OpenAI's 'Code Red' Problem

Last week, at the offices of the world's most valuable startup, something unusual happened. It began with a notification that flashed across screens in the middle of the workday. It's a typical Monday at OpenAI, and the company's employees get hit with this Slack message from Sam Altman, the CEO, where he declares a code red. Code red. CEO shorthand for we're in trouble. Kind of like a company wide emergency telling employees that they had been seeing this big problem kind of creep up and then kind of explode in recent weeks. That's our colleague, Berber Jin. He covers artificial intelligence. In many senses, it was a memo that you wouldn't expect from Sam Altman. Because Sam Altman, his leadership style is to dream big and to spin up products at a really rapid pace and ship them really fast and kind of look to the stars. And this memo was the opposite. It was like, we need to become more disciplined, and we need to focus on making the basic features of Chat JBT better for users. What prompted this urgent message? This is the first time in the company's history that it's faced such a big threat from one competitor, that competitor being Google. Usage of their AI app called Gemini just skyrocketed. I mean, they kinda dealt this blow to OpenAI in a way that they hadn't really before. Was this a surprise to you? This is definitely a surprise to me because for the three years that I've been covering this company, their lead with ChatChippity has almost been a given. Now the company that sparked the AI race is in danger of losing its lead, and this is coming at a time when its CEO needs revenue. Altman had already committed more than a trillion dollars to AI infrastructure projects like data centers and chips. If OpenAI can't figure out how to get over this bump, this blip, there's very high chance that OpenAI can't pay for those contracts or they just have trouble staying afloat financially. Welcome to The Journal, our show about money, business, and power. I'm Jessica Mendoza. It's Thursday, December 11. Coming up on the show, OpenAI's Code Red moment. This message is brought to you by Apple Card. Apple Card members can earn unlimited daily cash back on everyday purchases wherever they shop. This means you could be earning daily cash on just about anything, like a slice of pizza from your local pizza place or a latte from the corner coffee shop. Apply for Apple Card in the Wallet app to see your credit limit offer in minutes. Subject to credit approval, Apple Card issued by Goldman Sachs Bank USA, Salt Lake City branch. Terms and more at applecard.com. This episode is brought to you by Zoom. The way we work is changing, and Zoom is leading the way with meetings, chat, docs, AI companion, and more together on one powerful platform. With everything connected, teams can stay …