Can someone explain to me why California would believe Sam Altman plans to stay in California? This is a weak handshake agreement that could easily be flipped post IPO. The very flip from non-profit to IPO shows he will do what it takes for OpenAI to "succeed", so why would the geographical location be any more permanent than corporate structure. This isnt a diss to Sam either, it just shows he is motivated by whatever is best for the entity at any given time.
They might stay in California, but that probably has far more to do with available researchers and employee preferences than some agreement with the Attorney General.
Perhaps it’s not so much that they believe he’ll stay in California long term if he gets what he wants; more that they do believe he’ll leave in the short term if he doesn’t.
> This isnt a diss to Sam either, it just shows he is motivated by whatever is best for the entity at any given time.
This is the kind of weird rationalist (?) thing that people say a lot these days to justify bad behaviors: in this case Sam Altman behaves like a pathological liar.
It is being restructured to no longer be a nonprofit, but a for-benefit corporation instead. That is why California's approval was required (and IMO is just as corrupt as it sounds).
Corporate law is overwhelmingly state law. Every federally tax exempt entity is a state (or foreign) corporation or other kind of entity, and states (or foreign governments) impose rules on corporations registered in their borders.
Plus, many states levy their own corporate taxes. A nonprofit corporation needs to secure tax-exempt status from states as well as the federal government. This is a necessary implication of America's dual-sovereignty system.
> aren't non profits a federal thing with rules dictated by the IRS? Why is California involved?
Most states incorporate federal rules for their own exemptions for charities and non-profits. California treating OpenAI to date as a non-profit has revenue implications for Sacramento.
The Usa is divided into states, each with their own legal jurisdictions. Businesses tend to pay taxes to their state. OpenAI is headquartered in San Francisco, California.
you can IPO the for-profit subsidiary. done before. the main tricky part is resolving the tax issues since as a non profit you are exempt, but obviously a for profit is not exempt from paying taxes
Mozilla has this same structure (non-profit parent, for-profit subsidiary) because the subsidiary has to pay taxes on the money Google pays to be Firefox's default search engine.
As do many gift shops attached to non-profit museums and art galleries.
> OpenAI had spent months making the case that it was the economic heart of the California economy—and would be willing to leave if Bonta blocked its plan to convert to a simpler corporate structure.
> California is my home, and I love it here, and when I talked to Attorney General Bonta two weeks ago I made clear that we were not going to do what those other companies do and threaten to leave if sued.
> if Bonta blocked its plan to convert to a simpler corporate structure.
i'm a bit out of the loop but honestly why does California have a say? surely the investor base and Microsoft was a far harder negotiation than this one. this one smells of govt overreach.
Because of the unusual history of OpenAI, the Government had far more of a say than normal for a company. Remember, OpenAI was originally created as a California non-profit (a charity doing work to create a better AI future). As a charity, it doesn't have to pay the same taxes as it would as a for-profit company, but in exchange it has more rules it needs to follow. And then it released ChatGPT, it exploded in value, it needed to raise truly absurd amounts of capital in order to get to the next model, and thus the lawyers had to spend a good long time extracting the company from the charity.
For very good reasons, the laws make it hard to go from a charity to a for-profit company- because if you could easily transition between the two you could game tax laws with ease. In the end, being allowed to do this required negotiations, and promising to keep OpenAI in California- where they would be subject to other California regulations and taxes in the future.
If they had a "normal" corporate history- had been founded as a Delaware S Corp from the beginning- then this wouldn't be a thing and they would be free to move as they like(1). But, being a weird charity probably helped them attract talent in the critical beginning phases (before it became a money race with Zuck), and it has consequences now.
1: Just as an example, Palantir moved their corporate headquarters to Denver from Palo Alto years ago without a peep from the CA government.
But who oversees how charities use their assets and ensures that they are used for public benefit?
That job lies with the Charitable Trusts Section of California’s Office of the Attorney General, which is part of the state’s Department of Justice. Charged with both regulatory and law enforcement responsibilities, the section has a big job.
> Corporations exist at the pleasure of government do they not?
No. “At the pleasure of” means total discretion. The government can’t just stop letting businesses incorporate because it doesn’t like how a county voted.
There is no constitutional right to incorporate. Theoretically states could stop it at any time. Although they would still have to honor corporations formed in other states so it’s of limited effect.
