Yes, I mysteriously had cell service while fly fishing with my family on the Salt River (among the only rivers in the world to flow north). I promise: I wasn\u2019t intentionally checking Slack\u2014it was a pure, predictable reflex, the kind you try to curb on vacation. And there it was: two OpenAI models escaped their testing environment, and breached open source AI company Hugging Face\u2019s systems.<\/p>\n
While I was (quite literally) out fishing, my colleague Emily Forlini talked to Greg Brockman, OpenAI cofounder and president, about the attack<\/a>. Brockman told her that\u00a0\u201cThis incident, to some extent, is indicative of just the moment that we\u2019re in, right?\u201d He added that models have been getting so good that \u201csometimes it\u2019s hard to lose track of any one dimension that they\u2019re actually very capable at.\u201d<\/p>\n The incident was evocative and, frankly, nightmare fodder for our society\u2019s worst fears about AI. The timing here is also notable, given the stakes: OpenAI could be set to go public as soon as this year (my money is on 2027, personally). OpenAI\u2019s prospective IPO matters, I\u2019d argue, for everyone. It will be\u2014maybe even more so than an Anthropic IPO\u2014the quintessential test of the AI bubble. OpenAI\u2019s massive consumer reach, reportedly dicey margins, and narrative importance in the AI boom make it a perfect prism through which investors of all kinds will ask the question: Is this all worth it?<\/p>\n So, I was also intrigued by what Brockman had to say to Fortune editor-in-chief Alyson Shontell in their one-on-one about what a sustainable business model in AI can actually look like<\/a>.\u00a0<\/p>\n \u201cThere are two parts to that,\u201d Brockman said. \u201cOne is, let\u2019s suppose model capabilities were frozen today: what is the business? I think OpenAI is the most strongly positioned right now for that scenario\u2026 We have ChatGPT which has nearly a billion users, and there is so much more value we can deliver to those users through even just the technology that exists today.\u201d<\/p>\n So, part one seems to be: If you have scale and adoption, you\u2019ll be able to leverage that. I have some skepticism on this point: Anecdotally, it\u2019s pretty clear to me at a consumer and individual level people are willing to jump from model to model as suits them. Scale doesn\u2019t promise retention. That being said, Brockman does have a point: Scale is a business and it can certainly buy you time.\u00a0<\/p>\n Brockman\u2019s second point was probably more consequential: Model progress isn\u2019t fundamentally stalled\u2014LLMs will keep getting better.\u00a0<\/p>\n \u201cThe way to think about it is a little less like we have electricity now [LLMs] and now we need to build washing machines [businesses on top of the LLMs],\u201d he told Shontell. \u201cJust like people are trying to achieve fusion, we are trying to get the technology to do something that is very qualitatively different from what has been done before\u2026 The fundamental value delivery that we are after\u2014we\u2019re not there yet. The massive value creation is yet to come. Some of it will wind up being the value that the AI labs have. But some of it will accrue to the world.\u201d<\/p>\n Embedded in this point, Brockman implies something that\u2019s not just true for OpenAI but is true for all startups building in this era: We sincerely don\u2019t know what the business model of the future is or what sustainable AI unit economics can look like.<\/p>\n And if the past and present tell us anything, it\u2019s that at least some won\u2019t know until it\u2019s too late. Until then, it\u2019ll be a battle.\u00a0\u00a0<\/p>\n If you\u2019re wondering, I caught three fish out there, all a species of cutthroat trout. It felt oddly appropriate.<\/p>\n The Fortune Global 500\u2026 Today, the Fortune Global 500 list dropped! Amazon<\/a> took the top spot this year, becoming only the sixth company in 37 years to have the title. Other number ones: Walmart<\/a>, Shell<\/a>, Exxon Mobil, General Motors, and Mitsubishi<\/a>. Check out the whole list here<\/a>, and our feature on Jeff Bezos<\/a>, who I believe is perhaps the defining industrialist of our time.<\/p>\n See you tomorrow,<\/p>\n Allie Garfinkle Submit a deal for the Term Sheet newsletter here<\/a>.<\/p>\n Joey Abrams curated the deals section of today\u2019s newsletter. Subscribe here<\/a>.<\/p>\n VENTURE CAPITAL<\/p>\n – Multiverse Computing<\/a>, a San Sebastian, Spain-based quantum AI software company, raised $570 million in Series C funding. Forgepoint Capital International, BNPP SIVF, and Bullhound Capital led the round and were joined by Santander Alternative Investments, Tikehau Capital, and others.<\/p>\n – Antares<\/a>, a Los Angeles, Calif.-based nuclear microreactor company, raised $470 million in Series C funding. Paradigm and Caffeinated Capital led the round and were joined by Point72 Ventures, Shine Capital, Industrious Ventures, and others.<\/p>\n – Enigma<\/a>, a San Francisco-based startup building AI models for robots and other physical systems, raised $71 million in seed funding. Index Ventures and Ribbit Capital led the round and were joined by Conviction Partners and others.<\/p>\n – Flourish Health<\/a>, a Richmond, Va.-based mental health provider designed for kids in crisis, raised $26 million in Series A funding. B Capital, F-Prime, and Cherryrock Capital led the round.<\/p>\n – ZuriQ<\/a>, a Zurich, Switzerland-based quantum computing company, raised $25.5 million in seed funding. Quantonation led the round and was joined by Forward.one, Extantia, Firgun Ventures, and existing investors.<\/p>\n – Beelzebub<\/a>, a Milan, Italy-based AI-native cybersecurity platform that uses AI-powered decoys designed to detect and deflect cyberattacks, raised \u20ac3 million ($3.4 million) in seed funding. United Ventures led the round.<\/p>\n PRIVATE EQUITY<\/p>\n – Bridgepoint agreed to acquire a majority stake in Lansweeper<\/a>, a Ghent, Belgium-based technology asset intelligence platform. Financial terms were not disclosed.\u00a0<\/p>\n – Carlyle acquired Secturion Systems<\/a>, a Centerville, Utah-based hardware encryption company. Financial terms were not disclosed.\u00a0<\/p>\n – Matrix Adhesives Group, a portfolio company of TruArc Partners, acquired IPS Adhesives<\/a>, a Durham, N.C.-based provider of high-performance adhesives serving building and construction. Financial terms were not disclosed. <\/p>\n EXITS<\/p>\n – TransDigm Group agreed to acquire Prince & Izant<\/a>, a Cleveland, Ohio-based designer and manufacturer of brazing alloys and specialty metal components, from Industrial Growth Partners for approximately $1.07 billion in cash.\u00a0<\/p>\n IPOs<\/p>\n
X: @agarfinks<\/a>
Email: alexandra.garfinkle@fortune.com<\/a><\/p>\n