OpenAI To Remove Non-Profit Control and Give Sam Altman Equity (reuters.com) 80
OpenAI is working on a plan to restructure its core business into a for-profit benefit corporation that will no longer be controlled by its non-profit board. "Chief executive Sam Altman will also receive equity for the first time in the for-profit company, which could be worth $150 billion after the restructuring as it also tries to remove the cap on returns for investors," reports Reuters. From the report: The OpenAI non-profit will continue to exist and own a minority stake in the for-profit company, the sources said. The move could also have implications for how the company manages AI risks in a new governance structure. [...] The details of the proposed corporate structure, first reported by Reuters, highlight significant governance changes happening behind the scenes at one of the most important AI companies. The plan is still being hashed out with lawyers and shareholders and the timeline for completing the restructuring remains uncertain, the sources 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," an OpenAI spokesperson said.
Earlier today, OpenAI's chief technology officer Mira Murati announced her departure from the company. Her resignation follows the departures of founders Ilya Sutskever and John Schulman.
Further reading: OpenAI Pitched White House On Unprecedented Data Center Buildout
Earlier today, OpenAI's chief technology officer Mira Murati announced her departure from the company. Her resignation follows the departures of founders Ilya Sutskever and John Schulman.
Further reading: OpenAI Pitched White House On Unprecedented Data Center Buildout
That's quite a reversal (Score:5, Insightful)
Guess they just wanted money after all.
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Guess they just wanted money after all.
Have to make money somehow. It's not like Linux where it costs nothing to produce.
Re:That's quite a reversal (Score:5, Insightful)
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They ARE making money!
Are they making it faster than spending it? They have a long way to go. $2bn revenue last year. Expected to be higher this year. But that is on the back of a $13bn principle payment owed to Microsoft means they have a long LONG VERY FRIGGING LONG way to go before they have any profit to return to anyone.
And that is *revenue* I can't find actual profit numbers. Maybe I need to google for the word loss instead, at which point you find the number $5bn expected loss for 2024 over and over again.
Do you have any
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Source? The only thing I can find is that they are on track to *lose* $5bn this year. The only other things I can find is that they are kept afloat by investors, and some investors such as Microsoft are owed $13bn principle back on any profit.
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Re: That's quite a reversal (Score:1)
But how much will their valuation go up on that 5% loss? They are making money hand over fist from their valuation, investors are injecting money faster than they can lose it.
Re:That's quite a reversal (Score:5, Informative)
This is a good way to try and stop a rampant profiteering, AKA in recent years, enshittification. It's also a very good statement about what your company stands for - it stands for its products, and by extension the users of those products - not its shareholders.
While fairly easy circumvented by creative accounting that makes it look like costs are higher than they are, thus allowing revenue to creep up and actual profit to be realised off-shore, this kind of thing is usually as easy to trace as it is to set up, so it gets called out pretty quickly for any sufficiently large, and therefore interesting, non-profit.
If dropping its non-profit status, OpenAI would no longer stand for its products or its users. It would stand for its shareholders. From here, things follow an extremely familiar and extremely depressing path.
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Hint: the "open" in their name is a lie.
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Who told you non-profit's don't chase profit? It's really just about how compensation is distributed and the structure of the governance, but the executives sure as hell have a built-in profit motive (it's called "bonuses"). For instance my local hospital is a non-profit, as many are. They paid the CEO a $6m bonus last year despite barely breaking even. Next year I am sure they will barely break even again, and the CEO will get $8m.
Re:That's quite a reversal (Score:5, Insightful)
There really should be laws around this kind of bait and switch.
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Will they refund the money which they have now fraudulently gained from people who donated because it was always going to remain a non-profit?
Who donated money because of that?
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Every investor, contributor, and employee invested in the company. You'd have to ask them whether it being an open non-profit was part of that.
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For the rest of us, why are you surprised? The "open" in "OpenAI" has been a lie for quite sometime. They weren't hiding who they were.
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Kinda makes you wonder if some of the recent high profile departures from OpenAI may be related to this announcement.
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I'm sure they already have refunded all those non-existent people. No one chooses to donate to something on the basis of non-existent promise to remain non-profit in the future.
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Unfortunately thoughts and prayers doesn't doesn't pay the bills.
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A non profit can still make money and pay bills just as effectively as a for profit. They have trouble attracting capital.
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You don't need the equivalent of thousands of person-years of income to "pay the bills" either. $4M is roughly a lifetime of income for an average person. $40M is 10 lifetimes. $4B is 1000 lifetimes.
Think about it...
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Don't worry, they're just switching to a "Fair Source" revenue generation model.
