OpenAI considers for-profit status with equity for CEO Sam Altman
What's the story
OpenAI, the artificial intelligence research lab, is undergoing a significant transition from its non-profit roots. The change comes in the wake of CTO Mira Murati's sudden exit.
As part of this shift, CEO Sam Altman is expected to acquire equity in the company for the first time.
According to Reuters, OpenAI is planning to restructure into a for-profit benefit corporation similar to competitors like Amazon-backed Anthropic and Elon Musk's xAI.
Restructuring details
OpenAI's transition aims to attract outside investors
The restructuring process is still under discussion, with many details yet to be finalized.
The non-profit OpenAI board, currently in charge of the company's for-profit operations, will give up control but maintain a minority stake in the new entity.
This move is designed to make OpenAI more appealing to external investors who have previously been dissatisfied with the company's cap on returns.
Equity acquisition
Altman could receive 7% equity stake post-restructuring
As part of the restructuring, Altman is reportedly set to receive a 7% equity stake in OpenAI.
This would mark a significant departure for Altman, who had not previously held equity due to the company's non-profit status.
The transition follows a series of high-level departures from the company, including that of Murati as well as top research executives.
Earlier this year, co-founders John Schulman and Ilya Sutskever exited the AI firm.
Criticism and response
Musk criticizes OpenAI's shift to for-profit structure
Musk, an early backer and one of the co-founders of OpenAI, has publicly criticized the company's transition to a for-profit structure.
On social media platform X, Musk accused OpenAI of misleading people and straying from its original mission of developing AI for humanity's benefit rather than profit.
In response to Murati's departure and the ensuing criticism, Altman expressed his appreciation for her contributions and assured that transition plans would be communicated with employees soon.
Company evolution
OpenAI's journey and future fundraising plans
OpenAI was established in 2015 as a non-profit research organization, aiming to create safe and beneficial AI.
In 2019, it formed a for-profit subsidiary to fund the high costs of AI model development.
Since then, it has attracted billions in outside investment from entities like Microsoft.
Bloomberg recently reported that OpenAI is currently seeking to raise $6.5 billion at a $150 billion valuation, positioning it as one of the world's most valuable start-ups.