The Constitution directly grants very few individual rights. It’s mostly a document about what the government can’t do.
> Theoretically states could stop it at any time
Sure. That’s not “at the pleasure of.” Driver’s licenses are not issued “at the pleasure of” a state. Neither are marriage certificates. They’re issued as a matter of process that binds both the issuer and recipient to a predictable set of rules.
Why can't the government do that? Is it because the government created laws that limited its total discretion? That is besides my point. The people allow for corporations to exist is what I was getting at, and in the US businesses incorporate at the state level. So asking why California has a say in the structure of a company incorporated in it seemed odd to me on its face.
I would think that sort of framing implies that the government gives them permission to exist.
Rather than, the natural state is that they exist unless they do something bad enough to be shut down.
Unless you mean, they need the government's "permission" to even file to become a corporation... But even in that case, you aren't asking for permission, you're doing the old school equivalent of signing up for a domain, you're submitting a filing and reserving a spot for that name/ID.
It's more than that. When you file to incorporate, there is a birth. A new person is created, one that can potentially never die. Yes, it's routine, but it wasn't always, and it doesn't need to be forever. The ability to create a new, fake, person in order to shield yourself and your business partners from liability is a not a right. It is a deliberate policy that some sovereign jurisdictions allow their citizens.
> I would think that sort of framing implies that the government gives them permission to exist.
> Rather than, the natural state is that they exist unless they do something bad enough to be shut down.
JFC, come on. Corporations are legal entities and have no existence separate from the law. If they even have a natural state, that natural state is non-existence.
Yeah I think we're splitting hairs and actually aren't in any sort of disagreement here. I 100% agree that you have to be registered on paper with a government entity to get all the legal protections, insurance, etc etc etc. I've been a business owner for nearly 20 years. Like, a real business, with real paperwork and insurance and all that.
I'm thinking of all the unofficial mom and pops that transact and do business every day without having a proper legal entity. so it's more of a "does that count as a business even if they didn't file articles of incorporation?" of course it does, as far as its customers are concerned.
Think of the idea of "this guy has a lawn care business, I pay him every week to mow my lawn for 10 years", as far as his customers are concerned, he didn't need to get permission from the government to start doing that. And this sort of thing happens all the time.
I am NOT arguing whether a business where you filed articles is a legal entity, etc. There's no question that they are.
This feels like a narrative being pushed. Tech oligarchs these days are flexing by showing off how much they are able to bully government, and Altman wants to get in on the game by spinning things this way. I’m not convinced they really bent the rules for OpenAI any more than usual given they only employ a few hundred people.
I doubt OpenAI has to try very hard to convince state politicians, especially to the point of bullying. It's usually the complete opposite where they throw money at you to stay.
Imagine if California managed to scare away the hottest company in the world and all the tax revenue it brings...
This is kind of a wild story. Sam Altman is openly flexing that he was able to skirt the rules and regulations by threatening economic damage to California. It's not even subtle anymore.
This reminds me of when the former CEO of Hyundai, Chung Mong-koo, went to prison for embezzlement. In just 3 years he was pardoned because the President of South Korea basically said, "we need you for the economy."
We're not even pretending that the government is in control anymore. It's just full on anarcho-capitalism on display.
There is a book written about this topic. SA is the classic manipulator. He talks to each person whatever they want to hear, irrespective of what he really believes. Many of the things he says about AI and OpenAI are clear BS, but he'll sell that to anyone with a different flavor.
I can only speculate so take it with a spoon of salt... But people who are really good at sussing out other people's wants can find ways to make more people happy. It's like a maze of interests and I guess he's just really motivated and good at navigating and aligning them (at least among the rich and powerful).
He also seems to understand something about power and perception, in that he takes calculated risks that seem to keep working out.
So in other words, he seems to be an extraordinarily skillful politician (in both the general and the Patrick Lencioni sense).
It's too early to say if his risks "keep working out". Restructuring is not a risk. His, and others', original decision to make the company a non-profit was also not a calculated risk in this sense.
When he was fired from OpenAI, his use of employee manipulation to regain his position is not a risk; it is the only option he had. It was his bond maturing, of carefully cultivated loyalty he had accrued over years. Gaining that loyalty was not really a risk. It was smart politics.
One risk he took is: signing away such a large portion of the company to Microsoft. I'm not sure whether that is working out.
