OpenAI to Fully Transition into a For-Profit Company Next Year, CEO Altman to Acquire 7% Stake

OpenAI characterizes its business structure as a collaboration between its original nonprofit organization and a newly established capped-profit entity. This arrangement was a contributing factor to last year's brief board upheaval involving CEO Sam Altman and the recent lawsuit filed by co-founder Elon Musk. However, reports indicate that with a substantial new funding round still under negotiation, the situation is expected to change, potentially valuing the ChatGPT developer at over $150 billion.

According to Reuters, citing unnamed sources, the new plan includes offering equity to Altman for the first time, which Bloomberg reports could be around 7%. Reuters sources added that under the new structure, OpenAI will continue to operate as a for-profit benefit corporation, similar to its competitor, the AI company Anthropic.

The company will "no longer be under the control of its nonprofit board," making it more attractive to investors, while the nonprofit organization will retain a minority stake. However, this shift may raise concerns among those who focus on how OpenAI balances safety with potential profits, especially as the company pursues AI models with advanced reasoning capabilities.

In November last year, when Altman returned as CEO, he mentioned "improving our governance structure" in a letter. Now, this change appears to be taking shape as other executives depart. Reuters reports that OpenAI Chief Technology Officer Mira Murati announced her resignation today, President Greg Brockman has been on leave, and former Chief Scientist Ilya Sutskever also left the company earlier this year.