OpenAI is restructuring its core business into a for-profit benefit corporation, shifting control from its non-profit board. The OpenAI non-profit will continue to exist and hold a minority stake in the new for-profit company, but the reorganization will bring a new governance structure.
According to a Reuters report, CEO Sam Altman will have equity, which could value the company at $150 billion. The plan also seeks to remove the investor return ceiling. The specifics of the reorganization are still being discussed with the legal advisors and the owners of the shares, and it is still not known when the process should be completed.
Leadership changes rock OpenAI as CTO departs
This shift also comes at a time when there has been a change in leadership, with CTO Mira Murati leaving the company and OpenAI’s president, Greg Brockman, taking time off. OpenAI has reiterated the company’s ongoing focus on creating beneficial AI, with the non-profit staying at the core of its mission.
I shared the following note with the OpenAI team today. pic.twitter.com/nsZ4khI06P
— Mira Murati (@miramurati) September 25, 2024
OpenAI CEO Sam Altman thanked Murati for her efforts and support in the company during the difficult times. Last year, after Altman was fired, she became the acting CEO. Murati is said to have made complaints to the board about Altman’s conduct before he was fired. Murati’s exit joins other recent departures of executives from OpenAI. In August, co-founder John Schulman said he would be joining rival AI firm AI company Anthropic.
OpenAI’s journey from non-profit to for-profit entity unfolds
OpenAI was founded in 2015 as a non-profit AI research company. In 2019, it created a for-profit subsidiary known as OpenAI LP to secure funding. The company rose to fame after it launched ChatGPT at the end of 2022. ChatGPT emerged as one of the most popular products and gained more than 200 million weekly users.
The proposed restructuring is likely to help OpenAI attract more investors since the company has attracted billions from investors since its inception. OpenAI’s valuation has soared from $14 billion in the previous year to $150 billion in the present convertible debt financing talks.
As reported by Cryptopolitan, Microsoft, Nvidia, Apple, and Thrive Capital are some of the potential investors, with the funding round being potentially as high as $6.5 billion. OpenAI has been said to have spent a lot of its operational expenses on training models at $7 billion and staffing at $1.5 billion.
The recent shift in non-profit governance can also influence OpenAI’s commitment to AI safety. This is especially the case after the dissolution of its superalignment team this year that focused specifically on the problem of long-term AI risks. The restructuring would make OpenAI more similar to its rivals Anthropic and xAI led by Elon Musk are benefit corporations.
