Decoding Sam Altman's Letter: Inside OpenAI’s New Structure
On May 5, OpenAI released a blog post that includes an updated plan for its structure, along with a letter from Sam Altman to employees...
On May 5, OpenAI released a blog post that includes an updated plan for its structure, along with a letter from Sam Altman to employees.
I read the post, highlighted some key points, and wanted to share my thoughts.
Let’s get started!
OpenAI was founded as a non-profit and will continue to be controlled by that nonprofit
In the article, as always, they explicitly emphasize that OpenAI is not moving from a nonprofit to a profit-driven organization ( - there is no change on that front -):
“OpenAI was founded as a nonprofit, and is today overseen and controlled by that nonprofit. Going forward, it will continue to be overseen and controlled by that nonprofit.”
For-profit LLC will transition to a Public Benefit Corporation (PBC)
This is the main update, they state it clearly:
“Our for-profit LLC, which has been under the nonprofit since 2019, will transition to a Public Benefit Corporation (PBC)–a purpose-driven company structure that has to consider the interests of both shareholders and the mission.”
This move is clearly a step toward strengthening OpenAI’s position in the ongoing lawsuit with Elon Musk. As we'll see in Sam Altman's letter (next section), the Public Benefit Corporation (PBC) model is now the standard for other AI companies like Anthropic and X.ai. So essentially, OpenAI’s board is saying: if it works for Elon Musk’s X.ai, it can work for us too!
By the way, as the name implies, PBC = profit + public benefit, meaning it’s ideal for businesses that want to generate profit while being legally committed to a social mission.
On the other hand, for-profit LLCs (Limited Liability Companies), are focusing solely on profit, with greater flexibility in how they operate—without any legal obligation to serve the public good.
This is the key difference between them:
PBC = profit + public benefit
LLC = profit
So, in my opinion, it seems a PBC structure would have been the right path for OpenAI a long time ago.
Sam Altman’s Letter to OpenAI Employees
You can read the full letter in the article: https://openai.com/index/evolving-our-structure/, but below are the parts I highlighted while reading it:
“We now see a way for AGI to directly empower everyone as the most capable tool in human history. If we can do this, we believe people will build incredible things for each other and continue to drive society and quality of life forward. It will of course not be all used for good, but we trust humanity and think the good will outweigh the bad by orders of magnitude.”
Actually, nothing surprising here - this reflects the same mindset Sam Altman has consistently shared. If you have watched Sam Altman’s interviews before, you’ve probably heard him saying something similar before.
“People are using ChatGPT to increase their productivity as scientists, coders, and much more(opens in a new window). People are using ChatGPT to solve serious healthcare challenges they are facing and learn more than ever before. People are using ChatGPT to get advice about how to handle difficult situations. We are very proud to offer a service that is doing so much for so many people; it is the one of most direct fulfillments of our mission we can imagine.”
This aligns with OpenAI’s mission and is one of the key reasons why so many people prefer ChatGPT over its competitors: they take a broad, inclusive approach and address fundamental human needs.
In his letter, Sam outlines that OpenAI wants to accomplish three things:
1-) “We want to be able to operate and get resources in such a way that we can make our services broadly available to all of humanity, which currently requires hundreds of billions of dollars and may eventually require trillions of dollars. We believe this is the best way for us to fulfill our mission and to get people to create massive benefits for each other with these new tools.”
> To cover the massive operational costs (currently hundreds of billions of dollars, and may eventually require trillions of dollars as stated), OpenAI needs financial support - hence the creation of a for-profit branch. Initially, they tried with an LLC, and now they’re moving forward with a PBC structure.
2-) “We want our nonprofit to be the largest and most effective nonprofit in history that will be focused on using AI to enable the highest-leverage outcomes for people.”
> This is an important mission and there’s nothing preventing them from achieving it. (Except the lawsuits :))
3-) “We want to deliver beneficial AGI. As AI accelerates, our commitment to safety grows stronger. We want to make sure democratic AI wins over authoritarian AI.”
> This is a meaningful, yet somewhat controversial point. Given the past board crisis at OpenAI—and the departure of key figures like Mira Murati and Ilya Sutskever—it might help shed light on internal disagreements. Something to think about!
After listing these three goals, Sam discusses the structural changes at OpenAI:
“We made the decision for the nonprofit to stay in control after hearing from civic leaders and having discussions with the offices of the Attorneys General of California and Delaware. We look forward to advancing the details of this plan in continued conversation with them, Microsoft, and our newly appointed nonprofit commissioners.”
“OpenAI was founded as a nonprofit, is today a nonprofit that oversees and controls the for-profit, and going forward will remain a nonprofit that oversees and controls the for-profit. That will not change.”
As I mentioned at the start of this article, this move is driven by lawsuits and concerns about Microsoft allegedly gaining too much control. This restructuring is intended to bolster OpenAI’s legal position.
“The for-profit LLC under the nonprofit will transition to a Public Benefit Corporation (PBC) with the same mission. PBCs have become the standard for-profit structure for other AGI labs like Anthropic and X.ai, as well as many purpose driven companies like Patagonia. We think it makes sense for us, too.”
Mentioning X.ai is clearly a message to Elon Musk. But it also seems like a quiet admission from the OpenAI board that they may have taken the wrong structural path initially. (I don’t want to speculate but it seems that way)
And finally, there’s a thoughtful closing message—perhaps aimed at Musk, but also the broader community:
“The nonprofit will continue to control the PBC, and will become a big shareholder in the PBC, in an amount supported by independent financial advisors, giving the nonprofit resources to support programs so AI can benefit many different communities, consistent with the mission. And as the PBC grows, the nonprofit’s resources will grow, so it can do even more. We’re excited to soon get recommendations from our nonprofit commission on how we can help make sure AI benefits everyone—not just a few.”
Thanks for reading! These were my thoughts while going through the blog post and I wanted to share them here.
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See you in the next one!
Engincan, this was such a great deep dive. Thank you for this, definitely learned from it.