Microsoft’s early investments in OpenAI may seem like a no-brainer today, but Satya Nadella says the company and its founder, Bill Gates, saw the decision as a risk back then.
Microsoft invested $1 billion in OpenAI in 2019, less than four years after its founding. The company has since invested over $13 billion in the ChatGPT maker.
But getting that first investment deal across the finish line wasn’t that straightforward, Nadella said in an interview with “TPBN,” a tech-focused YouTube show, on Tuesday.
“Even at Microsoft, you kind of got to have to get a board approval to just go throw a billion dollars out there,” Nadella said.”But I must say it was not that hard to convince anyone that this is an important area and it’s going to be risky.”
“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,'” he continued.
Nadella told TBPN that Gates was also wary when he wanted to invest in OpenAI back in 2019.
“Remember this was a nonprofit, and I think Bill even said, ‘Yeah, you’re going to burn this billion dollars,'” Nadella said.
“We kind of had a little bit of high risk tolerance, and we said we want to go and give this a shot,” he added.
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Representatives for Nadella and Gates at Microsoft did not respond to a request for comment from Business Insider.
OpenAI has come a long way since Microsoft took its first bet on it.
The AI startup became a household name in November 2022 after it released an early demo of ChatGPT. The chatbot went viral on social media and added a million users within five days.
Sam Altman, the CEO of OpenAI, said at the company’s annual DevDay conference on October 6 that “more than 800 million people use ChatGPT every week.”
On Tuesday, OpenAI announced that it had completed its restructuring. Its nonprofit arm, OpenAI Foundation, will now oversee a new public benefit corporation, OpenAI Group PBC. With the changes, Microsoft holds a 27% stake, valued at about $135 billion, in OpenAI’s for-profit business.
Microsoft’s shares are up nearly 29% year to date.
