zlacker

My initial reaction was "Hold up - your RSUs vest, you sell the shares and pocket the cash, you quit OpenAI, a few years later you disparage them, and then when? They somehow try and claw back the equity? How? At what value? There's no way this can work." Then I remembered that OpenAI "equity" doesn't take the form of an RSU or option or anything else that can be converted into an actual share ever. What they call "equity" is a "Profit Participation Unit (PPU)" that once vested entitles you to a share of their profits. They don't share the equivalent of a Cap Table with employees, so there's no way to tell what sort of ownership interest a PPU represents. And of course, it's unlikely OpenAI will ever turn a profit (which if they did would be capped anyway). So this is all just play money anyway.

>>DebtDe+(OP)
Wow. Smart for them. Former employees are behooved to the company for an actual perpetuity. Sounds like a raw deal but when the potential gains are that big, I guess you'll agree to pretty much anything.

>>DebtDe+(OP)
This is wrong on multiple levels. (to be clear I don't work at OAI)

> They don't share the equivalent of a Cap Table with employees, so there's no way to tell what sort of ownership interest a PPU represents

It is known - it represents 0 ownership share. They do not want to sell any ownership because their deal with MS gives MS 49% ownership and they don't want MS to be able to buy up additional stake and control the company.

> And of course, it's unlikely OpenAI will ever turn a profit (which if they did would be capped anyway). So this is all just play money anyway.

Putting aside your unreasonable confidence that OAI will never be profitable, the PPUs are tender offered so they can be sold to institutional investors up to a very high limit, OAIs current tender offer round values them at ~$80b iirc

>>DebtDe+(OP)
Their profit is capped at $1T, which is amount no company has ever achieved.

>>ec1096+Q6
No company? Are you sure? Aramco?

>>arthur+va
Apple has spent $650 billion on stock buybacks in the last decade.

Granted, that might be most of the profit they have made, but still, they're probably at at least 0.7T$ so far. I bet they'll break $1T eventually.

>>whimsi+T3
> Note at offer time candidates do not know how many PPUs they will be receiving or how many exist in total. This is important because it’s not clear to candidates if they are receiving 1% or 0.001% of profits for instance. Even when giving options, some startups are often unclear or simply do not share the total number of outstanding shares. That said, this is generally considered bad practice and unfavorable for employees. Additionally, tender offers are not guaranteed to happen and the cadence may also not be known.

> PPUs also are restricted by a 2-year lock, meaning that if there’s a liquidation event, a new hire can’t sell their units within their first 2 years. Another key difference is that the growth is currently capped at 10x. Similar to their overall company structure, the PPUs are capped at a growth of 10 times the original value. So in the offer example above, the candidate received $2M worth of PPUs, which means that their capped amount they could sell them for would be $20M

> The most recent liquidation event we’re aware of happened during a tender offer earlier this year. It was during this event that some early employees were able to sell their profit participation units. It’s difficult to know how often these events happen and who is allowed to sell, though, as it’s on company discretion.

This NDA wrinkle is another negative. Honestly I think the entire OpenAI compensation model is smoke and mirrors which is normal for startups and obviously inferior to RSUs.

https://www.levels.fyi/blog/openai-compensation.html

>>almost+6b
> Additionally, tender offers are not guaranteed to happen and the cadence may also not be known. > PPUs also are restricted by a 2-year lock, meaning that if there’s a liquidation event, a new hire can’t sell their units within their first 2 years.

i know for a fact that these bits are inaccurate, but i don't want to go into the details.

the profit share is not known but you are told what the PPUs were valued at the most recent tender offer

>>saalwe+Ta
Based on this they've had $1tn profits since 2009: https://companiesmarketcap.com/apple/earnings/

>>whimsi+T3
You're not saying anything that in any way contradicts my original post. Here, I'll simplify it - OpenAI's PPUs are not in any sense of the word "equity" in OpenAI, they are simply a subordinated claim to an unknown % of a hypothetical future profit.

>>DebtDe+cj1
> there's no way to tell what sort of ownership interest a PPU represents

Wrong. We know - it is 0, this directly contradicts your claim.

> this is all just play money anyway.

Again, wrong - because it is sellable so employees can take home millions. Play money in the startup world means illiquid options that can't be tender offered.

You're making it sound like this is a terrible deal for employees but I personally know people who are able to sell $1m+ in OAI PPUs to institutional investors as part of the tender offer.