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Can someone explain to me why California would believe Sam Altman plans to stay in California? This is a weak handshake agreement that could easily be flipped post IPO. The very flip from non-profit to IPO shows he will do what it takes for OpenAI to "succeed", so why would the geographical location be any more permanent than corporate structure. This isnt a diss to Sam either, it just shows he is motivated by whatever is best for the entity at any given time.
They might stay in California, but that probably has far more to do with available researchers and employee preferences than some agreement with the Attorney General.
In any negotiation, you need to understand what leverage either side has. In this case, CA could block the conversion, and OpenAI could leave California. Both are possible but extremely unlikely outcomes! So the whole point is to take these unlikely outcomes to the table, negotiate in good faith, and come out with an agreement.
So California needs to believe that OpenAI will stay in California just as much as OpenAI needs to believe that CA won't block the conversion (or impose other onerous regulations around AI). So yes, it's possible to speculate about whether or not people are sincere in their motivations, but when you need to make a deal, there needs to be a measure of good faith and trust on both sides in order to make something happen.
And in this case, both sides are incentivized to make the deal. OpenAI wants to be a PBC in order to access more capital, and California wants OpenAI to be a PBC so that it can IPO so that all employees (all of whom are likely CA residents), will sell stock, which can then be taxed as CA income.
If I am understanding things correctly, OpenAI could leave in the future - but CA can’t retroactively block the conversion in that case.
California is home to 1 in 8 Americans, and likely a much higher fraction of AI researchers, users and partner organizations to OpenAI (like Nvidia). The California AG has plenty of leverage beyond blocking/reversing the conversion. What leverage will OpenAI have after "leaving"[1] the California?
1. They're guaranteed to have an engineering office in the SF Bay. Not many of those folk will agree to relocate to Texas/Miami.
By rendaw 2025-10-314:54 What's stopping OpenAI from offering telework? AI isn't dealing with high security or particularly sensitive data (that developers need to actively access - training data is all public or stolen works) and it's not a hardware product.
By Jackpillar 2025-10-3010:431 reply Yup the Tesla treatment. Can change HQ's all you want but the main engineering work, brains, and talent will be at a HQ in California no matter what. Sam will probably do this for brownie points with the current administration, it will be politicized news for a cycle, but after the dust settles the majority of non-admin people will still be working unchanged out of CA.
By hyperadvanced 2025-10-315:01 That’s assuming Altman is sincerely going to keep trying to develop “AGI” and not try to turn OpenAI into a profitable business. You don’t need AI researchers if you get good enough video generation and pornbots to become immortally wealthy and say fuck the rest. If this is the case, OpenAI could be a completely done product, all that’s left to do is stop spending so much money on SG&A and get those revenue streams cranking.
Yup, but the IPO will still have happened in CA, and there's going to be a tax windfall from that.
It's about a moment in time, not an "in perpetuity" agreement.
By giancarlostoro 2025-10-300:38 Unless you're Universal and Marvel, leaving Disney unable to buy out Universal's contract with Marvel, and unable to use classic comic book characters because the parks too close to Universals. Still cracks me up.
Not if the big holders aren't residents, they can move away just before like Rogan with his Spotify deal, or Jonathan Blow just before a game release after developing in California and going to public college there, etc.
Since it's a non-profit still holding it any gains to the non-profit entity upon the conversion don't go to California, and principal stakeholders can move away. Other funds raised from the IPO can be invested in other states untaxed (long term datacenter leases instead of booking the capital of building one) until they move the company away I think.
There will probably be a lot of smaller stakeholders that stay with a lot of money for the state, and California at least doesn't do the $15 million QSBS so they may get a lot from that tail of employees. A large portion of this tail of lower compensated employees may get laid off due to AI replacement before IPO and lose a lot of unvested years, if we are to believe OpenAI's own claims about timelines for job replacement in that field at lower levels.
I'd recommend anyone expecting to profit from OpenAI stock and aiming to avoid California taxes to look into the subject in depth with paid advisors. The California FTB is not stupid or naïve and has a history of successfully getting paid for stock that vested with a California nexus, even if the beneficiary moves out of state. Good luck!
By JumpCrisscross 2025-10-2921:395 reply > Can someone explain to me why California would believe Sam Altman plans to stay in California?
The simple answer is unless developing LLMs becomes commoditised, the best place in the world to do it is in San Francisco. You don't take your manufacturing business out of Shenzhen without very good reason.
By terminalshort 2025-10-300:091 reply Seems a little easier than that, though, because there are no supply chains involved (other than for the data centers, but those are already not in SF). Why else would the CA government be worried?
By standardUser 2025-10-301:032 reply There's books written about the Bay Area and the factors that make (or made) it uniquely suited for developing new technologies. There's even college courses about it. Some of it's surely provincial fluff, but it's undeniable that California has been an essential incubator for a whole series of world-changing, fortune-making technologies.
By terminalshort 2025-10-301:254 reply I don't want to downplay the network effects here, but it's in CA entirely by coincidence. SV is in CA because William Shockley's family is there, which is why he founded Shockley Semiconductor there. It could have been somewhere else. The 2nd largest tech hub is in Seattle. It's there because that's were Bill Gates is from. Is SF the best place to start a startup if you want in office talent in 2025. 100% yes, but that has nothing to do with the Bay Area and everything to do with accidents of history.
By JumpCrisscross 2025-10-305:341 reply > that has nothing to do with the Bay Area and everything to do with accidents of history
I think you’re wrong. But that’s irrelevant. The fact that it exists now is what gives it staying power. One of the surest bets I’ve seen in seed and Series A investing is when a market has one or two competitors in a cluster and the rest outside. The insiders win. Always. It’s the easiest bulldozing strategy that exists.
> I think you’re wrong. But that’s irrelevant.
It's on you to prove the parent wrong and you provided nothing to explain why the Bay Area is special beyond history/staying power.
By JumpCrisscross 2025-10-309:212 reply > It's on you to prove the parent wrong and you provided nothing to explain why the Bay Area is special beyond history/staying power
I’m literally saying it’s irrelevant due to incumbency effects. If someone is doing something AI outside the Bay Area, a decent business is to copy and outraise them.
> I think you’re wrong. But that’s irrelevant. The fact that it exists now is what gives it staying power.
You said OP was wrong to say "that has nothing to do with the Bay Area and everything to do with accidents of history" but that it's irrelevant anyway because the area has incumbency effects. Those are 2 separate things, something that you claim to be wrong but irrelevant, and something you say is true.
