OpenAI rival HuggingFace says it’s seeing more client interest after Sam Altman fiasco

Artificial intelligence startup Hugging Face says it’s seeing increased interest from potential customers following the chaos at rival OpenAI.

“I think a lot of companies, organizations now are kind of wondering about the risk about outsourcing their AI to just one AI provider,” Hugging Face CEO Clément Delangue said Tuesday on a call with reporters. “It creates, obviously a single point of failure for them — a little bit for the field too — so they’re investigating different solutions.”

Hugging Face, whose platform is used by developers to share AI model code, isn’t the first high-valued startup in the space to share that observation in the 11 days since Sam Altman was ousted as OpenAI CEO and then quickly reinstated following an uproar among employees and investors.

Cohere, the Toronto-based large language model (LLM) startup valued at more than $2 billion, has also seen more inquiries from prospective customers, according to spokesperson Josh Gartner.

Companies “want outstanding, reliable business solutions, not soap operas,” Gartner told CNBC on Tuesday.

Multiple companies told CNBC they’d considered switching from OpenAI to competitors’ services as the confusion swelled inside the company.

Cohere’s top executives, CEO Aidan Gomez and COO Martin Kon, sent a note to investors last week, prior to Altman’s return, informing them that the company’s mission and strategy are “shared fully” by its leadership team, company, enterprise customers and investors.

The letter didn’t name OpenAI but referred to “the events with one of our competitors over the weekend.” OpenAI has a unique structure in that the parent entity is a nonprofit, with a so-called capped-profit company underneath that umbrella. The board represents the nonprofit and oversees the activities of Altman and the rest of the corporate team.

Cohere’s executives laid out a clear contrast in how their company is run.

“Cohere is fortunate to have a board of extremely experienced external board members who are professional investors with significant stakes in the company, in addition to founder control of the board,” they wrote.

With the challenges at OpenAI, they added, “We believe enterprises feel more than ever that they need a stable and reliable LLM provider,”

Hugging Face, which is based in New York, raised $235 million in August at a valuation of $4.5 billion. Investors include Google, Amazon, Nvidia, Salesforce, AMD, Intel, IBM and Qualcomm.

Anthropic, founded by ex-OpenAI employees, declined to comment on whether it’s seen increased interest in the past couple weeks. The company is valued at $4.1 billion. A representative for Google’s Bard team, which competes with OpenAI’s ChatGPT, also declined to comment.

WATCH: If the U.S. doesn’t win on AI, the emerging China alliance will

Originally posted 2023-11-28 20:39:00.