Written by Crystal Ho and Kenrick Kay
SAN FRANCISCO (Reuters) – ChatGPT maker OpenAI is working on a plan to restructure its core business into a for-profit company that would not be controlled by its nonprofit board, people familiar with the matter told Reuters, a move that would make the company more attractive to investors.
The nonprofit OpenAI Foundation will continue to exist and own a minority stake in the for-profit company, the sources said. The move could also have implications for how the company manages AI risks under a new governance structure.
Chief Executive Officer Sam Altman will also get his first equity stake in the profit-making company, which could be worth $150 billion after the restructuring as it also tries to remove a cap on returns to investors, the people said. The people asked not to be identified discussing private matters.
“We remain focused on building AI that benefits everyone, and we are working with our board to ensure we are best positioned to succeed in our mission,” an OpenAI spokesperson said. “The nonprofit is at the core of our mission and will continue to exist.”
Details of the proposed corporate structure, first reported by Reuters, highlight the significant governance changes taking place behind the scenes at one of the world’s most important artificial intelligence companies. The plan is still being discussed with lawyers and shareholders, and a timeline for completing the restructuring remains uncertain, the people said.
The restructuring also comes amid a series of leadership changes at the startup. OpenAI’s longtime CTO, Mira Murati, abruptly announced her departure from the company on Wednesday. OpenAI’s president, Greg Brockman, has also been on leave.
OpenAI was founded in 2015 as a nonprofit AI research organization, and added the for-profit OpenAI LP in 2019 as a subsidiary of its nonprofit organization, receiving capital from Microsoft (NASDAQ:) to fund its research.
The company gained global attention with the launch of ChatGPT in late 2022, a generative AI app that provides human-like responses to text queries, which has become one of the fastest-growing apps in history with more than 200 million weekly active users, sparking a global race to invest in AI.
Alongside the success of ChatGPT, OpenAI’s valuation has skyrocketed from $14 billion in 2021 to $150 billion in the new convertible debt round under discussion, attracting investors like Thrive Capital and Apple (NASDAQ:).
AI Safety
The company’s unusual structure, which gives full control of the for-profit subsidiary to the nonprofit OpenAI, was originally designed to ensure the mission of creating “safe, broadly useful artificial general intelligence,” referring to artificial general intelligence that equals or exceeds human intelligence.
This structure was on display last November during one of Silicon Valley’s biggest boardroom dramas, when the nonprofit’s board of directors ousted Alman, citing a breakdown in communication and trust. He was reappointed five days later with overwhelming support from employees and investors.
Since then, OpenAI’s board has been revamped with more tech executives, led by Bret Taylor, the former co-CEO of Salesforce (NYSE: ) who now runs his own AI startup. Any corporate changes require approval from its nine-member nonprofit board.
Removing nonprofit control could make OpenAI operate more like a typical startup, a move generally welcomed by its investors who have poured billions of dollars into the company.
However, this may also raise concerns in the AI safety community about whether the lab still has enough governance to hold itself accountable in its pursuit of AGI, as it disbanded its Super Alignment team focused on the long-term risks of AI earlier this year.
It’s not yet clear how much equity Altman will get. Altman, who is already a billionaire thanks to his numerous startup investments, has previously said he chose not to take an equity stake in the company because the board needs a majority of disinterested directors who don’t own a stake in the company. He also said he has enough money and is doing it because he loves the work.
OpenAI’s new structure will resemble that of its main rivals Anthropic and Elon Musk’s xAI, which are registered as for-profit companies, a form of for-profit company that aims to promote social responsibility and sustainability in addition to making a profit.
Comments are closed, but trackbacks and pingbacks are open.