Shulou(Shulou.com)11/24 Report--

As the hottest and most mysterious AI startup today, what is the salary structure of OpenAI? The reporter of the foreign recruitment website revealed the secret exclusively for us.

The salary structure of OpenAI employees has always been a mystery. OpenAI has always been tight-lipped about how employee compensation works and how it is evaluated.

Recently, the compensation website Levels.fyi dug up according to various sources: the annual salary of software engineers in OpenAI is as high as $925000!

However, it is worth noting that this $925,000 does not seem to be the last price.

As for the other mystery-why doesn't OpenAI want to go public?

We have a strange structure called the profit ceiling (capped-profit), says Sam Altman, founder and CEO.

This mixed form of "profit cap" means that companies are allowed to raise external funds, but the company sets limits or caps on the amount of profits it can earn, in order to ensure that the company's focus is on serving customers and contributing to greater benefits. not profit maximization.

Is it true that there are companies in the world that do not pursue profit maximization? In a long article, a reporter from Levels.fyi revealed to us exclusively how OpenAI's unique equity compensation works.

Software engineers earn $925,000 a year recently, compensation website Levels.fyi has cobbled together some exclusive information about the OpenAI compensation model through internal channels, such as offering compensation negotiation services for job seekers at OpenAI.

As you can see, OpenAI software engineers earn $925000 a year.

Of this amount, the base salary is $300000, and the remaining 625000 are "equity".

The "equity" will be distributed over four years, and if nothing happens, it will get a total of $2.5 million.

According to rough statistics, the base for positions other than software engineers ranges from 100000 to 450000.

OpenAI's unique equity compensation structure note that on the face of it, OpenAI software engineers earn $925000 a year, but that's not how much they get.

Of the 90w + annual salary, the receiving salary of $300000 is easy to understand.

And accounted for the other 2 big 3 "equity", is OpenAI's original "Profit Participation Units" (PPU).

To put it simply, this is the equity incentive given to employees by OpenAI. PPU, worth $625000, may eventually bring employees 10 times, or $6.25 million in cash compensation.

So the job, which earns $925000 a year, may one day become 6.55 million.

Of course, this 625000 may turn out to be worthless.

What on earth is PPU? What on earth is the special "equity" of OpenAI-Profit Participation Units?

Literally, it means the unit that participates in the distribution of profits.

The core value of PPU is to share the profits generated by OpenAI.

This means that at some point in the future, if an investor wants to participate in the profits of OpenAI, he will spend money on PPU from employees who own PPU.

In this sense, PPU is very similar to traditional stocks.

However, OpenAI leaders such as Sam Altman have repeatedly mentioned on various occasions that OpenAI will not be listed in the future.

If it is not listed, who decides how much the "equity" in the hands of employees is worth?

Through what channels can investors buy these "shares" so that employees can withdraw at a profit?

So it sounds like the "equity" given to employees by OpenAI is a big pie that can never be valued or cashed.

According to the information gathered by Levels.fyi, when OpenAI sends Offer to prospective employees, OpenAI will introduce the value of the PPU to employees.

These PPU are distributed to employees free of charge on average over four years (25% per year) and do not need to be purchased by employees.

Its value is determined by a company's internal guidelines and valuation tools.

Employees who hold PPU can sell PPU and get cash when outside investors invest in OpenAI.

But employees are not allowed to sell the PPU for the first two years, and the price limit cannot exceed 10 times the internal valuation.

How is the value of these PPU calculated? According to employees contacted by Levels.fyi who are preparing to join OpenAI, OpenAI has an internal valuation tool to determine the value and growth of PPU.

If according to the plan that OpenAI claims not to go public, the specific value and value changes of PPU will not be known to the public.

And because the number of shares of PPU and the number of shares of PPU received by employees are not disclosed.

So employees only know the value of their PPU, but they can't know the specific share of PPU they hold.

But on the whole, the change in the value of PPU must be directly linked to the valuation of the company by outside investors.

In the most recent financing, investors valued OpenAI at $27 billion to $29 billion.

But some employees who are ready to join OpenAI have told Levels.fyi that OpenAI also told them that the value of PPU is based on OpenAI's eventual profitability.

If you can't make a profit, there is a zero risk in the value of PPU.

How to cash PPU? According to Levels.fyi, when OpenAI raises money, employees can sell their PPU holdings.

In the most recent financing earlier this year, early OpenAI employees were already able to sell their PPU holdings.

But it will be up to the company and management to judge when the next OpenAI financing will take place.

Does OpenAI have any other benefits?

It is not clear whether OpenAI offers any new or additional PPU to people who are close to the profit ceiling or after the four-year attribution period, but it must also provide other benefits to employees.

The reporter also found an old position in OpenAI called "Director of Equity Management".

One of the responsibilities of this position is to "supervise the management of employee equity, including the issuance, ownership and tracking of profit participating units", which is the only relevant information that can be found online so far and is no longer displayed.