Another risk he took is: neglecting and sidelining the "safety" portion of his organization. This caused a talent exodus and led to the formation of many competitors. I'm not sure whether that is working out either.
This is the guy who had everyone here rooting for him when the OpenAI board tried to kick him out. Which was almost certainly the result of a very successful PR campaign carried out by him.
He's not really comparable with Jobs. This guy is a politician and Jobs was a product guy.
It's a bit much to say he goes into situations with nothing - he, along with others created OpenAI. It's a decent sized company now and they have sway with governments. All decent sized companies do as employers. This kind of stuff happens all the time and it just doesn't get reported as much.
It's a great question. Here are two Paul Graham (PG) quotes on Sam Altman (Sama) from 2008 and 2009.
Note, PG is the founder of YC, Sam's former boss, and the one who removed Sam from the position of President of YC after first appointing Sam to succeed him as President of YC. (Sama was more focused on OpenAI than on YC at the time, which doesn't work when you're supposed to be leading YC.)
Sam Altman has it. You could parachute him into an island full of cannibals and come back in 5 years and he'd be the king. If you're Sam Altman, you don't have to be profitable to convey to investors that you'll succeed with or without them. (He wasn't, and he did.) Not everyone has Sam's deal-making ability. I myself don't. But if you don't, you can let the numbers speak for you.
5. Sam Altman
I was told I shouldn't mention founders of YC-funded companies in this list. But Sam Altman can't be stopped by such flimsy rules. If he wants to be on this list, he's going to be.
...
What I learned from meeting Sama is that the doctrine of the elect applies to startups. It applies way less than most people think: startup investing does not consist of trying to pick winners the way you might in a horse race. But there are a few people with such force of will that they're going to get whatever they want.
from OpenAI to Helion energy (Fusion), to Retro Biosciences (longevity), Neuralink (brain computer interface), to Reddit
Sama really wants to "build the future," and when some of those investments "hit", like OpenAI did - basically become the first new company with a clear path to a $1T valuation since Facebook or TikTok), you gain immense credibility for "betting the future will happen and getting your organization there first."
If YC's motto is "build something people want," and OpenAI is now serving 800M active users while delivering incredible revenue growth (and investors want to see both). Sama gains power by giving investors what they want, by giving users what they want, and basically authoring an entire new type of software company and a new part of the economy.
A thing to note here is that, being a YC partner and top angel investor from 2011 to 2020, you can argue that Sam himself is "the most successful YC graduate." He saw thousands of companies go through YC. He saw hundreds of 'hard tech companies' go through YC. And in that decade, he could only have learned an immense amount about how VCs/successful CEOs think and make decisions. Certainly, we see the learnings of those experiences in what he's been able to pull off since.
whoa there. corporations have the right to move to the best location for them. California does not have the eternal right to OpenAI's taxes and employee base. think about what you're implicitly assuming here. if one company simply leaving causes concerning "damage" then perhaps it is the government that is the problem, not the corporation driving economic growth.
Corporations are applications of government power and have no natural rights, their legal rights are at best proxies for the rights of natural persons with some interest in them, and at worst a fiction which serves to limit the rights of natural persons.
Also, having a right to do something does not contradict a description of you leveraging power by using a threat of doing it, in the first place.
> Corporations are applications of government power and have no natural rights
Sure. Whatever. The people who own and work at OpenAI have no obligation to remain in California.
(I’d also argue that global norms are currently walking back from the notion of natural rights pretty much everywhere except for in some parts of Europe. The concept doesn’t work without an appeal to divinity.)
The legal entity is what owns the IP, contracts, obligations, property, etc… so even if 100% of the current employees and owners moved, their collective worth and prospects would be significantly reduced if the legal entity doesn’t also come along.
didn't Sam does this before with another company? he was able to restructure it and come out on top... searching for article... was it Helion? now that i think harder, didnt he comment about it on HN??
That seems like expected behavior from someone whose barely veiled pitch is "the first one to AGI will IPO - Install Planetary Overlord.[1] Give me money and be part of the future ruling elite!" (Whether his actual plan is based on what he's saying in public, or to take the money and run, permanently install his company as in inescapable rent-extracting middle-man for modern life[2], or something else, I don't know.)
1. Credit to Charles Stross, The Jennifer Morgue
2. Thneed-style capitalism
This is very cynical, and almost certainly deliberately false take.
