With its pioneering research and development efforts, OpenAI continues to shape how we interact with rapidly evolving artificial intelligence (AI) technologies. For business owners, marketers, content creators, and those intending to learn from successful business stories, the history of OpenAI is a story of disruption, innovation, and ethical considerations.

At Business2Community, we’ve done the legwork to deliver a comprehensive history of OpenAI. Keep reading to discover everything you need to know about its funding, development, future, and more.

A History of OpenAI – Key Dates

  • OpenAI was founded in 2015 by tech visionaries Elon Musk, Sam Altman, Greg Brockman, Ilya Sutskever, Wojciech Zaremba, and John Schulman.
  • In 2019, OpenAI transitioned from a non-profit to a capped-profit company.
  • OpenAI launched ChatGPT in 2022, ushering in a new era of generative AI.
  • By 2023, teams in over 80% of Fortune 500 companies had adopted ChatGPT.
  • As of February 2024, OpenAI surpassed $2 billion in annualized revenue and achieved a $100 billion valuation.

Who Owns OpenAI?

As of April 2024, OpenAI is co-owned by Microsoft and various other investors. Microsoft owns an estimated 49% share in OpenAI, reflecting its substantial investment of up to $13 billion into the company.

The remaining 51% is divided among various other investors including Khosla Ventures, Sequoia, Thrive Capital, and Open AI’s non-profit arm, Open AI, Inc. While the non-profit arm holds a 2% stake, it retains crucial governing authority through its unique structure.

OpenAI was founded by Elon Musk, Sam Altman, Greg Brockman, Ilya Sutskever, Wojciech Zaremba, and John Schulman in December 2015. These tech visionaries started the company to develop AI safely and ensure that artificial general intelligence (AGI) or human-level AI benefits all of humanity.

Investment and Funding

In 2015, investors including Elon Musk, Sam Altman, Greg Brockman, Reid Hoffman, Jessica Livingston, Peter Thiel, Amazon Web Services (AWS), Infosys, and YC Research pledged  a combined $1 billion to OpenAI’s cause. Actual contributions from the “original donors” totaled $133.2 million, with YC Research providing no funding.

Following the company’s reorganization to a capped for-profit structure (owned by a non-profit parent company) in 2019, OpenAI was able to accept venture capital financing while still being overseen by its non-profit arm. That same year, Microsoft invested $1 billion in OpenAI Global LLC, mainly in the form of access to Microsoft’s Azure cloud service.

Valued at $29 billion in January 2023, OpenAI raised over $300 million in funding from investors such as Thrive Capital, Sequoia Capital, Andreessen Horowitz, and K2 Global. The company also received a $10 billion investment from Microsoft.

Through the deal, Microsoft would get a 75% share of OpenAI’s profits until it made back the money on its investment, after which the company would assume a 49% stake in OpenAI.

In 2023, it emerged that of the original donors, Elon Musk was the largest donor. He took to Twitter in March 2023 to voice his dismay about OpenAI.

A week later he tweeted, “I donated the first $100M to OpenAI when it was a non-profit, but have no ownership or control.” However, SEC filings later revealed Musk had actually donated around $57.4 million. This was later revised to $45 million in a March 2024 blog post by OpenAI. Following a string of fallouts with the startup he co-founded, Elon Musk went on to start his own artificial intelligence startup, xAI, in July 2023.

To support future development, OpenAI reportedly entered into early talks to raise between $8 billion and $10 billion from Abu Dhabi-based G42 for a new chip venture in December 2023.

In February 2024, OpenAI completed another deal that valued it at over $86 billion. As it did the previous year, the company sold existing shares in a so-called tender offer led by venture firm Thrive Capital. Rather than a traditional funding round, employees were able to cash out their shares and raise money for the company.

Who is the OpenAI CEO?

Sam Altman became CEO of OpenAI in May 2019 after the company shifted from being a non-profit company into a capped-profit corporation. Altman has been instrumental in OpenAI’s development of groundbreaking technologies like ChatGPT and ushering the company into a new era of profitability.

