OpenAI reportedly considering for-profit plans, but what would that be good for?

Opinion Once upon a time, OpenAI was purely a non-profit. Really. It was established in December 2015 as a non-profit AI research organization. Now it appears increasingly likely that OpenAI will become a for-profit company.

OpenAI, of course, has declined to comment on multiple reports on any moves to become a for-profit entity, but the wording of its statement to The Register yesterday was telling: "The non-profit is core to our mission and will continue to exist."

Currently, its structure is what it describes as a "partnership" between its original non-profit and a "capped profit arm."

As for Sam Altman, one of OpenAI's co-founders, he is very much at the helm again and has presided over the company during some of the most recent changes. Altman founded Loopt, a smartphone location-based social networking app, in 2005. It then became one of the first companies to be accepted into Y Combinator, one of the top venture capitalist groups. He promptly sold Loopt and joined Y Combinator as a partner. By 2014, he had become Y Combinator's president.

Then along came OpenAI, which could take Altman from ordinary rich - about two billion or so - to, well, whatever OpenAI ends up being valued at if it finally hits the stock market. I expect he's hoping for OpenAI to hit trillion-dollar valuations.

An IPO might not be the first step, of course. Rivals Anthropic and xAI are both "public benefit corporations," or PBCs, which operate as for-profits but are not actually publicly listed. Shareholders still expect PBCs to bring them a return on their investment, though.

Meanwhile, Bret Taylor, chairman of the OpenAI board, told Bloomberg this week that the "board has had discussions about whether it would be beneficial to the company and our mission to have Sam be compensated with equity, but no specific figures have been discussed nor have any decisions been made."

Getting everyone else at OpenAI on board with a for-profit move would not have been easy. Not everyone likes what have been described as Altman's "secretive for-profit" plans. In 2023, the board fired Altman for not being "consistently candid in his communications," although it never clarified what these were.

Meanwhile relationships with some of the other founders were foundering. Some guy named Elon Musk - you may have heard of him - another OpenAI cofounder and investor - had tweeted months earlier that "OpenAI was created as an open source (which is why I named it 'Open' AI), non-profit company to serve as a counterweight to Google, but now it has become a closed source, maximum-profit company effectively controlled by Microsoft. Not what I intended at all."

OpenAI rejected his claims, responding at the time: "We couldn't agree to terms on a for-profit with Elon because we felt it was against the mission for any individual to have absolute control over OpenAI."

In only a matter of days after Altman's November 2023 ousting, he was back in the CEO saddle again. Since then, OpenAI co-founder and Chief Scientist Ilya Sutskever quit. Now, several months later, CTO Mira Murati, Chief Research Officer Bob McGrew, and Research VP Barret Zoph have all left the company.

No one I can think of would ever quit a job with potential stock options worth billions, but to each their own. One could speculate, as many have, that OpenAI's next investors - Thrive Capital, Khosla Ventures, Nvidia, and Apple - might insist on a restructure in return for investing $6.5 billion in it. They'd also perhaps make it clear that OpenAI would have to remove its investors' profit cap.

Would a for-profit OpenAI be worth it?

Gary Marcus, an AI analyst with no love for OpenAI, wrote: "GPT-5 hasn't dropped, Sora hasn't shipped, the company had an operating loss of $5 billion last year, there is no obvious moat, Meta is giving away similar software for free, many lawsuits pending...  Absolutely insane."

I'm inclined to agree with Marcus.

Altman has become AI's high priest. His recent essay, The Intelligence Age, is AI hype taken to new heights. According to Altman, AI will lead to "shared prosperity to a degree that seems unimaginable today; in the future, everyone's lives can be better than anyone's life is now."

Funny that. I'm a writer with about 15 million published words to my credit, and I haven't seen a check from any AI maker for letting it use my work to train its models. Indeed, OpenAI has said it would be "impossible" to build top-tier neural networks that meet today's needs without using people's copyrighted work.

If AI makers really want to show that it will make life better for everyone, how about settling all the copyright lawsuits? Or perhaps they agree with Mustafa Suleyman, Microsoft AI CEO, that any content on the web is "freeware" that anyone can use. Or with Meta CEO Mark Zuckerberg, who said: "Individual creators or publishers tend to overestimate the value of their specific content."

AI companies are building billions of dollars on the work of writers, artists, and other creators who rarely get paid thousands for their work. According to ZipRecruiter, the average freelance writer or writer gets paid $23 an hour. I see the Silicon Valley AI tech bros making millions and billions. The people who made the content their LLMs rely upon? Not so much.

Besides, as famous software engineer Grady Booch recently said of Altman's "few thousand days" prediction of how long it will take before AI is all-knowing and wonderful: "I am so freaking tired of all the AI hype: it has no basis in reality and serves only to inflate valuations, inflame the public, garnet [sic] headlines, and distract from the real work going on in computing."

I wouldn't go that far. AI does have some real value. But as much value as investors are dreaming of? I doubt it. I also doubt that anyone other than AI companies will end up sharing much of that value, whether they are creators or companies dreaming of replacing employees with AI engines.  ®