OpenAI Considers Major Shift to For-Profit Model, Potentially Granting CEO Sam Altman Significant Stake

OpenAI Discusses 7% Stake for Altman in For-Profit Shift

OpenAI is discussing giving Chief Executive Officer Sam Altman a 7% equity stake in the company and restructuring to become a for-profit business, people familiar with the matter said, a major shift that would mark the first time Altman is granted ownership in the artificial intelligence startup. Bloomberg's Rachel Metz joins Ed Ludlow on "Bloomberg Technology." (Source: Bloomberg)

OpenAI reportedly mulls $10B payday for Sam Altman as more top...

OpenAI is reportedly discussing giving CEO Sam Altman a 7% equity stake while restructuring the artificial-intelligence giant as a for-profit entity - even as several top executives head for the exits. A 7% stake in Microsoft-backed OpenAI could soon be worth a whopping $10.5 billion for Altman, who had not previously taken an ownership position in the firm. Bloomberg was first to report on the potential size of Altman's stake, citing unnamed sources. OpenAI is currently pursuing a $6.5 billion financing round led by Thrive Capital that would value it at $150 billion. OpenAI is planning to restructure itself as a for-profit benefit corporation, which would mean that the non-profit board of directors that previously oversaw its operations would no longer be in control, according to multiple reports. A for-profit benefit corporation is an entity that considers both societal impact and profit when making decisions. Elon Musk's artificial intelligence startup xAI uses a similar structure. OpenAI brass is still discussing the specifics of the restructuring and a final timeline has yet to be determined, according to Bloomberg. It's also possible that the size of Altman's equity stake could change or not materialize at all. "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," an OpenAI spokesperson said in a statement. The restructuring is under consideration during a period of turmoil at OpenAI. Mira Murati, the company's chief technology officer who had worked closely with Altman, abruptly announced her resignation on Wednesday just before the first reports on the firm's potential for-profit move surfaced. In a message to OpenAI staffers shared on X, Murati said she was "stepping away because I want to create the time and space to do my own exploration. For now, my primary focus is doing everything in my power to ensure a smooth transition, maintaining the momentum we've built." Murati's departure reportedly came as a surprise to OpenAI employees, with some sharing a "WTF" emoji in response to her post on an internal Slack channel, according to Bloomberg. Altman later confirmed that two other OpenAI executives - chief research officer Bob McGrew and another top researcher Barrett Zoph - were also leaving. "Mira, Bob, and Barret made these decisions independently of each other and amicably, but 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," Altman wrote on X. Six current OpenAI executives will begin reporting to Altman directly following their exits, the CEO added. "Leadership changes are a natural part of companies, especially companies that grow so quickly and are so demanding," Altman added. "I obviously won't pretend it's natural for this one to be so abrupt, but we are not a normal company." Greg Brockman, OpenAI's president and co-founder, said last month that he would take an extended leave of absence through the end of the year. John Schulman, another co-founder, recently left for a gig at OpenAI rival Anthropic. Elsewhere, co-founder Ilya Sutskever and researcher Jan Leike resigned in May after OpenAI dissolved its "Superalignment" team, which was responsible for ensuring the safe development of advanced AI.

OpenAI is going for-profit -- and giving Sam Altman equity

OpenAI is looking to attract investors by shedding its non-profit business model. Reuters, citing sources familiar with the matter, reports that the ChatGPT-maker is reorganizing its central business into what's known as a benefit corporation, a for-profit company with the goal of creating a positive impact on society. That also means that it won't be controlled by its non-profit board. Chief executive officer Sam Altman will also get what could total roughly $150 billion of equity in the newly restructured accompany, according to the Reuters. The OpenAI non-profit will live on, however, and will hold a minority stake in the company. OpenAI is reportedly in talks with several investors to raise billions of dollars in new funding, which would value the company at more than $100 billion. This latest funding round would be its single biggest raise since it received $10 billion in backing from Microsoft (MSFT) back in January 2023, and could reportedly also include investments from tech and AI giants Apple and Nvidia. A deal allowing employees to sell stakes in the company valued OpenAI at $86 billion in late 2023, nearly triple what it was earlier in the year. News of the company's restructuring came just hours after chief technology officer Mira Murati announced that she would be exiting the company, marking the latest in a series of high-level executive departures at the AI startup. Murati, who spent six-and-a-half years at the artificial intelligence startup, said Wednesday that she had "made the difficult decision" to leave and that she wants "to create the time and space to do my own exploration." After OpenAI CEO Sam Altman was briefly ousted in November, Murati served as interim leader of the company. OpenAI co-founder and former chief scientist, Ilya Sutskever, and researcher Jan Leike, resigned from the company in May. The pair co-led of the startup's "superalignment" team, which was focused on AI's existential dangers. Critics, including former OpenAI employees, have warned that the company and its ambitions to create what's known as artificial general intelligence, pose "serious risks." The company said the "superalignment" team's work would be absorbed by other research efforts across OpenAI.

OpenAI's for-profit switch could include equity for Sam Altman

Open AI describes its business structure as "a partnership between our original Nonprofit and a new capped profit arm," which has been a contributing factor in last year's short-lived board coup against CEO Sam Altman and a recent lawsuit by co-founder Elon Musk. But that's reportedly set to change along with a massive new funding round that's still being negotiated but could value the ChatGPT maker at more than $150 billion. Now, Reuters cites unnamed sources saying that part of the new plan includes providing an unspecified amount of equity to Altman for the first time. It says that in the new structure, OpenAI would proceed as a for-profit benefit corporation, like rival AI company Anthropic. That business would "no longer be controlled by its non-profit board" and become more attractive to investors, with the non-profit maintaining a minority ownership stake. However, for those concerned with OpenAI's approach to safety vs. potential profits, it may be unsettling as the company pursues AI models capable of reasoning. When Altman returned as CEO last November, his letter mentioned "improving our governance structure," and that seems to be taking shape while other executives are leaving. OpenAI CTO Mira Murati announced her exit today, Reuters notes president Greg Brockman has been on leave, and former chief scientist Ilya Sutskever separated from the company earlier this year.

OpenAI to remove non-profit control and give Sam Altman equity

ChatGPT-maker OpenAI is working on a plan to restructure its core business into a for-profit benefit corporation that will no longer be controlled by its non-profit board, people familiar with the matter told Reuters, in a move that will make the company more attractive to investors. The OpenAI non-profit will continue to exist and own a minority stake in the for-profit company, these sources said. Chief executive Sam Altman will also receive equity for the first time in the for-profit company, which could be worth $150 billion after the restructuring as it also tries to remove the cap on returns for investors, sources added. The sources requested anonymity to discuss private matters. "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," an OpenAI spokesperson said. The details of the proposed corporate structure, first reported by Reuters, highlight significant governance changes happening behind the scenes at one of the most important AI companies. The plan is still being hashed out with lawyers and shareholders and the timeline for completing the restructuring remains uncertain, the sources said. The restructuring also comes amid a series of leadership changes at the startup. OpenAI's longtime chief technology officer Mira Murati abruptly announced her departure from the company on Wednesday. Greg Brockman, OpenAI's president, has also been on leave. Founded in 2015 as a non-profit AI research organization, OpenAI added the for-profit OpenAI LP entity in 2019 as a subsidiary of its non-profit, securing capital from Microsoft to fund its research. The company captured global attention with the launch of ChatGPT in late 2022, a generative AI app that spit out human-like responses to text queries, which has become one of the fastest-growing applications in history with over 200 million weekly active users, igniting a global race to invest in AI. Along with ChatGPT's success, OpenAI's valuation has skyrocketed from $14 billion in 2021 to $150 billion in the new convertible debt round under discussion, attracting investors such as Thrive Capital and Apple. AI safety The company's unusual structure, which gives full control of the for-profit subsidiary to the OpenAI nonprofit, was originally set to ensure the mission of creating "safe AGI that is broadly beneficial," referring to artificial general intelligence that is at or exceeding human intelligence. The structure came into focus last November during one of the biggest boardroom dramas in Silicon Valley, where members of the non-profit board ousted Altman over a breakdown in communication and loss of trust. He was reinstated after five days with overwhelming support from employees and investors. Since then, OpenAI's board has been refreshed with more tech executives, chaired by Bret Taylor, former Salesforce co-CEO who now runs his own AI startup. Any corporate changes need approval from its nine-person non-profit board. The removal of non-profit control could make OpenAI operate more like a typical startup, a move generally welcomed by its investors who have poured billions into the company. However, it could also raise concerns from the AI safety community about whether the lab still has enough governance to hold itself accountable in its pursuit of AGI, as it has dissolved the superalignment team that focuses on the long-term risks of AI earlier this year. It's unclear how much equity Altman will receive. Altman, already a billionaire from his multiple startup investments, has previously stated that he chose not to take an equity stake in the company because the board needed a majority of disinterested directors with no stake in the company. He has also said he has enough money and is doing it because he loves the work. The new structure of OpenAI would resemble that of its major rival Anthropic and Elon Musk's xAI, which are registered as benefit corporations, a form of for-profits that aim to promote social responsibility and sustainability in addition to making profits.

