Sure, with hindsight. But it didn't require much in the way of foresight to predict that some sort of problem would arise from the not-for-profit operating a hot startup that is by definition poorly aligned with the stated goals of the parent company. The writing was on the wall.
If OpenAI is struggling to hard with the corporate alignment problem, how are they going to tackle the outer and inner alignment problems?
Was it a mistake to create OpenAI as a public charity?
Or was it a mistake to operate OpenAI as if it were a startup?
The problem isn't really either one—it's the inherent conflict between the two. IMO, the only reason to see creating it as a 501(c)(3) being a mistake is if you think cutting-edge machine learning is inherently going to be targeted by people looking to make a quick buck off of it.
Only the current setup is feasible if they want to get the kind of investment required. This can work if the board is pragmatic and has no conflict of interest, so preferably someone with no stake in anything AI either biz or academic.
I mean that's certainly been my experience of it thus far, is companies rushing to market with half-baked products that (allegedly) incorporate AI to do some task or another.
(But yes; what you describe is absolutely happening left and right...)
Lots of ventures cut corners early on that they eventually had to pay for, but cutting the corners was crucial to their initial success and growth
I think it could have worked either as a non-profit or as a for-profit. It's this weird jackass hybrid thing that's produced most of the conflict, or so it seems to me. Neither fish nor fowl, as the saying goes.
> Organizations described in section 501(c)(3) are commonly referred to as charitable organizations. Organizations described in section 501(c)(3), other than testing for public safety organizations, are eligible to receive tax-deductible contributions in accordance with Code section 170.
https://projects.propublica.org/nonprofits/organizations/810...
https://www.irs.gov/charities-non-profits/eo-operational-req...
Suggests GP is not making a legal distinction, it's a description of how they are actually running things.
Why do they do that? Seems ridiculous on the face of it. Nothing about 501(c)(3) entails providing any sort of good or service to society at large. In fact, the very same thing prevents them from competing with for-profit entities at providing any good or service to society at large. The only reason they exist at all is that for-profit companies are terrible at feeding, housing, and protecting their own labor force.
Sure it does:
https://www.irs.gov/charities-non-profits/charitable-organiz...
While one might disagree that the particular subcategories into which a 501c3 must fit into one of do, in fact, provide a good or service to society at large, that's the rationale for 501c3 and its categories. Its true that "charity" or "charitable organization" (and "charitable purpose"), the common terms (used even by the IRS) is pedantically incomplete, since the actual purpose part of the requirement in the statute is "organized and operated exclusively for religious, charitable, scientific, testing for public safety, literary, or educational purposes, or to foster national or international amateur sports competition (but only if no part of its activities involve the provision of athletic facilities or equipment), or for the prevention of cruelty to children or animals", but, yeah, it does require something which policymakers have judged to be a good or service that benefits society at large.
TIL "public charity" is specific legal term that only some 501(c)(3) qualify as. To do so there are additional restrictions, including around governance and a requirement that a significant amount of funding come from small donors other charities or the government. In exchange a public charity has higher tax deductible giving limits for donors.
https://en.wikipedia.org/wiki/Novo_Nordisk_Foundation
There are other similar examples like Ikea.
But those examples are for mature, established companies operating under a nonprofit. OpenAI is different. Not only does it have the for-profit subsidiary, but the for-profit needs to frequently fundraise. It's natural for fundraising to require renegotiations in the board structure, possibly contentious ones. So in retrospect it doesn't seem surprising that this process would become extra contentious with OpenAI's structure.
I think it was a real mistake to create OpenAI as a public charity and I would be hesitant to step into that mess. Imagine the fun when it tips into a private foundation status.