> Let’s examine the structure from the bottom to the top. At the bottom is OpenAI Global, the capped profit entity. The restriction on the capped profit company is that it must start to return a profit to the nonprofit after a 100x return in capital. Later-stage investors shouldn’t expect to receive such a return.<p>> Microsoft, in particular, has tied its wagon closest to OpenAI. It’s a later investor, so it cannot make the ~100x return, but it invested $10 billion dollars in OpenAI, mostly in the form of cloud computing credits. The deal’s terms are not quite disclosed, but we all understand that Microsoft has the largest economic stake in OpenAI.<p>This explains the deal between Microsoft and OpenAI. They weren't able to find investors who were satisfied with a lower return, but Microsoft wanted something other then a financial return: Access to the models. So the restriction on the return ensured a much worse deal for them as the only potential investors were big tech companies to whom access to the models is useful.<p>This entire non-profit/capped-profit structure turned out to be too clever by half. Had OpenAI been a standard business, they wouldn't have had this problem.