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Guess they just wanted money after all.
Shouldn't this comment be +5 Funny or +2 No Shit
Try hard (Score:3)
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Re: Try hard (Score:2)
Is it just me? (Score:2)
Sam seems like AI poison more than anything.
People bitch about AI, but AI isn't the promblem (Score:3, Insightful)
Capitalism is the problem.
Using artists' work? Well, it really isn't that much a moral quandry if you're doing it to create more art for art's sake. More art in the world is, generally a good thing in the absence of exploitation. However, if you're building on others' art to make a profit, and the original artist has to toil under a profit motive to survive, then the society centered on profit motive is the root cause problem.
Taking labor from physical or knowledge workers and giving it to automation and AI...? Well, in a capitalist system that's bad because you're also diminishing their living conditions because labor for hire is the status quo. In a society organized primarily against profit motive, taking toil away from everyday people is actually a good thing.
Re:People bitch about AI, but AI isn't the promble (Score:5, Insightful)
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Are capitalism and "one greedy asshole" somehow different things here? OpenAI are literally switching from an ostensibly prosocial nonprofit, to capital-centric company, with Altman leading the charge and seemingly benefiting the most. I fail to see how I'm "wrong again" when my original point was about a system where greedy assholes ruin AI.
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The exception to the rule proves the rule
So you're seriously saying OpenAI / Altman is a counterexample that actually proves that capitalism is ethical, by default, as a rule, and that this specific situation somehow magically isn't just capitalist-minded people capitalizing?
Re: People bitch about AI, but AI isn't the prombl (Score:2)
Re: People bitch about AI, but AI isn't the promb (Score:2)
So, your only stated ethic is profit motive. He's seemingly only unethical because he is bad at extracting the excess value from leveraged resources and labor? Wealth extraction on behalf of the ownership class, with disregard to lives and livelihood of everyday folks, is literally the only virtue you've promoted. You're not helping the case that capitalism isn't the core problem.
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Re:People bitch about AI, but AI isn't the promble (Score:5, Insightful)
Capitalism is not the problem.
Profit-seeking behavior is a very deep survival instinct. Animals do things because those things benefit them. That's literally how they survive.
We put a few layers of abstraction between effort expended and rewards gained (e.g. money), but the basic formula is the same: personal benefit is the incentive to work.
This silly notion that people will be happy to just work and work at their max capacity "for the greater good," and then be happy to receive whatever baseline providence the government manages to doll out to everyone equally, has consistently failed to produce the promised utopia.
No system is perfect, and capitalism is not perfect either. But despite all its imperfections, it still works better than all the alternatives, so long is it is managed by a government that understands economics and has teeth when it comes to the task of maintaining open competition within the market (which is to say: proper regulation and trust-busting).
Re:People bitch about AI, but AI isn't the promble (Score:5, Interesting)
Humans can't be happy impersonating a Ferengi society. Funny you should be on Slashdot claiming Open Source can't work without a profit motive.
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You just deliberately misquoted me, and you know it. It is a bad faith argument used by people who lack the ability to make good arguments.
What I was talking about was communism. It doesn't work as an economic model. It doesn't ever produce the promised utopia.
This fact says nothing about whether or not the free open source movement can produce good and reliable software. It should be quite obvious that volunteers exist and can contribute as they please while operating within a capitalistic society. Th
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Or those contributing to open source value something other than money/profit in return for their work. It's still Capitalistic in nature. It's just a different reward that motivates those people/companies.
Capitalism just happens because it is natural. People are motivated by doing things that benefit them (or make them feel good). And that's why all the other contrived systems fail - they ignore the basics of human nature. If people are not rewarded for doing more than the bare minimum, they have no de
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OK, you were talking about "communism"... but why? You decided to call animal behaviors and incentives "profit-seeking" and then start talking about capitalism as though animals privately own and freely trade the means of production. Well, reality doesn't work like that, people and animals have all sorts of incentives most of which don't convert well to money nor relate to capitalism.
And now you're saying Open Source is capitalistic in nature... based on the argument that someone living in a communist count
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Re:People bitch about AI, but AI isn't the promble (Score:5, Insightful)
Capitalism is not the problem...Profit-seeking behavior is a very deep survival instinct. Animals do things because those things benefit them.
First off, logical flaw alert - you have equated "capitalism" with "profit-seeking behavior". As you point out, even animals have a version of profit seeking, but as far as I can tell they don't have anything like capitalism. Equating capitalism with profit-seeking is misdirection, whether you intended it or not.