OpenAI To Restructure Into For-Profit Company, Give Altman Stake, Reports Say

OpenAI reportedly is planning to restructure to become a for-profit organization, as the Microsoft (MSFT)-backed company struggles with an ongoing exodus of key personnel. According to Reuters, which first reported the plan, OpenAI is in talks to give CEO Sam Altman equity worth up to $150 billion, while Bloomberg said the company is discussing giving him a 7% stake. Bloomberg also said the startup is "considering becoming a public benefit corporation, tasked with turning a profit and also helping society." A commercial focus would mark a departure from the ChatGPT owner's original mission of building open-source technology that wouldn't be subject to commercial priorities. In an emailed statement to Investopedia, an OpenAI spokesperson said that its nonprofit mission will continue but didn't respond directly to the reports. "We remain focused on building AI that benefits everyone and as we've previously shared we're working with our board to ensure that we're best positioned to succeed in our mission," the spokesperson said. "The nonprofit is core to our mission and will continue to exist." Meanwhile, OpenAI's long-serving Chief Technology Officer (CTO) Mira Murati announced her departure Wednesday. Chief Research Officer Bob McGrew also said he was stepping down.

OpenAI to move to for-profit structure, Altman to receive equity- reports By Investing.com

Investing.com-- OpenAI is working on a plan to restructure its core business into a for-profit structure in a bid to make the ChatGPT maker more attractive to investors, with CEO Sam Altman to receive equity in the shift, multiple reports showed on Wednesday. The company also announced a slew of resignations in its top management, including chief technology officer Mira Murati, chief research officer Bob Mcgrew and research vice president Barret Zoph. OpenAI's plans to shift into a for-profit model were initially reported by Reuters, and come as the company courts investors for a $6.5 billion capital raise. Long-term investor Microsoft Corporation (NASDAQ:MSFT) is expected to participate in the round, as are Apple Inc (NASDAQ:AAPL), NVIDIA Corporation (NASDAQ:NVDA), and United Arab Emirates firm MGX, the Wall Street Journal recently reported. Recent reports also showed OpenAI valued at about $150 billion, making it one of the most valuable start-ups in the world. The firm was started as a non-profit AI research organization in 2015, and added the for-profit AI entity, which manages its ChatGPT product, as a subsidiary in 2019. The firm is now seeking to make the AI entity its core, for-profit business, with the non-profit still set to exist with a minority stake in the entity. OpenAI is also seeking to remove limits on returns to investors, reports showed. CEO Altman will potentially receive a 7% stake in OpenAI after the for-profit shift, Bloomberg reported. Altman has become the face of OpenAI over the past two years, after the launch of ChatGPT sparked a mad race into artificial intelligence. Altman announced Murati, Mcgrew and Zoph's resignations on social media platform X. He said that VP of research Mark Chen will be OpenAI's new senior vice president of Research and will lead the company's research wing with Jakub Pachocki as chief scientist. OpenAI saw a string of resignations over the past year, including several of its co-founders, after top executives and the board attempted an ouster of Altman last November. But Altman was swiftly reappointed, while the company's board was overhauled.

Elon Musk Posts Scoffing Remarks On Sam Altman Amid OpenAI For-Profit Saga

OpenAI is transitioning from a non-profit to a for-profit entity. Elon Musk recently expressed skepticism regarding the leadership of Sam Altman in light of the proposed structural changes at OpenAI. Musk's comments surfaced as OpenAI, a key player in artificial intelligence, moves towards a for-profit benefit corporation model, shifting away from its initial non-profit structure. In a recent post on X, Elon Musk referred to Sam Altman as "Little Finger," referring to a character known for strategic manipulation in the TV series Game of Thrones. This comment has sparked widespread attention as it coincides with significant corporate restructuring at OpenAI. The AI firm, initially established as a non-profit, is transitioning to a for-profit entity. Under Sam Altman's leadership, the firm is making drastic changes in its governance to attract more investment. Additionally, Elon Musk elaborated on his concerns, emphasizing the need for AI technologies to prioritize truth-seeking over political correctness. He criticized current AI models for their responses to culturally sensitive topics. Musk suggested that they could lead to outcomes detrimental to humanity's broader interests. As OpenAI shifts towards a for-profit model, Elon Musk's comments underscore ongoing concerns regarding ethical governance of AI technologies. The restructuring plan involves removing the cap on investor returns and modifying the company's oversight structures. This will most likely impact how AI risks are managed. This transition raises questions about the balance between profit motives and the safe development of AI technologies that are meant to benefit all of humanity. More so, the AI community has long debated the implications of profit-driven AI advancements on safety and ethical standards. The dissolution of OpenAI's superalignment team, which was focused on long-term AI safety, has further fueled these concerns. This moves suggests a shift in focus that may prioritize rapid development over thorough safety assurances. However, the restructuring aligns OpenAI more closely with peers like Anthropic and Elon Musk's xAI. Most recently, Elon Musk and El Salvador's President Nayib Bukele recently discussed the potential of AI and robotics, sparking global interest. Their dialogue highlights the growing intersection of technology with global leadership and development.

OpenAI discusses giving Altman 7% stake in for-profit shift

By Rachel Metz, Dina Bass, Ed Ludlow, Shirin Ghaffary, Bloomberg News The Tribune Content Agency OpenAI is discussing giving Chief Executive Officer Sam Altman a 7% equity stake in the company and restructuring to become a for-profit business, people familiar with the matter said, a major shift that would mark the first time Altman is granted ownership in the artificial intelligence startup. The company is considering becoming a public benefit corporation, tasked with turning a profit and also helping society, said the people, who asked not to be identified because the information is private. The transition is still under discussion and a timeline has not been determined, one of the people said. OpenAI is mulling the changes against the backdrop of an exodus of senior managers. Chief Technology Officer Mira Murati said on Wednesday she is leaving, a surprise move that marks the latest high-profile departure from the startup. In the months after it suddenly fired and then rehired Altman last year, OpenAI has been in a state of flux - losing multiple managers and shifting the structure of some of its teams. OpenAI was founded in 2015 as a nonprofit research organization with the goal of building artificial intelligence that would be safe and beneficial to humanity. In keeping with those origins, Altman had not taken equity, stressing the company was meant to broadly benefit society and that he had enough money. Yet as the value of the business soared, it's been increasingly difficult to stick with those ideals. In 2019, the company created a for-profit subsidiary to help fund the high costs of AI model development, and has since drawn billions in outside investment from Microsoft Corp. and others. OpenAI is currently working to raise $6.5 billion at a $150 billion valuation, which would make it one of the most valuable startups in the world, Bloomberg reported this month. That boost on top of the possible new equity could add more than $10 billion to Altman's net worth, according to the Bloomberg Billionaires Index, vaulting him into the ranks of the world's richest people. In a statement, a spokesperson said OpenAI remains "focused on building AI that benefits everyone," adding, "the nonprofit is core to our mission and will continue to exist." The possible equity holding, which is still under negotiation and could change or not materialize, would give Altman an ongoing financial stake in the success of OpenAI. Many investors favor the idea of a founder owning at least part of the businesses they run. Altman has also occasionally said in interviews that he wished he had taken equity so that people would stop asking him about it. Reuters earlier reported on OpenAI's plan to restructure and give Altman equity for the first time. Altman said the executive departures were not related to the restructuring. "I saw some stuff that this was related to a restructure, that's totally not true," Altman said on stage at the Italian Tech Week in Turin on Thursday. "This is just about people being ready for new chapters in their lives." In a statement on X, Murati said she was "stepping away because I want to create the time and space to do my own exploration." In response, Altman expressed "tremendous gratitude" for Murati's contributions, writing, "It's hard to overstate how much Mira has meant to OpenAI, our mission, and to us all personally." He also said that he would share more with employees about transition plans soon. Murati does not yet have a exit date at the company, according to a person familiar with the matter. She is still speaking with OpenAI's leadership about plans for her replacement, including the timeline. In the post, she wrote, "For now, my primary focus is doing everything in my power to ensure a smooth transition, maintaining the momentum we've built." Representatives for OpenAI and Murati declined to provide further comment. On Wednesday, many employees were shocked by the announcement of Murati's departure. On the company's internal Slack channel, multiple OpenAI employees responded to the news with a "WTF" emoji, according to a person familiar with the matter. Murati, an Albanian-born Dartmouth-educated engineer, played a key role in shepherding major product releases, including OpenAI's popular ChatGPT chatbot, its DALL-E image generation software, and its recently released advanced voice mode that lets users talk to ChatGPT in essentially real time. This spring, Murati came under fire for saying in an interview with the Wall Street Journal that she wasn't sure whether Sora, a text-to-video generator that OpenAI has showed off but not yet released, was trained on user-generated videos from YouTube, Facebook and Instagram. Such a use of YouTube content would be an infraction of the platform's terms of service, YouTube CEO Neal Mohan later told Bloomberg. After Altman's ouster, Murati gained a higher profile when she was appointed as interim CEO - but she quickly joined a group of executives pushing for Altman to be reinstated. Her departure marks the latest executive exit at OpenAI since Altman's firing and rehiring last year. Ilya Sutskever, the company's chief scientist, left in May. In August, co-founder Greg Brockman said he would go on leave until the end of the year and researcher John Schulman left for AI rival Anthropic. The departures leave only two members of OpenAI's original founding team at the startup: Altman and Wojciech Zaremba. In her post on X, the text of which she earlier sent to employees at the company, Murati said she was grateful to have worked with the OpenAI team. "Together we've pushed the boundaries of scientific understanding in our quest to improve human well-being," she wrote. The company currently has about 1,700 employees, more than double the roughly 770 it had in late 2023. Altman subsequently announced additional changes to OpenAI's management. In a memo to OpenAI he also posted to X on Wednesday, he wrote that Chief Research Officer Bob McGrew is leaving, along with Barret Zoph, a vice president of research who worked on products like ChatGPT. In his own post on X, Zoph said it was a "very difficult decision" to leave and he plans to "explore new opportunities" outside the company. "OpenAI is doing and will continue to do incredible work and I am very optimistic about the future trajectory of the company and will be rooting everybody on," he wrote. Altman also named six existing employees who will now report directly to him, some in new roles, including Matt Knight as chief information security officer. "I have over the past year or so spent most of my time on the non-technical parts of our organization; I am now looking forward to spending most of my time on the technical and product parts of the company," the CEO wrote, adding that there will be an all-hands meeting Thursday to answer employee questions. "Leadership changes are a natural part of companies, especially companies that grow so quickly and are so demanding," Altman wrote. "I obviously won't pretend it's natural for this one to be so abrupt, but we are not a normal company."

