From: allin
OpenAI is reportedly considering a for-profit conversion, which could lead to a future IPO [00:42:43]. Sam Altman has discussed this possibility with major shareholders like Microsoft [00:42:51].
Proposed Restructuring
OpenAI may transform into a for-profit benefit corporation (B Corp), similar to companies like Anthropic or xAI [00:42:57]. A benefit corporation has a stated mission that its board is responsible for pursuing, in addition to acting in the interest of shareholders [00:43:04].
At the time of this discussion, OpenAI was valued at $86 billion [00:43:24], and its revenue numbers were described as “crushing it,” doubling year-over-year [00:43:31].
Arguments for an IPO
Monetization and Early Success
Chamath Palihapitiya suggests that OpenAI should pursue an IPO as quickly as possible [00:43:38]. He notes that early winners in disruptive technologies often don’t sustain their lead, so it’s important to monetize perceived success and “secure the bag” rapidly [00:43:53].
Corporate Structure and Governance
David Sacks argues that OpenAI needs to resolve its “convoluted Byzantine corporate governance structure,” where a for-profit entity reports to a non-profit board, causing cultural clashes [00:44:57]. He advocates for a standard C Corp structure, which would make the company ready for an IPO [00:45:21].
Sacks believes OpenAI should:
- Make things “right” with Elon Musk, who provided the first $40 million in seed capital [00:46:08].
- Compensate Sam Altman appropriately as CEO [00:46:14].
- Allow the public to invest in the AI wave through an IPO, similar to the dot-com boom that allowed public participation in companies like Amazon and Google [00:46:17].
Employee Incentives and Turnover
It is noted that there has been significant employee turnover at OpenAI due to secondary market activity, with many early employees cashing out [00:48:15]. This suggests that existing incentives may not be enough to retain talent long-term without an IPO [00:48:21].
Strategic Implications of an IPO
Chamath views OpenAI’s move towards an IPO as part of a strategic plan to become a core part of the tech establishment [00:50:00].
This strategy involves:
- Government Connections: Adding the former head of the NSA to the board of directors [00:50:15]. This pulls OpenAI closer to government apparatus, potentially converting public hearings into confidential, national security-related discussions [00:50:47].
- Legal Resolution: Elon Musk conveniently dropped his lawsuit against OpenAI around the same time the former NSA head joined the board [00:51:04].
- Capital Markets Distribution: Syndicating ownership to large institutional investors like BlackRock and mutual funds [00:51:15]. This creates an “ally base” that supports OpenAI’s corporate objectives and makes it harder to investigate or criticize the company [00:51:24].
Sacks suggests this strategy allows OpenAI to “borrow their way into the deep state,” acting as a vessel for the intelligence community in exchange for protection and wealth [00:52:24]. He views this as a “horrible development for the civil liberties of the ordinary American” [00:53:23]. The presence of former CIA, FBI, and Justice Department personnel in big tech companies is also noted [00:53:34].
Chamath concludes that this grand strategy is about creating an international apparatus that supports OpenAI’s corporate objectives, moving beyond simple valuations [00:51:31].