OpenAI to become for-profit company

https://www.reuters.com/technology/artificial-intelligence/openai-remove-non-profit-control-give-sam-altman-equity-sources-say-2024-09-25/

by jspann • 2 years ago

1346 745 2 years ago

reuters.com

squarefoot• 2 years ago

https://archive.ph/jUJVU

dang• 2 years ago

That points to https://www.wsj.com/tech/ai/openai-chief-technology-officer-..., which was the submitted URL (thanks!), but we've changed to the Reuters article now, which seems to still have the most reporting on this story.

davesmylie• 2 years ago

Ahh. What a surprise - no-one could have predicted this

freitasm• 2 years ago

Seeing so much money rolling in, hard to not want a slice of the pie.

bdjsiqoocwk2• 2 years ago

Only hard if you're that kind of person. Not everyone is like that. And those kind of people have difficulty believing this.

vrighter• 2 years ago

What money? Aren't most (all?) AI companies are operating at a loss?

coffeebeqn• 2 years ago

Will they finally rename the company?

ognyankulev• 2 years ago

Renaming to "TheAI" would match their ambition for AGI.

tokai• 2 years ago

ClopenAI

mc32• 2 years ago

PigpenAI

ericjmorey• 2 years ago

Is the name Worldcoin available?

pelagicAustral• 2 years ago

Omni Consumer Products, or Altman-Yutani Corporation would be nice

probably_wrong• 2 years ago

ClosedAF

timeon2• 2 years ago

Sure. Since AI is closed now, they will try 'OpenAGI'.

srvmshr• 2 years ago

It seemed only a matter of time, so it isn't very surprising. Capped profit company running expensive resources on Internet scale, and headed by Altman wasn't going to last forever in that state. That, or getting gobbled by Microsoft.

Interesting timing of the news since Murati left today, gdb is 'inactive' and Sutskevar has left to start his own company. Also seeing few OpenAI folks announcing their future plans today on X/Twitter

mellosouls• 2 years ago

a couple of other discussions going on including this one with non-paywall op:

https://news.ycombinator.com/item?id=41651548

Flex247A• 2 years ago

The jokes write themselves!

code51• 2 years ago

Are the previous investments counting as "donations" still? Elon must have something to say...

Maledictus• 2 years ago

And the tax office! If this works, many companies will be founded as non-profit first in the future.

mtlmtlmtlmtl• 2 years ago

The most surprising thing to me in this is that the non-profit will still exist. Not sure what the point of it is anymore. Taken as a whole, OpenAI is now just a for-profit entity beholden to investors and Sam Altman as a shareholder. The non-profit is really just vestigial.

I guess technically it's supposed to play some role in making sure OpenAI "benefits humanity". But as we've seen multiple times, whenever that goal clashes with the interests of investors, the latter wins out.

bayindirh5• 2 years ago

The most surprising thing to me in this is that the non-profit will still exist.

That entity will scrape the internet and train the models and claim that "it's just research" to be able to claim that all is fair-use.

At this point it's not even funny anymore.

lioeters2• 2 years ago

Scraping the entire internet for training data without regard for copyright or attribution - specifically to use for generative AI to produce similar content for profit. How this is being allowed to happen legally is baffling.

It does suit the modus operandi of a number of American companies that start out as literally illegal/criminal operations until they get big and rich enough to pay a fine for their youthful misdeeds.

By the time some of them get huge, they're in bed with the government to dominate the market.

herval• 2 years ago

openAI converted to evilAI really fast

sim7c00• 2 years ago

The most surprising thing to me in this is that the non-profit will still exist.

I'm surprised people are surprised.

> That entity will scrape the internet and train the models and claim that "it's just research" to be able to claim that all is fair-use.

a lot of people and entities do this though... openAI is in the spotlight, but scraping everything and selling it is the business model for a lot of companies...

belter• 2 years ago

No, it's very funny as the CEO is trying to become Leon... https://fortune.com/2024/09/25/sam-altman-psychedelic-experi...

luqtas• 2 years ago

that was fun at some point?

sneak• 2 years ago

If you invented search engines (or, for that matter, public libraries) today and ran one, you'd be sued into oblivion by rightsholders.

johnalbertearle2• 2 years ago

Not funny anymore

johnalbertearle2• 2 years ago

Not funny anymore.

allie13• 2 years ago

We haven't even heard about who gets voting shares, and what voting power will be like. Based on their character, I expect them to remain consistent in this regard.

tsimionescu• 2 years ago

Consistent here meaning, I guess, that all voting power will go to Sam Altman personally, right?

rdtsc• 2 years ago

The most surprising thing to me in this is that the non-profit will still exist. Not sure what the point of it is anymore.

As a moral fig leaf. They can always point to it when the press calls -- "see it is a non-profit".

bbor11• 2 years ago

Totally agree that it’s “vestigial”, so it’s just like the nonprofits all the other companies run: it exists for PR, along with maybe a bit of alternative fundraising (aka pursuing grants for buying your own stuff and giving it to the needy). A common example that comes to mind is fast food chains that do fundraising campaigns for children’s health causes.

mdgrech232• 2 years ago

The non-profit side is just there to attract talent and encourage them to work harder b/c it's for humanity. Obviously people sniffed out the facts, realized it was all for profit and that lead to an exodus.

fakedang2• 2 years ago

Funnily, I think all the non-profit motivated talent has left, and the people left behind are those who stand to (and want to) make a killing when OpenAI becomes a for-profit. And that talent is in the majority - nothing else would explain the show of support for Altman when he was kicked out.

wheels7• 2 years ago

Kind of like everyone's favorite interior design non-profit, IKEA. (Seriously. It's a non-profit. It's bonkers.)

outside12343• 2 years ago

Scam Altman strikes again!

htk• 2 years ago

The non-profit will probably freeze the value of the assets accumulated so far, with new revenue going to the for-profit, to avoid the tax impact. Otherwise that'd be a great way to start companies, as non-profit and then after growth you flip the switch.

nerdponx• 2 years ago

It's just a tax avoidance scheme.

1oooqooq• 2 years ago

why wouldn't they keep it?

the well known scammer successfully scammed everyone twice. obviously he's keeping it around for the third (and forth...) time

elpakal• 2 years ago

I guess technically it's supposed to play some role in making sure OpenAI "benefits humanity". But as we've seen multiple times, whenever that goal clashes with the interests of investors, the latter wins out.

A tale as old as time. Some of us could see it, from afar <says while scratching gray, dusty beard>. Lack of upvotes and excitement does not mean support, but how to account for that in these times? <goes away>

bastardoperator• 2 years ago

The whole "safety" and "benefits humanity" thing always felt like marketing anyways.

zo1• 2 years ago

This is 85% of what the Mozilla foundation and it's group of companies did. It may not be exact, but to me it rubs me the exact same way in terms of being a bait and switch, and the greater internet being 100% powerless to do anything about it.

blackeyeblitzar6• 2 years ago

Elon Musk sued over this: https://www.npr.org/2024/03/01/1235159084/elon-musk-openai-s...

seydor• 2 years ago

an AGI is showering us with irony

sandwichmonger• 2 years ago

Then why keep the name OpenAI?

zmgsabst3• 2 years ago

Microsoft needs to lie due to pervasive ill-will from their previous abuses.

high_na_euv• 2 years ago

Some people will always manage to blame MSFT, even for someones else shadiness, lol.

Consider adding some EEE

HarHarVeryFunny5• 2 years ago

This would have been the perfect time to change it, but maybe soon if not at same time as any official announcement.

It's hard to say if there is much brand value left with "OpenAI" - lots of history, but lots of toxicity too.

At the end of the day they'll do as well as they are able to differentiate and sell their increasingly commoditized products, in a competitive landscape where they've got Meta able to give it away for free.

Mistletoe2• 2 years ago

"Doublethink means the power of holding two contradictory beliefs in one's mind simultaneously, and accepting both of them". -1984

charles_f2• 2 years ago

It's a widely known brand, even by people outside of the industry. Why would they change it? Their AI was never really open to begin with, so nothing really change on that front

throwaway9182992• 2 years ago

Open(YourWallet)AI

zmgsabst3• 2 years ago

So if I contributed IP to ChatGPT on the basis that OpenAI was a non-profit and they relicense can they sell my IP?

That seems like fraud to me.

boppo1• 2 years ago

Didn't altman say 'pwease wet us ignowe copywhite waw! we can't be pwofitabwe if we don't...' in some legal forum recently?

phito2• 2 years ago

I know nothing about companies (esp. in the US), but I find it weird that a company can go from non-profit to for-profit? Surely this would be taken advantage of. Can someone explain me how this work?

kupopuffs• 2 years ago

Time to go open source

csomar2• 2 years ago

I am not a tax specialist but from my understanding a non-profit is a for-profit that doesn't pay dividends. Why would the government care?

jprete5• 2 years ago

That's not correct, they also have tax advantages and a requirement to fulfill their charter.

freedomben3• 2 years ago

No, a non-profit is one in which there are no shareholders. The non-profit entity can own a lot and be extremely successful and wealthy, but it cannot give that money to any shareholders. It can pay out large salaries, but those salaries are scrutinized. It doesn't prevent abuse, and it certainly doesn't prevent some unscrupulous person from becoming extremely wealthy with a non-profit, but it is a little more complicated and limiting than you would think. Also, you get audited with routine regularity and if you are found in violation you lose your tax-exempt status, but you still are not a for-profit.

brap2• 2 years ago

Isn’t transferring all of your value to a for-profit company that can pay dividends, kinda the same thing?

sotix2• 2 years ago

A non-profit is a company that for accounting purposes does not have shareholders and therefore keeps nothing in retained earnings at the end of the period. The leftover money must be distributed (e.g. as salaries, towards the stated mission, etc.). Their financial statements list net profit for the period and nothing is retained.

moralestapia4• 2 years ago

Non-profits are tax-exempt, that's why they're carefully[1] regulated.

1: In principle; in practice, well, we'll see with this one!

Havoc• 2 years ago

That was the point musk was complaining about.

In practice it’s doable though. You can just create a new legal entity and move stuff and/or do future value creating activity in the new co. IF everyone is on board with the plan on both sides of the move then that’s totally doable with enough lawyers and accountants

0xDEAFBEAD3• 2 years ago

ICYMI, Elon Musk restarted his lawsuit a month or two ago: https://www.reuters.com/technology/elon-musk-revives-lawsuit...