If OpenAI Makes Its Core Business For-Profit, It Could Mean a $10 Billion Payday for 39-Year-Old CEO Sam Altman

Three top OpenAI execs said they would be departing the company. On Wednesday, while OpenAI chief technology officer Mira Murati, vice president of research Barret Zoph, and chief research officer Bob McGrew all announced that they would be leaving the company, reports emerged of a major restructuring that could transform the ChatGPT-maker into a multi-billion dollar for-profit corporation. According to sources who spoke with Reuters, OpenAI is considering becoming a for-profit that no longer answers to its non-profit board to attract more investors. The non-profit arm will still exist, per the sources. The move was first hinted at earlier in September with the news of OpenAI's new financing round that could catapult the $86 billion AI giant to a valuation of $150 billion with $6.5 billion in funding. The valuation depends on whether OpenAI can change its corporate structure to a for-profit model like its rivals, Anthropic and xAI, sources said, at the time. Related: 'A Real Growing Up Moment For Me': OpenAI's 39-Year-Old CEO Says He Learned a Lot from Being Fired If the fundraising round succeeds, 39-year-old OpenAI CEO Sam Altman could get an equity stake -- a 7% stake would increase his $2 billion fortune by $10 billion, according to Bloomberg estimates, and make him one of the richest people in the world. Altman posted on X on Wednesday addressing the high-level departures that occurred that day. "Mira, Bob, and Barret made these decisions independently of each other and amicably, but 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," Altman wrote.

OpenAI Restructures Business Model, What's In It For Sam Altman?

Artificial Intelligence (AI) giant OpenAI is undergoing a major restructuring that will remove its major limiting non-profit tag. The company is notably pushing for profit, and its previous non-profit board will no longer control the entity once it is done. The conversations around restructuring have been ongoing for a while now, with no defined timeline on when the firm will complete it. One of the major people who will benefit from the company's restructuring is its CEO, Sam Altman. As reported by Reuters, citing sources close to the restructuring, Altman will receive massive equity in the company. After restructuring, OpenAI may be worth as much as $150 billion. This valuation will make it one of the most valuable AI firms in the world. While Sam Altman and the core founders have been building the company for long, it attained limelight when it launched ChatGPT in November 2022. Within a few months, the new chatbot recorded massive userbase as its use case spread widely. Over the following months, OpenAI started charging for premium access to more applications linked to ChatGPT. This move triggered the backlash from co-founders like Elon Musk who decried a deviation from the original non-profit model. This ongoing restructuring will clear the firm to pursue business expansion the way it truly wants it. Per the Reuters report, the company's non-profit entity will still own a minority stake in the for-profit outfit. The whole restructuring plans comes amid a major shift in the firm's leadership. CTO Mira Murati who served as interim CEO when Sam Altman was temporarily ousted last December has announced her departure. Also OpenAI President Greg Brockman is on an indefinite leave. He announced this leave after the departure of former Chief Scientist Ilya Sustkever from the firm. Despite the abrupt changes the company is experiencing at the moment, OpenAI is still innovating the right way. As reported earlier by Coingape, the company recently launched its ChatGPT voice mode. However, this product launch comes with restriction for users in key regions like the United Kingdom and European Union. As one of the biggest beneficiaries of the incoming changes, Sam Altman may get more motivated to build on its best products. The company is looking to revolutionize different industries including video production. To do this, it has showcased the potentials of its video generation tool Sora. With more investors capital likely to flow in in the coming months, it remains to be seen what products will emerge.

OpenAI Rushing To Become For Profit Corp & Give CEO Altman Equity Stake - Report

This is not investment advice. The author has no position in any of the stocks mentioned. Wccftech.com has a disclosure and ethics policy. OpenAI will soon no longer be controlled by its nonprofit board as the firm shakes up its organizational structure to attract new investors, according to Reuters. The report comes just as the firm's chief technology officer, Mira Murati, who has spent years at the firm, announced her decision to leave the company on X (formerly Twitter). Reports of such a shakeup have been surfacing throughout this year, and as per the details, while the nonprofit board will relinquish control over the firm, it will continue to hold a stake in the for profit arm. OpenAI CEO Sam Altman Will Receive Equity In For Profit Arm As Firm Navigates To Become For Profit Benefit Corporation Reports of OpenAI considering to remove profit caps for investors surfaced late last month through sources quoted by the Financial Times. The report followed earlier ones which claimed that big ticket names such as Apple were interested in investing in the firm, and in its statement to FT, OpenAI stressed that the nonprofit arm was "core" to its mission. According to Reuters, as part of its effort to woo investors, OpenAI is considering removing the control that the nonprofit board has on the for profit entity. The board was at the center of significant upheaval at the firm last year when its CEO Sam Altman left and then returned after considerable effort from one of OpenAI's biggest partners, Microsoft. OpenAI's nonprofit arm will continue to exist and own a minority stake in the for profit company. The current governance structure was designed to ensure that OpenAI's operations were aligned with actions that were beneficial to society as a whole. In its statement made to Reuters, OpenAI asserted that it remains "focused on building AI that benefits everyone." The firm added that it is "working with our board to ensure that we're best positioned to succeed in our mission." As for the nonprofit arm, OpenAI repeated that it is "core" to its mission and "will continue to exist." The statement does not directly address the extent of control the nonprofit will have on the for profit arm, with the sources adding that the restructuring is being worked out and the timeline for its completion is uncertain. As part of the efforts, OpenAI's CEO Sam Altman is also slated to receive equity in the for profit division as part of the restructuring. OpenAI is believed to be worth around $150 billion, making it one of the most valuable startups in the world. The report comes on the heels of OpenAI chief technology officer Mira Murati's abrupt departure from the firm. In an X post, the executive shared that she was "stepping away" to "create the time and space to do my own exploration." Murati's departure is another high profile one for OpenAI, after co founder John Schulman left the firm to join rival Anthropic earlier this year. Schulman was OpenAI's head of alignment, and the firm's president, Greg Brockman, is also on extended leave until the end of this year.

OpenAI announces its shift to a for-profit corporation

The OpenAI non-profit will continue to exist and own a minority stake in the for-profit company, the sources said. The move could also have implications for how the company manages AI risks in a new governance structure. Chief executive Sam Altman will also receive equity for the first time in the for-profit company, which could be worth $150 billion after the restructuring as it also tries to remove the cap on returns for investors, sources added. The sources requested anonymity to discuss private matters. "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," an OpenAI spokesperson said.

