After dramatic infighting, OpenAI has a new board of directors, but it still faces the same problems: OpenAI's ownership structure and regulatory difficulties. OpenAI was originally a non-profit organization whose goal was to "ensure that artificial intelligence benefits all mankind" and is governed through a board of directors. But later, OpenAI added a for-profit subsidiary, OpenAIglobal, which raised huge amounts of money, including tens of billions of dollars in investment from Microsoft.
Charles Elson, director of the Center for Corporate Governance at the University of Delaware, pointed out that there are obvious conflicts of interest and governance issues when nonprofit boards oversee for-profit businesses. “For-profit and non-profit don’t mix, they have completely different goals.”
Elson added that after Altman regains control of OpenAI, the new board of directors should abolish the current "for-profit and non-profit" hybrid structure and convert it to a for-profit institution as soon as reasonably possible. The confusion caused by the dual identity is very problematic.
Currently, the first three members of OpenAI’s new board of directors are board chairman Bret Taylor, former U.S. Treasury Secretary Summers, and Adam D’Angelo, CEO of the question and answer website Quora; D’Angelo is also the only remaining member of OpenAI’s previous board of directors.
In addition, Microsoft received a "non-voting observer" seat, which means that company representatives can attend OpenAI's board meetings and obtain confidential information, but have no voting rights on matters such as electing or selecting directors. This also means that Microsoft will have a greater say in the subsequent management of OpenAI.
It is reported that the new board of directors will appoint more directors in the future and may make major reforms to OpenAI's governance structure.
According to OpenAI's current corporate charter, the board's sole responsibility is to ensure that the company develops artificial intelligence systems that benefit humanity, even if that means wiping out investors' profits. This goal has not changed with the establishment of the subsidiary.
Ruth Bernstein, associate professor of nonprofit management at Pepperdine University, said the primary focus of a nonprofit board is the mission of the organization, not any financial gain in making a profit.
Elson believes that in some ways, all boards, whether overseeing nonprofits or for-profit companies, are similar, with responsibilities including hiring and firing leadership and setting executive compensation.
However, their goals are different. The purpose of a for-profit company is to return capital to investors, while the purpose of a non-profit organization is to create social benefit. "But the two don't mix well together, like oil and water."
John Hotta, director of the National Association of Corporate Directors in Northern California, said board mismatch is not the only problem OpenAI faces. “The company’s reporting hierarchy needs to be clear, with the CEO and board chair determining the direction of the company, and when these two roles are separated, if there is a conflict between the two, the board needs to communicate and follow who has the ultimate authority.”
In the case of OpenAI, Altman's return was driven by backlash from investors and employees after the board fired the CEO. Three of the four board members who pushed Altman out of the company have now left, including OpenAI co-founder Ilya. Suskwo.
Professionals pointed out that OpenAI and the board of directors need to figure out what the company is, whether it is an ethical startup or a public service organization. I don’t know what they want to do.
Obviously, Ultraman is also aware of this problem. He said on Wednesday that OpenAI is reconsidering the company's hybrid "for-profit and not-for-profit" structure. "There are clearly some flaws with this structure, and our new board is thinking hard about what is the best corporate structure for our mission."