sam-altman

Who Is Sam Altman?

Back in 2005, Sam Altman at age 19 co-founded a startup called Looped which was a location-based social networking app that was accepted into the first batch of Y Combinator.

There was a company founded by Paul Graham that everyone knows as PG.

And from there, their career of Sematman started, and it was quite interesting because as soon as discovered he found out about what you could do in the world and what you could achieve by being an entrepreneur, but he never got back.

So this is the beginning of the journey of Sam Altman which would eventually lead him to be the CEO of OpenAI.

That is the company that now is actually changing the whole business world posing a threat after 25 years to Google’s business model.

So let’s look at the story of Sam Altman and, in parallel, the story of OpenAI and how it changed over the years.

Now Sam Altman has been for years the president of YC because after he found it in 2005 looked, he after sold the company after a few years in 2012 to another company called Green Dot Corporation for over 43 million from which sales he actually made a few million dollars.

So Sam Altman was already a wealthy man.

But the most exciting part is that he initially stayed part-time within Y Combinator and then after he joined as actual president of Y Combinator until 2019 when he stepped down to focus 100% on OpenAI.

Over the years as a president of Y Combinator, Sam Altman said the chance to follow one of the most interesting startups in the tech world and he was quite successful in placing angel investments.

Actually, he argued, I think in some of his interviews that he has probably angel investing has been the business that has made him more money over the years compared to anything else that he has done.

Indeed he placed bets and investments in companies like Uber, Pinterest, Asana, and many others.

So it’s pretty interesting to look at the story of Sam Altman and OpenAI because he started computer science at university but then dropped out actually as he became an entrepreneur.

It’s quite interesting because Sam Altman always had an interest in AI.

But really his interest in AI spiked when, in 2012, there was the launch of ImageNet, a project which was probably one of the first successful AI projects of the modern age, where this very large visual database was able to recognize, and indicate what an object was into Picture.

And from there the interest of Sam Altman in the space of AI actually spiked up and that’s why in 2014 it started OpenAI together with Elon Musk and a few other founding members.

Open AI initially started as a research lab where it had the funding to actually start to look into AI development as we said, this development was inspired by ImageNet in 2012 and that’s why one of the first products and applications of OpenAI was called Gym.

That was actually a model that sort of general intelligence benchmark that sort of tried to replicate what other large-scale recognition models were doing like ImageNet over the years.

Other applications were quite interesting, but the real explosion of OpenAI as a research lab into becoming then a for-profit company came in 2017-9 when there was the launch of the original paper on generative Pre-training or GPT.

That was the first language model that managed to do incredible stuff.

But really, the turning point probably was in 2019 when there was a further evolution of GPT into GPT-2, which was again really a revolution of GPT.

And debt was a turning point because GPT-2 started to do many more things and its applications started to be quite clear as a bunch of new startups were getting built on top of GPT-2 in the future, and the whole industry was starting to be built on the premise of text to text generation.

And with that in mind, Open AI transitioned from a research lab in 2019 to actually becoming a for-profit company.

There was also the moment in which Sam Atman stepped down from YC so from Y Combinator.

YC Combinator, and he focused 100% as CEO of OpenAI from there.

The other revolution we got was in 2020 when there was the release of GPT-3, which created an explosion of commercial applications, especially on the text-to-text generation side, where we had the bird of other many startups from Copy AI, Jasper AI that today are like multibillion dollars company.

And really, this was a massive evolution because it showed that those language models were growing exponentially, and it became clear that overnight, in order to actually be able to grow and be able to really achieve success from a commercial standpoint, it needed more and more resources.

That’s why at the time, OpenAI also partnered up with Microsoft, which invested in the partnership by getting an exclusive license for OpenAI products.

And this is still true today.

The partnership is still going forward right now and is one of the latest applications of the generative models.

Let’s remember that the turning point was also when in 2017, a paper came out that showed how the transformer architecture, which was a sort of paradigm shift compared to the previous model that those AI models followed.

That also led to other kinds of generality models, no more models that would be text-to-text only, but there was also the explosion of text-to-image with things like DALL-E or Clip and then Stable Diffusion and many others that came out. 

