OpenAI plans ‘for-profit’ shift amid leadership departures and restructuring

OpenAI is set to transition from its nonprofit roots to a for-profit model amid significant leadership changes, including the abrupt resignation of top executives on Wednesday.

The San Francisco-based startup is planning to restructure as a for-profit public-benefit corporation, ending its oversight by a nonprofit board, according to a Reuters report.

This shift comes as three key technical leaders — Chief Technology Officer Mira Murati, Vice President of Research Barret Zoph, and Chief Research Officer Bob McGrew — announced their resignations.

At the same time, OpenAI is reportedly negotiating a $6.5 billion funding round that would value the company at $150 billion. The deal may be contingent on the restructuring of its corporate structure.

Implications of the change

Founded in 2015, OpenAI was initially dedicated to developing AI “to benefit humanity as a whole, unconstrained by a need to generate financial return,” according to its original mission statement.

The company gained global attention after the successful release of ChatGPT in late 2022, which showcased AI’s potential to reshape industries and society. In response, OpenAI expanded its product offerings for both consumers and enterprise clients.

The shift sparked concerns, with early investor Elon Musk filing a lawsuit against the company, accusing CEO Sam Altman and co-founder Greg Brockman of misleading him into believing OpenAI would remain a nonprofit.

However, as the company now eyes a fresh round of investment and with generative AI capturing the interest of enterprises globally, investors may view the restructuring in a more favorable light.

“The idea of OpenAI becoming an explicit for-profit organization makes things easier for potential investors, as it allows them to have a normal expectation of pursuing profit from AI,” said Hyoun Park, CEO and chief analyst at Amalgam Insights.

Notably, this comes as unit costs and price-to-performance ratios for large language models (LLMs) have been dropping significantly, while open-source LLMs have also gained momentum, according to Leslie Joseph, principal analyst at Forrester.

“Against this backdrop, OpenAI’s shift to a for-profit structure could allow it to diversify and strengthen its partnerships with major tech giants like Microsoft, Apple, and Nvidia in pursuit of a broader charter,” Joseph said.

Concerns on AI safety and ethical use

An OpenAI spokesperson said that the company remains “focused on building AI that benefits everyone and as we’ve previously shared, we’re working with our board to ensure that we’re best positioned to succeed in our mission,” according to the Reuters report.

However, businesses concerned with the ethical use of AI, particularly in areas such as compliance, may view OpenAI’s shift in its corporate structure with caution.

“OpenAI has already shifted away from its initial goals of trust and safety to the point where organizations like Anthropic and Cohere are probably more attractive options for those solely focused on governance, trust, and cultural ethos,” said Park.

Impact of leadership change

The resignation of top executives is also a major concern for investors and enterprise partners as this could affect OpenAI’s innovation trajectory and its competitiveness in the enterprise AI space.

Park noted that in the short term, OpenAI is likely to concentrate on commercializing its existing models and capabilities. This will be a significant challenge for many who originally joined OpenAI to pursue artificial general intelligence (AGI) from a nonprofit perspective.

“[But] with over a $100 billion valuation, it is hard to escape the need to make money and pursue practical solutions that compete with the likes of Salesforce’s Agentforce or Microsoft Copilot in a role and business-focused way,” Park said.  

Joseph suggested that with several of the founding members now gone, Sam Altman’s control over the company may further consolidate, potentially leading to even less transparency.

However, Park emphasized that OpenAI needs a strong leadership team and cannot rely solely on a “cult of personality” centered around Altman’s vision. “With the shift towards a for-profit focus, open AI is now free to hire a CTO or a chief product officer or chief revenue officer, who is more focused on fully extracting the value associated with open AI models,” Park said. “And they should be attractive roles for software veterans with a strong track record of translating technology into enterprise products. It would not be a surprise to see pros from open source companies or security and governance-focused companies come into OpenAI to lock down models and support enterprise and government-grade products.”