Many people — particularly those outside the tech world — were introduced to OpenAI in November 2022, when the company launched its now-ubiquitous ChatGPT tool. However, it has been around for a lot longer than that. OpenAI captured headlines again more recently due to plans for a corporate restructuring that would mean it leaves behind its nonprofit roots. OpenAI’s Journey OpenAI started in 2015 as a nonprofit research organization dedicated to developing artificial intelligence tools that would benefit humanity as a whole, unrestricted by the need to turn a profit. Elon Musk and current OpenAI CEO Sam Altman were involved then, but Musk left in 2018. A year later, OpenAI added a for-profit subsidiary, turning the company into a hybrid for-profit and nonprofit entity in what it called a “capped profit” structure. Leaders at the time believed this change would keep OpenAI true to its roots while allowing it to use market power to grow its operations and revenue. The “capped” part of the structure’s name refers to limitations whereby the profits returned to the company’s investors can only be roughly 100 times what they put into the organization. Now, OpenAI’s structure seems set to change again, this time to a for-profit benefit corporation. This type of business focuses on sustainability and social responsibility in addition to profitmaking. One of the biggest differences about this development is that it would result in OpenAI’s nonprofit board losing control. For now, the nonprofit board has full control over the company’s for-profit arm. Another change is that Altman would receive equity for the first time — which could be worth billions. Moreover, the transition to a for-profit benefit company would remove the cap on investors’ returns. However, an interesting clarification came from an OpenAI representative who said the company’s nonprofit component would still exist and remain a core part of its goals. When will this restructuring occur? That’s anyone’s guess since those involved are still hashing out the details with legal professionals. However, as soon as the news reached major reporting outlets, some people started thinking about what it could mean for OpenAI and artificial intelligence in general. What Will the Restructuring Mean? Some people who have analyzed the matter said OpenAI’s restructuring might mean it will begin operating more like a startup. Investors would probably like that, but could it result in fewer checks and balances affecting products and processes? Contrary to its name, the company has never been upfront about its operations — employees must sign nondisclosure agreements that stop them from raising concerns to federal regulators. Additionally, a group of people working in the AI industry — including former OpenAI employees — signed an open letter explaining that those working on pioneering innovations in artificial intelligence have strong financial incentives to resist oversight and not share knowledge of what their products could or could not do with governments or civil society entities. Numerous employees have recently left OpenAI, with some, speaking anonymously, saying that the catalyst was a lack of trust in Altman and his ability to make AI work safely. Many have kept quiet because of a reported agreement people must sign when leaving the company that prevents them from speaking disparagingly about it. Some former workers who did not sign such paperwork have spoken out about their worries about the businesses’ increasingly powerful AI and the people who want it built not proceeding carefully enough. If OpenAI’s nonprofit board loses its current control, that may make the company’s leaders feel more equipped to proceed with whatever projects garner the most attention. Rushing to get these offerings on the market could also mean it doesn’t take safety as seriously as it should. OpenAI’s Impact on the Future of Artificial Intelligence Now that many AI tools are widely available, more people are insisting on controls that limit their potential applications. Others worry about the future, not necessarily because they believe that artificial intelligence will become smarter than humans, but due to privacy concerns, the prospect of job losses, and the potential for people to misuse AI. The shift to a for-profit model might also raise questions about priorities between profit and ethical AI development. Because of these concerns, transparency becomes even more crucial for the growing number of for-profit AI companies as they try to attract stakeholders — particularly as 60% of people cite transparency as the most important brand trait, according to one study. Embracing transparency can help build trust and reassure stakeholders that OpenAI remains committed to its foundational goals, even as its business model evolves. However, that sentiment could become problematic since OpenAI already has a reputation for being tight-lipped about its activities. People appreciate transparent companies, and it is arguably even more important to show that trait when the business specializes in a technology that the public views as largely foreign and new. For the average person who is merely curious about AI and how to use it, however, they likely won’t feel the impacts of OpenAI’s likely restructuring — at least not at first. Regular consumers will mostly pay attention to which products the company releases next. If those offerings become extremely profitable, such results will signal to its leaders that they should keep doing more of the same. It’s worth highlighting how OpenAI and the industry, in general, are already highly influential, with economic analysts saying generative AI will cause a 7% increase in global gross domestic product, resulting in a difference worth trillions of dollars. A related aspect is how relatively quickly people have gotten to know some of its tools and used them to do business and everyday tasks differently. Many individuals — even those who do not consider themselves tech-savvy — use AI numerous times throughout a typical week. That is almost certainly because of how accessible ChatGPT has become. Its popularity has helped OpenAI come into the mainstream, which arguably has implications for wider society — regardless of the ultimate impact of the eventual restructuring. An Uncertain But AI-Driven Future It’s too early to know the impacts of OpenAI transitioning to a for-profit benefit corporation. However, people can expect some aspects of its internal operations, stakeholder impact, and leadership to change in the coming months and years. We know with more confidence that artificial intelligence will continue playing a role in many people’s lives and shaping the tools they are now accustomed to using. Since OpenAI has enjoyed so much momentum in an increasingly crowded industry, its main task for the foreseeable future is to maintain it. If that happens, it will continue playing a significant role in artificial intelligence’s future, even if people don’t know what that looks like yet. Many people — particularly those outside the tech world — were introduced to OpenAI in November 2022, when the company launched its now-ubiquitous ChatGPT tool. However, it has been around for a lot longer than that. OpenAI captured headlines again more recently due to plans for a corporate restructuring