The Foundational Years: Non-Profit Origins and Pivotal Research (2015-2018)
OpenAI was founded in December 2015 by a high-profile group of tech luminaries, including Sam Altman, Elon Musk, Greg Brockman, Ilya Sutskever, Wojciech Zaremba, and John Schulman. Its initial structure was an open-source (hence the name “Open” AI), non-profit artificial intelligence research lab. The stated mission was to ensure that artificial general intelligence (AGI)—AI systems that outperform humans at most economically valuable work—would benefit all of humanity. A core tenet of this early philosophy was to freely collaborate with other institutions and researchers by making its patents and findings open to the public, positioning itself as a counterweight to the large, profit-driven AI efforts of major tech corporations.
A significant turning point came in 2018. Two key developments reshaped OpenAI’s trajectory. First, the research team unveiled the first Generative Pre-trained Transformer (GPT) model, demonstrating the powerful potential of transformer-based architectures for natural language processing. Second, and more structurally, the organization announced the creation of a “capped-profit” entity, OpenAI LP, which would be governed by the original non-profit, OpenAI Inc. This move was justified by the immense computational resources required to train increasingly large AI models. The capital required, running into hundreds of millions and eventually billions of dollars, was untenable for a pure non-profit. The capped-profit model allowed OpenAI to attract significant venture capital and other investments with the promise of a limited return, while the overarching non-profit board would retain control of the company’s direction and mission, theoretically ensuring it did not prioritize profit over safety.
The Microsoft Partnership and the Dawn of the GPT Era (2019-2022)
In July 2019, OpenAI took a monumental step by securing a $1 billion investment from Microsoft. This partnership was multifaceted: it provided OpenAI with the immense Azure cloud computing power needed for its most ambitious projects, and it gave Microsoft exclusive licensing rights to OpenAI’s AGI technologies, integrating them into its own products and Azure services for developers. This deal validated OpenAI’s capped-profit model and provided the fuel for its subsequent explosive growth.
The partnership bore its first major fruit with the release of GPT-2 in 2019, followed by the vastly more powerful GPT-3 in 2020. GPT-3, with its 175 billion parameters, was a watershed moment, demonstrating unprecedented capabilities in text generation, translation, and question-answering. Its commercial potential became immediately apparent. OpenAI began offering access to its models through a paid API, allowing developers and businesses to build applications on top of its AI. This marked a clear shift towards a B2B software-as-a-service (SaaS) revenue model.
The public consciousness of AI was forever altered with the launch of ChatGPT in November 2022. This consumer-facing chatbot, built on a refined version of GPT-3.5, became the fastest-growing consumer application in history, reaching 100 million monthly active users in just two months. It was a viral sensation that democratized access to powerful AI and made “OpenAI” a household name. This success triggered the next phase of the Microsoft partnership: a multi-year, multi-billion dollar investment extension announced in January 2023, rumored to be worth $10 billion over several years.
Monetization, Growth, and the Path to an IPO (2023-Present)
Following the ChatGPT phenomenon, OpenAI aggressively accelerated its monetization strategy. It launched a premium subscription tier, ChatGPT Plus, in February 2023. More significantly, it focused on enterprise sales, unveiling ChatGPT Enterprise in August 2023—a version offering enhanced security, privacy, and higher-speed access tailored for large businesses. The company also continued its relentless pace of innovation, releasing the multimodal GPT-4 model, which could understand both text and images, and developing tools like DALL-E for image generation and Sora for video generation.
Financially, OpenAI’s revenue skyrocketed. From virtually nothing in 2022, the company was projected to achieve an annualized revenue run rate of over $3.4 billion by the end of 2023, according to reports. This hypergrowth is a key driver behind the intense speculation about its public market debut. However, CEO Sam Altman has repeatedly stated that an initial public offering (IPO) is not an immediate priority. The primary reason cited is the company’s unusual structure and mission. A traditional IPO would involve answering to public shareholders whose primary interest is maximizing quarterly returns, which could conflict with the non-profit board’s mandate to safely develop AGI for the benefit of humanity.
Instead, OpenAI has explored alternative avenues for providing liquidity to its employees and early investors. The company has conducted regular tender offers, allowing insiders to sell their shares. In a landmark deal in February 2024, Thrive Capital led a tender offer that valued OpenAI at a staggering $80 billion or more. This secondary sale provided significant cashouts for employees without the company itself raising new capital or going public.
Expectations for a Public Offering: Scenarios and Implications
Despite the stated reluctance, market analysts and investors widely expect an IPO to be inevitable, likely in the 2025-2027 timeframe. The pressure from early investors like Khosla Ventures, Thrive Capital, and Sequoia Capital to realize returns on their massive investments will continue to mount as the company matures. The expectations for an OpenAI IPO are shaped by several key factors and potential structures.
A direct traditional IPO remains a possibility, which would instantly make it one of the largest and most watched public debuts in tech history, potentially rivaling or exceeding those of Meta or Alibaba. However, the governance conflict with its non-profit board makes this a complex path. A more likely scenario, often discussed by analysts, is a dual-class share structure. This would allow the company to issue Class A shares to the public with limited voting rights, while the original founders and the non-profit board retain Class B shares with super-voting power to maintain control over the company’s long-term mission and safety research. This structure is common in tech (e.g., Meta, Google) but would be tested by OpenAI’s unique charter.
Another plausible alternative is a direct listing or a special purpose acquisition company (SPAC) merger, though these have fallen out of favor since their 2020-2021 peak. The most intriguing possibility is that OpenAI’s path to the public markets is not through its core AGI research arm, but through a subsidiary. The company could spin off its applied AI and product divisions (like the API business, ChatGPT, and DALL-E) into a separate, for-profit entity that is easier to take public, while the parent research organization remains private and controlled by the non-profit board.
The valuation at any future IPO is a subject of intense speculation. While the last tender offer placed it above $80 billion, a successful public debut after several more years of hypergrowth could see it target a valuation in the hundreds of billions of dollars. This would be contingent on continued technological leadership, the successful fending off of competition from well-funded rivals like Anthropic, Google DeepMind, and Meta, and the expansion of its revenue streams far beyond its current API and subscription models. Key risks that would be heavily scrutinized in an S-1 filing include its extreme dependence on Microsoft, the immense and ongoing computational costs, the unpredictable regulatory environment for AI globally, and the fundamental, long-term safety challenges of developing AGI.
