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OpenAI to become for-profit company

reuters.com

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Re: OpenAI to become for-profit company

#711

Post by hackernewds »

cdchn wrote: post #586
throwaway314155 wrote: post #531

Earlier quoted context omitted.

It's about the narrative they tried to create. The spin. It doesn't matter much if they were technically behaving as a for-profit entity previously. What matters is that they wanted the public (and likely, their talent) to _think_ that they weren't even interested in making a profit as this would be a philosophical threat to the notion of any sort of impartial or even hopefully benevolent originator of AGI (a goal wh…

>What matters is that they wanted the public (and likely, their talent) to _think_ that they weren't even interested in making a profit as this would be a philosophical threat to the notion of any sort of impartial or even hopefully benevolent originator of AGI (a goal which is laid plainly in their mission statement) And now they want to cast off any pretense of that former altruistic yolk now that they have a new,…

Note Elon made a significant "donation" early into OpenAI given their non-profit designation and intentions, in return receiving zero equity. The donation was also received tax free

Re: OpenAI to become for-profit company

#712

Post by hackernewds »

talldayo wrote: post #581
pj_mukh wrote: post #576

Earlier quoted context omitted.

What do you do with a a lot of money past a point? A corporate controlled AGI being just a stop on the way to build another private space agency seems like a...letdown.

To be honest, I would take a private space agency 7 days out of the week with that kind of capital. We have no fundamental proof that LLMs will scale to the intelligence levels that we imagine in our heads. The industry application for LLMs is even weaker than computer vision, and the public sentiment is almost completely against it. Sam's product is hype; eventually people are going to realize that Q* and Strawberry…

This comment reeks of Steve Ballmer opinion of Apple and the Internet early days. If you work at any decent technology company, you realize AI applications every where and the pending mass layoffs. Or nimbler startups replicating their work more efficiently.

Re: OpenAI to become for-profit company

#713

Post by throwup238 »

hackernewds wrote: post #710
throwup238 wrote: post #352

I’m confused by this news story and the response here. No one seems to understand OpenAI’s corporate structure or non profits at all. My understanding: OpenAI follows the same model Mozilla does. The nonprofit has owned a for-profit corporation called OpenAI Global, LLC that pays taxes on any revenue that isn’t directly in service of their mission (in a very narrow sense based on judicial precedent) since 2019 [1]. I…

How is it possible to make tax free "donations" for profit making applications? You seem to imply there is nothing nefarious about the setup. Except the non-profit designation doesn't actually perform no social services, instead stand as a business structure to skirt taxation. Change my mind

> How is it possible to make tax free "donations" for profit making applications?

The nonprofit invests the tax free donations into the for-profit. It gets to keep its equity just like any other investor and as long as that equity held by the non-profit, there's no taxable event. If the nonprofit sells its share - since it was closely involved in the creation and management of the for-profit as an active investment - it becomes a taxable event under the unrelated business income tax rules. Until that time, the only "profit making applications" like ChatGPT and the API are run by the for-profit, which - I repeat - pays its taxes.

I genuinely don't understand why people think they've skirted taxation except out of sheer ignorance of how non-profits actually work. A 501(c)(3) is not some magic Monopoly "get-out-of-tax-free" card and the IRS isn't stupid, there's a ton of rules for tax exemption. They'd have a much easier time with tax avoidance if they were an actual for profit corporation with billions of dollars because GAAP rules are a lot more forgiving than non-profit regulations.

Re: OpenAI to become for-profit company

#714

Post by teleforce »

halJordan wrote: post #557
throwup238 wrote: post #352

I’m confused by this news story and the response here. No one seems to understand OpenAI’s corporate structure or non profits at all. My understanding: OpenAI follows the same model Mozilla does. The nonprofit has owned a for-profit corporation called OpenAI Global, LLC that pays taxes on any revenue that isn’t directly in service of their mission (in a very narrow sense based on judicial precedent) since 2019 [1]. I…

It isnt a tax thing or a money thing, its a control and governance thing. The board of the non-profit fired Altman and then Altman (& MS) rebelled, retook control, & gutted the non-profit board. Then, they stacked the new non-profit board with Altman/MS loyalists and now they're discharging the non-profit. It's entirely about control. The board has a legally enforceable duty to its charter. That charter is the proble…

I wished I have 10 upvote to give you, bravo excellent observations and conclusions.

Re: OpenAI to become for-profit company

#715

Post by authorfly »

vladms wrote: post #591
authorfly wrote: post #544

Earlier quoted context omitted.

I'm not sure if you mean whether the UK has the same low corporation vs high income/pension/NI contributions income? If so, yes. The UK does have employers NI contributions but that's not what I mean. The point is, if you spent a year to earn a gross £100k, and as you earn it, pay £50k of total tax, and with the remaining £40k/£50k you spend it on an employee at your company in salary and pay then £20k of tax, the go…

> So the government gets to re-tax most of that money when you use it to hire someone to build a new business with you. You should consider it also from the point of view of the employee. The government taxes your employee to offer him services, it does not care who hires him (you, that saved the money). Yes, it is true that you need lots of money to HIRE someone, but you can try to do a startup with a couple people…

True, you can try and do a startup without hiring anyone, but how many companies with no paid employees succeed or bring in a net profit? You can do that until you need to hire someone, then you still hit the end of the road.

