OpenAI’s promise to stay in California helped clear the path for its IPO
wsj.com
wsj.com
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.
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.
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.
It's about a moment in time, not an "in perpetuity" agreement.
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.
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.
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.
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.
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.
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.
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.
Which?
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.
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.
It's not like data centers are mainly in SF.
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.
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.
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.
People tried very hard to change it between 2020-2023 and utterly failed.
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...
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.
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.
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
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...
> 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?
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.
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.
also, 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.
I guess I have a different opinion - the tech, the product, the efficiency is the key to success.
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
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
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.
Whatever is best for his ego.
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)
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.
Politicians taking the superficial short-term win, as they will end up giving in to the megacorp anyway, is not surprising to me.
These clumsy stereotypes are so pointless.
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?
The Programming has changed get with the times. AI earnings have outweigh ESG scores.
They certainly arent reducing energy usage rn which could theoretically be a puzzle piece of reducing CO2.
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.
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.
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...
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.
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.
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?
https://thezvi.substack.com/p/ai-134-if-anyone-reads-it?open...
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.
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.
As do many gift shops attached to non-profit museums and art galleries.
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.
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.
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.
Actually you got it upside down. Only in western countries people will think it's corruption.
Eventually Cisco did indeed buckle in 2021 and reincorporate in Delaware . . .
Suddenly everyone here is very very concerned with the classification of this corporate entity, and I detect people feel personally slighted. Why is that?
Then, once GPT models exploded in value, making the for-profit arm worth tens of billions, they attempted to restructure toward a public company model to let investors and insiders cash out at scale, while claiming the non-profit board would still "control" the direction. This directly contradicts their original charter, which warned that profit motives could lead to unsafe AI racing.
Now it is clear that we are nowhere near AGI, and hence they have to make money from making fake tiktok videos and smut. And they just want to cash out because the original premise won't deliver. Specifically it was very disingenuous and that is why people hate it.
The workers and supporters who were taken by this idealistic vision, believe it was a bait-and-switch, and that the original promises were never intended to be kept.
I haven’t heard from any of the workers. Why are people white-knighting for them? My hot take is that they don’t mind being able to afford a house (or more) for their efforts. Where’s the outraged employees in this conversation?
As for “supporters,” what does that mean? People who watch from the sidelines and never actually contributed don’t usually get a say.
But did regular folks donate? Otherwise it seems people are outraged that their hypothetical donations were misused.
The only people who can claim harm are donors and workers who actually left, e.g. Murati. "Supporters" aren't stakeholders in any material sense.
As stated in their foundational legal filings, the primary activity of OpenAI is supposed to be described as: OpenAI, Inc. ("OpenAI") is a nonprofit artificial intelligence ("AI") scientific research organization. Its goal is to engage in research activities that advance digital intelligence in the way that is most likely to benefit humanity as a whole, unconstrained by a need to generate financial return. AI technology will help shape the 21st century, and OpenAI wants to help the world build safe AI technology and ensure that AI's benefits are as widely and evenly distributed as possible. To that end, OpenAI hopes to build AI as part of a larger community, and wants to openly share its plans and capabilities along the way.
As a member of humanity as a whole, they are supposed to be operating for my benefit, not primarily for the benefit of their investors. If they wanted to operate primarily for the benefit of their investors, they should have been paying taxes on every dollar they brought in.
No. The common good refers to “what is shared and beneficial for all or most members of a given community” [1]. There is no individual claim to benefit.
You can feel misled. Sort of like when a visionary promises something you want and then fails to deliver. But that doesn’t mean you were materially misled, which means you aren’t owed anything.
> they should have been paying taxes on every dollar they brought in
We don’t tax investment in America.
While it's true that we don't tax investments, we do tax gifts past a dollar value threshold, which is what donations become when nonprofit status drops away.
When companies are profit driven, the line must go up, shareholders need the line to go up, at all and any costs.
How is that complaint separate from OpenAI having been started as a for-profit entity?
