OpenAI Restructures into For-Profit Model

OpenAI is planning to transform its core business into a for-profit structure to attract investors. CEO Sam Altman is set to receive equity from this shift, according to multiple reports published on Wednesday.

The company also reported several high-profile resignations in its senior management, including:
– Chief Technology Officer Mira Murati
– Chief Research Officer Bob McGrew
– Research Vice President Barret Zoph

These plans for a for-profit model were first disclosed by Reuters, coinciding with OpenAI’s pursuit of $6.5 billion in capital. Notable investors expected to participate include Microsoft Corporation (NASDAQ:MSFT), Apple Inc (NASDAQ:AAPL), NVIDIA Corporation (NASDAQ:NVDA), and UAE-based MGX, as reported by the Wall Street Journal.

OpenAI is currently valued at approximately $150 billion, positioning it as one of the most valuable start-ups worldwide. Initially founded as a non-profit AI research organization in 2015, OpenAI established a for-profit subsidiary for its ChatGPT product in 2019.

Now, the firm intends to prioritize the for-profit entity while maintaining a minority stake for the non-profit. Additionally, OpenAI aims to relax the limits on investor returns.

CEO Altman could acquire a 7% stake in the company following this shift, as reported by Bloomberg. Altman has notably represented OpenAI after ChatGPT’s successful launch ignited a surge in AI development.

Altman announced the resignations of Murati, McGrew, and Zoph via the social media platform X, also noting that Mark Chen will take over as Senior Vice President of Research, with Jakub Pachocki becoming Chief Scientist.

Over the past year, OpenAI has experienced numerous resignations, including several co-founders, particularly after clashes between top executives and the board regarding Altman’s leadership last November. Although Altman was promptly reinstated, the company’s board underwent significant changes.