Will Elon Musk's xAI Be The Downfall Of OpenAI After Sam Altman's Betrayal and Ousting?

Elon Musk, the visionary CEO of Tesla Inc. TSLA, played a pivotal role in the inception of OpenAI. The seeds of the significant initiative can be traced to a conversation between Musk and former Google CEO Larry Page, which fueled Musk’s commitment to the artificial intelligence (AI) space and made him a prime mover behind OpenAI.

Despite being a co-founder of OpenAI and donating over $40 million, Musk expressed some of the differences he had with the other founders. He wanted to run OpenAI himself because he thought the company was falling behind Google. 

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“I provided all of the funding in the beginning, over $40 million. And the name, the Open in OpenAI is supposed to mean open source," Musk said during a recent interview on Lex Fridman's podcast. "It was created as a nonprofit open-source. And now, it is a closed source for maximum profit, which I think is not good karma.”

Musk left the OpenAI board in February 2018. The departure was framed as a measure to prevent potential conflicts, aligning with Tesla’s growing emphasis on AI technology. Musk posted on X, "I didn't agree with some of what OpenAI team wanted to do."

OpenAI is now valued at $100 billion. 

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Musk's departure did not end his involvement in AI. Instead, he launched xAI, a direct competitor to OpenAI. He's also expanded the AI efforts at Tesla. Unlike ChatGPT, xAI's chatbot Grok is updated in real-time because of its access to content on X. 

Musk is now raising up to $1 billion from investors, according to x.AI Corp.'s Securities and Exchange Commission filing in December. He's secured $134.7 million from four investors. 

The significant financial resources at x.AI’s disposal provide the means to invest in cutting-edge technology, research and talent acquisition. This, coupled with Musk’s strategic vision and experience in the AI sector, creates a strong combination that could propel x.AI to the forefront of AI innovation. Musk’s commitment to overcoming what he sees as OpenAI’s shortcomings adds a personal dimension to x.AI’s mission, making it more than just a business venture — it becomes a personal response to a perceived betrayal and a quest for dominance in the AI domain.

This wouldn't be the first time a startup with a first mover's advantage lost to an up-and-coming competitor. Archie was the first search engine, and Yahoo had a four-year headstart on Google. Myspace was founded a year before Facebook.

Being a first mover has its disadvantages. Startups are paving the way, but making a misstep could mean millions wasted or a publicity disaster. That leaves plenty of room for a new and innovative startup to step in and gain market share without making those same mistakes. 

Do you think Musk's x.AI will be able to outcompete OpenAI?

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