I'm wondering if OpenAI's charter might provide a useful legal angle. The charter states:

OpenAI’s mission is to ensure that [AGI ...] benefits all of humanity.
...
We commit to use any influence we obtain over AGI’s deployment to ensure it is used for the benefit of all, and to avoid enabling uses of AI or AGI that harm humanity or unduly concentrate power.
Our primary fiduciary duty is to humanity. We anticipate needing to marshal substantial resources to fulfill our mission, but will always diligently act to minimize conflicts of interest among our employees and stakeholders that could compromise broad benefit.
...
We are committed to doing the research required to make AGI safe, and to driving the broad adoption of such research across the AI community.
We are concerned about late-stage AGI development becoming a competitive race without time for adequate safety precautions. [...]
...

https://openai.com/charter/

I'm no expert here, but to me, this charter doesn't appear to characterize OpenAI's behavior as of the year 2024. Safety people have left, Sam has inexplicably stopped discussing risks, and OpenAI seems to be focused on racing with competitors. My question: Is the charter legally enforceable? And if so, could it make sense for someone to file an additional lawsuit? Or shall we just wait and see how the Musk lawsuit plays out, for now?

mminer2375• 2 years ago

If the non-profit is on board with that though, then they're breaking the law. The IRS should reclassify them as a for-profit for private inurement and the attorney general should have the entire board removed and replaced.

duchenne• 2 years ago

But, if the non-profit gives all its assets to the new legal entity, shouldn't the new legal entity be taxed heavily? The gift tax rate goes up to 40% in the US. And 40% of the value of openAI is huge.

crystal_revenge2• 2 years ago

That was the point musk was complaining about.

I think the real issue Musk was complaining about is that sama is quickly becoming very wealthy and powerful and Musk doesn't want any competition in this space.

Hopefully some people watching all this realize that the people running many of these big AI related projects don't care about AI. Sam Altman is selling a dream about AGI to help make himself both wealthier and more powerful, Elon Musk is doing the same with electric cars or better AI.

People on HN are sincerely invested in the ideas behind these things, but it's important to recognize that the people pulling the strings largely don't care outside how it benefits them. Just one of the many reasons, at least in AI, truly open source efforts are essential for any real progress in the long run.

moralestapia4• 2 years ago

It's not weird, it's illegal.

There's a lot of jurisdiction around preventing this sort of abuse of the non-profit concept.

The reason why the people involved are not on trial right now is a bit of a mystery to me, but could be a combination of:

* Still too soon, all of this really took shape in the past year or two.

* Only Musk has sued them, so far, and that happened last month.

* There's some favoritism from the government to the leading AI company in the world.

* There's some favoritism from the government to a big company from YC and Sam Altman.

I do believe Musk's lawsuit will go through. The last two points are worth less and less with time as AI is being commoditized. Dismantling OpenAI is actually a business strategy for many other players now. This is not good for OpenAI.

tomp2• 2 years ago

Dismantling OpenAI is actually a business strategy for many other players now.

Which ones exactly?

NVIDIA is drinking sweet money from OpenAI.

Microsoft & Apple are in cahoots with it.

Meta/Facebook seems happy to compete with OpenAI on a fair playing field.

Anthropic lacks the resources.

Amazon doesn't seem to care.

Google is asleep.

blackeyeblitzar6• 2 years ago

It is going to be taken advantage of. Musk and others have criticized this “novel” method of building a company. If it is legal then it is a puzzling loophole. But another way to look at it is it gives small and vulnerable companies a chance to survive (with different laws and taxes applying to the initial nonprofit). If you look at it as enabling competition against the big players it looks more reasonable.

entropi• 2 years ago

But another way to look at it is it gives small and vulnerable companies a chance to survive (with different laws and taxes applying to the initial nonprofit).

I feel like this is quite a slippery slope, though. Should we also give small companies a right to violate trademarks? Copyright? Kill people? These could also give them a chance to compete against big players.

xwowsersx• 2 years ago

At first, I thought, “Wow, if companies can start as nonprofits and later switch to for-profit, they’ll exploit the system.” But the more I learned about the chaos at OpenAI, the more I realized the opposite is true. Companies will steer clear of this kind of mess. The OpenAI story seems more like a warning than a blueprint. Why would any future company want to go down this path?

xiphias2• 2 years ago

It's quite simple: the talent pool that had already enough money that they quit their well paying job at a for profit company in part because they wanted to continue working at a non-profit high impact.

As OpenAI found its product-market fit, the early visionaries are not needed anymore (although I'm sure the people working there are still amazing)

insane_dreamer2• 2 years ago

Why would any future company want to go down this path?

most would happily sell their soul and deal with any mess to reach $150B valuation

m3kw9• 2 years ago

The NFL used to be a nonprofit and now for profit. OpenAI can use similar routes

walthamstow2• 2 years ago

Not an accountant but there are different kinds of nonprofits, OpenAI is a 501c3 (religious/charitable/educational) whereas the NFL was a 501c6 (trade association).

Obviously we all think of the NFL as a big money organisation, but it basically just organises the fixtures and the referees. The teams make all the money.

unnouinceput• 2 years ago

That's a lot of words for Micro$oft to say they just love money. Who knew!

Prkasd• 2 years ago

That could be the first step towards a complete takeover by Microsoft, possibly followed by more CEO shuffles.

I wonder though whether Microsoft is still interested. The free Bing Copilot barely gets any resources and gives very bad answers now.

If the above theory is correct (big if!), perhaps Microsoft wants to pivot to the military space. That would be in line with idealist employees leaving or being fired.

baq• 2 years ago

CEO shuffles

Yes, I too can see how sama could end up as Microsoft’s CEO as a result of this

HarHarVeryFunny5• 2 years ago

I don't see the point of anyone acquiring OpenAI - especially not Microsoft, Google, Meta, Anthropic, X.ai, all of which have developed the same tech themselves. The real assets are the people, who are leaving ship and potentially hireable. With this much turmoil, its hard to imagine we've seen the last of the high level exits.

int_19h6• 2 years ago

Of the companies you've listed, Microsoft's AI products that are actually useful are all based on GPT-4, and the rest of them don't have any models that are truly on par with it.

ndiddy• 2 years ago

Microsoft already effectively owns OpenAI. Their investments in OpenAI have granted them a 49% stake in the company, the right to sell any pre-AGI OpenAI products to Microsoft's customers, and access to all pre-AGI product research. Microsoft's $10 billion investment in early 2023 (after ChatGPT's launch massively increased OpenAI's operating expenses) was mainly in Azure compute credits rather than cash and delivered in tranches (as of November 2023 they'd only gotten a fraction of that money). It also gives Microsoft 75% of OpenAI's profits until they make their $10 billion back. All of these deals have effectively made OpenAI into Microsoft's generative AI R&D lab. More information: https://www.wheresyoured.at/to-serve-altman/

extr• 2 years ago

From the standpoint of today, the deal is so lopsided to Microsoft as to be comical. They basically gave away their prized IP with the assumption they would have more capability leaps (hasn't really happened), and now the brains behind the original breakthroughs are all leaving/left. Microsoft is probably cannibalizing their enterprise sales with Azure. They are clearly middling at shipping actual products. People are acting like it's crazy to see executives leaving - IMO it's the perfect time right now. o1 is clearly wringing the last drops out of the transformer architecture and there is nothing up next.

DebtDeflation• 2 years ago

Wouldn't surprise me if this was the actual cause of the revolt that led to Altman's short-lived ouster, they just couldn't publicly admit to it so made up a bunch of other nonsensical explanations.

gklitz6• 2 years ago

You have cause and effect flipped. The non-profit didn’t try to oust Sam because he was getting the non-profit to disengage from OpenAIs capped profit entity, that makes no sense and he can’t do that, he can’t stear the hand of the non-profit board. What is happening is that he’s detangling the non-profit from what will be the for-profit in order to not have people trying to throw him overboard. It was obviously going to happen the second the non-profit board thought they could just fire him and take control.

HeralFacker• 2 years ago

Converting to a for-profit changes the tax status of donations. It also voids plausibility for Fair Use exemptions.

I can see large copyright holders lining up with takedowns demanding they revise their originating datasets since there will now be a clear-cut commercial use without license.

zmgsabst3• 2 years ago

I hope I can join in, as a consumer, because there’s a difference between using the IP I contribute to conversations for a non-profit and a commercial enterprise.

codewench• 2 years ago

I suspect that if you have ever posted copyrightable material online, you will have valid cause to sue them, as they very obviously have incorporated your work for commercial gain. That said, I unfortunately put your chances of winning in court very low.

shakna• 2 years ago

A non-profit entity will continue to exist. Likely for the reasons you stated.

bbor11• 2 years ago

Any reasonable court would see right through “well we trained it for the public good, but only we can use it directly”. That’s not really a legal loophole as much as an arrogant ploy. IMO, IANAL

lewhoo2• 2 years ago

It also voids plausibility for Fair Use exemptions. I can see large copyright holders lining up with takedowns

I thought so for a moment but then again Meta, Anthropic (I just checked and they have a "for profit and public benefit" status whatever that means), Google or that Musk's thing aren't non-profits, are they ? There are lawsuits in motion for sure but with how it stands today I think ai gets off the hook.

__loam• 2 years ago

Doesn't make it morally or ethically okay

refurb• 2 years ago

The restructuring is designed in part to make OpenAI more attractive to investors

I'm not surprised in the least.

Who is going to give billions to a non-profit with a bizarre structure where you don't actually own a part of it but have some "claim" with a capped profit? Can you imagine bringing that to Delaware courts if there was disagreement over the terms? Investors can risk it if it's a few million, but good luck convincing institutional investors to commit billions with that structure.

At that point you might as well just go with a standard for-profit model where ownership is clear, terms are standard and enforceable in court and people don't have to keep saying "explain how it works again?".

stonethrowaway• 2 years ago

I’m waiting for pg and others to excuse this all by posting another apologetic penance which reminds us that founders are unicorns and everyone else is a pleb.

brap2• 2 years ago

pg is sama’s biggest DR-er (interpret this as you will).

They have that Michael Scott & Ryan energy.

imdsm4• 2 years ago

Lot of people unhappy about this yet not at all unhappy (or even caring) about the 1,000s of others who started out for profit. And while we're all here hacking away (we're hackers, right?) many of us with startups, what is it we're chasing? Profit, money, time, control. Are we different except in scale? Food for thought.

bayindirh5• 2 years ago

It's not what they're doing (trying to earn money), but it's how they're doing it (in a very unethical and damaging way), while trying to whitewash themselves.

neprune• 2 years ago

I see your point but I think it's fine to be angry and disappointed that an outfit that appeared to be trying to do it differently has abandoned the effort.

imdsm4• 2 years ago

Perhaps it's the only way to survive?

And what comes first, the mission, or being able to tell people you did your best but failed to build the thing you set out to build?

Perhaps most of us are more interested in fairness than progress, and that's fine.

quonn• 2 years ago

How is this food for thought? OpenAI had an unfair advantage by starting out as a non-profit.

imdsm4• 2 years ago

What stopped others doing this? Or is stopping others doing this?

dleeftink• 2 years ago

Profit, money, time, control

I feel this only scratches the surface of what to chase in life. And in respect to a potentially singular, all-knowing piece of technology, not necessarily a goal people want to embue.

ashkankiani• 2 years ago

Your food is undercooked

imdsm4• 2 years ago

That's a little unfair.

