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OpenAI to become for-profit company

reuters.com

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Re: OpenAI to become for-profit company

#251

Post by lolinder »

kweingar wrote: post #219

Can anybody explain how this actually works? What happens to all of the non-profit's assets? They can't just give it away for investors to own. The non-profit could maybe sell its assets to investors, but then what would it do with the money? I'm sure OpenAI has an explanation, but I really want to hear more details. In the most simple analysis of "non-profit becomes for-profit", there's really no way to square it ot…

If the assets were sold to the for profit at a fair price I could see this being legal (even if it shouldn't be). At least in that case the value generated by the non-profit tax free would stay locked up in non-profit land.

The biggest problem with this is that there's basically no chance that the sale price of the non-profit assets is going to be $150 billion, which means that whatever the gap is between the valuation of the assets and the valuation of the company is pure profit derived from the gutting of the non-profit.

If this is allowed, every startup founded from now on should rationally do the same thing. No taxes while growing, then convert to for profit right before you exit.

Re: OpenAI to become for-profit company

#252

Post by whamlastxmas »

0xDEAFBEAD wrote: post #69
Havoc wrote: post #43

Earlier quoted context omitted.

That was the point musk was complaining about. In practice it’s doable though. You can just create a new legal entity and move stuff and/or do future value creating activity in the new co. IF everyone is on board with the plan on both sides of the move then that’s totally doable with enough lawyers and accountants

ICYMI, Elon Musk restarted his lawsuit a month or two ago: https://www.reuters.com/technology/elon-musk-revives-lawsuit... I'm wondering if OpenAI's charter might provide a useful legal angle. The charter states: >OpenAI’s mission is to ensure that [AGI ...] benefits all of humanity. >... >We commit to use any influence we obtain over AGI’s deployment to ensure it is used for the benefit of all, and to avoid enabling…

Sam had a blog post literally two days ago that acknowledged risks. There’s also still a sizeable focus on safety and people with roles dedicated to it at open ai

Re: OpenAI to become for-profit company

#253

Post by xwowsersx »

phito wrote: post #20

I know nothing about companies (esp. in the US), but I find it weird that a company can go from non-profit to for-profit? Surely this would be taken advantage of. Can someone explain me how this work?

At first, I thought, “Wow, if companies can start as nonprofits and later switch to for-profit, they’ll exploit the system.” But the more I learned about the chaos at OpenAI, the more I realized the opposite is true. Companies will steer clear of this kind of mess. The OpenAI story seems more like a warning than a blueprint. Why would any future company want to go down this path?

Re: OpenAI to become for-profit company

#255

Post by 9dev »

kranke155 wrote: post #241
tomp wrote: post #227

Earlier quoted context omitted.

> Dismantling OpenAI is actually a business strategy for many other players now. Which ones exactly? NVIDIA is drinking sweet money from OpenAI. Microsoft & Apple are in cahoots with it. Meta/Facebook seems happy to compete with OpenAI on a fair playing field. Anthropic lacks the resources. Amazon doesn't seem to care. Google is asleep.

Google is asleep? Gemini is the product of a company that's asleep?

Gemini is the product of a company that is still half-asleep. We’re trying to work with it on a big data case, and have seen everything, from missing to downright wrong documentation, missing SDKs and endpoints, random system errors and crashes, clueless support engineers… it’s a mess.

OpenAI is miles ahead in terms of ecosystem and platform integration. Google can come up with long context windows and cool demos all they want, OpenAI built a lot of moat while they were busy culling products :)

Re: OpenAI to become for-profit company

#256

Post by espadrine »

camjw wrote: post #200
espadrine wrote: post #164

Earlier quoted context omitted.

