Employees of OpenAI to Sell Their Shares in a Move Counteracting Meta's Stance
OpenAI Plans Billion-Dollar Share Sale and Governance Shift
OpenAI, the renowned AI company behind the popular chatbot ChatGPT, is planning a significant move that involves a billion-dollar secondary share sale and a shift in its governance structure.
Currently, OpenAI operates under a unique structure, with a nonprofit entity, OpenAI, Inc., controlling multiple for-profit subsidiaries. However, the company has proposed a major restructuring plan to convert its capped-profit subsidiary into a Delaware-based public benefit corporation (PBC). This change would release the PBC from nonprofit control, with the nonprofit selling its control for equity, which it would use to fund separate charitable projects.
This restructuring aims to enable OpenAI to secure additional investments and is tied to its plans to simplify its corporate structure and eventually go public. Complex negotiations are ongoing, particularly with Microsoft, regarding the new ownership structure, access to intellectual property, and an “AGI clause” that could terminate this access once artificial general intelligence breakthroughs are declared.
In terms of financial moves, OpenAI has recently completed an oversubscribed funding round, raising $8.3 billion earlier than planned as part of a larger $40 billion round led by SoftBank and others, valuing the company at about $300 billion. More recent discussions indicate talks around an employee secondary stock sale aiming at a $500 billion valuation.
On the acquisition front, OpenAI has reportedly acquired a hardware startup specializing in AI acceleration. This acquisition reflects OpenAI's strategy to vertically integrate hardware and software to maintain cutting-edge AI capabilities. The startup, co-founded by Apple veteran Jony Ive, was acquired for $6.5 billion in shares.
The share sale involves current and former employees' shares, and it's not just about raising capital. OpenAI aims to retain talent by offering employees liquidity and a stake in the company's future success. The future ownership structure of OpenAI is uncertain due to ongoing negotiations with Microsoft, the largest investor with over $13 billion (approximately €11.2 billion).
Meanwhile, Mark Zuckerberg, CEO of Meta, is reportedly aggressively recruiting AI talent from OpenAI, Apple, and other tech companies with nine-figure compensation packages. However, OpenAI's share sale and potential entry into the hardware market, as planned with Jony Ive, could help retain its top talent.
OpenAI's plans for the future include releasing GPT-5 to further solidify its market leadership. The company's unique structure, strategic acquisitions, and ambitious funding rounds reflect its balance between pursuing its founding mission of benefiting humanity and the commercial pressures to scale and compete in a rapidly evolving AI landscape.
References: 1. The Verge 2. Bloomberg 3. TechCrunch 4. CNN Business 5. The Information
- The billion-dollar share sale by OpenAI, a move tied to the company's restructuring and plans to eventually go public, seeks to fund its operations and attract additional investments in the business sector, while also offering current and former employees liquidity and a stake in the company's future success.
- In the realm of technology, OpenAI's acquisition of a hardware startup specializing in AI acceleration and its plans to convert a profit subsidiary into a Delaware-based public benefit corporation (PBC) signal its intent to maintain cutting-edge AI capabilities and navigate the shifting landscape, all while remaining committed to its founding mission of benefiting humanity.