If you don't mind me asking, what generation are you from? Perchance you're newer than me to Earth, among those who find it hard that others have different opinions?

goodluckchuck• 2 years ago

It’s criminal. Many people donated money, worked for them, gave data, etc. on the promise that OpenAI was working towards the public good. It turns out those transactions occurred under false pretenses. That’s fraud.

gdhkgdhkvff• 2 years ago

In any thread about companies that have some amount of hype around them, it’s difficult to tell the difference between comments coming from people with legitimate concerns about the issues at hand vs cynical people that have found their latest excuse to glom on to outrage against hype.

retskrad• 2 years ago

Altman and OpenAI deserve their success. They’ve been key to the LLM revolution and the push toward AGI. Without their vision to make a product out of an LLM that hundreds of millions of people now use and have greatly enriched their lives, companies like Microsoft, Apple, Google, and Meta wouldn’t have invested so heavily in AI. While we’ve heard about the questionable ethics of people like Jobs, Musk, and Altman, their work speaks for itself. If they’re advancing humanity, do their personal flaws really matter?

idle_zealot• 2 years ago

If they’re advancing humanity, do their personal flaws really matter?

Well, yeah, they're positioning themselves as some of the most powerful and influential individuals on earth. I'd say any personality flaws are pretty important.

cebu_blue• 2 years ago

Elon Musk isn't "advancing humanity".

cbeach3• 2 years ago

I'm sure there were people that claimed Nikola Tesla or Henry Ford weren't "advancing humanity" at the time.

There will always be people who disagree with the politics/opinions/alleigances of a successful person and who wish to downplay their success for selfish reasons.

PierceJoy3• 2 years ago

I'm very far from a musk fan, and if you want to make the case that musk isn't responsible for Tesla, SpaceX, and Starlink I think that's a legitimate argument to be made. But I don't think there's much argument to be made that those 3 companies are not advancing humanity.

aiono• 2 years ago

Do you really want people who have a lot of power to have serious flaws? Looking back into history it doesn't end up good usually.

awesomeMilou• 2 years ago

If they’re advancing humanity, do their personal flaws really matter?

What's being discussed in this thread is not the personal failings of silicon valley darlings, but whether one of them just defrauded a few thousand people and embezzled a significant amount of capital. Citing his character flaws goes along with it though.

Are you seriously arguing that people should be exempt from law for "advancing humanity"? Because I don't see any advancements whatsoever from all of the people mentioned. Altman and Musk would get a hardon for sure though, from being mentioned together with Jobs.

infinitezest• 2 years ago

advancing humanity Perhaps but I'd say it's more of a mixed bag. Cell phones and social media have done harm and good at very large scales. As Dan Carlin once said, it feels like we're babies crawling toward hand guns. We don't seem like we're as wise as we are technically proficient.

Oppenheimer "advanced humanity" by giving us nuclear power. Cool. I love cheap energy. Unfortunately, there were some uh... "unfortunate side-effects" which continue to plague us.

CatWChainsaw2• 2 years ago

They matter MORE. Are you like, completely unfamiliar with Spiderman and the whole great power great responsibility line??

upwardbound5• 2 years ago

Relatedly, dalant979 found this fascinating bit of history: https://old.reddit.com/r/AskReddit/comments/3cs78i/whats_the...

Yishan Wong describes a series of actions by Yishan and Sam Altman as a "con", and Sam jumps in to brag that it was "child's play for me" with a smiley face. :)

benterix• 2 years ago

The board drama part and key people leaving seem oddly familiar.

latexr5• 2 years ago

and Sam jumps in to brag

I never read that as a brag, but as a sarcastic dismissal. That’s why it started with “cool story bro” and “except I could never have predicted”. I see the tone as “this story is convoluted” not as “I’ll admit to my plan now that you can’t do anything about it”.

That’s not to say Sam isn’t a scammer. He is. It just doesn’t seem like that particular post is proof of it. But Worldcoin is.

https://www.buzzfeednews.com/article/richardnieva/worldcoin-...

https://www.technologyreview.com/2022/04/06/1048981/worldcoi...

upwardbound5• 2 years ago

If I understand the history correctly, Yishan (the former Reddit CEO) is talking about himself when he talks about a CEO in this story, and so Yishan's post is a brag, with a thin denial tacked on at the end. That's why I believe that Sam (Yishan's friend) is also engaging in thinly-veiled bragging about these events.

Here is Yishan's comment with his name spelled out for clarity instead of just saying "CEO":

    In 2006, reddit was sold to Conde Nast. It was soon obvious to many that the sale had been premature, the site was unmanaged and under-resourced under the old-media giant who simply didn't understand it and could never realize its full potential, so the founders and their allies in Y-Combinator (where reddit had been born) hatched an audacious plan to re-extract reddit from the clutches of the 100-year-old media conglomerate.

    Together with Sam Altman, they recruited a young up-and-coming technology manager [named Yishan Wong] with social media credentials. Alexis, who was on the interview panel for the new reddit CEO, would reject all other candidates except this one. The manager was to insist as a condition of taking the job that Conde Nast would have to give up significant ownership of the company, first to employees by justifying the need for equity to be able to hire top talent, bringing in Silicon Valley insiders to help run the company. After continuing to grow the company, [Yishan Wong] would then further dilute Conde Nast's ownership by raising money from a syndicate of Silicon Valley investors led by Sam Altman, now the President of Y-Combinator itself, who in the process would take a seat on the board.

    Once this was done, [Yishan Wong] and his team would manufacture a series of otherwise-improbable leadership crises, forcing the new board to scramble to find a new CEO, allowing Altman to use his position on the board to advocate for the re-introduction of the old founders, installing them on the board and as CEO, thus returning the company to their control and relegating Conde Nast to a position as minority shareholder.

    JUST KIDDING. There's no way that could happen.

-- yishanwong

My understanding of what Sam meant by "I could never have predicted the part where you resigned on the spot" was that he was conveying respect for Yishan essentially out-playing Sam at the end (the two of them are friends) by distancing himself (Yishan) from the situation and any potential liability in order to leave Sam "holding the bag" of possible liability.

allie13• 2 years ago

"Shocking!" It's a shame that one of the biggest advancements of our time has come about in as sleazy a way as it has.

Reputationally... the net winner is Zuck. Way to go Meta (never thought I'd think this).

addedlovely• 2 years ago

In that case, where can I apply for my licensing fee for my content they have scraped and trained on.

List of crawlers for those who now want to block: https://platform.openai.com/docs/bots

nikcub3• 2 years ago

might as well do the full list:

https://github.com/ai-robots-txt/ai.robots.txt/blob/main/rob...

cloudflare have a button for this:

https://blog.cloudflare.com/declaring-your-aindependence-blo...

username223• 2 years ago

Don't stop at robots.txt blocking. Look through your access logs, and you'll likely find a few IPs generating a huge amount of traffic. Look them up via "whois," then block the entire IP range if it seems like a bot host. There's no reason for cloud providers to browse my personal site, so if they host crawlers, they get blocked.

7373737373• 2 years ago

Thank you very much for mentioning these! These parasites deserve to burn in hell for their greed and violation of consent

cdchn8• 2 years ago

I wonder how the AI/copyright arguments will play out in court.

"If I read your book and I have a photographic memory and can recall any paragraph do I need to pay you a licensing fee?"

"If I go through your library and count all the times that 'the' is adjacent to 'end' do I need to get your permission to then tell that number to other people?"

zelphirkalt2• 2 years ago

Cases where we see the absurdity of copyright in its current form. But either we have it for everyone, including OpenAI, or for no one. Or are perhaps some more equal than others before the law?

uxhacker• 2 years ago

Here is the story without a paywall https://www.reuters.com/technology/artificial-intelligence/o...

neilv2• 2 years ago

The incremental transformation from non-profit to for-profit... does anyone have legal standing to sue?

Early hires, who were lured there by the mission?

Donors?

People who were supposed to be served by the non-profit (everyone)?

Some government regulator?

bbor11• 2 years ago

This is the most important question, IMO! ChatGPT says that employees and donors would have to show that they were defrauded (lied to), which IMO wouldn’t exactly be hard given the founding documents. But the real power falls to the government, both state (Delaware presumably…?) and federal. It mentions the IRS, but AFAIU the DoJ itself could easily bring litigation based on defrauding the government. Hell, maybe throw the SEC in there!

In a normal situation, the primary people with standing to prevent such a move would be the board members of the non-profit, which makes sense. Luckily for Sam, the employees helped kick out all the dissenters a long time ago.

jjulius3• 2 years ago

Genuinely curious because I have no idea how any of this works...

Would the founding documents actually count as proof of a lie? I feel like the defense could easily make the argument that the documents accurately represented their intent at the time, but as time went on they found that it made more sense to change.

It seems like, if the founding documents were to be proof of a lie, you'd have to have corresponding proof that the documents were intentionally written to mislead people.

lenerdenator3• 2 years ago

Everyone has legal standing to sue at any time for anything.

Whether the case is any good is another matter.

ReaLNero• 2 years ago

This is not at all true, I recommend you look into the exact meaning of "legal standing".

moralestapia4• 2 years ago

Yeah, so funny, *yawn*.

Try to contribute to the conversation, though.

What you say is also untrue, there's a minimum set of requirements that have to be met regarding discovery, etc.

blackeyeblitzar6• 2 years ago

In the US standing is a specific legal concept about whether you have a valid reason/role to bring up a particular issue. For example most of Donald Trump’s lawsuits around the 2020 election were rejected for a lack of standing rather than on merit (whether the case is any good).

nialv7• 2 years ago

Well I heard someone named Elon did try.

HarHarVeryFunny5• 2 years ago

And more high level exits ... not only Mira Murati, but also Bob McGrew , and Barret Zoph

https://www.businessinsider.com/sam-altman-openai-note-more-...

nikcub3• 2 years ago

Difficult to see how these two stories aren't related.

OpenAI has been one of the most insane business stories in years. I can't wait to read a full book about it that isn't written by either Walter Isaacson or Michael Lewis.

HarHarVeryFunny5• 2 years ago

I've only read Michael Lewis's "Liars Poker" which I enjoyed, but perhaps that sort of treatment of OpenAI would make it into more of a drama (which also seems to be somewhat true) and gloss over what the key players were really thinking which is what would really be interesting.

edm0nd• 2 years ago

I want Chuck Palahniuk to write the book. It would be dark and amazing.

fxbois• 2 years ago

Can anyone trust the next "non-profit" startup ? So easy to attract appeal with a lie and turn around as soon as you are in a dominant position.

bbor11• 2 years ago

Yes, you should still trust cooperatives and syndicates. I am surprised they’re attempting such a brazenly disrespectful move, but in general, the people who started this company were self-avowed capitalists through-and-through; the fact that they eventually reverted to seeking personal gain isn’t surprising in itself. That’s basically their world view: whatever I can do to enrich myself is moral because Ethical Egoism/Free Market/etc.

int_19h6• 2 years ago

The trust problem here isn't with non-profits in general, it's specifically with Sam Altman. So no, you probably shouldn't trust the next non-profit he is involved with. But also, people have warned about Altman in advance.