As a strong advocate for the potential benefits and ethical concerns surrounding advanced artificial intelligence, Sam Altman’s vision and influence continue to shape OpenAI.

However, his tenure hasn’t been without controversy. On November 17, 2023, in what is now known as the “Sam Altman Drama“, OpenAI’s board of directors (namely Adam D’Angelo, Tasha McCauley, Helen Toner, and Ilya Sutskever) abruptly fired Sam Altman, shocking the entire tech community.

Sam Altman

Following public outcry, board members issued a statement stating that Altman’s ousting was due to not being candid in his communications with the board and that they no longer had confidence in his ability to continue leading OpenAI.

The board’s decision blindsided OpenAI’s employees and investors, attracting criticism and doubt about the company’s stability. Employees were so dedicated to Altman that almost all of them threatened to leave OpenAI if he wasn’t reinstated. That was an incredible threat as a huge portion of their pay is in OpenAI equity which would be worth much less if they all quit.

On November 20, 2023, Microsoft’s CEO Satya Nadella announced that Sam Altman and Greg Brockman (who had been removed as chairman and resigned as president) would be joining the company to lead a new advanced AI research team.

Before the said partnership with Microsoft was finalized, 738 of OpenAI’s 770 employees (a whopping 80%) signed an open letter threatening to resign. This forced the board to pivot and negotiate with Sam Altman.

A day later, Sam Altman was reinstated as CEO, and a new board of directors, chaired by Salesforce CEO Bret Taylor, was formed.

Here, Sam Altman talks to Bill Gates about the company’s past, present, and future:

Growth and Development of OpenAI

Valued at over $80 billion as of January 2024, OpenAI remains at the forefront of leadership in AI development. This success is fueled by a combination of factors, including diverse revenue streams, strategic partnerships, and a strong focus on sustainability.

2015: Laying the Foundation

In December 2015, OpenAI was founded as a non-profit artificial intelligence research company to advance digital intelligence and benefit humanity as a whole.

OpenAI announced that Sam Altman and co-founder Elon Musk would be OpenAI’s co-chairs, while Ilya Sutskever, a world expert in machine learning would be the research director. Meanwhile, Greg Brockman, former CTO of Stripe, was named the non-profit’s CTO.

Other founding members included top AI research engineers and scientists:

  • Trevor Blackwell
  • Vicki Cheung
  • Andrej Karpathy
  • Durk Kingma
  • John Schulman
  • Pamela Vagata
  • Wojciech Zaremba.

Pieter Abbeel, Yoshua Bengio, Alan Kay, Sergey Levine, and Vishal Sikka also joined as advisors to the group.

2016: Growth and Early Development

To carry out its mission, OpenAI needed to attract top talent. Although the company couldn’t pay salaries comparable to Facebook or Google, this didn’t stop AI talent from flocking to the company.

Top AI researchers like Ilya Sutskever, the chief scientist of OpenAI and a leading expert in deep learning, were primarily drawn in by OpenAI’s potential and mission to develop AI safely and ethically.

OpenAI declared its intention to freely collaborate with other institutions and researchers by making their work open to the public. This started with the launch of OpenAI Gym in April. OpenAI released the open-source toolkit, giving developers access to various environments to test their reinforcement learning bots.

OpenAI Universe

In November, Microsoft partnered with OpenAI to democratize AI technology. The deal involved OpenAI having access to Microsoft’s latest virtual machine technology for running large-scale AI training and simulation exercises. In return, Microsoft would get cutting-edge research conducted on its Azure cloud platform.

OpenAI unveiled the “Universe” in December, a platform for measuring and training an AI’s general intelligence across various games, websites, and applications.

2017: Rapid Advancements

In March, Open Philanthropy awarded OpenAI a $30 million grant ($10 million per year for 3 years) to support its mission.

