OpenAI’s promise to stay in California helped clear the path for its IPO • Hacker News Board

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

#81

Post by btian » Wed, Oct 29, 2025, 9:21 PM UTC

CamelCaseName wrote: post #10

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…

Can someone explain to me what Sam Altman is doing to be so far ahead of everyone else in terms of navigating these high stakes roles? This happened at YC and a number of other places too, he goes into situations with nothing and comes out on top despite all odds. Is he that skilled an operator, negotiator, or manipulator or something?

He has great foresight, which helps a lot in investing and operating OAI.

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

#82

Post by Hansenq » Wed, Oct 29, 2025, 9:21 PM UTC

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…

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 needs to believe that CA won't block the conversion (or impose other onerous regulations around AI). So yes, it's possible to speculate about whether or not people are sincere in their motivations, but when you need to make a deal, there needs to be a measure of good faith and trust on both sides in order to make something happen.

And in this case, both sides are incentivized to make the deal. OpenAI wants to be a PBC in order to access more capital, and California wants OpenAI to be a PBC so that it can IPO so that all employees (all of whom are likely CA residents), will sell stock, which can then be taxed as CA income.

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

#83

Post by stefan_ » Wed, Oct 29, 2025, 9:24 PM UTC

adastra22 wrote: post #39

fourseventy wrote: post #17

How can a non-profit IPO? I know that technically OpenAI is a for-profit company that is owned by a non-profit, but I still don't get it.

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).

So they avoid billions of tax on nonprofit status, then magically get to keep it all when they are for-benefit? How about no, fuck you, dissolve?

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

#84

Post by harmmonica » Wed, Oct 29, 2025, 9:25 PM UTC

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…

If they're still based in CA when they IPO at least those initial taxes will be collectible in state (assuming they're structured in a way where the IPO is a taxable event for the leadership and staff). Pretty sure the taxes collected from OpenAI will be the single biggest IPO tax windfall ever (correct me if I'm wrong, but I can't think of a bigger one).

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

#85

Post by ergocoder » Wed, Oct 29, 2025, 9:25 PM UTC

stefan_ wrote: post #83

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).

So they avoid billions of tax on nonprofit status, then magically get to keep it all when they are for-benefit? How about no, fuck you, dissolve?

I mean, OpenAI has never been profitable. If anything, they are insanely unprofitable.

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

#86

Post by cosmicgadget » Wed, Oct 29, 2025, 9:28 PM UTC

harmmonica wrote: post #84

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…

If they're still based in CA when they IPO at least those initial taxes will be collectible in state (assuming they're structured in a way where the IPO is a taxable event for the leadership and staff). Pretty sure the taxes collected from OpenAI will be the single biggest IPO tax windfall ever (correct me if I'm wrong, but I can't think of a bigger one).

We're finally going to get that bullet train.

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

#87

Post by make3 » Wed, Oct 29, 2025, 9:28 PM UTC

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…

In the US, one has to remember that megacorps usually end up winning, as people mostly only care about money and blindly supporting corporations is seen as pro-economy. There are also no limits on political financial contributions, and people have really short attention spans.

Politicians taking the superficial short-term win, as they will end up giving in to the megacorp anyway, is not surprising to me.

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

#88

Post by s3r3nity » Wed, Oct 29, 2025, 9:32 PM UTC

cosmicgadget wrote: post #86

harmmonica wrote: post #84

Earlier quoted context omitted.

If they're still based in CA when they IPO at least those initial taxes will be collectible in state (assuming they're structured in a way where the IPO is a taxable event for the leadership and staff). Pretty sure the taxes collected from OpenAI will be the single biggest IPO tax windfall ever (correct me if I'm wrong, but I can't think of a bigger one).

We're finally going to get that bullet train.

lol if you think $ was the barrier there, I have a few bridges to sell you too…

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

#89

Post by harmmonica » Wed, Oct 29, 2025, 9:39 PM UTC

cosmicgadget wrote: post #86

harmmonica wrote: post #84

Earlier quoted context omitted.

If they're still based in CA when they IPO at least those initial taxes will be collectible in state (assuming they're structured in a way where the IPO is a taxable event for the leadership and staff). Pretty sure the taxes collected from OpenAI will be the single biggest IPO tax windfall ever (correct me if I'm wrong, but I can't think of a bigger one).

We're finally going to get that bullet train.

Oh man know I know I shouldn’t say it but that’s a genius reply! Thanks for the (depressing) laugh.

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

#90

Post by JumpCrisscross » Wed, Oct 29, 2025, 9:39 PM UTC

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…

> 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.