Instacart CEO Fidji Simo is joining OpenAI as Applications CEO
What this means for OpenAI
Fidji Simo is an outsider. Born in a small French fishing village to two parents who didn’t go to university, she is an unlikely choice for OpenAI’s Applications CEO. In spite of this she is the perfect choice.
At Meta, she was responsible for building out their advertising business. Instacart chose her to be their CEO in 2021. Notably at Instacart, Fidji was responsible for acquisitions of Caper AI, Rosie, Eversight, and Wynshop. These acquisitions enabled growth in key areas for Instacart and provided additional advertising channels. This makes her a perfect choice for, as Altman says,
[Bringing] together a group of existing business and operational teams responsible for how our research reaches and benefits the world
This rolls nicely into OpenAI’s purchase of Windsurf. Windsurf is an AI coding tool. Others, such as Cursor, have tracked at a reported $100 Million in new ARR in the last 5 months. Growth in the LLM wrapper space, applications which wrap LLM’s to optimize existing workflows, is rocketing. These applications are also expanding the TAM, or total addressable market, of AI.
OpenAI itself does not have a growth problem. Per many reports, it is still growing at a staggering rate. OpenAI does however have a problem capturing some of the value it is creating. LLM wrappers are an excellent way for OpenAI, and presumably its competitors, to go after higher margin opportunities. Additionally these businesses are already reliant on foundational companies such as OpenAI to wrap their applications around. OpenAI can simultaneously lower COGS, LLMs in this case because they have lower prices than what they offer publicly, while increasing margins on the service of those LLMs. Once they have these additional channels, they can also focus on advertising and upselling other OpenAI services and applications in these LLM wrappers.
Fidji has exactly the right experience to be successful here. Naturally her experience in acquisitions and advertising is foundational. Beyond that, she also led Instacart through an IPO. OpenAI is getting a skilled executive who has experience with the roadmap they have ahead.