In August, an OpenAI bot made headlines when it beat the world’s best Dota 2 players. Dota 2 is a highly complex MOBA or multiplayer online battle arena game in which two teams of 5 players compete to siege and destroy the opposing team’s base. According to OpenAI engineers, the bot mastered the game in just two weeks of real-time learning.

Throughout the year, OpenAI spent $7.9 million, more than double the $2.3 million it spent on cloud computing in 2016.

2018: Elon Musk’s Departure

In February, OpenAI switched cloud providers from Amazon to Google, signing an agreement to spend at least $63 million with the tech giant over the next two years.

That same month, Elon Musk left OpenAI, citing a potential future conflict of interest with his position as CEO of Tesla and Tesla’s AI development of self-driving cars.

However, it was revealed that Musk believed the company had fallen behind other players like Google and had suggested taking over OpenAI. However, the board refused, and Musk subsequently left OpenAI. Despite initially claiming to continue as a donor, Musk made no further donations after leaving.

Elon Email

In June, the company released a paper titled Improving Language Understanding by Generative Pre-Training. The report sought to explain the concept of a Generative Pre-trained Transformer (GPT).

Open AI also spent $30.6 million that year, three times the amount spent the previous year.

2019: A Shift in Focus

In March, OpenAI shifted from a solely non-profit entity to a for-profit company and became formally known as OpenAI LP, controlled by parent company OpenAI Inc. According to a 2019 company blog post, OpenAI sought to raise capital while honoring its mission, and “no pre-existing legal structure they knew of struck the right balance”. Eventually, the company went with a unique limited partner (LP) structure.

OpenAI structure

With the new profit structure, OpenAI investors could earn up to 100 times their original investment. The remaining money would go to not-for-profit work.

OpenAI revealed that the non-profit’s board would consist of OpenAI LP employees Greg Brockman (Chairman and CTO), Ilya Sutskever (Chief Scientist), and Sam Altman (CEO), and non-employees Adam D’Angelo, Holden Karnofsky, Reid Hoffman, Shivon Zilis, and Tasha McCauley.

The company also confirmed that Elon Musk left the board of OpenAI Non-profit in February 2018 and would not be formally involved with OpenAI LP.

The company’s shift to capped profit status in 2019 fueled criticism that OpenAI’s mission to build “safe and beneficial” general artificial intelligence had become a profit-driven race to produce the most advanced AI technology on the market.

In July 2019, OpenAI received $1 billion in funding from Microsoft to license and commercialize OpenAI’s technology. A significant portion of the investment came in the form of computational resources on Microsoft’s Azure cloud service.

2020: The Rise of GPT-3

In February, Elon Musk openly criticized OpenAI on Twitter, stating that his confidence in the safety of its AI was “not high”. His comments were in response to an investigation into OpenAI by MIT Technology Review’s Karen Hao. The report suggested that the company was breaking its vow of transparency in order to outpace competitors.

In July, OpenAI launched GPT-3, a language model trained using massive internet datasets. Capable of answering questions in natural language, GPT-3 was first unveiled in a research paper published by OpenAI in May.

The advanced technology was a step up from GPT-2, which OpenAI chose not to release in 2019 due to safety and misuse concerns.

GPT-3 went on to become OpenAI’s first commercial product, with companies like Reddit signed up as initial customers.

2021: Expanding Horizons

2021 ushered in a new era of creativity with OpenAI’s launch of DALL-E, a revolutionary text-to-image AI system. The technology allowed users to create shockingly realistic images and art from natural language descriptions.

In March, the company announced that over 300 apps were using its GPT-3 API across varying categories and industries such as productivity, education, and gaming.

CNBC reported a bold prediction by Sam Altman. The CEO stated that artificial intelligence could generate enough wealth to provide every US adult with an annual income of $13,500 within the next decade.

The company expanded its horizons by launching Codex, a specialized AI model for translating natural language into code, in August.

As part of its effort to support and develop AI talent, OpenAI announced the OpenAI Residency in November. The program offered a pathway to a full-time role at OpenAI for researchers and engineers from diverse backgrounds who were eager to contribute to AI.

