OpenAI is reportedly preparing to undergo significant changes, restructuring its core business into a for-profit benefit corporation, according to sources familiar with the matter. OpenAI removes non-profit and grants Altman equity to align the company’s goals with investor interests. This shift would mark a departure from its current structure, where the company is controlled by a non-profit board. The move is expected to enhance OpenAI’s appeal to investors.
While the non-profit board will no longer hold control, it will continue to exist and retain a minority stake in the for-profit company. Insiders say this could have major implications for how OpenAI manages risks associated with artificial intelligence under its new governance structure.
Sam Altman to Gain Equity
CEO Sam Altman will receive equity in the newly structured for-profit company, a first since the company’s founding. Sources suggest the company could be valued at around $150 billion post-restructuring. OpenAI is also exploring the removal of the cap on investor returns, aiming to attract more capital. The process is still being finalized with legal teams and shareholders, and the timeline remains unclear.
“We’re focused on building AI that benefits everyone, and the non-profit is central to our mission,” an OpenAI spokesperson said. The non-profit board’s role in ensuring the company’s mission will continue, though its influence will be reduced.
Governance Changes and Leadership Shifts
As part of a governance shift, OpenAI removes non-profit and grants Altman equity, potentially increasing the company’s valuation to $150 billion. The proposed restructuring comes amid leadership changes at OpenAI. Mira Murati, the company’s Chief Technology Officer, announced her sudden departure this week, while OpenAI President Greg Brockman is currently on leave. These leadership adjustments have raised questions about how the company will navigate its future governance.
OpenAI was founded in 2015 as a non-profit AI research organization. In 2019, OpenAI added a for-profit entity, OpenAI LP, as a subsidiary to help raise capital. Microsoft became one of its major investors, providing crucial funding for its research initiatives.
The success of ChatGPT has propelled the company’s valuation from $14 billion in 2021 to a staggering $150 billion today. Investors such as Thrive Capital and Apple have shown strong interest in the company, eager to capitalize on its rapid growth in the AI industry.
AI Safety Concerns Arise
OpenAI’s unique structure, which originally placed full control of its for-profit subsidiary in the hands of the non-profit, was designed to ensure the safe development of artificial general intelligence (AGI). However, with the potential removal of non-profit control, some experts in the AI safety community have raised concerns.
The company recently disbanded its superalignment team, which was focused on long-term AI risks, further heightening these worries. Concerns over AI safety have emerged as OpenAI removes non-profit and grants Altman equity, reducing the influence of its non-profit board.
Boardroom Conflict
Last year, OpenAI was at the center of a major boardroom conflict when its non-profit board removed Altman over communication issues and a loss of trust. After five days, Altman was reinstated with the backing of employees and investors. Since then, the board has changed, with Bret Taylor, former Salesforce co-CEO, now serving as chair.
Investors generally support the removal of non-profit control, believing it will allow OpenAI to operate more like a typical startup. However, AI safety advocates are watching closely, concerned about the potential loss of accountability in OpenAI’s pursuit of AGI.
The amount of equity Altman will receive remains unclear. Although already a billionaire from prior startup ventures, Altman previously declined an equity stake in OpenAI to maintain a disinterested board with no personal financial interests. His involvement in the restructuring could further align him with OpenAI’s new direction, which is expected to resemble competitors like Anthropic and Elon Musk’s xAI, both of which are structured as benefit corporations.
Also Read: OpenAI’s Tech Chief Mira Murati Leaves, Marking Major Leadership Exit.