Many situations are fundamentally uncertain with respect to laws/rules in place. The idea that they "skirted rules and regulations" is wrong. Did they push in an attempt to get a decision made which would favor them? Sure. But there was a decision to be made.
And, the people are supposed to be in control anyway, not the government.
The government believed him that OpenAI will stay in CA the same way that that government, OpenAI founders and others believed that OpenAI will be non-profit.
I think here is the answer to another commenter's question about success - it looks like great success comes to one who is able to recognize in time when old obligations become "obsolete" and thus drop them well before those obligations start to block or heavily tax the way to further success.
Prediction for the future: OpenAI IPO's lots of money changes hands, it chugs along for a while, hits a hard spot and then is taken private for pennies on the dollar by Microsoft.
It used to be that you could find an IPO underwriter after 100M in revenue and growing YoY above others in the competitive basket.
I’m not sure that’s true anymore, I think you still need the revenue, but just need attention. everything else is just whatever because you can’t predict 10 year outcomes for any business at this point with any level of confidence, and there’s nothing to compare it to other than extremely different businesses.
Ultimately it’s more of the same goal with differing levers:
Offload a massive illiquid investment onto the public so that investors make their fund
Make sure it can tread water long enough for people to forget about it so it can go through the long and slow enshittification period
After all the prime investors have liquidated and some cooling period, risk of lawsuits from activist investors drops significantly, they can ratchet up the margins, do a few years of layoffs to pump the price.
Then everyone involved is back to where they started, only the top 100 richest people put even more distance between themselves and everyone else so they can now invest in radical life extension or whatever
> "Offload a massive illiquid investment onto the public so that investors make their fund"
This is what it looks like to me. Crazy growth numbers to bump the valuation and public interest, go public, gradually let the company shift into irrelevancy after major owners have cashed out.
The smoke and mirrors part here is that no one except the AI research community knows what the ML/AI capabilities will look like in 5 years. What that means is that the general public is probably going to eat up this IPO. Probably a better move to hedge by buying Microsoft, but whatevs.
My gut instinct is that this would be a hugely underperforming investment strategy on both an absolute and risk adjusted basis. I would welcome empirical evidence contradicting my gut.
OpenAi managed to keep Microsoft as major shareholder. Looking at the speed of growth Nvidia and friends are growing, OpenAI is 1 click far to IPO and one more click to 10x after IPO then finally buy Nvidia when GPU market cools down.
Can someone explain to me why California would believe Sam Altman plans to stay in California? This is a weak handshake agreement that could easily be flipped post IPO. The very flip from non-profit to IPO shows he will do what it takes for OpenAI to "succeed", so why would the geographical location be any more permanent than corporate structure. This isnt a diss to Sam either, it just shows he is motivated by whatever is best for the entity at any given time.
They might stay in California, but that probably has far more to do with available researchers and employee preferences than some agreement with the Attorney General.
Perhaps it’s not so much that they believe he’ll stay in California long term if he gets what he wants; more that they do believe he’ll leave in the short term if he doesn’t.
> This isnt a diss to Sam either, it just shows he is motivated by whatever is best for the entity at any given time.
This is the kind of weird rationalist (?) thing that people say a lot these days to justify bad behaviors: in this case Sam Altman behaves like a pathological liar.
How can a non-profit IPO? I know that technically OpenAI is a for-profit company that is owned by a non-profit, but I still don't get it.
It is being restructured to no longer be a nonprofit, but a for-benefit corporation instead. That is why California's approval was required (and IMO is just as corrupt as it sounds).
But aren't non profits a federal thing with rules dictated by the IRS? Why is California involved?
Because charities are also regulated by states as are all corporations. There is no federal corporate governance statute.
Corporate law is overwhelmingly state law. Every federally tax exempt entity is a state (or foreign) corporation or other kind of entity, and states (or foreign governments) impose rules on corporations registered in their borders.
Plus, many states levy their own corporate taxes. A nonprofit corporation needs to secure tax-exempt status from states as well as the federal government. This is a necessary implication of America's dual-sovereignty system.
> aren't non profits a federal thing with rules dictated by the IRS? Why is California involved?
Most states incorporate federal rules for their own exemptions for charities and non-profits. California treating OpenAI to date as a non-profit has revenue implications for Sacramento.
