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.
The dukes and earls are still essential to run the nation, and must be courted.
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?
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).
He's not really comparable with Jobs. This guy is a politician and Jobs was a product guy.
They're both excellent marketers.
S Jobs was a clinical and clear communicator. Altman in comparison? Lmao.
"his is the guy who had everyone here rooting for him when the OpenAI board tried to kick him out."
Finally... oh this is just funny. Who rooted for S Jobs when he was kicked out of Apple, and cheered for him on his return?
.....
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.
In both cases he had the option of accepting the status quo.
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.
He probably has everything every politician has ever asked chatgpt index and ready to be emailed out at any given time?
(0) Be exceptionally intelligent and capable of applying that intelligence to people, not just code or math — necessary for everything that follows.
(1) Keep attention diversified as long as possible until the winning path becomes obvious.
(2) Focus on fringe bets, but pursue many simultaneously until one clearly dominates (see (1)).
(3) Extreme social manipulation — people-pleasing, control- and power-seeking, selective transparency, skillful large-scale dishonesty, and a willingness to hurt or betray when it serves (1) and (2) and the relational cost is acceptable.
(2) brought him into the startup ecosystem and the first YC batch in the first place (he had to start somewhere); combined with (3) he made an early fortune from a failed startup. (3) also ingratiated him with PG and others in those years. (1)+(2) ensured he always had exposure to every plausible frontier of the industry; when he was effectively edged out of YC for over-diversifying, that same pattern made the OpenAI pivot the next obvious move — and a better one. (3) almost cost him his career when the board fired him from OpenAI temporarily, but he survived because (3) also ensured he had enough to offer everyone else that he leveraged his way back in.
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.
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.
Today, though, one can reasonably argue that megacorps have managed to successfully capture the most powerful government on Earth.
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.
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.)
ehh....
https://www.greenbacktaxservices.com/blog/california-exit-ta...
Skip to the "What California Can Still Tax After You Leave" section
If they do this to people, i am sure they can to corps too
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.
1. Credit to Charles Stross, The Jennifer Morgue 2. Thneed-style capitalism
Just sayin...
> 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...
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.
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.
> 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.
> There is no inherent nature whatsoever.
> What is inherently existing is empty.
> What is empty is inherently existing.
Nāgārjuna vs Delaware
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.
A corporation is a legal fiction that describes an association of people. The association is real and has a natural state. The corporate existence does not. (Analogous: a house is real. Land is real. Property is a social construct.)
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.
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.
Yes. As you said, "the people allow for corporations to exist," and the same people created the government and allow it to exist. And when those people created that government they created rules that govern what laws the government is allowed to enact. Those rules are known as the constitution. And one of the first rules the people made when they created the government is the aptly named "first amendment." And that rule clearly states that the government can't take legal action against a citizen for saying something the government doesn't like. The CA government retaliating against OpenAI for its CEO threatening to leave the state would clearly violate this rule.
The government can revoke a corporation's charter at any time it desires to.
One might reasonably claim it's overreach, but in response OpenAI could just leave the state. Which is what they threatened.
Board independence is largely a silly idea, people aren't even on the same page as to what the board is supposed to be independent of, and in this case it's not even clear which board you mean - the current one? The previous one? In what way are they less independent than any other board?
In the U.S. they absolutely are. The SEC defines independent directors [1]. If the majority of a (Delaware corporation's) Board isn't independent, it opens up the company and even individual Board members to heightened scrutiny by the courts [2].
[1] https://www.skadden.com/-/media/files/publications/2022/02/t...
[2] https://www.faegredrinker.com/en/insights/publications/2022/...
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.
Note: non-profit != charity. (All charities are non-profits. Not all non-profits are charities. PACs and non-profit hospitals, for example, are not charities, though the latter can have charitable arms.)
See, for example, Charity Navigator's page on OpenAI: https://www.charitynavigator.org/ein/810861541
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.
Guys, the only state morally bankrupt enough to just allow that is Texas. Why do you think these tech bozos love Texas? It's basically cyberpunk over here. Our government actively hates us.
We struck down paid water breaks in Texas. I once worked a job with no breaks at all. 10 hour days, no lunch. Yes, that's legal here.
They're going to have some leverage.