Sure. But if the services are rendered, the ideology is orthogonal. For the slim minority of uncompromising zealots for whom it is not, damages can be quantified and paid.
How it does and, to a limited degree, how it should.
If you donate to or volunteer for a non-profit, you have non-pecuniary interest in how they are run.
If you're sold a product that's promised to be made in a certain way, you do too. If you paid for--much less used without paying--a service because you thought it was ethical per some definition, but aren't similarly bound in other purchases in your life, or otherwise can't show this is a value you consistently follow (and so, in being denied it here, have been damaged), I'm not sure any functional economy can work where anyone has a free option to take back a purchase--or much less, non-monetary use--at any time in the future because they feel--but can't materially demonstrate--betrayal.
Like, maybe if Stallman used ChatGPT he could credibly claim he wouldn't have used it if it hadn't marketed its claims around goodness. But I'm deeply sceptical a rando has the same standing.
Combined with a feeling that they don't like this wave of GenAI, you get a lot of uninformed hate that's deeply felt, and probably reasonably felt. But also totally uninformed.
They're quite literally running away with millions in tax money they stole. That means from YOU.
It's a sense of entitlement that pisses people off. Imagine you're a hardworking American who pays his taxes for the betterment of his country.
And then here comes this Sam Altman douchebag, who thinks he's so important he doesn't have to pay taxes. He thinks you should foot the bill, because you're nobody, and he's Sam Altman.
If you're not at least a little bit pissed at the precedent this is setting, I personally view that as pathetic.
Of course that isn't distributed remotely evenly and a lot of employees have not nearly enough to want to leave CA over taxes or just don't want to leave CA for other reasons. But OpenAI could easily say "HQ is moving to Austin. All employees must relocate and will be given $1M relocation bonuses." And the part left unsaid would be "Failure to comply means you lose 7 figures of options." Take rate on that would be >95%.
I’m not sure that’s true anymore, I think you still need the revenue, but just need attention. everything else is just whatever because you can’t predict 10 year outcomes for any business at this point with any level of confidence, and there’s nothing to compare it to other than extremely different businesses.
Ultimately it’s more of the same goal with differing levers:
Offload a massive illiquid investment onto the public so that investors make their fund
Make sure it can tread water long enough for people to forget about it so it can go through the long and slow enshittification period
After all the prime investors have liquidated and some cooling period, risk of lawsuits from activist investors drops significantly, they can ratchet up the margins, do a few years of layoffs to pump the price.
Then everyone involved is back to where they started, only the top 100 richest people put even more distance between themselves and everyone else so they can now invest in radical life extension or whatever
Depends how you look at it but at DO we shot for 50, ended around 55. (25 % growth + 30 % profitability)
This is what it looks like to me. Crazy growth numbers to bump the valuation and public interest, go public, gradually let the company shift into irrelevancy after major owners have cashed out.
The smoke and mirrors part here is that no one except the AI research community knows what the ML/AI capabilities will look like in 5 years. What that means is that the general public is probably going to eat up this IPO. Probably a better move to hedge by buying Microsoft, but whatevs.
Anyone with OpenAI stock can do this in the private markets right now to the tune of hundreds of millions of dollars. Not billions. But I'm not convinced liquidity--versus appreciation, for investors, and access to capital, for the company--is the primary motivation for going public.
>Offload a massive illiquid investment onto the public
Because this state seems like a very solvable problem: All you have to is not buy it
Your index fund will buy them.
It started me wondering if theres an ETF that explicitly avoids the top 20 companies
Obviously, in tech/AI bull market it can't be not underperforming.
> OpenAI had spent months making the case that it was the economic heart of the California economy—and would be willing to leave if Bonta blocked its plan to convert to a simpler corporate structure.
https://x.com/sama/status/1983223056668746218:
> California is my home, and I love it here, and when I talked to Attorney General Bonta two weeks ago I made clear that we were not going to do what those other companies do and threaten to leave if sued.
Hmmm...
Agriculture in California hit $61 billion in annual receipts in 2024 (https://www.cdfa.ca.gov/statistics/).