I agree with the second point, incumbency is a heavy weight to dislodge. But why would OP be wrong to say there's nothing intrinsic to the place that give it power?
I think OP is completely correct, the Bay Area as a place itself isn't special, it's those historical accidental decisions that now make it a hard to dislodge incumbent. But this detail is very important because if "the place" doesn't have some intrinsic power, like some unique natural resource, geography, climate, etc. that just can't be replicated elsewhere, then it can be replicated elsewhere.
In fewer words, "the place" having something unique means immovability. Incumbency just means inertia. Inertia isn't what it use to be. Detroit was the place for building cars just a few decades ago. One accidental decision, one bad policy can send an incumbent on a slow roll down. The Bay Area itself has nothing that reasonably can't be replicated elsewhere, unlike for example an oil field which you have or you don't.
By fragmede 2025-10-3023:58 Municipalities trying to make their own Silicon... Alley, Beach, Hills, Slopes, Forest, Prairie, Bayou, Desert, Roundabout, Docks, Glen, Fen, Cape, Oasis, (and more!) with varying degrees of success, so I don't know that it is unreasonably replicatible. Despite all those efforts, OpenAI and Anthropic both are heavy hitters in the AI industry, and they are both headquartered in San Francisco.
Naturally, nothing lasts forever. Not Silicon Valley, not the USA, not the Holy Roman Empire. Some things do last quite a while though. If we look all the way back to Hewett-Packard, though now a shadow of its former self, it was established in 1939.
By Jackpillar 2025-10-3011:061 reply Exactly. No one is arguing the historical & material reasons as to why Bay Area is the birthing place of many technological revolutions. The Bay Area is special because of said history/staying power - which has systemic downstream advantages that cannot be replicated. 60% of total VC funding is in the Bay Area alone. Being surrounded by Stanford, Berkeley, etc gives the region a constant flow of world class engineers. Theres just no other region like it and won't be for a very long time.
> No one is arguing the historical & material reasons as to why Bay Area is the birthing place of many technological revolutions.
You're kinda missing the bigger picture - the fact that Bay Area was not always a tech hub, and became one at some point for various reason - which can happen in any other place (and has).
> which has systemic downstream advantages that cannot be replicated.
Seems like a very baseless and meaningless statement.
> Being surrounded by Stanford, Berkeley, etc gives the region a constant flow of world class engineers.
Except for the fact that the vast majority pf Bay Area tech talent does not come from Stanford or Berkeley, and is being outsourced at ever increasing rates.
> Theres just no other region like it and won't be for a very long time.
If you say so.
By Jackpillar 2025-10-3114:151 reply Yeah except for it has always been a tech hub because the term "tech hub" didn't exist before the Bay Area? I mean the first message sent over the precursor to the internet was from UCLA to the Stanford Research Institute in 1969, and the SF Bay Area having some of the first infrastructure for high-speed internet was a key factor into its position as the tech hub. Mind you this is all preceded by Hewlett Packard 30 years earlier setting the stage for the semiconductor revolution, and even this is preceded by 100 years with Leland Stanford. To much to talk about here as to why there is a unique mix of private capital, industry/government collusion, university research and development, and more that are entrenched in the region.
The makeup of tech companies employees doesn't remotely tell the full story of the advantages of the UC system, Stanford, and other universities in CA through research that feed into SV as the leading tech hub that cannot be replicated (See example of the invention of the internet above). I mean hell, 4 UC alum won nobel prizes this year alone, one of which was the chief scientist at Google's quantum AI.
But yeah sure, if we're talking in the context of "anything is possible" then yeah I concede, it can happen anywhere. Kind of a boring insight. The point is that no - it hasn't happened anywhere else to the extent of the bay area despite cities trying to for the past 30 years- and it won't happen for a very long time because of the converging mechanisms that took place over the past 100 years.
Places where technological innovation and development happen have existed long before the internet and semiconductors. The industrial revolution didn't originate or center around the Bay Area.
> The makeup of tech companies employees doesn't remotely tell the full story...
What? You made the argument that Bay Area has some kind of special access to tech talent because of Stanford - I simply pointed out that the vast majority of Bay Area tech employees are not from Stanford (not to mention many Stanford alums leave California).
> UC system, Stanford, and other universities in CA through research that feed into SV as the leading tech hub that cannot be replicated
Really? MIT, Harvard, Yale, Georgia Tech, Waterloo don't exist?
> I mean hell, 4 UC alum won nobel prizes this year alone, one of which was the chief scientist at Google's quantum AI.
And several google/deepmind employees from/educated in UK won a nobel prize in 2024... what's your point?
> Kind of a boring insight.
Nah, the same old 'bay area cause bay area' insight is what's boring.
It was more true (but still very boring) 10 years ago, not anymore.
By Jackpillar 2025-10-3118:281 reply > Places where technological innovation and development happen have existed long before the internet and semiconductors. The industrial revolution didn't originate or center around the Bay Area.
You said tech hub. By all definitions of the term the Bay Area was the first. Nor did I say the industrial revolution originated around the Bay Area?
> What? You made the argument that Bay Area has some kind of special access to tech talent because of Stanford - I simply pointed out that the vast majority of Bay Area tech employees are not from Stanford (not to mention many Stanford alums leave California).
You tend to do this a lot. "Many Stanford alums leave California" and "talent is being outsourced at ever increasing rates". Just vague generalizations that offer nothing to the overall conversation.
I made the argument that being close to these universities gives the region a constant flow of world class engineers and researchers. This is true whether or not they work for Bay Area tech companies you understand this right? Regardless, out of the reported feeder schools into tech 5 out of the top 10 are California universities.
> MIT, Harvard, Yale, Georgia Tech, Waterloo don't exist?
You just named universities from 5 different states/regions? Please keep up.
> And several google/deepmind employees from/educated in UK won a nobel prize in 2024... what's your point?
They weren't from the same school? The UC system altogether has over 150 nobel prizes and thats before including private institutions like Stanford, Caltech, USC, and others. Thus exemplifying the unique system dedicated to research and technology consolidated in one region..
> It was more true (but still very boring) 10 years ago, not anymore.
Going to be honest man from interacting with you it seems like you have a chip on your shoulder about the bay. I don't even live there I live in LA. It shouldn't bug you to point out the objective fact that the unique confluence of geographic location, surrounding education system and research institutions, compounded wealth from prior historical industrial/technological windfalls, makes SV the premiere tech hub that is consistently on the forefront of burgeoning technologies - not by accident.
