The Contrarian Strategy of OpenAI

OpenAI is now the clear leader in LLM APIs - a position that 4 years ago Google was arguably in the default position to win. The failure of Google to capitalize on its many advantages specifically in AI has been striking. It feels like a Xerox Parc moment of inventing transformers, having all the talent, data, and distribution to build the seminal ... See more

The most contrarian bet in venture capital right now is Thrive’s investment in OpenAI at an $80B valuation.

Before you bring your pitchforks against me or wonder if I’ve gone crazy, let me explain.

You can be contrarian in two ways:1

1. Having a different POV than the mainstream


2. Having 100% conviction in the mainstream POV and doubling down on it in a way

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Vicente jokes that they have an internal “wrapper-death countdown” which keeps track of the number of days the company survived since the last time it was “pronounced dead.” Here are his thoughts on how startups can be successful in a market where the capabilities of frontier models continues to expand: • Do one thing really well. Vicente takes the

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what OpenAI, Anthropic, DeepMind have all tried to do is raise billions & tap vast GPU resources of tech giants without having the resulting tech de facto controlled by them. I'm arguing the OpenAI fracas show that might be impossible.

Disruption Theory & risk-aversion don’t apply

Incumbents typically cede market space to startups wherever there’s new, unproven technology or a new, unproven market, especially in spaces where they can’t use past data to predict the future. But in AI, they’re rushing to embrace new technology and uncertain markets, spending historic amounts of ... See more

However, a key risk with several of these startups is the potential lack of a long-term moat. It is difficult to read too much into it given the stage of these startups and the limited public information available but it’s not difficult to poke holes at their long term defensibility. For example:

• If a startup is built on the premise of taking base L

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And for the rare successful operators who do go on to start a new company, most opt to copy a successful product and compete for market share. Today, the market is overrun with luxury credit cards and task management tools. While often lucrative, these are also generally  bad quests . While the players may profit from winning market share from

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