RivieraKid• 2 years ago

Good, I would do the same because it's a reasonable thing to do. It's easier to succeed as a for-profit.

j_maffe• 2 years ago

Succeed off of lies and deceit to gain goodwill from workers and governments.

roody15• 2 years ago

Wait.. Sam Altman also owns (or did own) ycombinator?

mrkramer• 2 years ago

I called this 9 months ago: https://news.ycombinator.com/item?id=38560352

OpenAI is Microsoft's AI R&D spin-off and Microsoft means business.

wg0• 2 years ago

For profit it will be when it will be profitable.

georgeplusplus• 2 years ago

I never understood why people take non profit companies as more altruistic than for profit companies. The non profit doesnt mean no profits at all they still have to be profitable. It's just boils down to how the profits are distributed. There are plenty of sleezy institutions that are non profit like the NCAA.

Foundations and charitable organizations that pubically get their funding are a different story but I'm talking about non profit companies.

I even had one fellow say that the green bay packers were less corrupt than the other for profit nfl teams , which sounds ridiculous.

hedora• 2 years ago

Regarding the Packers: At least (unlike literally every other NFL team), they’re not using city tax revenue to build a franchise that can move across the country at the drop of a hat.

The NFL’s non-profit status is a farce though. Similarly, their misuse of copyright (“you cannot discuss this broadcast”) and the trademark “Super Bowl” (“cannot be used in factual statements regarding the actual Super Bowl”) should have their ownership of that ip revoked, if only because it causes massive confusion about the underlying law with a big chunk of the US population.

limit499karma• 2 years ago

Reuters had the exclusive yesterday but somehow it never surfaced for long here:

"OpenAI to remove non-profit control and give Sam Altman equity"

https://www.reuters.com/technology/artificial-intelligence/o...

blackeyeblitzar6• 2 years ago

It appeared but was buried on the second page and never made it to the front page, for some weird reason. Some in the discussion speculated that it was due to a flame war detection algorithm:

https://news.ycombinator.com/item?id=41651548

CatWChainsaw2• 2 years ago

"for some weird reason" when Altman was an important player at YC and PG still sings his praises.

widerporst• 2 years ago

The fact that this has just disappeared from the front page for me, just like the previous post (https://news.ycombinator.com/item?id=41651548), somehow leaves a bitter taste in my mouth.

mattcollins• 2 years ago

I noticed that, too. It does seem 'odd'.

majke• 2 years ago

https://hnrankings.info/41655954/

Looks like it was flagged, before being brought back by an admin. This happens quite often.

lolinder9• 2 years ago

The previous post never entered the front page at all:

https://hnrankings.info/41651548/

It somehow got enough attention to get to 300+ votes while being entirely suppressed from the front page.

This one looks like it triggered a flag before being fixed:

https://hnrankings.info/41655954/

jjulius3• 2 years ago

I found this on the front page an hour after you made this comment.

davidcbc• 2 years ago

You can't post content critical of some HN darlings without being flagged by their fans

jjulius3• 2 years ago

How do you explain all of the constant unflagged criticism of OpenAI and Sam Altman throughout nearly every OpenAI thread? I mean, look around at all of the comments here...

Davidzheng• 2 years ago

Yeah hope for some transparency here

nitsuaeekcm• 2 years ago

Look at the URL. It’s because the original WSJ title was “OpenAI Chief Technology Officer Resigns,” which was a dupe of yesterday’s discussions. WSJ changed the title yesterday evening.

neilv2• 2 years ago

This post somehow fell off the front page before California wakes up (9:07 ET), but not buried deep like buried posts usually are:

57. OpenAI to Become For-Profit Company (wsj.com) 204 points by jspann 4 hours ago | flag | hide | 110 comments

upwardbound5• 2 years ago

Thank you dalant979 for finding a previous pattern of behavior also by Sam with a similar structure to what we have seen unfolding on the board of OpenAI.

https://news.ycombinator.com/item?id=41657001#41657014

Mistletoe2• 2 years ago

Feels like when Napoleon declared himself emperor, and other countless times when humans succumbed to power and greed when they were finally in the position to make that decision. I guess I’m stupid for holding on hope that Sam would be different.

Beethoven's reaction to Napoleon Bonaparte's declaration of himself as Emperor of France in May 1804 was to violently tear Napoleon's name out of the title page of his symphony, Bonaparte, and rename it Sinfonia Eroica
Beethoven was furious and exclaimed that Napoleon was "a common mortal" who would "become a tyrant"

whywhywhywhy• 2 years ago

This is for the best really, I can't even think of a non-profit in tech where over time it hasn't just become a system for non-productives to leech from a successful bit of technology while providing nothing and at times even stunting it's potential and burning money on farcical things.

dev1ycan• 2 years ago

Sam altman is just trying to cash out before the crash comes, the new model was nothing more than a glorified recursive gpt 4

causal3• 2 years ago

Considering all the high level departures, this makes the most sense to me. Their valuation largely rests on this mystique they've built that says they alone are destined to unlock AGI. But there's just no reason to believe they have a secret sauce nobody else can reproduce.

Seems more likely that OpenAI's biggest secret is that they have no secrets, and they are desperately trying to come up with a second act as tech companies with more robust product portfolios begin to catch up.

FrustratedMonky• 2 years ago

Not the only one questioning.

Going for-Profit, and several top exec leaving at same time? Before getting the money?

"""Question: why would key people leave an organization right before it was just about to develop AGI?" asked xAI developer Benjamin De Kraker in a post on X just after Murati's announcement. "This is kind of like quitting NASA months before the moon landing," he wrote in a reply. "Wouldn't you wanna stick around and be part of it?"""

https://arstechnica.com/information-technology/2024/09/opena...

Is this the beginning of the end for OpenAI?

gklitz6• 2 years ago

The point is that OpenAI (the for protists) won’t die from not having invested AGI, they have an extremely profitable opportunity from “just” selling api calls and consultant hours. But that just brings them a successful shovel seller, not the societal transformation that the non-profit is aiming at, so it makes sense to detangle the non-profit and for profit.

Also because you know… the non-profit tried to strangle the for profit to take over control when they tried to oust Sam, so there’s that.

Sunscratch• 2 years ago

Should be renamed to NonOpenAI,or MoneyMattersAI

xzjis• 2 years ago

ClosedAI or PrivateAI

causal3• 2 years ago

Saw someone on HN call it NopenAI

lenerdenator3• 2 years ago

Are you meaning to tell me that the whole nonprofit thing was just a shtick to get people to think that this generation of SV "founders" was going to save the world, for real this time guys?

I'm shocked. Shocked!

I better stock up on ways of disrupting computational machinery and communications from a distance. They'll build SkyNet if it means more value for shareholders.

Eliezer• 2 years ago

This is not how nonprofits usually work. This is blatant fraud. I cannot think of any other case besides OpenAI of this particular shenanigan being pulled.

ummonk• 2 years ago

The question isn't whether it has happened before, but whether they will get away with it.

baradhiren07• 2 years ago

Value vs Morality. Only time will tell who wins.

lenerdenator3• 2 years ago

In many SV denizens' heads, they're one in the same.

Which is why we need to reopen more asylums and bring back involuntary commitment.

charles_f2• 2 years ago

I'm wondering what this will change. This is probably naive from me because I'm relatively uneducated on the topic, but it feels like open-ai has never really worked like your typical non profit (eg keeping their stuff mostly closed sourced and seeking a profit)

humansareok12• 2 years ago

Given what Sam has done by clearing out every single person who went against him in the initial coup and completely gutting every safety related team the entire world should be on notice. If you believe what Sam Altman himself and many other researchers are saying, that AGI and ASI may well be within reach inside this decade, then every possible alarm bell should be blaring. Sam cannot be allowed to be in control of the most important technology ever devised.

lolinder9• 2 years ago

I don't know why anyone would believe anything this guy is saying, though, especially now that we know he's going to receive a 7% stake in the now-for-profit company.

There are two main interpretations of what he's saying:

1) He sincerely believes that AGI is around the corner.

2) He sees that his research team is hitting a plateau of what is possible and is prepping for a very successful exit before the rest of the world notices the plateau.

Given his track record of honesty and the financial incentives involved, I know which interpretation I lean towards.

mirekrusin• 2 years ago

...or he's just Palpatine who wants shitload of money regardless of future speculations, end of story.

cowpig• 2 years ago

This is a false dichotomy. Clearly getting money and control are the main objectives here, and we're all operating over a distribution of possible outcomes.

meowface3• 2 years ago

It's interesting because one of the points Sam emphatically stresses over and over on most podcasts he's gone on in the past 4 years is how crucial it is that a single person or a single company or a collection of companies controlling ASI would be absolutely disastrous and that there needs to be public, democratic control of ASI and the policies surrounding it.

Personally I still believe he thinks that way (in contrast to what ~99% of HN believes) and that he does care deeply about potential existential (and other) risks of ASI. I would bet money/Manifoldbux that if he thought powerful AGI/ASI were anywhere near, he'd hit the brakes and initiate a massive safety overhaul.

I don't know why the promises to the safety team weren't kept (thus triggering their mass resignations), but I don't think it's something as silly as him becoming extremely power hungry or no longer believing there were risks or thinking the risks are acceptable. Perhaps he thought it wasn't the most rational and efficient use of capital at that time given current capabilities.

verve_rat• 2 years ago

Or maybe he is just a gready lier? From the outside looking in how can you tell the difference?

humansareok12• 2 years ago

I would bet money/Manifoldbux that if he thought powerful AGI/ASI were anywhere near, he'd hit the brakes and initiate a massive safety overhaul.

Not sure how you can believe this given all of his recent actions and the ever growing list of whistleblowers dropping out of OpenAI explicitly saying Safety is not taken seriously.

I mean just generally the ability to actually stop and reorient around working on safety seems incredibly non trivial. To say nothing of the race dynamic he has perpetuated, the other frontier companies are unlikely to do the same.

ChrisArchitect5• 2 years ago

[dupe] more discussion:

https://news.ycombinator.com/item?id=41651548

lolinder9• 2 years ago

That one never made it to the front page because reasons. All that discussion was people reading the story elsewhere and going looking for the HN thread.

ChrisArchitect5• 2 years ago

never made it? That's the thread. The discussion is there. Long before this one. Lots of people saw it, commented on it. It's a dupe. Stop splitting the discussion up.

skadamat• 2 years ago

Now the real question is - will they finally drop the "Open" part?

kweingar2• 2 years ago

Can anybody explain how this actually works? What happens to all of the non-profit's assets? They can't just give it away for investors to own.

The non-profit could maybe sell its assets to investors, but then what would it do with the money?

I'm sure OpenAI has an explanation, but I really want to hear more details. In the most simple analysis of "non-profit becomes for-profit", there's really no way to square it other than non-profit assets (generated through donations) just being handed to somebody for private ownership.

tomp2• 2 years ago

exactly.

If that's how it works, why wouldn't you start every startup as a non-profit?

Investment is tax deductible, no tax on profits...

