OpenAI is looking to revamp its organizational structure as a for-profit company, according to two new reports.
Reuters reported that the structure is part of a move to make the company more attractive to outside investors and could also mean CEO Sam Altman could pocket a huge salary.
Bloomberg reported, citing anonymous people familiar with the matter, that OpenAI is considering giving Altman a 7% stake in the company. Another Bloomberg report said OpenAI is in talks with investors about raising capital at a valuation of $150 billion. Depending on how the stock grant is structured, Altman’s stake could be worth up to $10.5 billion. It would be Altman’s first ownership stake in OpenAI.
The new for-profit entity could be organized as a public benefit corporation, Bloomberg reported, citing people familiar with the matter, which said details were still being worked out, with the entity’s “role in serving society as well as making profits” being “a key component of the plan.”
The current nonprofit would take a minority stake in the new for-profit business, Reuters reported, citing people familiar with the talks, which it said are still ongoing.
Venture capital investors told BI that the new structure could pave the way for an eventual initial public offering.
The company is governed by a nonprofit board of directors, a holdover from its founding as a nonprofit in 2015.
Altman doesn’t own any shares in OpenAI and his salary is reportedly just $65,000, according to a June report by The Wall Street Journal, though in 2023 he said the lack of stock ownership didn’t bother him because the company has “plenty of capital.”
“I do it because I love it,” he said at a Senate hearing that year.
Still, he’s amassed a sizable net worth through investments in other companies: A Wall Street Journal report earlier this year estimated that his holdings, which include shares in Stripe, Airbnb, and Reddit, are worth $2.8 billion.
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OpenAI did not immediately respond to Business Insider’s request for comment, but a spokesperson told Reuters: “We remain focused on building AI that benefits everyone and are working with our board to ensure we are best positioned to succeed in our mission. The nonprofit is core to our mission and will remain so.”
The personnel changes come after a tumultuous year for the company’s leadership. Last November, Altman was briefly but ultimately unsuccessfully removed from the board for “not communicating consistently and openly,” though the company did not provide details. At the time, some board members had questioned Altman’s approach to AI development and urged him to act more cautiously.
Since then, several prominent researchers have left the company, citing similar concerns about the company’s aggressive approach to AI development. Chief scientist Ilya Sutskever and coordinator Jan Reicke left in May. Last month, President Greg Brockman announced he was taking an extended leave of absence until the end of the year. On Wednesday, Chief Technology Officer Mira Murati also announced her departure, saying she wanted to “create time and space for self-reflection.”
One AI investor told Business Insider that potential changes to the company’s structure could pave the way for an IPO, but also highlighted how unstable the company has been.
“OpenAI is simultaneously the most fascinating and scariest company of our time,” Matt Turk, a partner at venture firm FirstMark, which has invested in AI companies including Dataiku, Synthesia, and Ada, told Business Insider in a text. “What this means is that OpenAI is doing incredibly important work and has produced some of the most amazing products ever, but it also seems constantly on the brink of collapse.”
But he thinks the payment to Altman is a good thing for the company: “We feel this is part of what’s needed to normalize OpenAI into a regular corporate organization and pave the way for an IPO.”
UPDATE: Sept. 25, 2024 — This story has been updated to reflect details from a Bloomberg report on the size of OpenAI’s stake that could be granted to CEO Sam Altman.
