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OpenAI, the entity behind ChatGPT, is looking to shed its non-profit tag and become a more traditional for-profit company. CEO and co-founder Sam Altman told OpenAI employees that the transformation of its complex corporate structure will happen at some point in 2025, according to a report by Fortune.
Earlier, Altman had acknowledged that OpenAI’s corporate structure was “unusual” but said that it was intentional “because AI is an unusual technology.”
In 2015, a group of researchers, scientists, and entrepreneurs such as Sam Altman, Greg Brockman, Peter Thiel, and Elon Musk founded OpenAI as a non-profit organisation focused on researching and advancing artificial intelligence as an emerging technology. This non-profit arm is known as OpenAI Inc, which controls a holding company and an LLC called OpenAI GP.
These two entities further control the capped-profit subsidiary called OpenAI Global LLC that was set up in 2019 to commercialise the AI technologies that the organisation had developed. OpenAI Global LLC is the entity that has received billions of dollars in investments from Microsoft.
One of the reasons why OpenAI is revamping its corporate structure could be to appease investors. The AI venture is reportedly in the process of raising funds at a valuation of over $100 billion. By aligning its structure more closely with other large tech companies, OpenAI could give investors a more certain return on investment in the future.
Furthermore, most of the organisation’s employees are reportedly working on rolling out commercial AI products and the non-profit tag makes little sense in this context.
“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,” an OpenAI spokesperson was quoted as saying by Fortune.
OpenAI deciding to become a full-fledged, for-profit business has a lot to do with CEO Sam Altman’s dramatic ouster and return last year. Despite co-founding the company and emerging as its face, Altman had very little equity in the for-profit subsidiary of OpenAI which reportedly left him vulnerable to a boardroom coup.
In November 2023, four board members of OpenAI voted to fire Altman as CEO and remove him from the board, stating that he was “not consistently candid in his communications.” Several other top executives such as Greg Brockman, OpenAI’s president, had left in solidarity with Altman, who later returned to OpenAI with support from its employees and business partner Microsoft.
