One thing that’s not clear to me (and you may have discussed this in the previous posts, I don’t remember) is: was the previous structure even legally valid/enforceable? Can you write into the structure of a for-profit LLC that it has to act in accordance with some goal other than profit? Because as I understand it, a board member has a fiduciary duty to the company regardless of their own interests, or that of the organization or process that made them a board member. Someone recently highlighted to me some examples of cases (in normal for-profit startups) where this gives you behavior like board members approving some measure, and then the same individuals, now acting as shareholders where they can do as they please, vote against it.
Maybe the original OpenAI structure included a clever and enforceable way around this. But if not, then maybe it’s possible the switch to a PBC closes a loophole whereby investors could have sued the board for acting according to the nonprofit’s interests instead of their own.
One thing that’s not clear to me (and you may have discussed this in the previous posts, I don’t remember) is: was the previous structure even legally valid/enforceable? Can you write into the structure of a for-profit LLC that it has to act in accordance with some goal other than profit? Because as I understand it, a board member has a fiduciary duty to the company regardless of their own interests, or that of the organization or process that made them a board member. Someone recently highlighted to me some examples of cases (in normal for-profit startups) where this gives you behavior like board members approving some measure, and then the same individuals, now acting as shareholders where they can do as they please, vote against it.
Maybe the original OpenAI structure included a clever and enforceable way around this. But if not, then maybe it’s possible the switch to a PBC closes a loophole whereby investors could have sued the board for acting according to the nonprofit’s interests instead of their own.