Are you also confused as to why NYC is the finance capital of the world? Do you think Toronto could usurp it one day if they just try hard enough?
By wubrr 2025-10-3120:20 > You said tech hub.
No, you said tech hub. Which is short of 'technology hub', which is not just limited to mobile apps.
> You tend to do this a lot. "Many Stanford alums leave California" and "talent is being outsourced at ever increasing rates". Just vague generalizations that offer nothing to the overall conversation.
Those aren't generalizations, those are very specific statements, which go directly against your vague generalizations ('oh but there are good universities in the area for tech talent therefore its impossible to replicate'), and which you apparently can't disagree with because they are obviously true.
> I made the argument that being close to these universities gives the region a constant flow of world class engineers and researchers.
Nope, what you said is that because these universities are located in that area - no other region could possibly compete. And I gave you very specific examples of why that's not true.
> You just named universities from 5 different states/regions? Please keep up.
Yeah.. some of the leading universities for tech talent in the world... which are not in California... (which according to you is impossible)... please keep up.
> makes SV the premiere tech hub that is consistently on the forefront of burgeoning technologies
I never said SV is not a major tech hub. I actually said the opposite. What I disagreed with is your baseless assertion that no other region could possibly compete, or that tech companies have to be in SV to succeeded (which is obviously false, and which I see you shifting the goalposts on now)
> Are you also confused as to why NYC is the finance capital of the world?
Maybe you should rewind to back when NYC wasn't a major finance hub, then apply your same reasoning - 'NYC couldn't possibly become a finance hub, because London is the finance hub'.
Your arguments are self-contradictory and not logical.
It goes back way way further than that. The special mix of government funded technology, ruthless entrepreneurship, and social engineering predates Shockley by almost 100 years.
Start by figuring out who Leland Stanford is and how he got rich. Read the book ‘Palo Alto’ if you’re looking for a good starting point.
By vlovich123 2025-10-304:16 Yeah it’s quite bold to suggest that Shockley would have done the same thing outside the environment of the Bay Area rather than that someone other than Shockley would have done what he did in California if he wasn’t there or that even if he did it outside California that people inside California still industrialize it. It’s a very individualistic view of progress which is uniquely American and unlikely to capture how stuff happens given that multiple discoveries often happen simultaneously by people working on the problem (eg calculus and Newton vs Leibniz).
The truth is the Bay Area has structural reasons why SV happened and why the same thing has failed to replicate to any significant degree outside the Bay Area.
By bix6 2025-10-3013:59 Just borrowed thanks for the rec!
By ac29 2025-10-3015:22 Yep, I would highly recommend reading the Secret History of Silicon Valley for those that are interested: https://steveblank.com/secret-history/
By shuckles 2025-10-304:45 Shockley Semi was founded 16 years after Hewlett Packard, so you have to keep reaching backwards.
Not entirely by coincidence. Yes Shockley was from CA, but as late as the 1980, two places were competing to be the center: Boston's Route 128 ("America's Technology Highway") or Silicon Valley.
Silicon Valley won out because the CA constitution explicitly prohibits non-competes (which MA allows), leading to more rapid innovation. Very likely the infamous Traitorous Eight who left Shockley Semiconductor to found Fairchild could not have done that if noncompetes could be enforced.
By fragmede 2025-10-3023:45 Non-competes are one aspect, absolutely. However that's can't be the whole story because that applies to all of California and it's a decently sized state, with a lot of other areas. Any part of the southern California basin, San Diego, and Sacramento. If we include smaller areas (because silicon valley was once just apple orchards, that list gets longer.
By okdood64 2025-10-316:20 > There's books written
Which?
except developing AI is very much a knowledge exercise with very little dependency on location.
You don't move your manufacturing business out of Shenzhen because the entire hard supply chain from mining, refining, manufacturing, test, ship and trade are all there. You can't move a refinery that easily much less the entire supply chain.
By brokencode 2025-10-2921:501 reply Sure, but most of the country’s AI talent is concentrated there. Not to mention venture capital.
What’s the advantage of moving? Maybe lower taxes and a cheaper rent.
That seems like a small price to pay compared to the hundreds of billions they’re putting into data centers.
By alfalfasprout 2025-10-2921:534 reply They're concentrated there because they've been asked to concentrate there. That can change on a dime.
It's not like data centers are mainly in SF.
By hamdingers 2025-10-2923:352 reply You've got it backwards.
Well paid engineers congregate in California because it's a nice place to live if you can afford it.
Therefore if you want to hire the best engineers, and want an in-office work culture, you need to go to California.
By terminalshort 2025-10-300:12 Well paid engineers congregate in CA because that's where the companies that hire well paid engineers congregate, and they (mostly) want those well paid engineers to come to the office every couple of days. I don't know how you could get the causality so completely backwards on this.
By AdamN 2025-10-3011:05 Depends on the type of engineer - NYC for fintech is also a top spot, Boston for robotics, etc...
By doganugurlu 2025-10-3013:391 reply Anecdotal evidence: I moved to CA twice as an engineer.
Once to get my masters after college. Stayed for 13 years. Left during COVID.
Second time to raise kids.
Our reasons include weather, intellectual atmosphere, safety (in many regards), schools, and job opportunities.
The geo area sandwiched between Berkeley and Stanford is only rivaled by Boston. You think Stanford and Berkeley are in the Bay because they’re told to?
And I would also question: what’s the point of living in US if you’re not in California? Once you decide to not live in CA, a bunch of other countries rank better than other US states. Such as Canada, Australia, New Zealand.
If I were to not live in CA, even the imperial units would quickly become annoying.
By FajitaNachos 2025-10-3015:51 How many other places, inside and outside the U.S., have you lived?
By vessenes 2025-10-2922:14 I think you're wrong. The concentration is for a host of reasons. Witness the large number of cities and countries that have tried to create a local Silicon Valley competitor unsuccessfully over the last 25 years.
The data centers I think prove this point, and disprove yours -- huge spend has gone into data centers, but places like Wenatchee remain stubbornly not Silicon Valley.
Intel has not made Portland into SV. Austin, while a tech hub and one of the US supply chain centers for hardware, is multiple orders of magnitude less productive than SV for tech startups. Productive as in numbers of unicorns, total value creation, however you want to spin it.
> That can change on a dime.
People tried very hard to change it between 2020-2023 and utterly failed.
By yellow_postit 2025-10-2921:515 reply The Texas Stock Exchange launches next year and I predict we will see a lot of tech try to move to launch there given txse claim to have lower compliance and less esg needs.