A short history: 1986: Geoffrey Hinton publishes the backpropagation algorithm as applied to neural networks, allowing more efficient training. 2011: Jeff Dean starts Google Brain. 2012: Ilya Sutskever and Geoffrey Hinton publish AlexNet, which demonstrates that using GPUs yields quicker training on deep networks, surpassing non-neural-network participants by a wide margin on an image categorization competition. 2013…

I know this is just a short history but I think it is inaccurate to say "2015: Ilya Sutskever founds OpenAI." I get that we all want to know what he saw etc and he's clearly one of the smartest people in the world but he didn't found OpenAI by himself. Nor was it his idea to?

Short histories remove a lot of information, but it would be impractical to make it book-sized. There were numerous founders, and as another commenter mentioned, Elon Musk recruited Ilya, which soured his relationship with Larry Page.

Honestly, those are not the missing parts that most matter IMO. The evolution of the concept of attention across many academic papers which fed to the Transformer is the big missing element in this timeline.

Re: OpenAI to become for-profit company

#257

Post by kweingar »

n2d4 wrote: post #237
kweingar wrote: post #219

Can anybody explain how this actually works? What happens to all of the non-profit's assets? They can't just give it away for investors to own. The non-profit could maybe sell its assets to investors, but then what would it do with the money? I'm sure OpenAI has an explanation, but I really want to hear more details. In the most simple analysis of "non-profit becomes for-profit", there's really no way to square it ot…

After the non-profit sells its assets, it would either donate the proceeds in a way that would be aligned with the original mission, or continue to exist as a bag of cash, basically.

It seems incredibly convenient that a non-profit's leaders can say "I want equity in a for-profit company, so we will sell our assets to investors (who will hire me) and pass off the proceeds to some other non-profit org run by some other schmuck. This is in the public interest."

Re: OpenAI to become for-profit company

#258

Post by fourseventy »

kranke155 wrote: post #241
tomp wrote: post #227

Earlier quoted context omitted.

> Dismantling OpenAI is actually a business strategy for many other players now. Which ones exactly? NVIDIA is drinking sweet money from OpenAI. Microsoft & Apple are in cahoots with it. Meta/Facebook seems happy to compete with OpenAI on a fair playing field. Anthropic lacks the resources. Amazon doesn't seem to care. Google is asleep.

Google is asleep? Gemini is the product of a company that's asleep?

Gemini thinks the founding fathers of america were black and that the nazis were racially diverse. so ya

Re: OpenAI to become for-profit company

#259

Post by whamlastxmas »

freedomben wrote: post #57
csomar wrote: post #41

Earlier quoted context omitted.

I am not a tax specialist but from my understanding a non-profit is a for-profit that doesn't pay dividends. Why would the government care?

No, a non-profit is one in which there are no shareholders. The non-profit entity can own a lot and be extremely successful and wealthy, but it cannot give that money to any shareholders. It can pay out large salaries, but those salaries are scrutinized. It doesn't prevent abuse, and it certainly doesn't prevent some unscrupulous person from becoming extremely wealthy with a non-profit, but it is a little more compli…

I’m not sure extreme wealth is possible with a non-profit. You can pay yourself half a million a year, get incredible kickbacks by the firms you hire to manage the nonprofits investments, have the non-profit hire outside companies that you have financial interests in, and probably some other stuff. But none of these things are going to get you a hundred million dollars out of a non profit. The exception seems to be OpenAI which is definitely going to be netting at least a couple people over a billion dollars, but as Elon says, I don’t understand how or why this is possible

Re: OpenAI to become for-profit company

#260

Post by matwood »

sotix wrote: post #115
csomar wrote: post #41

Earlier quoted context omitted.

I am not a tax specialist but from my understanding a non-profit is a for-profit that doesn't pay dividends. Why would the government care?

A non-profit is a company that for accounting purposes does not have shareholders and therefore keeps nothing in retained earnings at the end of the period. The leftover money must be distributed (e.g. as salaries, towards the stated mission, etc.). Their financial statements list net profit for the period and nothing is retained.

The money doesn't have to be used. Many non-profits have very large balance sheets of cash and cash equivalent assets. The money just won't be paid out as dividends to shareholders.
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