Imagine if California managed to scare away the hottest company in the world and all the tax revenue it brings...
Edward Niedermeyer, author of “Ludicrous: The Unvarnished Story of Tesla Motors,” said Musk was happy to benefit from California’s largesse when it suited him and to move on when he saw fit.
“I think Musk has made the calculation that he’s gotten all the benefits he’s likely to get out of the state and he’s moving on to the next one,” Niedermeyer said. “The state of California clearly thought that all its work bought loyalty [from Musk] but, instead, I think it bought a sense of entitlement.”
Elon Musk’s messy divorce with California leaves ugly grievances all around: https://www.latimes.com/california/story/2024-07-23/elon-mus...
Agriculture in California hit $61 billion in annual receipts in 2024 (https://www.cdfa.ca.gov/statistics/).
So, not that OpenAI isn't big, but, "the heart of the California economy"?
OpenAI needs to IPO, because if they don't get in on the current meme stock economy, they're going to collapse.
As do many gift shops attached to non-profit museums and art galleries.
OpenAI’s profit-generating subsidiary isn’t just there to further the non-profit mission like a museum gift shop or Mozilla’s for-profit subsidiary.
Novo Nordisk the maker of Ozempic for example IPOd, diluting the Novo Nordisk Foundation’s share (though they still have controlling voting rights due to share classes IIRC) to raise money. SRI International spinoffs often get sold (Siri) or raise money and IPO (Nuance) diluting the nonprofit’s share significantly in the process.
A nonprofit that owns a for profit subsidiary is no different than a regular shareholder and can decide that diluting to reward employees or get investors is worth it to grow the value of the whole company.
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.
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.
For example - every US nonprofit starts as a plain old vanilla C corporation, and then applies for 501(c)3 status which the IRS may or may not grant. It's a privilege to be a nonprofit.
The punishment that may be levied on a nonprofit is ... loss of that status and a return to a commercial corporation. That loss of status might have knock-on impacts on things like, say, tax deductions offered to donors, and I guess possibly on corporate income tax to the extent a company's accounting shows a profit. But it's not a thing you're "locked into" somehow and trying to escape. Quite the opposite; it's a thing the Federal government chooses to support financially as a matter of public policy.
oAI had a lot of work to do to get recapitalized like it did, but it was not the non-profit status that was the (major) problem. It was (at the least) the investment covenants made with the Microsofts of the world that bound them; the MS deal was the big thing here.
There is no clear path to the trillion dollars today. By IPOing, the owners (who have a good idea of where it's going) can exchange their ticket to the trillion for cash today.
Seems like a bad deal unless you know the ticket won't get called. Then you've just made bank.
And you might have noticed some form of hype around AI these last few years - arguably this could be to make the trillion dollar seem more realistic and therefore making the owners more money when selling their ticket to it.
But I think you're totally incorrect on this; oAI is going to be one of the enduring tech consumer brands built in this half of the 21st century.
They definitely have a strong consumer brand so it’s not like they’re going to disappear, but I understand the bear case.
I think it's highly likely in the next 10 years companies like Spotify and Uber will no longer exist. They're fundamentally antogonistic to their capital.
The correct time to invest in individual companies is never.
Of course the stock can rise again eventually.
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.
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.
So California needs to believe that OpenAI will stay in California just as much as OpenAI needs to believe that CA won't block the conversion (or impose other onerous regulations around AI). So yes, it's possible to speculate about whether or not people are sincere in their motivations, but when you need to make a deal, there needs to be a measure of good faith and trust on both sides in order to make something happen.
And in this case, both sides are incentivized to make the deal. OpenAI wants to be a PBC in order to access more capital, and California wants OpenAI to be a PBC so that it can IPO so that all employees (all of whom are likely CA residents), will sell stock, which can then be taxed as CA income.
It's about a moment in time, not an "in perpetuity" agreement.
Since it's a non-profit still holding it any gains to the non-profit entity upon the conversion don't go to California, and principal stakeholders can move away. Other funds raised from the IPO can be invested in other states untaxed (long term datacenter leases instead of booking the capital of building one) until they move the company away I think.
