The governance structure at OpenAI has an unconventional setup that Altman helped create.
The nonprofit organization, founded in 2015, has a for-profit arm that operates independently and is majority-owned by Microsoft. The intricate corporate structure has led to a lack of control by major investors over the company’s decisions, contributing to the board’s ability to remove Altman without investor consent.
OpenAI’s Unprecedented Growth
During Altman’s leadership, OpenAI transformed from a small nonprofit to a multibillion-dollar company at an unprecedented pace.
The launch of a for-profit arm facilitated significant funding from Microsoft, leading to the rapid expansion of the company’s commercial offerings. However, this growth also underscored the tension between the research-focused nonprofit and the commercially successful arm, symbolized by Altman’s abrupt departure.
Altman’s unique governance structure for OpenAI, intentionally designed to grant the board the power to fire him, was supposed to be a precaution to ensure the safety of how artificial intelligence is developing.