Indirect effects can be significant
OpenAI never was Just like other AI startups — or other startups period, for that matter. Its management structure is unique and is what ultimately led to the surprise ouster of CEO Sam Altman on Friday.
Even after pivoting from a nonprofit to a for-profit company in 2019, OpenAI has maintained an unusual structure that spells out in no uncertain terms what investors can — and can’t — expect from the startup’s leadership.
For example, returns for OpenAI backers are limited to 100 times the investment in the first round. This means that if an investor puts in $1, for example, the total profit returned will be $100.
OpenAI investors also agree – at least in theory – to adhere to the mission of the nonprofit that guides OpenAI’s commercial endeavors. That mission is to achieve artificial general intelligence (AGI), or AI that can “outperform humans at most tasks of economic value” — but not necessarily generate profit during or after achieving it. Exactly when OpenAI has achieved AGI is at the sole discretion of the Board of Directors, and such AGI – in whatever form – is exempt from the commercial licensing agreements that OpenAI has with its existing customers.
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How did OpenAI describe its operational structure in the pre-disruption days? Image credits: OpenAI
OpenAI’s dual mission-oriented architecture was ambitious, to say the least, inspired Effective altruism It aims to clearly define a company’s profit-making efforts through its more ambitious humanitarian goals. But investors did not expect the board to exercise its power the way it did. Apparently many employees didn’t either.