Then turn it into a for-profit if/when it becomes successful!

jameshart• 2 years ago

Donations are not investments. They don’t result in ownership.

n2d42• 2 years ago

After the non-profit sells its assets, it would either donate the proceeds in a way that would be aligned with the original mission, or continue to exist as a bag of cash, basically.

kweingar2• 2 years ago

It seems incredibly convenient that a non-profit's leaders can say "I want equity in a for-profit company, so we will sell our assets to investors (who will hire me) and pass off the proceeds to some other non-profit org run by some other schmuck. This is in the public interest."

bschmidt12• 2 years ago

[flagged]

lolinder9• 2 years ago

If the assets were sold to the for profit at a fair price I could see this being legal (even if it shouldn't be). At least in that case the value generated by the non-profit tax free would stay locked up in non-profit land.

The biggest problem with this is that there's basically no chance that the sale price of the non-profit assets is going to be $150 billion, which means that whatever the gap is between the valuation of the assets and the valuation of the company is pure profit derived from the gutting of the non-profit.

If this is allowed, every startup founded from now on should rationally do the same thing. No taxes while growing, then convert to for profit right before you exit.

bdowling• 2 years ago

For-profit startups don’t pay taxes while growing either, because they aren’t making any profit during that phase.

amluto• 2 years ago

It’s pretty great if you can manage to have the parent be 501(c)(3). Have all the early investors “donate” 90% of their investment to the 501(c)(3) and invest 10% in the for-profit subsidiary the old-fashioned way. They get a tax deduction, and the parent owns 90% of the subsidiary. Later on, if the business is successful, the parent cashes out at the lowest possible valuation they can pull off with a mostly straight face, and all the investors in the subsidiary end up owning their shares, pro rata, with no dilution from the parent. The parent keeps a bit of cash (and can use it for some other purpose).

Of course the investors do end up owning their shares at a lower basis than they would otherwise, and they end up a bit diluted compared to a straightforward investment, but the investors seem likely to more than make up for this by donating appreciated securities to the 501(c)(3) and by deferring or even completely avoiding the capital gains tax on their for-profit shares.

Obviously everyone needs to consult their lawyer about the probability of civil and/or criminal penalties.

SkyPuncher4• 2 years ago

You actually don't even need to sell them. Just sign an exclusive, non-revocable license agreement.

Practically the same as selling, but technically not. Non-profit still gets to live up to it's original mission, on paper, but doesn't really do anything internally.

mlinsey• 2 years ago

I haven't seen any details, but isn't this a pretty straightforward way of doing it? The non-profit has had majority ownership of the for-profit subsidiary since 2019. The already-for-profit subsidiary has owned all the ChatGPT IP, all the recent models, all the employee relationships, etc etc.

The cleanest way for this to work is the for-profit to just sell more shares at the $150B valuation, diluting the non-profit entity below majority ownership. The for-profit board, which the non-profit could still probably have multiple seats on, would control the real asset, the non-profit would still exist and hold many tens of billions of value. It could further sell its shares in the non-profit and use the proceeds in a way consistent with its mission.

They wouldn't even have to sell that much - I am pretty sure the mega-fundrasing rounds from Microsoft etc brought the non-profit's ownership to just north of 50% anyway.

I don't see how this wouldn't be above board, it's how I assumed it was going to work. It would indeed mean that the entity that controls ChatGPT would now be answerable to shareholders, a majority of which would be profit seeking and a minority of which would be the non-profit with its mission, but non-profits are allowed to invest in for-profits and then sell those shares; all the calls for prosecutions etc seems just like an internet pitchfork mob to me.

JumpCrisscross• 2 years ago

there's basically no chance that the sale price of the non-profit assets is going to be $150 billion

The non-profit’s asset is the value of OpenAI minus the value of its profit-participation units, i.e. the value of the option above the profit cap. Thus, it must be less than the value of OpenAI. The non-profit owns an option, not OpenAI.

benreesman• 2 years ago

“You don't get rich writing science fiction. If you want to get rich, you start a religion.”

― L. Ron Hubbard

TZubiri• 2 years ago

But what is the non-profit going to do with all that money is the question.

blackeyeblitzar6• 2 years ago

Maybe it’s a hint that the tax rate for small and medium companies should be reduced (or other non tax laws modified based on company size), to copy the advantages of this nonprofit to profit conversion, while taxes for large companies should be increased. It would maybe help make competition more fair and make survival easier for startups.

sophacles2• 2 years ago

This is actually a good idea. I say we go even further and stop wasting so much money cleaning up after companies - get rid of the entire legal entity known as a corporation and let investors shoulder the full liability that comes with their ownership stake.

bradleyjg• 2 years ago

Blue Cross / Blue Shield is a good case study. This is a bit in the weeds but should get you keywords to search for: https://advocacy.consumerreports.org/research/community-invo...

winternett• 2 years ago

Can anybody explain how this actually works?

Every answer moving forward now will contain embedded ads for Sephora, or something completely unrelated to your prompt...

That money will go into the pockets of a small group of people that claim they own shares in the company... Then the company will pull more people in who invest in it, and they'll all get profits based on continually rising monthly membership fees, for an app that stole content from social media posts and historical documents others have written without issuing credit nor compensating them.

baking2• 2 years ago

The nonprofit gives all its ownership rights to the for-profit in return for equity. The nonprofit is free to hold the equity and maintain control or sell the equity and use the proceeds for actual charitable purposes.

As long as the money doesn't go into someone's pocket, it's all good (except that Sam Altman is also getting equity but I assume they found a way to justify that.)

OpenAI will eventually be forced to convert from a public charity to a private foundation and will be forced to give away a certain percentage of their assets every year so this solves that problem also.

jprete5• 2 years ago

The significant asset isn't equity, it's control. 51% is much more valuable than 49% when the owned organization is supposedly working towards technology that will completely change how the world works.

SkyPuncher4• 2 years ago

I've actually worked through a similar situation for a prior startup. We were initially funded by a large, hospital system (non-profit) who wanted to foster innovation and a startup mentality. After getting started, it became clear that it was effectively impossible for us to operate like a startup under a non-profit. Namely, traditional funding routes were neigh impossible and the hospital didn't want direct ownership.

It's been many years, but the plan was essentially this:

* The original, non-profit would still exist

* A new, for-profit venture would be created, with the hospital having a board seat and 5% ownership. Can't remember the exact reason behind 5%. I think it was a threshold for certain things becoming a liability for the hospital as they'd be considered "active" owners above 5%. I think this was a healthcare specific issue and unlikely to affect non-profits in other fields.

* The for-profit venture would seek, traditional VC funding. Though, the target investors were primarily in the healthcare space.

* As part of funding, the non-profit would grant exclusive, irrevocable rights of it's IP to that for-profit venture.

* Everyone working for the "startup" would need to sign a new employment contract with the for-profit.

* Viola! You've converted a non-profit into a for-profit business.

I'm fuzzy on a lot of details, but that was the high level architecture of the setup. It's one of those things where the lawyers earn a BOAT LOAD of money to make sure every technicality is accounted for, but everything is just a technicality. The practical outcome is you've converted a non-profit to a for-profit business.

Obviously, this can't happen without the non-profit's approval. From the outside, it seems that Sam has been working internally to align leadership and the board with this outcome.

-----

What will be interesting is how the employees are treated. These types of maneuvers are often an opportunity for companies to drop employees, renegotiate more favorable terms, and reset vesting schedules.

feoren2• 2 years ago

* As part of funding, the non-profit would grant exclusive, irrevocable rights of it's IP to that for-profit venture.

This is the part that should land people literally in jail. A non-profit should not be able to donate its assets to a for-profit, and if it's the same people running both companies, those people must be sent to prison for tax evasion. There is no other way to preserve the integrity of the "non-profit" status with this giant loophole.

VirusNewbie• 2 years ago

As part of funding, the non-profit would grant exclusive, irrevocable rights of it's IP to that for-profit venture.

Isn't that fraud/stealing from all the donors? I mean how is that different than just giving money to another business not owned by the non profit?

jdavdc• 2 years ago

My expertise is in NFP hospitals. Generally, when they convert for for-profit part of that deal is the creation of a foundation funded with assets that are ostensibly to advance the original not for profit mission.

throwaway9182992• 2 years ago

Huh? I thought they already had for-profit and non-profit entities? Is the non-profit entity just going away (paywall)? gross.

aoeusnth1• 2 years ago

The IRS should get involved. This is a cut and dry case of embezzlement of 501c3 resources.

hakcermani• 2 years ago

Can they at least change the name to from OpenAI to something else, and leave gutted OpenAI as the non-profit shell..

anon291• 2 years ago

Wonder what happens to the employee's equity.

Traubenfuchs• 2 years ago

Why were they a non-profit in the first case?

throw_m239339• 2 years ago

I imagine for tax reasons?

Why the h are they called "openAI" too? nothing is open for them but your own wallet.

fourseventy2• 2 years ago

So are they going to give elon equity? He donated millions to the non profit and now they are going to turn around and turn the company into a for-profit based on the work done with that capital.

LeafItAlone• 2 years ago

Given that Musk was already worried about this and has a legal team the size of a small army, one would expect that any conditions he wanted applied to the donation would have been made at the time.

wmf• 2 years ago

Elon has allegedly refused equity in OpenAI. He seems to want it to go back to its original mission (which isn't going to happen) or die (which isn't going to happen).

throwaway3141554• 2 years ago

Sam Altman also allegedly had no interest in equity.

sampo• 2 years ago

Musk doesn't seem to be happy about the situation:

https://x.com/elonmusk/status/1839121268521492975

planetpluta• 2 years ago

This is deeply wrong

I can’t tell if Elon is saying that the tweet is misinformed or OpenAI’s behavior is reprehensible

kanbara• 2 years ago

he doesn’t need the money, for one. he missed out and didn’t control it, and now he’s jealous that it took off. oh well, world’s richest man and smallest violin.

uhtred• 2 years ago

Fund your startup by masquerading as a non profit for a few years and collecting donations, genius!

The stinking peasants will never realize what's happening until it's too late to stop!

bjornsing• 2 years ago

The OpenAI saga is a fine illustration of how “AI safety” will work in practice.

Hint: it won’t.

typon• 2 years ago

AI Safety is a science fiction created by large corporations and useful idiots to distract from working on boring, real AI safety concerns like bias, misinformation, deepfakes, etc.

yapyap• 2 years ago

Become? lol

bossyTeacher• 2 years ago

There is an post with 500 comments that was posted before this one. Why didn't that post make it to the top? I know Y Combinator used to have Sama has a president but you can't censor this type of big news in this time and age

thesurlydev• 2 years ago

I can't help but wonder if things would be different if Sam Altman wasn't allowed to come back to OpenAI. Instead, the safeguards are gone, challengers have left the company, and the bottom line is now the new priority. All in opposition to ushering in AI advancement with the caution and respect it deserves.

elAhmo• 2 years ago

Similar example can be seen with the demise of Twitter under the new owner, which has no safeguards or guardrails - anyone who opposed him is gone and we can see in what state it is now.