There will probably be a lot of smaller stakeholders that stay with a lot of money for the state, and California at least doesn't do the $15 million QSBS so they may get a lot from that tail of employees. A large portion of this tail of lower compensated employees may get laid off due to AI replacement before IPO and lose a lot of unvested years, if we are to believe OpenAI's own claims about timelines for job replacement in that field at lower levels.
Politicians taking the superficial short-term win, as they will end up giving in to the megacorp anyway, is not surprising to me.
These clumsy stereotypes are so pointless.
The simple answer is unless developing LLMs becomes commoditised, the best place in the world to do it is in San Francisco. You don't take your manufacturing business out of Shenzhen without very good reason.
You don't move your manufacturing business out of Shenzhen because the entire hard supply chain from mining, refining, manufacturing, test, ship and trade are all there. You can't move a refinery that easily much less the entire supply chain.
What’s the advantage of moving? Maybe lower taxes and a cheaper rent.
That seems like a small price to pay compared to the hundreds of billions they’re putting into data centers.
It's not like data centers are mainly in SF.
The data centers I think prove this point, and disprove yours -- huge spend has gone into data centers, but places like Wenatchee remain stubbornly not Silicon Valley.
Intel has not made Portland into SV. Austin, while a tech hub and one of the US supply chain centers for hardware, is multiple orders of magnitude less productive than SV for tech startups. Productive as in numbers of unicorns, total value creation, however you want to spin it.
People tried very hard to change it between 2020-2023 and utterly failed.
Well paid engineers congregate in California because it's a nice place to live if you can afford it.
Therefore if you want to hire the best engineers, and want an in-office work culture, you need to go to California.
However, post Sarbox US is vastly more regulated than the markets that "built" Silicon Valley, and there are many costs to corporations, founders and employees of that heavier regulation -- including a radically less friendly public capital market for companies worth hundreds of millions of dollars.
The TXSE was launched by an energy magnate [1] and "is financed by institutional investors including Charles Schwab, Fortress, BlackRock, and Citadel Securities" [2]. It's a direct response to the NASDAQ and NYSE putting their feet down on carbon emissions.
Nothing about its structure requires a company be incorporated in Texas much less based there [3]--those restrictions would go against the reason it was founded.
[1] https://en.wikipedia.org/wiki/Kelcy_Warren
[2] https://en.wikipedia.org/wiki/Texas_Stock_Exchange
[3] https://www.hunton.com/insights/legal/a-comparative-analysis...
also, where you are and who you know are very different things
Different but related. Getting a purposeful introduction involves a lot more friction than being invited to someone's home for dinner with their colleagues and contacts.
Of course it does.
The benefits of proximity to business clusters [1] is well researched [2]. There is no evidence remote work has dampened that tendency; if anything, as evidenced by AI, the effect seems to have increased.
[1] https://en.wikipedia.org/wiki/Business_cluster#Cluster_effec...
[2] https://www.isc.hbs.edu/competitiveness-economic-development...
> Sometimes cluster strategies still do not produce enough of a positive impact to be justified in certain industries.
Let's take a step back and look at the fundamentals of a tech company who's employees are remote - what are the specific benefits of having a San Francisco office?
I'm linking to studies summarising a century of work. There is no evidence Covid changed this.
Exhibit A for Covid having not changed this is the continuing supremacy of Silicon Valley (tech), Shenzhen (manufacturing) and New York (finance) as industrial clusters that others have tried to replicate (everyone, America and Miami, respectively) and failed.
> Let's take a step back and look at the fundamentals of a tech company who's employees are remote - what are the specific benefits of having a San Francisco office?
Proximity to investors. Proximity to customers. Proximity to a skilled employee pool. Proxomity to acquirers. (A lot of deals happen at cocktail parties and ski trips.)
By the way, I'm not arguing anyone needs an office. Just people physically and and proximate to the cluster.
You mean like when China built chatgpt 4 in a weekend and open-sourced it for giggles?
> Shenzhen (manufacturing)
..or you mean how US manufacturing 'clusters' almost completely disappeared/replaced by Chinese ones?
> Proximity to investors. Proximity to customers. Proximity to a skilled employee pool. Proxomity to acquirers.