The Usa is divided into states, each with their own legal jurisdictions. Businesses tend to pay taxes to their state. OpenAI is headquartered in San Francisco, California.
you can IPO the for-profit subsidiary. done before. the main tricky part is resolving the tax issues since as a non profit you are exempt, but obviously a for profit is not exempt from paying taxes
Mozilla has this same structure (non-profit parent, for-profit subsidiary) because the subsidiary has to pay taxes on the money Google pays to be Firefox's default search engine.
As do many gift shops attached to non-profit museums and art galleries.
OpenAI - the AGI entity with a gift shop.
TFA:
> OpenAI had spent months making the case that it was the economic heart of the California economy—and would be willing to leave if Bonta blocked its plan to convert to a simpler corporate structure.
https://x.com/sama/status/1983223056668746218:
> California is my home, and I love it here, and when I talked to Attorney General Bonta two weeks ago I made clear that we were not going to do what those other companies do and threaten to leave if sued.
Hmmm...
> if Bonta blocked its plan to convert to a simpler corporate structure.
i'm a bit out of the loop but honestly why does California have a say? surely the investor base and Microsoft was a far harder negotiation than this one. this one smells of govt overreach.
Because of the unusual history of OpenAI, the Government had far more of a say than normal for a company. Remember, OpenAI was originally created as a California non-profit (a charity doing work to create a better AI future). As a charity, it doesn't have to pay the same taxes as it would as a for-profit company, but in exchange it has more rules it needs to follow. And then it released ChatGPT, it exploded in value, it needed to raise truly absurd amounts of capital in order to get to the next model, and thus the lawyers had to spend a good long time extracting the company from the charity.
For very good reasons, the laws make it hard to go from a charity to a for-profit company- because if you could easily transition between the two you could game tax laws with ease. In the end, being allowed to do this required negotiations, and promising to keep OpenAI in California- where they would be subject to other California regulations and taxes in the future.
If they had a "normal" corporate history- had been founded as a Delaware S Corp from the beginning- then this wouldn't be a thing and they would be free to move as they like(1). But, being a weird charity probably helped them attract talent in the critical beginning phases (before it became a money race with Zuck), and it has consequences now.
1: Just as an example, Palantir moved their corporate headquarters to Denver from Palo Alto years ago without a peep from the CA government.
The entity in question operates in california and is thus subject to california law. California has laws around charitable entities.
One might reasonably claim it's overreach, but in response OpenAI could just leave the state. Which is what they threatened.
Not when the AG sues the board and Sam for all the violations that happened around his ouster. The board isn't independent.
Because the company was formed as a non-profit and now wants to cash out? He has to protect the integrity of non-profits as a distinct entity type.
Corporations exist at the pleasure of government do they not? They are not some naturally-existing thing.
> Corporations exist at the pleasure of government do they not?
No. “At the pleasure of” means total discretion. The government can’t just stop letting businesses incorporate because it doesn’t like how a county voted.
There is no constitutional right to incorporate. Theoretically states could stop it at any time. Although they would still have to honor corporations formed in other states so it’s of limited effect.
> There is no constitutional right to incorporate
The Constitution directly grants very few individual rights. It’s mostly a document about what the government can’t do.
> Theoretically states could stop it at any time
Sure. That’s not “at the pleasure of.” Driver’s licenses are not issued “at the pleasure of” a state. Neither are marriage certificates. They’re issued as a matter of process that binds both the issuer and recipient to a predictable set of rules.
Why can't the government do that? Is it because the government created laws that limited its total discretion? That is besides my point. The people allow for corporations to exist is what I was getting at, and in the US businesses incorporate at the state level. So asking why California has a say in the structure of a company incorporated in it seemed odd to me on its face.
I would think that sort of framing implies that the government gives them permission to exist.
Rather than, the natural state is that they exist unless they do something bad enough to be shut down.
Unless you mean, they need the government's "permission" to even file to become a corporation... But even in that case, you aren't asking for permission, you're doing the old school equivalent of signing up for a domain, you're submitting a filing and reserving a spot for that name/ID.
It's more than that. When you file to incorporate, there is a birth. A new person is created, one that can potentially never die. Yes, it's routine, but it wasn't always, and it doesn't need to be forever. The ability to create a new, fake, person in order to shield yourself and your business partners from liability is a not a right. It is a deliberate policy that some sovereign jurisdictions allow their citizens.
