How is OpenAI structured?

OpenAI was initially established as a nonprofit organization but later adapted its structure to include both nonprofit and profit-oriented components due to the need for more capital for development and operations. Sam Altman discussed how OpenAI started as a nonprofit and later introduced a subsidiary that is a capped-profit entity. This structure allows investors and employees to earn a fixed return, after which surplus profits revert to the nonprofit. This setup grants full voting control to the nonprofit, enabling it to make unconventional decisions that might not align with shareholder interests but are deemed necessary for the organization’s goals, especially related to artificial general intelligence (AGI) 1.

Sam Altman’s notion was partly driven by recognizing the limitation in raising sufficient funds under a pure nonprofit model and the need to leverage some benefits of capitalism but with restrictions to guard against excessive profit motivations. The hybrid structure allows OpenAI to make decisions that can include cancelling equity or merging without needing to prioritize shareholder returns over the organization’s broader goals 1.