By JumpCrisscross 2025-10-2922:55 > Texas Stock Exchange launches next year
The TXSE was launched by an energy magnate [1] and "is financed by institutional investors including Charles Schwab, Fortress, BlackRock, and Citadel Securities" [2]. It's a direct response to the NASDAQ and NYSE putting their feet down on carbon emissions.
Nothing about its structure requires a company be incorporated in Texas much less based there [3]--those restrictions would go against the reason it was founded.
[1] https://en.wikipedia.org/wiki/Kelcy_Warren
[2] https://en.wikipedia.org/wiki/Texas_Stock_Exchange
[3] https://www.hunton.com/insights/legal/a-comparative-analysis...
By everfrustrated 2025-10-2922:231 reply I learned recently that Nasdaq imposes DEI on companies as a requirement of listing.
By kasey_junk 2025-10-2922:38 The 5th circuit struck those rules down last year.
I doubt it. The state where a company is incorporated or has its headquarters located doesn't impact where it can list shares. There are several foreign companies with no significant US operations which are listed on US stock markets just to gain access to capital.
By kasey_junk 2025-10-2922:39 Not to mention that the actual trading will happen in New Jersey
By seanhunter 2025-10-3014:411 reply You know that Nasdaq isn't in Silicon Valley right? Lots of companies are based in the valley, listed in either CA or Delaware and go on to list in NYC now. There's no compelling reason for them to move to Texas.
As for the compliance thing it remains to be seen, but generally companies in low-compliance jurisdictions trade at a "fraud discount" to compensate investors for the likelihood of untoward shenanigans that would be prevented by that compliance.
By fragmede 2025-10-310:04 Stock exchange aside, being able to build buildings without getting held of years or even decades for an endangered tree frog, and also employees being able to afford housing are kind of important to companies. Texas has its downsides, for sure, but it would be silly to pretend there aren't other reasons for companies to move there that have nothing to do with the new stock exchange.
By vessenes 2025-10-2922:17 downvoted -- this is a low quality comment, and worse, it's uninformed. Texas may be lower reg than NASDAQ at launch, and it may compete for business that way, and consumers may or may not like this and may or may not benefit from it.
However, post Sarbox US is vastly more regulated than the markets that "built" Silicon Valley, and there are many costs to corporations, founders and employees of that heavier regulation -- including a radically less friendly public capital market for companies worth hundreds of millions of dollars.
By BobaFloutist 2025-10-2922:152 reply That still doesn't explain the value of Sam Altman's pinky promise.
By JumpCrisscross 2025-10-2923:08 > doesn't explain the value of Sam Altman's pinky promise
The MOU [1] requires OpenAI "provide at least 21 days’ prior written notice to the Attorney General before consenting to: (a) a change of control of the PBC; (b) any change to the PBC mission as set out in the PBC Delaware charter; (c) any amendment to the PBC Delaware charter that would remove the NFP’s sole right, as holder of the Class N shares, to appoint PBC directors or otherwise reduces in any material respect the rights of the Class N shares; or (d) the relocation of the headquarters of the NFP or PBC outside of California" [1].
The meat appears to be in the agreements by OpenAI to not change its ownership and control structure. California's real leverage would be in re-opening this dispute, though ¶ 22 seems to water down that power somewhat. (Maybe go after the donors?)
[1] https://oag.ca.gov/system/files/attachments/press-docs/Final... ¶ 19
The location you're physically sitting in doesn't really matter. Saying 'san francisco cause san francisco' is also kinda boring and meaningless.
By JumpCrisscross 2025-10-2922:431 reply > location you're physically sitting in doesn't really matter
Of course it does.
The benefits of proximity to business clusters [1] is well researched [2]. There is no evidence remote work has dampened that tendency; if anything, as evidenced by AI, the effect seems to have increased.
[1] https://en.wikipedia.org/wiki/Business_cluster#Cluster_effec...
[2] https://www.isc.hbs.edu/competitiveness-economic-development...
You're linking to pre-covid studies, that mention some types of benefits (for specific reasons like logistics benefits for businesses relying on physical materials/goos, or physical access to people for the purposes of networking), for some kinds of industries, and also mention that these benefits are not seen for some industries.
> Sometimes cluster strategies still do not produce enough of a positive impact to be justified in certain industries.
Let's take a step back and look at the fundamentals of a tech company who's employees are remote - what are the specific benefits of having a San Francisco office?
By JumpCrisscross 2025-10-2923:371 reply > linking to pre-covid studies
I'm linking to studies summarising a century of work. There is no evidence Covid changed this.
Exhibit A for Covid having not changed this is the continuing supremacy of Silicon Valley (tech), Shenzhen (manufacturing) and New York (finance) as industrial clusters that others have tried to replicate (everyone, America and Miami, respectively) and failed.
> Let's take a step back and look at the fundamentals of a tech company who's employees are remote - what are the specific benefits of having a San Francisco office?
Proximity to investors. Proximity to customers. Proximity to a skilled employee pool. Proxomity to acquirers. (A lot of deals happen at cocktail parties and ski trips.)
By the way, I'm not arguing anyone needs an office. Just people physically and and proximate to the cluster.
> Exhibit A for Covid having not changed this is the continuing supremacy of Silicon Valley (tech)
You mean like when China built chatgpt 4 in a weekend and open-sourced it for giggles?
> Shenzhen (manufacturing)
..or you mean how US manufacturing 'clusters' almost completely disappeared/replaced by Chinese ones?
> Proximity to investors. Proximity to customers. Proximity to a skilled employee pool. Proxomity to acquirers.
Right, cause you have to physically pet every investor on the head to fundraise, your remote employees must be in san fran cause network latency interferes with their windows remote desktop workflow, and, for some reason, you have to be physically close to your customers when you're selling your web-only llm wrapper saas.
> You mean like when China built chatgpt 4 in a weekend and open-sourced it for giggles?
DeepSeek R1 is an amazing feat. It's not at the same level as other large frontier models from American companies, just close enough to make them sweat.
> ..or you mean how US manufacturing 'clusters' almost completely disappeared/replaced by Chinese ones?
The value of goods manufactured in the US has never been higher. US manufacturing focuses on goods at the top of the value chain: jetliners, cars, semiconductors, medical scanners, and other advanced electronics. These tend to cluster in a few places - for example, Long Beach is a hub of space and avionics manufacturing, Texas has the "Silicon Prarie," and Boeing in Everett is one of the major employers in the region. Manufacturing has disappeared as a share of GDP, but that's not because we make less stuff.