> I would think that sort of framing implies that the government gives them permission to exist.
> Rather than, the natural state is that they exist unless they do something bad enough to be shut down.
JFC, come on. Corporations are legal entities and have no existence separate from the law. If they even have a natural state, that natural state is non-existence.
> All corporations are devoid of inherent nature.
> There is no inherent nature whatsoever.
> What is inherently existing is empty.
> What is empty is inherently existing.
Nāgārjuna vs Delaware
Yeah I think we're splitting hairs and actually aren't in any sort of disagreement here. I 100% agree that you have to be registered on paper with a government entity to get all the legal protections, insurance, etc etc etc. I've been a business owner for nearly 20 years. Like, a real business, with real paperwork and insurance and all that.
I'm thinking of all the unofficial mom and pops that transact and do business every day without having a proper legal entity. so it's more of a "does that count as a business even if they didn't file articles of incorporation?" of course it does, as far as its customers are concerned.
Think of the idea of "this guy has a lawn care business, I pay him every week to mow my lawn for 10 years", as far as his customers are concerned, he didn't need to get permission from the government to start doing that. And this sort of thing happens all the time.
I am NOT arguing whether a business where you filed articles is a legal entity, etc. There's no question that they are.
Hope that clarifies my point.
This feels like a narrative being pushed. Tech oligarchs these days are flexing by showing off how much they are able to bully government, and Altman wants to get in on the game by spinning things this way. I’m not convinced they really bent the rules for OpenAI any more than usual given they only employ a few hundred people.
OpenAI has over 5,000 employees. In addition to their headcount, they are now the highest valued private company in the world.
They're going to have some leverage.
I doubt OpenAI has to try very hard to convince state politicians, especially to the point of bullying. It's usually the complete opposite where they throw money at you to stay.
Imagine if California managed to scare away the hottest company in the world and all the tax revenue it brings...
This is kind of a wild story. Sam Altman is openly flexing that he was able to skirt the rules and regulations by threatening economic damage to California. It's not even subtle anymore.
This reminds me of when the former CEO of Hyundai, Chung Mong-koo, went to prison for embezzlement. In just 3 years he was pardoned because the President of South Korea basically said, "we need you for the economy."
We're not even pretending that the government is in control anymore. It's just full on anarcho-capitalism on display.
Can someone explain to me what Sam Altman is doing to be so far ahead of everyone else in terms of navigating these high stakes roles?
This happened at YC and a number of other places too, he goes into situations with nothing and comes out on top despite all odds.
Is he that skilled an operator, negotiator, or manipulator or something?
There is a book written about this topic. SA is the classic manipulator. He talks to each person whatever they want to hear, irrespective of what he really believes. Many of the things he says about AI and OpenAI are clear BS, but he'll sell that to anyone with a different flavor.
I can only speculate so take it with a spoon of salt... But people who are really good at sussing out other people's wants can find ways to make more people happy. It's like a maze of interests and I guess he's just really motivated and good at navigating and aligning them (at least among the rich and powerful).
He also seems to understand something about power and perception, in that he takes calculated risks that seem to keep working out.
So in other words, he seems to be an extraordinarily skillful politician (in both the general and the Patrick Lencioni sense).
It's too early to say if his risks "keep working out". Restructuring is not a risk. His, and others', original decision to make the company a non-profit was also not a calculated risk in this sense.
When he was fired from OpenAI, his use of employee manipulation to regain his position is not a risk; it is the only option he had. It was his bond maturing, of carefully cultivated loyalty he had accrued over years. Gaining that loyalty was not really a risk. It was smart politics.
One risk he took is: signing away such a large portion of the company to Microsoft. I'm not sure whether that is working out.
Another risk he took is: neglecting and sidelining the "safety" portion of his organization. This caused a talent exodus and led to the formation of many competitors. I'm not sure whether that is working out either.
Lol glazing much. Hes a poor mans Steve Jobs.
This is the guy who had everyone here rooting for him when the OpenAI board tried to kick him out. Which was almost certainly the result of a very successful PR campaign carried out by him.
He's not really comparable with Jobs. This guy is a politician and Jobs was a product guy.
