OpenAI, the creator of ChatGPT, is planning a significant restructuring of its business model. The company intends to transition from its current non-profit status to a for-profit benefit corporation.
This move will result in the non-profit board relinquishing control over the for-profit entity, according to sources familiar with the matter.
Sam Altman to Gain Equity
For the first time, OpenAI's CEO Sam Altman will receive equity in the company, which could be valued at approximately $150 billion post-restructuring.
Additionally, the company is considering removing the cap on investor returns, making it more appealing to potential investors.
"We remain focused on building AI that benefits everyone. We're working with our board to ensure we're best positioned to succeed in our mission. The non-profit is core to our mission and will continue to exist," an OpenAI spokesperson stated
Governance and Leadership Changes
The proposed restructuring underscores significant governance changes within OpenAI, though details are still being finalized with lawyers and shareholders, leaving the timeline for completion uncertain.
Coinciding with this transition are notable leadership changes, including the sudden departure of longtime CTO Mira Murati and the leave of absence of President Greg Brockman.
Founded in 2015 as a non-profit AI research organization, OpenAI introduced the for-profit OpenAI LP entity in 2019. This restructuring enabled the company to secure capital from Microsoft and other investors to fund its research.
Implications for AI Safety and Governance
OpenAI's unique structure, which previously granted full control of the for-profit subsidiary to the non-profit, was designed to ensure the mission of creating "safe AGI that is broadly beneficial."
This governance model came under scrutiny last November when the non-profit board ousted Altman due to a breakdown in communication and trust.
Altman was reinstated after five days, backed by overwhelming support from employees and investors.
The removal of non-profit control could make OpenAI operate more like a typical startup, a move generally welcomed by investors.
However, it raises concerns within the AI safety community about whether OpenAI will maintain sufficient governance to hold itself accountable in its pursuit of AGI.
Earlier this year, OpenAI dissolved its superalignment team, which focused on the long-term risks of AI.
Future Outlook and Market Impact
OpenAI's new structure would align more closely with major rivals like Anthropic and Elon Musk's xAI, both registered as benefit corporations that aim to promote social responsibility and sustainability alongside profitability.
Valuation has skyrocketed from $14 billion in 2021 to $150 billion in the new convertible debt round under discussion, attracting prominent investors such as Thrive Capital and Apple.
Editor's Comments
The restructuring of OpenAI into a for-profit benefit corporation marks a significant shift in the AI landscape.
For users of ChatGPT, this change could lead to enhanced features and services, potentially at a cost.
App developers might see more robust tools and APIs, driven by increased investor funding.
However, the shift raises questions about AI safety and governance, particularly as the company moves away from non-profit oversight.
The future of AI applications will likely see intensified competition and innovation, but maintaining ethical standards and safety protocols will be crucial.
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