candor, only to reinstate him days later after a massive employee revolt and pressure from Microsoft. The event revealed deep divisions within the organization about its direction, safety culture, and governance. Since then, the company has been working to stabilize its leadership, but the recent strategic pivots suggest that the underlying tensions remain unresolved.
The enterprise push is not without logic. The consumer AI market, while large, is notoriously difficult to monetize. ChatGPT’s free tier generates minimal revenue, and even the premium subscription ($20 per month) may not sustain the high costs of inference and training. Enterprise contracts, on the other hand, can be worth millions of dollars annually and offer higher margins. Companies like Anthropic have shown that a focus on enterprise can yield strong growth: Anthropic reported annualized revenue of $850 million in 2024, up from essentially zero two years earlier, and is projected to reach $2 billion by 2025. OpenAI’s own enterprise revenue is not publicly disclosed, but analysts estimate it to be several hundred million dollars, still far behind its consumer revenues.
Another factor complicating OpenAI’s strategy is the rapidly changing competitive landscape. Google, through its DeepMind and Google Brain labs, has released competing models such as Gemini, which are integrated into its vast ecosystem of products. Meta, with its open-source Llama models, has captured a significant share of the developer community. Startups like Mistral AI in France and Cohere in Canada have also carved out niches. Meanwhile, Anthropic, which was founded by former OpenAI researchers Dario and Daniela Amodei, has been gaining traction by positioning itself as the safer, more trustworthy alternative. Its Claude models are particularly popular in regulated industries like finance and healthcare, where reliability and transparency are paramount.
OpenAI’s purchase of the tech talk show TBPN (Tech Business Podcast Network) was criticized by an investor as “a distraction.” The acquisition, which cost tens of millions of dollars, was intended to boost the company’s media presence and thought leadership. However, it also signaled a willingness to venture beyond core AI research and product development, further blurring the company’s focus. Media assets are notoriously difficult to operate profitably, and the move seemed out of step with the urgent need to compete on enterprise AI.
From a technology standpoint, OpenAI still has a lead in some areas. Its GPT-4 model remains one of the most powerful large language models, and the company has invested heavily in multimodal capabilities. However, the margin of leadership is shrinking. Anthropic’s Claude 3 models have been benchmarked as competitive or even superior in certain tasks, such as coding and long context understanding. Google’s Gemini Ultra has also matched GPT-4 on several metrics. The commoditization of foundation models means that differentiation now depends on factors like safety, customization, and ecosystem integration—areas where OpenAI may not have an inherent advantage.
The company’s infrastructure decisions also merit scrutiny. The cancellation of the $30 billion UK data centre project, which had been announced with fanfare as a major investment in the UK’s tech economy, was attributed to changing energy costs and regulatory hurdles. However, some analysts believe it reflects broader uncertainty about demand for computing capacity. OpenAI had also planned to build a massive cluster in Abilene, Texas, but that expansion was put on hold. These pullbacks come at a time when competitors like Anthropic are aggressively building out their own cloud partnerships (with AWS and Google Cloud) to ensure they have enough compute for future model training. The risk is that OpenAI could face a compute shortage just as it needs to scale its enterprise offerings.
Investor sentiment is further soured by the lack of a clear path to profitability. OpenAI reportedly spent over $5 billion in 2024 on operations, including compute costs, salaries, and customer acquisition. Its revenue, while growing, is estimated at around $3.7 billion, leaving a significant gap. The company has repeatedly said it is investing for long-term growth, but patience among early backers—who have seen their stakes diluted through successive funding rounds—is wearing thin. The valuation of $852 billion implies that investors expect OpenAI to become one of the most valuable companies in the world within a few years, a bet that seems increasingly speculative given the challenges.
In the midst of these critiques, there are still voices of optimism. Sarah Friar has emphasized that the funding round is a vote of confidence, and that the company has a clear mission to build AGI and deploy it safely. She has pointed to OpenAI’s research breakthroughs, such as GPT-5 (expected in late 2025), as evidence of its continued innovation. The company is also exploring new revenue streams, such as licensing its technology to other businesses and developing custom enterprise models. And ChatGPT’s consumer base provides a massive data advantage that can be used to improve models faster than competitors.
Nevertheless, the question of focus remains paramount. In the fast-moving AI industry, companies that try to do everything often end up doing nothing well. OpenAI’s investor base, which includes heavyweights like Microsoft, Khosla Ventures, and Andreessen Horowitz, is likely to continue pushing for greater clarity. Some have suggested that the board should consider a strategic review, or even a split into separate consumer and enterprise entities. Others argue that the company should double down on its ChatGPT moat and accelerate monetization of that platform, postponing the enterprise push until it has a stronger foundation.
As the AI industry enters a phase of consolidation and hypercompetition, OpenAI’s next moves will be critical. The company must navigate between the expectations of its investors, the demands of the market, and the imperatives of its founding mission. Whether it can maintain its leadership while addressing the “unfocused” label may determine not just its own future, but the direction of the entire AI ecosystem.
Source: Silicon UK News