Sam Altman’s OpenAI pursuing switch to for-profit structure to avoid ‘hostile takeovers’: report
OpenAI is reportedly “pursuing” plans to abandon its nonprofit roots and restructure as a for-profit entity – a move that could insulate Sam Altman and his allies from “hostile takeovers” or objections over their leadership.
The firm’s board is planning to restructure as a public benefit corporation – an unusual structure that would have its leaders weigh both societal impact and profit when making decisions, The Financial Times reported. Rival firms like Elon Musk’s xAI and Amazon-backed Anthropic use the structure.
If the move is finalized, the nonprofit entity that has overseen OpenAI since it was founded in 2015 will continue to exist, but it will no longer be in control of the firm’s operations.
The restructuring would allow OpenAI to take a “multipronged approach to fiduciary obligations” and a “safe harbor” from any activist investors or attempts to challenge Altman, a personal with knowledge of the talks told the FT.
Altman was famously fired by the firm’s nonprofit board of directors last fall. Altman returned as CEO in a matter of days as part of talks that saw nearly all of the previous board members resign.
Last week, OpenAI raised a whopping $6.6 billion in a fundraising round that valued the company at $157 billion. That’s despite the fact that the firm has burned through cash at a rapid clip while developing its next AI models.
Sources familiar OpenAI’s thinking told the outlet that no final decisions have been made and that the restructuring would likely to take time to complete. The nonprofit entity, which would gain a stake in OpenAI’s for-profit corporation, is not expected to be run by Altman.
“OpenAI wants to keep that societal licence, with both a mission and a duty, while creating cutting-edge technology,” a source told FT.
The Post has reached out to OpenAI for comment.
Reports about OpenAI’s restructuring discussions emerged last month on the same day that chief technology officer Mira Murati and two other top executives resigned from their posts.
Their exits were the latest in a significant exodus of top OpenAI executives who have resigned or taken extended leaves since the start of the year.
OpenAI has said that it is “focused on building AI that benefits everyone, and we are 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 and thrive,” the company said in a statement when reports about a potential restructuring first surfaced last month.
The fundraising round was led by Josh Kushner’s Thrive Capital, with other participants including Microsoft, AI chip supplier Nvidia, Khosla Ventures, SoftBank, Abu Dhabi’s state-backed MGX fund, Altimeter Capital and Fidelity.
The potential restructuring was said to be a sticking point for investors, which can reportedly renegotiate OpenAI’s valuation – or receive their money back entirely – if the shift isn’t complete within two years, Reuters reported.
Altman – who has faced scrutiny over what critics have described as an aggressive and domineering leadership style – is expected to receive an equity stake in the restructured OpenAI, though the exact terms remain unclear.
During a staff meeting last month, Altman described reports that his stake could approach 7% — which would be valued at more than $10 billion – as “ludicrous.”
Elsewhere, some critics have accused Altman of prioritizing rapid advancement over safety while building advanced AI that could potentially pose a threat to humanity.
