Sam Altman Poised For $10.5B Payday As OpenAI Transitions To For-Profit Model With $150B Valuation On Horizon

OpenAI is revamping its business model to attract more investors. This restructuring could result in a significant financial gain for CEO Sam Altman.

What Happened: Microsoft Corp.-backed MSFT OpenAI plans to transition from being controlled by a nonprofit board to a new structure. This change aims to make the company more appealing to outside investors.

Sources familiar with the matter told Reuters that the current nonprofit will retain a minority stake in the new for-profit entity. This move could pave the way for an initial public offering (IPO) in the future.

The company, initially launched as a nonprofit in 2015, is currently looking at a valuation of $150 billion, hinging on its conversion to a for-profit organization.

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The new structure would also allow Altman to receive 7% equity in OpenAI, potentially leading to a substantial payday. Assuming the $150 billion valuation materializes, Altman's stake would be worth $10.5 billion.

An OpenAI spokesperson told Reuters, “We remain focused on building AI that benefits everyone, and we’re working with our board to ensure that we’re best positioned to succeed in our mission.”

See Also: Jeff Bezos-Backed Perplexity AI In Discussion With Marriott And Nike As It Prepares To Challenge To Google

This restructuring follows a challenging year for OpenAI’s leadership, including the brief ousting of Altman last November and the departure of several high-profile executives and researchers.

Why It Matters: The restructuring of OpenAI marks a significant shift in the company’s trajectory. The move from a nonprofit to a for-profit entity has sparked various reactions and controversies.

Elon Musk, who co-founded OpenAI in 2015 and left in 2018, has expressed discontent with the transition. Musk voiced concerns over the legality of this shift.

Adding to the complexity, OpenAI’s Chief Technology Officer Mira Murati stepped down, citing a desire to explore new opportunities. Her departure follows the exit of several high-profile members, raising questions about the company’s future.

The restructuring also comes amid ongoing legal battles. Musk has reignited a lawsuit against OpenAI, accusing the company of prioritizing commercial gains over its original mission of benefiting humanity.

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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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