How This AI-Powered Company Is Tapping OpenAI’s New Image Generator

OpenAI’s wildly-popular image-generation AI model has only been open to commercial use for a few weeks, but businesses are already saying the new model is a cut above the competition. In late April, OpenAI made a new model called gpt-image-1 available through the company’s API. The model is the core piece of technology behind ChatGPT’s updated image-generation capabilities (the one famous for all those Studio Ghibli-style memes). Now, any business can give their applications the same image-generation abilities as ChatGPT. That service has been a game changer for Mariam Naficy, founder of AI-powered jewelry and homegoods marketplace Arcade. Arcade is a first-of-its-kind online marketplace in which people can use AI to generate images of products and then commission independent artisans to turn those images into real objects. Customers generate an image of jewelry, rugs, or pillows, and then Arcade uses its own AI systems to analyze the image, determine the materials needed, select an artisan or maker to produce the piece, and set a price. According to Naficy, over 800,000 products have been designed on Arcade since the platform launched in September 2024. Naficy, a multi-time Inc. Female Founders honoree, says that her team wanted to add a feature that would allow users to make small edits and adjustments to product images using natural language, and were deep in discussions with a major AI provider to use their image-generation model. “We were testing it out, and we were going to roll it out,” says Naficy, but just as they had finished designing the user experience for the new feature, OpenAI dropped the new image-generation model on April 23. Naficy says that internal testing made it clear that OpenAI’s new image-gen model was “vastly better” when compared to the rival company, and because Arcade already had their UX designed, it was easy for the team to slot in the new OpenAI model. The difference between the two models was “pretty stark in terms of success rates,” says Naficy. The company still uses an AI model produced by one of OpenAI’s competitors to generate the initial images, but switches to gpt-image-1 for the edits. That quality comes with a cost, though, as gpt-image-1 is more expensive than the rival company’s model. But cost isn’t a major factor to Naficy, who says that Arcade is well-funded enough that using a more expensive model is a worthwhile trade-off if customers are having a great experience while using Arcade. In March, the company raised $25 million in a series A round, bringing its total funding to $42 million. Here’s how it works in practice: I prompted Arcade to generate an image of “a thick gold wedding band featuring rough handworking,” and was presented with several variants, including one originally priced at $212. I then asked the new OpenAI-powered editor to add a small ruby to the ring, which raised the price to $232. “I think the model is quite a big unlock for both creators and consumers on our site,” says Naficy, who believes that by enabling users to more easily adjust their creations, more customers will buy AI-generated products, boosting business for Arcade and the artisans on the platform. Arcade’s business model and use of AI is unique. Other platforms allow users to generate product designs, like AI fashion design startup The New Black, or generate prints to go on clothing, like lingerie brand Adore Me’s AM By You feature; but none allow consumers to generate an AI image and then commission a human artisan to turn that image into a physical product. Naficy previously told Inc. that the most difficult thing about building a business on the cutting edge is that “there’s no playbook to follow,” so she’s using best practices to write her own playbook. For instance, Arcade blocks users from generating products featuring copyrighted materials and IP. Naficy says that if the new OpenAI model can encourage users to create more product designs, it will be a success for Arcade. “It’s almost like we’re stocking our fish pond with great products,” says Naficy, “the more prompts and edits you make on our site, the more products we create that other people can buy.” BY BEN SHERRY @BENLUCASSHERRY