In the latest podcast series by computer scientist and tech YouTuber Lex Fridman, Bill Ackman, the founder of Pershing Square Capital Management, expressed concerns about the governance structure of ChatGPT-parent OpenAI.
What Happened: During the conversation with Fridman, Ackman highlighted the significance of governance in companies, particularly those in the AI sector. He pointed out that OpenAI’s governance structure, which includes a non-profit entity with a for-profit subsidiary, has led to issues.
"Look, governance really matters, and the governance structure of OpenAI, I think, leaves something to be desired," he said.
Ackman noted that the non-profit entity owns a significant portion of OpenAI, while the investors have a capped interest with no representation on the board. He suggested that this setup was a recipe for problems, which eventually occurred.
See Also: OpenAI Sets Sights On Something Its Backer Microsoft Failed To Do: Beat Google At Web Search
He also underscored the importance of shareholder input in the governance of companies, particularly those in the private venture-backed stage. He pointed out the potential conflicts of interest that can arise in such companies due to the divergent incentives of board members.
Last year in November, there were dramatic changes in OpenAI’s leadership, with Sam Altman stepping down as CEO and then returning. The company also introduced a new framework, giving its board veto power over decisions made by the leadership to ensure its sustainability.
However, at the time, it was reported that Altman’s surprise ouster from the company could have been caused by something Elon Musk has long been complaining about. “It was a ‘misalignment' of the profit versus nonprofit adherents at the company,” Kara Swisher at the time.
Why It Matters: OpenAI, co-founded by Musk, Altman, Ilya Sutskever, Greg Brockman, Trevor Blackwell, Andrej Karpathy and others, has been at the center of several controversies and changes in recent years.
Musk, who initially envisioned OpenAI as a non-profit entity, has multiple times expressed disappointment in the company’s evolution into a for-profit entity.
"OpenAI was created as an open source (which is why I named it "Open" AI), non-profit company to serve as a counterweight to Google, but now it has become a closed source, maximum-profit company effectively controlled by Microsoft," he said last year, adding, "Not what I intended at all."
Despite these changes, Satya Nadella, the CEO of Microsoft Corporation, the largest investor with a $13 billion investment in OpenAI, has expressed satisfaction with their partnership with ChatGPT-maker, emphasizing the value of stability in the partnership.
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Disclaimer: This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors.
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