2022: Going Mainstream

OpenAI kicked off the year with DALL-E 2, a new and improved version of the image-generating AI system it had introduced a year earlier.

Dalle 2

Building on this momentum, in September, OpenAI announced that it had trained and would be open-sourcing a neural net called Whisper, an automatic speech recognition (ASR) system trained on 680,000 hours of supervised data collected from the web.

Later, in November 2022, OpenAI released ChatGPT. ChatGPT immediately captured global attention, becoming the fastest app to gain over a million signups in five days and amassing over 100 million users in two months (before being surpassed by Meta’s Threads).

The company also debuted Whisper 2, an upgraded version of its ASR system, enhanced to support multiple languages.

2023: Scaling Up and Restructuring

On February 7, Microsoft announced that it would be incorporating a next-generation OpenAI model based on the same foundation as ChatGPT, but more powerful, into Bing, Edge, Office 365, and its other products.

On March 1, OpenAI made its ChatGPT and Whisper models available on its API, giving developers access to advanced language and speech-to-text capabilities at cost-effective rates.

Early users of the ChatGPT API included Snap Inc., creators of Snapchat, through My AI for Snapchat+ and Instacart. While language app Speak used the Whisper API to power an AI-speaking companion product.

GPT Snapchat example

On March 3, Reid Hoffman, co-founder of LinkedIn, stepped down from the OpenAI board due to potential conflicts of interest with his investments in AI technology companies.

The following month, OpenAI announced a partnership with PwC. The consulting firm committed $1 billion to responsibly expanding and scaling its AI capabilities using OpenAI’s GPT-4/ChatGPT technology and Microsoft’s Azure OpenAI Service.

By August, teams in over 80% of Fortune 500 companies had adopted ChatGPT. Amid growing concerns about AI, OpenAI launched ChatGPT enterprise later in the month. Early corporate adopters included Carlyle, The Estée Lauder Companies, and PwC.

On November 7, OpenAI unveiled Whisper 3, an upgraded version of its open-source automatic speech recognition model, accessible through GitHub under a permissive license. Dubbed the best transcription tool available on the market at the time, the upgraded version effortlessly transcribed various types of content for users.

Following the Sam Altman drama earlier in the month, OpenAI announced that an anonymous Microsoft employee had joined the board as a non-voting member to observe the company’s operations.

In December, the New York Times became the first major news organization to sue OpenAI and Microsoft for using their publications to train AI systems.

The Times filed a lawsuit against OpenAI and Microsoft for copyright infringement, accusing them of illegally using millions of Times articles to train LLMs and create AI products that now compete with the paper.

Taking a page out of Apple’s App Store playbook, OpenAI ushered in the new year with the launch of a GPT Store for users to buy and sell customized chatbots.

OpenAI’s large investments attracted the attention of regulators, with European Commission officials stating in early January that they would look into whether Microsoft’s backing raised antitrust concerns.

On January 24, the US Federal Trade Commission followed suit, stating that it was investigating whether investments from Microsoft, Google, and Amazon into AI companies including OpenAI harmed competition.

The next month, the AI company introduced Sora, a text-to-video generation model set to revolutionize video content creation.

On February 29, OpenAI and CEO Sam Altman were sued by Elon Musk for prioritizing profits over public good and violating OpenAI’s original mission to develop AI for the benefit of humanity.

The lawsuit referred to OpenAI’s policy shift after partnering with Microsoft and questioned whether it was still open-source. Elon Musk alleged that OpenAI had dishonored its original mission, pointing to the release of GPT-4 as a glorified Microsoft product.

Musk sought a court ruling to compel OpenAI to make its research and technology available to the public and prevent the startup from using its assets, including GPT-4, for the financial gain of Microsoft or any individual.

By February 2024, OpenAI was among the most highly valued AI companies, raking in an estimated $2 billion in annual revenue through licensing fees, subscriptions, and investments.

