OpenAI & IO
Not many deals get their own sizzle reel. Let alone when it's one startup buying another. But when the most well capitalized startup in history buys another startup co-founded by Jony Ive, you get one, apparently.
Honestly, it's not even fair to call it a sizzle reel. I'm not sure what it is. It's 10 minutes of footage that serves to provide context for the deal, gives a glimpse into the relationship between Ive and Sam Altman, acts as a sort of trailer for what's to come, and is generally a love letter to San Francisco. I still can't quite wrap my head around it all.
I would say it's risky from a PR-perspective as it just places an additional layer of hype on top of entities that clearly don't need any more buzz. But it's just sort of... nice? It's not a TED talk. It's just a regular talk?
And it hits on many of the talking points that the two gave in interviews announcing the deal. Notably, that the two came together two years ago after one of Ive's children put ChatGPT on his radar. He sought out Altman and a collaboration with LoveFrom started. But they realized they needed another new company to handle what was clearly going to be not just one device, but potentially a whole range of devices built from the ground up for AI. But it likely starts with one device. Which is likely coming at some point next year. There are prototypes and both men consider it to be beautiful and profound.
How's that for hype?
One thing Ive and Altman don't wax poetic about: deal terms. But not to worry, the publications have that covered. $6.5B all-stock deal. Though it's technically less than that because OpenAI already owned some 23% of io – which, naturally, is the name of the aforementioned new startup. IO – for my own sanity, I'm going to need to capitalize it here, though Altman, who famously types in mostly lowercase, must appreciate the name – has some 55 employees who will be coming over in the deal. That includes co-founders (and fellow Apple alums) Scott Cannon,1 Evans Hankey, and Tang Tan. That does not include Ive. He'll stay behind at LoveFrom (which is not being acquired) but he'll also be doing work for OpenAI as a sort of contractor alongside some of his LoveFrom team to help bring these devices to life.
What else? Well, this all isn't entirely out of the blue, as it has been known for some time that Ive and LoveFrom were working with Altman and OpenAI on some new AI-focused hardware – and that they formed a new company to do so. And The Information reported previously that the two sides were discussing folding the entity into OpenAI. Ive himself gave an interview just a couple weeks ago, hinting at what such a collaboration could be working towards – notably, a potential anecdote to smartphone addiction that Ive feels some level of remorse for having helped to usher into existence via his iPhone designs.
Beyond that, all we get are whispers of "headphones" and "cameras" from WSJ sources. NYT talks vaguely about "ambient computing". What might this be? It's almost impossible to say, but I'm not sure it's exactly wearable, which is interesting. One thing it's not: a pair of smart glasses.2
Speaking of, it might seem weird for the duo to schedule this embargo for Wednesday morning, the day after Google I/O's kick-off keynote. After all, Altman loves to undercut such things. But how confusing would that have been? "OpenAI Acquires IO As Google I/O Kicks Off". Day 2 of I/O – the conference, not the company – is the next best thing, I suppose.
Undoubtedly they'll both say it's not about that. It's bigger than that. And given the video and the price tag here, it better be!
I honestly love that Google and OpenAI are the main competitors right now in this race for the AI crown. As I wrote earlier today in my summary of the I/O keynote:
That's why I in no way think this was Google overreacting/overcorrecting. Don't be fooled by the demos. Those are a moment in time. Take a step back and look at the bigger picture here. AI is transforming everything. It's happening right now. It's not just nerds, it's everywhere. And it will only continue to ramp. Google just showed us that they're up to the challenge and are here to meet the moment. To the point where, in my mind right now, it's a two-horse race for the future of AI.
That's subject to change of course – and certainly in a field as dynamic and fast-moving as AI – but it's starting to feel like Google and OpenAI are breaking away from the pack.
OpenAI has all the consumer momentum at the moment thanks to ChatGPT. And Google just, well, fully shoved Gemini into Search. And Chrome. And Android. And every other surface they control. They have a sheer numbers advantage (both in terms of user base and employee base) as well as a monetary one. But OpenAI – still a startup, albeit one valued at $300B – can operate more nimbly and without the burdensome baggage of legacy.
These two horses are hustling. And just when we thought things couldn't look any worse for Apple. I would love to know the vibe in Cupertino right now.3 Those iPhones must be absolutely ablaze with notifications.
M.G. Siegler
Interesting sub-head...
M.G. Siegler
M.G. Siegler
1 Also, notably, the co-founder of Mailbox (RIP) back in the day. I've been lucky enough to back two of Cannon's startups. Sadly, not this one! Come on, Scott!
2 One thing that OpenAI won't have -- even with the IO team on board -- is a massive logistics operations in Asia, like, say, Apple. Or the partners helping Meta and Google in their wearable AI tech. The IO team should have all the right contacts, but it takes time, and money, to build up such things. At least OpenAI has the money! Or maybe they aim to build in the US? That would be looked upon very favorably by you-know-who...
3 I won't say this is like Apple buying NeXT to bring back Steve Jobs -- for one thing, Ive isn't "going back" anywhere -- but there are some echoes... Blasphemy? It will all depend how this plays out...