OpenAI to Become For-Profit Company
Deepa Seetharaman et al. (Hacker News):
OpenAI is planning to convert from a nonprofit organization to a for-profit company at the same time it is undergoing significant personnel changes, including the resignation Wednesday of its chief technology officer, Mira Murati.
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Under the proposed changes, the nonprofit arm of OpenAI and Chief Executive Sam Altman would own stakes in the new for-profit company. Altman hasn’t previously owned a stake in OpenAI.
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The restructuring is designed in part to make OpenAI more attractive to investors, as the company is currently attempting to close a funding round of up to $6.5 billion. […] Unlike prior investors in OpenAI, those who put money into the current round wouldn’t have a cap on the profits they can earn.
Jay Peters and Kylie Robison (Hacker News):
“I’m stepping away because I want to create the time and space to do my own exploration,” she wrote in a post on X. “For now, my primary focus is doing everything in my power to ensure a smooth transition, maintaining the momentum we’ve built.”
In addition to Murati, two other OpenAI leaders are also departing: Bob McGrew, OpenAI’s chief research officer who spoke to The Verge for the release of its o1 “reasoning” model just two weeks ago, and Barret Zoph, VP of post training. CEO Sam Altman said they “made these decisions independently of each other and amicably” in a separate note to employees he also posted on X.
[For Altman, a] 7% of $150B – the rumored valuation of the most recent funding coming together – is just over $10B. That’s probably not a coincidence.
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Clearly, this was not some sort of planned transition – as Altman’s statement (which was actually a re-statement to include the people beyond Murai leaving– read into that what you will) highlights[…] So again, he’s chalking these three departures up to coincidental timing. That’s certainly possible, but it’s also hard to overlook all of the other recent departures. Someone has to ask: what is going on here?
See also: Brew Markets.
Previously:
- Automattic vs. WP Engine
- OpenAI and Ive
- Safe Superintelligence Inc.
- Sutskever and Leike Out at OpenAI
- Altman and Brockman Out at OpenAI
- OpenAI Is Today Unrecognizable
Update (2024-09-27): Hayden Field (via Hacker News):
At an all-hands meeting Thursday, OpenAI CEO Sam Altman said there are no plans for him to get a “giant equity stake” in the company.
Update (2024-09-30): M.G. Siegler:
While they published this on Friday – before the subsequent WSJ report that Apple had dropped out of the financing – it's worth digging a bit more into the numbers that Mike Isaac and Erin Griffith obtained with regard to OpenAI[…]
Update (2024-10-03): Cade Metz (via Hacker News):
OpenAI said on Wednesday that it had completed a $6.6 billion fund-raising deal that nearly doubles the high-profile company’s valuation from just nine months ago.
The new fund-raising round, led by the investment firm Thrive Capital, values OpenAI at $157 billion, according to two people with knowledge of the deal. Microsoft, the chipmaker Nvidia, the tech conglomerate SoftBank, the United Arab Emirates investment firm MGX and others are also putting money into OpenAI.
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Under the terms of the new investment round, OpenAI has two years to transform into a for-profit business or its funding will convert into debt, according to documents reviewed by The Times.
Update (2024-10-07): David Karpf (via Hacker News):
OpenAI announced this week that it has raised $6.6 billion in new funding and that the company is now valued at $157 billion overall. This is quite a feat for an organization that reportedly burns through $7 billion a year—far more cash than it brings in—but it makes sense when you realize that OpenAI’s primary product isn’t technology. It’s stories.
Case in point: Last week, CEO Sam Altman published an online manifesto titled “The Intelligence Age.” In it, he declares that the AI revolution is on the verge of unleashing boundless prosperity and radically improving human life. “We’ll soon be able to work with AI that helps us accomplish much more than we ever could without AI,” he writes. Altman expects that his technology will fix the climate, help humankind establish space colonies, and discover all of physics. He predicts that we may have an all-powerful superintelligence “in a few thousand days.” All we have to do is feed his technology enough energy, enough data, and enough chips.
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From the outside, it seems to me that people were sold a bill of goods. This is just my opinion, but here goes:
The non-profit and "open" nature of OpenAI made authors who stood against their works being used to train ChatGPT, violating copyright law and GPL licenses seem petty and Luddites (using Anna's archive is not legal, fair use or not). Now that this knowledge has been privatized (since people will stop buying books if they can use ChatGPT instead), the company can stop pretending and get on with making money.
The non-profit and "open" nature of OpenAI attracted initial investors such as Elon Musk. Now that OpenAI seems to actually have a product and seems less risky than a bunch of mathematicians scratching on pieces of paper, it can attract the usual capitalist sharks who "invest" to gain more control over money flows. "It's not personal, just business and I want that yacht".
The non-profit and "open" nature of OpenAI attracted researchers who wanted to build a better future. They were willing to take lower salaries, to make it possible. Now, they find their work is closed, and used to monopolize profits. So they leave, bound by harsh non-disclosure agreements, that were only rescinded when there was enough negative publicity. Employees who disagree with this are either leaving or have already left.
For the rest of us, it's fascinating to see how little legal documents enshrining the company's non-profit structure are worth. A CEO can eject a board trying to restrain him, and replace them by yes-men who award him a lot of equity for doing so.
Quite fascinating, given that the CEO used to crow about how he wasn't getting rewarded for it. The argument was that money was going to go away, because Artificial Super Intelligence would remove the need for it, making all normies' fears of being replaced by AIs and made poorer, "misunderstandings". Yet now, large chunks of equity are going to the company's upper management and its recent moves suggest a strong belief that might-is-right, and that only idiots believe past promises.
So it sounds like money isn't going away after all, good researchers aren't needed to improve AI further, that ASI is not around the corner, and really this was all about getting rich off the work of others, as usual. Learn to dig a ditch, you ungrateful peasant.
What with the impending fall of 23andme, who knows what happens to that data, exploding consumer devices, hello darkness, my old friend.
