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OpenAI CEO Sam Altman, who has famously claimed he doesn’t own any equity in the $157 billion A.I. company he runs, could soon be a multibillionaire as OpenAI is reportedly looking to grant him a 7 percent equity stake, worth $11 billion, according to Reuters. While Altman denied the report, OpenAI chairman Bret Taylor issued a statement saying the company’s board indeed had discussions about “whether it would be beneficial to the company and our mission to have Sam be compensated with equity, but no specific figures have been discussed nor have any decisions been made.”
The pressure to give Altman equity likely came from external investors. Fortune reported on last week that OpenAI investors are “pushing hard” for him to have skin in the game in order to raise massive funding. Reuters reported last month that OpenAI was ready to raise $6.5 billion from investors contingent on whether the company can change its corporate structure and remove a profit cap for investors.
Restructuring the company and giving Altman equity would reassure OpenAI investors that the leadership team is committed to maximizing their returns, which is crucial as OpenAI seeks more funding to meet its ambitious goals. Earlier this year, Altman made headlines for eventually wanting to raise up to $7 trillion in funding—more than Germany’s annual GDP, the world’s third largest—to achieve its long-term goals.
While Altman has not confirmed his plan to transition OpenAI into a for-profit structure, he said at a technology conference in Italy last week that OpenAI had been considering a restructuring to get to the “next stage.” Also last week, OpenAI’s CTO, Mira Murati, announced resignation. So did two other senior executives, Barret Zoph and Bob McGrew. Industry observers wondered whether their exits were related to the company’s restructuring, although Altman denied such speculations at the Italy conference.
OpenAI was founded in 2015 as a nonprofit research lab funded by donations from billionaires like Reid Hoffman and Elon Musk. Realizing that “donations alone would not scale with the cost of computational power and talent required to push core research forward,” according to its website, OpenAI in 2019 introduced a for-profit arm. The arm operates by a capped-profit model but the cap is so high that it might as well not exist—it allows OpenAI’s investors to reap a gain of up to 100 times their initial investments.
Altman is already a billionaire
Altman, 39, is currently estimated to be worth $2 billion, according to Bloomberg. He has $1.2 billion invested across a range of venture capital funds branded as Hydrazine Capital, along with an additional $434 million in Apollo Projects.
Altman owns shares in several high-flying tech companies, including a 8.7 percent stake in Reddit. In 2021, he invested $375 million in Helion Energy, a startup building the world’s first fusion plant. In 2022, he invested $180 million Retro Biosciences, a startup focused on slowing aging.
At a congressional hearing last May, Altman said he owned “no equity in OpenAI.” In a later statement through OpenAI spokesperson Steve Sharpe, Altman confirmed he doesn’t own profit-participation units either, an OpenAI scheme that gives employees a right to earn a given percentage of the company’s profit, similar to equity compensation.
According to regulatory filings, Altman owns 75 percent of the OpenAI Startup Fund, an independent entity associated with OpenAI but doesn’t receive funding from the company. The fund manages $325 million in assets to invest in smaller A.I. companies. However, Sharpe said Altman has not invested his own money, so he cannot financially benefit from the fund. In April, Altman was removed as an owner or controller of the startup fund over scrutiny that it’s too closely tied to OpenAI despite claiming independence.
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Shreyas Sinha
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