OpenAI may turn into a for-profit organization, CEO Sam Altman reportedly in talks to acquire 7% of all shares


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TechCrunch

OpenAI, the developer of ChatGPT, was originally founded as a non-profit organization and then became a for-profit corporation. There have been rumors that OpenAI might switch from a non-profit organization to a for-profit organization, but it has finally been reported that CEO Sam Altman plans to acquire shares in OpenAI as a for-profit company.

Exclusive: OpenAI to remove non-profit control and give Sam Altman equity | Reuters
https://www.reuters.com/technology/artificial-intelligence/openai-remove-non-profit-control-give-sam-altman-equity-sources-say-2024-09-25/



OpenAI Discusses Giving Sam Altman 7% Stake in For-Profit Transition - Bloomberg
https://www.bloomberg.com/news/articles/2024-09-25/openai-cto-mira-murati-says-she-will-leave-the-company

OpenAI was founded in 2015 as a non-profit research organization, OpenAI Inc. Then, to cover the high costs of developing AI models, a for-profit subsidiary, OpenAI Global LLC, was formed in 2019. This for-profit entity was owned by the non-profit, and the non-profit board of directors had full control over the for-profit arm.

However, it was reported that OpenAI was considering transitioning from a non-profit to a for-profit entity, specifically a public interest corporation. This legal structure aims to balance financial profits with social and environmental goals. At the same time that OpenAI's change of policy was reported, three executives, including Chief Technology Officer Mira Murati, announced that they had left the company.

OpenAI's CTO Mira Murati and three other executives announce their resignations one after another - GIGAZINE



When OpenAI was a non-profit corporation, there was a cap on investor revenue. This was intended to protect OpenAI's non-profit mission and curb excessive profit-making. However, by converting to a for-profit company, the cap on investor revenue could be lifted. This would make OpenAI more attractive to venture capitalists and other investors, and make it easier for OpenAI to raise funds.

According to Bloomberg, CEO Altman plans to acquire 7% of all shares as stock compensation, but details are still under negotiation. At a Senate hearing in 2023, CEO Altman stated his position that 'OpenAI's mission is to benefit humanity as a whole, not individual interests,' and made it clear that he does not hold any shares in the company.



If the 7% stake is realized, it will be the first time that CEO Altman will directly own OpenAI shares. If OpenAI's valuation is reported to be $150 billion (about 21.75 trillion yen), the 7% stake will be worth $10.5 billion (about 1.5 trillion yen), which could significantly increase Altman's personal assets.


by Village Global

On the other hand, this change in policy has sparked debate over its consistency with OpenAI's original philosophy. Public interest corporations are structures that aim to balance the pursuit of profits with a social mission, but the challenge is how to balance the 'original goal of seeking the benefit of all of humanity' with 'the pursuit of profits for investors.' How the removal of the revenue cap will affect this balance will be an important point of discussion in the future.

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