Sam Altman, CEO of the AI powerhouse OpenAI, is reportedly considering a significant restructuring of the company behind the viral chatbot sensation ChatGPT. According to sources cited by The Information, Altman has discussed transitioning OpenAI into a traditional for-profit entity. This move would mark a departure from the company's current “capped-profit” structure, which was implemented in 2019 to balance its mission-driven approach with capital-raising needs.
This news comes amidst lingering controversy surrounding Altman's leadership and transparency. Just last November, Altman was briefly removed from his position after the OpenAI board accused him of withholding information and misleading them on several occasions. While he was quickly reinstated, the episode exposed deep fissures within the company.
Adding fuel to the fire, former board member Helen Toner recently spoke out on "The TED AI Show" podcast, accusing Altman of being a deceptive leader who repeatedly lied to the board and hid crucial information, including the release of ChatGPT itself.
Toner alleged that Altman concealed his ownership of the OpenAI Startup Fund, a venture capital fund investing in AI startups, despite claiming to have no financial interest in the company. While OpenAI has since clarified that Altman's ownership was a temporary arrangement with no personal investment, Toner's accusations paint a concerning picture of Altman's leadership style.
OpenAI has yet to respond to requests for comment on the potential restructuring. Meanwhile, board chairman Bret Taylor expressed disappointment over Toner's public criticisms, stating that the company remains focused on its mission to ensure the benefits of artificial general intelligence are accessible to all.
Capped-Profit Company
A capped-profit company is a relatively new type of corporate structure that blends aspects of both for-profit and non-profit organisations. The goal is to allow the company to generate revenue and attract investment like a traditional business, but with internal guardrails that prioritise its social mission over maximising profits for shareholders.
Here's how it generally works:
Profit Cap: As the name suggests, there's a pre-defined limit on how much profit the company can distribute to its investors or stakeholders. This cap is determined at the outset and outlined in the company's governing documents.
Mission Focus: Any profits exceeding the cap are redirected back into the company or to a designated non-profit entity to further its social mission. This ensures that financial gains are primarily used to advance the company's stated goals beyond just generating wealth.
Attracting Investment: The "for-profit" element makes it more attractive to investors than a traditional non-profit. Investors can still see financial returns, albeit capped, which incentivises them to support the company's growth.
Balancing Act: It's a balancing act between social impact and financial sustainability. The profit cap needs to be carefully calibrated to attract investment while ensuring the company's mission remains at the forefront.
Example: OpenAI, the company behind ChatGPT, initially adopted a capped-profit structure. Their goal was to attract investment for their AI research while ensuring that any outsized profits would be funnelled back into their mission of developing beneficial AI for humanity.
Pros:
Allows for mission-driven growth.
Attracts investors who align with the company's values.
Can potentially lead to more ethical and socially responsible business practices.
Cons:
Complex structure with legal and operational challenges.
Finding the right balance between profit and mission can be tricky.
Limited potential for investor returns compared to traditional for-profit companies.