Second, you might want to be careful about what 'brand' of capitalism you're talking about. In today's world, the only significant one is corporate capitalism, with its limited liability, its shielding of criminal perpetrators from the consequences of their actions, and its ongoing and successful attempts to subvert freedom and democratic governance.
...capitalism is not perfect either. But despite all its imperfections, it still works better than all the alternatives, so long is it is managed by a government that understands economics and has teeth when it comes to the task of maintaining open competition within the market (which is to say: proper regulation and trust-busting).
And how, pray tell, do we return to that state where the government "has teeth"? Sure, we might be able to re-tool corporate governance so that it enforces effective corporate liability. Maybe we could take back control over public-good elements of society - healthcare, schools, utilities, etc.
But our corporate masters would still have bribery, campaign donations, revolving doors, etc. up their sleeves. They would still be masters of misdirection, propaganda, sowing dissent, and dividing public opinion. So yet again we would have corrupt governance of a populace which can't or won't differentiate among profit-seeking, capitalism, and corporatocracy. Voters will still be convinced that naked, arrogant greed is merely innocuous "profit seeking" - AKA "capitalism", if we go by your logic. They'll come to regard capitalism as either sacred and patriotic, or "better than all the alternatives" - truly a distinction without a difference. And the appropriation and enslavement will begin anew.
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What you're describing isn't capitalism. It's more like feudalism, or some related oligarchic system. Actual capitalism had a lot to do with replacing those sys
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I'm glad you pointed out the feudalism similarity - now that you mention it I had feudal-era images in my mind as I was writing, but I hadn't made the explicit connection. Also, I do need to study the history of economies and economics. I'm only vaguely aware of the warnings you mention, and it might be useful to know the details.
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One of my favourite "capitalism" shenanigans goes like this:
During the industrial revolution, tools (i.e. capital) suddenly started to look like they were going to be way more important than labour. You don't need a bunch of highly skilled weavers anymore, just a guy with a bit of common sense to run the loom. Worse, lots of tools are getting really big and expensive so they're effectively out of reach for most individual people. A carpenter's adze was always super expensive, but it's nothing compared to a
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There will always be corruption no matter what we do. In government as well as among the wealthy elite business owners. It's a given. It's a feature of humanity, so it will be present in every social system. There is no escaping it. Nor is there any kind of ideal structure we can erect that will prevent it.
All we can do is adapt to it, and attempt to manage it. Eternal vigilance, and all that. Apply what political leverage we have towards noble causes and holding corrupt actors as accountable as we c
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Sigh... agreed. I've come to that conclusion myself a bunch of times, but I keep 'forgetting' it because it sucks.
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The US kneecaps every non-capitalist system with sanctions (or worse) wherever and whenever they emerge. Every. Single. Time.
With AI about to take everyone's jobs it would have been nice if the world had been able to try out some alternative systems.
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This silly notion that people will be happy to just work and work at their max capacity "for the greater good," and then be happy to receive whatever market rate has consistently failed to produce the promised utopia.
That would be silly, we don't expect people to be happy with their pay. We expect them to work, and at their maximum capacity, regardless what they make. Who said anything about utopia, be happy to have a job.
What makes this different, who's on top?
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No system is perfect, and capitalism is not perfect either. But despite all its imperfections, it still works better than all the alternatives
False. In the most pure forms capitalism is worse than many other systems of government. The reality is what we have is not capitalism. It is a heavily regulated system designed to keep the profit motives of capitalism from being highly destructive, but the existence of those regulations are by definition anti-capitalistic.
Re: People bitch about AI, but AI isn't the prombl (Score:2)
Capitalism is unavoidable ... *unregulated* capitalism (the actual problem) is not.
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Capitalism is unavoidable ...
I reject that notion. That notion necessitates that humanity never achieves a Star Trek future.
I would say that capitalism is unavoidable in societies where psychopathy is rewarded. That isn't to say we can't create a society where psychopaths aren't allowed to run things.
Hoarding of resources to the denial of others, particularly at a level where survival is at stake, is not actually general human nature. Or even in the nature of social animals. A chimpanzee hoarding a thousand bananas while other chimps s
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How about you share with everyone details of your life with some receipts, and I'll lay out mine, and we'll see who has got the better one.
You won't of course, because you didn't even have the guts to put a name on your witty, oh-so-original repartee.
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a society where psychopaths aren't allowed to run things.
If creating such a society were easy, we would have done so by now. We have been at this for over two millennia now, and have not done so, despite very valiant efforts.