So, not that OpenAI isn't big, but, "the heart of the California economy"?
OpenAI needs to IPO, because if they don't get in on the current meme stock economy, they're going to collapse.
i'm a bit out of the loop but honestly why does California have a say? surely the investor base and Microsoft was a far harder negotiation than this one. this one smells of govt overreach.
For very good reasons, the laws make it hard to go from a charity to a for-profit company- because if you could easily transition between the two you could game tax laws with ease. In the end, being allowed to do this required negotiations, and promising to keep OpenAI in California- where they would be subject to other California regulations and taxes in the future.
If they had a "normal" corporate history- had been founded as a Delaware S Corp from the beginning- then this wouldn't be a thing and they would be free to move as they like(1). But, being a weird charity probably helped them attract talent in the critical beginning phases (before it became a money race with Zuck), and it has consequences now.
1: Just as an example, Palantir moved their corporate headquarters to Denver from Palo Alto years ago without a peep from the CA government.
Note: non-profit != charity. (All charities are non-profits. Not all non-profits are charities. PACs and non-profit hospitals, for example, are not charities, though the latter can have charitable arms.)
See, for example, Charity Navigator's page on OpenAI: https://www.charitynavigator.org/ein/810861541
One might reasonably claim it's overreach, but in response OpenAI could just leave the state. Which is what they threatened.
Board independence is largely a silly idea, people aren't even on the same page as to what the board is supposed to be independent of, and in this case it's not even clear which board you mean - the current one? The previous one? In what way are they less independent than any other board?
In the U.S. they absolutely are. The SEC defines independent directors [1]. If the majority of a (Delaware corporation's) Board isn't independent, it opens up the company and even individual Board members to heightened scrutiny by the courts [2].
[1] https://www.skadden.com/-/media/files/publications/2022/02/t...
[2] https://www.faegredrinker.com/en/insights/publications/2022/...
"Independence is neither a fixed condition nor a universal status for all purposes. " and goes on to talk about how complicated it is to even define and how it depends on who is defining it.
Your document makes my exact point, not yours. You are out of your depth.
But who oversees how charities use their assets and ensures that they are used for public benefit?
That job lies with the Charitable Trusts Section of California’s Office of the Attorney General, which is part of the state’s Department of Justice. Charged with both regulatory and law enforcement responsibilities, the section has a big job.
Guys, the only state morally bankrupt enough to just allow that is Texas. Why do you think these tech bozos love Texas? It's basically cyberpunk over here. Our government actively hates us.
We struck down paid water breaks in Texas. I once worked a job with no breaks at all. 10 hour days, no lunch. Yes, that's legal here.
For the life of me, I will never understand why workers vote against even the most minimal break requirements.
Is it simply that the majority of voters already work a job that gives them breaks and so don't see the need to make it a legal requirement? That seems very much like a "pull the ladder up behind you" mentality.
No. “At the pleasure of” means total discretion. The government can’t just stop letting businesses incorporate because it doesn’t like how a county voted.
The Constitution directly grants very few individual rights. It’s mostly a document about what the government can’t do.
> Theoretically states could stop it at any time
Sure. That’s not “at the pleasure of.” Driver’s licenses are not issued “at the pleasure of” a state. Neither are marriage certificates. They’re issued as a matter of process that binds both the issuer and recipient to a predictable set of rules.
The government can revoke a corporation's charter at any time it desires to.
Yes. As you said, "the people allow for corporations to exist," and the same people created the government and allow it to exist. And when those people created that government they created rules that govern what laws the government is allowed to enact. Those rules are known as the constitution. And one of the first rules the people made when they created the government is the aptly named "first amendment." And that rule clearly states that the government can't take legal action against a citizen for saying something the government doesn't like. The CA government retaliating against OpenAI for its CEO threatening to leave the state would clearly violate this rule.
Rather than, the natural state is that they exist unless they do something bad enough to be shut down.
