OpenAI's unusual nonprofit structure led to dramatic ouster of sought-after CEO

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Unlike Google, Facebook and countless other tech giants, the company behind ChatGPT was not created to be a business

SAN FRANCISCO — Unlike Google, Facebook and other tech giants, the company behind ChatGPT was not created to be a business. It was set up as a nonprofit by founders who hoped that it wouldn’t be beholden to commercial interests.

But the arrangement got complicated.

While OpenAI later transitioned to a for-profit model, its controlling shareholder remains the nonprofit OpenAI Inc. and its board of directors. This unique structure made it possible for four OpenAI board members — the company's chief scientist, two outside tech entrepreneurs and an academic — to oust CEO Sam Altman on Friday.

The abrupt removal of one of the world's most sought-after AI experts led to an employee revolt that has put the entire organization’s future in jeopardy and underscored the unusual arrangement that sets OpenAI apart from other tech enterprises.

It's exceedingly rare for major tech companies to have such a structure.

Facebook parent Meta, as well as Google and others, are essentially set up the opposite way — giving founders ultimate control over the company and the board of directors through a special class of voting shares not available to the masses. The idea comes from Berkshire Hathaway, which was established with two classes of stock so the company and its leaders would not be beholden to investors seeking short-term profit.

OpenAI’s stated mission is to safely build artificial intelligence that is “generally smarter than humans.” Debates have swirled around that goal and whether it conflicts with the company’s increasing commercial success.

“What was revealed with this board structure is they just idealistically