Sam Altman Poised For $10.5B Payday As OpenAI Transitions To For-Profit Model With $150B Valuation On Horizon - Microsoft (NASDAQ:MSFT)

OpenAI is revamping its business model to attract more investors. This restructuring could result in a significant financial gain for CEO Sam Altman. What Happened: Microsoft Corp.-backed MSFT OpenAI plans to transition from being controlled by a nonprofit board to a new structure. This change aims to make the company more appealing to outside investors. Sources familiar with the matter told Reuters that the current nonprofit will retain a minority stake in the new for-profit entity. This move could pave the way for an initial public offering (IPO) in the future. The company, initially launched as a nonprofit in 2015, is currently looking at a valuation of $150 billion, hinging on its conversion to a for-profit organization. Subscribe to the Benzinga Tech Trends newsletter to get all the latest tech developments delivered to your inbox. The new structure would also allow Altman to receive 7% equity in OpenAI, potentially leading to a substantial payday. Assuming the $150 billion valuation materializes, Altman's stake would be worth $10.5 billion. 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." See Also: Jeff Bezos-Backed Perplexity AI In Discussion With Marriott And Nike As It Prepares To Challenge To Google This restructuring follows a challenging year for OpenAI's leadership, including the brief ousting of Altman last November and the departure of several high-profile executives and researchers. Why It Matters: The restructuring of OpenAI marks a significant shift in the company's trajectory. The move from a nonprofit to a for-profit entity has sparked various reactions and controversies. Elon Musk, who co-founded OpenAI in 2015 and left in 2018, has expressed discontent with the transition. Musk voiced concerns over the legality of this shift. Adding to the complexity, OpenAI's Chief Technology Officer Mira Murati stepped down, citing a desire to explore new opportunities. Her departure follows the exit of several high-profile members, raising questions about the company's future. The restructuring also comes amid ongoing legal battles. Musk has reignited a lawsuit against OpenAI, accusing the company of prioritizing commercial gains over its original mission of benefiting humanity. Check out more of Benzinga's Consumer Tech coverage by following this link. Read Next: Tech YouTuber MKBHD Responds After Facing Massive Backlash Over His New $12 A Month Wallpaper App Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors. Photo courtesy: Shutterstock Market News and Data brought to you by Benzinga APIs

OpenAI's Restructure: From Non-Profit To Potential $150B For-Profit -- Sam Altman Could Get Equity - Microsoft (NASDAQ:MSFT)

ChatGPT-maker OpenAI is reportedly transitioning from a non-profit to a for-profit benefit corporation. The AI startup's CEO Sam Altman could receive equity in the newly structured company. What Happened: OpenAI is revamping its business structure to make it more attractive to investors. The non-profit board will no longer govern the company, although the non-profit entity will retain a minority stake in the for-profit company, reported Reuters, citing people familiar with the matter. The restructuring could potentially affect the company's management of AI risks under the new governance model. See Also: Steve Jobs And Steve Wozniak Once Pranked The Pope By Pretending To Be Henry Kissinger: 'I'm Just Calling To Make A Confession,' Said One Apple Co-Founder Altman is set to receive equity in the for-profit company, which could be valued at $150 billion post-restructuring. The company is also considering removing the cap on returns for investors. 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." The restructuring plan is still being finalized with lawyers and shareholders, and the timeline remains uncertain. The transition from non-profit control could make OpenAI operate more like a typical startup, a move generally welcomed by its investors. However, it could also raise concerns from the AI safety community about the lab's governance in its pursuit of AGI, the report noted. Subscribe to the Benzinga Tech Trends newsletter to get all the latest tech developments delivered to your inbox. Why It Matters: This development comes amid leadership changes at OpenAI, with the company's CTO Mira Murati announcing her departure and president Greg Brockman currently on sabbatical. OpenAI was established in 2015 as a non-profit AI research organization. It launched the for-profit OpenAI LP entity in 2019, securing capital from Microsoft Corporation MSFT. Tesla and SpaceX CEO Elon Musk, who co-founded the company and later left it in 2018 over some differences, has repeatedly spoken against OpenAI's transition. "Either turning a non-profit into a for-profit is legal and everyone should be doing it or it's illegal and OpenAI is a house of cards," he said in August earlier this year. Previously, it was reported that OpenAI's next funding round is anticipated to include convertible notes, with a potential valuation of $150 billion. This valuation will hinge on whether the company can restructure and remove the current profit cap for investors. Check out more of Benzinga's Consumer Tech coverage by following this link. Read Next: 'Possible, But Not Probable': Steve Jobs' Witty Transportation Answer In 1973 Resume Earns Him Online Accolades -- Bill Gates $15k Salary No Less Impressive In The Same Era Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors. Market News and Data brought to you by Benzinga APIs

OpenAI shakes up management, set to end non-profit status

STORY: OpenAI is headed for a big shakeup, including an end to its non-profit status. Three top technical leaders at the ChatGPT maker quit Wednesday. Chief Technology Officer Mira Murati was among them. She was often the public face of the startup, alongside Chief Executive Sam Altman. It's just the latest in a string of departures during a tumultuous year. Earlier Wednesday, Reuters reported that the AI company planned to drop its non-profit status. Instead, it will restructure as a for-profit benefit corporation. And that move will see Altman get a big equity stake. Right now, OpenAI does have a for-profit wing, but it's controlled by the non-profit board - an unusual setup that has led to turbulence. In November last year Altman was ousted by the board over a loss of trust - only to be reinstated five days later. OpenAI is also now in the middle of a big new fundraising round. It aims to secure $6.5 billion in new investment, and will see the company valued at around $150 billion. But the round is contingent on the restructuring going through, and it's not clear if the executive departures could have a bearing on the outcome. Earlier this year, chief scientist and cofounder Ilya Sutskever was among those to leave OpenAI, going on to launch his own startup. Fellow cofounder John Schulman then left to join rival AI outfit Anthropic.

ChatGPT inventor to receive $10bn as his company abandons non-profit status

Sam Altman is to receive a 7pc stake in the company as it moves to a for-profit status James Titcomb Technology Editor 26 September 2024 2:21pm The founder of ChatGPT-maker OpenAI is to receive more than $10bn (£7.5bn) as the artificial intelligence (AI) company abandons its long-held not-for-profit status. OpenAI is considering granting Sam Altman a 7pc stake in the company, which is currently raising funds at a valuation of around $150bn. The valuation would make Mr Altman's potential stake worth $10.5bn. It comes after a leadership exodus at the company with chief technology officer Mira Murati among those announcing their departure. OpenAI was founded in 2015 by technology executives including Elon Musk as a non-profit that planned to make its technology "open source", or freely available. Mr Altman has also not taken a direct stake in the company, saying he is only paid a modest salary that allows him to qualify for health insurance. However, the growing capabilities of AI systems and commercial interest from tech giants including Microsoft means it has watered down those promises. OpenAI no longer open-sources its technology and is now run as a for-profit entity that is controlled by a not-for-profit parent. However, the company is now considering ending that status as it seeks to raise huge amounts of funding needed to train advanced AI systems. One possible option is becoming a public benefit corporation, which are allowed to make profits while being structured to help wider society. As part of that OpenAI is considering granting Mr Altman the 7pc stake, according to Bloomberg. Mr Altman is already a billionaire through investments in companies such as Stripe and Reddit but the grant would multiply his net worth several times over. Mr Musk, who quit OpenAI in 2018 amid a row with executives including Mr Altman, wrote on X: "You can't just convert a non-profit into a for-profit. That is illegal." He added: "Sam Altman is Little Finger," a reference to the Machiavellian character in the TV series Game of Thrones. Mr Altman was dramatically fired and re-hired over the course of five days last year when OpenAI's board accused him of misleading them. A subsequent independent review of the incident cleared Mr Altman of any wrongdoing and he was later restored to the board. Ms Murati, who had been a key player in developing ChatGPT, was briefly appointed chief executive after Mr Altman was sacked. In a note announcing her departure she said that she was "stepping away because I want to create the time and space to do my own exploration", and said resigning was a "difficult decision". Bob McGrew, the company's chief research officer, and Barret Zoph, the vice-president of research, also announced their resignations. OpenAI has lost a string of senior executives in recent months, including Ilya Sutskever, its chief scientist and co-founder. In a message to staff, Mr Altman wrote: "Leadership changes are a natural part of companies, especially companies that grow so quickly and are so demanding. I obviously won't pretend it's natural for this one to be so abrupt, but we are not a normal company." OpenAI said: "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 nonprofit is core to our mission and will continue to exist."

'This is illegal': Elon Musk criticises OpenAI's shift to for-profit model

ChatGPT-maker OpenAI is working on a plan to restructure its core business into a for-profit benefit corporation that will no longer be controlled by its non-profit board, in a move that will make the company more attractive to investors.Microsoft-backed OpenAI is working on a plan to restructure its core business into a for-profit benefit corporation that its non-profit board will no longer control, Reuters reported, a move which has rubbed Elon Musk the wrong way. Musk, who was among the founders of the artificial intelligence (AI) startup in 2015, took to X, to say, "You can't just convert a non-profit into a for-profit. That is illegal," after a user questioned OpenAI's move. As part of this restructuring, Sam Altman, the company's chief executive officer (CEO) is set to receive equity for the first time in the for-profit company, which could be worth $150 billion after the restructuring as it also tries to remove the cap on returns for investors. Musk has been active on X since the report was released, mocking Altman and calling him "the little finger", a comment on three senior executives leaving the company. This comes months after Musk sued OpenAI, alleging that the organisation breached contractual agreements established when he co-founded the ChatGPT maker. The lawsuit claimed that Altman, along with cofounder Greg Brockman, initially approached Musk with the idea of creating an open-source, non-profit organisation dedicated to developing AI technology for the "benefit of humanity", He ultimately dismiss the lawsuit, without giving a reason for the move, according to a filing in San Francisco Superior Court. In August, however, the Tesla CEO revived a lawsuit against OpenAI and Altman stating that the firm put profits and commercial interests ahead of the public good. Sources have told Reuters that despite the changes, OpenAI non-profit will continue to exist and will own a minority stake in the for-profit company. "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," an OpenAI spokesperson said. Mira Murati to leave Mira Murati, chief technology officer of the company, announced her departure on Thursday from the startup in a post on X. Her exit marks the latest in a series of executive departures this year. "I'm stepping away because I want to create the time and space to do my own exploration," Murati wrote in the X post. Murati has been with the ChatGPT maker for six and a half years and briefly took the role of CEO when in November the board made the unexpected decision to temporarily oust and then reinstate cofounder Altman. In August, OpenAI cofounder John Schulman announced on X that he had joined rival AI company Anthropic. Meanwhile, another cofounder, Greg Brockman, stated on X that he would be taking a sabbatical until the end of the year. Additionally, a third cofounder, chief scientist Ilya Sutskever, departed from OpenAI and started his own AI company named Safe Superintelligence Inc. (SSI), just one month after leaving the company.

