Sam Altman Is Reportedly Considering Transforming OpenAI Into a For-Profit Company. It Would Be the Ultimate Plot Twist

According to The Information, OpenAI would shift from advocating for “friendly” AI to enhancing its commercial focus, setting the stage for an IPO.

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OpenAI CEO and co-founder Sam Altman has purportedly informed some of the company’s shareholders that he’s contemplating altering its governance structure to transition into a for-profit company, as reported by The Information.

This change would mean that the company will no longer be controlled by its current non-profit board.

Why this matters. This potential shift represents a significant departure from OpenAI’s existing model and principles. The company, which is valued at around $86 billion, was originally established as a non-profit organization with the goal of “developing friendly AI to benefit humanity,” a mission that came under scrutiny after the success of ChatGPT.

The keys to transformation.

  • OpenAI has a hybrid structure: A non-profit parent (OpenAI Inc.) controls several subsidiaries for commercial purposes, but with a cap on profit distributions to investors.
  • Altman has reportedly told the board that one option he’s considering is to become a B Corp, a model used by rivals like Anthropic and xAI.
  • This would allow OpenAI to pursue unlimited profits while maintaining a social purpose, but without the control of the current board.
  • It would also pave the way for a possible IPO.

According to The Information, talks are still open and the outcome could be different.

Some context. OpenAI was established in 2015 as a non-profit corporation. It was initially supported by prominent individuals like Elon Musk, who later abandoned the project due to disagreements over strategy. In 2019, OpenAI formed a profit-capped subsidiary called OpenAI LP and received a $1 billion investment from Microsoft to advance its technology.

The success of ChatGPT in late 2022 increased OpenAI’s value and drew commercial interest. Microsoft quickly increased its investment with an additional $10 billion. However, critics stated that OpenAI was straying from its original mission of “democratizing AI” and putting a priority on profit.

Leadership changes. Altman recently reorganized the board, bringing in himself and allies such as Sue Desmond-Hellmann, the former CEO of the Gates Foundation. He also appointed Paul Nakasone, the former director of the NSA.

Final thoughts. OpenAI’s potential shift toward a purely commercial model represents a significant change for a company that was founded with the intention of using AI for the greater good.

Maintaining a charitable approach in an extremely competitive environment is increasingly challenging, and some worry that prioritizing unlimited profits could steer the company away from its original principles. The tug-of-war between idealism and practicality will determine the path forward for this major player in generative AI.

Image | Adobe Stock | Xataka using Midjourney

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