It's a bit much to say he goes into situations with nothing - he, along with others created OpenAI. It's a decent sized company now and they have sway with governments. All decent sized companies do as employers. This kind of stuff happens all the time and it just doesn't get reported as much.
https://www.newyorker.com/magazine/2016/10/10/sam-altmans-ma...
> Is he that skilled an operator, negotiator, or manipulator or something?
He probably has everything every politician has ever asked chatgpt index and ready to be emailed out at any given time?
It's a great question. Here are two Paul Graham (PG) quotes on Sam Altman (Sama) from 2008 and 2009.
Note, PG is the founder of YC, Sam's former boss, and the one who removed Sam from the position of President of YC after first appointing Sam to succeed him as President of YC. (Sama was more focused on OpenAI than on YC at the time, which doesn't work when you're supposed to be leading YC.)
2008 Essay "A Fundraising Survival Guide" https://www.paulgraham.com/fundraising.html
Sam Altman has it. You could parachute him into an island full of cannibals and come back in 5 years and he'd be the king. If you're Sam Altman, you don't have to be profitable to convey to investors that you'll succeed with or without them. (He wasn't, and he did.) Not everyone has Sam's deal-making ability. I myself don't. But if you don't, you can let the numbers speak for you.
2009 Essay "5 Founders" https://paulgraham.com/5founders.html
5. Sam Altman I was told I shouldn't mention founders of YC-funded companies in this list. But Sam Altman can't be stopped by such flimsy rules. If he wants to be on this list, he's going to be. ... What I learned from meeting Sama is that the doctrine of the elect applies to startups. It applies way less than most people think: startup investing does not consist of trying to pick winners the way you might in a horse race. But there are a few people with such force of will that they're going to get whatever they want.
That's PG's take on Sama.
I would say, looking at a wide range of Sam Altman's more investments https://observer.com/2025/06/sam-altman-startup-investments/
from OpenAI to Helion energy (Fusion), to Retro Biosciences (longevity), Neuralink (brain computer interface), to Reddit
Sama really wants to "build the future," and when some of those investments "hit", like OpenAI did - basically become the first new company with a clear path to a $1T valuation since Facebook or TikTok), you gain immense credibility for "betting the future will happen and getting your organization there first."
If YC's motto is "build something people want," and OpenAI is now serving 800M active users while delivering incredible revenue growth (and investors want to see both). Sama gains power by giving investors what they want, by giving users what they want, and basically authoring an entire new type of software company and a new part of the economy.
A thing to note here is that, being a YC partner and top angel investor from 2011 to 2020, you can argue that Sam himself is "the most successful YC graduate." He saw thousands of companies go through YC. He saw hundreds of 'hard tech companies' go through YC. And in that decade, he could only have learned an immense amount about how VCs/successful CEOs think and make decisions. Certainly, we see the learnings of those experiences in what he's been able to pull off since.
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> threatening economic damage to California.
whoa there. corporations have the right to move to the best location for them. California does not have the eternal right to OpenAI's taxes and employee base. think about what you're implicitly assuming here. if one company simply leaving causes concerning "damage" then perhaps it is the government that is the problem, not the corporation driving economic growth.
Corporations are applications of government power and have no natural rights, their legal rights are at best proxies for the rights of natural persons with some interest in them, and at worst a fiction which serves to limit the rights of natural persons.
Also, having a right to do something does not contradict a description of you leveraging power by using a threat of doing it, in the first place.
> Corporations are applications of government power and have no natural rights
Sure. Whatever. The people who own and work at OpenAI have no obligation to remain in California.
(I’d also argue that global norms are currently walking back from the notion of natural rights pretty much everywhere except for in some parts of Europe. The concept doesn’t work without an appeal to divinity.)
The legal entity is what owns the IP, contracts, obligations, property, etc… so even if 100% of the current employees and owners moved, their collective worth and prospects would be significantly reduced if the legal entity doesn’t also come along.
Corporations used to not have that much political power
Corporations used to have their own militaries, they colonized entire nations and owned people. They underwrote kings and empires.
Democracy lets us swap out our king and some of the nobles.
The dukes and earls are still essential to run the nation, and must be courted.
didn't Sam does this before with another company? he was able to restructure it and come out on top... searching for article... was it Helion? now that i think harder, didnt he comment about it on HN??
