OpenAI, valued at $80 billion, may transition to a for-profit model with scrutiny.

From Observer: 2024-07-06 14:41:11

OpenAI, valued at $80 billion, operates uniquely as a nonprofit with a capped-profit subsidiary where investors can buy equity. CEO Sam Altman may transition it to a fully for-profit entity. Founded in 2015 by Altman, Elon Musk, and Ilya Sutskever, OpenAI aims to advance digital intelligence for human benefit.

In 2019, OpenAI introduced a capped-profit arm to raise funds for research while staying true to its nonprofit mission. The profit cap is an outstanding 100x, surpassing major A.I. stocks like Nvidia. OpenAI’s structure includes an original nonprofit and a new capped profit arm to balance financial support and mission alignment.

OpenAI’s board faced scrutiny after attempting to remove CEO Sam Altman, showcasing potential power struggles. Microsoft, a major investor, rehired Altman after the incident, leading to questions about Microsoft’s control over OpenAI. This prompted criticism and speculation about the company’s autonomy and decision-making.

OpenAI’s potential transition to a for-profit model raises concerns about its nonprofit mission. The company maintains its focus on building AI for the benefit of all, but changes in governance may occur. The hybrid model, with a nonprofit board overseeing a for-profit subsidiary, is a unique yet precedented approach in corporate structures.



Read more at Observer: Why Would OpenAI Want to Shift to a True For-Profit Anyway?