MaxHoppersGhost2• 2 years ago

Now Twitter has both left and right propaganda instead of just left wing propaganda. Bummer.

senorrib• 2 years ago

With the small difference that Twitter is a for-profit company, unlike OpenAI.

stackedinserter• 2 years ago

In what state is it now?

matt3210• 2 years ago

The bottom line was always the priority.

lyu07282• 2 years ago

It was always a bit too optimistic to think we will be cautiously developing AGI, in a way it's not so bad that this happened so soon rather than later after it progressed much further. (I mean in theory we could understand to do something about it now.)

Although I guess it doesn't really matter. What if we all understood climate change earlier? wouldn't really have made a difference anyway

wonnage• 2 years ago

Maybe my expectations were too high but they seem to have run out of juice. Every major announcement since the original ChatGPT release has been kind of a dud - I know there have been improvements, but it's mostly the same hallucinatory experience as it was on release day. A lot of the interesting work is now happening elsewhere. It seems like for a lot of products, the LLM part is just an API layer you can swap out if you think e.g Claude does a better job.

IAmNotACellist• 2 years ago

What else would you expect from a skeevy backstabber who got kicked out of Kenya for refusing to stop scanning people's eyes in exchange for shitcoin crypto? He was building a global surveillance database with Worldcoin.

Altman was fucking with OpenAI for long before the board left in protest, since about the time Elon Musk had to leave due to Tesla's AI posing a conflict of interest. He got more and more brazen with the whole fake-altruism shit, up to and including contradicting every point in their mission statement and promise to investors in the "charity."

surfingdino2• 2 years ago

Things would be different for sure. I wonder if people leaving OpenAI has something to do with the prosaic comparison of what they are getting (a salary) and what he's getting (a cool $10B at the current valuation).

imranhou• 2 years ago

Based on what I've read it is allowed for a non profit to own a for profit asset.

So I'm assuming the game plan here is to adjust the charter of the non profit to basically say we are going to still keep doing "Open AI" (we all know what that means), but through the proceeds it gets by selling chunks of this for-profit entity, so the essence could be the non-profit parent isn't fulfilling its mission by controlling what openai does but how it puts the money to use it gets from openai.

And in this process, Sam gets a chunk (as a payment for growing the assets of the non-profit, like a salary/bonus) and the rest as well....?

SkyPuncher4• 2 years ago

I went through something similar with a prior startup. Though, it wasn't anything nefarious, like this.

Basically, the plan was to create a new for-profit entity then have the not-for-profit license the existing IP to the for-profit. There were a lot of technicalities to it, but most of that was handled by lawyers drawing up the chartering paperwork.

breck• 2 years ago

This is great. Sam tried the non-profit thing, it turned out not be a good fit for the world, and he's adapting. We all get to benefit from seeing how non-profits are just not the best idea. There are better ways to improve the world than having non-profits (for example, we need to abolish copyright and patent law; that alone would eliminate the need for perhaps the majority of non-profits that exist today, which are all working to combat things that are downstream of the the toxic information environment created by those laws).

garbanz0• 2 years ago

Yes, Altman not having 7% of the company was not a good fit for the world.

kidsil• 2 years ago

And the enshittification process begins.

hooverd• 2 years ago

Will they be rebranding to ClosedAI?

throwup23810• 2 years ago

I’m confused by this news story and the response here. No one seems to understand OpenAI’s corporate structure or non profits at all.

My understanding: OpenAI follows the same model Mozilla does. The nonprofit has owned a for-profit corporation called OpenAI Global, LLC that pays taxes on any revenue that isn’t directly in service of their mission (in a very narrow sense based on judicial precedent) since 2019 [1]. In Mozilla’s case that’s the revenue they make from making Google the default search engine and in OpenAI’s case that’s all their ChatGPT and API revenue. The vast majority (all?) engineers work for the for-profit and always have. The vast majority (all?) revenue goes through the for-profit which pays taxes on that revenue minus the usual business deductions. The only money that goes to the nonprofit tax-free are donations. Everything else is taxed at least once at the for-profit corporation. Almost every nonprofit that raises revenue outside of donations has to be structured more or less this way to pay taxes. They don’t get to just take any taxable revenue stream and declare it tax free.

All OpenAI is doing here is decoupling ownership of the for-profit entity from the nonprofit. They’re allowing the for profit to create more shares and distribute them to entities other than the non-profit. Or am I completely misinformed?

[1] https://en.wikipedia.org/wiki/OpenAI#2019:_Transition_from_n...

seizethecheese• 2 years ago

“Decoupling” is such a strange euphemism for removing an asset worth north of $100b from a nonprofit.

throwup23810• 2 years ago

OpenAI Global LLC is the $100b asset. It’s not being removed, the nonprofit will still own all the shares it owns now until it decides to sell.

simantel• 2 years ago

Almost every nonprofit that raises revenue outside of donations has to be structured more or less this way to pay taxes.

I don't think that's true? A non-profit can sell products or services, it just can't pay out dividends.

throwup23810• 2 years ago

If those products and services are unrelated business income, they have to pay taxes on it: https://www.irs.gov/charities-non-profits/unrelated-business...

What counts as “related” to the charity’s mission is fuzzy but in practice the courts have been rather strict. They don’t have to form for-profit subsidiaries to pay those taxes but it helps to derisk the parent because potential penalties include loss of nonprofit status.

For example, the nonprofit Metropolitan Museum of Modern Art has a for-profit subsidiary that operates the gift shop. National Geographic Society has National Geographic Partners which actually owns the TV channel and publishes the magazine. Harvard and Stanford have the Harvard Management Company and Stanford Management Company to manage their endowments respectively. The Smithsonian Institute has Smithsonian Enterprises. Mayo Clinic => Mayo Clinic Ventures. Even the state owned University of California regents have a bunch of for-profit subsidiaries.

throwaway3141554• 2 years ago

It's about the narrative they tried to create. The spin. It doesn't matter much if they were technically behaving as a for-profit entity previously. What matters is that they wanted the public (and likely, their talent) to _think_ that they weren't even interested in making a profit as this would be a philosophical threat to the notion of any sort of impartial or even hopefully benevolent originator of AGI (a goal which is laid plainly in their mission statement).

As you've realized, this should have been (and was) obvious for a long time. But that doesn't make it any less hypocritical or headline worthy.

pj_mukh11• 2 years ago

Occam's razor: I think Sam's personal narrative is the correct one. He built a non-profit that took off in a way that he didn't expect it and now a for-profit is the best way to run the lightning they've caught.

In terms of profit, AFAICT, Sam doesn't have designs on building extra large yachts and his own space agency but what he wants is to be the one at the stead of building what he considers is world-changing tech. One could rationally call this power-hungry but one could also rationally call this just helicopter parenting of a tech you've helped built. And for that a for-profit that is allowed to maximize profits to re-invest in the tech is the optimal setup (esp if all the competitors are doing the same)

Is this a different org than when it started? Yes. Was this a dupe from the beginning? I don't think so.

"But why can't he have a more worldly-aligned board looking over his shoulder?"

Because we live in California and have a bad taste for governance by committee or worse: governance by constant non-representative democracy (see: Housing).

If this now completely comes off the wheels, I still think Congressional action can be a stopgap, but atleast for now, this restructure makes sense to me.

cdchn8• 2 years ago

What matters is that they wanted the public (and likely, their talent) to _think_ that they weren't even interested in making a profit as this would be a philosophical threat to the notion of any sort of impartial or even hopefully benevolent originator of AGI (a goal which is laid plainly in their mission statement)

And now they want to cast off any pretense of that former altruistic yolk now that they have a new, better raison d'etre to attract talent: making absolutely unparalleled stacks of cash.

halJordan• 2 years ago

It isnt a tax thing or a money thing, its a control and governance thing.

The board of the non-profit fired Altman and then Altman (& MS) rebelled, retook control, & gutted the non-profit board. Then, they stacked the new non-profit board with Altman/MS loyalists and now they're discharging the non-profit.

It's entirely about control. The board has a legally enforceable duty to its charter. That charter is the problem Altman is solving.

knome• 2 years ago

That charter is the problem Altman is solving

We worry about the existential threat of AI becoming a paperclip factory while many humans are already.

teleforce• 2 years ago

I wished I have 10 upvote to give you, bravo excellent observations and conclusions.

burnte2• 2 years ago

The problem is that OpenAI calls itself OpenAI when it's completely sealed off, and calls itself a non-profit when, as you say, almost everything about is for profit. Basically they're whitewashing their image as an organization with noble goals when it's simply yet another profit motivated company. It's fine if that's what they are and want to be, but the lies are bothersome.

rilien• 2 years ago

It's like North Korea calling themselves Democratic People's Republic of Korea. The name doesn't mean anything

bbor11• 2 years ago

Good questions!

Right now, OpenAI, Inc. (California non-profit, lets say the charity) is the sole controlling shareholder of OpenAI Global LLC (Delaware for-profit, lets say the company). So, just to start off with the big picture: the whole enterprise was ultimately under the sole control of the non-profit board, who in turn was obligated to operate in furtherance of "charitable public benefit". This is what the linked article means by "significant governance changes happening behind the scenes," which should hopefully convince you that I'm not making this part up.

To get really specific, this change would mean that they'd no longer be obligated to comply with these CA laws:

https://leginfo.legislature.ca.gov/faces/codes_displayText.x...

https://oag.ca.gov/system/files/media/registration-reporting...

And, a little less importantly, comply with the guidelines for "Public Charities" covered by federal code 501(c)(3) (https://www.law.cornell.edu/uscode/text/26/501) covered by this set of articles: https://www.irs.gov/charities-non-profits/charitable-organiz... . The important bits are:

  The term charitable is used in its generally accepted legal sense and includes relief of the poor, the distressed, or the underprivileged; advancement of religion; advancement of education or science; erecting or maintaining public buildings, monuments, or works; lessening the burdens of government; lessening neighborhood tensions; eliminating prejudice and discrimination; defending human and civil rights secured by law; and combating community deterioration and juvenile delinquency.
  ... The organization must not be organized or operated for the benefit of private interests, and no part of a section 501(c)(3) organization's net earnings may inure to the benefit of any private shareholder or individual.

I'm personally dubious about the specific claims you made about revenue, but that's hard to find info on, and not the core issue. The core issue was that they were obligated (not just, like, promising) to direct all of their actions towards the public good, and they're abandoning that to instead profit a few shareholders, taking the fruit of their financial and social status with them. They've been making some money for some investors (or losses...), but the non-profit was, legally speaking, only allowed to permit that as a means to an end.

Naturally, this makes it very hard to explain how the nonprofit could give up basically all of its control without breaking its obligations.