OpenAI planning to become for-profit company, say reports

Reported move follows recent departure of several senior figures from ChatGPT developer OpenAI is reportedly pushing ahead with plans to become a for-profit company, as more senior figures left the ChatGPT developer after the surprise exit of its chief technology officer, Mira Murati. The San Francisco-based startup is preparing to change its corporate structure as it seeks $6.5bn (£4.9bn) of new funding, according to reports. Under the changes, OpenAI will become a for-profit benefit corporation - an entity that makes profits but is committed to the social and public good - that will no longer be controlled by its nonprofit board, Reuters reported. OpenAI declined to comment on the specific details of the reports but a spokesperson said the startup's nonprofit board would not be scrapped. "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 nonprofit is core to our mission and will continue to exist," said the spokesperson. OpenAI was founded as a nonprofit in 2015 and four years later added a for-profit subsidiary in which Microsoft is the biggest investor. On its website OpenAI describes its structure as "a partnership between our original nonprofit and a new capped profit arm". The ChatGPT developer, whose CEO, Sam Altman, has become the poster child for the AI boom, is reportedly heading for a new valuation of $150bn under the new fundraising, broadly in line with Uber's. Apple and chipmaker Nvidia are among the companies cited in reports as potential investors in the new funding round. OpenAI's progress towards its goal of creating artificial general intelligence - which it describes as "AI systems that are generally smarter than humans" - has alarmed former employees. William Saunders, a research engineer who left OpenAI this year, said he left the company because he "lost faith" it would make responsible decisions about AGI, while a former leading safety researcher at the company, Jan Leike, claimed in May that OpenAI was prioritising "shiny products" over safety. Responding to Leike's comments on X at the time, Altman wrote: "He's right we have a lot more to do; we are committed to doing it." Reports of the corporate restructuring process, which could run into next year, came as more senior technical staff announced their departures. Murati - who was the figurehead for the May launch of OpenAI's GPT-4o model - announced on Wednesday she was leaving. She had also spent a short period of time as OpenAI's temporary CEO in November last year, when Altman was fired and then reinstated by the nonprofit board. Hours later, two additional colleagues, Barret Zoph and Bob McGrew, also quit, according to a post from Altman on social media platform X. Zoph held the title VP research, and McGrew held the title of chief research officer. "Mira, Bob, and Barret made these decisions independently of each other and amicably, but 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," Altman wrote. He added that leadership changes like Murati's departure were a "natural part of companies", adding: "I obviously won't pretend it's natural for this one to be so abrupt, but we are not a normal company."

OpenAI key personnel changes

(Reuters) - Microsoft-backed OpenAI is planning to restructure its core business into a for-profit benefit corporation no longer controlled by its non-profit board, Reuters reported on Wednesday, even as another senior executive departed. The ChatGPT-maker could be worth $150 billion after the restructuring, and CEO Sam Altman will also receive equity for the first time, the report added. The news comes as Chief Technology Officer Mira Murati, announced she would leave, following a series of other senior executives. Here is a list of some notable departures and additions. OpenAI had 11 founding members, including Altman and Elon Musk, who were the group's co-chairs. Only two of the original members, Altman and Wojciech Zaremba are still with the company. Date Personnel Changes Feb. 13 Andrej Karpathy, an artificial intelligence March 8 CEO Sam Altman returns to OpenAI's board along develop safe artificial intelligence systems in Sept. 25 Mira Murati, OpenAI's Chief Technology Officer (Reporting by Juveria Tabassum and Juby Babu; Editing by Shounak Dasgupta)

OpenAI to End Nonprofit Control of Main Business, Reuters Says

OpenAI, the artificial intelligence startup behind ChatGPT, is working on a plan to restructure so that its nonprofit board would no longer control its main business, Reuters reported, citing people familiar with the matter. The nonprofit arm of OpenAI would continue to exist and would own a minority stake in the for-profit company, the news service reported on Wednesday, without identifying its sources. Co-founder and Chief Executive Officer Sam Altman will be given equity in the for-profit company, which could potentially be worth $150 billion following the restructuring, the report said.

OpenAI key personnel changes

Sept 25 (Reuters) - Microsoft-backed OpenAI is planning to restructure its core business into a for-profit benefit corporation no longer controlled by its non-profit board, Reuters reported on Wednesday, even as another senior executive departed. The ChatGPT-maker could be worth $150 billion after the restructuring, and CEO Sam Altman will also receive equity for the first time, the report added. The news comes as Chief Technology Officer Mira Murati, announced she would leave, following a series of other senior executives. Advertisement · Scroll to continue Here is a list of some notable departures and additions. OpenAI had 11 founding members, including Altman and Elon Musk, who were the group's co-chairs. Only two of the original members, Altman and Wojciech Zaremba are still with the company. Date Personnel Changes Feb. 13 Andrej Karpathy, an artificial intelligence researcher and one of the founding members of OpenAI leaves the company. Karpathy in July announced that he was starting an AI-integrated education platform named Eureka Labs. March 8 CEO Sam Altman returns to OpenAI's board along with three new directors: Sue Desmond-Hellmann, a former CEO of the Bill and Melinda Gates Foundation, Nicole Seligman, a former president of Sony Entertainment, and Fidji Simo, CEO of Instacart. Altman was fired from his role in November, with OpeanAI's board blaming his lack of candor and its need to defend OpenAI's mission to develop AI that benefits humanity, but swiftly returned as CEO. May 14 OpenAI co-founder and chief scientist Ilya Sutskever, who was on its board and helped orchestrate Altman's firing, exits the startup. Safe Superintelligence (SSI), newly co-founded by Sutskever, raised $1 billion in cash to help develop safe artificial intelligence systems in September. June 10 OpenAI hires Sarah Friar, the former CEO of social media firm Nextdoor (KIND.N), as its first chief financial officer. Also appointed Kevin Weil, who has previously worked at Twitter, Facebook and Instagram, as chief product officer. Aug. 5 John Schulman, one of the co-founders of OpenAI, departs the ChatGPT maker for rival Anthropic, while the company's president and co-founder Greg Brockman also took a sabbatical through the end of the year. Aug. 8 Appoints Zico Kolter, professor and director of the machine learning department at Carnegie Mellon University, to its board. Kolter, whose work predominantly focuses on AI safety, will also join OpenAI board's safety and security committee. Sept. 25 Mira Murati, OpenAI's Chief Technology Officer leaves the firm after six-and-a-half years. She had served as CEO briefly when Altman was sacked by the company's board. Reporting by Juveria Tabassum and Juby Babu; Editing by Shounak Dasgupta Our Standards: The Thomson Reuters Trust Principles., opens new tab

