Sam Altman told OpenAI’s staff in a recent company-wide meeting that the startup’s complex non-profit corporate structure is set to change — likely sometime next year.
Altman, OpenAI’s co-founder and CEO, touched on the impending changes in one of his weekly meetings with the entire staff, where employees are free to ask him questions in real-time, according to two people familiar with the exchange. He admitted that the company had effectively outgrown its convoluted structure, wherein a nonprofit arm is in control of a for-profit arm, which itself has control of a holding company, which controls another for-profit entity. That last for profit entity is what outside investors like Microsoft are putting billions of dollars of investment into. Altman has admitted OpenAI’s structure is “unusual,” saying last year it was done intentionally “because AI is an unusual technology.”
While Altman did not get into specifics with staff about what exactly a new company structure for the ChatGPT maker will look like, he said the company is set to move away from being controlled by a non-profit, and it will happen sometime next year, according to the people familiar. This would make OpenAI a more traditional for-profit company.
A spokesperson for 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 non-profit is core to our mission and will continue to exist.”
Such a change has been rumored for a few months, with reports of Altman considering restructuring the company to a more traditional for-profit entity—mainly to appease investors—that would align OpenAI with the structure of most other large businesses in the tech industry. Altman’s comments to staff, which have not been previously reported, suggest that the company is moving forward with the restructuring.
With the company in the process of raising new funds at a valuation somewhere north of $100 billion, the non-profit structure is proving increasingly awkward. For investors, a change means a more certain potential return on their investment. And given that much of OpenAI’s staff is focused on work that goes into commercial products, the non-profit label is confusing.
Beyond that, OpenAI insiders have expected such a structural change to take place since Altman’s dramatic ouster and return last year spurred new regulatory scrutiny of its investors and operations in the U.S. And abroad.
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