All the above covers "why does it feel unfair for a non-profit entity to gift its assets to a for-profit", but I'll briefly cover the more specific issue of "why does it feel unfair for OpenAI in particular to abandon their founding mission". The answer is simple: they explicitly warned us that for-profit pursuit of AGI is dangerous, potentially leading to catastrophic tragedies involving unrelated members of the global public. We're talking "mass casualty event"-level stuff here, and it's really troubling to see the exact same organization change their mind now that they're in a dominant position. Here's the relevant quotes from their founding documents:

  OpenAI is a non-profit artificial intelligence research company. Our goal is to advance digital intelligence in the way that is most likely to benefit humanity as a whole, unconstrained by a need to generate financial return. Since our research is free from financial obligations, we can better focus on a positive human impact... 
  It’s hard to fathom how much human-level AI could benefit society, and it’s equally hard to imagine how much it could damage society if built or used incorrectly. Because of AI’s surprising history, it’s hard to predict when human-level AI might come within reach. When it does, it’ll be important to have a leading research institution which can prioritize a good outcome for all over its own self-interest.

From their 2015 founding post: https://openai.com/index/introducing-openai/

  We commit to use any influence we obtain over AGI’s deployment to ensure it is used for the benefit of all, and to avoid enabling uses of AI or AGI that harm humanity or unduly concentrate power. Our primary fiduciary duty is to humanity...
  We are concerned about late-stage AGI development becoming a competitive race without time for adequate safety precautions. Therefore, if a value-aligned, safety-conscious project comes close to building AGI before we do, we commit to stop competing with and start assisting this project. We will work out specifics in case-by-case agreements, but a typical triggering condition might be “a better-than-even chance of success in the next two years.”

From their 2018 charter: https://web.archive.org/web/20230714043611/https://openai.co...

Sorry for the long reply, and I appreciate the polite + well-researched question! As you can probably guess, this move makes me a little offended and very anxious. For more, look at the posts from the leaders who quit in protest yesterday, namely their CTO.

throwup23810• 2 years ago

I'm personally dubious about the specific claims you made about revenue, but that's hard to find info on, and not the core issue. The core issue was that they were obligated (not just, like, promising) to direct all of their actions towards the public good, and they're abandoning that to instead profit a few shareholders, taking the fruit of their financial and social status with them. They've been making some money for some investors (or losses...), but the non-profit was, legally speaking, only allowed to permit that as a means to an end.

Look at your OpenAI invoices. They're paid to OpenAI LLC, not OpenAI Inc. I can't find confirmation on openai.com what the exact relationship between OpenAI Global LLC and OpenAI LLC is but the former is on their "Our Structure" page and the latter is in their data processing addendum so it's probably the subsidiary in charge of operating the services while Global does training and licenses it downstream. OpenAI Global was the one that made that big $10 billion deal with Microsoft

That obligation is why they had to spin off a for-profit corporation. Courts are very strict in their interpretation of what "unrelated business income" is and the for-profit LLC protects the non-profit's tax exempt status.

"why does it feel unfair for a non-profit entity to gift its assets to a for-profit"

What assets were gifted, exactly? They created the for-profit shortly after GPT2 (in 2019) and as far as I can tell that's the organization that has developed the IP that's actually making money now.

I honestly don't understand how this isn't in the interest of the nonprofit's mission. It's currently a useless appendage and will never have any real power or resources until either OpenAI is in the black and sending profit up to it, or they can sell OpenAI shares. I don't think the charity has any more claim over GPT4 than Google does, having invented transformers.

If this next round of funding goes through at $100-150 billion valuation, OpenAI Inc will probably be (on paper at least) the second wealthiest charity on the planet after the Novo Nordisk Foundation. This restructuring opens the way for the nonprofit to sell its shares and it's going to be a hell of a lot of money to dedicate towards their mission - instead of watching its subsidiary burn billions of dollars with no end in sight.

nfw2• 2 years ago

"All OpenAI is doing here is decoupling ownership of the for-profit entity from the nonprofit."

Yes, but going from being controlled by a nonprofit to being controlled by a typical board of shareholders seems like a pretty big change to me.

wubrr• 2 years ago

What leverage does Sam Altman have to get equity now? Does he personally have control over that decision?

joe_the_user2• 2 years ago

There's a now-quintessential HN post format, "Poster criticizing X don't seem to under [spray of random details about X that don't refute the criticism - just cast posts as ignorant]".

In this case, Mozilla as a non-profit owning a for-profit manages to more or less fulfill the non-profit's mission (maintaining an open, alternative browser). OpenAI has been in a hurry to abandon it's non-profit mission for a while and the complex details of its structure doesn't change this.

mr_toad2• 2 years ago

All OpenAI is doing here is decoupling ownership of the for-profit

All? As far as I know this is unprecedented.

A1kmm• 2 years ago

Maybe at this scale.

But unfortunately charities and not-for-profits putting their core business into a company, and then eventually selling it off is not unprecedented. For example, The Raspberry Pi Foundation was a not-for-profit organisation around Raspberry Pi. They formed a LLC for their commercial operations, then gradually sold it off before eventually announcing an IPO: https://www.raspberrypi.org/blog/what-would-an-ipo-mean-for-....

I think it is terrible that not-for-profits are just being used as incubators for companies that eventually take the core mission and stop primarily serving the public interest.

There are of course other examples of charities or not-for-profits that put part of their core operations in a company and don't sell out, instead retaining 100% ownership - for example Mozilla. However, I think there should be some better way for impactful not-for-profits to have some revenue generating aspects in line with their mission (offset by allowing temporary surplus to cover future expenses, or by other expenses).

hackernewds4• 2 years ago

How is it possible to make tax free "donations" for profit making applications? You seem to imply there is nothing nefarious about the setup. Except the non-profit designation doesn't actually perform no social services, instead stand as a business structure to skirt taxation. Change my mind

throwup23810• 2 years ago

How is it possible to make tax free "donations" for profit making applications?

The nonprofit invests the tax free donations into the for-profit. It gets to keep its equity just like any other investor and as long as that equity held by the non-profit, there's no taxable event. If the nonprofit sells its share - since it was closely involved in the creation and management of the for-profit as an active investment - it becomes a taxable event under the unrelated business income tax rules. Until that time, the only "profit making applications" like ChatGPT and the API are run by the for-profit, which - I repeat - pays its taxes.

I genuinely don't understand why people think they've skirted taxation except out of sheer ignorance of how non-profits actually work. A 501(c)(3) is not some magic Monopoly "get-out-of-tax-free" card and the IRS isn't stupid, there's a ton of rules for tax exemption. They'd have a much easier time with tax avoidance if they were an actual for profit corporation with billions of dollars because GAAP rules are a lot more forgiving than non-profit regulations.

mossTechnician• 2 years ago

This might be unpopular, but I don't think Mozilla's behavior is inherently good[1]. And even if it has, I don't think it should be used as a litmus test for other corporate behavior. Every company should stand on its own against scrutiny.

[1] "The Mozilla Foundation has no members" https://hacktivis.me/articles/mozilla-foundation-has-no-memb...

lucasyvas• 2 years ago

Boo this man, booo.

Kim_Bruning• 2 years ago

I guess this vindicates the (original) OpenAI Board, when they tried to fire Sam Altman.

hyggetrold• 2 years ago

Reminds me of what my first-year econ professor in college once stated after disabusing myself and some other undergrads of our romantic notions about how life should work.

"Do I shock you? This is capitalism."

djohnston• 2 years ago

When a company makes such a transition are they liable for any sort of backdated taxes/expenses they avoided as a non-profit?

1024core• 2 years ago

Now we know why people like Ilya, Brockman, Murati, etc. left the company.

throwaway3141554• 2 years ago

Any reporting on the impact this is having on lower level employees? My understanding is they are all sticking around for their shares to vest (or RSU's I guess).

but still, you'd think some of them would have finally had enough and have enough opportunities elsewhere that they can leave.

haliskerbas• 2 years ago

Woah, the pompous eccentric billionaire(?) is actually not altruistic, never heard this story before!

zombiwoof2• 2 years ago

Shocking

croes• 2 years ago

And suddenly Altman's firing no longer seems so crazy

crystal_revenge2• 2 years ago

"suddenly"?

I was under the impression that most people saw this coming years ago. The second "Open"AI refused to release the weights for GPT-2 for our "safety" (we can see in hind sight how obviously untrue this was, but most of us saw it then too) it was clear that they were headed towards profitability.

KoolKat23• 2 years ago

I do wonder if this is why Mira left, as one of the non-profit board members.

keepamovin• 2 years ago

Monday to come after Sunday, in revised push for transparency

piyuv• 2 years ago

I hope they rename the company soon, it’s a disgrace to call it “open”

adversaryIdiot• 2 years ago

Ahh the American way

sergiotapia• 2 years ago

https://x.com/yacineMTB/status/1839039293961961543

so much for sam "i have no equity" altman

redbell• 2 years ago

It's really hard to stick to your original goals after you achieve unexpected success. It's like a politician making promises before the elections but finding it difficult to keep them once elected.

On March 1st, 2023, a warning was already sounding: OpenAI Is Now Everything It Promised Not to Be: Corporate, Closed-Source, and For-Profit (https://news.ycombinator.com/item?id=34979981)

msie• 2 years ago

Quelle surprise.

jwr• 2 years ago

Can we all agree that the next time a company announces itself (or a product) as "open", we'll just laugh out loud?

I can't think of a single product or company that used the "open" word for something that was actually open in any meaningful way.

dmitrygr• 2 years ago

Most of us laughed out loud this time too, for this very same reason. But it is fun to watch the rest of y'all learn :)

rqtwteye• 2 years ago

When will they start adding ads to the AI output? Seems that's the next logical step.

hello_computer• 2 years ago

another mozilla. it’s time for guillotines. past time.

unstruktured• 2 years ago

I wish they would at least rename the company to "ClosedAI" because that's exactly what it is at this point.

stoperaticless2• 2 years ago

That would be a nice thing they could do.

amelius• 2 years ago

Unfortunately, that's not how trademarks work.

You can name your company "ThisProductWillCureYouFromCancer" and the FDA cannot do a thing about it if you put it on a bottle of herbal pills.

pieix• 2 years ago

Is this true? If so it seems like an underexploited loophole.

EcommerceFlow• 2 years ago

On what planet would Elon not get a piece of this new for-profit company?

volleygman180• 2 years ago

Earth

1vuio0pswjnm7• 2 years ago

Works where archive.ph is blocked:

https://www.msn.com/en-us/money/other/openai-to-become-for-p...

Text-only:

https://assets.msn.com/content/view/v2/Detail/en-in/AA1rcDWH

game_the0ry2• 2 years ago

OpenAI founded as non-profit. Sam Altman goes on Joe Rogan Podcast and says he does not really care about money. Sam gets caught driving around Napa in a $4M exotic car. OpenAI turns into for-profit. 3/4 of founding team dips out.

Sketchy.

This whole silicon valley attitude of fake effective altruism, "I do it for the good of humanity, not for the money (but I actually want a lot of money)" fake bullshit is so transparent and off-putting.

