OpenAI is working to revamp its structure into a for-profit business, according to two new reports.
The structure would be part of a move to make the company more attractive to outside investors, Reuters reported — and it could also mean CEO Sam Altman could be in for a big payday.
OpenAI was discussing giving Altman a 7% equity stake in the company, Bloomberg reported, citing unnamed people familiar with the matter. OpenAI has been talking to investors about raising funds at a $150 billion valuation, according to a separate Bloomberg report. That would make Altman’s stake worth as much as $10.5 billion, depending on how the equity award is structured. It would be Altman’s first ownership stake in OpenAI.
A newly formed for-profit entity could be structured as a public benefit corporation, Bloomberg reported, citing the sources familiar. The corporation would be “tasked with turning a profit and also helping society,” the report said, noting details were still under discussion.
The current nonprofit would hold a minority stake in the new for-profit venture, Reuters reported, citing sources familiar with the discussions, which it said were ongoing.
A venture capital investor told BI that the new structure could pave the way for an eventual initial public offering.
The company has been controlled by the nonprofit board — a relic of its original launch as a nonprofit in 2015.
Altman hasn’t had an equity stake in OpenAI and has reportedly taken a salary of just $65,000, according to a June report in The Wall Street Journal. In 2023, he said not having a stake didn’t bother him because he had “enough money.”
“I’m doing this because I love it,” he said at a Senate hearing that year.
Still, he’s amassed a sizable net worth because of his investments in other companies. The Journal report from earlier this year estimated his holdings, which have included stakes in Stripe, Airbnb, and Reddit, to be worth $2.8 billion.
OpenAI didn’t immediately respond to a request for comment from Business Insider, but a 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 nonprofit is core to our mission and will continue to exist.”
The potential changes follow a tumultuous year for the company’s leadership. Last November, Altman was briefly, ultimately unsuccessfully ousted by its board for not being “consistently candid in his communications,” it said, without providing details. Several board members at the time questioned Altman’s approach to developing AI and wanted Altman to tread more carefully.
Since then, several high-profile researchers have left the company, citing similar concerns about its aggressive approach to developing AI. Chief scientist Ilya Sutskever and head of alignment Jan Leike left in May. Last month, President Greg Brockman announced he was taking a sabbatical until the end of the year. On Wednesday, Chief Technology Officer Mira Murati also announced her resignation, saying that she wanted to “create the time and space to do my own reflection.”
One AI investor told Busines Insider that the potential changes to the company’s structure could help pave the way for an initial public offering — but in the meantime, they underline what a turbulent company it’s been.
“OpenAI is both the most fascinating and the most terrifying company of our times,” Matt Turck, a partner at venture firm FirstMark, who’s invested in AI companies including Dataiku, Synthesia, and Ada, told Business Insider by text. “By that, I mean it’s doing incredibly important work, creating some of the most impressive products ever — yet seems constantly on the verge of implosion.”
However, he reckons that Altman’s possible payout is good for the company. “Feels part of the necessary normalization of OpenAI into a regular corporate structure, which paves the way to an IPO.”
Update: September 25, 2024 — This story was updated with details from a Bloomberg report about the possible size of the stake in OpenAI that could be granted to CEO Sam Altman.
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