Unless you mean, they need the government's "permission" to even file to become a corporation... But even in that case, you aren't asking for permission, you're doing the old school equivalent of signing up for a domain, you're submitting a filing and reserving a spot for that name/ID.
> Rather than, the natural state is that they exist unless they do something bad enough to be shut down.
JFC, come on. Corporations are legal entities and have no existence separate from the law. If they even have a natural state, that natural state is non-existence.
A corporation is a legal fiction that describes an association of people. The association is real and has a natural state. The corporate existence does not. (Analogous: a house is real. Land is real. Property is a social construct.)
> There is no inherent nature whatsoever.
> What is inherently existing is empty.
> What is empty is inherently existing.
Nāgārjuna vs Delaware
I'm thinking of all the unofficial mom and pops that transact and do business every day without having a proper legal entity. so it's more of a "does that count as a business even if they didn't file articles of incorporation?" of course it does, as far as its customers are concerned.
Think of the idea of "this guy has a lawn care business, I pay him every week to mow my lawn for 10 years", as far as his customers are concerned, he didn't need to get permission from the government to start doing that. And this sort of thing happens all the time.
I am NOT arguing whether a business where you filed articles is a legal entity, etc. There's no question that they are.
Hope that clarifies my point.
Edward Niedermeyer, author of “Ludicrous: The Unvarnished Story of Tesla Motors,” said Musk was happy to benefit from California’s largesse when it suited him and to move on when he saw fit.
“I think Musk has made the calculation that he’s gotten all the benefits he’s likely to get out of the state and he’s moving on to the next one,” Niedermeyer said. “The state of California clearly thought that all its work bought loyalty [from Musk] but, instead, I think it bought a sense of entitlement.”
Elon Musk’s messy divorce with California leaves ugly grievances all around: https://www.latimes.com/california/story/2024-07-23/elon-mus...
They're going to have some leverage.
Imagine if California managed to scare away the hottest company in the world and all the tax revenue it brings...
Of course the stock can rise again eventually.
The correct time to invest in individual companies is never.
Result: 70% NVDA, 30% GBTC (Bitcoin), and 0% QQQ or TQQQ. Honestly, not a bad mix — especially for a small, high-risk slice of your portfolio.
Next, I compared TQQQ (Triple Qs) vs. QQQ using the same 10-year monthly data. The optimizer picked 100% TQQQ, which again makes sense if you’re doing this in a tax-advantaged account like a 401(k) or IRA and only with money you’re willing to take some risk on.
Then I expanded the dataset — 55 years of returns across major asset classes (S&P 500, gold, short- and long-term Treasuries, corporate bonds, real estate, etc.) — and asked for the optimal portfolio. The winner: ~85% S&P 500, 15% gold, though 75/25 gives nearly the same return with a better Sharpe ratio.
A few quick takeaways:
Gold → GLDM ETF is the best vehicle.
QQQ → QQQM or TQQQ are the best versions.
And if you’re feeling adventurous: 70% NVDA, 30% IBIT (Bitcoin) isn’t crazy.
For what it’s worth, I’ve been running 75% stocks / 25% gold for a while now, but I’m thinking of carving out ~10% of the stock portion for a more aggressive tilt: TQQQ (6%), NVDA (2%), IBIT (1%) — because why not?
Thinking about it, my recommendation is read:
https://www.reddit.com/r/personalfinance/wiki/index/
and then after maxing your 401k, open a Betterment account, and then max your HSA if applicable. The tax savings easily best custom portfolio picking.
What happens if you backtest it by finding the equivalent portfolios for 1998-2008 (or even 1919-1929?)
This reminds me of when the former CEO of Hyundai, Chung Mong-koo, went to prison for embezzlement. In just 3 years he was pardoned because the President of South Korea basically said, "we need you for the economy."
We're not even pretending that the government is in control anymore. It's just full on anarcho-capitalism on display.
whoa there. corporations have the right to move to the best location for them. California does not have the eternal right to OpenAI's taxes and employee base. think about what you're implicitly assuming here. if one company simply leaving causes concerning "damage" then perhaps it is the government that is the problem, not the corporation driving economic growth.
