OpenAI released GPT-4.5
Will AI’s Free-Trial era last?
The hottest AI companies are AI ‘Apps’
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OpenAI released GPT-4.5
OpenAI has just released GPT-4.5, a new version of its flagship large language model. The company claims it is its biggest and best model for all-round chat yet. “It's really a step forward for us,” says Mia Glaese, a research scientist at OpenAI. Since the releases of its so-called reasoning models o1 and o3, OpenAI has been pushing two product lines. GPT-4.5 is part of the non-reasoning line-up, what Glaese's colleague Nick Ryder, also a research scientist, calls “an installment in the classic GPT series.”
All large language models pick up patterns across the billions of documents they are trained on. Smaller models learned syntax and basic facts. Bigger models can find more specific patterns like emotional cues, such as when a speaker’s words signal hostility, says Ryder: “All of these subtle patterns that come through a human conversation—those are the bits that these larger and larger models will pick up on.” “It has the ability to engage in warm, intuitive, natural, flowing conversations,” says Glaese. “And we think that it has a stronger understanding of what users mean, especially when their expectations are [a] bit more implicit, leading to nuanced and thoughtful responses.”
Unlike reasoning models like o1 and o3, which work through answers step by step, “classic” large language models like GPT-4.5 spit out the first response they come up with. But GPT-4.5 is more general-purpose. GPT-4.5’s special charm seems to be in its conversation. Human testers employed by OpenAI say they preferred GPT-4.5’s answers to GPT-4o for everyday queries. “But GPT-4.5 feels like a shiny new coat of paint on the same old car,” he says. “Throwing more compute and data at a model can make it sound smoother, but it’s not a game-changer.” “The juice isn’t worth the squeeze when you consider the energy costs, the complexity, and the fact that most users won’t notice the difference in daily use,” he says. “I’d rather see them pivot to efficiency or niche problem-solving than keep supersizing the same recipe.”
“GPT-4.5 is OpenAI phoning it in while they cook up something bigger behind closed doors. Until then, this feels like a pit stop.” Sam Altman has said that GPT-4.5 will be the last release in OpenAI’s classic line up and that GPT-5 will be a hybrid that combines a general-purpose large language model with a reasoning model....
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Will AI’s Free-Trial era last?
Every big consumer tech cycle has its free-trial era. In 1999, in a few cities, it was the magic of at-cost same-day delivery from Kozmo, which lost money on every order in a bid for growth. Through the 2000s, it was the rise of powerful search engines and social networks with relatively few ads. In the 2010s, the VC-backed lose-money-to-make-money strategy returned to the physical world, with services like Uber (and a hundred Uber-fors) hemorrhaging money on underpriced taxis, food delivery, and DTC goods in a multibillion-dollar experiment in customer acquisition memorialized as a fleeting “millennial lifestyle subsidy.”
Companies do this, and investors allow it, because it sometimes works. In the process, early adopters can reap small but real benefits from strategic underpricing. Kozmo was beloved by its tiny customer base but collapsed into a punch line; Amazon, its money-losing contemporary, is one of the largest companies in the world. In 2025, we’re somewhere in the front half of a historically massive tech-investment cycle in and around AI, and the pattern is showing signs of repeating. An “interesting situation has returned where free-to-access AI is very close to the frontier,” writes Wharton professor and AI evangelist Ethan Mollick. Still, if you’re looking for it, you can see the outline of a familiar situation: OpenAI, Google, Meta, Microsoft, and smaller firms like Anthropic are losing massive amounts of money by giving away their AI products or selling them at a loss. “We are in the era of $5 Uber rides anywhere across San Francisco but for LLMs,” wrote early OpenAI engineer Andrej Karpathy in response to Mollick, “weee.” Chatbots are free, programming assistance is cheap, and attention-grabbing, money-losing AI toys are everywhere. AI is in its free(ish) trial era.
OpenAI’s confusing and constantly changing pricing currently gives unpaid users limited access to near-cutting-edge models and unlimited access to its basic ChatGPT and Search functions, with more powerful models, and more features, tiered at $20 and $200 per month, a price at which the company still loses money, according to CEO Sam Altman. To some extent, competition between AI firms can be understood as a battle to control the next version of the omnibox, the universal computer interface that has made Google hundreds of billions of dollars; in this more familiar territory, providing services for free, or very cheaply, is a necessary part of the plan. This dovetails with recent reporting that OpenAI is considering much higher price tiers for its next generation of AI “agents”:
OpenAI executives have told some investors it planned to sell low-end agents at a cost of $2,000 per month to “high-income knowledge workers”; mid-tier agents for software development costing possibly $10,000 a month; and high-end agents, acting as PhD-level research agents, which could cost $20,000 per month, according to a person who’s spoken with executives.
OpenAI is claiming that it sees a path to creating tools to match these prices….
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The hottest AI companies are AI ‘Apps’
Not long ago, Silicon Valley was dismissive of startups like Harvey. While OpenAI developed cutting-edge artificial intelligence models with the potential to shake up almost every industry, Harvey had a more modest goal: building software that makes OpenAI’s technology more useful for lawyers. “The market’s perception of companies like us… was that they’re GPT wrappers,” said Harvey Chief Executive Officer Winston Weinberg, referencing a derisive term used to suggest the repackaging of OpenAI’s models. If investors “were going to put money into something,” he added, “it needed to be into OpenAI or Anthropic.”
Today, so-called AI wrappers are all the rage. Step into any venture capital office in Silicon Valley and you’ll hear investors buzzing about startups that offer AI chatbots, research tools and other software applications for coding, clinicians and customer service, all built at least in part on the backs of large language models (LLMs) created by other leading AI developers. These startups are seeing revenue and valuations grow at a fast clip, often while spending a fraction of the amount that top AI model developers do on chips, data centers and talent. Harvey, founded in 2022, surpassed $50 million in annual recurring revenue in December, Weinberg said. Likewise, Anysphere, the startup behind the popular code-editing tool, Cursor, has hit $100 million in annual recurring revenue, according to people familiar with the matter, who spoke on condition of anonymity to discuss private information. (Anysphere did not respond to a request for comment.)
Michael Mignano, a partner at Lightspeed Venture Partners, likens this moment in AI to the original smartphone app boom nearly two decades ago. “Just like after the iPhone launched, there were millions of new mobile apps,” said Mignano, an investor in the AI notetaking service Granola, which uses technology from OpenAI and Anthropic. “Now with AI and LLMs, there will be millions of new AI products.” Investors are eager to put their money into these services. Harvey raised a $300 million round earlier this year led by Sequoia at a $3 billion valuation. Anysphere raised a $105 million round led by Thrive Capital and Andreessen Horowitz in January valuing it at $2.5 billion. And VC demand is so high that founders like Varun Mohan say the conventional fundraising process “isn’t something we have to do.”….
Enjoy! SBalley Team