> Right, cause you have to physically pet every investor on the head to fundraise, your remote employees must be in san fran cause network latency interferes with their windows remote desktop workflow, and, for some reason, you have to be physically close to your customers when you're selling your web-only llm wrapper saas.
You sound sarcastic, but YES. You do generally have to physically be present to make deals. It is obviously theoretically possible to run a world-leading software company fully remote. Despite that, most of them are in-person at least a few days a week. If you want to take advantage of SV's easy VC money, you absolutely have to be present.
Companies are not purely about the numbers. A lot of business is imprecise and heavily dependent on things like just plain LIKING the people you're in bed with, and unfortunately there is no substitute for being in the same room as someone to make a decision like that.
> Manufacturing has disappeared as a share of GDP, but that's not because we make less stuff.
We assemble. The actual parts are largely made overseas.
Because location matters, assemblers in China are able to do better work at a much lower price, see every Chinese EV company, or Chinese drone companies.
Heck in China you can buy a competent Chinese EV motorscooter for less than a kids bicycle in America.
By SR2Z 2025-10-313:18 > We assemble. The actual parts are largely made overseas.
It really depends on the product and the supply chains involved. Lots of parts make trips through multiple countries, and even the US multiple times.
But yes, I agree that agglomeration matters a ton.
> It's not at the same level as other large frontier models from American companies
Cool story
> The value of goods manufactured in the US has never been higher... Manufacturing has disappeared as a share of GDP, but that's not because we make less stuff.
You're seriously going to try to argue how US manufacturing (which was the greatest share of global manufacturing by far) didn't decline, to support a point about how China (Shenzhen) is apparently an unreplicable manufacturing hub due to 'cluster effect'? It's funny that you don't see the contradiction. For the record, US manufacturing as a share of global manufacturing has significantly declined over the years. [0][1]
" > The United States' share of global manufacturing activity declined from 28% in 2002, following the end of the 2001 U.S. recession, to 16.5% in 2011
> China displaced the United States as the largest manufacturing country in 2010
> Manufacturing output, measured in each country's local currency adjusted for inflation, has been growing more slowly in the United States than in China, South Korea, Germany, and Mexico "
> You do generally have to physically be present to make deals.
If you need to be physically present for a meeting, you make a trip. There is absolutely zero benefit to living in close proximity to investors the rest of the time.
> It is obviously theoretically possible to run a world-leading software company fully remote.
It is obviously not just theoretically possible, and many companies do so.
[0] https://en.wikipedia.org/wiki/Manufacturing_in_the_United_St... [1] https://www.bcg.com/press/21september2023-north-american-com...
> Cool story
I am not going to link you benchmarks or revenue numbers. You can find those yourself, if you actually care about being right.
> It's funny that you don't see the contradiction. For the record, US manufacturing as a share of global manufacturing has significantly declined over the years. [0][1]
Yes, because China is _cheap_ and _dense_ and has a billion newly-minted middle-class members. Do you expect them to import everything from the US and just ignore the vast labor pool within a few metro stops of any given factory?
> to support a point about how China (Shenzhen) is apparently an unreplicable manufacturing hub due to 'cluster effect'?
The Pearl River Delta, which Shenzen is part of, has almost 90 million people and a world-class transit system. It's across the water from Hong Kong, a global financial center, and is bordered by factory-filled cities on the other side.
Yes, that makes it nearly impossible for other places to become Shenzen. Even within China it's special.
> If you need to be physically present for a meeting, you make a trip. There is absolutely zero benefit to living in close proximity to investors the rest of the time.
Right, because if you're doing business you can get by with a single investor meeting a year, right? There's no downside in time lost, money spent, ease of access, etc.? You think there's no benefit to, say, playing tennis on weekends with your buddy from college who now works at a VC?
> You're seriously going to try to argue how US manufacturing (which was the greatest share of global manufacturing by far) didn't decline
Why the hell does it matter what percentage of global manufacturing is done in the US? You cannot ask the average American (one of the wealthiest people in the world) to work in a sweatshop making T-shirts. You cannot ask the average American to work for minimum wage tightening screws in iPhones.
You can, as it turns out, ask them to work a robotic assembly line to build a car or weld on a jetliner - because you can pay them much more, and because there are enough of them in an area to run a factory. Aggregation benefits are even more important for manufacturing than they are for software.
> Yes, that makes it nearly impossible for other places to become Shenzen. Even within China it's special.
You're skipping n = 1 and jumping straight to k. How did modern Shenzen become what it is? Through specific reasons like infrastructure investment, or because it was always a 'manufacturing cluster'? By your logic Shenzen must have been the manufacturing hub of the world since before the dawn of time... since it's 'impossible for any place to become Shenzen'.
> Right, because if you're doing business you can get by with a single investor meeting a year, right?
Because the only way to meet and communicate in 2025 is in person?
> There's no downside in time lost, money spent, ease of access, etc.?
All of these are better remote/digitally in most cases.
> You're skipping n = 1 and jumping straight to k. How did modern Shenzen become what it is? Through specific reasons like infrastructure investment, or because it was always a 'manufacturing cluster'? By your logic Shenzen must have been the manufacturing hub of the world since before the dawn of time... since it's 'impossible for any place to become Shenzen'.
Sure, any region in a rapidly developing and very dense country, with a large preexisting financial hub nearby, 50 years ago, could have become Shenzen. There was only one of those, and consequently there is only one Shenzen. How far back do you want me to go? Should I discuss the agglomeration effects enjoyed by the Han Dynasty?
> Because the only way to meet and communicate in 2025 is in person?
Why don't you try using that logic on someone you're convincing to give you a large sum of money and report back? The real world does not work this way, and that is why there is still only one Silicon Valley. I've made this point several times now and can point to the status quo to back it up.
> All of these are better remote/digitally in most cases.
I work partially remote. I intentionally schedule my meetings in person because I find that to be significantly better than a video call. I am definitely not alone, and for startups it is even more advantageous to physically be in the same room as the entire rest of the company.
> There was only one of those, and consequently there is only one Shenzen.
Really? There was only one rapidly developing, densely populated region with a financial hub nearby (why does the proximity of finance even matter?), in the entire world in the last 50 years (why 50 years)? Are you sure about that? (you are 100% wrong)
> I intentionally schedule my meetings in person because I find that to be significantly better than a video call.
