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OpenAI faces possible restructuring to traditional company model

OpenAI CEO Sam Altman is reportedly contemplating transforming the ChatGPT creator into a conventional for-profit company. According to The Information, which cited a source who spoke with Altman, the 39-year-old Stanford dropout has discussed this potential restructuring.

Currently, OpenAI operates as a “capped-profit” entity, with its for-profit arm regulated by a nonprofit. This unique structure was established to balance the company’s mission of developing safe artificial general intelligence (AGI) with the need to attract investment. In a March 2019 blog post, OpenAI announced it was shifting from a traditional nonprofit model to better pursue its goals.

“We aim to enhance our capacity to raise capital while adhering to our mission. No existing legal framework seemed to strike the right balance, so we created OpenAI LP as a hybrid between a for-profit and a nonprofit, which we call a ‘capped-profit’ company,” OpenAI explained.

Also read: OpenAI begins training of GPT-4 successor, forms safety board

Representatives for OpenAI did not respond to The Information‘s request for comment.

Altman’s leadership, bolstered by backing from Microsoft, has not been without controversy. In November, he was briefly ousted from his position after the former board of OpenAI accused him of not being “consistently candid in his communications” with them.

“For years, Sam had made it really difficult for the board to do its job by withholding information, misrepresenting events at the company, and sometimes outright lying,” former OpenAI board member Helen Toner said on “The TED AI Show” podcast aired Tuesday.

Toner accused Altman of repeatedly deceiving the board, including failing to inform them about the release of ChatGPT in November 2022. The board only learned about the chatbot’s existence through social media, like the general public, according to Business Insider.

Toner, who left the board soon after Altman was reinstated as CEO, also alleged that he misrepresented his financial interests in OpenAI. “Sam didn’t disclose to the board that he owned the OpenAI Startup Fund, despite his claims of being an independent board member without financial interests in the company,” she said, referencing OpenAI’s venture capital fund for AI startups.

On March 29, OpenAI revealed in an SEC filing that Altman no longer owned or controlled the venture capital fund. The company stated to Axios that the fund’s initial ownership structure was a “temporary arrangement, involving no personal investment or financial interest from Sam.”

Also read: From Grok-1 to Grok-1.5V: Elon Musk xAI’s rapid progress fuels investor confidence, secures $6 billion fund

“We are disappointed that Ms. Toner continues to revisit these issues,” OpenAI chairman Bret Taylor commented on the podcast. “Our focus remains on moving forward and pursuing OpenAI’s mission to ensure AGI benefits all of humanity.”

Representatives for OpenAI did not immediately respond to a request for comment from Business Insider sent outside regular business hours.

Samuel Bolaji

Samuel Bolaji holds a Master of Letters in Publishing Studies from the University of Stirling, Scotland, United Kingdom, and a Bachelor of Arts in English from the University of Lagos, Nigeria. He is an experienced researcher, multimedia journalist, writer, and Editor. He is currently the Editor of Arbiterz.

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