The Pragmatic Engineer

The Pragmatic Engineer

Share this post

The Pragmatic Engineer
The Pragmatic Engineer
The Pulse #94: OpenAI’s ethics crisis
Copy link
Facebook
Email
Notes
More
The Pulse

The Pulse #94: OpenAI’s ethics crisis

Claims of predatory stock clawback clause and unethical use of an actor’s voice plague leading AI startup. Also: Microsoft’s urgent focus on security.

Gergely Orosz's avatar
Gergely Orosz
May 23, 2024
∙ Paid
61

Share this post

The Pragmatic Engineer
The Pragmatic Engineer
The Pulse #94: OpenAI’s ethics crisis
Copy link
Facebook
Email
Notes
More
8
1
Share

The Pulse is a series covering insights, patterns, and trends within Big Tech and startups. Notice an interesting event or trend? Send me a message.

Today, we cover:

  1. Industry pulse. Replit pivots from “hobbyist coders” to enterprise, Microsoft takes on Apple with ARM64 laptop, Vercel’s late-stage funding round, GitHub Copilot extensions, and more.

  2. OpenAI’s ethics crisis. Déjà vu: six months after OpenAI’s board booted out Sam Altman as CEO for “not being consistently candid in his communications,” Altman (since restored to his old role) faces new but familiar allegations. This time, he insists he knew nothing of predatory vested stock clawback terms, or that the demo voice of ChatGPT-4o sounds almost identical to Scarlett Johansson in the movie, ‘Her.’

  3. Microsoft’s urgent security focus. After a string of embarrassing, high-profile security incidents, Microsoft is making security a top priority and putting its money where its mouth is, by linking executives’ compensation to security milestones. Tech companies might be wise to consider taking security as seriously as Microsoft.

1. Industry pulse

Replit pivots from consumer to enterprise focus

Replit is a software development and deployment platform offering an online integrated development experience (IDE.) Founded in 2016, the company raised $222M in funding and was valued just above $1B in early 2023. In 2021, Replit’s vision was to bring the “next billion” software creators online. During the 2023 fundraising, the stated focus was to expand cloud services and AI development.

There is a lot to like about Replit in the boldness of its vision, the generous free plan for developers, and a friendly pricing model. They also treat employees well; in November 2023 the company offered a total of $20M in liquidity to current and former employees.

Unfortunately, last week the company announced letting go 20% of staff (30 people) and that it is switching focus to enterprise customers: not the “next billion software creators,” but “knowledge workers” and the “Fortune 500.”

To me, this makes sense. The company has built neat AI capabilities – a tool called Replit AI – but AI is expensive to build and run. In order to have any shot at turning a profit, Replit needs professionals to pay more. There is little point trying to reach a billion or more developers if the company’s future is uncertain. Should Replit succeed in building a viable business from enterprise customers, I’m sure they will consider re-focusing on the “software creator” market.

Anecdotally, I’ve heard about the usage of Replit by startups and scaleups. A scaleup CEO told me they pay for Replit so they can hack together things; sometimes, when the engineering team says that building a prototype will take weeks to complete, the CEO spins up a Replit service, and builds a prototype of the project in a few hours which gets the point across. This CEO tells me they can’t roll out Replit to their company because it’s a “hobbyist product” without sufficient enterprise features. Well, this seems to be exactly what Replit is changing!

I expect more consumer-focused AI startups to pivot into enterprise. A takeaway from Replit is that AI-powered products are a hard sell for consumers, who are unlikely to pay more for them. For the economics to work, enterprise customers are needed, otherwise big trouble awaits down the line. Replit is making this pivot when it’s in a strong financial position. Good luck to the team in executing this shift!

Microsoft takes on Apple with ARM64 Surface Laptop

This post is for paid subscribers

Already a paid subscriber? Sign in
© 2025 Gergely Orosz
Privacy ∙ Terms ∙ Collection notice
Start writingGet the app
Substack is the home for great culture

Share

Copy link
Facebook
Email
Notes
More