Sounds like a you problem. Also the fact that you are 'partially remote' and you still schedule your meetings to be in person tells me: a) you do not have very many meetings b) you work with a fairly narrow scope of people who you can physically get into the same room on a regular basis.
I meet with founders, investors, tech leaders, and many various stakeholders on a regular basis. It would be absolutely IMPOSSIBLE to have these meetings in person.
> for startups it is even more advantageous to physically be in the same room as the entire rest of the company.
If you say so, but the record number of fully remote startups that keep popping up at ever increasing rates says the opposite.
> Why don't you try using that logic on someone you're convincing to give you a large sum of money and report back?
Been there done that. If you need to meet in person to make final agreements/sign you can travel. Vast majority of communications/negotiations around fundraising and related happens digitally today.
By SR2Z 2025-10-3123:38 > There was only one rapidly developing, densely populated region with a financial hub nearby (why does the proximity of finance even matter?
Because if you want to build factories you need capital. This is not rocket science. Much easier to get a loan when there are a billion bankers across the bridge.
Yes, there was only one place with all the ingredients to become Shenzen. Believe it or not, global financial centers are not commonly found in developing countries. Why don't you propose some alternatives, I'll wait.
> Sounds like a you problem. Also the fact that you are 'partially remote' and you still schedule your meetings to be in person tells me: a) you do not have very many meetings b) you work with a fairly narrow scope of people who you can physically get into the same room on a regular basis.
I have plenty of meetings, and I don't know what you're smoking if you think that more than a large conference room's worth of people could all participate in a meeting. Neither of these disqualifies what I'm saying.
> If you say so, but the record number of fully remote startups that keep popping up at ever increasing rates says the opposite.
And how many of these are becoming wildly successful, compared to in-person companies located in desirable cities?
> Vast majority of communications/negotiations around fundraising and related happens digitally today.
[citation needed]
Also it doesn't count if the numbers get worked out over email but the handshake was in person.
> You mean like when China built chatgpt 4 in a weekend and open-sourced it for giggles?
Link?
By fragmede 2025-10-310:11 It's hyperbole, but they're referring to Deepseek-r1.
This is the opposite of true. It's actively wrong. Location is almost everything; people move to financial and tech centers for a reason -- it matters where you are and who you know.
By JumpCrisscross 2025-10-2923:401 reply > where you are and who you know are very different things
Different but related. Getting a purposeful introduction involves a lot more friction than being invited to someone's home for dinner with their colleagues and contacts.
By wubrr 2025-10-3021:54 You seem to assume dinner parties and in-person social engineering is the key to success.
I guess I have a different opinion - the tech, the product, the efficiency is the key to success.
By Jackpillar 2025-10-3011:141 reply This is so funny to imply that you (living in East Jesus, Texas) have a better or similar opportunity to me (living in SF) in making more relationships and connections to AI related companies, engineers, investors, customers, acquirers, scientists, etc.
I live a lot further from SF than Texas, yet I've been working fully remote for SF tech companies (among others) for 10+ years.
If I need to meet someone in person, I make a trip (~few times a year)
It's true that I can't brownnose/service random tech talking heads in person on a daily basis tho, which is what I assume you mean by 'relationships and connections' lmao
By Jackpillar 2025-10-3113:331 reply Okay so what you're doing is contradicting the objective advantages/benefits of living near the epicenter of a specific industry with a purely anecdotal example of 10+ years experience in jobs from said epicenter, with the expendable income to travel (domestic/international) for in-person meetings, then defining networking to a disingenuously generalization because it reinforces your opinion.
What if I were to tell you that you can make meaningful relationships and connections w/o "brown nosing/servicing" and its easier to do so in the center of a specific industry?
By wubrr 2025-10-3120:33 I'm giving you a specific example of why it's not necessary to be in any particular location to work in tech, or network, collaborate, communicate with other tech people.
Directly contradicting your baseless assertion about how you have to be in SF for those reasons.
Literally a specific, physical example and you're talking about 'defining networking to a disingenuously generalization' ...
You are disingenuous.
By dragonwriter 2025-10-307:381 reply > Can someone explain to me why California would believe Sam Altman plans to stay in California? This is a weak handshake agreement that could easily be flipped post IPO.
It is not a “handshake agreement”, but binding written agreement with terms constraining the governance of the restructure OpenAI entities.
https://oag.ca.gov/system/files/attachments/press-docs/Final Executed MOU Between OpenAI and California AG re Notice of Conditions of Non-Objection %2810.27.2025%29 %28Signed by OpenAI%29 %28Signed by CA DOJ%29.pdf
By bix6 2025-10-311:43 Page not found
By harmmonica 2025-10-2921:253 reply If they're still based in CA when they IPO at least those initial taxes will be collectible in state (assuming they're structured in a way where the IPO is a taxable event for the leadership and staff). Pretty sure the taxes collected from OpenAI will be the single biggest IPO tax windfall ever (correct me if I'm wrong, but I can't think of a bigger one).
By cosmicgadget 2025-10-2921:283 reply We're finally going to get that bullet train.
By harmmonica 2025-10-2921:39 Oh man know I know I shouldn’t say it but that’s a genius reply! Thanks for the (depressing) laugh.
By int_19h 2025-10-300:51 Yeah, but it'll be run by ChatGPT. ~
By s3r3nity 2025-10-2921:32 lol if you think $ was the barrier there, I have a few bridges to sell you too…
By mmooss 2025-10-307:03 What are the taxes on an IPO?
It's capital gains, which aren't taxed until the capital (IPO stock) is liquidated. I'm sure some people will liquidate their stock promptly but I expect that most will hold it, expecting further growth, and that the big investors, including Altman, will hold onto it for because of the same reason, because they need to sell optimism (what would people think if Altman or Microsoft sold a significant chunk of stock?), and because OpenAI needs lots of assets to build datacenters and buy power.
By dragonwriter 2025-10-307:49 stocks sold by the company in an IPO aren’t taxable income. Pre-IPO stocks that people liquidate because there is now a liquid market and they want to realize some gains will generate some, but I don’t know how you’d predict the magnitude of that.
By gyomu 2025-10-2920:59 Perhaps it’s not so much that they believe he’ll stay in California long term if he gets what he wants; more that they do believe he’ll leave in the short term if he doesn’t.
By tw04 2025-10-301:59 I’m pretty sure Sam is motivated by whatever is best for Sam, not OpenAI.
By qwertox 2025-10-308:24 > whatever is best for the entity
Whatever is best for his ego.
