Abstract

This case is about the meteoric rise of San Francisco-based AI research and deployment company OpenAI whose aim is to create and promote safe, transparent, and beneficial AI for all. Founded in 2015 as a nonprofit research organization by a group of tech entrepreneurs including Elon Musk and Sam Altman, OpenAI’s mission is to democratize AI in a way that would best benefit humanity. Since its inception, OpenAI has been instrumental in developing groundbreaking technologies, such as the ChatGPT, DALL-E, Whisper, and Codex. By May 2023, OpenAI became one of the leading AI research labs in the world, with a market valuation of US$29 billion. The case discusses OpenAI’s transition from a non-profit organization into a “capped-profit” company to raise funds and attract talent. This structure capped investor profits at 100 times their investment. However, the move was criticized by some analysts as they felt that it went against the company’s claim of democratizing AI, thereby diluting its mission and leading it away from its founding principles. Moreover, the company found itself grappling with growing competition and regulatory challenges.

Learning Objectives

The case is structured to achieve the following Learning Objectives:

• Understand Artificial General Intelligence (AGI) and the concept of disruptive innovation
• Analyze the benefits and challenges of democratizing AI.
• Evaluate OpenAI’s business model.
• Discuss the pros and cons of transitioning from a non-profit organization to a hybrid company, with a capped profit company
• Study the interrelationship between Purpose and Profits

Keywords

OpenAI; Purpose vs Profits; Generative Artificial Intelligence; Responsible AI; Disruptive innovation; Business Model Innovation; Ethical AI; ChatGPT; Capped for-Profit Model