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OpenAI’s promise to stay in California helped clear the path for its IPO

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Re: OpenAI’s promise to stay in California helped clear the path for its IPO

#131

I don’t understand the animus towards OAI going public. ChatGPT undoubtedly changed the world. The non->for profit status of the company is not impacting anyone. It’s not like their success was made possible by being a non-profit. Suddenly everyone here is very very concerned with the classification of this corporate entity, and I detect people feel personally slighted. Why is that?

Because the development of this technology was originally done under a certain set of promises ostensibly intended to prevent pure capitalist profitmaxxing. The workers and supporters who were taken by this idealistic vision, believe it was a bait-and-switch, and that the original promises were never intended to be kept.

> The workers and supporters who were taken by this idealistic vision

I haven’t heard from any of the workers. Why are people white-knighting for them? My hot take is that they don’t mind being able to afford a house (or more) for their efforts. Where’s the outraged employees in this conversation?

As for “supporters,” what does that mean? People who watch from the sidelines and never actually contributed don’t usually get a say.

Re: OpenAI’s promise to stay in California helped clear the path for its IPO

#132
post #106

Earlier quoted context omitted.

> Can someone explain to me why California would believe Sam Altman plans to stay in California? The simple answer is unless developing LLMs becomes commoditised, the best place in the world to do it is in San Francisco. You don't take your manufacturing business out of Shenzhen without very good reason.

The location you're physically sitting in doesn't really matter. Saying 'san francisco cause san francisco' is also kinda boring and meaningless.

> location you're physically sitting in doesn't really matter

Of course it does.

The benefits of proximity to business clusters [1] is well researched [2]. There is no evidence remote work has dampened that tendency; if anything, as evidenced by AI, the effect seems to have increased.

[1] https://en.wikipedia.org/wiki/Business_cluster#Cluster_effec...

[2] https://www.isc.hbs.edu/competitiveness-economic-development...

Re: OpenAI’s promise to stay in California helped clear the path for its IPO

#133
post #91

Earlier quoted context omitted.

Mozilla has this same structure (non-profit parent, for-profit subsidiary) because the subsidiary has to pay taxes on the money Google pays to be Firefox's default search engine. As do many gift shops attached to non-profit museums and art galleries.

The difference is that Mozilla’s for-profit arm is owned by the non-profit. The for-profit part of OpenAI is there to make a lot of individuals and for-profit corporations rich. OpenAI’s profit-generating subsidiary isn’t just there to further the non-profit mission like a museum gift shop or Mozilla’s for-profit subsidiary.

That’s why this was scrutinized more and the California AG got involved but it’s not that rare either.

Novo Nordisk the maker of Ozempic for example IPOd, diluting the Novo Nordisk Foundation’s share (though they still have controlling voting rights due to share classes IIRC) to raise money. SRI International spinoffs often get sold (Siri) or raise money and IPO (Nuance) diluting the nonprofit’s share significantly in the process.

A nonprofit that owns a for profit subsidiary is no different than a regular shareholder and can decide that diluting to reward employees or get investors is worth it to grow the value of the whole company.

Re: OpenAI’s promise to stay in California helped clear the path for its IPO

#134

Earlier quoted context omitted.

There is a book written about this topic. SA is the classic manipulator. He talks to each person whatever they want to hear, irrespective of what he really believes. Many of the things he says about AI and OpenAI are clear BS, but he'll sell that to anyone with a different flavor.

What book?

‘Empire of AI’ maybe?

Re: OpenAI’s promise to stay in California helped clear the path for its IPO

#135

Earlier quoted context omitted.

> Can someone explain to me why California would believe Sam Altman plans to stay in California? The simple answer is unless developing LLMs becomes commoditised, the best place in the world to do it is in San Francisco. You don't take your manufacturing business out of Shenzhen without very good reason.

The Texas Stock Exchange launches next year and I predict we will see a lot of tech try to move to launch there given txse claim to have lower compliance and less esg needs.

> Texas Stock Exchange launches next year

The TXSE was launched by an energy magnate [1] and "is financed by institutional investors including Charles Schwab, Fortress, BlackRock, and Citadel Securities" [2]. It's a direct response to the NASDAQ and NYSE putting their feet down on carbon emissions.

Nothing about its structure requires a company be incorporated in Texas much less based there [3]--those restrictions would go against the reason it was founded.

[1] https://en.wikipedia.org/wiki/Kelcy_Warren

[2] https://en.wikipedia.org/wiki/Texas_Stock_Exchange

[3] https://www.hunton.com/insights/legal/a-comparative-analysis...

Re: OpenAI’s promise to stay in California helped clear the path for its IPO

#136

Is it possible for a poor fool retail investor to invest in OAI

From what i understand, and I’m no expert, is that all the smart money Is able to get in on an IPO early on way before retail investors have a chance. By the time the retail investors have a chance it’s too late and usually the stock dips post IPO as the early investors sell.

Of course the stock can rise again eventually.

Re: OpenAI’s promise to stay in California helped clear the path for its IPO

#137
post #82
post #66

Can someone explain to me why California would believe Sam Altman plans to stay in California? This is a weak handshake agreement that could easily be flipped post IPO. The very flip from non-profit to IPO shows he will do what it takes for OpenAI to "succeed", so why would the geographical location be any more permanent than corporate structure. This isnt a diss to Sam either, it just shows he is motivated by whatev…

In any negotiation, you need to understand what leverage either side has. In this case, CA could block the conversion, and OpenAI could leave California. Both are possible but extremely unlikely outcomes! So the whole point is to take these unlikely outcomes to the table, negotiate in good faith, and come out with an agreement. So California needs to believe that OpenAI will stay in California just as much as OpenAI…

If I am understanding things correctly, OpenAI could leave in the future - but CA can’t retroactively block the conversion in that case.

Re: OpenAI’s promise to stay in California helped clear the path for its IPO

#139
Interesting - this reminds me a lot of the story with Cisco: for decades they remained a California C-Corp while many other companies reincorporated in Delaware. I once heard a lawyer say “all my clients are Delaware C-Corps except Cisco, and their reason is political.”

Eventually Cisco did indeed buckle in 2021 and reincorporate in Delaware . . .

Re: OpenAI’s promise to stay in California helped clear the path for its IPO

#140

Prediction for the future: OpenAI IPO's lots of money changes hands, it chugs along for a while, hits a hard spot and then is taken private for pennies on the dollar by Microsoft.

Jacques, I've been reading and enjoying your posts here for at least 15 years. (Thank you for your service.) But I think you're totally incorrect on this; oAI is going to be one of the enduring tech consumer brands built in this half of the 21st century.

Why do you say so? They’re burning cash and don’t currently have a viable path to profitability. Sure they have millions of MAU but not many paying ones.
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