By terminalshort 2025-10-2923:571 reply Can someone explain to me how staying in CA has anything whatsoever to do with whether or not they IPO? Because it seems like it should have absolutely nothing to do with it. (Linked article is a paywall, so I can't read it.)
By Hansenq 2025-10-305:43 OpenAI needs to IPO because they want to access the public capital markets to fund their AI investments, more deep-pocketed investors are wary of investing in a LLC, and for liquidity, etc.
OpenAI needs to convert to a C-corp in order to IPO.
OpenAI needs the CA Attorney General's approval to convert a LLC into a C-Corp because the LLCs is headquartered in CA and incorporated with many CA laws.
So the article is making the point that OpenAI likely got the CA Attorney General's approval for the conversion because they promised to stay in CA (whether or not that's actually true).
(or support journalism and pay to read the article)
By throwaway294729 2025-10-2921:16 > This isnt a diss to Sam either, it just shows he is motivated by whatever is best for the entity at any given time.
This is the kind of weird rationalist (?) thing that people say a lot these days to justify bad behaviors: in this case Sam Altman behaves like a pathological liar.
In the US, one has to remember that megacorps usually end up winning, as people mostly only care about money and blindly supporting corporations is seen as pro-economy. There are also no limits on political financial contributions, and people have really short attention spans.
Politicians taking the superficial short-term win, as they will end up giving in to the megacorp anyway, is not surprising to me.
By philipallstar 2025-10-2921:561 reply > and blindly supporting corporations is seen as pro-economy
These clumsy stereotypes are so pointless.
By afavour 2025-10-2922:13 It’s a broad statement but I wouldn’t say it’s an incorrect one.
IPO is to leave someone holding the bag, right? The narrative has really changed from AGI, the most consequential technology, blabla. If I had that I would keep it private. If I wanted to cash out, I’d do an IPO. Is there a narrative that doesn’t make it seem like pump and dump?
I was watching the OpenAI livestream yesterday.
Sam was saying they have a $1.4 tn financial obligation to build 30 GW worth of data centers https://youtu.be/ngDCxlZcecw?t=1179
That's a lot of money to raise given they have no earnings.
He also says they are talking about being able to build 1 GW a week at a cost of $20bn/GW
I find it all a bit worrying. Weren't we supposed to be careful with energy use to reduce CO2 emissions? Could the billions maybe better deployed to schools hospitals, housing and the like rather than chatbots?
Rather than a fictional paperclip maximising AI eating the world we have a chatbot maximising Altman trying to do so?
By akimbostrawman 2025-10-3011:59 >Weren't we supposed to be careful with energy use to reduce CO2 emissions?
The Programming has changed get with the times. AI earnings have outweigh ESG scores.
You didn't notice as soon as energy was needed for AI, all the tech companies gave up on green power and reducing emissions?
By Annatar01 2025-10-3111:51 It does, but its partly just the hot thing because you can increase energy usage without going back on CO2 promises.
They certainly arent reducing energy usage rn which could theoretically be a puzzle piece of reducing CO2.
By johnnienaked 2025-10-313:41 [flagged]
By derekdahmer 2025-10-304:544 reply They have 800M weekly active users that have yet to be monetized but enormous capital costs. It makes sense they'd be looking to raise large amounts of money in an IPO.
By randerson 2025-10-3015:11 A capital investment is predicated on there being future profits. I don't understand why they can't be profitable already. If 800M AU is not a critical mass for flipping on the revenue switch, I can't imagine what is.
So what stops them from monetizing those users today? Why would it be any different in the future if they can't?
I say further limit the free tier and more aggressively push those free users to a paid plan. Raise the prices for Business users and API access. An IPO isn't going to raise the trillion they need to keep running off capital.
Once OpenAI reaches the eventual pricing needed to break even, I suspect we'll see that it no longer makes sense for many of their customers to replace humans with AI after all. As it stands now, their investors are essentially paying OpenAI to put employees of other businesses out of jobs by masking the true costs. The sooner they can reach the sustainable pricing phase the better.
By arnaudsm 2025-10-3012:05 OpenAI burns <5B$/year in inference. They're raising that money to hyperscale larger models.
How many of these users will be able to be monitized is an unanswered question as of yet however.
API usage on the other hand has a clear path to monetization and as of right now Anthropic is looking a lot better than OpenAI there.
By deepdarkforest 2025-10-308:583 reply Everyone. People are becoming dependent on chatgpt. They literally cannot function professionally or even socially without it. They will pay their last 20-30 dollars if needed. It's literally like a drug especially when it's asking you if you want to followup/continue.
Everyone also uses Google, YouTube or Instagram. No one would ever pay for any of it though and it is financed through ads. So far it is unclear, if this is also a viable option for chatgpt.
By FinnKuhn 2025-10-3014:08 Out of about 2.7 billion users. So about 5% of all users are subscribed to YouTube.
If the same were true then Open AI at 1 billion weekly users they should have about 50 million subscribers. Right now that numbers sits at 20 million though and growth is slowing down. [1]
So people are more willing to pay for YouTube than ChatGPT and that is ignoring that YouTube is still largely relying on ad revenue and can only allow itself to have more and more ads as there are no alternatives. Open AI has plenty of competitors that would love to offer users free access if ChatGPT were to start showing you ads.
[1] https://fortune.com/2025/10/14/openai-subscriptions-flatline...
By HighGoldstein 2025-10-3013:11 > Everyone also uses Google, YouTube or Instagram. No one would ever pay for any of it though and it is financed through ads.
A lot of people already pay for YouTube since the introduction of Premium. Google/Facebook don't push for paid versions of these products because the data from billions of "free" users is more valuable to them than payments from millions of paid users.
If Google search were paywalled (pre-AI) the most likely outcome would be a separation of consumers into "premium" customers paying for Google, some people paying for cheaper but not quite as good alternatives, and everyone else getting by with the free alternatives. There would also likely be some kind of enterprise tier for indexing your corporate resources or some such.
There's a reason Adobe is still extracting billions from its ~~victims~~ users despite many great free (or reasonably priced) alternatives existing.
How do you explain that not even 5% of users are on paid subscriptions?
By deepdarkforest 2025-11-0110:13 This has nothing to do with what i said. I said they are addicted. The free limits are designed this way. If openai suddenly removed the free plan, i guarantee you a lot of people would buy. They dont have an alternative they cannot think independently anymore
At least one of us is inside a bubble. Nobody I interact with regularly uses chatgpt for anything more than novelty. Even people who used it as glorified google for looking up things reduced their use.