Forget who the government is supposed to be taxing for what supposed purpose. The decision about asset and income law working differently (liabilities counting for one and all sources being able to intermingle over the financial year, financially speaking, for assets - with income always being payable within a month) is why these taxes work differently in practice then just one being for income, and one for personal asset (accrual). We could instead "tax an employee to offer his services" with a tax which allowed them to discount the liability of savings spent in businesses from their due tax from other sources, or we could charge higher capital gains than personal taxes.

If you earned the original income from renting out properties or capital gains however and then invested it, you can write it off as a loss for your overall individual capital gains, pay $0 for all your rental/share increase in value, and only pay for the startups employee, with no tax on your original income as a result that tax year.

If you have asset wealth, you don't get taxed twice like this as you can write it off. If you have income based savings wealth, you always get taxed and can't count it against investments you make.

1900 is obviously different but income taxes help people with assets retain them for the reasons mentioned above. If Assets were taxed at a higher rate and you could not personally include liabilities in your capital gains (as with income), then it would be the opposite scenario.

We say capital gains tax is all about wealth, but it's not: The US has no wealth tax. The capital gains tax is just lower tax on unearned income and the ability to intermingle that income. It's all income at the end of the day - just one, income from work, the government taxes heavily, the other, the government taxes less heavily, but most people never significantly earn that income.

Re: OpenAI to become for-profit company

#716

Post by WillPostForFood »

imiric wrote: post #402
WillPostForFood wrote: post #385

Earlier quoted context omitted.

So what's your specific problem with that? Unless you open a bookstore selling the copies, it sounds fine.

Are you implying that these AI companies aren't equivalent to bookstores?

For it to be a bookstore, it would have to provide complete copies of the books, which it doesn't do at all.

Re: OpenAI to become for-profit company

#717

Post by A1kmm »

mr_toad wrote: post #689
throwup238 wrote: post #352

I’m confused by this news story and the response here. No one seems to understand OpenAI’s corporate structure or non profits at all. My understanding: OpenAI follows the same model Mozilla does. The nonprofit has owned a for-profit corporation called OpenAI Global, LLC that pays taxes on any revenue that isn’t directly in service of their mission (in a very narrow sense based on judicial precedent) since 2019 [1]. I…

> All OpenAI is doing here is decoupling ownership of the for-profit All? As far as I know this is unprecedented.

Maybe at this scale.

But unfortunately charities and not-for-profits putting their core business into a company, and then eventually selling it off is not unprecedented. For example, The Raspberry Pi Foundation was a not-for-profit organisation around Raspberry Pi. They formed a LLC for their commercial operations, then gradually sold it off before eventually announcing an IPO: https://www.raspberrypi.org/blog/what-would-an-ipo-mean-for-....

I think it is terrible that not-for-profits are just being used as incubators for companies that eventually take the core mission and stop primarily serving the public interest.

There are of course other examples of charities or not-for-profits that put part of their core operations in a company and don't sell out, instead retaining 100% ownership - for example Mozilla. However, I think there should be some better way for impactful not-for-profits to have some revenue generating aspects in line with their mission (offset by allowing temporary surplus to cover future expenses, or by other expenses).

Re: OpenAI to become for-profit company

#718

Post by throwup238 »

A1kmm wrote: post #717
mr_toad wrote: post #689

Earlier quoted context omitted.

> All OpenAI is doing here is decoupling ownership of the for-profit All? As far as I know this is unprecedented.

Maybe at this scale. But unfortunately charities and not-for-profits putting their core business into a company, and then eventually selling it off is not unprecedented. For example, The Raspberry Pi Foundation was a not-for-profit organisation around Raspberry Pi. They formed a LLC for their commercial operations, then gradually sold it off before eventually announcing an IPO: https://www.raspberrypi.org/blog/what-w…

> Maybe at this scale.

I don't think it's unprecedented, even at this scale.

Novo Nordisk, the pharmaceutical company behind Semaglutide (aka Ozempic) with a market cap >$600 bilion, was founded by the Novo Nordisk Foundation before going public. The latter now has an endowment of over $150 billion and owns a significant fraction of the public company.

Re: OpenAI to become for-profit company

#719

Post by k__ »

hackernewds wrote: post #712
talldayo wrote: post #581

Earlier quoted context omitted.

To be honest, I would take a private space agency 7 days out of the week with that kind of capital. We have no fundamental proof that LLMs will scale to the intelligence levels that we imagine in our heads. The industry application for LLMs is even weaker than computer vision, and the public sentiment is almost completely against it. Sam's product is hype; eventually people are going to realize that Q* and Strawberry…

This comment reeks of Steve Ballmer opinion of Apple and the Internet early days. If you work at any decent technology company, you realize AI applications every where and the pending mass layoffs. Or nimbler startups replicating their work more efficiently.

Fair.

On the other hand, just because the execs who do the layoffs bought into the narrative it doesn't mean they're right.

Re: OpenAI to become for-profit company

#720

Post by tivert »

troad wrote: post #685
conqrr wrote: post #675

I remember a time when promises meant something. Lots of epics in human time (Greek, Hindu), people would stick to their word and commitment was respected. Written word was much more powerful than spoken. People appreciated depth. Wish we could teach and learn from those times.

Proto-Indo-European culture seems to have placed a great deal of importance on the sanctity of contracts and the notion of reciprocal hospitality, reflected in many descendant myths and etymologies surviving from Ireland through India. If the Indo-Europeans did indeed come from the Ukrainian steppes, as seems likely, this may be a reflection of their high mobility (on horseback) causing lots of contact with potential…

> Proto-Indo-European culture seems to have placed a great deal of importance on the sanctity of contracts and the notion of reciprocal hospitality ... There's some great books on Indo-European society if you're interested.

What are those books?

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