@sama, for the record - I am not saying making is a bad thing. Labor and talent markets should be efficient. But when you pretend to be altruistic when you are obviously not, then you come off hypocritical instead of altruistic. Sell out.

peanuty1• 2 years ago

Regarding the 4 million dollar car, Sam already made a ton of money from Reddit and being President of YC.

game_the0ry2• 2 years ago

Liking and buying expensive cars is not wrong.

But buying a $4M car while saying you do not car about money is a mis-alignment between words and actions, which comes off untrustworthy.

klabb3• 2 years ago

I swear the reason why we have so many sociopaths is because how goddamn easy it is to fool people, it’s like stealing candy from kids. Just put on the pseudo intellectual mask and say that you care deeply about grandeur issue X, and people will just believe you at face value, despite your entire track record showing you care only about power, money and status.

moozilla• 2 years ago

Couldn't find the JRE clip, but here's a recent one where he says "I don't really need more money." This is how I always understood it, he's already worth billions from past ventures, what difference does a stake in OpenAI make?

https://www.youtube.com/watch?v=PScOZzzXnDA

ForHackernews• 2 years ago

The good thing is, we need to worry about AGI because we already know what it's like in a world populated by soulless inhuman entities pursuing their own selfish aims at the expense of mankind.

reducesuffering• 2 years ago

OpenAI couldn't even align their Sam Altman and their people to their non-profit mission. Why should you ever believe they will align AGI to the well being of humanity?

What happened to all the people making fun of Helen Toner for attempting to fire Sama? She and Ilya were right.

germandiago• 2 years ago

What a surprise!!!! I would have never said so...

xyst• 2 years ago

Probably one of the many decisions that Mira and other original founders were against.

Sam Altman is a poison pill.

versteegen• 2 years ago

Mira joined in 2018. OpenAI was founded in 2015.

Jatwood• 2 years ago

shocked. shocked! well not that shocked.

geodel• 2 years ago

Good. Now it is just a matter of profit-making company.

thih9• 2 years ago

I’d guess it would be legally not possible to turn a non-profit into a for-profit company, no matter how confusing the company structure gets. And even (or rather, especially) if the project disrupts the economy on a global level. I’m not surprised that this is happening, but how we got here - I don’t know.

ayakang31415• 2 years ago

About a year ago (I believe), Sam Altman touted his mission to promote safe AI with claims that he has no equity in OpenAI and was never interested in getting any. Look where we are now, well played Sam.

upwardbound5• 2 years ago

Does that amount to making a false forward-looking financial statement? (Specifically his claim that he wasn’t interested in getting equity in the future.)

This claim he made was likely helpful in ensuring the OpenAI team’s willingness to bring him back after he was temporarily ousted by the board last year for alleged governance issues. (Basically: “don’t worry about me guys, I’m in this for the mission, not personal enrichment”)

Since his claim likely helped him get re-hired, he can’t claim it was immaterial.

I really hope someone from the SEC scrutinizes him someday. The Singularity is too important to let it be run by someone with questionable ethics.

jacobsimon• 2 years ago

My unprofessional take: The SEC is concerned primarily with protecting investors. If anything, changing to a normal for-profit structure and removing the cap on returns would be viewed as more investor/market-friendly than their current structure, which is partly to blame for what unfolded last year.

theGnuMe• 2 years ago

It’s not a public company? Not sure why the sec would get involved.

onelesd• 2 years ago

Sam and all the others. At this point, there should be required courses in college to teach this seemingly required skill to future corporate USA.

apwell239• 2 years ago

[flagged]

apwell239• 2 years ago

[flagged]

baoha• 2 years ago

To be fair both of them probably didn't imagine Stripe would be the one today. You can apply the same logic for any successful companies, like the guy who gave up 10% of Apple for some changes.

wheels7• 2 years ago

Weridly this is the second time this has been repeated in this thread, but Sam wasn't even a teenager anymore when he met PG the first time (but would have just turned 20), and was 25 when Stripe was founded, so your story is obviously wrong.

truculent• 2 years ago

well played Sam

Is it well played if you simply decide to lie brazenly? Anyone can win at monopoly if they decide to steal from the bank.

grogenaut• 2 years ago

I can confirm this is the only way I win at monopoly. My strategy for A$$hole is more devious and involves going from ass to president with a similar strategy to my monopoly strategy then making no one want to play again as president. As a great man, Charles Wopr, once said: the only winning move is not to play.

zombiwoof2• 2 years ago

Sam Bullshit Altman

johanneskanybal• 2 years ago

I'm willing to pair up with fundamentalist christians to derail this with the argument that he/this is satan/the end of the world.

kopirgan• 2 years ago

Guess what they mean is for loss company

e-clinton• 2 years ago

So many red flags about Saltman. I have to imagine some of the investors are having second thoughts.

kranke1553• 2 years ago

Some number must be people who only care about winning like Sam. Plus they're getting huge returns.

I get strong "next Mark Zuckerberg" vibes from Sam. Build a zombie product that approaches worthlessness after a few years, but made himself hugely rich in the process, and buys off tech and people as needed to maintain some kind of relevance.

ein0p• 2 years ago

Ethics aside, I think there’s a silver lining to all this: at least they believe this can be profitable

southernplaces7• 2 years ago

It's hilarious that this should surprise anyone at all, or that Sam Altman is anything but a mendacious, self-serving, compulsive liar of the worst tech world kind. For example, Elon Musk gets lots fo hate for all kinds of things. Some of it is very valid, but much of it also goes to the point of there being derangement syndrome around him, partly (I suspect) because of his openly stated zeitgeist-contrary political beliefs, yet i'd pick his sometimes crude, bullying but fundamental openness about who he is any day over the shiny paint job of platitudes and false correctness found in someone like Altman. Not to mention that the overall value of Musk's companies trumps anything I've seen done by Altman's sludge-pumping AI technology so far. This last is of course not a moral judgement but a practical one.

replwoacause• 2 years ago

Objectively, they’re both no good.

seanvelasco• 2 years ago

the openai team, including the tech community, should've sided with the board, not sam. the fact that ilya had a hand in it should've given it weight and backing.

"openai is nothing without its people." well, the key people left. soon, it will just be sam and his sycophants.

worik• 2 years ago

Liars

scubadude• 2 years ago

Stop believing that these companies and people are benevolent.

conqrr• 2 years ago

I remember a time when promises meant something. Lots of epics in human time (Greek, Hindu), people would stick to their word and commitment was respected. Written word was much more powerful than spoken. People appreciated depth. Wish we could teach and learn from those times.

yieldcrv• 2 years ago

This nation’s largest institutions were founded on deceit from the colonies to the founding fathers.

Aaron Burr raised capital for a fake water company and applied for a banking charter for what is now JP Morgan Chase

some people are playing by a more effective set of rules and others are being lied to from a young age

troad3• 2 years ago

Proto-Indo-European culture seems to have placed a great deal of importance on the sanctity of contracts and the notion of reciprocal hospitality, reflected in many descendant myths and etymologies surviving from Ireland through India. If the Indo-Europeans did indeed come from the Ukrainian steppes, as seems likely, this may be a reflection of their high mobility (on horseback) causing lots of contact with potential for friction, and the fact that important personal property (for a steppe society, mainly herd animals) was moveable and vulnerable to cattle rustling. There's some great books on Indo-European society if you're interested.

mr_toad2• 2 years ago

With no centralised justice system people had to rely on people keeping their word. If people had lied and cheated all the time their society would have collapsed.

An oath breaker didn’t just harm an individual, they did harm to the whole community, and the whole community viewed them negatively.

tivert• 2 years ago

Proto-Indo-European culture seems to have placed a great deal of importance on the sanctity of contracts and the notion of reciprocal hospitality ... There's some great books on Indo-European society if you're interested.

What are those books?

insane_dreamer2• 2 years ago

It's worth noting that of OpenAI's 13 original founders, 10 have now left the company and 1 more is on leave, leaving only Sam and Wojciech.

Safe AI, altruistic AI, human-centric AI, are all dead. There is only money-generating AI. Fuck.

zingerlio• 2 years ago

We are booing Altman because his bait and switch feels unethical, but many of us saw it coming from a mile away, how does he make this transition to take advantage of the financial system so smoothly? Is there no legal guard for such maneuver, or is he just an insanely good player to circumvent all of them in plain view?

hackernewds4• 2 years ago

It has been running on an honor code, that someone pulling off something so slimy as to funnel money meant for non-profits would just get shunned by society and business. Yet here we are.

Ironically the one person with resources fighting it in a tangible way, even if for spite, is Elon Musk.

joe_the_user2• 2 years ago

Just cobbling together articles I've read... Once the board failed to fire Altman, this transition was a done-deal, it was just a matter of when. Before the board fired Altman, he had been engaging in a more covert effort to take control - putting together personal attacks on various board members intended to drive them out and hiring people with a similar attitude to and loyalty to himself. When the board fired him, they didn't give any clear reasons and that's most mysterious part of the situation. Apparently they were all concerned about his campaign to take control of the board but they each had slightly different reasons for agreeing. I'd further speculate that the board thought in lawyer-advice terms - say as little as possible to avoid a retaliatory lawsuit.

But the board's lack of communication apparently allowed Altman to demonstrate he was more important to the organization than the formal/legal structure, 90% signed intents to quit and the board backed down. It seemed that Altman simply represented the attitude of the many Silicon Valley tech-people - once you have a chance of money, don't hold back, do everything you can to make it.

ocodo• 2 years ago

Oh! You don't say.

AI_beffr• 2 years ago

i remember years ago i saw a video of sam altman interviewing elon musk. it was filmed inside the spacex factory. maybe you know the one? i didnt know who sam was at the time. i remember being very, very put off by the way sam was behaving. he had this bizarre, almost unbelievable expression on his face, almost like he was pantomiming as a child looking up at his parents, adoring them. this weird, fake shy-smile. and i remember immediately having an intense disliking of him. this person seemed extremely fake, manipulative and narcissistic. it was such low-level behavior that i thought it must be some intern or someone way out of their depth. this interview is some kind of fluke. its so unbelievably insane to me that this person, who i disliked so much that i remembered him even without knowing his name or who he was, is now at the helm of one of the most important developments in human history. and the subject of todays headline is no surprise at all... i think everyone should think very carefully about the fact that sam altman will at some point, probably, be the very first person in the world to sit down in front of a console and hold the reigns directly and without supervision to a super-intelligent system that does not bear any of the regulatory or moral restrictions that would stop it from taking over the world. this evil narcissist, liar, money hungry, power grabbing A* hole will hold the most power that any human has ever held. do you really want that?

surfingdino2• 2 years ago

Let me guess, the talent will be getting screwed on options?

gklitz6• 2 years ago

Part of the reason is exactly so the talent gets easier liquidity on their stakes. Sucks to have been part of building the success that OpenAI is only to not be able to get anything significant out of it just because the company is a capped-profit under a non-profit, they’ll instead just end up owning shares in a traditional for profit on the market, with the ability to sell shares to pay of their mortgage or buy a new car etc.

enslavedrobot• 2 years ago

Sounds like a liquidity even to me. Time to pay taxes on 150B in equity.

OpenAI to become for-profit company

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