OpenAI is an artificial intelligence research laboratory that transitioned into a for-profit organization in 2019. The corporate structure is organized around two entities: OpenAI, Inc., which is a single-member Delaware LLC controlled by OpenAI non-profit, And OpenAI LP, which is a capped, for-profit organization. The OpenAI LP is governed by the board of OpenAI, Inc (the foundation), which acts as a General Partner. At the same time, Limited Partners comprise employees of the LP, some of the board members, and other investors like Reid Hoffman’s charitable foundation, Khosla Ventures, and Microsoft, the leading investor in the LP.
History of OpenAI
OpenAI Business Model
OpenAI’s mission is to ensure that artificial general intelligence (AGI).
As OpenAI explains, “by which we mean highly autonomous systems that outperform humans at most economically valuable work—benefits all of humanity.”
How does OpenAI corporate structure work?
OpenAI is broken down in:
- OpenAI Inc., which is a single-member Delaware LLC controlled by OpenAI non-profit.
- And OpenAI LP, which is a capped-profit entity.
OpenAI Inc. board is the general partner, which leads, managed, and controls the decision made by the OpenAI LP.
On the other hand, limited partners, which do have not control over the management of the LP also have a capped return of 100x on their investments.
The cap is based on agreements that are in place for each of the limited partners.
Microsoft commercial partnership
Microsoft is the leading limited partner, and it also has a commercial agreement as part of the one billion invested in 2019, which comprises the following:
- Microsoft/OpenAI Azure AI supercomputing technologies.
- OpenAI products are served through Microsoft Azure.
- Microsoft is OpenAI’s preferred partner for commercializing new AI technologies.
In the meantime, a further partnership was closed on January 23rd, 2023, where Microsoft and OpenAI confirmed a multi-year, multi-billion agreement where Microsoft announced three main parts of this partnership:
- Supercomputing at scale – Microsoft will increase our investments in the development and deployment of specialized supercomputing systems to accelerate OpenAI’s groundbreaking independent AI research. We will also continue to build out Azure’s leading AI infrastructure to help customers build and deploy their AI applications on a global scale.
- New AI-powered experiences – Microsoft will deploy OpenAI’s models across our consumer and enterprise products and introduce new categories of digital experiences built on OpenAI’s technology. This includes Microsoft’s Azure OpenAI Service, which empowers developers to build cutting-edge AI applications through direct access to OpenAI models backed by Azure’s trusted, enterprise-grade capabilities and AI-optimized infrastructure and tools.
- Exclusive cloud provider – As OpenAI’s exclusive cloud provider, Azure will power all OpenAI workloads across research, products and API services.
- History of OpenAI:
- OpenAI started as an artificial intelligence research laboratory.
- In 2019, it transitioned into a for-profit organization.
- The organization’s structure includes two main entities: OpenAI, Inc. and OpenAI LP.
- OpenAI’s Mission:
- OpenAI’s mission is to ensure the development of artificial general intelligence (AGI) that benefits humanity.
- AGI refers to highly autonomous systems that surpass human performance in economically valuable tasks.
- Corporate Structure:
- OpenAI, Inc. is a single-member Delaware LLC controlled by the OpenAI non-profit.
- OpenAI LP is a capped-profit entity.
- The board of OpenAI, Inc. serves as the General Partner for OpenAI LP.
- Limited Partners, including employees, board members, investors like Microsoft, have capped returns and limited control.
- Microsoft Partnership:
- Microsoft is a leading limited partner in OpenAI.
- Microsoft invested a billion dollars in 2019 and entered into a commercial agreement.
- The partnership involves various aspects:
- Microsoft contributes to OpenAI’s supercomputing technologies.
- OpenAI products are hosted on Microsoft Azure.
- Microsoft deploys OpenAI models across its products, introducing new AI-powered experiences.
- Azure is OpenAI’s exclusive cloud provider, supporting research, products, and API services.
- Recent Multi-Year Agreement:
- In January 2023, Microsoft and OpenAI announced a multi-year, multi-billion agreement.
- The agreement includes:
- Microsoft’s increased investments in specialized supercomputing systems to aid OpenAI’s AI research.
- Deployment of OpenAI’s models in Microsoft’s consumer and enterprise products.
- Microsoft Azure as the exclusive cloud provider for OpenAI’s workloads.
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