How would you suggest that leaders be chosen? By free election? Well ok, how does that play out? Your honest and noble souls mostly don't seek after power, so mostly don't even apply. The few who do apply, stand up and state uncomfortable truths about what must be done and what th
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At least you admit to believing in the Stalinist regime. Anyone that does not submit to the government mandates will be beaten and thrown in gulags for hoarding some bananas.
Empires have not fallen due to cronyism. Past democratic societies failed once the citizens learned they could vote themselves unlimited handouts. It's why the US is a Republic and why we have separation of powers. Unfortunately, we're headed that way as one party has learned that it can keep promising all sorts of free stuff in ret
So much for "open" (Score:4, Interesting)
Re:So much for "open" (Score:4, Insightful)
Show me the money (Score:2)
Sam wants his billions, but Microsoft want theirs too
What a shocker (Score:2, Redundant)
And here, I thought OpenAI was an idealistic company and wasn't just the greedy sugar baby of Microsoft. What a totally unexpected letdown!
Oh well. At least they never had "Don't be evil" in their motto.
Re:What a shocker (Score:5, Interesting)
What I want to know is what state law is it that allows Converting a non-profit into a for-profit.
It is starting to seem like they arere fraudulently organized as a non-profit on the books then.
Those assets are supposed to be owned by the Public, and it is never in the public interest to convert public assets into private for-profit assets.
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They can sell the company as an asset to then use the profits to pursue their charter. They can start OpenAIForRealThisTime with the money.
Though I don't see how handing Altman ~10 Billion fits in there (he will not settle for less).
Re:What a shocker (Score:4, Insightful)
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That's not what a non-profit is. It has nothing to do with public ownership.
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That's not what a non-profit is. It has nothing to do with public ownership.
That is exactly what a non-profit organization is: 100% of the net earnings are prohibited by law from inuring to the private benefit.
You can check the IRS website [irs.gov] on that one. It is a fundamental requirement for 501c3 status. The net earnings of the organization are permanently encumbered by this requirement. If a public charity chooses to dissolve, then they are required generally to contribute all their holdings to ei
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Yes. That has nothing to do with public ownership.
Public ownership is when the public (via a government) owns something. The phrase "public ownership" kind of tells you that. Non-profits are privately owned, but agree not to make any profit. The US
The OpenAI Nonprofit Foundation is a nonprofit, but it is not owned, even partially, by the public.
Are you perhaps confusing "public ownership" with "publicly traded", and then stirring vigorously with "non-profit?"
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Those assets are supposed to be owned by the Public, and it is never in the public interest to convert public assets into private for-profit assets.
Assets need to stay non-profit. But there's no reason you can't derive profit from it elsewhere. E.g. computer systems can still be a public asset while you rake in for -profit revenue. You just have to cover the non-profit assets as they were, and that is easy enough to do since they are keeping a non-profit segment of the company to retain that ownership and directing 2% of revenue to cover that.
Reincorporating as a for profit is not something new. Most states have specific laws governing how this is done
How does this make sense for the non profit? (Score:2)
Everyone damned Musk for negotiating a huge paydeal, now Altman is scamming a non profit out of the same and it's okay?
Going private is pretty sketchy to begin with, but then taking part of that profit to make Altman a billionaire makes little sense.
Profiting of stolen goods (Score:3)
So OpenAI stole basically all its training materials, and because it was a "non-profit" they get a free pass, right?
But if they become a for-profit, can people rally come after them for having their works stolen? I hope so!
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So OpenAI stole basically all its training materials, and because it was a "non-profit" they get a free pass, right?
But if they become a for-profit, can people rally come after them for having their works stolen? I hope so!
That sounds fun in theory, but in reality can you point to a ruling where OpenAI has been able to use its non-profit status in any way to influence the copyright lawsuits it faced? There's no carveout for copyright being a non-profit. The laws apply the same to both. Only the punishment for infringement and distribution is more severe if you derived profit from something.
By the way OpenAI is still "non-profit". They are projected to lose $5bn this year.
Rope-a-dope (Score:2)
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Gave money to a non-profit, they took it and went for-profit
And who is the stupid one here?
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You, and anyone else supporting this crime.
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Avoiding taxes until it's convenient (Score:2)
Step 1: Organize as a nonprofit. Build your business tax-free.
Step 2. Gain traction in the marketplace, start making big bucks.
Step 3: Convert to for-profit. Pay off executives and shareholders. Don't bother to pay back taxes.
Fine to adjust form, but that amount of equity? (Score:2)
I think it's totally fine to have them end the nonprofit board's control and move to a different leadership/profit structure, but that amount of equity for Altman seems deeply excessive. Cap it at $50 million at least, somehow.
Change of company name? (Score:2)