OpenAI plans tectonic shift from nonprofit to for-profit, giving Altman equity

Under plans that have attracted criticism, shift may give Altman 7% equity in the firm. On Wednesday, Reuters reported that OpenAI is working on a plan to restructure its core business into a for-profit benefit corporation, moving away from control by its nonprofit board. The shift marks a dramatic change for the AI company behind ChatGPT, potentially making it more attractive to investors while raising questions about its commitment to sharing the benefits of advanced AI with "all of humanity," as written in its charter. Further Reading A for-profit benefit corporation is a legal structure that allows companies to pursue both financial profits and social or environmental goals, ostensibly balancing shareholder interests with a broader mission to benefit society. It's an approach taken by some of OpenAI's competitors, such as Anthropic and Elon Musk's xAI. In a notable change under the new plan, CEO Sam Altman would receive equity in the for-profit company for the first time. Bloomberg reports that OpenAI is discussing giving Altman a 7 percent stake, though the exact details are still under negotiation. This represents a departure from Altman's previous stance of not taking equity in the company, which he had maintained was in line with OpenAI's mission to benefit humanity rather than individuals. The restructuring would see OpenAI's nonprofit arm continue to exist but own only a minority stake in the new for-profit entity. Meanwhile, OpenAI is exploring a new funding round that could value the company at $150 billion, according to sources familiar with the matter that spoke with Reuters. The proposed restructuring also aims to remove the cap on returns for investors, potentially making OpenAI more appealing to venture capitalists and other financial backers. Microsoft, which has invested billions in OpenAI, stands to benefit from this change, as it could see increased returns on its investment if OpenAI's value continues to rise. Transformation over time OpenAI's journey from a nonprofit research organization founded in 2015 to its current status as an AI market leader has been marked by rapid growth and increasing commercial success. The company added a for-profit subsidiary, OpenAI LP, in 2019 to help fund its research and development efforts. However, the nonprofit board retained full control over the for-profit arm, a structure designed to ensure the company's focus on developing safe and beneficial artificial general intelligence (AGI). Further Reading While the restructuring may streamline decision-making and attract more investment, it could also complicate OpenAI's commitment to its original mission, as Musk and former OpenAI board member Helen Toner have claimed. Musk, an original co-founder of OpenAI, sued the company and Sam Altman in March, claiming that OpenAI's alliance with Microsoft had broken its agreement to make a major breakthrough in AI "freely available to the public." Musk withdrew the suit in June, then revived it in August under similar complaints about the company abandoning its commitment to truly open source releases of AI tech. In November 2023, after internal dissent over the increasingly commercial direction of OpenAI and how it handled product releases, the company experienced a brief but intense boardroom drama that saw Altman ousted and then quickly reinstated as CEO after overwhelming support from employees and investors. OpenAI's moves since then have seemed to hinge on goals that would be beneficial to Altman getting a tighter rein on the company and transforming it into more of a consumer tech corporation than a research organization. These include de-emphasizing "AI safety" research that focused on sci-fi-like existential threats (previously led by a cohort of employees that sometimes challenged public AI model releases, providing impediments to commercial growth), attracting Altman-loyal board members and allowing people who originally participated in firing Altman from the company to leave (the departure of Ilya Sutskever for example), and positioning the company toward a rapid increase in company valuation, going hand-in-hand with Altman's ambitious plans toward expanding world infrastructure for AI models. These changes have coincided with a significant upheaval in OpenAI's leadership. On Wednesday, longtime Chief Technology Officer Mira Murati announced her departure from the company, as we covered in a separate piece. Murati, who played a key role in developing products like ChatGPT and DALL-E, stated she was leaving to "create the time and space to do my own exploration." She also reportedly played a major role in Altman's ouster last year, despite later voicing support for him. Her exit follows those of other senior figures, including the temporary departure of co-founder and President Greg Brockman, who is currently on leave. Listing image by Benj Edwards / OpenAI

OpenAI Looks to Shift Away From Nonprofit Roots and Convert Itself to For-Profit Company

OpenAI's history as a nonprofit research institute that also sells commercial products like ChatGPT may be coming to an end as the San Francisco company looks to more fully convert itself into a for-profit corporation accountable to shareholders. The company's board is considering a decision that would change the company into a public benefit corporation, according to a source familiar with the discussions who wasn't authorized to speak publicly about them. While OpenAI already has a for-profit division, where most of its staff works, it is controlled by a nonprofit board of directors whose mission is to help humanity. That would change if the company converts the core of its structure to a public benefit corporation, which is a type of corporate entity that is supposed to help society as well as turn a profit. No final decision has been made by the board and the timing of the shift hasn't been determined, the source said. OpenAI's CEO Sam Altman acknowledged in public remarks Thursday that the company is thinking about restructuring but said the departures of key executives the day before weren't related. Speaking at a tech conference in Italy, Sam Altman mentioned that OpenAI has been considering an overhaul to get to the "next stage." But he said it was not connected to the Wednesday resignations of Chief Technology Officer Mira Murati and two other top leaders. "OpenAI will be stronger for it as we are for all of our transitions," Altman told the Italian Tech Week event in Turin. "I saw some stuff that this was, like, related to a restructure. That's totally not true. Most of the stuff I saw was also just totally wrong," he said without any more specificity. "But we have been thinking about (a restructuring)," he added. OpenAI's board has been considering a revamp for a year as it tries to figure out what's needed to "get to our next stage." OpenAI said Thursday that it will still retain a nonprofit arm. "We remain focused on building AI that benefits everyone and as we've previously shared we're working with our board to ensure that we're best positioned to succeed in our mission," it said in a written statement. "The nonprofit is core to our mission and will continue to exist." The resignations of Murati, Chief Research Officer Bob McGrew and another research leader, Barret Zoph, were "just about people being ready for new chapters of their lives and a new generation of leadership," Altman said. The exits were the latest in a string of recent high-profile departures that also include the resignations of OpenAI co-founder Ilya Sutskever and safety team leader Jan Leike in May. In a statement, Leike had leveled criticism at OpenAI for letting safety "take a backseat to shiny products." Much of the conflict at OpenAI has been rooted in its unusual governance structure. Founded in 2015 as a nonprofit with a mission to safely build futuristic AI to help humanity, it is now a fast-growing big business still controlled by a nonprofit board bound to its original mission. This unique structure made it possible for four OpenAI board members -- Sutskever, two outside tech entrepreneurs and an academic -- to briefly oust Altman last November in what was later described as a dispute over a "significant breakdown in trust" between the board and top executives. But with help from a powerful backer, Microsoft, Altman was brought back to the CEO role days later and a new board replaced the old one. OpenAI also put Altman back on the board of directors in May. -- -- The Associated Press and OpenAI have a licensing and technology agreement that allows OpenAI access to part of AP's text archives. Copyright 2024 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

OpenAI looks to shift away from nonprofit roots and convert itself to for-profit company

OpenAI's history as a nonprofit research institute that also sells commercial products like ChatGPT may be coming to an end as the San Francisco company looks to more fully convert itself into a for-profit corporation accountable to shareholders. The company's board is considering a decision that would change the company into a public benefit corporation, according to a source familiar with the discussions who wasn't authorized to speak publicly about them. While OpenAI already has a for-profit division, where most of its staff works, it is controlled by a nonprofit board of directors whose mission is to help humanity. That would change if the company converts the core of its structure to a public benefit corporation, which is a type of corporate entity that is supposed to help society as well as turn a profit. No final decision has been made by the board and the timing of the shift hasn't been determined, the source said. OpenAI's CEO Sam Altman acknowledged in public remarks Thursday that the company is thinking about restructuring but said the departures of key executives the day before weren't related. Speaking at a tech conference in Italy, Sam Altman mentioned that OpenAI has been considering an overhaul to get to the "next stage." But he said it was not connected to the Wednesday resignations of Chief Technology Officer Mira Murati and two other top leaders. "OpenAI will be stronger for it as we are for all of our transitions," Altman told the Italian Tech Week event in Turin. "I saw some stuff that this was, like, related to a restructure. That's totally not true. Most of the stuff I saw was also just totally wrong," he said without any more specificity. "But we have been thinking about (a restructuring)," he added. OpenAI's board has been considering a revamp for a year as it tries to figure out what's needed to "get to our next stage." OpenAI said Thursday that it will still retain a nonprofit arm. "We remain focused on building AI that benefits everyone and as we've previously shared we're working with our board to ensure that we're best positioned to succeed in our mission," it said in a written statement. "The nonprofit is core to our mission and will continue to exist." The resignations of Murati, Chief Research Officer Bob McGrew and another research leader, Barret Zoph, were "just about people being ready for new chapters of their lives and a new generation of leadership," Altman said. The exits were the latest in a string of recent high-profile departures that also include the resignations of OpenAI co-founder Ilya Sutskever and safety team leader Jan Leike in May. In a statement, Leike had leveled criticism at OpenAI for letting safety "take a backseat to shiny products." Much of the conflict at OpenAI has been rooted in its unusual governance structure. Founded in 2015 as a nonprofit with a mission to safely build futuristic AI to help humanity, it is now a fast-growing big business still controlled by a nonprofit board bound to its original mission. This unique structure made it possible for four OpenAI board members -- Sutskever, two outside tech entrepreneurs and an academic -- to briefly oust Altman last November in what was later described as a dispute over a "significant breakdown in trust" between the board and top executives. But with help from a powerful backer, Microsoft, Altman was brought back to the CEO role days later and a new board replaced the old one. OpenAI also put Altman back on the board of directors in May. -- -- The Associated Press and OpenAI have a licensing and technology agreement that allows OpenAI access to part of AP's text archives.

Why is OpenAI planning to become a for-profit business and does it matter?

Company plans announced as it reckons with departure of senior executives and seeks huge investment OpenAI, the developer of the groundbreaking ChatGPT chatbot, is preparing to overhaul its corporate structure and become a for-profit business. The startup's chief executive, Sam Altman, acknowledged on Thursday that it was "not a normal company" after another surprising development at OpenAI this week when its its chief technology officer, Mira Murati, resigned. Her departure was quickly followed by the announcement that two other executives had quit. The company is synonymous with an artificial intelligence boom triggered by the emergence, in 2022, of OpenAI's signature product, a chatbot that stunned users with its ability to craft convincing, human-like responses to an array of prompts. Altman, in turn, has become the poster child for a technology that is advancing rapidly and is being developed by the world's largest tech companies, including Microsoft - OpenAI's biggest backer - Google, the Facebook owner Meta and Amazon. Here, we look at some of the issues arising from the changes at OpenAI.