The month of March started on a higher note with OpenAI reportedly pitching Sora, its upcoming text-to-video generator, to several Hollywood studios, talent agencies, and media executives.

On April 12, OpenAI fired researchers Leopold Aschenbrenner and Pavel Izmailov for allegedly leaking information following an undisclosed internal investigation. The move highlighted a potential contradiction in the company’s mission, stirring up criticism for straying from its original values of openness and transparency.

Three days later, OpenAI opened its first Asian office in Tokyo, Japan, expanding its global presence. To lead commercial and market engagement efforts, the company appointed Tadao Nagasaki as President of OpenAI Japan.

How to Get an OpenAI API Key

Generally, to get an Open AI Key, create an Open AI account, navigate to the API page, and set up an API Key.

OpenAI API keys offer businesses paid access to advanced AI models that generate text, code, or images, enhance data analysis, enable developers to build AI assistants within their own applications, and more.

As of April 2024, the following pricing applies to OpenAI API keys:

GPT-4-turbo:

  • Input – $0.01 per 1000 tokens
  • Output – $0.03 per 1000 tokens

GPT-3.5-turbo:

  • Input – $0.0005 per 1000 tokens
  • Output – $0.0015 per 1000 tokens

Assistant/Code interpreter:

  • Input – $0.03 per session
  • Retrieval Input – $0.20 per GB per assistant per day.

Dalle 3:

  • Standard Resolution – 1024×1024
  • Price – $0.040 per image

Whisper:

  • Whisper – $0.006 per minute (rounded to the nearest second)
  • TTS (Text-to-speech) – $15.00 per 1 million characters
  • TTS HD – $30.00 per 1 million characters

As costs are dependent on usage, businesses are advised to set up usage limits, alerts, or budgets to prevent unexpected expenses. They should also follow OpenAI’s usage guidelines to maintain access.

Since the company was first founded in 2015, the OpenAI logo has changed to reflect its evolving brand and mission. The first OpenAI logo was a simple logo featuring the word “OpenAI” in a straightforward, sans-serif font.

Openai logo 1

The design emphasized clarity and accessibility, aligning with the organization’s focus on transparent and collaborative AI research.

In 2020, OpenAI introduced a more distinctive logo. This time, the familiar sans serif font was paired with an abstract design of a looping, Mobius strip-like figure.

OpenAI logo 2

The rebranding aligned with the company’s push towards more advanced, scalable, and impactful AI technologies. Symbolizing infinity or a continuous loop, the design alluded to the iterative process of learning and the endless possibilities of AI.

The Future of OpenAI

With a growing team of over 100 researchers and engineers, OpenAI remains at the cutting edge of AI research, working to achieve artificial general intelligence. For businesses seeking to disrupt and innovate, the history of OpenAI offers valuable lessons:

  • Prioritize long-term vision and focus: OpenAI’s bold mission and vision have guided it through challenges and kept it focused on the potential transformative impact of AI. This highlights the importance of having a clear, inspiring long-term vision to navigate challenges and seize new opportunities.
  • Leverage collaboration and open research: This needs to be done through strategically collaborating with researchers, developers, and leading technology companies. OpenAI has been able to leverage the open exchange of ideas, accelerating the development of transformative AI technologies. This demonstrates the benefit of strategically sharing knowledge or resources.
  • Adaptability is key: OpenAI continues to demonstrate flexibility, shifting its strategies and approaches as AI technology rapidly develops. For companies operating in fast-paced fields, OpenAI is a prime example of how to learn, adapt, and try new approaches quickly.
  • Balance idealism with practical moves: To continue funding its ambitious research, OpenAI transitioned from a non-profit entity to a for-profit capped company. This move towards a more sustainable business model reflects the importance of making practical adjustments to stay the course.

With growing interest in its technology, OpenAI is well-positioned for continued financial growth. However, navigating the ethical complexities of AI safety and potential legal hurdles regarding intellectual property will be crucial for the company’s long-term success.

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