So the landscape grew exponentially from 2020 going forward to 2022 farther, and we got then the release of ChatGPT.

That has been an incredible tool. 

Right now, the evolution is going forward and we’re going to see the launch of multimodal models that will be able to do many things at once. 

And we’ll be able to handle many kinds of formats, and interactions, a bit like from text to image, image to text, videos, audio, and so on and so forth. 

So those models are getting way more powerful. 

Background

Samuel H. Altman is an investor, entrepreneur, and programmer who is the current CEO of OpenAI and former Y Combinator president. Thanks to his successful track record as an angel investor and various high-level roles, Altman has an estimated net worth of $250 million.

Below we’ve described some of Altman’s extensive business history.

Early career

Altman initially enrolled in computer science at Stanford University but dropped out after two years to start Loopt with two of his classmates. Loopt was a social mobile app that enabled users to share their location with friends.

The company received $6,000 from Y Combinator and, with Reddit, was among the first 8 companies at the start-up accelerator. It reached a peak valuation of $175 million, but after seven labor-intensive years, the venture failed to attract enough users to remain unviable. 

Loopt was ultimately acquired by banking company Green Dot in 2012 for $43.4 million in cash.

Hydrazine Capital and Y Combinator

With the proceeds of the Loopt sale, Altman co-founded the venture fund Hydrazine Capital with brother Jack. The company raised $21 million in total with billionaire entrepreneur Peter Thiel taking part.

Altman then invested 75% of the money in Y Combinator companies and grew Hydrazine Capital by a factor of 10 in just four years. Driving this growth was Altman’s ability to spot hidden opportunities, noting in an interview with The New Yorker that “you want to invest in messy, somewhat broken companies. You can treat the warts on top, and because of the warts the company will be hugely underpriced.

Despite initially joining Y Combinator as a part-time partner in 2011, Altman rapidly rose to president in 2014 after Jessica Livingston and Paul Graham had become worn out running YC. Altman then became president of YC Group in 2016 – a company comprised of Y Combinator, equity fund YC Continuity, and non-profit YC Research.

After becoming the head of Y Combinator, Altman became involved with companies such as Dropbox, Reddit, and Airbnb. But with subsequent investments in nuclear energy, he was also not afraid to push the accelerator into unchartered territory.

Altman’s rise to the top before his thirtieth birthday may have come as a surprise to some, but not to Y Combinator founder Paul Graham.

In a 2006 blog post titled A Student’s Guide to Start-Ups, Graham recalled meeting Altman for the first time after he invested in Loop: “Within about three minutes of meeting him, I remember thinking “Ah, so this is what Bill Gates must have been like when he was 19.”

OpenAI

In 2015, Altman was part of the team that founded OpenAI. When the company transitioned to a for-profit in 2019 and attracted a $1 billion investment from Microsoft, Altman noted that the money would be spent “within five years, and possibly much faster”. He also explained that OpenAI may need to raise “more capital than any non-profit has ever raised” to achieve its goal of artificial general intelligence.

Around the same time as the Microsoft investment, Altman stepped down as YC President to focus more on OpenAI. However, he would continue to be involved with the start-up accelerator as its chairman. 

Altman became CEO of OpenAI in May 2019.

Views on artificial intelligence and humanity

Altman is an advocate of generative AI and believes that its benefits to society will cause it to be rapidly adopted. He compared the transition – where AI will make humans healthier, smarter, and more productive – to the one that occurred when the world moved from the pre-smartphone era to the post-smartphone era. 

However, in a series of Twitter posts in early 2023, Altman stressed the need for industry regulation: “Regulation will be critical and will take time to figure out; although current-generation AI tools aren’t very scary, I think we are potentially not that far away from potentially scary ones.”

The hype around ChatGPT in particular has caused some to call Altman the gatekeeper and “explainer-in chief” of tech that could one day become sufficiently advanced as to threaten humanity’s existence. But with a rather circumspect personality and tendency to shy away from publicity, whether Altman is fit for that role remains to be seen.