Also, having a right to do something does not contradict a description of you leveraging power by using a threat of doing it, in the first place.
Sure. Whatever. The people who own and work at OpenAI have no obligation to remain in California.
(I’d also argue that global norms are currently walking back from the notion of natural rights pretty much everywhere except for in some parts of Europe. The concept doesn’t work without an appeal to divinity.)
ehh....
https://www.greenbacktaxservices.com/blog/california-exit-ta...
Skip to the "What California Can Still Tax After You Leave" section
If they do this to people, i am sure they can to corps too
Today, though, one can reasonably argue that megacorps have managed to successfully capture the most powerful government on Earth.
This happened at YC and a number of other places too, he goes into situations with nothing and comes out on top despite all odds.
Is he that skilled an operator, negotiator, or manipulator or something?
(0) Be exceptionally intelligent and capable of applying that intelligence to people, not just code or math — necessary for everything that follows.
(1) Keep attention diversified as long as possible until the winning path becomes obvious.
(2) Focus on fringe bets, but pursue many simultaneously until one clearly dominates (see (1)).
(3) Extreme social manipulation — people-pleasing, control- and power-seeking, selective transparency, skillful large-scale dishonesty, and a willingness to hurt or betray when it serves (1) and (2) and the relational cost is acceptable.
(2) brought him into the startup ecosystem and the first YC batch in the first place (he had to start somewhere); combined with (3) he made an early fortune from a failed startup. (3) also ingratiated him with PG and others in those years. (1)+(2) ensured he always had exposure to every plausible frontier of the industry; when he was effectively fired from YC for (1)+(3), (2) made the OpenAI pivot the next obvious move — and a better one. (3) almost cost him his career a second time when the board fired him from OpenAI temporarily, but he survived because (3) also ensured he had enough to offer everyone else that he leveraged his way back in.
He also seems to understand something about power and perception, in that he takes calculated risks that seem to keep working out.
So in other words, he seems to be an extraordinarily skillful politician (in both the general and the Patrick Lencioni sense).
When he was fired from OpenAI, his use of employee manipulation to regain his position is not a risk; it is the only option he had. It was his bond maturing, of carefully cultivated loyalty he had accrued over years. Gaining that loyalty was not really a risk. It was smart politics.
One risk he took is: signing away such a large portion of the company to Microsoft. I'm not sure whether that is working out.
Another risk he took is: neglecting and sidelining the "safety" portion of his organization. This caused a talent exodus and led to the formation of many competitors. I'm not sure whether that is working out either.
In both cases he had the option of accepting the status quo.
He probably has everything every politician has ever asked chatgpt index and ready to be emailed out at any given time?
Note, PG is the founder of YC, Sam's former boss, and the one who removed Sam from the position of President of YC after first appointing Sam to succeed him as President of YC. (Sama was more focused on OpenAI than on YC at the time, which doesn't work when you're supposed to be leading YC.)
2008 Essay "A Fundraising Survival Guide" https://www.paulgraham.com/fundraising.html
Sam Altman has it. You could parachute him into an island full of cannibals and come back in 5 years and he'd be the king. If you're Sam Altman, you don't have to be profitable to convey to investors that you'll succeed with or without them. (He wasn't, and he did.) Not everyone has Sam's deal-making ability. I myself don't. But if you don't, you can let the numbers speak for you.
2009 Essay "5 Founders" https://paulgraham.com/5founders.html
5. Sam Altman I was told I shouldn't mention founders of YC-funded companies in this list. But Sam Altman can't be stopped by such flimsy rules. If he wants to be on this list, he's going to be. ... What I learned from meeting Sama is that the doctrine of the elect applies to startups. It applies way less than most people think: startup investing does not consist of trying to pick winners the way you might in a horse race. But there are a few people with such force of will that they're going to get whatever they want.
That's PG's take on Sama.
