Sam Altman Could Get a 7% Equity Stake
OpenAI is planning to restructure its core operations into a for-profit benefit corporation, shifting control away from its non-profit board.
This strategic move aims to enhance the company's appeal to investors and could position CEO Sam Altman for a significant financial gain.
Reports indicate that OpenAI is considering granting Altman a 7% equity stake, which could be valued at up to $10.5 billion, depending on the specifics of the equity award.
SAM ALTMAN WORTH $10.5 BILLION?!?!
Sam Altman is in discussion to get a 7% ownership stake in OpenAI as part of its transition to a for profit entity
OpenAI is currently in discussions to raise money at a $150 Billion valuation meaning Altman's 7% would be worth $10.5B pic.twitter.com/gcfirLyRnk
— Evan (@StockMKTNewz) September 26, 2024
This restructuring could potentially elevate the company's worth to $150 billion while lifting the cap on investor returns.
Importantly, while the non-profit will continue to exist and hold a minority stake in the new entity, the proposed governance changes raise questions about how the company will manage AI risks.
An OpenAI spokesperson said:
"We remain focused on building AI that benefits everyone, and we’re working with our board to ensure that we're best positioned to succeed in our mission. The non-profit is core to our mission and will continue to exist."
The specifics of this restructuring are still being finalised with legal and shareholder input, leaving the timeline for completion uncertain.
One AI investor noted that these structural changes could pave the way for an initial public offering, reflecting the company's turbulent history.
Matt Turck, a partner at venture firm FirstMark, who's invested in AI companies including Dataiku, Synthesia, and Ada, pointed out:
"OpenAI is both the most fascinating and the most terrifying company of our times. By that, I mean it's doing incredibly important work, creating some of the most impressive products ever — yet seems constantly on the verge of implosion."
However, he also expressed optimism that Altman's potential payout could ultimately benefit OpenAI.
He concluded:
"Feels part of the necessary normalization of OpenAI into a regular corporate structure, which paves the way to an IPO."
OpenAI Sees Continuous Leadership Changes
Since the sudden firing and rehiring of Altman last year, OpenAI has been navigating a period of upheaval, marked by the loss of key managers and shifts in team structures.
The latest high-profile exit is Mira Murati, OpenAI's longtime Chief Technology Officer, who announced on 26 September that she is stepping down to pursue personal exploration.
I shared the following note with the OpenAI team today. pic.twitter.com/nsZ4khI06P
— Mira Murati (@miramurati) September 25, 2024
Murati's decision came as a surprise to many within the company.
Altman expressed his deep gratitude for her contributions and promised to provide more details on transition plans soon.
I replied with this. Mira, thank you for everything.
It’s hard to overstate how much Mira has meant to OpenAI, our mission, and to us all personally.
I feel tremendous gratitude towards her for what she has helped us build and accomplish, but I most of all feel personal…
— Sam Altman (@sama) September 25, 2024
Though Murati's exit date remains unclear, discussions are ongoing about her replacement and the timeline for her departure.
Murati's announcement follows a wave of senior leadership departures, further highlighting the internal turbulence at OpenAI.
Chief Scientist Ilya Sutskever left in May, co-founder Greg Brockman took a leave of absence in August, and researcher John Schulman departed for competitor Anthropic.
These exits leave only two members of OpenAI's original founding team—Altman and Wojciech Zaremba—still with the company.
Murati's departure, in particular, sparked shock among employees, with many responding to the news on OpenAI's internal Slack channel with a "WTF" emoji, according to an insider.
This series of exits has raised questions about the company's direction and stability during a critical time of transformation.
Altman posted on X (formerly known as Twitter) less than five hours ago about his thoughts on Murati's exit and the people on his team.
i just posted this note to openai:
Hi All–
Mira has been instrumental to OpenAI’s progress and growth the last 6.5 years; she has been a hugely significant factor in our development from an unknown research lab to an important company.
When Mira informed me this morning that…
— Sam Altman (@sama) September 26, 2024
OpenAI Shift to For-Profit Raises Concern on AI Safety
OpenAI's unique structure, which places full control of its for-profit subsidiary under the OpenAI nonprofit, was originally designed to ensure the development of "safe AGI"—artificial general intelligence that benefits humanity.
OpenAI is restructuring into a for-profit, removing control from its non-profit board, which was originally created to ensure the development of “safe AGI that is broadly beneficial" to humanity.https://t.co/2WvuwzlkdF
— Ground News (@Ground_app) September 26, 2024
This framework gained attention last November during a high-profile boardroom conflict, when the nonprofit board ousted Altman due to a breakdown in communication and trust.
However, Altman was reinstated just five days later with strong backing from employees and investors.
Since then, the board has undergone changes, now chaired by Bret Taylor, former Salesforce co-CEO.
All corporate decisions still require approval from the nonprofit's nine-member board.
Investors, who have invested billions into the company, generally support OpenAI's potential shift to a more traditional startup model, which could reduce nonprofit control.
However, this raises concerns within the AI safety community about the company's commitment to oversight, especially after disbanding its superalignment team earlier this year, which focused on long-term AI risks.
As for Altman's role, it is unclear how much equity he will receive.
Despite being a billionaire from his various ventures, Altman has previously declined equity in OpenAI to ensure the board's independence.
While he has expressed a deep passion for the work and stated that financial gain is not his motivation, he has also occasionally remarked that taking equity might have put an end to persistent questions about his financial interests.
sam altman on taking equity in openai
“it’s so deeply unimaginable to people to say i don’t really need more money … if i were to say i’m going to try and make a trillion dollars with openai it would save a lot of conspiracy theories”
— all-in podcast, may 2024 pic.twitter.com/9XNEmkCE2n
— morgan — (@morqon) September 25, 2024
The new structure would align OpenAI more closely with competitors like Anthropic and Elon Musk's xAI, both registered as benefit corporations—companies that prioritise social responsibility alongside profit.