Helion Energy

Helion Energy is a private startup that is developing a novel approach to fusion power generation. The company was founded in 2013 by Dr. David Kirtley, Dr. John Slough, and Dr. George Votroubek.

What sets Helion Energy apart from others is the use of a novel type of plasma injector. The injector can produce an intense magnetic field capable of compressing fuel to the required temperatures and pressures. It is hoped that this process will be able to produce clean, cheap electricity derived exclusively from water.

Altman has been funding Helion since 2015, with a $375 million investment in 2021 the largest amount of money he has ever committed to a start-up. He is excited about the future potential of fusion energy and claims that, unlike some competitors, Helios has a simple, affordable, and portable fusion machine that is also commercially viable.

Angel investing 

Altman is also an angel investor who has invested in many notable companies. These include Asana, Pinterest, Zenefits, Stripe, Reddit, Airbnb, Instacart, Soylent, Vicarious, and Reserve. 

He has also made partner investments in the likes of Beacon AI and Titan and boasts notable exits such as URX, Virool, Oyster, Quill, Nervana, and Kimono Labs.

In a rare sit-down with a small audience in January 2023, TechCrunch editor Connie Loizos asked Altman what he liked to invest in with so much success behind him.

He replied: “I try to just do things that I’m interested in at this point… And so I’ve tried to hold myself to the stuff I really love, which tends to be the hard tech, [involving] years of R&D, [is] capital intensive or is sort of risky research. But if it works, it really works.”

Worldcoin

Altman co-founded Worldcoin with Alex Blania in 2020. The company was started to increase cryptocurrency adoption among underprivileged consumers and planned to distribute it to users in developing countries.

To identify individuals and enable them to set up a wallet to receive their allocation of digital currency, Worldcoin constructed a hardware biometric device known as an Orb. The device features an iris recognition feature to ensure the same person does not receive their allocation more than once. 

However, Altman’s bold new idea has faced problems in several countries because of regulations that have hindered business and the departure of key local contractors.

Key takeaways:

  • Samuel H. Altman is an investor, entrepreneur, and programmer who is the current CEO of OpenAI and former Y Combinator president. According to some estimates, he has a net worth of around $250 million. 
  • Altman initially enrolled in computer science at Stanford University but dropped out after two years to found Loopt with two of his classmates. Loopt was one of the first eight companies to work at Y Combinator.
  • With the proceeds of the Loopt sale, Altman co-founded the venture fund Hydrazine Capital with brother Jack. He then invested 75% of an early funding round in Y Combinator companies and eventually became that company’s president before stepping down and becoming the CEO of OpenAI.

Related Analyses

OpenAI Business Model

how-does-openai-make-money
OpenAI has built the foundational layer of the AI industry. With large generative models like GPT-3 and DALL-E, OpenAI offers API access to businesses that want to develop applications on top of its foundational models while being able to plug these models into their products and customize these models with proprietary data and additional AI features. On the other hand, OpenAI also released ChatGPT, developing around a freemium model. Microsoft also commercializes opener products through its commercial partnership.

OpenAI/Microsoft

openai-microsoft
OpenAI and Microsoft partnered up from a commercial standpoint. The history of the partnership started in 2016 and consolidated in 2019, with Microsoft investing a billion dollars into the partnership. It’s now taking a leap forward, with Microsoft in talks to put $10 billion into this partnership. Microsoft, through OpenAI, is developing its Azure AI Supercomputer while enhancing its Azure Enterprise Platform and integrating OpenAI’s models into its business and consumer products (GitHub, Office, Bing).

Stability AI Business Model

how-does-stability-ai-make-money
Stability AI is the entity behind Stable Diffusion. Stability makes money from our AI products and from providing AI consulting services to businesses. Stability AI monetizes Stable Diffusion via DreamStudio’s APIs. While it also releases it open-source for anyone to download and use. Stability AI also makes money via enterprise services, where its core development team offers the chance to enterprise customers to service, scale, and customize Stable Diffusion or other large generative models to their needs.

Stability AI Ecosystem

stability-ai-ecosystem

About The Author

Scroll to Top
FourWeekMBA