I would say, looking at a wide range of Sam Altman's more investments https://observer.com/2025/06/sam-altman-startup-investments/
from OpenAI to Helion energy (Fusion), to Retro Biosciences (longevity), Neuralink (brain computer interface), to Reddit
Sama really wants to "build the future," and when some of those investments "hit", like OpenAI did - basically become the first new company with a clear path to a $1T valuation since Facebook or TikTok), you gain immense credibility for "betting the future will happen and getting your organization there first."
If YC's motto is "build something people want," and OpenAI is now serving 800M active users while delivering incredible revenue growth (and investors want to see both). Sama gains power by giving investors what they want, by giving users what they want, and basically authoring an entire new type of software company and a new part of the economy.
A thing to note here is that, being a YC partner and top angel investor from 2011 to 2020, you can argue that Sam himself is "the most successful YC graduate." He saw thousands of companies go through YC. He saw hundreds of 'hard tech companies' go through YC. And in that decade, he could only have learned an immense amount about how VCs/successful CEOs think and make decisions. Certainly, we see the learnings of those experiences in what he's been able to pull off since.
The dukes and earls are still essential to run the nation, and must be courted.
I think here is the answer to another commenter's question about success - it looks like great success comes to one who is able to recognize in time when old obligations become "obsolete" and thus drop them well before those obligations start to block or heavily tax the way to further success.
1. Credit to Charles Stross, The Jennifer Morgue 2. Thneed-style capitalism
Many situations are fundamentally uncertain with respect to laws/rules in place. The idea that they "skirted rules and regulations" is wrong. Did they push in an attempt to get a decision made which would favor them? Sure. But there was a decision to be made.
And, the people are supposed to be in control anyway, not the government.
This wasn't some straightforward matter. Many things are not. OpenAI are not obliged to passively sit and wait while various other parties try to influence the outcome (and there were many, and they weren't nobodies).
More like Capitalistic AI.
But I think you're totally incorrect on this; oAI is going to be one of the enduring tech consumer brands built in this half of the 21st century.
I am curious why you think that, they're early to market but that by no means guarantees them a long term place at the table.
They definitely have a strong consumer brand so it’s not like they’re going to disappear, but I understand the bear case.
I think it's highly likely in the next 10 years companies like Spotify and Uber will no longer exist. They're fundamentally antogonistic to their capital.
There is a time limit for shareholders to make return on that investment and so far their operating costs are astronomical given they don't yet seem to offer any substantial product that can't be without, if anything, they're pushing people further away from AI with the slop their churning out.
reference : https://www.reuters.com/business/openai-lays-groundwork-jugg...
Given the froth in the market right now, I think there is a good chance the IPO gets scrapped if we are talking mid 2026. An IPO at a trillion would work right now but mid 2026 is a long ways away.
Like how the Deepseek moment feels like ancient history but it wasn't even a year ago.
If the financial future of OpenAI is not as rosy as they say it is then there is a fair chance that post IPO the stock will not rise. There are plenty of signs that this is the case, including the 'erotic' version of ChatGPT slated for release in December, the strong push to monetize even the most inane interactions and the mention of advertising as a possible source of income. All of those combined tell me that OpenAI is seriously worried about their bottom line.
But Microsoft already has a bottom line and AI is the one way in which they could put one over on Google, which they've been dying to do for many years.
So the logical progression to me seems to be:
- do the IPO, everybody associated with OpenAI will be filthy rich (including MS)
- attempt to polish up the financials
- if that fails activate plan B, have Microsoft make an offer to take OpenAI private again
The hype around this IPO increases the chance the stock will drop post IPO.
There is no clear path to the trillion dollars today. By IPOing, the owners (who have a good idea of where it's going) can exchange their ticket to the trillion for cash today.
Seems like a bad deal unless you know the ticket won't get called. Then you've just made bank.
And you might have noticed some form of hype around AI these last few years - arguably this could be to make the trillion dollar seem more realistic and therefore making the owners more money when selling their ticket to it.
Just sayin...