The position is now 404.

Note that the annual salary for this position ranges from $180000 to $285000, and it seems that OpenAI's announced annual salary did not include PPU when it posted the job posting.

In addition to standard medical, dental and mental health benefits, they also provide the following services:

401 (k) plan, 4% match

Unlimited holidays and 18 + company holidays per year

Paid parental leave (20 weeks) and family planning support

Annual learning and development allowance ($1500 per year)

Finally, the reporter stressed that although OpenAI's offer looks high, because of the chaotic nature of PPU, it is difficult to compare OpenAI's compensation with big tech companies such as Apple.

What is the "profit ceiling" model? At this point, we can understand the salary structure of OpenAI as follows:

The fixed basic salary paid by the company + the irregular salary paid by investors through the purchase of PPU.

But if OpenAI is not listed, why should investors buy shares in OpenAI?

This involves the structure of OpenAI and its commitment to investors.

The structure of OpenAI in 2019, due to operational difficulties caused by continued money burning, OpenAI changed from a non-profit organization to a "profit ceiling" model and continued to raise funds.

Namely OpenAI=OpenAI Non profit (non-profit part) + OpenAI LP (for-profit partnership)

Why switch to this model?

OpenAI's blog describes it like this--

The basic idea of OpenAI LP is that if we successfully complete our mission, investors and employees can get a capped return, which allows us to raise investment capital and attract employees with equity similar to that of a start-up.

But any return that exceeds that amount-- if we succeed, it is expected to generate several orders of magnitude more value than the number of investors or employees we owe to OpenAI LP-- is owned by the original OpenAI non-profit entity.

In other words, OpenAI is used to exchange equity sources for external investments and most employees are employed by OpenAI LP.

In the future, if OpenAI makes money, investors will get a return on investment based on their own share of PPU and an upper limit of 10 times PPU value.

This is the most direct reason that drives outside investors to invest in OpenAI.

Such a framework meets the needs of OpenAI itself for a large amount of financing in the process of development.

At the same time, there is no need to worry about the founders losing control of OpenAI because they have ceded too much equity to investors.

This ensures that OpenAI can continue to develop as a non-profit organization according to its own original intention.

Commitment to investors according to Fortune, the return on investment in the investment agreement between OpenAI and Microsoft is divided into four stages:

The profit distribution of OpenAI can be divided into four stages:

1. Corporate profits let the first batch of investors, led by Musk, recover 1 billion dollars of investment, and then exit.

two。 Subsequently, 75 per cent of OpenAI's profits are allocated to Microsoft until Microsoft recoups its $13 billion investment.

3. Microsoft's stake fell to 49 per cent after OpenAI's profits reached $92 billion. The rest of the profits are shared by other venture capitalists and OpenAI employees.

4. When the profit reaches $150 billion, the shares of Microsoft and other venture capitalists will be transferred to OpenAI's non-profit fund for free.

Listed or is not listed, and since is a question launched ChatGPT in November last year, OpenAI has been in the headlines around the world and has even been invited by the White House to discuss artificial intelligence legislation with giants such as Google and Microsoft.

Back in 2015, when OpenAI was founded, it was a "non-profit organization."

In 2019, OpenAI officially became a for-profit start-up with an investment of $1 billion from Microsoft. Musk was also outraged that he was at odds with his business philosophy and withdrew from the founder's team.

Today, with the big model hurricane detonated by ChatGPT, OpenAI raised another $10 billion from Microsoft, valuing it at close to $30 billion.

At the Abu Dhabi conference in early June, Sam Altman said again: "when we develop super intelligence, we may make some decisions that are very strange to most investors." I don't want to be sued by the open market, Wall Street, etc. So we will not go public for the time being, there is no such plan. "

Recently, the internal meeting attended by Sam Altman revealed that OpenAI is seriously limited by GPU, and it often costs tens of millions of dollars to train large models, not to mention the fact that hundreds of millions of ChatGPT users are consuming huge computing resources every day.

It is not enough to choose not to go public, just by clinging to Microsoft's thighs.

On the other hand, if we insist on not going public, we can pay more attention to independence and not be too subject to capital markets and commercial profits. It also reflects the original intention of OpenAI to ensure that the research results benefit the whole world.

From 2015 to 2023, OpenAI's goal has always been to develop general artificial intelligence (AGI) "in a way that is most likely to benefit mankind as a whole", whether it is an early non-profit organization or today's for-profit start-up.

It remains to be seen whether OpenAI can benefit its own employees before benefiting mankind as a whole.

Reference:

Https://www.levels.fyi/blog/openai-compensation.html

Https://www.levels.fyi/companies/openai/salaries/software-engineer

Https://fortune.com/2023/01/11/structure-openai-investment-microsoft/

This article comes from the official account of Wechat: Xin Zhiyuan (ID:AI_era)

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