OpenAI on Friday announced that it will create a public benefit corporation to oversee commercial operations, remove some nonprofit restrictions and allow it to function more like a high-growth startup in preparation for its transition to a new for-profit organization in 2025. announced that it would.
“The hundreds of billions of dollars major companies are currently investing in AI development shows what OpenAI really needs to continue pursuing its mission,” OpenAI’s board of directors said in a post. “We again need to raise more capital than we ever imagined. Investors want to support us, but with capital of this size, traditional capital and less structural order Maid-ness is not necessary.”
The pressure on OpenAI relates to the $157 billion valuation the company achieved in the two years since it launched its viral chatbot ChatGPT, sparking a generative artificial intelligence boom. OpenAI closed its latest round of $6.6 billion in October and is poised to compete aggressively with Elon Musk’s xAI and Elon Musk’s xAI. microsoftGoogle, Amazon, and Anthropic. Forecast to exceed $1 trillion It will be profitable within 10 years.
Developing the large-scale language models at the heart of ChatGPT and other generative AI products requires continued investment in powerful processors, primarily: Nvidiaand the cloud infrastructure is primarily provided by OpenAI’s top backer, Microsoft.
OpenAI expects to lose about $5 billion this year on $3.7 billion in revenue, CNBC confirmed in September. Their number is rapidly increasing.
By moving to a Delaware PBC that “holds common stock,” OpenAI will pursue its commercial operations while hiring separate staff for its nonprofit division, which will conduct medical, educational, and scientific philanthropic activities. states that it can be done.
OpenAI wrote that the nonprofit would have a “material interest” in PBC at a “fair valuation determined by an independent financial advisor.”
The complex structure of OpenAI that exists today is the result of its founding as a nonprofit organization in 2015. It was founded by CEO Sam Altman, Musk and others as a research institute focused on artificial general intelligence (AGI). AGI was a completely futuristic concept at the time. time.
In 2019, OpenAI aimed to move beyond its role as a research institute and function more like a startup, creating a so-called profit cap model in which the nonprofit continues to control the entire entity.
“Our current structure does not allow boards to directly consider the interests of those who fund their missions and does not allow nonprofits to easily do more than manage for-profits.” , OpenAI wrote in a post on Friday.
OpenAI added that the changes will “enable us to raise the funding we need on traditional terms, similar to our competitors.”
Mr. Musk’s opposition
OpenAI’s restructuring efforts face some major hurdles. The most important person is Mr. Musk, who is currently The intense legal battle with Altman could have a significant impact on the company’s future.
In recent months, Mr. Musk has sued OpenAI, asking courts to prevent the company from transitioning from a nonprofit to a for-profit corporation. In a post on X, he described the effort as a “complete scam” and claimed that “OpenAI is evil.” Earlier this month, OpenAI pushed back, claiming in 2017 that Musk “not only wanted a for-profit entity, but actually created it” as part of the company’s proposed new structure.
In addition to the showdown with Mr. Musk, OpenAI has also been dealing with a loss of high-level talent amid concerns that the company is focused on bringing commercial products to market at the expense of safety.
In late September, OpenAI Chief Technology Officer Mira Murati announced that she would be leaving the company after six and a half years. On the same day, Director of Research Bob McGrew and Vice President of Research Barrett Zoff also announced their resignations. A month ago, co-founder John Schulman announced he was leaving rival startup Anthropic.
Altman said in an interview at Italian Tech Week in September that the recent executive departures were unrelated to the company’s potential restructuring, saying, “We have been considering it independently for almost a year.” “I’ve done it. I’m moving on to the next stage,” he said.
This wasn’t the first time a big-name player had left the team. In May, OpenAI co-founder Ilya Sutskever and former safety leader Jan Leike announced their retirement, with Leike also joining Anthropic.
Reike wrote in a social media post at the time that the decision was driven by disagreements with management over the company’s priorities.
“In recent years, safety culture and processes have taken a backseat to shiny products,” he says. I wrote.
One employee who worked for Reich, who quit shortly after, wrote: on X “While OpenAI is organized as a nonprofit, it functions like a for-profit,” he said in September. The employee added: “You shouldn’t trust OpenAI when it promises to do the right thing later.”