That seems like expected behavior from someone whose barely veiled pitch is "the first one to AGI will IPO - Install Planetary Overlord.[1] Give me money and be part of the future ruling elite!" (Whether his actual plan is based on what he's saying in public, or to take the money and run, permanently install his company as in inescapable rent-extracting middle-man for modern life[2], or something else, I don't know.)
1. Credit to Charles Stross, The Jennifer Morgue 2. Thneed-style capitalism
This is very cynical, and almost certainly deliberately false take.
Many situations are fundamentally uncertain with respect to laws/rules in place. The idea that they "skirted rules and regulations" is wrong. Did they push in an attempt to get a decision made which would favor them? Sure. But there was a decision to be made.
And, the people are supposed to be in control anyway, not the government.
With cynical people, a cynical take is the right one.
The government believed him that OpenAI will stay in CA the same way that that government, OpenAI founders and others believed that OpenAI will be non-profit.
I think here is the answer to another commenter's question about success - it looks like great success comes to one who is able to recognize in time when old obligations become "obsolete" and thus drop them well before those obligations start to block or heavily tax the way to further success.
Is it possible for a poor fool retail investor to invest in OAI
The bag is being designed, cut and stitched, with retail investor shaped handles.
Just buy $QQQ.
The correct time to invest in individual companies is never.
Prediction for the future: OpenAI IPO's lots of money changes hands, it chugs along for a while, hits a hard spot and then is taken private for pennies on the dollar by Microsoft.
Could you elaborate? Not looking for a proof, just want to understand your train of thought. Always liked your commentary. Thanks!
Probably predicting either pop of AI bubble like dotcom in 1999 or the OpenAI emperor has no clothes and the marker sees its shrunk hunk.
Open AI will probably have the highest market cap of any company in the world on the opening day of trading.
that would be certifiably insane
It used to be that you could find an IPO underwriter after 100M in revenue and growing YoY above others in the competitive basket.
I’m not sure that’s true anymore, I think you still need the revenue, but just need attention. everything else is just whatever because you can’t predict 10 year outcomes for any business at this point with any level of confidence, and there’s nothing to compare it to other than extremely different businesses.
Ultimately it’s more of the same goal with differing levers:
Offload a massive illiquid investment onto the public so that investors make their fund
Make sure it can tread water long enough for people to forget about it so it can go through the long and slow enshittification period
After all the prime investors have liquidated and some cooling period, risk of lawsuits from activist investors drops significantly, they can ratchet up the margins, do a few years of layoffs to pump the price.
Then everyone involved is back to where they started, only the top 100 richest people put even more distance between themselves and everyone else so they can now invest in radical life extension or whatever
For folks curious, In terms of IPO, rule of 40 was common when I was involved in thinking about IPOs. https://www.mckinsey.com/industries/technology-media-and-tel...
Depends how you look at it but at DO we shot for 50, ended around 55. (25 % growth + 30 % profitability)
> "Offload a massive illiquid investment onto the public so that investors make their fund"
This is what it looks like to me. Crazy growth numbers to bump the valuation and public interest, go public, gradually let the company shift into irrelevancy after major owners have cashed out.
The smoke and mirrors part here is that no one except the AI research community knows what the ML/AI capabilities will look like in 5 years. What that means is that the general public is probably going to eat up this IPO. Probably a better move to hedge by buying Microsoft, but whatevs.
I agree with you and I hope you are right.
>Offload a massive illiquid investment onto the public
Because this state seems like a very solvable problem: All you have to is not buy it
ETFs like VOO will buy it eventually.
It started me wondering if theres an ETF that explicitly avoids the top 20 companies
My gut instinct is that this would be a hugely underperforming investment strategy on both an absolute and risk adjusted basis. I would welcome empirical evidence contradicting my gut.
There's SPXT (S&P 500 excluding tech sector), +79% in 5y, vs full S&P +110% in 5y.
Obviously, in tech/AI bull market it can't be not underperforming.
I'd rather cross to international (including. US) than to that, for a less performing but more Black Swan proof fund.
Couldn't you set up some options to simulate that?
XMGA
Staying in California doesn't mean it will keep employees in California. Prepare for the great offshoring.
OpenAi managed to keep Microsoft as major shareholder. Looking at the speed of growth Nvidia and friends are growing, OpenAI is 1 click far to IPO and one more click to 10x after IPO then finally buy Nvidia when GPU market cools down.
Just sayin...