OpenAI needs ‘more money than we thought’ to pivot to profitability | Real Time Headlines

OpenAI said on Friday that as it shifts to a new for-profit structure in 2025, it will create a public benefit corporation to oversee commercial operations, removing some nonprofit restrictions to make it operate more like a high-growth startup.

“The hundreds of billions of dollars that companies are currently investing in artificial intelligence development illustrate what OpenAI will need to continue to achieve this mission,” the OpenAI board wrote in the post. “Once again, we need to raise more capital than we thought. “Investors want to support us, but at this scale of capital, traditional equity and less structural customization are required.”

The pressure on OpenAI is related to its $157 billion valuation, which it achieved in the two years since it launched its viral chatbot ChatGPT and kicked off the generative artificial intelligence boom. Open artificial intelligence Completed the latest round of financing of US$6.6 billion in Octoberprepare to compete aggressively Musk’s xAI and Microsoft, Google, Amazon In the same market as Anthropic Expected to exceed US$1 trillion Income over ten years.

Developing the large language models at the heart of ChatGPT and other generative AI products requires ongoing investment in high-performance processors, driven primarily by NVIDIAand cloud infrastructure, which OpenAI gets largely from top backer Microsoft.

According to CNBC, OpenAI expects revenue this year of US$3.7 billion and a loss of approximately US$5 billion. Confirmed September. These numbers are increasing rapidly.

OpenAI said that by transforming into a People’s Bank of Delaware that “owns common stock,” it can conduct commercial operations while hiring a separate employee for its nonprofit arm and allow that arm to operate in the health care, education and science sectors. charity activities.

OpenAI wrote that the nonprofit will have a “significant interest” in the People’s Bank of China “at a fair valuation determined by an independent financial advisor.”

OpenAI’s complex structure today is a result of its creation as a non-profit organization in 2015. 2015 is a completely futuristic concept.

In 2019, OpenAI aimed to move away from its role as a mere research lab and look more like a startup, so it created a so-called capped profit model, where the nonprofit still controls the entire entity.

“Our current structure does not allow the board to directly consider the interests of those who fund the mission, and does not allow nonprofits to easily do more than control profit-making,” OpenAI wrote in a post on Friday. sexual organization.

OpenAI added that the change will “enable us to raise the necessary capital on traditional terms like our competitors.”

OpenAI’s restructuring efforts face some significant obstacles. The most important thing is Musk, he is in a Fierce legal battle A partnership with Altman could have a significant impact on the company’s future.

In recent months, Musk has sued OpenAI and ask the court Prevent a company from converting from a nonprofit to a for-profit corporation. In a post on X, he described the effort as a “total scam” and claimed that “OpenAI is evil.” Earlier this month, OpenAI responded, claim In 2017, Musk “not only wanted, but actually created a for-profit organization” as the company’s proposed new structure.

In addition to its standoff with Musk, OpenAI has been facing an exodus of senior talent, in part due to concerns that the company is focusing on bringing commercial products to market at the expense of security.

At the end of September, OpenAI chief technology officer Mira Murati announced that she would Leave the company 6.5 years later. On the same day, head of research Bob McGrew and vice president of research Barret Zoph also announced their departures. A month ago, co-founder John Shulman said he was leaving for rival startup Anthropic.

Altman told Italian Tech Week in September that the recent departures of senior executives had nothing to do with a potential restructuring of the company: “Our board has been thinking independently for almost a year because we were thinking about how we could achieve this goal.

This isn’t the first big name exit. In May, OpenAI co-founder Ilya Sutskever and former security chief Jan Leike announce departureLake also joined Anthropic.

Lake wrote in a social media post at the time that disagreements with leadership over the company’s priorities drove his decision.

“Over the past few years, safety culture and processes have given way to shiny products,” he said. Wrote.

One of Lake’s employees soon resigned, he wrote on X In September, “OpenAI is structured as a nonprofit but operates like a for-profit.” The employee added, “When OpenAI promises to do the right thing later, you shouldn’t believe it.”