OpenAI to become for-profit amid management churn

ChatGPT-maker OpenAI is reportedly revamping its corporate structure to become a for-profit business, while exploring offering chief executive officer Sam Altman a 7% equity stake in the company.

The firm, whose signature artificial intelligence (AI) chatbot, ChatGPT, was launched in 2022 and is synonymous with the boom in the AI space, is considering becoming a public benefit corporation, Bloomberg reported.

The board has had discussions “about whether it would be beneficial to have Sam be compensated with equity,” but no specific figures have been discussed nor have any decisions been made, the Bloomberg report said, citing OpenAI board chairman Bret Taylor.

OpenAI was set up in 2015 as a non-profit with the aim of developing artificial intelligence for the benefit of humankind.

However, as the business grew, the San Francisco-based startup has found it difficult to stick to its non-profit ideals and so carved out a for-profit subsidiary in 2019 that has since raised funding from companies including Microsoft Corp.

OpenAI is currently in talks to raise about $6.5 billion in a deal that values the company at $150 billion.

The new equity stake in OpenAI could raise Altman’s net worth by $10 billion, putting him in the league of world’s richect people, according to the Bloomberg Billionaires Index.

Reuters had reported first on OpenAI’s plan to restructure and give Altman equity.

The artificial intelligence firm’s plans to overhaul its corporate structure comes against the backdrop of a churn in its top management.

In a surprise move, chief technology officer Mira Murati said this week that she is leaving.

“Mira has been instrumental to OpenAI’s progress and growth the last 6.5 years; she has been a hugely significant factor in our development from an unknown research lab to an important company,” Altman said in a note.

OpenAI’s chief research officer, Bob McGrew, and a research vice-president, Barret Zoph, also exited the firm, hours after Murati announced her departure from the firm.

“I also want to share that Bob and Barret have decided to depart OpenAI. Mira, Bob, and Barret made these decisions independently of each other and amicably, but the timing of Mira’s decision was such that it made sense to now do this all at once, so that we can work together for a smooth handover to the next generation of leadership,” Altman said in the note. “I am extremely grateful to all of them for their contributions.”

Altman said in the note that Srinivas Narayanan, OpenAI’s Indian-origin vice-president of engineering, along with chief product officer Kevin Weil, will continue to lead its applied team, which is responsible for bringing the company’s tech to both enterprises and customers.

“I’m stepping away because I want to create the time and space to do my own exploration. For now, my primary focus is doing everything in my power to ensure a smooth transition, maintaining the momentum we’ve built,” Murati said in a statement.

“Together, we’ve pushed the boundaries of scientific understanding in our quest to improve human well-being. While I may no longer be in the trenches with you, I will still be rooting for you all,” she added.

Murati’s exit and OpenAI’s fundraising efforts come even as it released a new voice assistant to paid users, four months after it first gave a sneak preview of the feature.

OpenAI in May demonstrated the tool, showing it quickly respond to written and visual prompts from users with a spoken voice.

Earlier this month, it also launched a new AI system called Strawberry, designed not just to provide responses to questions but to think and reason.

OpenAI’s Strawberry is not one AI program, but several–together known as o1. These are intended to answer complex questions, solve tough maths problems, and are also capable of writing computer code.