OpenAI's board is considering plans to restructure the company into a for-profit business, according to a source who asked to remain anonymous because the talks are ongoing. The source said that the company would retain its non-profit segment as a separate entity.
OpenAI is currently structured as a nonprofit that is controlled not by its CEO or by its shareholders, but by a board with a single mission to “keep humanity safe.” (Which has a little bit of a “Don't Be Evil” vibe to it, and we all know how that turned out.) However OpenAI began to slide away from that vision years ago in 2019 when it created a for-profit arm (with capped returns) so that it could take in huge investments from Microsoft.
The restructuring aims to make the company more attractive to investors by removing the cap on returns, according to the same source, who also mentioned that the plan is still being hashed out with lawyers and shareholders and that the timeline for completing the restructuring remains uncertain.
Bloomberg reported that OpenAI's board was discussing giving CEO Sam Altman a 7% stake in the company that would be worth billions, as part of the company's pivot to a for-profit entity, however, Altman immediately denied the report and called it “ludicrous.”
An OpenAI spokesperson told Reuters, “We remain focused on building AI that benefits everyone, and we’re working with our board to ensure that we’re best positioned to succeed in our mission. The non-profit is core to our mission and will continue to exist.”
Jeffrey Wu, who joined the company in 2018 and worked on early models like GPT-2 and GPT-3, told Sigal Samuel at Vox, “We can say goodbye to the original version of OpenAI that wanted to be unconstrained by financial obligations.”
You can turn for-profit?
To be honest, I didn't even know that a nonprofit organization could restructure into a for-profit entity — so that's news to me as well — but apparently it's happened many times in the past, particularly across healthcare, health insurance, and the nonprofit education sectors. It seems fair to me that a company would have to “cash out” their existing nonprofit shares into for-profit shares, and thus incur a tax liability on the value of the company that they previously avoided as a nonprofit… but that's a conversation for another day.
Massive leadership departures at OpenAI
News of the discussions came after OpenAI's CTO Mira Murati said that she is leaving the company after six and a half years, and subsequently and after research chief Bob McGrew and research VP Barret Zoph also announced their departures the same day.
CEO Sam Altman later shared that the decisions for everyone to depart were independent of each other, but that “the timing of Mira’s decision was such that it made sense to now do this all at once, so that we can work together for a smooth handover to the next generation of leadership.”
These aren't the only executives to depart the company this year.
OpenAI co-founder Ilya Sutskever and former safety leader Jan Leike announced their departures in May, followed by co-founder John Schulman last month who said he was leaving to join rival Anthropic.
OpenAI is currently pursuing a $6.5B funding round that would value the company at more than $150B, with rumors that Thrive Capital, Tiger Global, Microsoft, Nvidia, and Apple are in talks to participate in the round. (However the Wall Street Journal has since reported that Apple is no longer in talks to invest in OpenAI.)
In other OpenAI news… the company launched Advanced Voice Mode (AVM) to its Plus and Team customers on Tuesday, which makes ChatGPT more natural to speak with. ChatGPT is also getting five new voices that users can try out — Arbor, Maple, Sol, Spruce, and Vale — which brings its total number of voices to nine. Lastly, OpenAI expanded some of ChatGPT's customization features to AVM including custom instructions, which allows users to personalize how ChatGPT responds to them, and Memory, which allows ChatGPT to remember conversations to reference later on.
If you're ready for a good laugh, watch this TikTok Video where @hoffdigital trains his ChatGPT to speak to him in ebonics!