- OpenAI was supposed to be the antidote to the terrors of artificial intelligence by eschewing profits.
- But the organization says it will now try to make a buck after all, limiting who will get the money.
- OpenAI was founded with $1 billion endowment from Elon Musk (who has since left the board), Sam Altman (who is now CEO) and other big names in tech like Reid Hoffman, Peter Thiel, Amazon Web Services.
OpenAI is an organization that creates artificial intelligence technology and has decided that one of its founding ideals— to be a non-profit — is no longer its whole deal.
It has converted itself into a for-profit company, able to issue stock to employees and generate returns, it said on Monday.
It calls itself a "capped-profit" company. That’s a term it coined to mean it will limit the amount of money it returns to investors and employees and use most of whatever it generates to fund its non-profit entity, which will continue to exist. The non-profit entity will rule the company’s board with more board seats, and investors and employees have to sign a pledge acknowledging that the non-profit comes before their financial interests.
"Returns for our first round of investors are capped at 100x their investment (commensurate with the risks in front of us), and we expect this multiple to be lower for future rounds as we make further progress," the OpenAI said in a blog post announcing the change.
Obviously, there’s nothing wrong with being a for-profit business. But there is something notable in OpenAI’s about-face given how it was founded and by whom.
OpenAI was originally launched by Tesla CEO Elon Musk and Y Combinator chairman Sam Altman in December 2015 with a $1 billion endowment.
Drew Angerer/GettyThat $1 billion came from Musk and other tech bigwigs such as Reid Hoffman, Y Combinator founder Jessica Livingston, famed VC Peter Thiel, Amazon Web Services (AWS), Infosys, and YC Research. The organization’s CTO, Greg Brockman, formerly the CTO of Stripe, also kicked in.
Musk left the board in February, 2018, due to conflicts of interests as Tesla delved deeper into AI tech for self-driving cars.
He is not formally involved with OpenAI LP, the for-profit company, it says, however his name remains associated with OpenAI as a founder and contributor to its original $1 billion kitty. Musk also hired away Andrej Karpathy from OpenAI to work on Tesla’s self-driving cars some months before he left the board.
OpenAI was founded in part because of Musk’s concerns about the potential dangers of AI. Back in 2014 at at talk at MIT, he said AI was humanity’s "biggest existential threat" and likened the tech to "summoning the demon."
OpenAI was intended to be the anecdote in that it would create all sorts of AI technologies but would freely give them to world. If everyone had AI, than one side couldn’t use it to subjugate another, the theory went, and if profits were not the focus the group was free to work solely on projects to help humanity.
"Our goal is to advance digital intelligence in the way that is most likely to benefit humanity as a whole, unconstrained by a need to generate financial return. Since our research is free from financial obligations, we can better focus on a positive human impact," the organization said in a blog post in 2015 when it was founded.
OpenAI has since gone on to hire 100 people and release a whole bunch of free and open source AI projects. For instance, it’s created tech that can help teach computers to understand language, to learn in new ways, to control robotic arms and movement, even to beat amateur human teams in playing the video game Dota 2.
Last month it made headlines by creating a bot that could create such convincing troll-like fake news that the organization decided not to release the full project, lest it be misused. Instead, it released a smaller, water-down version, reported the Register.
Meanwhile, Altman just left Y Combinator last week to focus on the CEO role at OpenAI.
But convincing top talent to work for a non-profit when they can be getting big bucks and stock from startups and major tech companies could not have been easy. Now OpenAI’s employees will work for the for-profit entity, it said. The non-profit side will handle educational programs and engage in policy discussions.
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