(Bloomberg) — Naveen Rao, the head of artificial intelligence at the $100 billion startup Databricks Inc., is planning to leave his position to launch a new venture making a novel type of computer, according to a person familiar with the matter. 

A spokesperson for Databricks confirmed that Rao is transitioning to an advisory role at the company, and said that Databricks is planning to invest in his new startup. The spokesperson declined to disclose the size of the investment.

Rao has also held early talks with other investors about backing the new company, which would focus on building a next-generation computer to address the rising costs of AI computing power, said the person familiar with the conversations, who asked not to be named discussing private information.

Rao declined to comment on his plans for the new company.

Rao is a serial entrepreneur who sold his data and AI analytics startup MosaicML to Databricks in 2023 for $1.3 billion. MosaicML had raised about $30 million from investors including Maverick Ventures, Lux Capital and DCVC. Before that, Rao co-founded Nervana Systems, a machine intelligence platform, which was acquired by Intel Corp. in 2016 for about $350 million. 

Given Rao’s track record, the new venture could attract significant investor interest at a lofty valuation. He would also join a wave of prominent tech executives who’ve launched startups, including former OpenAI Chief Technology Officer Mira Murati, whose company Thinking Machine Labs was last valued at $10 billion, and ex-Salesforce co-CEO Bret Taylor, whose two-year-old AI startup Sierra was also recently valued at $10 billion.

Databricks recently raised $1 billion in a funding round that made it one of the country’s most valuable startups. The round was co-led by Andreessen Horowitz, Insight Partners, MGX, Thrive Capital and WCM Investment Management.

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The company’s changes also include improvements to inventory strategy, product innovation and connection with core customers, as well as a recapitalization plan that was announced in August, Rent the Runway Co-Founder and CEO Jennifer Hyman said Thursday (Sept. 11) during the company’s quarterly earnings call.

“Significant business transformations typically take place over a long time horizon,” Hyman said. “However, over the last several months, we’ve made swift progress and delivered results quickly.”

Recent product launches that enable personalized recommendations include features based on each customer’s favorite designers, styles and occasions, according to a presentation released Thursday.

Launched in August, these features personalize the customer’s browsing experience with “relevant recommendations based on her preferences and interests to make picking easy,” the presentation said.

The company also plans to leverage AI to surface insights from members’ reviews, making it easier for customers to find the right style and fit, per the presentation.

“Looking forward, product improvements will focus on incorporating more personalized recommendations […] and using AI for review summaries and fit improvements to build a continuously improved product for our customers,” Hyman said during the call.

Hyman also highlighted other components of Rent the Runway’s transformation, including a “historic investment in inventory” that has added 2,200 new styles and 56 new brands to the platform so far this year, giving customers more items to browse and rent; the launch of affiliate emails that enable customers to purchase from brands via links in Rent the Runway’s emails; new social media campaigns that facilitate the company “meeting our customers where they are on Instagram, TikTok and Reddit”; and exclusive, in-person events for subscribers that drew demand that was three times greater than capacity.

During the quarter ended July 31, Rent the Runway saw year-over-year increases of 2.5% in revenue, 13.4% in active subscribers, 5.7% in total subscribers, and 77% in average subscription net promoter score, according to a Thursday earnings release.

Hyman also spotlighted the recapitalization plan that Rent the Runway announced Aug. 21, saying it will strengthen the company’s balance sheet and supply it with fresh capital.

“Since COVID, I believe that our capital structure has been the thing holding us back from making a full comeback, and we’re happy to be moving forward into a new chapter,” Hyman said during the call. “We’re ready to be reacquainted with the investor community and I view this as our IPO 2.0.”

Artificial intelligence giant OpenAI on Thursday announced its nonprofit parent will retain control of the company while also gaining an equity stake worth more than $100 billion.

The move will allow OpenAI to raise new capital while also making its nonprofit parent company “one of the most well-resourced philanthropic organizations in the world,” according to Bret Taylor, chairman of OpenAI’s board.

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“This recapitalization would also enable us to raise the capital required to accomplish our mission — and ensure that as OpenAI’s [public benefit corporation] grows, so will the nonprofit’s resources, allowing us to bring it to historic levels of community impact,” Taylor said in a statement.

OpenAI and Microsoft also said in a joint statement on Thursday that they signed a non-binding memorandum of understanding (MOU) to shape their next phase of partnership and are actively working to finalize a definitive deal. The companies said they are focused on building “the best” artificial intelligence tools that are also safe.

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“OpenAI and Microsoft have signed a non-binding memorandum of understanding (MOU) for the next phase of our partnership,” the two companies said in a joint statement Thursday afternoon. “We are actively working to finalize contractual terms in a definitive agreement. Together, we remain focused on delivering the best AI tools for everyone, grounded in our shared commitment to safety.”

The Microsoft headquarters campus in Redmond, Washington. (iStock / iStock)

Microsoft has reportedly invested around $13 billion in the ChatGPT creator since 2019.

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In May, OpenAI announced it was scuttling its plan to move the company away from a nonprofit structure to becoming a for-profit company. The ChatGPT-maker created a for-profit limited liability company (LLC), which it converted into a public benefit corporation that considers the interests of shareholders as well as OpenAI’s mission. The tech giant announced at the time that OpenAI’s nonprofit would have operational control over the public benefit corporation and would be a large shareholder in it.

Sam Altman, co-founder and CEO of OpenAI, speaks during a panel discussion titled “The Age of AI” at the Technical University of Berlin on February 07, 2025, in Berlin, Germany. (Sean Gallup/Getty Images / Getty Images)

OpenAI CEO Sam Altman, who prompted the company’s exploration of moving to a for-profit structure to make it easier for the company to raise the large amounts of money for investments he thinks will be needed to achieve artificial general intelligence (AGI), sent a letter to employees at the time explaining the decision and what it means for the company.

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“OpenAI was founded as a nonprofit, is today a nonprofit that oversees and controls the for-profit, and going forward will remain a nonprofit that oversees and controls the for-profit. That will not change,” Altman wrote in May.

FOX Business’ Eric Revell contributed to this report.