[hodder]

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.

[Hansenq]

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.

[johnrob]

If I am understanding things correctly, OpenAI could leave in the future - but CA can’t retroactively block the conversion in that case.

[JumpCrisscross]

> 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.

[terminalshort]

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?

[booi]

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.

[yellow_postit]

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.

[BobaFloutist]

That still doesn't explain the value of Sam Altman's pinky promise.

[wubrr]

The location you're physically sitting in doesn't really matter. Saying 'san francisco cause san francisco' is also kinda boring and meaningless.

[dragonwriter]

> 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

[bix6]

Page not found

[harmmonica]

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).

[cosmicgadget]

We're finally going to get that bullet train.

[mmooss]

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.

[dragonwriter]

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.

[gyomu]

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.

[tw04]

I’m pretty sure Sam is motivated by whatever is best for Sam, not OpenAI.

[qwertox]

> whatever is best for the entity

Whatever is best for his ego.

[terminalshort]

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.)

[Hansenq]

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)

[throwaway294729]

> 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.

[make3]

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.

[philipallstar]

> and blindly supporting corporations is seen as pro-economy

These clumsy stereotypes are so pointless.