AI Update

In a shock to the system, a billion-dollar Silicon Valley darling led by the former head of Silicon Valley’s most prestigious venture capital firm has decided that it’s time to make some money. OpenAI, the maker of ChatGPT and harbinger of AI’s world dominance, is restructuring from a nonprofit model to a for-profit model. OpenAI started as a nonprofit in 2015 and later created a for-profit subsidiary. It long touted its non-profit status as a way to achieve its goals for “advanced digital intelligence” while remaining “unconstrained by a need to generate financial return.” With the proposed change, that all goes out the window, as the board will move into a minority ownership position and will relinquish full control to CEO Sam Altman.

Why make the change? “Nonprofit” isn’t an attractive label to investors who look exclusively for profit. Changing the structure opens the company to more investment: It reportedly received a fresh influx of $6.5 billion in VC money, putting its valuation at $150 billion. And speaking of billions…the new structure would also give Altman an equity stake—something he previously eschewed because he “loved” what he did—rumored to be 7%, or roughly $10 billion. That would make him one of the
richest people in the world. But money won’t solve all of its problems. So many main characters are leaving. OpenAI that it's starting to feel like Edmure Tully’s wedding.

This week, three leadership figures announced they were leaving: CTO Mira Murati, CRO Bob McGrew, and research VP Barret Zoph.
Earlier this year, several engineers and researchers quit over concerns about what they saw as OpenAI’s prioritization of money instead of safety.
Of the 11 people who founded the company, just two remain: Altman and one other computer scientist.

Zoom out: Some experts see the restructuring as a response to the events of late last year, when the nonprofit board ousted Altman for a few days after it lost confidence in his leadership, and then, at the behest of its biggest investor (Microsoft), brought him back.—CC

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