OpenAI's restructuring will see it become a for-profit company | Digital Trends

Reuters reports that, in an effort to make itself more attractive to investors, OpenAI plans to scrap the nonprofit structure of its core business, thereby removing the authority of its board of directors, as well as granting CEO Sam Altman equity in the company. "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 nonprofit is core to our mission and will continue to exist," an OpenAI spokesperson told Reuters. The nonprofit portion of the business will not be done away with entirely, but instead would continue to exist and own a minority stake in the overall company. Recommended Videos Sam Altman could receive as much as $150 billion in equity from the restructured company. That's quite the reversal of fortunes for Altman, who, just last November, had been fired from OpenAI by its board of directors. Since Altman's firing and subsequent rehiring, OpenAI has seen the departure of numerous high-level employees. Researchers Jan Leike and Ilya Sutskever both left in May, citing what they called the company's disregard of safety guidelines in favor of building "shiny products." Earlier this week, Chief technology officer Mira Murati also announced her resignation from the company, and was quickly followed by Chief Research Officer Bob McGrew and Barret Zoph, senior research executive, though Altman denies that their departures are due to the proposed restructuring plan. The plan is reportedly still being vetted by the company's lawyers and stakeholders. There is no word yet on when the restructuring might be completed. OpenAI was founded in 2015 as a nonprofit research organization, then incorporated a for-profit subsidiary, OpenAI LP, in 2019 in order to secure funding from Microsoft. With the release of ChatGPT in 2022, OpenAI's valuation has grown from $14 billion in 2021 to $150 billion in the most recent round of funding.

OpenAI looks to shift away from nonprofit roots and convert itself to for-profit company

OpenAI's history as a nonprofit research institute that also sells commercial products like ChatGPT may be coming to an end as the San Francisco company looks to more fully convert itself into a for-profit corporation accountable to shareholders. The company's board is considering a decision that would change the company into a public benefit corporation, according to a source familiar with the discussions who wasn't authorized to speak publicly about them. While OpenAI already has a for-profit division, where most of its staff works, it is controlled by a nonprofit board of directors whose mission is to help humanity. That would change if the company converts the core of its structure to a public benefit corporation, which is a type of corporate entity that is supposed to help society as well as turn a profit. No final decision has been made by the board and the timing of the shift hasn't been determined, the source said. OpenAI's CEO Sam Altman acknowledged in public remarks Thursday that the company is thinking about restructuring but said the departures of key executives the day before weren't related. Speaking at a tech conference in Italy, Sam Altman mentioned that OpenAI has been considering an overhaul to get to the "next stage." But he said it was not connected to the Wednesday resignations of Chief Technology Officer Mira Murati and two other top leaders. "OpenAI will be stronger for it as we are for all of our transitions," Altman told the Italian Tech Week event in Turin. "I saw some stuff that this was, like, related to a restructure. That's totally not true. Most of the stuff I saw was also just totally wrong," he said without any more specificity. "But we have been thinking about (a restructuring)," he added. OpenAI's board has been considering a revamp for a year as it tries to figure out what's needed to "get to our next stage." OpenAI said Thursday that it will still retain a nonprofit arm. "We remain focused on building AI that benefits everyone and as we've previously shared we're working with our board to ensure that we're best positioned to succeed in our mission," it said in a written statement. "The nonprofit is core to our mission and will continue to exist." The resignations of Murati, Chief Research Officer Bob McGrew and another research leader, Barret Zoph, were "just about people being ready for new chapters of their lives and a new generation of leadership," Altman said. The exits were the latest in a string of recent high-profile departures that also include the resignations of OpenAI co-founder Ilya Sutskever and safety team leader Jan Leike in May. In a statement, Leike had leveled criticism at OpenAI for letting safety "take a backseat to shiny products." Much of the conflict at OpenAI has been rooted in its unusual governance structure. Founded in 2015 as a nonprofit with a mission to safely build futuristic AI to help humanity, it is now a fast-growing big business still controlled by a nonprofit board bound to its original mission. This unique structure made it possible for four OpenAI board members -- Sutskever, two outside tech entrepreneurs and an academic -- to briefly oust Altman last November in what was later described as a dispute over a "significant breakdown in trust" between the board and top executives. But with help from a powerful backer, Microsoft, Altman was brought back to the CEO role days later and a new board replaced the old one. OpenAI also put Altman back on the board of directors in May. -- -- The Associated Press and OpenAI have a licensing and technology agreement that allows OpenAI access to part of AP's text archives.

OpenAI looks to shift away from nonprofit roots and convert itself to for-profit company

OpenAI's history as a nonprofit research institute that also sells commercial products like ChatGPT may be coming to an end as the San Francisco company looks to more fully convert itself into a for-profit corporation accountable to shareholders. The company's board is considering a decision that would change the company into a public benefit corporation, according to a source familiar with the discussions who wasn't authorized to speak publicly about them. While OpenAI already has a for-profit division, where most of its staff works, it is controlled by a nonprofit board of directors whose mission is to help humanity. That would change if the company converts the core of its structure to a public benefit corporation, which is a type of corporate entity that is supposed to help society as well as turn a profit. No final decision has been made by the board and the timing of the shift hasn't been determined, the source said. OpenAI's CEO Sam Altman acknowledged in public remarks Thursday that the company is thinking about restructuring but said the departures of key executives the day before weren't related. Speaking at a tech conference in Italy, Sam Altman mentioned that OpenAI has been considering an overhaul to get to the "next stage." But he said it was not connected to the Wednesday resignations of Chief Technology Officer Mira Murati and two other top leaders. "OpenAI will be stronger for it as we are for all of our transitions," Altman told the Italian Tech Week event in Turin. "I saw some stuff that this was, like, related to a restructure. That's totally not true. Most of the stuff I saw was also just totally wrong," he said without any more specificity. "But we have been thinking about (a restructuring)," he added. OpenAI's board has been considering a revamp for a year as it tries to figure out what's needed to "get to our next stage." OpenAI said Thursday that it will still retain a nonprofit arm. "We remain focused on building AI that benefits everyone and as we've previously shared we're working with our board to ensure that we're best positioned to succeed in our mission," it said in a written statement. "The nonprofit is core to our mission and will continue to exist." The resignations of Murati, Chief Research Officer Bob McGrew and another research leader, Barret Zoph, were "just about people being ready for new chapters of their lives and a new generation of leadership," Altman said. The exits were the latest in a string of recent high-profile departures that also include the resignations of OpenAI co-founder Ilya Sutskever and safety team leader Jan Leike in May. In a statement, Leike had leveled criticism at OpenAI for letting safety "take a backseat to shiny products." Much of the conflict at OpenAI has been rooted in its unusual governance structure. Founded in 2015 as a nonprofit with a mission to safely build futuristic AI to help humanity, it is now a fast-growing big business still controlled by a nonprofit board bound to its original mission. This unique structure made it possible for four OpenAI board members -- Sutskever, two outside tech entrepreneurs and an academic -- to briefly oust Altman last November in what was later described as a dispute over a "significant breakdown in trust" between the board and top executives. But with help from a powerful backer, Microsoft, Altman was brought back to the CEO role days later and a new board replaced the old one. OpenAI also put Altman back on the board of directors in May. -- -- The Associated Press and OpenAI have a licensing and technology agreement that allows OpenAI access to part of AP's text archives.

What's behind OpenAI's potential governance shift

Why it matters: A potential plan to move the generative-AI pioneer into the control of a fully independent for-profit outfit would remove any uncertainty over whether financial motivations are at the core of the ChatGPT maker's ambitions. Catch up fast: The company's board is weighing the controversial moves as OpenAI tries to close a massive new investment round, but neither the governance changes nor the funding have been finalized, Axios' Ina Fried and Scott Rosenberg reported Wednesday. Between the lines: Without nonprofit oversight -- which was originally established to ensure OpenAI's products benefited humanity -- the company will be "more attractive to investors," Reuters reported. What they're saying: An OpenAI spokesperson told Ina and Scott yesterday that the nonprofit "is core to our mission and will continue to exist." 💭 Nathan's thought bubble: The issue here is the cultural divide between what Silicon Valley believes is good for humanity and what AI watchdogs believe is potentially problematic. The other side: Elon Musk, who co-founded and partially funded OpenAI before splitting with its leaders, ripped Altman, comparing him to a manipulative character from "Game of Thrones."

