This analysis was first published in SvD Näringsliv, in Swedish, on November 7th, 2023. This piece was translated from Swedish by Claude. Some phrasing may differ from a human translation.
OpenAI has borrowed the strategy of Silicon Valley’s most successful company. Now they want to become the app store of the AI era.
It is called “Cerebral Valley” these days — something like Brain Valley or the Intellectual Valley.
The small hipster neighbourhood in San Francisco is actually called Hayes Valley. Wedged between a motorway and the slightly more upscale Fillmore district, Hayes Valley is ordinarily a place where you buy green juices, eat brunch, and browse home furnishings.
Over the past few months, it has also become a centre of AI development in the San Francisco area — and the world at large. Entire buildings in the neighbourhood have been transformed into collectives where AI development takes place at a furious pace.
That Sam Altman, CEO of OpenAI, chose to hold his first developer conference in San Francisco was therefore no coincidence.
Altman — a Silicon Valley veteran — knows how important it is to have developers on side. And he had clearly drawn inspiration from a particular, black-clad business leader from the region when he presented OpenAI’s news to the world on Monday evening Swedish time.
“Later this month, we will be launching the GPT Store,” Altman said from the stage.
A lone enthusiast in the audience spontaneously applauded, interrupting him, before being thanked for his encouragement by Altman with a laugh.
The GPT Store will be a kind of app store for AI products. Instead of an “app,” it is called a “GPT.” But the purpose is the same as Apple’s App Store or Google’s Play. It is a place where developers can distribute their AI products to the public, and where users can find ready-made applications of AI technology.
Altman was sparing with the details, but specifically mentioned the possibility of sharing revenue between OpenAI and the developers.
The announcement came roughly one year after the product ChatGPT took the world by storm and started the great AI wave we are now living through. OpenAI’s valuation is reported to be around 985 billion kronor today.
Just over 15 years earlier, Steve Jobs — then CEO of Apple — stood in a black turtleneck in San Francisco and presented the concept of the “App Store.” The store came after the iPhone had launched, and was introduced in a somewhat similar fashion to the way Altman did on Monday. The message was: now you as a developer can reach all iPhone users with your product. And we will share revenue with you when you sell your product to them.
It was, of course, no coincidence that the introduction looked so similar.
Analyst Ben Thompson coined the term “aggregation theory” to describe when a company brings together dispersed products, services, or users and packages them all in one place.
If you manage to aggregate enough of something, you become very difficult to compete with. Why go anywhere else when everything is already available in one place?
Through aggregation theory, you can understand the strategy behind Amazon (aggregate all products), Google (aggregate all search results), and Facebook (aggregate all relationships). Apple has also benefited from this — but perhaps most powerfully through the App Store itself.
By aggregating all apps, Apple built a destination for iPhone users and a vital sales channel for developers. Apple sits at the centre of this entire app economy. You cannot go around them even if you wanted to — they permit no other stores on their platform, a matter that has been before the courts on numerous occasions.
For Steve Jobs and Apple, the App Store became a masterstroke of strategy. Not only did it supply their hardware with a vast array of games and services; it became an entire economy in its own right. A study commissioned by Apple itself showed it had sold digital goods and services worth around 1.1 trillion kronor in 2022 alone. And in the middle sits Apple — earning on every transaction, both directly and indirectly.
Just as app development exploded in the late 2000s, it is now AI development that has taken the equivalent position. OpenAI launched it on a massive scale with ChatGPT. You could call it AI development’s iPhone moment — the starting point for a new era. What, then, could be more logical than following the same strategy when it comes to the store?
The GPT Store instantly becomes the hub for this AI development — a place where you will find new, exciting AI products, and where companies can sell what they have built.
But this time, it is not Apple in the driving seat. It is Sam Altman and OpenAI. He has seen how it tends to go when a new era arrives.
All you have to do is borrow the strategy from Apple — the most successful company in Silicon Valley — and make your own version.
