As you may recall, Microsoft OpenAI's largest investor promptly got the company's board fired when they tried to oust Sam Altman because he was trying to turn the non profit into a money making enterprise and lacked the enthical controls on the new technology they felt were required. Microsoft then injected more money into the company.
Of course, the idea of using this as a money-making tool never entered their mind. BTW all the new Microsoft Office 365 tools new include links to ChatGPT. BAM
For those of you living under a rock, OpenAI owns ChatGPT.
OpenAI may become a for-profit because it needs 'more capital than imagined'
It could face a roadblock in the form of Elon Musk, a co-founder, suing to halt its plans
By William Gavin, Quartz Media
OpenAI has revealed a plan to restructure its operations and more cleanly separate the for-profit and non-profit arms of its business as it seeks to raise more cash.
The artificial intelligence startup has been discussing plans to restructure for several months now, according to various reports, as it tries to attract new investors. OpenAI raised $6.6 billion at a $157 billion evaluation in its latest round of funding, which was reportedly led by Joshua Kushner’s Thrive Capital and backed by Microsoft and Nvidia .
“The hundreds of billions of dollars that major companies are now investing into AI development show what it will really take for OpenAI to continue pursuing the mission,” OpenAI’s board wrote in a new blog post. “We once again need to raise more capital than we’d imagined. Investors want to back us but, at this scale of capital, need conventional equity and less structural bespokeness.”
Under OpenAI’s current structure, the company’s investors are issued equity by its for-profit arm, which is overseen by its non-profit board, whose “principal beneficiary is humanity, not OpenAI investors.” The company announced its “capped profit” structure in 2019, after founding the company in 2015 as a non-profit.
“As we enter 2025, we will have to become more than a lab and a startup — we have to become an enduring company,” OpenAI wrote, adding that its plans “enable us to raise the necessary capital with conventional terms like others in this space.”
The ChatGPT maker’s new plan includes establishing the for-profit arm of OpenAI as a public benefit company (PBC), mirroring a step taken by xAI — helmed by OpenAI founder Elon Musk — as well as Anthropic. Although such companies have a stated goal of positively impacting society, the pivot to establish AI firms as PBCs has led to accusations of “ethicswashing.”
By setting up the for-profit arm as a PBC, OpenAI’s current board will be able to consider the interests of investors more easily, which could help it win over potential shareholders. xAI, despite being less than two years old, raised $6 billion at a $50 billion valuation earlier this month, while Anthropic has raised almost $14 billion in venture capital since it was founded in 2021 by ex-OpenAI employees.
Although details were not revealed by OpenAI on Friday, previous discussions had explored giving CEO Sam Altman about $150 billion of equity, according to Reuters.
The non-profit side of the business will hire its own leadership team and staff to engage in charity involving the healthcare, education, and science sectors, according to OpenAI. It will also own “significant interest” in the for-profit side through stock determined at a “fair evaluation” determined by third-party advisors.
OpenAI’s plans face a few hurdles, including a slew of recent executive departures and a revived lawsuit from Musk, who wants to stop the company from becoming a for-profit.
In November, Musk expanded his lawsuit against the AI startup and several of its co-founders, accusing it of anticompetitive behavior and calling it a “market-paralyzing gorgon.” Later in the month, Musk’s attorneys filed a preliminary injunction against the AI startup, several of its co-founders, and Microsoft to stop its transition to a for-profit company.
—Britney Nguyen contributed to this article
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