OpenAI’s For-Profit Model: Sam Altman Shares Key Reasons for Shift

Sam Altman, the CEO of OpenAI, explains that the company transitioned to a for-profit model to increase funding for AI research due to the nonprofit model’s inability to meet business needs.

Sam Altman, CEO of OpenAI, said that the main reason the company changed from a nonprofit to a for-profit model was to raise more money. Altman told Harvard Business School in an interview that they couldn’t raise enough money as a nonprofit to scale up their AI research.OpenAI began as a nonprofit in 2015 with the goal of creating AI that would benefit people. To attract investors, it switched to a “capped-profit” model in 2019.

The model gave investors a chance to make money while still trying to keep the company’s mission alive. But after getting $6.6 billion in funding this fall, OpenAI promised to start making money on its own within two years.

Altman agreed that building the infrastructure needed to train AI models and make them work on a larger scale would cost a lot of money.

He said, “We didn’t count on how much we needed to scale.” Even though the company is changing, OpenAI says its nonprofit arm is still crucial to its mission to make AI that helps everyone. Altman also said that nonprofits can help develop AI, but they probably won’t be in charge of research that helps people. “As a nonprofit, you probably can’t be at the forefront.”