When OpenAI started out, it was dependent on donations from some large investors, as many companies are. It’s been this way for about nine years, but that might change before the company’s 10th birthday. According to a new report, OpenAI could move to a for-profit structure.
OpenAI has spent a ton of money since things really took off for the company, and it seems to have paid off. Its GPT models are powering many (if not most) of the AI tools that we use every day, and one of them is ChatGPT. However, it didn’t get there by its own motors. The company had to fish for investors to help keep the lights on and the GPUs flowing in. It was fortunate enough to reel in some big fish (not to mention the whale that is Microsoft).
This shouldn’t be a surprise, as many AI companies rely on investor money. For example, Anthropic has benefited from investments from Google and Amazon among other companies.
OpenAI could be a for-profit company next year
OpenAI just held its weekly meeting, where it broke the news to its staff. A company spokesperson told Fortune that it wants to transition to being a more traditional for-profit company sometime next year. However, the publication wasn’t given much more information than that. They told Fortune that OpenAI remains “focused on building AI that benefits everyone.”
However, there was a statement that sheds a little light on what the company is planning on doing. The spokesperson said that non-profit is “core to [its] mission and will continue to exist.” That’s a bit of an odd statement, but apparently means that the company will continue to have a non-profit board.
We’re not sure if this is to soften the transition. We’re sure that, when the company moves to being a for-profit company, there will be some major changes internally. However, this doesn’t mean that the company won’t accept investments. All of the biggest companies get money from investors. So, If OpenAI does go through the change, we’re sure that will still be getting money from investors.
Why the switch?
As OpenAI puts it, it was only able to earn about $130.5 million from donations over the years. As such, the company decided to stitch things up a bit. “donations alone would not scale with the cost of computational power and talent required to push [its] core research forward,” the spokesperson said.
According to the report, OpenAI created a for-profit subsidiary, which was controlled by its non-profit entity… but this for-profit arm controls a holding company that takes investments from donors. It’s a pretty complicated structure. In any case, we expect to see some changes within the company when it makes this switch.