To use, or not to use OpenAI’s API (e.g. GPT-3) as a foundation for your business? Jasper, an AI copywriting startup, might just be the one learning this lesson the hard way right now. It soared to fame in 2021, only to be quickly outshone by ChatGPT. It’s still considered a member of the Generative AI (GenAI) Unicorn club, but its standing is unstable: a few weeks ago, it saw a $0.3 billion drop in valuation. It makes it a prime case to study, being one of the largest enterprises initially wholly reliant on GPT-3 model. Today, we'll examine the insights this case offers.
How to survive ChatGPT?
The starting point of Jasper
No doomism in Jasper’s mission
Financial situation
How does Jasper (plan to) make money?
What does it offer?
Tech behind Jasper
Bonus: All important links about the founders
How to survive ChatGPT?
November of 2022, OpenAI released ChatGPT giving the public power of Jasper and similar tools in a user-friendly interface making it everyone’s favorite in an instant. While the AI tool managed to hypnotize the public with its magic, it caused mayhem among the industry insiders; including Jasper’s CEO who had some urgent calls to make.
In a virtual meeting, Dave Rogenmoser, Jasper’s CEO, found himself on one side of the screen, while Sam Altman, OpenAI’s CEO, appeared on the other. The brainchild of Rogenmoser, had been built upon OpenAI's flagship model, GPT-3, establishing a close-knit relationship between the two tech startups. The Information reported that they also share a Slack channel for exchanging updates and feedback related to GPT-3.
Rogenmoser's attention was piqued by the release of ChatGPT, a product strikingly similar to Jasper's, but… free of charge.
Considering the significant payments made by Jasper, a Y Combinator-backed enterprise, for the use of GPT-3, Rogenmoser felt a need to address the matter with OpenAI. While recognizing that OpenAI had no obligation to Jasper, the CEO expressed the necessity for a reconsideration of their business strategies if Silicon Valley’s new darling intended to continue providing its AI chatter box for free.
Soon, ChatGPT indeed introduced a monthly fee… significantly lower than Jasper’s prices.
That became a huge problem for many so-called 'thin wrappers' that built their products around OpenAI technology.
In September 2023, less than year after making that call to Altman, Rogenmoser has decided to step down as the CEO to help the company gain more enterprise customers through its next chief, Timothy Young, previous president of Dropbox Inc.
In October 2023, the company released an end-to-end AI copilot to personalize each company and combine business context and memory with purpose-built skills. With this launch, the company also added analytics and AI insights for better performing content, an intelligence hub to securely tap into brand, strategy and audience information, and campaign acceleration tools to monitor processes.
Jasper’s path was never rosy; at some point it may have seemed like an instant triumph, yet its origins trace back to a lengthy eight-year journey of trial and error for its co-founders.
The starting point of Jasper
In 2014, Rogenmoser, JP Morgan (yes, his name indeed matches the financial giant's), and Chris Hull forged a pact, vowing to establish a company, generate $30,000 per month, and uphold their camaraderie above all else.
Following the closure of two unsuccessful Software as a Service (SaaS) ventures, the trio eventually landed up with a digital marketing agency, which trajectory soon shifted towards educational courses, and understanding the intricacies of marketing. But there was no scale, and much more hassle than money. Dissatisfied with their agency and info-publishing ventures, Dave sought a software business with recurring revenue. Over a weekend, he and co-founders created a widget displaying recent course purchases, doubling their sales. Testing it on friends' websites yielded positive sales conversions, leading to the inception of Proof. This led them to the Y Combinator program.