Benchmark's Bill Gurley: Microsoft-OpenAI deal sounds like one of the most complex of all time

Bill Gurley from Benchmark discussed the complexities of the $500 billion Stargate joint venture involving OpenAI, Oracle, and SoftBank, highlighting skepticism around its financial backing and structure, particularly given the rushed announcement at the White House. He noted the potential for increased tension between Microsoft and OpenAI, as well as the ongoing public feud between Elon Musk and OpenAI’s CEO Sam Altman, reflecting broader uncertainties in the AI market.

In a recent discussion, Bill Gurley, a general partner at Benchmark, shared his insights on the newly announced $500 billion joint venture called Stargate, involving OpenAI, Oracle, and SoftBank. The announcement was made at the White House, with President Trump praising it as a significant investment in America’s potential. However, the deal has sparked skepticism, particularly from Elon Musk, who questioned the financial backing behind the venture, leading to a public exchange with OpenAI’s CEO, Sam Altman.

Gurley expressed that the announcement seemed rushed, possibly to align with Trump’s desire for early wins in his administration. He noted that the structure of the deal might be a “prop co op co,” where one entity owns the property while another leases it. This complexity raises questions about SoftBank’s involvement, as it typically does not engage in private credit pools. Additionally, he highlighted that OpenAI would be the sole customer in this arrangement, which could add further complexity to its already intricate capital structure.

The conversation also touched on the broader implications of the deal, particularly regarding the relationship between Microsoft and OpenAI. Gurley pointed out that the partnership between these two companies has been fraught with tension, and the Stargate announcement could exacerbate existing fractures. He emphasized that the deal’s complexity, including profit rights and potential equity conversions, makes it one of the most intricate agreements in the tech industry.

Gurley noted the hyperbolic nature of the AI market, suggesting that while there is excitement surrounding these developments, it is essential to approach them with a degree of skepticism. He indicated that the financial structure of the deal might involve debt rather than raising the entire $500 billion in equity upfront. This cautious perspective reflects the uncertainty surrounding the venture’s actual viability and long-term impact.

Finally, Gurley acknowledged the ongoing public feud between Musk and Altman, which adds an intriguing layer to the narrative. He likened the situation to a dramatic television series, highlighting the unprecedented nature of executives engaging in real-time discussions on social media. The tensions between the two figures stem from differing visions for OpenAI, particularly its transition from a nonprofit to a for-profit entity, which has implications for their respective interests in the evolving AI landscape.