that would mean it leaves behind its nonprofit roots. OpenAI’s Journey OpenAI started in 2015 as a nonprofit research organization dedicated to developing artificial intelligence tools that would benefit humanity as a whole, unrestricted by the need to turn a profit. Elon Musk and current OpenAI CEO Sam Altman were involved then, but Musk left in 2018. A year later, OpenAI added a for-profit subsidiary, turning the company into a hybrid for-profit and nonprofit entity in what it called a “capped profit” structure. Leaders at the time believed this change would keep OpenAI true to its roots while allowing it to use market power to grow its operations and revenue. The “capped” part of the structure’s name refers to limitations whereby the profits returned to the company’s investors can only be roughly 100 times what they put into the organization. roots while allowing it to use roots while allowing it to use Now, OpenAI’s structure seems set to change again, this time to a for-profit benefit corporation. This type of business focuses on sustainability and social responsibility in addition to profitmaking. One of the biggest differences about this development is that it would result in OpenAI’s nonprofit board losing control. For now, the nonprofit board has full control over the company’s for-profit arm. Another change is that Altman would receive equity for the first time — which could be worth billions. Moreover, the transition to a for-profit benefit company would remove the cap on investors’ returns. However, an interesting clarification came from an OpenAI representative who said the company’s nonprofit component would still exist and remain a core part of its goals. nonprofit component would still exist nonprofit component would still exist When will this restructuring occur? That’s anyone’s guess since those involved are still hashing out the details with legal professionals. However, as soon as the news reached major reporting outlets, some people started thinking about what it could mean for OpenAI and artificial intelligence in general. What Will the Restructuring Mean? Some people who have analyzed the matter said OpenAI’s restructuring might mean it will begin operating more like a startup. Investors would probably like that, but could it result in fewer checks and balances affecting products and processes? Contrary to its name, the company has never been upfront about its operations — employees must sign nondisclosure agreements that stop them from raising concerns to federal regulators. must sign nondisclosure agreements must sign nondisclosure agreements Additionally, a group of people working in the AI industry — including former OpenAI employees — signed an open letter explaining that those working on pioneering innovations in artificial intelligence have strong financial incentives to resist oversight and not share knowledge of what their products could or could not do with governments or civil society entities. Numerous employees have recently left OpenAI, with some, speaking anonymously, saying that the catalyst was a lack of trust in Altman and his ability to make AI work safely. Many have kept quiet because of a reported agreement people must sign when leaving the company that prevents them from speaking disparagingly about it. Some former workers who did not sign such paperwork have spoken out about their worries about the businesses’ increasingly powerful AI and the people who want it built not proceeding carefully enough. businesses’ increasingly powerful AI businesses’ increasingly powerful AI If OpenAI’s nonprofit board loses its current control, that may make the company’s leaders feel more equipped to proceed with whatever projects garner the most attention. Rushing to get these offerings on the market could also mean it doesn’t take safety as seriously as it should. OpenAI’s Impact on the Future of Artificial Intelligence Now that many AI tools are widely available, more people are insisting on controls that limit their potential applications. Others worry about the future, not necessarily because they believe that artificial intelligence will become smarter than humans, but due to privacy concerns, the prospect of job losses, and the potential for people to misuse AI. The shift to a for-profit model might also raise questions about priorities between profit and ethical AI development. Because of these concerns, transparency becomes even more crucial for the growing number of for-profit AI companies as they try to attract stakeholders — particularly as 60% of people cite transparency as the most important brand trait, according to one study. Embracing transparency can help build trust and reassure stakeholders that OpenAI remains committed to its foundational goals, even as its business model evolves. 60% of people cite transparency 60% of people cite transparency However, that sentiment could become problematic since OpenAI already has a reputation for being tight-lipped about its activities. People appreciate transparent companies, and it is arguably even more important to show that trait when the business specializes in a technology that the public views as largely foreign and new. For the average person who is merely curious about AI and how to use it, however, they likely won’t feel the impacts of OpenAI’s likely restructuring — at least not at first. Regular consumers will mostly pay attention to which products the company releases next. If those offerings become extremely profitable, such results will signal to its leaders that they should keep doing more of the same. It’s worth highlighting how OpenAI and the industry, in general, are already highly influential, with economic analysts saying generative AI will cause a 7% increase in global gross domestic product, resulting in a difference worth trillions of dollars. A related aspect is how relatively quickly people have gotten to know some of its tools and used them to do business and everyday tasks differently. Many individuals — even those who do not consider themselves tech-savvy — use AI numerous times throughout a typical week. will cause a 7% increase will cause a 7% increase That is almost certainly because of how accessible ChatGPT has become. Its popularity has helped OpenAI come into the mainstream, which arguably has implications for wider society — regardless of the ultimate impact of the eventual restructuring. An Uncertain But AI-Driven Future It’s too early to know the impacts of OpenAI transitioning to a for-profit benefit corporation. However, people can expect some aspects of its internal operations, stakeholder impact, and leadership to change in the coming months and years. We know with more confidence that artificial intelligence will continue playing a role in many people’s lives and shaping the tools they are now accustomed to using. Since OpenAI has enjoyed so much momentum in an increasingly crowded industry, its main task for the foreseeable future is to maintain it. If that happens, it will continue playing a significant role in artificial intelligence’s future, even if people don’t know what that looks like yet.

The is an opinion piece based on the author’s POV and does not necessarily reflect the views of HackerNoon.

Inside OpenAI's Path to Becoming a For-Profit Powerhouse

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