• Latestly AI
  • Posts
  • How OpenAI Became a $90B Company Without a Business Model (Until It Did)

How OpenAI Became a $90B Company Without a Business Model (Until It Did)

A deep dive into how OpenAI went from nonprofit lab to $90B juggernaut, despite launching with no business model and no product.

Author

Marco Fazio
April 07, 2025

AI Breakdowns: OpenAI

How OpenAI Became a $90B Company Without a Business Model (Until It Did)

When OpenAI was founded in 2015, it had no product, no revenue plan, and no clear path to market. It launched as a nonprofit research lab dedicated to “safe artificial general intelligence.”

By 2023, it was generating over $2B ARR and valued at $90B. Here's how it happened.

The Origin Story

  • Founded: December 2015

  • Initial Backers: Elon Musk, Sam Altman, Reid Hoffman, Peter Thiel, Amazon Web Services

  • Structure: Originally a nonprofit, later became a “capped-profit” hybrid

OpenAI was a response to fears that AI development would be monopolized by big tech without proper oversight. The mission was clear: ensure AGI benefits all of humanity. But the structure left little room for monetization.

Phase 1: The Research Lab (2015–2019)

  • Focused on open-sourcing AI models (e.g., GPT-2)

  • Built credibility through breakthroughs in natural language processing

  • Gained academic respect and public attention

  • No monetization, no product strategy

In 2019, OpenAI pivoted. It launched a for-profit subsidiary (OpenAI LP), secured a $1B investment from Microsoft, and announced its shift to productization.

Phase 2: The Product Pivot (2020–2022)

  • Launch of GPT-3 API (2020): First step toward a revenue model

  • OpenAI Playground: Freemium access to the API

  • Adoption by early builders (e.g., Jasper, Copy.ai, Replit)

By enabling thousands of startups to build on its API, OpenAI let others discover its use cases—without committing to one itself. This ecosystem strategy paid off.

Phase 3: The Breakout (2022–2023)

  • ChatGPT launched (Nov 2022): 1M users in 5 days

  • ChatGPT Pro ($20/month): First direct revenue stream

  • Enterprise plans and integrations with Microsoft Office

  • By late 2023, OpenAI reached ~$2B in ARR

  • Microsoft invested another $10B, effectively becoming its go-to-market arm

The product-market fit of ChatGPT, paired with distribution via Microsoft and word of mouth, changed everything.

Business Model

  • API usage (token-based)

  • ChatGPT subscriptions

  • Enterprise licensing

  • Embedded use in Microsoft products (Azure, Word, Excel, Teams)

OpenAI monetizes both directly (ChatGPT) and indirectly (via Microsoft Azure consumption and integrations).

Key Drivers of Success

  1. Timing: Released GPT-3 when interest in AI spiked

  2. Platform Strategy: Let others build the use cases

  3. Distribution via Microsoft: Solved trust and reach in one deal

  4. Product Simplicity: ChatGPT made GPT accessible

  5. Scarcity to Virality: API access was invite-only → built buzz

  6. Mission-Driven PR: Framed as an “alignment-first” org even as it scaled

What You Can Learn

  • You don't need a business model to start — but you do need distribution and trust

  • Letting builders experiment on your platform can surface winning use cases faster than building them yourself

  • Simplicity wins — the ChatGPT UX made AI click for the masses

  • B2B growth can be powered by B2C virality

Join Tens of Thousands Founders, Creators, and Builders

Get the top AI tools, side hustles, and comparisons — in your inbox every Tuesday.

Marco Fazio Editor,
Latestly AI,
Forbes 30 Under 30

We hope you enjoyed this Latestly AI edition.
📧 Got an AI tool for us to review or do you want to collaborate?
Send us a message and let us know!

Was this edition forwarded to you? Sign up here