- OpenAI’s buzz has a lot of tech workers eager to join the generative AI company.
- The company’s straightforward method of compensation is relatively unique in tech.
- Given its structure, most employees could make millions in the next few years.
OpenAI’s work of building generative AI is complex, yet how it compensates its employees is not.
The eight-year-old company behind ChatGPT, led by co-founder and CEO Sam Altman, is compensating its roughly 500 workers in a way that is almost entirely unique for Silicon Valley. While the last two years or so saw the tech industry in turmoil, with mass layoffs and executives resetting massive pay packages doled out during the pandemic-induced race for talent, OpenAI has built a straightforward compensation structure that is relatively uncomplicated.
Zuhayeer Musa, the founder of the popular tech pay database and advisory Levels.fyi, which researched OpenAI’s pay, said there has been only one other company with a similar compensation structure to OpenAI: Argo AI, an autonomous driving company that shut down last year.
“Other than them I can’t think of any other prominent company adopting this model at this scale,” Musa said.
OpenAI’s compensation is a simple salary-plus-equity model. Most employees are paid a flat base salary of about $300,000 alongside a yearly grant of around $500,000 in PPUs, or profit participation units, a form of equity compensation. And that’s it.
Signing bonuses are very rare; there is no target performance bonus; and there is also little to no room for negotiation on compensation, Musa and another person familiar with the company said. All of those things are standard with other tech companies, from startups to Big Tech firms like Meta, Google, and Microsoft.
Musa noted there is some differentiation in pay for workers at OpenAI depending on experience, up or down several thousand dollars in salary or PPU grants, typically in increments of $25,000. Yet, most roles come close to the $300,000 salary and $500,000 grant split. Over the course of four years, the vesting period for the PPU grants, most OpenAI workers can expect to take home at least $2 million in equity pay alone.
A spokesperson for OpenAI declined to comment.
The payout from OpenAI’s PPU grants could actually be much higher, depending on the company’s growth and valuation going forward. While profit participation units are technically a company granting a fractional portion of its future profits, OpenAI employees are still able to sell them once or twice a year during internal liquidity events. They recently did so, fetching nearly $500 million from investors. This process is similar to that of other private tech companies, including Elon Musk’s SpaceX.
The concept of PPU’s has been somewhat confusing for prospective hires, Musa noted, not least because OpenAI does not share the size of an individual’s PPU allocation, only the dollar value. On top of that, the company doesn’t share exactly how the units are priced.
“People have definitely been worried about the risk,” Musa said. The potential upside, however, is a big pull. Although the price an employee can fetch for their grant is capped at 10x the granted value, that still means today’s typical OpenAI worker could make up to $20 million on their PPUs. The company’s valuation most recently jumped from $20 billion to $29 billion, and its valuation has doubled since 2021. Being one of the most talked about companies in the world has employees expecting the valuation to climb even higher by the time their grant is fully vested.
Internal talk at the company, where the ultimate goal is the development of AGI or artificial general intelligence that surpasses human capabilities, rarely mentions numbers, the person familiar said. When they do come up, the person added, there is “no limit” to what Altman and other leaders see as the financial potential of the company.
Are you an OpenAI employee or someone else with insight to share? Contact Kali Hays at email@example.com, on secure messaging app Signal at 949-280-0267, or through Twitter DM at @hayskali. Reach out using a non-work device.
Read the full article here