OpenAI's Leadership Shakeup: Murati's Exit and Potential Restructuring

Wall Street Breakfast: For Profit

More drama is enveloping generative artificial intelligence firm OpenAI, whose ChatGPT took the world by storm. The startup is looking to restructure and convert itself into a for-profit benefit corporation in a move that would award CEO Sam Altman an equity stake. Under the new possible format, OpenAI's non-profit unit, which currently controls the firm, would take up a minority stake in the larger company, but the latest reports may have resurfaced some tensions. Backdrop: Since its founding in 2015, OpenAI's mission has been to develop cutting-edge AI technologies that would "benefit humanity as a whole, unconstrained by a need to generate financial return." Only a few years later, the non-profit formed a "capped profit" subsidiary, which eventually helped it attract the billions of dollars in investment that were needed to develop its large language models and other expensive generative AI offerings. Top talent was secured, and it began licensing its technologies commercially, but a schism was growing between Altman and the board that was skeptical of corporate expansion. It ultimately led to Altman's ouster a year ago, before he was reinstated within days, following heavy pressure from employees and investors like Microsoft (MSFT). Now, a newly proposed structure would do away with the approvals currently needed from the nine-person nonprofit board, and some could already be expressing their hesitations. Chief Technology Officer Mira Murati has announced her exit, as well as Chief Research Officer Bob McGrew and Vice President of Research Barret Zoph. Bottom line: With President Greg Brockman on an extended leave, only two of OpenAI's 11 founders remain with the company. The ChatGPT creator is also in the process of raising additional funds that would value the firm at $150B. Questions remain over whether prioritizing revenue could compromise the management of long-term AI risks, or if it's only a matter of time before corporate rivals catch up and by being the leader they can set the tone on responsibility and governance for the emerging industry. (7 comments) As Hurricane Helene strengthens, it is forecasted to strike Florida's Big Bend coast later tonight, posing a risk to people and state energy infrastructure. Power utilities like FPL (NEE), Tampa Electric, Alabama Power, Georgia Power (SO), Dominion Energy (D) and Duke Energy (DUK) are gearing up to deal with the possible impact the current Category 4 tropical storm will bring on oil, natural gas and electricity infrastructure. On the federal front, President Biden has declared a state of emergency in Florida, fast-tracking federal funds needed to tackle the upcoming calamity. Meta's (META) CEO Mark Zuckerberg showcased a slew of new augmented reality products and artificial intelligence updates at the Meta Connect 2024 event. The main highlight was the Orion prototype, which Meta claimed to be its "first true holographic augmented reality glasses." Zuckerberg also unveiled a cheaper version of its virtual reality headset called Meta Quest 3s at a price of $299 and new celebrity voices for its AI assistant. AI updates to the Ray-Ban Meta glasses were additionally teased, as well as upcoming partnerships with Spotify (SPOT) and Amazon Music (AMZN) to improve the audio content experience. (18 comments) Walt Disney (DIS) has launched a password crackdown on its Disney+ service following in the footsteps of a successful "paid sharing" initiative at rival Netflix (NFLX). Disney's new move aims to draw a revenue stream by combatting those who are "freeloading" on the streaming system by using other paid users' credentials. To give context, when Netflix launched its paid sharing feature, it added more than 20M subscribers to its rolls. As expected, analysts see Disney similarly benefiting from the new streaming rules.

Wall Street Breakfast Podcast: OpenAI Eyes Restructure

OpenAI (MSFT) to remove non-profit control, give Altman equity stake: report. (00:21) Disney+ (DIS) rolls out 'paid sharing' password crackdown in most markets. (01:49) Blackstone (BX) to park $13B in AI data center in Britain. (02:45) OpenAI (NASDAQ:MSFT) is working on a plan to restructure itself and convert into a for-profit benefit corporation. The company is currently set up in a structure that has both non-profit and for-profit subsidiaries. Reuters added citing sources familiar with the matter that the non-profit subsidiary, which currently controls the company, will continue to exist and take a minority stake in the company. Additionally, Chief Executive Officer Sam Altman will receive equity for the first time in the for-profit company. OpenAI was founded in 2015 by a number of individuals, including Altman and Elon Musk, as a non-profit AI research organization. In 2019, the company added OpenAI Global LLC as a for-profit subsidiary. Musk is currently suing the company for putting profit over humanity. Microsoft announced a "multi-billion" dollar investment into OpenAI in early 2023. The investment is believed to give Microsoft a 49% stake in the company. Separately on Wednesday, OpenAI's Chief Executive Mira Murati announced she is leaving the company because she wants the "time and space" to do her own exploration. The company's password crackdown on Disney+ has rolled out in the U.S., Canada, Europe, Costa Rica, Guatemala and the Asia-Pacific region after it was tested out in a few regions over the summer. The move looks to draw a revenue stream from those who are essentially "freeloading" on the streaming system by using other paid users' credentials. When Netflix (NFLX) launched its paid sharing initiative/crackdown, it said it estimated some 100M users were watching as unpaid users on the passwords of others. Netflix (NFLX) added more than 20M subscribers to its rolls in the aftermath of launching paid sharing as a feature -- and analysts expect a similar benefit for Disney. Disney (DIS) says an extra member can be added for a fee if they are not within the same household. (in the U.S., $6.99 per month for Disney+ Basic and $9.99 per month for Disney+ Premium). A common example is students away at college. Blackstone (NYSE:BX) confirmed a £10B ($13.35B) investment for an artificial intelligence data center in northeast England, Prime Minister Keir Starmer said during his visit to New York that the investment is expected to create 4,000 jobs, including 1,200 roles dedicated to the construction of the site in Blyth, Northumberland. Construction is expected to begin next year. "The UK is a top investment market for Blackstone because of its powerful combination of talent and innovation along with a highly transparent legal system." Jon Gray, president and COO of Blackstone (BX) confirmed. More articles on Seeking Alpha: Vistra passes Nvidia to become S&P 500's top gainer this year Zuckerberg shows off Orion AR glasses, Quest 3s, limited edition Ray-Ban at Meta Connect 2024 Stocks that are set to benefit from either Harris or Trump winning scenarios - Barclays Catalyst watch: Now let's take a look at the markets as of 6 am. Ahead of the opening bell today, Dow, S&P and Nasdaq futures are in the green. Crude oil is down 1.6% at $68/barrel. Bitcoin is up 0.2% at $63,000. In the world markets, the FTSE 100 is up 0.3% and the DAX is up 1%. The biggest movers for the day premarket: Micron Technology (NASDAQ:MU) is up 15% following better than expected FQ4 results and FQ1 outlook, driven by rising demand for artificial intelligence.