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

wsj.com

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

#71

Post by coliveira »

danielmarkbruce wrote: post #12
leetharris wrote: post #4

This is kind of a wild story. Sam Altman is openly flexing that he was able to skirt the rules and regulations by threatening economic damage to California. It's not even subtle anymore. This reminds me of when the former CEO of Hyundai, Chung Mong-koo, went to prison for embezzlement. In just 3 years he was pardoned because the President of South Korea basically said, "we need you for the economy." We're not even pr…

This is very cynical, and almost certainly deliberately false take. Many situations are fundamentally uncertain with respect to laws/rules in place. The idea that they "skirted rules and regulations" is wrong. Did they push in an attempt to get a decision made which would favor them? Sure. But there was a decision to be made. And, the people are supposed to be in control anyway, not the government.

With cynical people, a cynical take is the right one.

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

#72

Post by wbl »

polski-g wrote: post #48
adastra22 wrote: post #39

Earlier quoted context omitted.

It is being restructured to no longer be a nonprofit, but a for-benefit corporation instead. That is why California's approval was required (and IMO is just as corrupt as it sounds).

But aren't non profits a federal thing with rules dictated by the IRS? Why is California involved?

Because charities are also regulated by states as are all corporations. There is no federal corporate governance statute.

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

#73

Post by wbl »

danielmarkbruce wrote: post #23
swyx wrote: post #14

Earlier quoted context omitted.

> if Bonta blocked its plan to convert to a simpler corporate structure. i'm a bit out of the loop but honestly why does California have a say? surely the investor base and Microsoft was a far harder negotiation than this one. this one smells of govt overreach.

The entity in question operates in california and is thus subject to california law. California has laws around charitable entities. One might reasonably claim it's overreach, but in response OpenAI could just leave the state. Which is what they threatened.

Not when the AG sues the board and Sam for all the violations that happened around his ouster. The board isn't independent.

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

#74

Post by atonse »

palmotea wrote: post #47
atonse wrote: post #24

Earlier quoted context omitted.

I would think that sort of framing implies that the government gives them permission to exist. Rather than, the natural state is that they exist unless they do something bad enough to be shut down. Unless you mean, they need the government's "permission" to even file to become a corporation... But even in that case, you aren't asking for permission, you're doing the old school equivalent of signing up for a domain, y…

> I would think that sort of framing implies that the government gives them permission to exist. > Rather than, the natural state is that they exist unless they do something bad enough to be shut down. JFC, come on. Corporations are legal entities and have no existence separate from the law. If they even have a natural state, that natural state is non-existence.

Yeah I think we're splitting hairs and actually aren't in any sort of disagreement here. I 100% agree that you have to be registered on paper with a government entity to get all the legal protections, insurance, etc etc etc. I've been a business owner for nearly 20 years. Like, a real business, with real paperwork and insurance and all that.

I'm thinking of all the unofficial mom and pops that transact and do business every day without having a proper legal entity. so it's more of a "does that count as a business even if they didn't file articles of incorporation?" of course it does, as far as its customers are concerned.

Think of the idea of "this guy has a lawn care business, I pay him every week to mow my lawn for 10 years", as far as his customers are concerned, he didn't need to get permission from the government to start doing that. And this sort of thing happens all the time.

I am NOT arguing whether a business where you filed articles is a legal entity, etc. There's no question that they are.

Hope that clarifies my point.

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

#75

Post by jakub_g »

d0odk wrote: post #28
somanyphotons wrote: post #7

Earlier quoted context omitted.

ETFs like VOO will buy it eventually. It started me wondering if theres an ETF that explicitly avoids the top 20 companies

My gut instinct is that this would be a hugely underperforming investment strategy on both an absolute and risk adjusted basis. I would welcome empirical evidence contradicting my gut.

There's SPXT (S&P 500 excluding tech sector), +79% in 5y, vs full S&P +110% in 5y.

Obviously, in tech/AI bull market it can't be not underperforming.

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

#76

Post by mrbabbage »

polski-g wrote: post #48
adastra22 wrote: post #39

Earlier quoted context omitted.

It is being restructured to no longer be a nonprofit, but a for-benefit corporation instead. That is why California's approval was required (and IMO is just as corrupt as it sounds).

But aren't non profits a federal thing with rules dictated by the IRS? Why is California involved?

Corporate law is overwhelmingly state law. Every federally tax exempt entity is a state (or foreign) corporation or other kind of entity, and states (or foreign governments) impose rules on corporations registered in their borders.

Plus, many states levy their own corporate taxes. A nonprofit corporation needs to secure tax-exempt status from states as well as the federal government. This is a necessary implication of America's dual-sovereignty system.

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

#77

Post by sipjca »

empath75 wrote: post #57
jacquesm wrote: post #38

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.

Open AI will probably have the highest market cap of any company in the world on the opening day of trading.

that would be certifiably insane

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

#78

Post by scyzoryk_xyz »

throwup238 wrote: post #37
swyx wrote: post #20

Earlier quoted context omitted.

you can IPO the for-profit subsidiary. done before. the main tricky part is resolving the tax issues since as a non profit you are exempt, but obviously a for profit is not exempt from paying taxes

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.

OpenAI - the AGI entity with a gift shop.

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

#80

Post by throwaway294729 »

hodder wrote: 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…

> This isnt a diss to Sam either, it just shows he is motivated by whatever is best for the entity at any given time.

This is the kind of weird rationalist (?) thing that people say a lot these days to justify bad behaviors: in this case Sam Altman behaves like a pathological liar.

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