[DrBurrito]

My understanding is that there are two types of stock, and the non profit controls the voting stock majority. This cannot be diluted. All other stock gives a (capped) fraction of the profits. This cannot be diluted by these operations, but the cap also can be a bad deal.

[tgma]

This is news to me. Do you have any reference for this? FWIW they did a restructuring that got rid of the capped-profit regime very recently.

[DrBurrito]

Ah right, the restructuring seems to change some things:

From here: https://openai.com/index/evolving-our-structure/

The nonprofit will continue to control the PBC, and will become a big shareholder in the PBC, in an amount supported by independent financial advisors, giving the nonprofit resources to support programs so AI can benefit many different communities, consistent with the mission. And as the PBC grows, the nonprofit’s resources will grow, so it can do even more. We’re excited to soon get recommendations from our nonprofit commission on how we can help make sure AI benefits everyone—not just a few. Their ideas will focus on how our nonprofit work can support a more democratic AI future, and have real impact in areas like health, education, public services, and scientific discovery.

The previous structure is here: https://openai.com/our-structure/

[tgma]

I don't interpret that paragraph as non-dilutive. It's to say that the parent is just a regular shareholder currently holding the majority and then weasels away with "more resources as valuation growth" which is true in absolute mark-to-market sense, not relative ownership, but I don't think they have free cash to pony up and exercise any first right of refusal even if they have something like that on a pro-forma basis, so unless the non-profit board is adamant on voting against all capital raises and stock-based acquisitions and employee stock (they won't), their ownership share will be diluted.

[DrBurrito]

Yes, that is the new one.

From what I understand reading Mat Levine explanation of the topic, the non-profit controls the board and has supervoting rights, so it cannot be diluted to be outed.

https://www.bloomberg.com/opinion/newsletters/2025-05-06/ope...

[tgma]

Gosh, that was a very hard article to decipher for me, initially consisting of the author's own view on what should've been, old conversion plans that did not happen, and in the end alluding to what actually happened, except he also has no additional facts to offer, and it is his own speculation that the non-profit holds supervoting shares. I would totally not base an analysis on the author's mere educated guesses.

[DrBurrito]

The gist is that the nonprofit still controls the board. The details of course are surely full of technicalities I cannot find anywhere. At least to me, the walkthrough was useful to see what changed.

[SlimIon729]

That's an interesting point about the different stock classes and voting rights. It adds another layer to how these kinds of acquisitions and valuations might play out in the long run, especially concerning the non-profit's influence. How often are such dual-class stock structures truly effective in maintaining the original mission when large sums and external valuations come into play?

[DrBurrito]

The case of OpenAI is very unique. The structure is very successful. See Meta, Google, Palantir.

Some take the form of different stock classes, with some classes having voting rights, and others no vote at all; other schemes are stock with supervoting rights.

[JamesBarney]

This is 100% definitely how it works. The number of board seats the non-profit gets is not dependent on how many outstanding shares there are.