Elon Musk's xAI Eyes ChatGPT Rivalry with New Funding Boost

Elon Musk's AI venture, xAI, recently raised $6 billion in a series B funding round which boosted its valuation to $24 billion. Some of the key investors included Valor Equity Partners, Vy Capital, Andreessen Horowitz, Sequoia Capital, and Fidelity. Musk now believes that Grok could even become a competitor to ChatGPT by the end of the year. Despite xAI's fast growth and progress, Musk is still extremely cautious about AI's societal impact. He predicts AI will surpass human abilities by 2025. AI expert Kai-Fu Lee also predicted that AI could replace half of the global workforce by 2027.

Musk's xAI Attracts Big Investors

Elon Musk’s artificial intelligence venture, xAI, successfully completed a $6 billion series B funding round that attracted investments from some very well known firms like Valor Equity Partners, Vy Capital, Andreessen Horowitz, Sequoia Capital, Fidelity Management & Research Company, Prince Alwaleed Bin Talal, and Kingdom Holding.

This round ended up pushing xAI's valuation to $24 billion, which is a major achievement considering the company launched only 11 months ago in July of 2023.

In comparison, OpenAI, the creator of ChatGPT, has a valuation of $80 billion, more than three times that of xAI. On the other hand, OpenAI was established in December of 2015, and has had an eight-year head start.

The newly raised funds will be used by xAI to improve the research and development of its AI systems to bring its first product to market. xAI's mission is to develop advanced AI systems that are truthful, competent, and beneficial for humanity, with a much broader goal of understanding the true nature of the universe.

xAI has already made some impressive progress in AI development, and released its first AI chatbot, Grok-1, last November. The upgraded Grok-1.5, which was introduced in April, features image-understanding capabilities that allows it to process documents, diagrams, charts, screenshots, and photos. The network architecture of Grok-1 was also open-sourced in March.

Musk believes that Grok could even become a competitor to ChatGPT by the end of 2024, although he acknowledges that xAI still has a lot of ground to cover to catch up with established players like Google DeepMind and OpenAI.

Despite his work with xAI, Musk is still concerned about the rapid development of AI. In March, he joined more than 2,600 tech experts in calling for a pause on AI development because of the potential risks it poses to society and humanity.

xAI to Build “Gigafactory of Compute”

Elon Musk’s xAI is also planning to build a supercomputer in partnership with Oracle to power the next version of its “Grok” AI large language model. A report from The Information, that refers to a presentation shown to xAI stakeholders, describes the project as a “Gigafactory of Compute” for developing the next generation of the Grok AI system.

At first, Musk planned to raise $4 billion at a $15 billion valuation for xAI, with plans to increase its GPU count from 10,000 to 100,000. Due to high investor interest, this goal was later increased to $6 billion.

The funds will likely be used to transform the 100,000 GPU cluster into a unified supercomputer architecture that resembles the “Gigafactories” associated with Tesla.

xAI’s Grok

Grok is an artificial intelligence chatbot developed by xAI. It was released in 2023 and is available to users with a Premium+ subscription to the social media platform X.

Grok-1, the large language model powering Grok, was trained using a custom tech stack including Kubernetes, JAX, and Rust, making it possible to develop faster and more efficiently compared to other chatbots. Grok is trained on extensive text data from the internet and it has direct access to real-time posts on X, which gives it a major advantage in maintaining up-to-date knowledge.

Grok offers two interaction styles: “Fun Mode” and “Regular Mode.” The default “Fun Mode” provides an edgy, humorous personality but can produce factually incorrect responses. “Regular Mode” delivers more accurate answers but may still generate false or contradictory information.

Grok’s humor and personality were inspired by Douglas Adams' "The Hitchhiker’s Guide to the Galaxy," which is one of Musk's favorite books. The name “Grok” very likely comes from Robert A. Heinlein’s 1961 novel "Stranger in a Strange Land," where it signifies a profound understanding. Musk even hinted at this connection by posting “Stranger in a Strange Land” on X after Grok's announcement.

AI Will Surpass Humans by 2025

Elon Musk recently once again shared his belief that humans would need a “universal high income” thanks to AI-driven job displacement. He even suggested that without jobs, our purpose might be to “give AI meaning.”

Speaking at the VivaTech 2024 event in Paris, Musk talked about his concerns that AI would eventually provide all goods and services, surpassing humans in every task. He questioned the future role of humans and suggested that if machines outperform us in all areas, our lives might lack meaning. However, he speculated that humans might still find purpose in giving AI meaning.

Musk mentioned that people might work as a hobby if they chose, but painted a very grim picture of a future where AI replaces humans in all endeavors. He predicted that AI would surpass human abilities as soon as 2025.

It's worth keeping in mind that Musk's AI predictions have not always been very accurate. In 2019, he promised 1 million fully autonomous Tesla robotaxis by 2020, a goal that was not achieved.

Kai-Fu Lee’s Job Displacement Prediction

Musk is not alone in his AI beliefs and predictions. Computer scientist and venture capitalist Kai-Fu Lee also recently shared more about his prediction that AI technology will replace at least half of the global human workforce by 2027.

Lee first made this prediction in 2017 and has consistently maintained it since. In a 2018 interview with IEEE Spectrum, he pointed out that many human jobs are repetitive, like truck-driving, telemarketing, dishwashing, fruit picking, and assembly-line work, making them susceptible to AI replacement.

In a recent interview with Fortune, Lee reaffirmed this prediction and stated that it has proven to be "uncannily accurate." He also noted that the growth of generative AI has led many to agree with his timeline. Lee believes that AI will become a foundational technology, more significant than electricity and the internet combined.

Lee has a pretty impressive career, having worked as an executive at Apple, the founder and director of Microsoft Research Asia, and the vice president of Google and head of Google China. As of May 2024, he is the founder and chairman of Sinovation Ventures, a venture capital fund that is focused on global tech products and services, and the founder of 01.AI, an AI startup targeting the Chinese market.