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OpenAI Plans Share Sale Following Leadership Turmoil

OpenAI is reportedly proceeding with its share sale following a high-profile leadership shake-up last week.

That sale is expected to value the artificial intelligence (AI) company at $86 billion, and could test how the recent firing and rehiring of CEO Sam Altman has cost the firm, the Financial Times (FT) reported Sunday (Nov. 26).

OpenAI had announced the sale last month and still plans to go forward with it, sources close to the matter told the FT. The report notes that it will be the first test of investor attitude following the conflict between Altman and his board.

According to the FT, investors are still bullish that a new sale can eclipse the $29 billion valuation OpenAI reached following Microsoft’s $10 billion investment earlier this year.

“Clearly this almost destroyed a lot of value in the short term, it’s hard to say what happens next,” said venture capitalist Vinod Khosla, one of OpenAI’s early backers. “Valuation is a function of investor perceptions. The company is the same or better off than it was last Thursday.”

However, the report added, some analysts argue OpenAI will be hurt by the week’s events, with rivals like Google and Amazon offering more stable generative AI alternatives.

“It hurt their valuation — we all know that. It’s just a mess,” Anat Alon-Beck, associate professor in corporate law and governance at Case Western Reserve University School of Law, told the FT. “I don’t think their valuation is going to go up without them now taking the proper measures.”

Altman was removed from his post on Nov. 17 after the board conducted a review that found that the CEO had not been “consistently candid in his communications” with them.

Supporters of Altman — among them Satya Nadella, CEO of Microsoft — spent the next few days lobbying for his reinstatement. But when negotiations hit an impasse, Altman instead took a job with Microsoft, overseeing its new AI research team.

Still, the company and its employees kept pushing for Altman’s return, and got their wish Nov. 22, when OpenAI announced Altman would retake the CEO title, working with a new board.

As PYMNTS CEO Karen Webster wrote after the ousting of Altman, OpenAI board consisted of four people who were tech-heavy and public policy-focused — and “remarkably light” on the business skills needed to monetize and scale generative AI.

“But none of that should be surprising given its stated mission: the nonprofit’s principal beneficiary is humanity, not OpenAI investors or customers.” Webster wrote. “It’s not clear from reading the board manifesto what ‘humanity’ as the principal beneficiary means, nor how the board would weigh lost jobs from AI against lives saved from medical advances, for example.”