The unavoidable is coming. According to Fortune magazine, Sam Altman is initiating a change in OpenAI’s complex non-profit corporate structure. Essentially, the startup has outgrown its original status.
The structure and mission of OpenAI, the company behind ChatGPT, were among the main sources of discontent last year when Altman was temporarily removed as CEO.
OpenAI started out in 2015 as a nonprofit with the goal of making sure that AI doesn’t wipe out humans. The co-founders said they would not be driven by commercial incentives and would operate more like a think tank or a research facility.
In 2019, however, Altman transformed the AI lab into a for-profit company controlled by the nonprofit and its board.
The two tribes have managed to co-exist for years, but then the release of ChatGPT changed everything, and the pressure to commercialize clashed with the firm’s stated mission.
To complicate things even further, OpenAI’s for-profit arm controls a holding company, which in turn controls another for-profit entity. Investors like Microsoft are pouring billions of dollars into that last one. The firm’s structure is unusual, to say the least.
Now, according to Fortune, Altman – firmly in charge of the company nearly a year after the chaos of late 2023 – told OpenAI’s staff in a recent meeting that its structure is about to change sometime next year.
Fortune’s sources say Altman admitted that the company has outgrown its “convoluted” structure, even though it’s not yet clear what exactly the new look would be.
Still, it seems that OpenAI will become a more traditional for-profit company. The startup is valued at much more than $100 billion, and the non-profit structure has increasingly been awkward and confusing for investors eager for a more certain return on their stakes.
Reuters reported last week that OpenAI was in talks to raise $6.5 billion at a $150 billion pre-money valuation. According to the news agency, the success of the deal is contingent on whether OpenAI can restructure and remove a profit cap for investors.
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