You might have wondered why Musk proposed a $97.4 billion deal for OpenAI (or maybe you just learned about it—check the first two attachments for context).
Here’s the thing: the for-profit division of OpenAI is still owned by the non-profit OpenAI entity. It’s not legally permissible to simply sell it for $1—otherwise, every startup would try to incubate itself as a non-profit. However, in the U.S., it is possible for a non-profit to sell a for-profit entity it owns. This is where things get more interesting.
OpenAI’s recent valuation was approximately $150 billion.
Since Sam Altman is on both sides of the deal—as both the seller and the buyer—it’s clear that he would push for a lower price. Essentially, what Musk did was set a minimum benchmark for the price of the for-profit division. Selling it below Musk’s proposed price would now create a conflict of interest between the original OpenAI non-profit and the now-independent ChatGPT (or whatever it becomes).
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Here’s the thing: the for-profit division of OpenAI is still owned by the non-profit OpenAI entity. It’s not legally permissible to simply sell it for $1—otherwise, every startup would try to incubate itself as a non-profit. However, in the U.S., it is possible for a non-profit to sell a for-profit entity it owns. This is where things get more interesting.
OpenAI’s recent valuation was approximately $150 billion.
Since Sam Altman is on both sides of the deal—as both the seller and the buyer—it’s clear that he would push for a lower price. Essentially, what Musk did was set a minimum benchmark for the price of the for-profit division. Selling it below Musk’s proposed price would now create a conflict of interest between the original OpenAI non-profit and the now-independent ChatGPT (or whatever it becomes).
Should Dev Meme post more content like this? Let us know!
#News
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