‘You're going to burn this $1 billion’: Satya Nadella recalls when Bill Gates doubted Microsoft's investment in OpenAI

OpenAI may be the world's most valuable private company today, but when Microsoft invested a billion dollars in the AI startup in 2019, success was far from certain. The bet in the company was so risky that even the co-founder and former CEO, Bill Gates, advised Satya Nadella against the move.

In a recent interview with the tech-focused YouTube channel TBPN, Nadella, now Microsoft's CEO, recalled how Gates had expressed doubts when the company invested in OpenAI, led by co-founder and CEO Sam Altman.

“Remember this was a nonprofit, and I think Bill [Gates] even said, ‘Yeah, you’re going to burn this billion dollars,’” Nadella said during the interview.

Despite the pushback, Nadella and his team persisted and did not withdraw their bet on OpenAI. However, Nadella said he needed to go through the proper channels and get approval from the board because of the sheer size of the investment.

The Microsoft CEO said that, despite the huge amount and the risk of the investment, “it was not that hard to convince anyone that this is an important area.”

He added that people at Microsoft wanted to give OpenAI a chance.

“We kind of had a little bit of high risk tolerance, and we said, ‘We want to go and give this a shot,’” Nadella said.

In 2019, Microsoft viewed the investment and partnership with OpenAI as a mere channel to gain a foothold in the up-and-coming technology of artificial intelligence. They also thought it could help promote Microsoft's own Azure AI capabilities. But nothing could have prepared them for what was coming their way.

“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,’” Nadella said.

Microsoft's investment in OpenAI

Microsoft invested $1 billion in OpenAI in 2019 to support the AI company in building Artificial General Intelligence (AGI) with widely distributed economic benefits.

Under the partnership, the companies agreed to build a hardware and software platform within Microsoft Azure.

Microsoft started reaping the benefits of its investment in October last year, when OpenAI gave the company a 27% stake as part of its restructuring, turning the investment into about $135 billion. Microsoft also did away with its cloud exclusivity with OpenAI, but still inked a deal under which OpenAI will buy $250 billion worth of Azure services incrementally.

Cut to January this year, Microsoft reported that OpenAI lifted its net income to the tune of $7.6 billion.

How OpenAI has fared till now

Meanwhile, OpenAI itself continued to make headlines and is now credited with bringing AI to the mainstream market and causing massive disruption in how the world works.

It has fared well for the startup financially as well, making it the most valuable private company in the world right now.

According to a report by Bloomberg, the company is now projecting that its revenue will grow at a fast clip in the next few years and exceed $280 billion in 2030.

OpenAI Chief Financial Officer Sarah Friar recently said the company’s annualised revenue topped $20 billion in 2025, up from roughly $6 billion the year prior.

The AI startup is now in the first phase of a new funding round that is likely to bring in more than $100 billion, another Bloomberg report said.