How the Company Behind ChatGPT Has Changed
OpenAI is moving to prioritize profits amid several key departures, helping CEO Sam Altman consolidate his power.
When it was founded in 2015, OpenAI began with a noble mission: to operate as a non-profit organization, receiving funding from parties to develop AI in a way that is safe and beneficial to humanity, instead of an investment and profit sharing model. However, when it became the most sought-after startup in Silicon Valley, the original goal was supposedly pushed aside, giving way to financial calculations - the way a normal business is operating.
OpenAI is in talks to transition to a for-profit model, according to Reuters and Bloomberg . The move comes weeks after the company launched a large language model (LLM) that it claims is capable of “ reasoning .”
Sam Altman, CEO of OpenAI, at an event in San Francisco, California in 2023. Photo: Reuters
Meanwhile, several senior employees have left, including chief technology officer Mira Murati on September 25. That same day, chief research officer Bob McGrew and vice president Barret Zoph also announced their departures. CEO Sam Altman called leadership changes “a natural part of companies.”
“I won’t pretend to say this is natural, even though this departure is sudden. We are not a normal company,” Altman wrote on X.
After a failed attempt to fire Altman last November, several key executives left the company. Co-founder and chief architect Ilya Sutskever moved on to start a new AI company in May. Another prominent researcher, Jan Leike, left a few days later. Before leaving, he said that “culture and safety processes have been pushed aside by shiny products.” Nearly all of OpenAI’s board members have resigned, except for Quora CEO Adam D’Angelo.
Turmoil after CEO ousting
OpenAI began as a nonprofit research lab, and later expanded into a for-profit arm called OpenAI LP. The for-profit arm raises money to build AGI, while the nonprofit group’s mission is to ensure AGI benefits humanity.
On its board structure page, OpenAI notes that “it would be wise to view any investment in OpenAI as a donation,” meaning that investors may “not see any return.” If they do take the money, investors are also limited to a 100x return. Any excess goes to support the nonprofit, which prioritizes social benefit over financial gain. If the for-profit arm strays from that mission, the nonprofit can intervene.
OpenAI is aiming for a $150 billion valuation, according to CNBC . However, its “for-profit, managed by a nonprofit group” structure also puts the company at a financial disadvantage. So it’s no surprise that sources say Altman told OpenAI employees in early September that they would restructure as a for-profit company next year. Last week, Bloomberg reported that OpenAI would operate like rival Anthropic, with Altman getting a 7% stake, though he immediately denied the claim, calling it “ridiculous.”
Both Altman and Murati have said their decision to leave was “accidental.” Whatever the reason, the departure of OpenAI’s key figures marks a near-complete shakeup of the company’s leadership, observers say.
No longer a "research lab"
As Leike alluded to in his farewell speech to OpenAI about the “shiny product,” the transformation of a startup that operated as a nonprofit research lab into a for-profit company put many longtime employees in a difficult position. Indeed, many of the industry’s top experts joined OpenAI because its mission was to focus on AI research, not to develop and commercialize products.
A research organization can delay product release if necessary. More importantly, they can be more cautious, more thorough, and more secure about the product.
However, there is evidence that OpenAI has been more hasty in releasing its product than cautious. In July, a source told the Washington Post that the company held a launch party for GPT-4o “before determining whether it was safe enough to release to the public.” The WSJ reported last week that internal testing had shown that GPT-4o was not safe enough to deploy, but it was released to users anyway.
“All recent signs point to OpenAI becoming a conventional tech company under the control of a powerful CEO — the structure it was built to avoid,” The Verge commented.
“I think it’s a good transition for everyone. I hope OpenAI will be stronger, because it shows that we always have greater strength through every event,” Altman said on stage at Italy’s Tech Week on September 26, a day after Murati’s departure was announced.
Bao Lam
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