OpenAI, the non-profit organization founded by billionaire tech magnet Elon Musk, has recently decided to change its business strategy and pursue profits. The CEO of Tesla founded OpenAI with an initial endowment of $1 billion along with a bunch of the biggest tech wizards of Silicon Valley. Other big names associated with this organization include the likes of Sam Altman, who heads the company as the CEO of OpenAI, as well as Peter Thiel, Reid Hoffman, and Amazon Web Services. Elon Musk has left the board of OpenAI after founding the organization in 2015.
OpenAI was initially a non-profit organization dedicated to the research of Artificial Intelligence. The entity aims to create friendly AI technologies that will benefit mankind.
On Monday, the organization revealed that it will be able to issue stocks in the stock market to its employees and generate revenue, as it is getting ready to start its journey as a for-profit company.
OpenAI has coined the term ‘capped-profit’ to describe its new role. The term basically means that the company will limit the number of returns that will be given to its employees or investors and use most of the money generated from its activities into its non-profit division, which will continue to exist after this change.
The non-profit part of OpenAI will have more governing power over the entire company as the change will result in more board seats for the non-profit entity, and investors will have to sign a pledge which acknowledges that the company will put the needs of the non-profit entity before their financial interests.
OpenAI in a recent blog post has stated that it will cap the returns of the initial round of investors at 100x and this rate will drop for future rounds of investors.
Although there is nothing inherently wrong with being a for-profit company but based on the circumstances on which this company was founded upon, it begs the question as to why the company suddenly took a U-turn on its operating procedure.
Elon Musk had to leave the board of OpenAI as there was a conflict of interest with his role as a CEO of Tesla. This was due to Tesla getting deeper into AI research for its self-driving cars.
OpenAI was founded on the premise of fears about the advancement of AI from Elon Musk. The rapid pace at which AI is being developed has posed a huge risk to mankind, and this is what prompted Musk to start a non-profit AI organization dedicated to finding solutions for AI. Back in 2014, Elon Musk stated at a talk at MIT that AI was humanity’s “biggest existential threat” and likened this technology to “summoning the demon.”
OpenAI was thought to be the anecdote of all modern AI technologies. If all parties have access to AI technologies, then it is less likely that one side will use AI to subjugate the other party. This is what the theory towards creating OpenAI was. The theory further added that if profits were not the sole focus of the organization, then the founders would be free to work solely for the betterment of mankind.