Right, cause you have to physically pet every investor on the head to fundraise, your remote employees must be in san fran cause network latency interferes with their windows remote desktop workflow, and, for some reason, you have to be physically close to your customers when you're selling your web-only llm wrapper saas.
Link?
The MOU [1] requires OpenAI "provide at least 21 days’ prior written notice to the Attorney General before consenting to: (a) a change of control of the PBC; (b) any change to the PBC mission as set out in the PBC Delaware charter; (c) any amendment to the PBC Delaware charter that would remove the NFP’s sole right, as holder of the Class N shares, to appoint PBC directors or otherwise reduces in any material respect the rights of the Class N shares; or (d) the relocation of the headquarters of the NFP or PBC outside of California" [1].
The meat appears to be in the agreements by OpenAI to not change its ownership and control structure. California's real leverage would be in re-opening this dispute, though ¶ 22 seems to water down that power somewhat. (Maybe go after the donors?)
[1] https://oag.ca.gov/system/files/attachments/press-docs/Final... ¶ 19
Start by figuring out who Leland Stanford is and how he got rich. Read the book ‘Palo Alto’ if you’re looking for a good starting point.
Suddenly everyone here is very very concerned with the classification of this corporate entity, and I detect people feel personally slighted. Why is that?
The workers and supporters who were taken by this idealistic vision, believe it was a bait-and-switch, and that the original promises were never intended to be kept.
I haven’t heard from any of the workers. Why are people white-knighting for them? My hot take is that they don’t mind being able to afford a house (or more) for their efforts. Where’s the outraged employees in this conversation?
As for “supporters,” what does that mean? People who watch from the sidelines and never actually contributed don’t usually get a say.
But did regular folks donate? Otherwise it seems people are outraged that their hypothetical donations were misused.
The only people who can claim harm are donors and workers who actually left, e.g. Murati. "Supporters" aren't stakeholders in any material sense.
Combined with a feeling that they don't like this wave of GenAI, you get a lot of uninformed hate that's deeply felt, and probably reasonably felt. But also totally uninformed.
Then, once GPT models exploded in value, making the for-profit arm worth tens of billions, they attempted to restructure toward a public company model to let investors and insiders cash out at scale, while claiming the non-profit board would still "control" the direction. This directly contradicts their original charter, which warned that profit motives could lead to unsafe AI racing.
Now it is clear that we are nowhere near AGI, and hence they have to make money from making fake tiktok videos and smut. And they just want to cash out because the original premise won't deliver. Specifically it was very disingenuous and that is why people hate it.
They're quite literally running away with millions in tax money they stole. That means from YOU.
It's a sense of entitlement that pisses people off. Imagine you're a hardworking American who pays his taxes for the betterment of his country.
And then here comes this Sam Altman douchebag, who thinks he's so important he doesn't have to pay taxes. He thinks you should foot the bill, because you're nobody, and he's Sam Altman.
If you're not at least a little bit pissed at the precedent this is setting, I personally view that as pathetic.
Eventually Cisco did indeed buckle in 2021 and reincorporate in Delaware . . .
Of course that isn't distributed remotely evenly and a lot of employees have not nearly enough to want to leave CA over taxes or just don't want to leave CA for other reasons. But OpenAI could easily say "HQ is moving to Austin. All employees must relocate and will be given $1M relocation bonuses." And the part left unsaid would be "Failure to comply means you lose 7 figures of options." Take rate on that would be >95%.
AndrewKemendo•8h ago
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
gretch•8h ago
>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
somanyphotons•8h ago
It started me wondering if theres an ETF that explicitly avoids the top 20 companies
NewJazz•8h ago
CGMthrowaway•8h ago
d0odk•8h ago
hshdhdhehd•6h ago
jakub_g•5h ago
Obviously, in tech/AI bull market it can't be not underperforming.
Jensson•3h ago
Your index fund will buy them.
jppope•8h ago
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.
neom•7h ago
Depends how you look at it but at DO we shot for 50, ended around 55. (25 % growth + 30 % profitability)
JumpCrisscross•3h ago
Anyone with OpenAI stock can do this in the private markets right now to the tune of hundreds of millions of dollars. Not billions. But I'm not convinced liquidity--versus appreciation, for investors, and access to capital, for the company--is the primary motivation for going public.
nemo44x•55m ago