OpenAI is officially done pretending it can run like a charity. On Friday, the company announced it has finalized plans to transition into a public benefit corporation (PBC) as soon as possible next year, finally ditching the nonprofit structure that’s apparently been holding it back.
“The hundreds of billions of dollars that major companies are now investing into AI development show what it will really take for OpenAI to continue pursuing the mission,” its board said. They confidently added that:
“Our plan would result in one of the best-resourced non-profits in history. The non-profit’s significant interest in the existing for-profit would take the form of shares in the PBC at a fair valuation determined by independent financial advisors. This will multiply the resources that our donors gave manyfold.”
OpenAI is losing money—and fast
OpenAI is valued at $157 billion, a jaw-dropping figure for a company that launched ChatGPT only two years ago. The chatbot kicked off a massive generative AI boom, and OpenAI has been riding the wave ever since. But big ambitions come with even bigger bills.
This year, the company expects $3.7 billion in revenue. Sounds great, right? Not when you realize they’re also forecasting $5 billion in losses. CNBC confirmed these numbers back in September, and they’ve only gotten worse since.
Building and running massive AI models like ChatGPT isn’t cheap. OpenAI leans heavily on Nvidia processors and Microsoft’s cloud infrastructure—tools that don’t come with discount tags.
In October, OpenAI closed a $6.6 billion funding round. That money is supposed to help the company hold its ground against competitors like Elon’s xAI, Google, Amazon, and Anthropic.
Why? Because the generative AI market is projected to hit $1 trillion in revenue within a decade, and everyone wants a piece of that pie. But here’s the thing: investors don’t just hand over money out of the goodness of their hearts. OpenAI’s nonprofit structure was a problem, and they knew it.
By becoming a Delaware-based PBC, OpenAI claims it will issue ordinary shares of stock. This lets them raise money like a traditional company while still keeping a nonprofit arm. That nonprofit wing will handle the warm and fuzzy stuff—think health care, education, and science. But make no mistake: this is about making OpenAI a lean, mean, for-profit machine.
Elon Musk isn’t having it
Of course, this is OpenAI we’re talking about, so drama is never far behind. Enter Elon Musk. The Tesla and SpaceX billionaire has been feuding with OpenAI for months, and this restructuring plan has only made things worse.
Elon has gone as far as suing OpenAI to block the switch, calling it a “total scam” and claiming that “OpenAI is evil.” This isn’t just Twitter-level trash talk. Elon is dragging this fight to court.
Why is Elon so mad anyway? Because according to OpenAI, he proposed a similar for-profit structure back in 2017. They claim he was all for it until the idea became inconvenient for him. Elon, predictably, denies this and accuses OpenAI of selling out its original mission.
Meanwhile, OpenAI’s leadership isn’t holding back. The board insists this shift is necessary to survive in a market where every competitor has deep pockets and fewer restrictions.
The Elon drama doesn’t stop there. He’s been loudly criticizing OpenAI’s focus on shiny, marketable products like ChatGPT. He’s not the only one. Critics inside and outside the company argue that safety and ethics have taken a backseat to profits. Elon’s claims have found some traction among former OpenAI employees too.
The talent exodus raises questions
Meanwhile, OpenAI’s leadership has had a rough few months. In late September, CTO Mira Murati announced her departure after six and a half years with the company. The same day, two other big names—research chief Bob McGrew and VP Barret Zoph—also walked out the door.
A month earlier, co-founder John Schulman left for rival Anthropic. And let’s not forget May, when OpenAI lost two more high-profile figures: co-founder Ilya Sutskever and Jan Leike, a former safety leader who also joined Anthropic.
So, what’s going on you ask? Well, CEO Sam Altman says it’s all just coincidence. In a September interview, he brushed off concerns, saying the departures were unrelated to the restructuring plan. But not everyone is buying that.
Jan Leike actually explained his decision to leave. In a blunt social media post, he said, “Over the past years, safety culture and processes have taken a backseat to shiny products.” Ouch. Another former employee echoed that sentiment, calling out the company for acting like a for-profit while still pretending to be a nonprofit. “You should not believe OpenAI when it promises to do the right thing later,” they said.
These departures—and the reasons behind them—highlight the growing tension between OpenAI’s original mission and its current priorities. Back in 2015, when Altman, Elon, and others founded OpenAI, the focus was on research and artificial general intelligence (AGI). It wasn’t supposed to be about profits.
That changed in 2019, when OpenAI introduced its capped-profit model, letting the nonprofit control a for-profit wing. Now, even that compromise seems to be falling apart.
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Source: https://www.cryptopolitan.com/openai-admits-it-needs-more-cash/