So there’s this AI called “ChatGPT” being developed by OpenAI, right? And let me tell ya, despite its name, OpenAI ain’t exactly an open company. Even Elon Musk, who was involved in founding the company, has been mocking them, saying, “OpenAI was created as an open-source and non-profit company to rival Google (that’s why I named it ‘Open’), but now it’s become a closed-source, profit-making company essentially controlled by Microsoft. That was never the intention, man.”
Now, they may not be as “evil” as Musk implies. You see, OpenAI has these two unique company schemes that not many people know about, man. First, they call themselves a “capped-profit” company, meaning they set a limit on the profits they distribute to their shareholders and employees (the limit is negotiated in advance and won’t exceed 100 times the investment amount for each investor). OpenAI follows this hybrid corporate governance scheme, consisting of two companies: “OpenAI LP,” a for-profit entity (technically an LLC in California), and “OpenAI Nonprofit,” a tax-exempt non-profit organization (officially named “OpenAI, Inc.” under US Code 501(c)(3)). The for-profit LP is managed and controlled by a non-profit General Partner that has an independent board of directors with a majority of external members. No other owners exist besides the General Partner (Sam Altman, Greg Brockman, and Ilya Sutskever, who are LP members, can’t vote on matters that directly affect their interests). That’s the first scheme.
The second scheme is that OpenAI has a charter, man. Hear me out, this charter declares that OpenAI has a primary fiduciary duty to humanity in achieving artificial general intelligence (AGI), and shareholder interests will be secondary to that. If another project that shares OpenAI’s values and aims for AGI with an emphasis on safety comes close to building it before OpenAI, guess what? OpenAI will stop competing and start supporting that project, bro! They really put this commitment to humanity’s benefit before their own, and they’ve made sure it’s part of every contract with shareholders and employees, man. Now, that’s something, right?
But here’s the thing, man, the traditional concept of shareholder primacy, you know, the one economist Milton Friedman talked about, it’s hitting a turning point. Many experts are advocating for a shift from shareholder primacy to something called “stakeholder capitalism,” where companies consider not only the shareholders but also employees, customers, local communities, and the environment. The growing BCorp movement, including Benefit Corporations that prioritize corporate social responsibility, proves that this trend ain’t some fleeting thing, man. So you can argue that OpenAI’s corporate governance adventure falls within this wave, bro. Now, I ain’t saying setting the cap at 100 times is perfect or anything, but the fact that they’re taking concrete actions sets them apart from most companies today, and it definitely ain’t “evil,” alright?
Now, if we trace the origins of companies, we’ll end up with these joint-stock companies like the British East India Company and the Virginia Company in America. The so-called “Mayflower Compact” by the Pilgrim Fathers who sailed on the Mayflower, it wasn’t just a social contract that laid the foundation for the United States, man, it was also a joint-stock company’s organizational contract. According to legal scholar Michiyo Hamada, it’s natural that the governance structure of constitutional democracy bears resemblance to that of a company because the governance structure of constitutional democracy has its origins in companies. It’s pretty obvious that corporations, which have gained legal personhood, are major players in modern society, but the essence of a company, where it came from and where it’s heading, man, asking these questions goes beyond mere corporate design theory, okay?
