OpenAI CEO Sam Altman recently spoke during the Microsoft Build conference, where he discussed the company’s plans to allow stakeholders to sell a portion of their shares every year. However, concerns have been raised among current and former employees about access to liquidity and OpenAI’s ability to determine who can participate in these sales. As the company’s valuation has skyrocketed, many early employees are sitting on millions of dollars worth of equity, and the only way for them to realize any value from their equity in the near term is through secondary stock sales.
In response to these concerns, OpenAI recently circulated a document detailing how the company has conducted equity purchases in the past and how it plans to handle them in the future. The issue of equity purchases has become a major topic of conversation at OpenAI and among people who have recently left the company. OpenAI has told employees that it will try to hold one tender offer roughly every year, depending on how both the company and the market are faring at the time.
This controversy comes at a time when OpenAI has been at the center of the tech universe, with recent announcements including a partnership with Apple to integrate ChatGPT and Siri. The company, backed by roughly $13 billion from Microsoft, has a unique “capped-profit” model, with a nonprofit as the governing entity for the for-profit subsidiary. However, there have been concerns raised about OpenAI’s treatment of departing employees and the restrictions placed on their vested equity.
Former OpenAI employees have raised questions about the security of their equity, particularly when it comes to potential clawbacks and restrictions on participating in future tender events or liquidity opportunities. OpenAI has faced criticism for its treatment of ex-employees who leave to work at competitors, with concerns raised about potential legal issues related to non-compete agreements. The company’s behavior has been described as playing hardball and creating undue pressure on former employees.
As the company navigates these controversies, OpenAI has announced the hiring of Sarah Friar, who previously served as CEO of Nextdoor and CFO of Square, as its finance chief. OpenAI has held three tender rounds to date, with former employees typically participating in these rounds months after transactions for current staffers. OpenAI has faced scrutiny for its aggressive tactics in dealing with departing employees and the restrictions placed on their vested equity, with concerns raised about the potential for future litigation tied to non-compete agreements.
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