By andy99 2025-10-3012:07 There are definitely big?bubbles where everyone has outsourced their thinking to AI. I’d like to think it’s mostly at the lower end of “knowledge work” - think Deloitte, but it seems that even people / orgs that you would expect more critical thinking of are using it uncritically.
Of course this all occurs in a very small segment of society, I think the majority of people don’t really use it, and certainly haven’t moved any of their day-to-day thinking over to it.
By AdamN 2025-10-3011:06 monetization is straightforward - the only question is who gets the money and which business models succeed.
By lm28469 2025-10-3015:44 800m users, 25m paying subscribers
LLMs have been commodified... Why would I pay for chatgpt when I can rotate free accounts on all providers and essentially never run out of tokens?
In the before times, companies went public to raise capital in order to grow their business.
By sexeriy237 2025-10-301:45 It hasn't been like that for quite some time. The corpse is sold off to mutual funds and pension plans
By linuxftw 2025-10-302:21 Maybe? They want to grow the company, and they've run out of VC and circular financing money. Are they going to use the capital raised to make actual profits? That's the question.
By techblueberry 2025-10-302:40 If they’re on the path to AGI, there’s probably a predictable cost structure to get us to the point where these models are self-reinforcing and we get fast takeoff. This is the dumbest they’ll ever be remember.
By MagicMoonlight 2025-10-3022:04 Yeah, it's a pump and dump. You wouldn't sell AGI for any amount of money. You'd literally be a god king. You could build an army of sentient robots and just seize entire countries.
By sschueller 2025-10-309:45 IPO day would be a great time for someone else to release a revolution of an open model to the public...
By fourseventy 2025-10-2918:503 reply How can a non-profit IPO? I know that technically OpenAI is a for-profit company that is owned by a non-profit, but I still don't get it.
It is being restructured to no longer be a nonprofit, but a for-benefit corporation instead. That is why California's approval was required (and IMO is just as corrupt as it sounds).
By gadders 2025-10-3014:23 "OpenAI and Microsoft have made their next move in their attempt to expropriate the OpenAI nonprofit and pull off one of the largest thefts in human history."
https://thezvi.substack.com/p/ai-134-if-anyone-reads-it?open...
But aren't non profits a federal thing with rules dictated by the IRS? Why is California involved?
By mrbabbage 2025-10-2921:06 Corporate law is overwhelmingly state law. Every federally tax exempt entity is a state (or foreign) corporation or other kind of entity, and states (or foreign governments) impose rules on corporations registered in their borders.
Plus, many states levy their own corporate taxes. A nonprofit corporation needs to secure tax-exempt status from states as well as the federal government. This is a necessary implication of America's dual-sovereignty system.
By wbl 2025-10-2921:02 Because charities are also regulated by states as are all corporations. There is no federal corporate governance statute.
By JumpCrisscross 2025-10-2920:03 > aren't non profits a federal thing with rules dictated by the IRS? Why is California involved?
Most states incorporate federal rules for their own exemptions for charities and non-profits. California treating OpenAI to date as a non-profit has revenue implications for Sacramento.
By adastra22 2025-10-2922:28 Corporations and nonprofits are a state regulated thing. The IRS only gets involved to approve whether donations are federally tax deductible and things like that, which apply to federal tax laws only.
By righthand 2025-10-2919:55 The Usa is divided into states, each with their own legal jurisdictions. Businesses tend to pay taxes to their state. OpenAI is headquartered in San Francisco, California.
So they avoid billions of tax on nonprofit status, then magically get to keep it all when they are for-benefit? How about no, fuck you, dissolve?
I mean, OpenAI has never been profitable. If anything, they are insanely unprofitable.
By terminalshort 2025-10-300:20 The more interesting question is will they be able to deduct those past losses (while they were "nonprofit") from their future income in the same way they could if they had been a normal corporation all along.
you can IPO the for-profit subsidiary. done before. the main tricky part is resolving the tax issues since as a non profit you are exempt, but obviously a for profit is not exempt from paying taxes
By throwup238 2025-10-2919:082 reply Mozilla has this same structure (non-profit parent, for-profit subsidiary) because the subsidiary has to pay taxes on the money Google pays to be Firefox's default search engine.
As do many gift shops attached to non-profit museums and art galleries.
The difference is that Mozilla’s for-profit arm is owned by the non-profit. The for-profit part of OpenAI is there to make a lot of individuals and for-profit corporations rich.
OpenAI’s profit-generating subsidiary isn’t just there to further the non-profit mission like a museum gift shop or Mozilla’s for-profit subsidiary.
By throwup238 2025-10-2922:49 That’s why this was scrutinized more and the California AG got involved but it’s not that rare either.
Novo Nordisk the maker of Ozempic for example IPOd, diluting the Novo Nordisk Foundation’s share (though they still have controlling voting rights due to share classes IIRC) to raise money. SRI International spinoffs often get sold (Siri) or raise money and IPO (Nuance) diluting the nonprofit’s share significantly in the process.
A nonprofit that owns a for profit subsidiary is no different than a regular shareholder and can decide that diluting to reward employees or get investors is worth it to grow the value of the whole company.
By scyzoryk_xyz 2025-10-2921:12 OpenAI - the AGI entity with a gift shop.
There's so, so much misinformation about this out there.
For example - every US nonprofit starts as a plain old vanilla C corporation, and then applies for 501(c)3 status which the IRS may or may not grant. It's a privilege to be a nonprofit.
The punishment that may be levied on a nonprofit is ... loss of that status and a return to a commercial corporation. That loss of status might have knock-on impacts on things like, say, tax deductions offered to donors, and I guess possibly on corporate income tax to the extent a company's accounting shows a profit. But it's not a thing you're "locked into" somehow and trying to escape. Quite the opposite; it's a thing the Federal government chooses to support financially as a matter of public policy.
oAI had a lot of work to do to get recapitalized like it did, but it was not the non-profit status that was the (major) problem. It was (at the least) the investment covenants made with the Microsofts of the world that bound them; the MS deal was the big thing here.
By LudwigNagasena 2025-10-300:011 reply A corporation is locked into its nonprofit status due to its articles of incorporation and state law regardless of its federal tax-exempt status.
By vessenes 2025-10-307:18 I think it’s generally more accurate to say that charitable assets are likely either locked to charitable purposes or need a fair valuation in case of disposal or wind down. I don’t know all the details here, but I would guess it’s enough of a mess between the parent and the for profit sub that some negotiation was inevitable.
