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The board does and they are not supposed to have a financial stake in the non-profit. Usually they just vote their friends on. Welcome to the loony tunes that is nonprofit management.

Clearly Microsoft staked its whole product roadmap on 4 random people with no financial skin in the game.

>>dougmw+(OP)
That does sound like loony tunes. If the board elects itself then I think it is a very very bad arrangement for something as important as OpenAI.

>>dougmw+(OP)
> Usually they just vote their friends on

You actually think that for-profit corporate boards are significantly different, especially in the startup/early IPO phase?

>>PaulDa+p1
But those are people who have some skin in the game right? And shareholders can change the board structure right?

>>PaulDa+p1
Sure, the investors own the company and the board answers to them. Nonprofits are significantly disconnected from their own financial incentives. I have witnessed it at every nonprofit I have worked for.

>>crop_r+N1
I was at amzn when jeff formed the first board. No skin in the game, and no shareholders with any votes. I gather this is pretty typical.

>>PaulDa+72
But Jeff was the shareholder and those were his nominees right? Not to mention he was mostly able to pick the board as needed. In for profit corporation there is a clear ultimate ownership in shareholders. No such thing here.

>>crop_r+q2
The claim was that non-profits "just put their friends on the board". No difference.

>>dougmw+52
In the early stage the investor does not own the startup. 20-30% stake would be typical. Hence why a Series A investor usually demands a board seat and special considerations.

>>crop_r+z
That is one problem with non-profits. They end up with completely unprofessional leadership because they hire their friends who are crazies just like themselves.

When things cool down in a few months we will learn Altman and Brockman were some of the few sane people on the board.

>>dougmw+52
> Sure, the investors own the company and the board answers to them.

Huh? Plenty of startups in the stage being referenced are still majority owned by the founders.

>>PaulDa+p1
From Tom Perkins’s biography - after serving on boards both big private companies and non-profjts, he said that non profits were much worse. His theory was that with no money on the stake it’s all about egos, and they cause weird situations to happen.

Also, I worked in startups and my ex-gf in various nonprofits, and the amount of drama she saw was way higher than in the commercial world

>>cthalu+Re
Even if I only owned 1% of Google I’d be very motivated to vote in the best financial interests of the company. If I owned 0% not so much.

>>dougmw+52
I mean.. the OpenAI foundation is literally not motivated by profit. I guess the main question here is how was the board chosen, and why didn't Sam much sure they were friendly to them.

>>adastr+n4
Investor here is not someone who puts cash in professionally without running the company. Investor here means whoever owns the stock. There is always an investor in a company even if its just the founder owning 100% stock.

The board reports to the shareholders and the management reports to the board.

In early stage companies it is possible and likely that all three are the same person, that doesn't change the different fiduciary responsibilities for each role they play.

>>manque+Jq1
The word you are looking for is "shareholder."

>>adastr+Yp2
I specifically did not use the word shareholder.

This has not do with beneficial ownership of the underlying asset alone. Principals sometimes do not have that relationship. Asset ownership is a common way to benefit from a entity, but not the only way.

Specifically here Sam Altman does not own shares in the for-profit entity and non profit entities do not have shares.

I don't have direct knowledge on how OpenAI handles it, however it is not uncommon to do revenue sharing, or lease an underlying asset like a brand name (WeWork did this) from the Principal directly, or pay for perks like housing, planes etc, or pay lot of money in Salary/Cash compensation, there are myriad ways to benefit from control without share ownership.