How OpenAI has been built. In today’s newsletter, OpenAI's rise to a $157B giant wasn't just about building superior AI. It was driven by five bold business decisions that broke the rules and built an unbeatable competitive moat.

In today’s edition:

• AI Case Study— How to build a $157 billion company? OpenAI [Case Study]

• Build Together— Here’s How I Can Help You

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[AI Case Study]

How to build a $157 billion company? OpenAI [Case Study]

In 2015, OpenAI was a nonprofit research lab with a noble mission: to ensure Artificial General Intelligence (AGI) would benefit all of humanity.

Less than a decade later, it has become a $157 billion powerhouse dictating the pace of technological revolution.

This wasn't an accident.

It wasn't just about building GPT.

OpenAI's dominance is the result of a series of bold, strategic decisions that rewrote the rulebook for scaling a tech company.

This is the story of how they did it, and the lessons you can apply to your own business.

Here are 5 Decisions that changed the course of this company:

1. The Capped-Profit Gambit

2. The Microsoft Alliance

3. The Ladder of Innovation

4. Surviving a Near-Death Experience

5. Building the AI Power Grid

You and I are going to break down this playbook, so you can steal the lessons for yourself.

Let’s go!

[Decision 1] They Invented a New Way to Do Business

By 2019, OpenAI was facing an existential crisis.

They started in 2015 as a nonprofit with a mission to build safe AGI for everyone.

But AGI is expensive.

The computational power and talent they needed cost far more than nonprofit donations could cover.

They were burning cash fast.

So, they did something no one expected.

They invented a new way to structure a company.

They created a "capped-profit" model.

How it Worked

OpenAI created a new for-profit arm, OpenAI LP, governed by the original nonprofit, OpenAI Inc.

This structure allowed them to raise billions in venture capital and offer equity to attract top engineers.

The Genius

It preserved their core mission while unlocking the capital engine of Silicon Valley.

Investors' returns were capped (initially at 100x), ensuring that any profits would flow back to the nonprofit's mission of benefiting humanity.

Lesson

When existing models don't fit your mission, invent a new one.

Governance can be a product, and OpenAI's hybrid structure was its first world-changing innovation.

[Decision 2] The Microsoft Alliance

With their new structure, OpenAI could have taken money from anyone.

They chose a strategic partner.

Their $1 billion+ deal with Microsoft gave them two things money alone can't buy:

1) Massive Compute

They got exclusive access to Microsoft Azure's supercomputing infrastructure.

Without this, training models like GPT-3 would have been impossible.

2) Instant Distribution

The partnership put OpenAI's tech directly into Microsoft products like Office, Teams, and GitHub Copilot.

This gave them a direct line to millions of enterprise and individual users.

Lesson

Don't just look for an investor.

Look for a partner who can give you an unfair advantage in infrastructure or distribution.

That's how you build a real moat(your competitive advantage).

[Decision 3] The Ladder of Innovation

OpenAI didn't just drop ChatGPT on the world and hope for the best.

They built up to it, step by step.

Each model release was a strategic move.

GPT-1 (2018)

A proof-of-concept that showed their transformer-based approach was viable.

GPT-2 (2019)

A major leap in capability.

They initially withheld the full model over safety concerns, but they established themselves as thoughtful, responsible leaders in the space.

GPT-3 (2020)

The breakthrough.

Released via API, it created a new ecosystem, allowing thousands of developers to find product-market fit for OpenAI and prove the technology's value.

ChatGPT (2022)

The masterstroke of consumer adoption.

It wrapped their powerful engine in a simple chat interface, reaching 100 million users in two months and making "AI" a household term.

GPT-4 (2023)

Demonstrated exponential progress, scoring in the 90th percentile on the bar exam (up from the 10th for GPT-3.5) and cementing OpenAI's technical leadership.

Lesson

Don't wait for perfection.

Build in public through iterative releases.

Each step can build market confidence, create an ecosystem, and fund the next leap forward.

[Decision 4] Surviving a Near-Death Experience

The November 2023 board crisis, where CEO Sam Altman was fired and reinstated in five days, could have destroyed the company.

95% of employees threatened to quit.

Instead, it made them stronger.

The crisis started from a fundamental conflict between the nonprofit board's mission to safely govern AGI vs the for-profit arm's mission to pace of commercialization.

• board was reconstituted with experienced leaders like Bret Taylor and Larry Summers, capable of managing a high-growth company

• crisis forced open conversations about risk, safety, and speed, leading to clearer communication protocols and a more resilient organizational structure.

Lesson

The crisis is a catalyst.

If managed correctly, it can expose weakness and force an organization to mature.

Don't fear it.

Use it to evolve.

[Decision 5] Building the AI Power Grid

Now, OpenAI is playing the long game. They're moving from making the product to owning the entire ecosystem.

GPT Store (2024)

By allowing anyone to build and monetize custom GPTs, OpenAI transformed from a product company into a platform, mirroring the wildly successful App Store models of Apple and Google.

This outsources innovation and creates a powerful network effect.

$500 Billion Stargate Project (2025)

This ambitious plan to build a 10-gigawatt AI supercomputer is a clear signal of their endgame.

They aren't just building models, they are building the electrical grid for the AI revolution, creating a barrier to entry so high that few can ever hope to compete.

Lesson

The ultimate moat isn't a single product.

It's the platform everyone else has to build on.

Think beyond the application layer and toward becoming the underlying utility.

Key Takeaways

• if existing business or governance models don't serve your mission, create new ones

• seek a partnership that provides a strategic advantage in computing, data, or distribution

• use a ladder of increasingly powerful public releases to build momentum, create an ecosystem, and fund your vision

• use high-pressure moments to stress-test your governance and culture, emerging more resilient

• long-term goal for dominance is to transition from making the product to owning the infrastructure everyone else uses

Final Thought

OpenAI's story isn't just about brilliant code.

It's about brilliant strategy.

They understood that to build a world-changing technology, you first have to build a world-changing company.

They bent the rules of corporate governance, leveraged partnerships for an unfair advantage, and systematically built a platform that is now becoming the foundation of the next technological era.

The AI world is moving fast.

There is no first-mover advantage, there is only a fast-mover advantage.

Learn fast, build fast, win fast, and move fast.

Happy AI

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