OpenAI announced Sunday that ChatGPT now analyzes PDFs. Great new feature! But not everyone is happy about the new feature.

As reported by Business Insider (A minor ChatGPT update is a warning to founders: Big Tech can blow up your startup at any time, written by Hasan Chowdhury and available here), OpenAI introduced a new beta feature for ChatGPT subscribers on Sunday, which allows them to upload PDFs. The chatbot analyzes the files and allows users to start asking questions about them.

Anyone who has ever tried scrolling through hundreds of pages of PDFs to pull out useful data and synthesize information will know just how tedious it can be. That makes the update a pretty nifty one for ChatGPT Plus users.

But the fact that ChatGPT now analyzes PDFs creates a wider problem.

Some startups have built their businesses around ChatGPT’s lack of interactivity with PDFs. Now that ChatGPT can interact with them, what can these other startups offer that ChatGPT can’t?

The simple answer may be a whole lot of nothing.

Sahar Mor, product lead at payments giant Stripe, wrote on LinkedIn that “OpenAI just executed a move that will wipe out dozens of AI companies.” Specifically, he referred to “wrapper startups.”

These are essentially startups that “wrap” themselves around an API like ChatGPT, using the core technology underneath the chatbot to offer some sort of service that isn’t available directly from that API.

Perhaps the most prominent wrapper to date has been Jasper AI, which went into 2023 with a $1.5 billion valuation, with backing from big VC players such as Coatue and Bessemer Venture Partners.

What did it do to get that lofty valuation? It created an “AI copilot” specific to the needs of enterprise marketing teams by wrapping around OpenAI’s GPT model.

It’s an idea that seems to be struggling, with the company cutting its internal valuation, The Information reported. It also announced layoffs in July.

Startups that offered user interactions with PDFs by wrapping around tools like ChatGPT may wonder if they face a similar fate.

Here’s one example. In May, data scientist Alex Reibman announced ChatOCR, a ChatGPT plugin that “reads text from PDFs, including scans and handwriting.”

Following the ChatGPT update this past weekend, he ran a poll on X that asked users what would happen to his plugin “now that ChatGPT has built in PDF processing.” Out of 210 respondents, 72.4% said they expected the plugin to “see less usage.”

I can see trends like this affecting companies across numerous industries, including legal technology and eDiscovery. If OpenAI sees a wrapper capability that is catching on with potential customers, they could decide to add that same functionality and significantly impact the startup that leveraged it in the first place. Software companies that are leveraging ChatGPT into their tech stack need to offer enough other capabilities to establish a firm footing.

So, what do you think? Is it a good thing or bad thing that ChatGPT now analyzes PDFs? Please share any comments you might have or if you’d like to know more about a particular topic.

Image created using Microsoft Bing’s Image Creator Powered by DALL-E, using the term “a brain analyzing a document”.

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