OpenAI may be the world’s most valuable private company right now, but when Microsoft invested a billion dollars in the AI startup in 2019, it was nowhere close to seeing such success. The bet in the company was unsure to a point where even co-founder and original CEO Bill Gates advised Satya Nadella against the move.
In a recent interview with tech-focused YouTube channel TBPN, Satya Nadella, who is now the CEO of Microsoft, recalled how Bill Gates had expressed his lack of confidence when the company invested in OpenAI.
“Remember this was a nonprofit, and I think Bill [Gates] even said, ‘Yeah, you’re going to burn this billion dollars,’” Nadella said during the interview.
But Nadella and his team persisted despite the pushback and did not withdraw their bet on OpenAI. However, Nadella noted that he needed to go through the proper channels and get approval from the board because of the sheer size of the investment.
The Microsoft CEO said despite the huge amount and the risk of the investment, “it was not that hard to convince anyone that this is an important area.”
He said people at Microsoft wanted to give OpenAI a chance.
“We kind of had a little bit of high risk tolerance, and we said, ‘We want to go and give this a shot,’” Nadella said.
In 2019, Microsoft viewed the investment and partnership with OpenAI as a mere channel to set their foot in the up and coming technology called artificial intelligence. They also thought that it could help promote Microsoft’s own Azure’s AI capabilities. But nothing could have prepared them for what was coming their way.
“In retrospect, who would have thought? I didn’t put in a billion dollars saying, ‘Oh yeah, this is going to be a hundred bagger,’” Nadella said.
Microsoft’s investment in OpenAI
Microsoft in 2019 invested $1 billion in OpenAI to support the AI company in building artificial general intelligence (AGI) with widely distributed economic benefits.
Under the partnership, the companies agreed to build a hardware and software platform within Microsoft Azure.
Microsoft started reaping the benefits of its investment in October last year as OpenAI gave a 27% stake to the company as part of its restructuring, turning the investment to about $135 billion. Microsoft also did away with its cloud exclusivity with OpenAI, but still inked a deal that would make OpenAI buy $250 billion worth of Azure services incrementally.
Cut to January, Microsoft reported that OpenAI lifted its net income to the tune of $7.6 billion.
How OpenAI has fared till now
Meanwhile, OpenAI itself continued to make histrories and is now credited with bringing AI to the mainstream market and causing massive disruption in how the world works.
It has fared well for the startup financially as well, making it the most valuable private company in the world right now.
According to a report by Bloomberg, the company is now projecting that its revenue will grow at a fast clip in the next few years and exceed $280 billion in 2030.
‘Yeah, you’re going to burn this billion dollars,’” Nadella recalled Gates saying.
OpenAI Chief Financial Officer Sarah Friar recently said the company’s annualised revenue topped $20 billion in 2025, up from roughly $6 billion the year prior.
The AI startup is now in the first phase of a new funding round that is likely to bring in more than $100 billion, another Bloomberg report said.
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