OpenAI is nearly free from its do-gooder shackles | Dave Lee

"OpenAI is a nonprofit artificial intelligence research company. Our goal is to advance digital intelligence in the way that is most likely to benefit humanity as a whole, unconstrained by a need to generate financial return. Since our research is free from financial obligations, we can better focus on a positive human impact." That was the founding mission statement of OpenAI. It's now quite out of date, so let's do some light editing. Maybe something like: "OpenAI is an artificial intelligence research company. Our goal is to advance digital intelligence to generate financial return." That is much clearer and far more accurate. On Wednesday, Reuters first reported that the company is set to announce a restructuring under which its nonprofit board will lose control over the company's core business. The new structure is designed to help make it more attractive to potential investors. Recall that it was OpenAI's nonprofit board that moved dramatically last November to oust Chief Executive Officer Sam Altman, leaving its biggest backer at the time, Microsoft Corp., wondering if its $10 billion AI strategy was about to turn to dust. A governance change should stop that from happening again. The move to reduce the board's control comes as, any day now, OpenAI is expected to confirm that it has received the biggest venture capital investment ever: a $6.5 billion (or more!) injection valuing the company at around $150 billion. Those investors aren't doing it for the good of humanity; they're doing it for the good of their funds and partners. Unlike investments made under OpenAI's original structure, The Wall Street Journal reported, "those who put money into the current round wouldn't have a cap on the profits they can earn." Still, before any of them have any hope of being paid back, OpenAI must turn around an eye-watering deficit between its revenue ($3.6 billion annually, according to reports) and its costs (more than $5 billon). Even if the company decides to restructure as a public benefit corporation, as Bloomberg has reported is an option, those sums don't change. If you think OpenAI can possibly operate "free from financial obligations," you're hallucinating. That dream is over. (The cynic in me is pretty sure it never existed.) It's not the only transformation at OpenAI. From its original 11-member founding team, just two remain: Altman and Polish computer scientist Wojciech Zaremba. On Wednesday came news of another prominent departure: Mira Murati, OpenAI's chief technology officer, who wasn't among those founders but was an influential executive who stepped in briefly as CEO when Altman was pushed out. Murati gained media prominence after poorly attempting to dodge a question from the Journal about whether OpenAI had been scraping videos from YouTube to build its models. She said on Wednesday that she was "stepping away because I want to create the time and space to do my own exploration." (Not long after she shared her note, two more departures, from OpenAI's research team, were announced.) We don't yet know Murati's plans, but her unexpected departure shares some of the hallmarks of other senior executives who went on to join or launch competing AI companies. Ilya Sutskever, who announced he was leaving OpenAI in May, recently raised $1 billion for his new company, Safe Superintelligence, which pledges to work solely on safety and has "no near-term intention of selling AI products or services." (With "techno-optimists" Andreesen Horowitz among the backers, let's see how long that promise holds up. There's that cynic in me again.) Sutskever's exit was part of a pattern of high-profile executives who left OpenAI with departing messages (or future actions) that suggested concern about the direction of OpenAI under Altman. According to the Journal, Murati had previously described Altman's leadership style as "psychologically abusive." Finding it impossible to force change at OpenAI from within -- Sutskever had cast the deciding vote to try to force out Altman -- they have ended up as the ones departing. Altman has seemingly neutralized any opposition within the company. This is all to say after a turbulent year, OpenAI's metamorphosis is almost complete. The course change, which was set in rapid motion by the failed ouster of Altman, will be fully realized once the new structure is confirmed and that gigantic VC check clears. It will mean the company that had admirable checks and balances, and a CEO without equity in his own creation, now looks a lot more like the other tech giants it competes against. Maybe that's the only way it can keep up. Crucially, OpenAI 2.0, unlike its original incarnation, is very much Altman's company. He will, reports suggest, finally be given equity valued at around $10 billion. No longer constrained by hollow pledges of good before profits, and with new financial incentives of his own, we'll see whether the concern of those who exited was justified.

OpenAI plans to become a for-profit business -- here's what that means for the AI company

According to a new report, OpenAI -- the organization that burst onto the scene with the release of its popular AI chatbot, ChatGPT, in 2022 -- is looking to restructure into a for-profit company. Much to the chagrin of its biggest critics, like former investor Elon Musk, OpenAI has been slowly moving away from the non-profit ethos it was initially founded on. OpenAI was originally founded in 2015 as a non-profit organization. In 2019, a for-profit subsidiary of the non-profit was set up, and the organization has been headed in that direction ever since. OpenAI is now looking to make its evolution into a for-profit company complete by shedding the non-profit board that controls it. In its current state, a non-profit organization sits atop OpenAI's business operations and controls the for-profit business' operations. This was set up in an attempt to keep true to part of OpenAI's original mission of ensuring a "safe AGI that is broadly beneficial." Potential dangers with AI, namely AI that surpasses its human creators, had once been a concern at the forefront of the organization. Late last year, the board's role and those concerns were thrust into the headlines after the non-profit board fired OpenAI CEO Sam Altman, setting off a chain of events that eventually landed Altman back at the head of the company. Altman was accused by some of his peers of putting AI safety issues aside in order to focus on growth at the for-profit company. Investors, such as companies like Microsoft, have put billions of dollars into OpenAI. Even with these big investments, as OpenAI critic Ed Zitron recently pointed out, OpenAI is on track to lose billions this year. As these Big Tech companies seek returns on their investments, it seems inevitable that OpenAI will continue to focus on its profit motives. But, to fully do that, the non-profit board has to go - and it appears Altman is in the midst of doing that. On Wednesday, the same day this report was published, OpenAI's CTO Mira Murati announced she was leaving the company. Shortly after Murati's announcement, OpenAI's chief research officer Bob McGrew and VP of research Barret Zoph both announced their intention to leave the organization as well. OpenAI appears to be undergoing big change as the organization restructures everything from how the company operates to its executive offices. While OpenAI says its non-profit will continue to exist, it will only own a minority stake in the for-profit company. OpenAI will seemingly take more risks in order to turn a profit, operating more so as a standard tech startup than before. But, it's unclear whether those risks will solve the for-profit company's financial issues or leave a net positive impact on society as a whole.

Shift toward for-profit structure puts OpenAI's corporate soul at risk

Why it matters: At stake is OpenAI's overarching commitment "to build general-purpose artificial intelligence that benefits humanity, unconstrained by a need to generate financial return." (That's from its most recent nonprofit tax filing.) Between the lines: Some observers, including Robert Weissman, co-president of Public Citizen, have already concluded that "OpenAI is no longer serving its public, nonprofit purpose and is instead effectively controlled by the for-profit OpenAI affiliate." Where it stands: "As far as we can tell, OpenAI no longer exists as a public interest organization." says Mozilla president Mark Surman, who leads one of the tech world's best-known non-profits. The big picture: OpenAI has been blurring the lines between nonprofit and for-profit for some years now as its cash needs continue to spiral upwards. (It's a lot easier to raise $6.5 billion in venture capital than in charitable donations.) How it works: OpenAI's current board is well stocked with dyed-in-the-wool capitalists, including former Treasury Secretary Lawrence Summers as well as the current or former CEOs of Salesforce, Instacart, Quora and OpenAI itself. Zoom out: OpenAI was founded by a group of researchers who feared Silicon Valley would race to build super-powerful AI without making sure it was safe first. Critics of the company's evolution argue that, under Sam Altman, OpenAI flipped that script once it found that it could lead the race. The bottom line: Getting rid of OpenAI's non-profit control won't be easy, and will almost certainly attract litigation from figures such as Elon Musk, an OpenAI cofounder who put up some of the original money behind the nonprofit, and who has already filed a different suit against the company.

OpenAI reportedly plans to ditch its nonprofit mission with CEO Sam Altman said to be in line to make billions

Make it stop. Please make it stop. Being not-for-profit was surely the very essence of OpenAI, its reason to exist in contrast to other companies chasing the dollar via artificial intelligence. Wasn't it? Not any longer. According to reports, OpenAI plans to completely restructure itself. Gone will be the nonprofit remit, the control not by a CEO or by bloodsucking shareholders but a board with a clear mission to do AI safely and not just for the dollar. In comes a full for-profit model, reportedly with CEO Sam Altman taking on a nice, big chunk of equity and ultimate control of the organisation. Strictly speaking, the nonprofit organisation will continue to exist. However, it will only own a minority stake in the new for-profit structure, and thus lose outright control. These reports come alongside official news of several significant departures from OpenAI, including its CTO Mira Murati, its Chief Research Officer Bob McGrew and Research VP Barret Zoph. The clear implication, according to reports, is that OpenAI's restructuring plans and these departures are no coincidence, they are directly correlated. Of course, OpenAI's nonprofit purity was diluted some time ago when the organisation set up a for-profit subsidiary that enabled large quantities of Microsoft cash to be funnelled in to invest in scaling up the project. AI chips, as we know, do not come cheap. If the move does happen, it perhaps puts a different spin on the rather bizarre fired-then-rehired spectacle late last year that saw Sam Altman ejected by the OpenAI board, only to be reinstated mere days later along with a new-look and presumably pro-Altman board. It was all a bit Soviet Politburo in the 1950s, albeit careers rather than actual lives were being knifed. Anyway, it's certainly worth reflecting on OpenAI's self-stated mission statement from 2015, which is still posted on the organisation's website: "OpenAI is a non-profit artificial intelligence research company. Our goal is to advance digital intelligence in the way that is most likely to benefit humanity as a whole, unconstrained by a need to generate financial return. Since our research is free from financial obligations, we can better focus on a positive human impact." That's entirely unambiguous, so a shift to for-profit would undeniably be a fundamental change. And would require something of a website purge, if nothing else. But somehow, it wouldn't be a huge surprise. We've been here before, of course, what with Google's once motto, "Don't be evil" eventually being phased out in 2018 as the company became ever more focused on pure commercial concerns. In general, things seem to happen pretty fast, so it's perhaps no surprise if it takes less than a decade for OpenAI to ditch the noble nonprofit cause. And needless to say, we will welcome whatever AI overlords OpenAI foists upon us, for profit, not for profit or otherwise.