OpenAI LP: profit with a ceiling
On 11 March 2019 Greg Brockman and Ilya Sutskever announced OpenAI LP, a 'capped-profit' company controlled by the board of the non-profit OpenAI. Returns for first-round investors are capped at 100 times their investment and anything above belongs to the non-profit. Most staff, around a hundred people, moved to the LP.
Why it matters
A laboratory founded as a non-profit was rebuilt to raise billions for compute without formally giving up the mission's precedence: the duty to the charter is written into every agreement. Four months later Microsoft's billion-dollar investment came into this structure, and four years later the non-profit's board dismissed the chief executive.
The post: OpenAI will need to invest billions of dollars in cloud compute, people and supercomputers, and no existing legal structure struck the needed balance. Only a minority of board members may hold financial stakes in the partnership at one time, and only those without stakes vote where the partners' interests and the mission may conflict, including on payouts. The cap for later rounds is expected to be lower than 100x. Board: Brockman, Sutskever, Altman, Adam D'Angelo, Holden Karnofsky, Reid Hoffman, Sue Yoon, Tasha McCauley; Elon Musk left the board in February 2018. No independent document on the structure was found: a full-text search of EDGAR for 'OpenAI LP' over 2019-2020 returned no filing. The record claims no amount of capital raised.